Wednesday, December 13, 2017

Fed Finishes Rate Hike Regimen for Year; Stocks Close Off Highs

Folks old enough to remember the comedy group Firesign Theatre might recall the famous, "Department of Redundancy Department," which is applicable to the never-ending, record-breaking after record-breaking stock market.

As Janet Yellen dispatches her final 0.25% rate increase to the federal funds rate, the markets did what they usually (always) do.

At the end of the day, the surprise was that the major indices closed well off the highs of the day, making for an interesting setup for Thursday.

At the Close, Wednesday, December 13, 2017:
Dow: 24,585.43, +80.63 (+0.33%)
NASDAQ: 6,875.80, +13.48 (+0.20%)
S&P 500: 2,662.85, -1.26 (-0.05%)
NYSE Composite: 12,699.54, +1.76 (+0.01%)

Alabama Turns Blue; Yellen's Final Rate Hike In Focus

Late Tuesday night, the nation learned that Democrat Doug Jones defeated embattled Republican Roy Moore in Alabama's special election for the seat formerly occupied by Jeff Sessions, who vacated when he was promoted to Attorney General by President Trump.

What may very well go unlearned is how much the blatant attacks on Roy Moore by women claiming he sexually assaulted him or otherwise acted in immoral ways swung the election to Jones, who will be the first Democrat elected to the senate from Alabama since sitting senator Richard Shelby won as a Democrat in 1986, but changed parties in 1994.

The election of Jones narrows the Republican majority in the senate to 51-49, a slim edge that puts any future Republican-sponsored legislation in serious jeopardy. That's news that Wall Street should cheer because a lame congress is usually good for business, though it's far too early to say what the overall effect will be.

Looking further out, Democrats are bolstered by the upset victory in usually-red Alabama, believing - with good reason - that they have an opportunity to wrest control of the Senate in the 2018 mid-term elections, the campaigns for which will begin heating up shortly after the holidays.

What's also on the minds of investors is the FOMC policy meeting concluding Wednesday afternoon. The Fed is widely expected to vote to increase the federal funds rate another 25 basis points, to 1.25-1.50%.

As has been the case for the past nine years and the slow parade of 0.25% rate hikes which began in December of 2016, it's unlikely to cause much of a stir on Wall Street.

The Fed has plans for three to four more hikes in 2018, which would put the overnight lending rate at something around two percent. While still historically low, some analysts believe the economy isn't nearly durable enough to maintain a positive bent in the face of higher rates.

The Fed makes its policy statement at 2:00 pm ET Wednesday afternoon.

At the Close, Tuesday, December 12, 2017:
Dow: 24,504.80, +118.77 (+0.49%)
NASDAQ: 6,862.32, -12.76 (-0.19%)
S&P 500: 2,664.11, +4.12 (+0.15%)
NYSE Composite: 12,697.78, +29.57 (+0.23%)

Tuesday, December 12, 2017

More of the Same: Stocks Start Week With Gains; Even Doug Noland Doesn't Know How It Ends

Nothing new about this, except that it's beginning to become obvious to everybody that the relentless ramping of stocks by central banks and their cohorts in the commercial banking sector (think Goldman Sachs, JP Morgan Chase, Bank of America, Citibank, Morgan Stanley) cannot continue uninterrupted.

On the other hand, it's been going on for a lot longer than anyone could have possibly expected...

The big questions are:

1. When does it end?
2. How does it end?

At this point, nobody in the financial world even has a clue, including people as bright and provocative as Doug Noland, who has been authoring the Credit Bubble Bulletin since the late 90s.

His recent interview podcast by Chris Martenson of Peak Prosperity is incredibly prescient and offers insights into the global credit bubble that cannot be found anywhere else.

It is highly recommended listening.

At the Close, Monday, December 11, 2017:
Dow: 24,386.03, +56.87 (+0.23%)
NASDAQ: 6,875.08, +35.00 (+0.51%)
S&P 500: 2,659.99, +8.49 (+0.32%)
NYSE Composite: 12,668.21, +25.15 (+0.20%)

Friday, December 8, 2017

Stocks End Week Higher; Bitcoin Still Bubbly; Gold, Silver Pounded Lower

Stocks got back to rising without worry on Friday following the 238,000 new jobs reported in November, according to the BLS' non-farm payroll data.

The Dow, S&P, and Composite set new all-time high closing marks, the NASDAQ falling short of a record by 74 points, due primarily to the drubbing of the FAANGs late last week and early this week. Highly speculative tech stocks are considered to be benefited least of all companies by the tax bill currently coursing its way through congress, thus, some investors were shunning the sector for that reason. Others were likely taking profits after what is looking like a banner year for the tech leaders.

Bonds ended the week with a quiet session, the curve steepening ever so slightly, with the short-duration issues yielding the same or .01% more, while the 10-year-note yield was bumped a pip higher, to 2.38%.

The curve is still quite flat, with the spread between 2s and 30s only 98 basis points (0.98%). In other words, investors are flocking to short terms, which spells long-term trouble. In more normal times, a 30-year treasury bond would be yielding five from seven percent, but, even with the economy growing - albeit sluggishly - long-dated commitments are out of fashion. Lending the government money for a long period of time will only produce a return of 2.75%, hardly anything upon which one would hang a retirement fund. The federal government, if one believes in free market economics, is not a worthy bet from more than a few years.

Difficult to believe, but would you put your money at risk for an additional 20 years for an extra 0.37% return (the difference between the ten-year and the 30 year)? Probably not, and expert bond traders apparently agree.

No report would be complete without mentioning Bitcoin, which galloped above $17,000 on Thursday, but dropped back to just under $16,000 Friday, capping a week which it began just below $12,000 per coin.

On the flip side (pun intended), gold and silver were beaten down all week, sending silver to a loss year-to-date. Looks like a buying opportunity in the physical mining and bullion sector which has been the poster children for underperformance the past four years.

At the Close, Friday, December 8, 2017:
Dow: 24,329.16, +117.68 (+0.49%)
NASDAQ: 6,840.08, +27.24 (+0.40%)
S&P 500: 2,651.50, +14.52 (+0.55%)
NYSE Composite: 12,643.06, +74.08 (+0.59%)

Gold: 1,245.90, -3.90 (-0.31%)
Silver: 15.73, +0.01 (+0.06%)

For the week:
Dow: +97.57 (+0.40%)
NASDAQ: -7.51 (-0.11%)
S&P 500: +9.28 (+0.35%)
NYSE Composite: +28.50 (+0.23%)

Stocks Bid as Congress Avoids Government Shutdown; NFP Grows by 228,000

On Thursday, with the House and Senate agreeing to keep the federal government open for business via a two-week continuing resolution, investors took that relief as reason to rally stocks, erasing some of the losses of the previous week.

As Friday morning advanced toward the opening bell, the Commerce Department's Bureau of Labor Statistics released their most recent data on employment in the November non-farm payroll (NFP) report.

Coming in better-than-expected, the department reported an increase of 228,000 net new jobs in the month of November, adding more evidence that the economy, under the guidance of President Donald J. Trump, continues to expand. The unemployment rate remained at decades-low, 4.1%.

Futures pointed to a strong positive open for Friday's week-ending session.

At the Close, Thursday, December 7, 2017:
Dow: 24,211.48, +70.57 (+0.29%)
NASDAQ: 6,812.84, +36.47 (+0.54%)
S&P 500: 2,636.98, +7.71 (+0.29%)
NYSE Composite: 12,568.98, +36.55 (+0.29%)

Thursday, December 7, 2017

Stocks Continue to Stall While Crypto Goes Wild; Silver Down for 2017

Stocks continued to plan through the early days of December, giving up early gains to close mixed to down on the day.

Overnight, Bitcoin careened through $13,000, $14,000, and $15,000 per coin to set all-time highs in an unprecedented move.

While the cryptocurrencies may have Wall Street and central banks on the ropes, it hasn't presented the chief manipulators of precious metals from pounding down gold and silver, the latter of which dropped below $16 per ounce, leaving it down for the year.

Bonds were bid, dropping yields, though the curve remained stubbornly flat. With the FOMC meeting less than a week ahead, declining bond yields may give the Fed reason to pause on their planned federal funds rate increase.

Meanwhile, Washington, DC is working out an emergency continuing resolution, designed to keep the government running for at least a few more weeks.

Amid all the political and monetary madness, stocks remain resilient, though the recent lag may be a sign that gains for the year may be already locked in to many portfolios.

Other than Bitcoin, which has entered either a bubble or mania stage, and precious metals, which are a screaming buy, there doesn't seem to be much to tantalize the usual stock purchasers. Valuations have been stretched, and, with Novemebr non-farm payroll data due out Friday morning, Thursday is setting up to be another day of divestiture and consolidation.

At the Close, Wednesday, December 6, 2017:
Dow: 24,140.91, -39.73 (-0.16%)
NASDAQ: 6,776.38, +14.16 (+0.21%)
S&P 500: 2,629.27, -0.30 (-0.01%)
NYSE Composite: 12,532.43, -34.73 (-0.28%)

Wednesday, December 6, 2017

Tech Rout Spreads to Other Sectors; Bonds Signaling Slowdown

We have seen this show before.

Jittery markets, just off fresh all-time highs, make dramatic swings to the downside.

For the past nine years running, such activity has typically been followed by aggressive "dip-buying" and soon thereafter, new all-time highs on all the major indices.

Is this time different?

It's tempting to say that it is, especially for analysts who have been consistently wrong about market corrections during the grand recovery, but, it's probably nothing, unless...

... one considers the US treasury bond complex and its fast-collapsing curve, which currently has the spread between between a 2-year bill (1.80%) and the 10-year-note (2.34%) at a mere 54 basis points. The 2/30 spread is a minuscule 92 basis points (1.80%-2.72%), but perhaps most troubling is the tiny, 21 basis points between the 5-year and 10-year note.

The five-year note is yielding 2.13%.

Why does this matter? There are a number of good reasons, primarily, because in banking, one typically buys short-duration and lends long duration, making money on the spread. But, if there is no spread, there's scant money to be made and only a relative few defaults on long loans (such as occurred during the sub-prime crisis) can cause calamity for the lenders.

Also, the danger of inversion is weighty, occurring when a shorter-duration bond yields higher than a longer-duration. Such inversion might occur between the fives and tens, where the spread is - as mentioned above - only 21 basis points (0.21%).

Inversion matters because it signals that investors have no appetite for anything of long duration (loss of confidence) and are attempting to get all the yield on the short end, as quickly as possible. Every time bond yields have inverted in the past 90 years of market history, a significant inversion has been followed by a recession.

So, while Wall Street is enjoying salad days in stocks, the bond market is worrying, as Main Street finds difficulty in borrowing for the future.

The tide in stocks may also be turning, as evidenced yesterday as the Dow took over the lead in the relentless decline experienced in the NASDAQ. At this point, all stocks are at risk, probably due to the threat of yet another government shutdown, looming close at December 8. The November non-farm payroll report Friday could be the catalyst to send stocks even lower and bond spreads tighter. Extreme caution is advised the remainder of the week, noting that holiday season stock routs are extremely rare events. They usually happen in January.

In conclusion, this time is not different. It's the same as it always has been. Periods of stock euphoria are usually followed by recession. Boom-bust. Nothing lasts forever. To think so is pure tom-foolery.

At the Close, Tuesday, December 5, 2017:
Dow: 24,180.64, -109.41 (-0.45%)
NASDAQ: 6,762.21, -13.15 (-0.19%)
S&P 500: 2,629.57, -9.87 (-0.37%)
NYSE Composite: 12,567.16, -67.73 (-0.54%)

Tuesday, December 5, 2017

FAANGs, NASDAQ Under Assault as Investors Book Profits

Profit-taking in tech stocks continued on Monday as high-flying, high-p/e companies known affectionately as the FAANGs (Facebook, Apple, Amazon, Netflix, and Google) were subjected to relentless, high-volume selling.

For the record, here's how these tech darlings fared on Monday:
Facebook (FB) 171.47, -3.63 (-2.07%)
Apple (AAPL) 169.80, -1.25 (-0.73%)
Amazon (AMZN) 1,133.95, -28.40 (-2.44%)
Netflix (NFLX) 184.04, -2.78 (-1.49%)
Alphabet (Google, GOOG) 998.68, -11.49 (-1.14%)

General holders of these stocks are not yet alarmed over the losses which began a week ago, following the last-gasp ramping over Black Friday and Cyber Monday, because the companies have been among the best performers since January.

What is apparent is that investors are taking profits made in these stocks - none of which, other than Apple, offers dividends - and investing largely in Dow companies, all of which provide dividends to shareholders.

There's nothing unusual about what analysts typically call "sector rotation," except that the movement is quite pronounced. The S&P and Dow have outperformed the NASDAQ for six straight sessions.

With the markets less than two hours from the opening bell on Tuesday, futures are diverging wildly, with Dow futures up in the range of 130 points, while NASDAQ futures are falling by 90 points or greater.

At the Close, Monday, December 4, 2017:
Dow: 24,290.05, +58.46 (+0.24%)
NASDAQ: 6,775.37, -72.22 (-1.05%)
S&P 500: 2,639.44, -2.78 (-0.11%)
NYSE Composite: 12,634.89, +20.33 (+0.16%)

Monday, December 4, 2017

Dow Posts Best Week Of Year; NASDAQ Falls


In what was the best performance week of the year for the Dow (a nearly three percent gain), the NASDAQ lost more than one half percent.

The math is fairly simple. Outside of Apple (AAPL), which is a component of Dow 30 stock, the FAANGs (Facebook, Apple, Amazon, Netflix and Google) all got beaten down.

Facebook (FB) lost 1.78%.
Netflix (NFLX) was down 0.41%.
Amazon (AMZN) fell 1.44%, and Google (GOOG) dropped 1.10%. Additionally, another of the high-fliers, Tesla (TSLA) shed 0.75%.

Those stocks make up a mammoth portion of the total volume on the NASDAQ, thus nullifying any gains by all other stocks on the index.

Fear not, however, holders of high P/E paper, because since the Senate tax legislation was cleared Saturday morning by a narrow margin, all is well in the land of the free. Monday morning futures are pointing to a moon shot open.

For the Week Ending December 1, 2017:
Dow: +673.60 (+2.86%)
NASDAQ: -41.57 (-0.60%)
S&P 500: +39.80 (+1.53%)
NYSE Composite: +192.63 (+1.55%)

Thursday, November 30, 2017

Dow Gains, NASDAQ Falls, Bitcoin Up, then Down, Precious Metals Hammered

Dow stocks led the way on the second last day of November, as tech stocks (especially the FAANGS) were beaten down on the NASDAQ, suffering a loss of more than one percent - a rare occurrence these days.

Bitcoin ramped up over $11,000, before crashing. Silver and gold were flogged, as has been the case for too long as central banks struggle for survival in an increasingly fractured global environment.

Governments are still hanging onto their taxing powers, but it's becoming increasingly apparent in the West that promises made to workers - especially public employees - via pensions, are going to be revised.

The final day of the month signals new all-time highs as window dressing will be in effect. Republicans in congress hope to hold a vote on tax reform either Thursday or Friday. The margin of error for passing a bill is very slim as Republicans hold a small majority and all Democrats are expected to vote against any tax bill.

At the Close, Wednesday, November 29, 2017:
Dow: 23,940.68, +103.97 (+0.44%)
NASDAQ: 6,824.39, -87.97 (-1.27%)
S&P 500: 2,626.07, -0.97 (-0.04%)
NYSE Composite: 12,561.32, +41.09 (+0.33%)

Wednesday, November 29, 2017

All-Time Highs Becoming the Norm on Wall Street

Even though a potential government shutdown and another rate hike by the Fed are just weeks away, stock investors don't seem to care.

All the major indices rocketed out of the gate to impressive gains on Tuesday, eviscerating previous records.

As Wednesday morning approaches the opening bell, news that third quarter GDP was revised higher in the second estimate, to 3.3%, has futures kicking higher.

While Bitcoin surpassed $10,000 per coin on Tuesday night, the Dow might one-up the cryptocurrency by hurtling past 24,000 on Wednesday. The Dow Industrials passed the 22,000 mark on September 11, and cruised above 23,000 on October 18, so, ripping through 24,000 in just over a month wouldn't be much of a surprise.

At the Close, Tuesday, November 28, 2017:
Dow: 23,836.71, +255.93 (+1.09%)
NASDAQ: 6,912.36, +33.84 (+0.49%)
S&P 500: 2,627.04, +25.62 (+0.98%)
NYSE Composite: 12,520.23, +129.45 (+1.04%)

Tuesday, November 28, 2017

Fittingly, Bitcoin Nears $10,000 on Cyber Monday

Catching a ten-bagger is a noteworthy event in any trader's history, but believers in Bitcoin - the original and most prominent cryptocurrency on the planet - are enjoying their days in the sun as the currency heads for $10,000, currently trading for more than $9900 per digital coin.

Bitcoin ended 2016 at a mere $970.17, but it's gone completely bonkers in 2017 as more and more people adopt the digital currency as a hedge against the faults of fiat currencies of central bankers that are based on nothing but faith.

While bitcoin is similarly faith-based, it has properties that traditional currencies do not. It is anonymous, and also not subject to excessive printing of fresh fiat out of thin air. The number of bitcoins mined is capped at 21 million. There are only four million left to be mined. After that, there can be no more Bitcoins ever created, so the currency has an inflation governor that is rivaled only by gold, silver and other precious metals.

This advantage is not lost on holders and speculators in Bitcoin. As acceptance and adoption grows, the number of bitcoin holders naturally ratchets up the price. As of this writing, Bitcoin's market cap is higher than many major corporations, making the digital currency something that keeps central bankers on their toes.

Widespread acceptance of Bitcoin threatens the central bank stranglehold on global forex, currencies and commerce. While this speculative phase is phenomenal for early adopters (some who bought into the Bitcoin mania before it was even priced in triple digits), the long-term implications are other-worldly. If Bitcoin - or some other form of cryptocurrency continues to be established globally - it could conceivably rival currencies such as the US dollar, the euro, Japanese yen or China's yuan.

Just as gold and silver have been recognized as money, currency and stores of value for thousands of years, so too, Bitcoin has emerged as a potentially viable alternative for the 21st century.

At the Close, Monday, November 27, 2017:
Dow: 23,580.78, +22.79 (+0.10%)
NASDAQ: 6,878.52, -10.64 (-0.15%)
S&P 500: 2,601.42, -1.00 (-0.04%)
NYSE Composite: 12,390.78, -31.15 (-0.25%)

Monday, November 27, 2017

Black Friday Delivers; Wall Street Reaction Upcoming

Apparently, Black Friday 2017 was a mammoth hit, resulting in reported record consumer spending and a record day for firearms background checks.

According to Reuters:
U.S. retailers raked in a record $7.9 billion in online sales on Black Friday and Thanksgiving, up 17.9 percent from a year ago, according to Adobe Analytics, which measures transactions at the largest 100 U.S. web retailers, on Saturday.

Wall Street, which closed early on Friday, didn't have the news in hand, it being too early for reaction, but closed modestly higher in the shortened session.

Monday is shaping up as a volatile day, with plenty of crosswinds from the political front and economic data from China and Europe whipsawing futures prior to the opening bell in New York.

For the week as a whole, stocks put in a stellar performance. The NASDAQ and S&P 500 each closed at record highs on Friday.

At the Close, Friday, November 24, 2017:
Dow: 23,557.99, +31.81 (+0.14%)
NASDAQ: 6,889.16, +21.7988 (+0.3174%)
S&P 500: 2,602.42, +5.34 (+0.21%)
NYSE Composite: 12,421.93, +31.10 (+0.25%)

For the Week:
Dow: +199.75 (+0.86%)
NASDAQ: +106.37 (+1.57%)
S&P 500: +23.57 (+0.91%)
NYSE Composite: +119.04 (+0.97%)

Friday, November 24, 2017

Stupid Money for a Stupid Country

It's Black Friday, the day known in America as the day to get the best deals on just about anything, from computers, to wide-screen TVs, to clothes, to toys, to, well, you get the picture.

Big TVs are all the rage in fat-a$$ America, as usual. People just can't seem to stop plopping down on the couch or easy chair to gaze at oversized images of overpaid actors or athletes doing things the average Jane or Joe calls "entertainment."

As far as network shows are concerned, they're the epitome of immorality and trashiness these days, as multi-cultural stupidity has overtaken the airwaves. Homosexuals, deviants, people of diverse backgrounds overpopulate network fare. In the sports arena, it's mostly minorities doing the running, throwing, diving, catching, and, especially in the NFL, kneeling during the national anthem.

Ordinary people watching the millionaire thugs, bullies, wife-beaters, and serial abusers of self and others has taken a bit of a hit this season, with both attendance and TV viewership lower, but there are still millions of people who - for whatever reason - cannot separate themselves from the stadia or the television, despite the paucity of good play, the obligatory self-congratulatory on-field celebrations, and the obscene amounts of money that help pay these goons, sell their merchandise, and fill the stands.

Thankfully (yes, let's not forget that yesterday was Thanksgiving), perhaps, people are paying for their entertainment, trinkets, TVs, and trash with equally worthless money. Federal Reserve notes (debt instruments) are the medium of choice (make that demand, by force, by the federal government) for payment in the former land of the free. The value of the almighty dollar has fallen precipitously since its inception in 1913, when the Federal Reserve System took control of the monetary affairs of the country.

In 1913, a loaf of bread and a gallon of milk would cost somebody about 38 cents. Today - or rather, in 2008, according to this handy chart - those items would cost roughly $5.37, an increase of over 1400%.

A new car, in 1913, could be had for about $500. In 2008, new cars averaged over $27,000. An average house cost $3,400 in 1913. Today, one can have multiple walls and a roof over one's head for a mere $206,000.

People will protest that these numbers are hogwash or some other kind of whitewash, eyewash, or mouthwash, because wages were lower back in 1913 and cars and houses are better today than back then. Such an argument would be hard to maintain when one considers the materials going into new homes and the massive amounts of plastic needed to build a new car. Back in the day, houses were mortar, plaster, wood, brick, pipe and other durable building materials. Today's homes are pressed wood, plastic, sheetrock and other flimsy stuff that probably will be mostly done with after fifty years.

Further, milk and eggs are pretty much the same (actually they were better, more nutritious, and more wholesome back in 1913) then as now, but we pay much more for them.

Another argument can be made that Disposable Income in 1913 was $1,283.04; $30,465.50 in 2008, an improvement of 2,374%. OK, but, how about the federal income tax? In 1913, it was 1%. In 2008, it was roughly 18.5%, an increase of 53,414%, but, who's counting? Good thing the government accepts only fiat Federal Reserve Notes for payment of taxes, and it's no wonder that they try to collect more and more of them every year because, well, they're not holding their value very well.

So, go shopping. Buy junk you'll throw away in a few years. Pay for it with dollars that aren't worth much. You'll be rewarded for such foolish behavior by having to pay more and more every year, especially in taxes, because the government - yes the government of which halls of congress are populated by molesters, liars, crooks, bribe-takers, and miscreants of all stripes - just can't get enough.

And you keep paying them, and paying them, and paying them.

Go ahead. Spend those nearly-worthless Federal Reserve Notes.

It's Black Friday.

At the Close, Wednesday, December 22, 2017:
Dow: 23,526.18, -64.65 (-0.27%)
NASDAQ: 6,867.36, +4.88 (+0.07%)
S&P 500: 2,597.08, -1.95 (-0.08%)
NYSE Composite: 12,390.83, +4.95 (+0.04%)

Tuesday, November 21, 2017

Why Nobody Can Short This Market

Central banks control the money supply. They can print infinite amounts of dollars, euros, yen or other currencies.

Actually, they don't even have to print the money, they just push buttons on their magic computers and viola! new money.

The money gets circulated to their stockholders, large international banks. The banks invest in the stock market, sending stocks - any stock they choose, or all of them - higher.

That's why, as evidenced by today's out-of-nowhere rally, nobody can short this market.

It's easy money, mostly for the richest of the rich, and, if one is savvy enough and holds long enough without wavering, for everybody.

At the Close, Tuesday, November 21, 2017:
Dow: 23,590.83, +160.50 (+0.69%)
NASDAQ: 6,862.48, +71.76 (+1.06%)
S&P 500: 2,599.03, +16.89 (+0.65%)
NYSE Composite: 12,385.89, +65.11 (+0.53%)

Monday, November 20, 2017

Stocks Ignore Political Risks, China Regulations; Glint App Takes Gold Digital

Early morning in Europe and the Western Hemisphere were looking downright dreary to open the week's financial escapades, until buyers (central banks) emerged from the shadows (crypts), quickly erasing concerns over China's new rules to crimp the burgeoning shadow banking uprising and the failure of German Chancellor Angela Merkel to form a coalition government.

While futures were down sharply - especially on the European news - they were quickly corrected. China's markets quickly went from negative, staging a day-long rally, while European bourses were mostly positive and US stocks rallied sharply from the opening bell.

However, the euphoria flagged in the US as the session wore on, with stocks finishing off their highs of the day. Still, the results were much more cheerful than what might have happened if markets and investors were left alone, barring the blatant interventionism that seems to pervade trading in all markets.

The new paradigm is such that stocks cannot fail, but only go higher, valuations be damned, while gold and silver are routinely taken out to the woodshed for a weekly beating, such as occurred this morning, prior to the opening bell on Wall Street and throughout the day.

The setup isn't all so new at all. Since 2012, gold and silver have been mercilessly suppressed, to the point at which some staunch supporters are rethinking their love for shiny metals. This is exactly what central bankers wish, that wealth protectors give up and resign themselves to the fiat money regimen, but it is also precisely the time - if one is guided by sound investment stratagems - to begin loading up on what most would be shunning.

In that regard, London-based Glint launched a mobile app today that sets gold sailing into the digital age, offering Glintpay as a means by which to hold gold in a Swiss-based vault with the ability to spend one's holdings via a complementary MasterCard.

The app, which is available for download through the Apple App Store, works on iPhones and iPads using Apple's iOS operating system and is promising to provide quick and easy debit access to gold and a host of other currencies, with millions of locations worldwide accepting MasterCard.

How well the start-up will fare is an open question, but it does raise an interesting alternative to Bitcoin and other cryptocurrencies, which have witnessed monumental growth over the past six months and continue to raise eyebrows in the conventional banking universe.

The world is at a crossroads in terms of currencies. Trust in the debt-slavery central bank system continues to wane in various places as the rise of cryptos offers a glimpse of a possible future and precious metal devotees cling to long-held beliefs in money that is backed by physical assets.

Currency events are historically long-winded affairs, taking years or decades in which to sort themselves out. The ongoing forays between fiat, crypto, and physical seems to have gained some momentum today.

Investors with an eye on the global financial landscape would be wise to hold some of each, allocating more toward the digital and physical as events warrant as old systems are dying and may have been dealt an unrecoverable blow during the Great Financial Crisis of 2007-09.

At the Close, Monday, November 20, 2017:
Dow: 23,430.33, +72.09 (+0.31%)
NASDAQ: 6,790.71, +7.92 (+0.12%)
S&P 500: 2,582.14, +3.29 (+0.13%)
NYSE Composite: 12,320.77, +17.88 (+0.15%)

Sunday, November 19, 2017

US Equites In Danger Zone After Very Volatile Week

The US economy isn't exactly on its back, but it also isn't growing by the phony 3+ percent the government reported in the past two quarters.

Speaking strictly from an economist's perspective, the US government GDP figures include grossly-inflated government spending and just about every spare dollar their statisticians can unearth from the mainland, Alaska and Hawaii.

GDP-watching is a Wall Street phenomena, serving the interests of the corporatists who need to return dividends or share growth to stockholders. Thus, it adds impetus to the argument that investing in US corporations is a good idea. That may or may not be true, depending largely upon which corporation is attracting the investing dollars.

Obviously, the FAANGs (Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (Alphabet, GOOG) have been the most attractive of the past six to eight years, while quite a few have faltered. Most of the stocks making gains since the GFC of 2007-09 have been the result of massive stock buybacks, a dubious distinction, as these high-fliers are the ones most prone to collapse in the case of a market rout.

They've diluted their shares and have deployed capital in one of the worst ways, buying back shares in order to boost EPS (earnings per share). Having fewer shares available while keeping profits at roughly the same level improves EPS, but it does not expand the business potential. Banks and financials are especially guilty in this regard. They're over-leveraged and will pay a price, but their executives and shareholders are happy little clams, for now.

When the share price falls, and dividends are slashed, the shareholders will be singing a different tune. The executives will be long gone because they've proven to care only about their own pockets and bonuses.

In any case, stocks ran through a very volatile week, punctuated by a massive dead-cat-bounce rally on Thursday which stanched some of the losses incurred since all-time highs the previous Tuesday.

There could be a waterfall effect developing, because confidence is waning. The holiday shopping season - which is demonstrably longer than last year's - should provide a boost, but the economy is lurching closer to two important events: the December Fed meeting and the expected rate hike, and another round of negotiations in congress over the debt ceiling limit, both mid-month.

Elsewhere, oil remains at elevated levels, above $55/barrel for WTI crude, gold and silver were bounced around but appear ready for a breakout (as they have too many times in the past four years, with nothing to show), bonds were flatter still.

At the Close, Friday, November 17, 2017:
Dow: 23,358.24, -100.12 (-0.43%)
NASDAQ 6,782.79, -10.50 (-0.15%)
S&P 500: 2,578.85, -6.79 (-0.26%)
NYSE Composite: 12,302.89, -0.39 (0.00%)

For the Week:
Dow: -63.97 (-0.27%)
NASDAQ: +31.85 (+0.47%)
S&P 500: -3.45 (-0.13%)
NYSE Composite: -19.71 (-0.16%)

Thursday, November 16, 2017

Stocks Rebound After Week of Losses

No reason for stocks to gain at all, probably just buying the dip, or, BTFD, if one prefers.

There's still a way to get to get back to all-time highs form last Tuesday (23,602 on the Dow), but, with Thanksgiving coming up and a shortened Black Friday always good for a holiday boost, there's a very, very good chance that stocks will resume rising, because that's all there is in this kinky investing environment.

You didn't really think the bull market was ending, did you?

The fast answer, for those paying attention, is, "it can't." Because then everything turns to mud.

At The Close, Thursday, November 16, 2017:
Dow: 23,458.36, +187.08 (+0.80%)
NASDAQ: 6,793.29, +87.08 (+1.30%)
S&P 500: 2,585.64, +21.02 (+0.82%)
NYSE Composite: 12,303.28, +82.94 (+0.68%)

Wednesday, November 15, 2017

Stocks Drubbed on Cool CPI

Stocks opened on the downside for the seventh consecutive session, only this time they did not manage a complete comeback by the close. What triggered the selloff was a tight CPI number, as the widely-watched index of US consumer prices inched up only 0.1% in October, the smallest gain in three months.

At another time in the pantheon of stock market momentum and movement, the soft inflation figure might have spurred a buying spree, as investors could gain confidence that the Fed would not raise rates in December, as is widely anticipated, but that was not the case today. The mood has changed significantly and there's a persistent pessimistic undertone that there soon could be blood in the streets.

Bonds may be calling the next move via the curve (or non-curve as the case may soon be). The spread between 5s and 30s plunged to 73 Basis Points today, the flattest since November of 2007, a key point in time, as it was then that the Great Financial Crisis (GFC) was about to unfold.

The 10-year note remains mired in the 2.30-2.38 range. A break in yield below 2.28 could be a triggering event prior to the December FOMC meeting at which the Fed is poised to raise the federal funds rate for the third time this year.

Credit is being squeezed as are margins in various industries, especially consumer retail. Amazon's foray into the grocery business via its Whole Foods acquisition may be the defining deflationary event of the decade.

As far as the indices are concerned, all eyes are on the Dow Industrials, which, after breaking to an all-time high last Tuesday, have done nothing but drift lower, though the flight path has been gradual... until today.

At the close today, the blue chips have shed 331 points, or about 1.4% since the high reached on November 7.

At the Close, Wednesday, November 15, 2017:
Dow: 23,271.28, -138.19 (-0.59%)
NASDAQ: 6,706.21, -31.66 (-0.47%)
S&P 500: 2,564.62, -14.25 (-0.55%)
NYSE Composite: 12,220.34, -59.77 (-0.49%)

Tuesday, November 14, 2017

Stocks Under Pressure; Bulls All Die At Some Point

Anybody who believes that this current bull market - fueled by easy money policies from central banks, fake statistics, and enormous government deficits - will continue much longer needs to take a reality check.

Just for those who cannot or will not see the forest for the trees, the following:

  • The 10-year-note is stuck in a perpetual yield range of 2.3-something.
  • Stocks have been going sideways for week.
  • There's almost no chance that the congress will pass any kind of tax reform bill this year as they are doing nothing more than posturing for the midterm elections.
  • The national debt continues to soar to new heights, despite happy talk from the administration (remember, congress holds the purse-strings).
  • The percentage of people in the workforce is still at near-record lows.
  • The Us trade deficit with China is not shrinking.
  • State pension plans and many private pension plans are underfunded by trillions of dollars.
  • Voting doesn't matter (see the fiasco over Roy Moore)
  • Corporate profits are beginning to show serious signs of a slowdown (GE, Chipolte, others)
  • Foreclosures, bankruptcies, student loan defaults are rising.

That is just a sampling, and today's market, in form with the past few sessions, took a nosedive at the open only to recover thanks to spirited heavy lifting by the PPT or central bank cronies on the heaviest volume in five months.

The Dow was down 168 points shortly after 10:00 am ET, only to close with a marginal loss. Even at its lowest point, the index was 900 points above its 50-day moving average.

Stocks are as overpriced as they've ever been, setting up for a crash of enormous proportions.

It's coming, but nobody knows when or why it will occur. The Fed is still insistent upon raising interest rates again in December, at a time at which the economy is neither growing fast enough to warrant such behavior nor robust enough to withstand repeated rate hikes.

Over the years, the Federal Reserve has caused more crashes and recessions than it will admit. Uncontrollable spending by government and cascading business and individual debt is reaching unprecedented heights, worse than preceding the Great Financial Crisis of 2007-09.

Extreme caution is advised.

At the Close, Tuesday, November 14, 2017:
Dow: 23,409.47, -30.23 (-0.13%)
NASDAQ: 6,737.87, -19.72 (-0.29%)
S&P 500: 2,578.87, -5.97 (-0.23%)
NYSE Composite: 12,280.11, -36.71 (-0.30%)

Monday, November 13, 2017

Stocks Stumble Early, Rally for Minor Gains; GE Tumbles, Halves Dividend

Stocks continue to show weakness on a day-to-day basis, with implicit underpinning via central bank purchases, much as was the case today as General Electric (GE) posted horrifying third quarter numbers which cost the stock more than seven percent of its market capitalization [19.02, -1.47 (-7.17%)].

The company cut its annual dividend in half, from $0.24 to $0.12, and announced a broad-based restructuring, shedding up to $20 billion of its core assets.

Jeff Immelt, former CEO and Chairman of the Board, had been under pressure from investors to make changes until his ouster just weeks ago.

There's speculation that General Electric could be bounced from the Dow Jones Industrial Average, a position its held since November 7, 1907, having fallen by as much as 35% in the past year while the overall market has posted strong gains. GE is the oldest continuous member of the blue chip index.

GE's hammering at the open no doubt contributed to the dour mood in the early going, but stocks regained their footing and gradually advanced throughout the somewhat lackluster session.

The Dow closed at a new all-time high last Tuesday, but has been subdued since. With the year of 2017 drawing to a close and many fund managers closing their books (or already having done so), it will be interesting to watch the movement of the major indices over the coming weeks and through the holiday season.

Black Friday is a mere 11 days off. Gobble, gobble.

At the Close, Monday, November 13, 2017:
Dow: 23,439.70, +17.49 (+0.07%)
NASDAQ: 6,757.60, +6.66 (+0.10%)
S&P 500 2,584.84, +2.54 (+0.10%)
NYSE Composite: 12,316.83, -5.78 (-0.05%)

Saturday, November 11, 2017

Stocks Slide for Week as Wall Street Sees Little Hope for Tax Reform

For the week, the Dow Jones Industrial Average declined 0.50% finishing with its first weekly decline after eight straight weekly gains, though the blue chip index remained less than 150 points from an all-time closing high set on Wednesday, November 8.

The S&P 500 finished the week lower as well, but only marginally so. It was the S&P's first weekly decline in nine weeks. The NASDAQ posted its first weekly loss in seven weeks. Both the NASDAQ and S&P closed at record highs on Wednesday as well.

The one index that did not reach record highs during the week past was also the broadest. The NYSE Composite index closed down for the second week in the past three, but those losses were more than offset by gains in the prior six weeks.

In general, analysts blamed congress for the poor performance in equities, citing the lack of a clear path to a tax overhaul that was a cornerstone of President Trump's winning strategy of a year ago. The House and Senate both introduced measures that vary widely and seem unlikely to offer much in the way of relief for individuals or businesses. Rolled out on Thursday, the Senate version pushes for a permanent (until they change it) tax rate of 20% for corporations, but delays implementing the proposed rate until 2019.

Both versions increase the standard deduction to $12,000 for individuals and $24,000 for married couples filing joint returns, but the congress and the media fail to mention that both versions cut out the personal exemption, which was $4,050 in 2016. That leaves the net gain for most single taxpayers at $1,650, and $3,300 for couples.

The standard deduction for 2016 was $6300 for singles, and $12,600 for married couples.

With Democrats generally understood to oppose any Republican plan, the chances for passage this year of either bill remain slim. President Trump and conservative leaders in the Senate face any number of challenges from the likes of Ted Cruz, John McCain, Bob Corker and others who have either stated their opposition to the measures or are likely to vote against any changes to the intricate, pitfall-ridden federal income tax code.

As far as Wall Street is concerned, lowering the corporate tax and the tax on offshore profits are at the top of the wish list, but, little is being done to address their concerns with a congress largely already focused on being re-elected in the 2018 midterms, now less than a year away.

It has become more than obvious to most Americans that congress is an inept, bought-and-paid body, loyal only to special interests which fund their expensive campaigns. Any thoughts of providing relief to beleaguered taxpayers or companies are beyond their admittedly limited legislative scope.

Thus, investors should treat any talk of reform coming from the mouths of elected officials in Washington as nothing more than make believe rhetoric, designed solely to make themselves appear to be working when they are, in fact, not.

At the Close, Friday, November 10, 2017:
Dow: 23,422.21, -39.73 (-0.17%)
NASDAQ: 6,750.94, +0.89 (+0.01%)
S&P 500: 2,582.30, -2.32 (-0.09%)
NYSE Composite: 12,322.60, -17.06 (-0.14%)

For the Week:
Dow: -116.98 (-0.50%)
NASDAQ: -13.50 (-0.20%)
S&P 500: -5.54 (-0.21%)
NYSE Composite: -50.46 (-0.41%)

Friday, November 10, 2017

Stocks Balk at Indecisive Congressional Tax Reform Efforts

Stocks tumbled at midweek as prospects for comprehensive tax reform dimmed in Washington.

The Senate was roundly blamed for the poor performance on the session, as a handful of Republicans expressed doubts over the version of the package submitted by the House days earlier.

A Republican bill was presented, with significant changes, including a permanent 20% business tax rate which would be implemented in 2019. The delay of more than a year concerned investors, though such concern is largely a canard, being that the effective rate for most significant corporations is about 14%.

As the day wore on the pain subsided and late buying boosted averages, though not enough to offset an across-the-board decline, putting the major indices in the red for the week.

Without a positive narrative and strategy for tax reform forthcoming for the congress, it appears that President Trump will be thwarted once again in his efforts to Make American Great Again, though many may argue that his initial tax proposals fell far short of any significant, progressive changes to the tax code.

Simplification would be an effective measure towards keeping the Trump loyalists in camp, but that does not appear to be on the congressional agenda, as per usual.

There's spreading sentiment that nothing will be done in terms of tax reform, which, like Social Security, Medicare/Medicaid, and immigration, has serious problems which year after year seem to defy the ability of congress to implement meaningful change. The more convenient route of promising change and delivering nothing of consequence appears to be the overriding theme of a congress that's essentially done nothing of benefit to the general population for the past twenty years.

As far as Wall Street is concerned, Washington is more a parody, a thinly-veiled lie at effective governance and thus it is, more often than not, discounted as meaningless.

The declines of Wednesday will be considered a sign of weakness, though most will express the opinion that "it's only a flesh wound."

At the Close, Thursday, November 9, 2017:
Dow: 23,461.94, -101.42 (-0.43%)
NASDAQ: 6,750.05, -39.06 (-0.58%)
S&P 500: 2,584.62, -9.76 (-0.38%)
NYSE Composite: 12,339.66, -45.05 (-0.36%)

Wednesday, November 8, 2017

Stocks Hit Roadblock as House Tax Plan Falters in Senate

With Rand Paul absent due to injury, senators John McCain and Ted Cruz already announced no votes, the much-ballyhooed house-Trump tax plan looks to be dead on arrival and investors are not pleased.

Tuesday's action in the markets were punctuated by a pronounced leveling of the yield curve, with 2-10 and 5-30 spreads plumbing new lows.

Just in case the bickering in Washington continues towards implosion - a highly likely event horizon - with Democrats aligning with no-vote Republicans, forward looking people will next look to the upcoming December deadline for the debt ceiling and an anticipated increase to the federal funds rate by the Fed's FOMC.

That's putting pressure on stocks as the market opens Wednesday, though the declines are far from substantial. Also of note is crude oil's decline off recent three-year highs, while precious metals continue to the upside, a split in the commodity complex.

President Trump continues his extensive Pacific tour, in China for the time being, as news flow should slow to a crawl as the week closes in on Friday. With stocks fluctuating, it may be time to seek out undervalued equities, if any are to be found. Stocks remain wildly overpriced with backing by central banks preventing any potential cascading declines.

At the Close, Tuesday, November 7, 2017:
Dow: 23,557.23, +8.81 (+0.04%)
NASDAQ: 6,767.78, -18.65 (-0.27%)
S&P 500: 2,590.64, -0.49 (-0.02%)
NYSE Composite: 12,371.25, -29.68 (-0.24%)

Tuesday, November 7, 2017

Saudi Purge Prompts Higher Prices for Oil, Precious Metals

Midday Monday, the commodity complex (especially gold, silver and WTI crude oil) took off to the upside, and, by the end of the day, had maintained their newfound levels, oil hitting a nearly three-year high.

This dramatic rise in the price of oil coincides with tumultuous incidents in Saudi Arabia, wherein 11 princes, four ministers and several former ministers have been detained. Some prominent businessman have also been placed on a so-called "no fly" list, as Crown Prince Mohammed bin Salman purges his enemies in an overt effort to considerate power in the kingdom.

Oil rising and Saudi unrest are not isolated events, as neither is the incidental visit by President Trump some months ago and the more recent visit by Trump advisor and son-in-law Jared Kushner.

The Saudis have seen their profits collapse as oil has languished under $50 for years, but the political shakeup may have more to do with overall foreign interests, primarily focused on investments in US companies such as Citibank and Twitter, via the kingdom's sovereign wealth fund.

Silver and gold also rising at the same time during the day as oil confirms that there was coordinated buying of commodities in the futures market. The move was far from insignificant and was presaged by a similar move to the downside in the complex on Friday, prior to the Saudi purge, which went public on Sunday.

With President Trump safely traveling in the Pacific, the intrigue is high that something major is afoot globally, recalling Trump's cryptic tweet a few weeks ago, "the calm before the storm."

It seems that the storm has arrived, at least in the middle East. Whether it continues to lash out across Europe and the United States is, at this time, still conjecture.

As has been demonstrated periodically in the past, commodity futures can be highly volatile and can have profound effects further into the supply and demand chain. If oil continues to rise, it may be time to take any number of protective measures, from purchasing a fuel-efficient vehicle, to selling the dollar, to buying precious metal in anticipation of a major - and long overdue - breakout.

While nothing in the interconnected world of finance operates in a vacuum, stocks could also feel some heat, though the markets have more than ample protection on the downside via central bank stealth and overt (Swiss National Bank) purchases.

It is apparent, however, that given the Saudi purge and the rise in the price of oil, something big is happening.

At the Close, Monday, November 6, 2017:
Dow: 23,548.42, +9.23 (+0.04%)
NASDAQ: 6,786.44, +22.00 (+0.33%)
S&P 500: 2,591.13, +3.29 (+0.13%)
NYSE Composite: 12,400.93, +27.87 (+0.23%)

Friday, November 3, 2017

Trump Nominates Jerome Powell As Fed Chair; Goldman Sachs Execs Happy

Some equities responded with favor to President Trump's nomination of ultimate insider, Jerome Powell, to the chairmanship of the Federal Reserve.

Without so much as the batting of a single eyelash, Goldman Sachs (GS), Microsoft (MSFT), McDonald's (MCD), Boeing (BA), and JP Morgan Chase (JPM) led the Dow to yet another record high, mainly upon the notion that Powell would continue to easy money and lax regulatory environment so loved by Wall Street.

It would be easy to point the finger at Mr. Trump for appeasing the status quo, though it might not be an accurate assessment of the situation. The president is smart enough to know that keeping Wall Street happy and profitable has a profound effect on his standing within the business community and promoting a life-long lawyer (not an economist) and financier with multiple ties to various private and public money machines goes a long way toward keeping the Fed on its current track (Powell has not cast a dissenting FOMC vote in his five years as a voting member.

There could be worse environments than the current regime controlling the global economy, though it is difficult to think of one that could compare with the outright rigging and asset-prompting the central banks have engaged in over the past ten years. In case one was not in complete agreement and chose not to engage in one of the longest and best-maintained bull markets in history, the past is prologue and the nomination of Powell ensures a smooth transition to the Fed's top post. More of the same would seem to be the open dialogue of the day.

Keeping the rich rich and the middle and lower classes entertained, while not the optimal policy directive, has served to keep the system afloat, despite its various warts, bruises and open wounds.

Much of finance is done behind closed doors and it's probably a good thing, because were the wicked deals to be generally known by the public, riotous behavior might ensue. Keeping the Fed on an even keel will likely result in ever higher prices for stocks and a more complacent (if that is even possible with the VIX hovering around 10) investment community.

What could go wrong?

At the Close, Thursday, November 2, 2017:
Dow: 23,516.26: +81.25 (+0.35%)
NASDAQ: 6,714.9429, -1.59 (-0.02%)
S&P 500: 2,579.85, +0.49 (+0.02%)
NYSE Composite: 12,372.96, +10.08 (+0.08%)

Thursday, November 2, 2017

FOMC Leaves Rates Unchanged; Markets Respond Positively

The Federal Reserve's FOMC issued their policy statement at 2:00 pm ET, after a two-day meeting that was widely anticipated to keep the federal funds rate unchanged at 1.00-1.25%.

What the Fed did change in its statement was a few words which piqued the interest of the bullish crowd on Wall Street, saying that the US economy was displaying "solid" growth over the past few months, a change from their use of the word "moderate" or "moderately" to describe US economic growth.

That was enough for investors to snap up a few more mostly overpriced shares on the first day November, except on the NASDAQ, which was the one index to end the session at a loss.

The Fed is prepared to raise interest rates in December, boosting the federal funds rate to 1.25-1.50%, a level still well below what most economists consider normal and sustainable.

At the Close, Wednesday, November 1, 2017:
Dow: 23,435.01, +57.77 (+0.25%)
NASDAQ: 6,716.53, -11.14 (-0.17%)
S&P 500: 2,579.36, +4.10 (+0.16%)
NYSE Composite: 12,362.88, +21.87 (+0.18%)

Wednesday, November 1, 2017

Stocks End October on High Note: Fed's FOMC on Deck

With no rate hike expected from the ongoing FOMC meeting this week, investors tacked on small gains as October came to a close.

In what was a sluggish session, the main indices limped higher, awaiting jobs data later in the week and the unveiling of some kind of tax bill from congress.

The Fed will release its policy announcement at 2:00 pm ET on Wednesday, though most analysts insist there will be little to motivate buyers or sellers.

At the Close, Tuesday, October 31, 2017:
Dow: 23,377.24, +28.50 (+0.12%)
NASDAQ: 6,727.67, +28.71 (+0.43%)
S&P 500: 2,575.26, +2.43 (+0.09%)
NYSE Composite: 12,341.01, +21.54 (+0.17%)

Tuesday, October 31, 2017

Scary Stocks for Halloween, But Apple's Business Model May Be More Frightening

Stocks fell uniformly n Monday, for no apparent reason other than the usual causes, fear, caution, valuation.

With the major indices counting to hover around all-time highs, there's no doubt reason to maintain some degree of caution. In fact, if one were so disposed to selling at a profit, now, as the year winds into its final two months, might not be a bad time to do so, considering the tax angles for 2018.

While stocks are scary on the day before Halloween, perhaps one may really get tingles from Aaple's business model concerning cell phones. Here's a one-off demonstration by an admittedly older fellow:

Apple has a problem with its business model in that they have to keep selling essentially the same product over and over and over again, every two years or so (their imaginary product cycle) to conumers who are probably fiarly content with the model they currently own.

In other words, in order to maintain their high level of profitability, Apple has to sell new iPhones to current iPhone users every two years.

I am (well, was, when Steve Jobs ran the company) an ardent fan of Apple. In fact, I'm using a MacBook Pro to connect to the internet and compose this missive. Its from 2011, six years old, and still performs incredibly well, so, why hasn't Apple forced me to upgrade?

Different market, I guess.

Anyhow, not to get too deep into the weeds, the problem I see is that their business model, as currently constructed, is unsustainable. Anybody who thinks they need to upgrade their phone every two years is off their rocker. America was built on products that worked well and lasted a long time. Maytag washers, GE refrigerators, Ford trucks, etc.

If every company adopted Apple's business model of a 2-year product cycle, the average consumer would have been tapped out long ago.

Why don't they just install a kill switch which renders their phones inoperable after 24 months? Admittedly, I am not a big cell phone advocate. I use a 10-year-old flip phone, and very seldom, at that.

The author makes some good points. Apple should be scared about changing consumer preferences and habits, considering their iPhone creation is now ten years into its product cycle and one can only suppose that the original iPhone from 2007 probably still functions, albeit slower and with fewer bells and whistles than the current models.

A day approaches in which cell phones will be maxed out on power and abilities. That's when Apple's business plans hit the wall.

At the Close, Friday, October 30, 2017:
Dow: 23,340.28: -85.45 (-0.40%)
NASDAQ: 6,688.32, -2.30 (-0.19%)
S&P 500: 2,570.72, -8.24 (-0.40%)
NYSE Composite: 12,319.47, -46.97 (-0.39%)

Monday, October 30, 2017

Stocks continue Mostly Higher In Late October

Just a marker for the weekend notes interestingly that all of the huge NASDAQ gain was on Friday and the NYSE Composite actually posted a loss for the week.

This isn't really normal market behavior, but few are paying attention.

At the Close, Friday, October 27, 2017:
Dow: 23,434.19, +33.33 (+0.14%)
NASDAQ: 6,701.26, +144.48 (+2.20%)
S&P 500: 2,581.07, +20.67 (+0.81%)
NYSE Composite: 12,366.4346, +14.01 (+0.11%)

For the week:
Dow: +105.56, (+0.45%)
NASDAQ: +144.49 (+2.20%)
S&P 500: +5.86 (+0.23%)
NYSE Composite: -64.10 (-0.52%)

Friday, October 27, 2017

Stocks Rebound Thursday; 3rd Quarter GDP Increases 3%

Stocks bounced off of Wednesday's decline, with the Dow Industrials again leading the way on Thursday, shrugging off any suggestion that the economy or stock market was about to experience a slowdown.

On Friday morning, the Bureau of Economic Analysis (BEA) released the preliminary estimate of GDP for the third quarter, beating most of the positive projections, coming at at three percent growth.

Highlights of the report included a positive contribution from Personal Consumption Expenditures (PCE), offset by lower residential fixed investment and state and local government spending.

The 3.0% reading follows the second quarter's 3.1% advance, though the figures from the government are always subject to timely revisions (forever).

This should be good news for equity investors. The dollar is strengthening on the news.

Some are skeptical, however, noting that GDP is a very broad measure of economic strength or weakness and the fact that government spending is a component, which, at the federal level, is 40% borrowed money, making a mockery of the statistical importance of the data.

In other words, if a person borrowed $1000 to spend a total of $1800, one would not call that $1800 in spending, but $800 in real spending, plus $1000 in new debt, which, as everyone knows, should be repaid some day. As for the government and its $20 trillion - and growing - mountain of debt, that is probably never going to be repaid.

At the Close, Thursday, October 26, 2017:
Dow: 23,400.86, +71.40 (+0.31%)
NASDAQ: 6,556.77, -7.12 (-0.11%)
S&P 500: 2,560.40, +3.25 (+0.13%)
NYSE Composite: 12,352.43, +15.85 (+0.13%)

Wednesday, October 25, 2017

Stocks slide as bond yields continue rising

Stocks took a rare turn to the downside after solid gains earlier in the week.

The selling was rather broad as interest rates worldwide began to reach levels that investors might be minimizing risk by tracking from stocks into bonds, particularly the 10-year note which has been rising steadily since mid-September when the Federal Reserve announced the beginning of their asset sales as they seek to trim their balance sheet.

The 10-year settled at 2.44%, a seven-month high. As recently as September 8, prior to the most recent FOMC policy meeting, the yield was 2.06%, representing a 10-month low, dating back to November 8, 2016, on the eve of the national election which put Donald J. Trump into the office of President of the United States.

Thus, yields are testing the buoyancy of the stock market, especially those stocks which produce dividends. While many blue chip-type companies yield similarly to the 10-year, they also carry risk that the US economy may stall and send stocks lower, which would reduce the effective yield and possibly decimate profits.

As the Federal Reserve intends to normalize rates - with another rate hike widely assumed to be coming in December - stocks will naturally come under pressure, though it is far too soon to tell exactly what the Fed will do should the long-winded bull market from 2009 stall.

There is considerable debate over the general health of the US and global economies, which have been aided to a great extent by easy monetary policy and massive stealth purchases by the central banks of Europe and Japan.

A single day of declines should not be taken too seriously, as stock indices have been recently making new highs almost on a daily basis, but, that said, this does not seem to be a time in which investors should throw caution to the wind. As always, the Fed stands ready with fresh injections of fiat or policy adjustments to ameliorate any kind of market detour.

Bull markets do not last forever, however, and there are significant headwinds to growth without the aid of fresh central bank intervention.

At the Close, Wednesday, October 25, 2017:
Dow: 23,329.46, -112.30 (-0.48%)
NASDAQ: 6,563.89, -34.54 (-0.52%)
S&P 500: 2,557.15, -11.98 (-0.47%)
NYSE Composite: 12,336.64, -68.35 (-0.55%)

Dow Soars To New All-Time High, Paced By Caterpillar, 3M

Led by two of its highest-priced components, the Dow Jones Industrial Average blasted to another new high on Tuesday.

Caterpillar (CAT) and 3M (MMM) announced strong third quarter results with the maker of heavy industrial and earth-moving equipment was up nearly five percent, while 3M rose almost six percent on the day.

With those two posting extraordinary gains and the remainder of the Dow 30 rather muted, the blue chip index vastly outpaced the other main indices, putting 24,000 within sight just days after breaking through the 23,000 mark.

The Dow closed above 23,000 for the first time on October 18 and is up nearly 500 points in just one week.

Investors continue to chase returns, and, in the case of Dow components, dividend yield. Both 3M and Caterpillar offer dividend yields rivaling the 10-year treasury bill and are considered by analysts to be among the safest of equities to hold in a portfolio.

The other indices all ended the session with gains, but at much lower percentages than the Dow.

At the Close, Tuesday, October 24, 2017:
Dow: 23,448.20, +174.24 (+0.75%)
NASDAQ: 6,597.09, +10.26 (+0.16%)
S&P 500: 2,567.98, +3.00 (+0.12%)
NYSE Composite: 12,405.13, +20.70 (+0.17%)

Tuesday, October 24, 2017

Don't Count on a Market Correction in this Environment

For a change, stocks took a little dip to open the week, but it was certainly nothing by which anybody was rattled or otherwise deterred from buying ever more expensive stocks.

Since the Great Financial Crisis of 2007-2009, the favorite acronym of traders has been BTD, otherwise known as Buy The Dip, which is exactly what is to be expected when markets open on Tuesday.

Almost without fail - actually, fully without fail - US equity indices, since March of 2009, have never fallen much more than a few percentage points before ramping back to new all-time highs. While there have been occasions in which the dip in stocks has persisted over a period of weeks or months, there has been no failure to recover in recent years.

Anybody invested on more than a casual basis is aware that central bank largesse and stock buybacks have been the primary drivers of stock market prosperity, and even with the Federal Reserve beginning to engage in the process of unwinding its balance sheet - selling off much of its horde of $4.5 million in bonds and other sketchy assets - there seems to be little to scare investors away from he equity bandwagon.

It's largely a controlled environment, nothing like the heydays of the 50s and 60s, when America was a growing concern and didn't need monetary boosts to fuel investment markets. Today's markets and investors are completely synthetic, consisting mainly of larger brokerages and funds of all types, from sovereign wealth types to hedges to mutuals to pensions. The general public and governments are so heavily invested in stocks that a collapse in markets would likely trigger catastrophic consequences to all parties. Private individuals would be harmed by pension promises unable to be met, while the large funds would face liquidation, bankruptcy or dissolution. Governments, likewise would be under attack for making pledges to the populace that could not be manifested over time, such as social security and other entitlements.

It is for those reasons, and the overall interconnectedness and fragility of markets that corrections do not occur. People in power would be without and instead of order, there would be chaos, and that is something that central bankers and their cohorts in the government realm simply cannot stomach.

At the Close, Monday, October 23, 2017:
Dow: 23,273.96, -54.67 (-0.23%)
NASDAQ: 6,586.83, -42.23 (-0.64%)
S&P 500: 2,564.98, -10.23 (-0.40%)
NYSE Composite: 12,384.42, -46.10 (-0.37%)

Thursday, October 19, 2017

30 Years After the Crash: New All-Time High for Dow Industrials

Get your party hats out?

Dow 24,000 here we come!

At the Close, Thursday, October 19, 2017:
Dow: 23,163.04, +5.44 (+0.02%)
NASDAQ: 6,605.07, -19.15 (-0.29%)
S&P 500: 2,562.10, +0.84 (+0.03%)
NYSE Composite: 12,380.32, +9.30 (+0.08%)

30 Years Later, Is the New Reality Sustainable?

Thirty years ago today, US equity markets were rocked by the biggest one-day collapse in stocks, when on October 19, 1987, the Dow Jones Industrial Average fell 22%.

With suitable hindsight, investors and analysts now say the Black Monday crash of '87 was fueled by what was then called program trading, in which computers were keyed to buy or sell when stocks hit certain, predetermined levels.

Much more sophisticated today, computers do the bulk of all trading on Wall Street, using algorithms which accomplish much the same effect as old-fashioned limit orders.

The Dow and other indices have been soaring to fresh all-time highs on a near-daily basis and the fear is that what has fueled the rally of the past eight years is running close to empty.

Freshly-minted money from the world's central banks and stock buybacks from some of the most unstable and overpriced listed companies (see McDonald's (MCD), for instance) have driven stocks to unfathomable levels. A pullback is inevitable, the trick primarily laying in the timing of such an event.

For now, Wall Street wallows in its great, contrived success.

At the Close, Wednesday, October 18, 2017):
Dow: 23,157.60, +160.16 (+0.70%)
NASDAQ: 6,624.22, +0.56 (+0.01%)
S&P 500: 2,561.26, +1.90 (+0.07%)
NYSE Composite: 12,371.02, +21.05 (+0.17%)

Wednesday, October 18, 2017

Stocks Keep Rising...

Are we entertained?

At the Close, Tuesday, October 17, 2017:
Dow: 22,997.44, +40.48 (+0.18%)
NASDAQ: 6,623.66, -0.35 (-0.01%)
S&P 500: 2,559.36, +1.72 (+0.07%)
NYSE Composite: 12,349.97, -9.55 (-0.08%)

Tuesday, October 17, 2017

Stocks Continue to Soar; Dow Closing in on 23,000

Maybe, in some strange, new world not yet discovered, the spectacular gains in pieces of paper known as stocks is considered awesome and grand.

Oh, wait, that's this world.

The Dow Jones Industrial Average crossed the 22,000 mark just over a month ago on September 11. Since then, there have been 18 sessions in which the Dow finished higher, as opposed to just seven in which it closed lower. Additionally, the down days were much smaller, percentage-wise, than the up days.

Party on!

At the Close, Monday, October 16, 2017:
Dow: 22,956.96, +85.24 (+0.37%)
NASDAQ: 6,624.00, +18.20 (+0.28%)
S&P 500: 2,557.64, +4.47 (+0.18%)
NYSE Composite: 12,359.52, +7.52 (+0.06%)

Sunday, October 15, 2017

Markets Finish Week On Positive Note

Stocks shrugged off Thursday's minor descent with a ho-hum advance in Friday's session, the Dow ending the week at record highs and its fifth straight week of gains.

After PPI and CPI data showed inflation on the rise, market participants were content to trade upwards, as inflation expectations are supposedly a key to the Fed keeping their promise to raise interest rates again this year, purportedly by 25 basis points in December.

The Fed has been desperately seeking consumer inflation, targeting two percent, but prices have remained stubbornly low according to the widely-used government data.

So long as inflation continues to rise and unemployment remains at historically-low levels, the Fed sees a path to higher interest rates and a cushion against any economic headwinds.

Of course, the Fed needs to continue their narrative for normalization of interest rates, which have been one percent or lower for almost all of the 21st century and have been in that range continuously since the crash of 2008.

All of the major indices ended the week with gains, albeit small ones of less than 1/2 percent.

The level of complacency in the financial community is mind-boggling.

At the Close, Friday, October 13, 2017:
Dow: 22,871.72, +30.71 (+0.13%)
NASDAQ: 6,605.80, +14.29 (+0.22%)
S&P 500: 2,553.17, +2.24 (+0.09%)
NYSE Composite: 12,352.00, +13.26 (+0.11%)

For the week:
Dow: +98.05 (+0.43%)
NASDAQ: +15.62 (+0.24%)
S&P 500: +3.84 (+0.15%)
NYSE Composite: +34.31 (+0.28)

Friday, October 13, 2017

Stocks Take a Breather

Stocks did not close at record highs Thursday.


At the Close, Thursday, October 12, 2017:
Dow: 22,841.01, -31.88 (-0.14%)
NASDAQ: 6,591.51, -12.04 (-0.18%)
S&P 500 2,550.93, -4.31 (-0.17%)
NYSE Composite: 12,338.74, -23.32 (-0.19%)

Thursday, October 12, 2017

Adam Smith, Grains, Silver, the PPI, and Deflation

For months, if not years, Federal Reserve officials have been harping on the absence of inflation during their era of unrelenting quantitative easing (money printing). This phenomenon has baffled the pointed heads of the Fed, since it would be only natural for prices to rise with the advent of scads of fresh money hitting the market.

The problem for the Fed is simple. Their transmission lines have been blunted for the past eight years, with their easy money stopped at the bank level, never actually reaching commercial or consumer participants in the general economy. Thus, stocks, bonds and various currencies have experienced outsize gains - those assets experiencing above average appreciation, i.e., inflation - while the more mundane elements of the vast economic landscape have wallowed in a regime of low inflation, disinflation or outright deflation.

As the Fed prepares to sell off assets from its enormous ($4.4 trillion) balance sheet, the matter of price inflation has once again become a major concern. Fed officials disingenuously mutter on and about wage growth, seeking to convey the impression that they are somehow concerned for the welfare of workers (labor). Wage growth, which has stagnated since the year 1999 if not earlier, is a false argument for inflation. what the Fed wants is price inflation for everyday goods, commercial mid-production products, and base goods.

It's not happening.

In his magnificent tome, "The Wealth of Nations," author Adam Smith takes pains - and many pages - in discussion of nominal prices, concerning himself in his writings with the price of corn. Scholars rightfully insist that Smaith's intention was to show how prices in base goods are more important a measurement of economic health than pricing in currency.

With that knowledge, variations in currencies and base grains - wheat, corn, rice - can serve as an impressive measurement of real inflation, since the cost of producing marketable grain from hectares of farm land is somewhat non-variable, considering that the labor and fuel costs are relatively static.

In other words, since farmers are paying their hired hands roughly the same wage and the cost of operating the machinery to harvest the grains is also somewhat static, the price of finished grain in terms of currencies of choice - in his case, silver, can determine whether the environment is inflationary, deflationary, or neutral.

This morning's release of PPI data showed an increase of 0.4% month-over-month and a rate of 2.6% year-over-year. The increase puts the PPI at a level last seen in 2012. CPI (Consumer Price Index) remains mired in mediocrity, at a rate of 1.9% annually. That is the final inflation number, though it is hardly a reliable one.

Since the US economy is so vast and dynamic, it's difficult to get a grip on the overall flow of anything, though it's fairly certain that the inflation rate is higher than what the government is reporting.

On the other hand, taking into account Adam Smith's famous measurements, grains - the basis for much of what Americans and animals of husbandry eat - have crashed in recent weeks and months, along with silver, which has been rangebound for the past four years and is thus a benign measurement, useful in actual discussions of nominal prices.

On that basis, the Fed is likely to be disappointed in their inflation expectations. Since their data is so badly maligned, it cannot be trusted, while Adam Smith's has stood the tests of time.

It's deflation, as far as the eye can see, no matter what the Federal Reserve officials - who have proven, time and again, to be nothing more than dunces with degrees - try to squeeze out of the economy. The deflation is especially evident considering the levels of price suppression in silver. Were silver to rise to somewhat more realistic levels, the cost of buying a bushel or wheat or corn or rice would fall substantially.

Stocks made new all-time highs on Wednesday, but are pulling back in early trading Thursday morning.

Tuesday, October 10, 2017

Economics - and Nobel Prizes - Aren't What They Used To Be

In 1946, with the world recovering from the devastation of a global war, Henry Hazlitt wrote Economics in One Lesson. It's become a classic of Austrian Economics.

There's a free PDF HERE, that would be a good place for the 98% (probably more) of the population that has either never even heard of Henry Hazlitt nor read any of his material.

Since then, the study and application of economics has taken a path which mirrors that of the value of the US dollar. In other words, it's taken a fairly precipitous decline.

So it is that this year's winner of the Nobel Prize for economics is one Richard Thaler, a pop psychologist masquerading as an intelligent person. Thaler's prize-winning contribution to the field stems from a 2015 book he had published, called Misbehaving. Thaler's enormous discovery was that people don't always react to economic conditions in the ways Keynesian economists expect.

That revelation is so deep (sarcasm) that Thaler is being mocked in the comments section of an article in that bastion of higher learning, Yahoo! Finance.

It's not necessary to go into how insipid and uninspiring Thaler's work is. All that is necessary to understand the superficial nature of his "scholarship" is that he has been bestowed with the title of father of behavioral economics, whatever that's supposed to mean.

Now wonder central banks control the world. The rest of us are stupid.

At the Close, Monday, October 9, 2017:
Dow: 22,761.07, -12.60 (-0.06%)
NASDAQ: 6,579.73, -10.45 (-0.16%)
S&P 500: 2,544.73, -4.60 (-0.18%)
NYSE Composite: 12,293.95, -23.74 (-0.19%)

Saturday, October 7, 2017

Payroll Loss Means Nothing As Stocks Recover to Close Friday Flat

Weekend Wrap: Even a horrible September jobs report couldn't slow down the runaway freight train that is the US stock market.

After the BLS reported on Friday a net loss of 33,000 jobs in the month, stocks were lower for most of the session, though investors shrugged off the data as the result of hurricane that hit Texas and Florida and continued to buy as the afternoon wore towards the closing bell.

The late-day surge left the markets mostly flat for the session, with the NASDAQ the only major index to post a gain.

For the week, however, stocks put in one of their best performances of the year, led by the Dow Industrials, which ramped up 1.65%. The laggard was the broad-based NYSE Composite, which posted a gain of just under one percent.

The non-farm payroll report for September was the first since 2010 to show a loss in employment. Despite the three-month average declining sharply to 91,000 from 172,000, stocks were still the place to be.

As stated previously here at Money Daily many times, there is nothing to impede stocks from careening higher for what looks to be the remainder of 2017. with the Fed on hold until December conceding rate increases, and the Bank of Japan and the ECB buying stocks with both fists, passive investors need do nothing besides sitting back and waiting for their quarterly statements.

Making money has never been so easy.

At the Close, Friday, October 6, 2017:
Dow: 22,773.67, -1.72 (-0.01%)
NASDAQ: 6,590.18, +4.82 (+0.07%)
S&P 500: 2,549.33, -2.74 (-0.11%)
NYSE Composite: 12,317.69, -21.24 (-0.17%)

For the Week:
Dow: +368.58 (+1.65%)
NASDAQ: +94.22 (+1.45%)
S&P 500: +29.97 (+1.15%)
NYSE Composite: +108.53 (+0.89%)

Friday, October 6, 2017

Easy Money Fosters a World of Fatties, Free-Spending, and Fallacies

Easy Street.

It's where we all reside these days, as stocks reach new all-time highs on a regular basis, quarterly fund notices are eagerly awaited for the good news, and no calamity, disaster, data, or dictator can hope to stem the flow of money into the pockets of Wall Street brokers and their eager investors.

Easy Money.

That's the ticket to lifestyles of the rich and famous. What's known widely as the "wealth effect," has everybody giddy with the possibilities of bigger homes, faster cars, more lavish lifestyles. Why would anybody claim that these manufactured dreams are not for the best?

Because they're dreams, fallacies, shadow plays on the collective psyche of investors, which these days happens to include anybody with a decent job and a 401k retirement plan. TV ads show healthy retirees working on sports cars, opening wineries, bicycling along the shore of some deserted beach.

It's a facade for the real lives people live. More than a fair share of people are either in poor health, somewhat destitute, unable to decide between paying for medication or food, and the rents or mortgages on those "bigger homes" are increasing at an unsustainable rate.

Everything, from pickle relish to cell phone plans, is massively overpriced and planning on going higher. The very priests and priestesses of high finance = the governors of the Federal Reserve - tell us that they would like to see more inflation. Seriously. Higher prices... for everything.

Walk through any upscale supermarket and witnessed the blank stares of shoppers strolling and trolling the aisles, mesmerized by colorful labels and delicious deals. It's enough to make the whole country obese.

And it is. Nobody in the financial realm will admit it, but easy money is a leading cause of obesity. It's also a leading cause of mass stupidity. It takes no financial discipline nor anything more than basic math skills to suck up the profits from the font of Wall Street. It's intellectually dishonest and mentally disarming. It results in being massively unprepared for the present and especially, the future.

Easy money fuels the general degradation of society because of it's essential falsity. The money is conjured out of thin air - with a dabble of debt added for good measure - to buy minuscule portions of companies at prices one would have sneered at 20 years ago. Most people with investments don't even know which companies they own, how many shares of such or what the price to earnings ratio is of the underlying securities.

Is this rational? People have so much trust in money-changers that they don't even know what they own, or why. That's what's troubling. American investors have entrusted their futures to the same group of people who brought us the dotcom disaster, the sub-prime mortgage bubble and the Great Financial Crisis (GFC) of 2008-09. It's lunacy of a high order.

There's an old adage that goes, "you get what you pay for." Besides being an example of poor grammar (another sign of the times), there is the ring of truth to the expression. What people have paid for their stocks, their perceived riches, their assumed wealth, is small, yet they expect the returns to be great.

After fees, taxes and the great wealth destroyer of inflation, they're not likely to be very pleased when they cash out.

At the close, Thursday, October 5, 2017: (all record closing highs)
Dow: 22,775.39, +113.75 (+0.50%)
NASDAQ: 6,585.36, +50.73 (+0.78%)
S&P 500: 2,552.07, +14.33 (+0.56%)
NYSE Composite: 12,338.93, +34.26 (+0.28%)

Thursday, October 5, 2017

With September Non-Farm Payroll Data On Deck, Stocks Post Record Highs

Even though ADP reported the weakest jobs numbers in 11 months Wednesday, investors shrugged off the data and limped higher, with all major indices closing at fresh all-time highs.

ADP private employment figures for September showed a gain of 135,000 jobs, with the most damage done to firms with less than 20 employees, which registered a loss of 11,000 jobs. The firm, which tracks private payrolls, was quick to point out that hurricanes Harvey and Irma accounted for 50-60,000 fewer jobs created, noting that many mom-and-pop-like outfits were forced to close during and after the disasters that covered much of Florida and the Houston metropolitan area.

Without doing the requisite math, October's figures are likely to be higher by an order of magnitude, unless Mother Nature unleashes more of her wrath on America's southern states.

The data which ADP provides usually presages the Bureau of Labor Statistics (BLS) Non-farm Payroll release, due out on Friday, October 6.

Wall Street will likely remain unfazed with a low NFP number, taking the easy way out by blaming storms and natural disasters for the poor showing.

Life goes on, new jobs or not.

At the Close, Wednesday, October 4, 2017:
Dow: 22,661.64, +19.97 (+0.09%)
NASDAQ: 6,534.63, +2.91 (+0.04%)
S&P 500: 2,537.74, +3.16 (+0.12%)
NYSE Composite: 12,304.67, +1.79 (+0.01%)

Wednesday, October 4, 2017

Stocks Race to All-Time Highs... Again

It's getting to be like a broken record. All of the major indices leapt to all-time closing highs on Tuesday.

Presented without comment, because, really, what is one to say?

At the Close, Tuesday, October 3, 2017:
Dow: 22,641.67, +84.07 (+0.37%)
NASDAQ: 6,531.71, +15.00 (+0.23%)
S&P 500: 2,534.58, +5.46 (+0.22%)
NYSE Composite: 12,302.88, +38.21 (+0.31%)

Monday, October 2, 2017

Stocks Start Fourth Quarter Off Like Rocket Launch

Borrowing a phrase from Buzz Lightyear from the Pixar movie, Toy Story, US equity markets are on a trajectory to "infinity and beyond," blasting off the fourth quarter with massive gains based entirely on the notion that it's the beginning of a new quarter.

That mindset alone - that there's always a good reason to follow the herd and buy, buy, buy, has propelled stocks for the better part of the last nine years. While that has been a boon to monied investors and the big brokerages, it's also been a gentle salve to the collective psyches of pensioners, at least those of the present and future beneficiary class.

This is a familiar cry during manias, booms, and bubbles which eventually become scorned, busted and bursted. The laws of physics and the loose interpretations of economics cannot be unilaterally undone by the stock markets, no matter how much help is - or has been - given by the Fed and other central banks.

Increases in the prices of stocks at the tail end of a long bull market - and this is the second longest in history - need to rationale. To a large degree, they are driven by their own momentum and the rush to "get in" or "get more" by the captains of fantasy known widely as investment advisors.

At this juncture, prices will probably continue to rise until something finally snaps. What the snap will be, or when it will occur, is the great unknown. For the time being, there still seems to be nothing to derail the freight train to wealth and riches that is the US stock market.


At the Close, Monday, October 2, 2017:
Dow: 22,557.60, +152.51 (+0.68%)
NASDAQ: 6,516.72, +20.76 (+0.32%)
S&P 500: 2,529.12, +9.76 (+0.39%)
NYSE Composite: 12,264.84, +55.68 (+0.46%)

Stocks End Third Quarter with Solid Week

Stocks were up nicely for the final week of the third quarter, posting solid gains for the period from July through September.

At the Close, Friday, September 29:
Dow: 22,405.09, +23.89 (+0.11%)
NASDAQ: 6,495.96, +42.51 (+0.66%)
S&P 500: 2,519.36, +9.30 (+0.37%)
NYSE Composite: 12,209.16, +29.85 (+0.25%)

For the week:
Dow: +55.50 (+0.25%)
NASDAQ: +69.04 (+1.07%)
S&P 500: +17.14 (+0.68%)
NYSE Composite: +57.37 (+90.47%)

Thursday, September 28, 2017

Has the United States Been in a Depression Since 2007?

We're going to dispense with the usual stock market blather today and promote an article posted on Zero Hedge titled, "We Are Already In Depression (If Borrowing Money Is Not Income) written by Baker & Company Advisory Group (Tim Baker).

The article is available HERE.

At the Close, Thursday, September 28, 2017:
Dow: 22,381.20, +40.49 (+0.18%)
NASDAQ: 6,453.45, +0.19 (0.00%)
S&P 500: 2,510.06, +3.02 (+0.12%)
NYSE Composite: 12,179.33, +21.68 (+0.18%)

Stocks Are Up Because... Trump's Tax Plan? Maybe, But for all the Wrong Reasons

Every day the market is open, especially since the advent of financial news networks like CNBC, there always has to be a reason for stocks to go up, down, or sideways.

Usually, the reason is a political event - like Wednesday's release of the Trump tax plan - or a weather event, or, for heaven's sake, an actual financial event, like the Fed hiking or lowering the federal funds rate.

Generally speaking, however, the reasoning for general market advances or declines is just a cover story, and usually nonsense. Stocks go up because some greater fool is willing to pay more for shares than the previous fool. They go lower when there are the fools are selling, usually to people wishing to catch falling knives, buy the dip or any of a number of cliche rationales.

So, with Wednesday's broad advance, the financial media was giddy over the prospects for an overhaul to the federal income tax regime. That's the story, and the talking heads are sticking to it.

What belies their fabulous innuendo is the reality that the tax plan was only released as an outline and is sure to undergo great debate (if congress can be said to do anything "great") and numerous revisions before it ever comes out of committees, onto the floors of the dual chambers and sent to the president for his final signature.

The plan released on Wednesday was the result of months of wrangling and preparing by the so-called "Big Six," which includes House Majority Leader Paul Ryan, House Ways and Means Chairman Kevin Brady, Senate Majority Leader Mitch McConnell, Senate Finance Chairman Orrin Hatch, National Economic Council Director Gary Cohn and Treasury Secretary Steven Mnuchin, all Republicans.

The plan may have sounded good on the surface, but only to the ultra-heathy in the top tax bracket, who get a reduction in their rate, from 39.6% to 35%. While the plan reduces the number of brackets from seven to three, the lowest rate goes from 10% to 12%, which is supposedly going to be offset by a near doubling of the standard deduction and an increase in the child tax credit. The devil is in the details, however. The higher standard deduction is attained by taking away the personal exemption. It's a swap-out, and a swindle that's not being properly reported.

The other windfall for the upper crust is a reduction in the corporate tax rate, from the current 35% to 20%. Superficially, that's a big cut, but it is also widely understood that very few, if any, corporations actually pay at that level, thanks to an assortment of loopholes and very loose policies on deductions and amortizations.

One of the more controversial parts of the plan is the scrapping of almost every deduction at the personal level, except those for mortgage interest and charitable contributions, an odd combination, since people who have mortgages often don't have much left over to help out others in need. Additionally, the plan caps the deduction for state taxes, which will largely affect people who live in high state income tax states like New York, New Jersey, and California.

So, for the lower and what's left of the middle class, the changes don't really add up to much, except that if you're really on the lowest rung of the income ladder, you may not have to file at all, though the government will make sure to deduct 15-18% of your earnings every pay period in order to fund the failing entitlements of Social Security and Medicaid/Medicare. Of course, most people won't see that much deducted, as their employers pay half. Still, the government is already in the people's pockets before they get to cash their paltry checks.

The winning side is obvious in this case. People making over $250,000 or whatever the low end of the top tax rate will be, are going to save bundles of cash under the new rates. An individual or couple earning $500,000, will see a 4.6% reduction in their tax, or $23,000. That's an entire year's earnings for somebody at or near the bottom.

That poor schlub, will pay 12% on $11,000, instead of 10%, or $1320 instead of $1100. How paying another $220 in taxes exactly helps out the lower class is a mystery.

With tax reform like this, it's a wonder more people don't simply incorporate themselves. The tax rate is lower, the deductions greater and more liberal, and there are more ways to save and hold profits and losses over years than those offered to the simple plebeians.

Without a doubt, the plan as rolled out benefits only people in upper income brackets and the rhetoric from President Trump about creating more jobs and helping out the middle class is shameful, to say the least.

More of the same. Americans can change their president every four years, but loosening the tax noose around their collective throats is obviously a tougher proposition, one which the president's advisors and the plotters and planners in congress want to keep as tight as possible around the necks of the lower and middle classes.

At the Close, Wednesday, September 27, 2017:
Dow: 22,340.71, +56.39 (+0.25%)
NASDAQ: 6,453.26, +73.10 (+1.15%)
S&P 500: 2,507.04, +10.20 (+0.41%)
NYSE Composite: 12,157.65, +29.73 (+0.25%)

Tuesday, September 26, 2017

Janet Yellen Admits She May Not Know What She's Talking About

As Janet Yellen dispensed more gibberish about labor markets and inflation in a speech at the annual conference of the National Association for Business Economics, stocks drifted aimlessly, seeking some sense of direction from congress, the president, the Fed Chair, anybody.

The problem for the markets is that there isn't any other direction but down. In just the past few weeks, Houston, Florida and Puerto Rico and the Virgin Islands have been wracked by hurricanes, NFL protests became more important than the games themselves, Kim Jong-un and President Trump continue to trade insults. These are not exactly headlines or stories that make people confident about buying stocks, mutual funds, ETFs or any of the other wealth-enhancing products offered by the Wall Street swindle machine.

In fact, since the FOMC meeting came to a close last Wednesday, stocks have done nothing but go lower. The Dow Jones Industrial Average is down four straight days since the Fed confirmed that it would begin shrinking its balance sheet in October. Though the losses have not been great, they have been consistent. The blue chip index is off 128 points since closing at a record high of 22,412.59 on September 20.

The S&P 500 snapped a three-day losing streak, but only by 18 cents, finishing green for the first time since the Fed announcement. The NYSE Composite bucked the trend by making new highs on Friday, but has posted losses both days this week, and the NASDAQ finished higher on Tuesday, but is still down 42 points from FOMC day.

Yellen's remarks aren't of any help to markets seeking guidance. In here address today, she said the following:
"My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective or even the fundamental forces driving inflation."
Essentially, statements like those are not going to inspire much confidence. Parsing the quote, she's basically saying all of the Fed's assumptions about the labor market, inflation and even the fundamentals of the economy itself may be wrong.

Wow. Just wow. And people actually listen to this witch doctor of finance for guidance and direction?

What's amusing, or scary, depending on your point of view, is the current madness is just the warm-up act to the Fed's actual sales of MBS and treasury bonds in upcoming months, a global garage sale that will commence over at least three to five years. Anything less would rapidly throw markets into a death spiral because of the number of assets, the size ($4.4 trillion) of the balance sheet and the lack of quality in the offerings.

For now, markets are taking it in stride, slowly adjusting to the new paradigm of rising interest rates in an environment of low inflation, slack wage demand and slow to no growth in GDP, globally.

If anything, the officials at the Fed should trade in their accountant vizors for dunce caps because they're sending the economy down a black hole with experimental policies and solutions to problems that don't already exist. Judging by past performance, the Fed will find a way to assure the business cycle is complete by plunging the economy into recession.

You can almost count on it.

At the Close, Tuesday, September 26, 2017:
Dow: 22,284.32, -11.77 (-0.05%)
NASDAQ: 6,380.16, +9.57 (+0.15%)
S&P 500: 2,496.84, +0.18 (+0.01%)
NYSE Composite: 12,127.93, -13.64 (-0.11%)

Monday, September 25, 2017

Stocks Drop, Gold, Silver Soar, NFL Ratings Tank

Less than a week after the Fed committed to selling off their hoard of toxic and subprime bond "assets," stocks are down, gold and silver are up and the NFL is imploding.

None of this is coincidence. The market rally has run its course, as phony as it always was. US dominance in global currency markets - as the reserve currency - is waning. Gold and silver and hard assets will become more and more valued as economies adjust to the new realities of a bi-polar (East vs. West) global economic paradigm.

There is no stopping the forces that have been at work for a long time. The United States has squandered its treasure, the US government is ineffective, emasculated, and impotent. The rest of the world has tired of US domination, just like sports fans have tired of boring games complete with bold-faced, meaningless protests by millionaires on the sidelines and on the field.

A great reset is coming because working Americans are not happy. They toil and cannot save. They work only to see their paychecks taxed and exploited by government programs - from horrible attempts at education to crumbling infrastructure - and they are told to shut up and pay up, so now they are fed up.

If you're one of the millions of Americans who have had their pay stagnate, their credit cards and social security numbers left unprotected and hacked, and who have seen their money pay for social welfare programs that are designed only to enrich the status quo and keep the recipients on the dole, then you know the score.

It's why Donald J. Trump won the presidency. It's why Hillary Clinton is a whiner and sore loser. It's why the left is fighting so hard to continue their wasteful policies, but there's no going back. Change is in the wind.

Get used to days like this one in the stock market. This is only the beginning.

At the close, Monday, September 25, 2017:
Dow: 22,296.09, -53.50 (-0.24%)
NASDAQ: 6,370.59, -56.33 (-0.88%)
S&P 500: 2,496.66, -5.56 (-0.22%)
NYSE Composite: 12,141.60, -10.23 (-0.08%)