Thursday, October 19, 2017

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.

Shocking!

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.

Nothing.

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%)

Sunday, September 24, 2017

Weekend Wrap: Stocks Pop and Stop After FOMC Meeting

With the Fed's $4.4 trillion balance sheet overhanging the global economy, US stocks spent Thursday and Friday treading water as investors try to figure out just how the added weight from tranches of MBS and various maturities of treasury bonds will affect liquidity and markets in the coming months and years.

While the Fed's stated goal is to reduce the size of its balance sheet alongside an attempt to normalize interest rates, the structure of their policies leaves open many questions and uncertainties, chief among them being just wo is supposed to sop up all of the excess the Fed will be releasing into markets.

More than likely it will be the usual suspects, money center banks, hedge funds, and possibly sovereign wealth funds, which may consider buying up bonds on the cheap a strategy for preserving wealth rather than increasing it.

Equity markets being particularly overvalued by nearly any metric, large players should be more cautious than they have been during eight years of unprecedented gains in US markets.

How it all plays out may turn out to be an exercise in futility from the sidelines because the Fed and their inner workings are not generally what one would call transparent.

Effects from the whirlwind of bond offerings in private settings will probably only be felt after the fact and in widely-varied segments of the economy. One thing is certain: the Fed is intent on unloading some highly toxic assets in the case of the mortgage-backed securities, something that could lead to unforeseen circumstances with homeowners and real estate speculators possibly exposed to long-standing, but previously hidden, claims.

With uncertainty as a backdrop following Wednesday's FOMC announcement, the record highs from Monday and Tuesday were not built upon, US equity indices generally taking a wait-and-see attitude into the weekend.

At the Close, Friday, September 22, 2017:
Dow: 22,349.59, -9.64 (-0.04%)
NASDAQ: 6,426.92, +4.23 (+0.07%)
S&P 500: 2,502.22, +1.62 (+0.06%)
NYSE Composite: 12,151.79, +18.17 (+0.15%)

For the week:
DOW: +81.25 (+0.36%)
NASDAQ: -21.55 (-0.33%)
S&P 500: +1.99 (+0.08%)
NYSE Composite: +71.66 (+0.59%)

Thursday, September 21, 2017

Witch Doctors at the Fed Brewing Something Wicked?

Eventually, everything matters.

Whether it's a hurricane ravaging Houston, Miami, or Puerto Rico, Toys 'R Us going chapter 11, or JP Morgan Chase CEO Jamie Dimon bashing cryptocurrencies in general and Bitcoin in the specific, all actions have consequences. It's the butterfly flapping its wings in Africa resulting in the subtropical windstorm, pure physics, action, reaction, cause and effect.

Thus it is consequential that the Fed's announcement in June indicating that it would begin to sell off it's hefty bag of assets - confirmed just yesterday - beginning in October (a scant ten days from now) should have some noticeable effect.

Market reaction to the announcement three months ago was muted. It was more serious yesterday and took on a gloomy tone today as all of the major indices retreated from all-time highs, the hardest hit being the speculative NASDAQ index, though one could posit that the knee-jerk nature of the selling today was nothing more than casual.

Suppose it is more than that.

Wouldn't the biggest players in the investing universe be monitoring market movements closely, making incremental moves, buying insurance? Of course. None of them want to tip their hand, but, they are concerned that the Federal Reserve has lost control of the monetary side of the equation. After all, ZIRP (zero interest rate policy) didn't work, nor did quantitative easing (QE). With all of their bullets spent, the Fed has nonchalantly called the financial crisis over and done and signaled to the market that they are going to raise interest rates, sell off the assets they've been hoarding for some six, seven, or eight years and the economy of the United States - and the world - will suddenly and magically be wonderful again.

As Dana Carvey playing the "Church Lady" might say, "how convenient!"

The Fed is at a loss and has been for eight or nine years running (some may say longer), because they cannot control distant event, geological occurrences, sunrises, or the whims of people with money. They are what Ayn Rand and Rollo May might have called witch doctors whose power is derived from people's belief in their so-called powers.

When the Fed begins selling their cache of securities (mostly treasury bonds and mortgage-backed securities) expect some degree of howling from various quarters, notably those who have been calling the central bank's attempts to control global markets a scam, sham, or film-flam from the start.

Especially when it comes to the mortgage-backed securities (MBS) there will be great gnashing of teeth, especially deep inside the bowels of the Eccles Building, where it cannot be heard, as Fed governors (a number of them already jumping ship) bemoan their dissatisfaction over the task at hand.

They are about to become scorned, and with good reason. They've mismanaged other people's money (practically everybody's) to their own profit. Bernie Madoff would look like a saint compared to the crimes the people at the Fed have committed. Those crimes continue, and they will be manifest in the "great unwind."

As the case may be, all of these high priests and witch doctors of finance will claim they didn't see the carnage coming, but come it will. There's a place for people who use deceit and obfuscation to achieve their ends, and it's certainly not in heaven.

Keep a close eye on three things: the price of silver, the price of corn and wheat, and the performance of the major stock indices. If suspicions play out, all three (or two of three, with the only gainer being silver) will decline for months before there's true confirmation that, in the long scheme of things, the Fed officials, from Greenspan to Bernanke to Yellen, knew exactly what they were doing but did it anyway.

Today's position: Fetal.

At the Close, Thursday, September 21, 2017:
Dow: 22,359.23, -53.36 (-0.24%)
NASDAQ: 6,422.69, -33.35 (-0.52%)
S&P 500: 2,500.60, -7.64 (-0.30%)
NYSE Composite: 12,133.62, -13.88 (-0.11%)

Wednesday, September 20, 2017

Counterfeiting and Money Laundering At Its Finest: Fed To Begin Balance Sheet Unwind

If there's one thing everybody can be sure of after today's FOMC rate announcement (spoiler alert: fed funds remain unchanged), it's that the officials at the Federal Reserve will continue to tell everybody that everything is under control, until it's obvious that nothing is under control.

What the Fed will embark upon beginning in October is selling off the assets it purchased during and after the Great Financial Collapse (GFC), thos being primarily mortgage backed securities (MBS, AKA, toxic bond waste) and Treasury bills, notes, and bonds.

Of the two, the treasury issuance will be much less of a problem unloading than the MBS, since treasuries come with an implied guarantee that they're as good as the federal government's full faith and credit promise to repay... with interest and return of principal.

Those toxic mortgage backed securities, which the Fed likely purchased at or near par (100% of value), will be more of a challenge, but, being the central banker to the world, the Fed has nothing about which to worry.
Many of these MBS contain tranches of mortgages minted during the sub-prime crisis. Many of them are worthless. Many more are worth less than half of par value.

But, that does not worry the Federal Reserve, because, since they want to shrink their balance sheet, they can just sell them at whatever price they can get, because they - unlike just about any other entity in the known universe - can just print more money if they need it.

So, $4.4 trillion is going to be wound down to probably under $1 trillion over the course of six to ten years. Some of the mortgage backed securities are performing, many are not. They're in default. Somebody will buy them, ostensibly, because if not, they remain on the Fed's balance sheet - at par value.

It's ludicrous. The Fed will, let's say, sell what they consider to be $500 billion of MBS which is in fact worth maybe, $100 billion. They'll write the $400 billion off their books, in effect, taking a loss. It won't matter. It's gone. It's all just accounting, and, since the Fed doesn't report to the IRS, IMF, BIS, or anybody for that matter, they'll just whistle past the grave of homes lost or stolen by vicious, unscrupulous bankers, who, by the way, will probably be the ones repurchasing - at pennies on the dollar - the very same MBS they unloaded onto the Fed.

And, just for good measure, those very same banks will try to enforce their rights on those bonds, triggering another round of financial shenanigans, this time going after people who thought they bought properties with good title, only to learn that there are claims on them, claims that were hidden in the bowels of the Fed's books for five, six, seven or eight years.

It's the best counterfeiting and money laundering operation that's ever been hatched, and it will all be done out in the open because 99% of the people in the world don't actually understand how it all works.

In the long run, it's all flimflammery of the flimsiest variety, but our glorious central counterfeiters and money launderers just do business that way.

As they say in investing, gambling, and, supposedly, now, banking, "easy come, easy go."

At the close, Wednesday, September 20, 2017:
Dow: 22,412.59, +41.79 (+0.19%)
NASDAQ: 6,456.04, -5.28 (-0.08%)
S&P 500: 2,508.24, +1.59 (+0.06%)
NYSE Composite: 12,147.50, +15.77 (+0.13%)

Stocks at All-Time Highs Awaiting Fed Unwind

In what could be a truly historic day for equity investors, stocks sit at all-time highs prior to Wednesday's FOMC rate policy announcement, which is also expected to include a definitive start date of the Federal Reserve's asset disposal program, as the central bank begins to unload up to $4 trillion of assets into the market.

All of the major indices closed at record levels on Tuesday, setting up the FOMC announcement as the ultimate "bell ringer" at the tippy-top of the year-year-plus bull market, the second longest in history.

While it is improbable to call the closing quotes of September 19 the absolute top, it may make some sense to keep stops close, just in case the market has telegraphed the turn.

A turn in markets is usually more subtle, most often without warning, but, considering the fantastical nature of finances in the days of general central bank control, this may be as good a time as any to sit on the sidelines or dispose ones portfolio of risky equity assets.

A complete report will be posted after the close today. The FOMC rate decision is scheduled for 2:00 pm ET.

At the Close, Tuesday, September 19, 2017:
Dow: 22,370.80, +39.45 (+0.18%)
NASDAQ: 6,461.32, +6.68 (+0.10%)
S&P 500: 2,506.65, +2.78 (+0.11%)
NYSE Composite: 12,131.73, +20.28 (+0.17%)

Tuesday, September 19, 2017

Dow Jones Industrials, S&P 500 Mark New All-Time Highs; Fed To Unwind Massive Fake Balance Sheet

All is well!

At the Close, Monday, September 18, 2017:
Dow: 22,331.35, +63.01 (+0.28%)
NASDAQ: 6,454.64, +6.17 (+0.10%)
S&P 500 :2,503.87, +3.64 (+0.15%)
NYSE Composite: 12,111.45, +31.31 (+0.26%)

Following a truly boffo week past, the mid-point of September brings more record-breaking on the stock exchanges.

Just ahead is a roadblock to progress, as the FOMC begins a meeting on Tuesday, concluding Wednesday with what should be a statement covering plans to begin unwinding its $4.5 trillion portfolio of Treasuries and mortgage backed securities.

Remember, many of those mortgage-backed securities which the Fed holds (lots of them 20 or 30 years in length) are largely worthless, and, since the Fed purchased them at par (ha, ha), they'll be selling at a loss.

Of course, it's all just worthless paper in any case, so, if the Federal Reserve paid $100 million for mortgage toilet paper X, and they sell it for $30 million, the result is a 70% loss, or a cool $70 million. Multiply that into the billions which the Fed held and that balance sheet will erode pretty quickly.

The effort is going to be largely deflationary, as opposed to what many analysts believe will be an inflationary tsunami driving interest rates sky high.

There's also the question of just who will be buying the mortgage toilet paper. Will it be the very same banks which issued it in the first place back in 2006-2009? That is a somewhat likely outcome, or, as karma dictates, what goes around, comes around.

Couldn't happen to a better bunch of banker crooks.

Have a happy.

Friday, September 15, 2017

Dow Posts New All-Time High; Retail Sales Miss, Inflation Higher In August

With a 45-point gain on Thursday, the Dow Jones Industrial Average set a new all-time closing high (22,203.48), putting an exclamation mark on what has been an incredibly fruitful week for investors.

With a small gain last Friday, the Dow has now gone five straight sessions without posting a loss. The blue chip average is up 405 points for the week (1.86%) and despite some discouraging data prior to Friday's open, it appears set to finish the week on a healthy note.

The data Friday morning that sent futures lower was a pickup in inflation according to the CPI figures for August, showing a 0.4% increase, due largely to a spike in retail gas prices and a 0.5% increase in the rent factor. On a year-over-year basis, the index is up 1.9%, closing in on the Federal Reserve's two percent target rate.

Retail sales were down 0.2% in August, with the largest contributor to the decline the drop in auto sales which slumped 1.6% for the month after being flat in July.

With inflation up slightly (and understandably) and sales down, the Fed will find itself once again in a box on rate increases and likely do nothing when the FOMC meets next week. Some mention of the winding down of their enormous, $4.1 trillion balance sheet is expected and that could move markets, although the Fed has been extremely cautious to commence the wind-down as it could spark inflation, a market selloff or other unforeseen consequences.

Nonetheless, stocks are poised for another solid week while the economy appears to be slowing gradually during the third quarter.

At the Close, Thursday, September 14, 2017:
Dow: 22,203.48, +45.30 (+0.20%)
NASDAQ: 6,429.08, -31.10 (-0.48%)
S&P 500: 2,495.62, -2.75 (-0.11%)
NYSE Composite: 12,062.62, +7.44 (+0.06%)

Wednesday, September 13, 2017

Stocks on Track for Awesome 3rd Quarter Returns

Spoiler Alert: Depending on how your money is allocated, your third quarter 2017 401k, pension or retirement fund statement is going to look pretty good when you get it the first or second week of October.

That's because the rally that started in March, 2009 is still alive and well here in September, 2017.

For instance, if you're a blue chip kind of person, the Dow Jones Industrial Average ended May just below 21,000. Two-and-a-half months later, it's broken through 22,000 and is poised for more gains through the end of the September. The Dow is tracking for roughly a five percent gain for the quarter. That's 20% annualized. Who knew this investing stuff was so easy?

In case you're a tech spec, the NASDAQ began the quarter at 6200 and just yesterday broke through to a new all-time high, above 6450. The gain is just over 4%, a little less than the Dow.

For those widely diversified, say, in an index fund tracking the S&P or NYSE, the 500 started June rocketing through 2420 and is currently just below 2500. Again, the profit is around 4%. The NYSE Composite has gone from 11,600 to over 12,000 in the quarter. That 400 point gain is less than four percent, but very safe and sound.

There are just 13 trading days remaining in the third quarter and no impediments for stocks to continue making new high after new high.

Happy returns!

At the Close, Tuesday, September 12, 2017:
Dow: 22,118.86, +61.49 (+0.28%)
NASDAQ: 6,454.28, +22.02 (+0.34%)
S&P 500: 2,496.48, +8.37 (+0.34%)
NYSE Composite: 12,057.12, +46.86 (+0.39%)

Monday, September 11, 2017

Stocks Erase Previous Week's Losses with Monday Gains; US Government Debt Surpasses $20 Trillion

Within the first few moments after the opening bell, the major indices - with the notable exception of the NASDAQ - had eviscerated the losses from last week. The NASDAQ almost wiped off last week's 75-point loss, but not quite. The other indices moved radically higher, the S&P setting a new all-time closing high, as did the NYSE.

Hurricane Irma failed to live up to disaster speculation, President Trump seems to have found his best stride, picking off the budget, debt ceiling and disaster relief debates all in one fell swoop, and the tensions over North Korea seem to have subsided, for the present.

Thus, stock investors saw smooth sailing to push already inflated prices even higher with nary a care for valuation. It is this very sort of nonchalance that usually leads to major corrections, but one has failed to materialize. That's not to say that it won't, but, with the Federal Reserve and their cohorts in centra banking picking up any slack, there is no reason to end any rally.

All of this enthusiasm for stocks occurs after this past Friday the US government debt surpassed the magical $20 trillion mark, which gives one pause to ponder the wisdom of markets. Albeit, the mainstream news media failed entirely to report this salient fact.

As the saying - attributable to John Maynard Keynes - goes, "Markets can remain irrational longer than you can remain solvent."

Hedge accordingly.

At the Close, Monday, September 11, 2016:
Dow: 22,057.37, +259.58 (+1.19%)
NASDAQ 6,432.26, +72.07 (+1.13%)
S&P 500: 2,488.11, +26.68 (+1.08%)
NYSE Composite: 12,010.37, +122.39 (+1.03%)

Sunday, September 10, 2017

Stocks Post Down Week With Irma, FOMC Approaching

Since topping out in late July and early August, stocks have gyrated sideways to lower, with the Dow Jones Industrial Average finishing the week with a marginal (0.06%) gain Friday, enduring a losing week for all the major indices.

The losses were not great, the NASDAQ taking the brunt of the declines, down 1.17 percent for the week, while the NYSE composite was off just a quarter of a percent.

Facing a FOMC meeting in two weeks (Sept. 19-20) and the aftermath of yet-undetermined damages from hurricane Irma in Florida, Wall Street probably won't need much cheerleading to forge upward since the potential damages from Irma have been wildly overstated and the tone from the Fed continues to be accommodative. What may be worrying will come Thursday morning, when initial unemployment claims are announced prior to the opening bell.

Last week's spike of 62,000 of the 298,000 total, was largely attributable to Hurricane Harvey, as Texans sought government assistance. Similar spikes were seen after major hurricanes Katrina in 2005 and Sandy in 2012. However, the surge may be masking a breakdown in hiring and staffing as the US economy plods its way toward the important holiday season.

Full employment, a mandate of the Federal Reserve, is as close as its going to get, with unemployment nationally being reported at under five percent, historically the level understood to be full employment. Such a level - even if, as the case may be, many of the jobs are part-time - is not sustainable over the long haul. Companies will trim when profits are threatened, as has been the case throughout multiple trips through the business cycle.

Whether the government statisticians will provide true figures of the employment condition is another matter altogether. The Labor Department is congested with assumptions and adjustments which often distort the true picture.

Unless the FOMC goes rogue at their next meeting and actually raises the federal funds rate (highly unlikely), there's little to keep stocks from making a rebound, though it's probably going to be short-lived and thinly traded. The overall trend remains slightly to the downside.

At The Close, 9/8/17:
Dow: 21,797.79, +13.01 (+0.06%)
NASDAQ: 6,360.19, -37.68 (-0.59%)
S&P 500: 2,461.43, -3.67 (-0.15%)
NYSE Composite: 11,887.98, +8.37 (+0.07%)

For the week:
Dow: -189.77 (-0.86%)
NASDAQ: -75.14 (-1.17%)
S&P 500: -15.12 (-0.61%)
NYSE: -30.13 (-0.25%)

Friday, September 8, 2017

Stocks Have Nowhere To Go, Set Up For Losing Week

As dull a session as there has been for many months, Thursday's action was muted and indecisive, with stocks trading in very tight ranges.

There's some concern over the coming effects of hurricane Irma, the disaster of the week that has captured the attention of people who are afraid of shadows and dark rooms.

With the media, with help from Florida's Governor, officials from FEMA and other officious morons panicking the entire population of the Sunshine State, the expected destruction had better be significant or stocks will spend Monday of next week making up for lost time and lost profits.

In the meantime, there's ample evidence exhaustion in the equity markets, while significant action in bonds and precious metals with gold and silver scoring large gains on the day and the 10-year note yield plummeting back to levels not seen in ten months, below 2.06%.

All of this points toward a potential bloodbath Friday and the first losing week in the past three for the main indices.

With minutes until the opening bell on Friday, futures are down significantly, with the Dow futures trending lower by some 60 points.

Keep you stops close, this could get ugly.

At The Close, 9/7/17
Dow: 21,784.78, -22.86 (-0.10%)
NASDAQ: 6,397.87, +4.55 (+0.07%)
S&P 500: 2,465.10, -0.44 (-0.02%)
NYSE Composite: 11,879.61, +6.69 (+0.06%)

Wednesday, September 6, 2017

Stocks Bounce, but Fail to Erase Previous Losses; Congressional Republicans in Shock

Stocks rebounded from Tuesday's drubbing, but not nearly enough to erase the damage done, a classic dead cat bounce.

News was heavy, most of it coming out of Washington, where President Donald Trump reportedly reached agreement with congressional democrats on not only a debt ceiling increase but funding for hurricane Harvey victims and at least the outline of a continuing resolution. The proposed legislative deal would fund the government through December 15, upsetting - only in Washington - Republicans, who hoped for a longer debate on all of the issues.

Obviously, Trump has determined that with friends like his fellow Republicans in congress, he doesn't need enemies, thus making compromises with Democrats. It's actually - for a fellow who's supposedly not a politician - pretty smart politics. Republicans, included Senate majority leader, Mitch McConnell and House leader, Paul Ryan, were reportedly angered over the development.

Wall Street was immediately impressed, though stocks tailed off noticeably into the close.

Trump also tamped down recent bellicosity toward North Korea, hoping that China would do more to keep leader Kim Jong-un on a short leash.

Federal Reserve vice-chairman, Stanley Fischer announced that he would retire from his position on October 13, a surprise leaving open one of the most prestigious seats in Washington and a puzzler for Fed watchers. Fischer cited personal reasons for his decision, but speculation is that the departure has more to do with health than money, but suspect that Janet Yellen will be out at the culmination of her term in February.

Hurricane Irma continued to barrel towards Florida, the Fed's beige book revealed that members thought the economy was showing signs of improvement, though the continuing bemoaning over a lack of inflation was prominent.

While stocks improved modestly, the effect was greater on fixed income and precious metals. Gold and silver halted their recent advances and bond yields rose, with the 10-year note increasing to 2.11%

Overall, nothing was settled, except that Washington might actually avoid the drama that usually surrounds debt ceiling and budget debates, which is actually quite a positive development.

Trump making deals? Who knew?

At the Close, 9/6/17:
Dow: 21,807.64, +54.33 (+0.25%)
NASDAQ: 6,393.31, +17.74 (+0.28%)
S&P 500: 2,465.54, +7.69 (+0.31%)
NYSE Composite: 11,872.92, +45.77 (+0.39%)

Tuesday, September 5, 2017

Bonds Don't Lie As Risk Rears Ugly Head At Stocks

Sooner or later, all good things come to an end, and it appears that the 101 month bull run in US equities is just about over.

All things considered, from global uncertainty (think North Korea, and immigration, currently) to underfunded pensions (about half of the states' public retirement funds) to the upcoming debate over the debt ceiling and nothing looks really positive about the American economy, the same one that has limped along at less than three percent annual growth for almost nine years.

Last Friday's miss on the non-farm payroll data certainly didn't help matters on Monday as once-giddy speculators were morose and confused, many seeking the safety of bonds.

While a somewhat ugly day for stocks, bonds were bid with gusto, the 10-year note getting so much action it hit its lowest yield since two days after Trump's election, crashing to 2.06%, on what turned out to be the best day for bond bulls since Brexit (June, 2016). It's fairly obvious by now that the benchmark 10-year will be yielding below two percent soon, the level it was occupying prior to the surprise presidential election of Donald J. Trump.

In an odd way, stock pickers may have an opening or two. Since bond yields are horrible, stocks, though vastly overvalued, may be worthwhile investments for those willing to take the risk. On the other hand, there may not be many stocks which are able to perform well through a prolonged recession, possible debt defaults around the world and a demographic nightmare that makes all other metrics pale by comparison.

Spoken of before in this space, the demographic dilemma cannot be understated. All of the developed nations are aging, starting with Japan and Germany, and older people simply do not spend as much or with as much frequency as younger folks. Aging populations are settled in their ways, move slowly (if at all) and are very conscious of their spending habits, many of them on fixed incomes.

That said, inflation is virtually impossible, pricing power for companies difficult if at all attainable. All that's left is financial engineering, cooking the books and keeping the creditors in the dark or off the doorstep.

Even the mighty Dow Industrials slipped again, for the ninth time in the last 20 sessions. The popular index is down more than 500 points over that span.

Precious metals also had a solid day, again, continuing the trend begun mid-August.

Stocks have crossed the rubicon.

At the Close, 9/5/17:
Dow: 21,753.31, -234.25 (-1.07%)
NASDAQ: 6,375.57, -59.76 (-0.93%)
S&P 500 2,457.85, -18.70 (-0.76%)
NYSE Composite: 11,827.15, -90.93 (-0.76%)

Saturday, September 2, 2017

Was September 1st a Market Reality Check? Gold Hits One-Year High

On Friday, after it was announced that August non-farm payrolls had increased by a less-than-expected 156,000, stock futures ramped higher heading into the opening bell on Wall Street.

Stocks did indeed gain, on the twisted hope that a soft labor market would chill Fed ambitions to raise interest rates and/or begin to wind down their massive, $4 trillion balance sheet when the FOMC meets September 12 and 13.

Those were the thoughts of traders in the morning, but, when the NASDAQ fell briefly into the red mid-morning, sentiment seemed to take on a more sober tone, as the reality of a stuttering recovery over the past eight years - fueled primarily by massive infusions of freshly-created cash by central banks and historically-low interest rates - might actually be - rather than good news - bad news.

All of the major indices finished with gains, but they were hardly of the kind that one could take comfort in as the long Labor Day weekend commenced.

Rather, the afternoon session was mild, largely belonging to fixed assets, as precious metals traded briskly. Gold went into the weekend trading at a one-year high, $1320.40 the ounce, silver, while it didn't make any historic high marks, gains 16 cents, ending at $17.50, a mid-point range advantageous to speculation on both sides of the trade.

The 10-year note firmed up at a 2.15% yield and crude oil, in the aftermath of hurricane Harvey, regained its footing, trading higher in the afternoon to $47.35 per barrel.

Was this a wake-up call for equity traders and general market participants?

Doubtful. But, it is somewhat instructive to take into account that the second-longest bull market in history has been built on promises, fallacies, distortions, and the conjuring of more than $14 trillion worldwide.

Bull markets all end. And this one, 101 months old, is more likely to end sooner than later.

At the Close, 9/1/17:
Dow: 21,987.56, +39.46 (+0.18%)
NASDAQ: 6,435.33, +6.67 (+0.10%)
S&P 500: 2,476.55, +4.90 (+0.20%)
NYSE Composite: 11,918.08, +42.39 (+0.36%)

For the Week:
Dow: +173.89 (+0.80%)
NASDAQ: +169.69 (+2.71%)
S&P 500: +35.50 (+1.37%)
NYSE Composite: +106.05 (+0.90%)

Friday, September 1, 2017

Great News! August Jobs Numbers Miss; Stocks Aim For Moon Shot

Bad news is still good news on Wall Street.

According to the impeccable source of all financial excitement, Yahoo! News,

The August jobs report is out and it’s a miss.

The U.S. economy added 156,000 nonfarm payrolls in August while the unemployment rate rose slightly to 4.4%, according to the latest figures from the Bureau of Labor Statistics.

Economists were looking nonfarm payrolls to grow by 180,000 in August while the unemployment rate was expected to hold steady at 4.3% near a post-crisis low. The BLS noted in its report that Hurricane Harvey had “no [discernible] effect” on the employment data for August.

Wage growth was also a disappointment, with average hourly earnings rising 0.1% over the prior month and 2.5% over last year. Earnings were expected to rise 0.2% over the prior month and 2.6% over the prior year. A rise in wages is seen by economists as portending an uptick in inflation, which has disappointed this year.

The rest of the story is here.

After ten years of the most tepid "recovery" on record, and despite $14 trillion of magic money creation by the central banks of the developed countries (adding in China, it's more like $18 trillion), poor employment data is still greeted with smiles by stock jockeys, because it means the economy is not really recovering and the Fed and other globalist central banks cannot realistically raise interest rates.

That means the punch bowl will be refilled with easy credit and the bubbly stock market can advance to every higher levels of insanity.

Forget that the average P/E of S&P 500 stocks is four standard deviations above the norm, that government pension shortfalls threaten the retirement of millions of aging Americans. Forget that wages have been stagnant for 17 years running. Just buy more stocks and everything will turn out just fine.

It's madness. Nothing, absolutely nothing will change until the day comes when it all changes at once. But that day may still be years away because the central banks and government number crunchers will see to it that the veil is never removed from the eyes of ordinary people who will be taxed and regulated into the ether.

There are no jobs. Party on!

At the Close, 8/31/17:
Dow: 21,948.10, +55.67 (+0.25%)
NASDAQ: 6,428.66, +60.35 (+0.95%)
S&P 500: 2,471.65, +14.06 (+0.57%)
NYSE Composite: 11,875.69, +70.62 (+0.60%)

Thursday, August 31, 2017

Stocks Post Gains As August Winds Down; Nomi Print On Central Bank Collusion

Investors put their money down as the major indices posted small gains heading into the end of the month. The NASDAQ was, in particular, on fire, posting the largest increase on the day, a more then one percent rise.

Non-farm payroll data for August will be released Friday morning in advance of the three-day Labor Day weekend, so that should color the final two days of the week, the last day of August and the first day of September.

As mentioned in prior posts, there's nothing stopping stocks from posting gains until congress comes back in September to begin debates on the debt ceiling, tax reform (that's funny, they always talk about tax reform and the tax code just keeps getting larger), and the federal budget (another fat boy).

To get an idea of just how far afield the world's central bankers have gone in trying to maintain a broken global financial system, Nomi Prins puts perfect spin on the topic, in her latest blog post, A Decade of G7 Central Bank Collusion... and Counting.

At the Close, 8/30/17:
Dow: 21,892.43, +27.06 (+0.12%)
NASDAQ: 6,368.31, +66.42 (+1.05%)
S&P 500: 2,457.59, +11.29 (+0.46%)
NYSE Composite: 11,805.07, +13.19 (+0.11%)

Wednesday, August 30, 2017

Stocks, Gold, Silver, Bonds Ominously Reverse Course

As noted in the previous post, stocks were poised - via lower futures pricing - for a major downdraft on Tuesday, but, oddly enough, or, thanks to the good folks at the PPT, that never actually occurred to any great extent.

Instead, stocks did indeed start the session lower, but quickly reversed course and ended mostly on the upside. Additionally, the dollar dropped then popped on the widely-watched dollar index, crushing the gains in gold, silver and bonds, with the 10-year note ending at 2.14% yield.

It's amusing to see such theatrics carried out by those mostly "in charge" of global finance, i.e., the central bankers and government operatives in the Treasury Department, SEC and State. It's going to get more amusing, if that's what one wants to call outright market manipulation via direct, clandestine equity purchases, once congress comes back from vacation following the long Labor Day holiday.

One obvious feature of late has been the decline of the dollar over the past six months. It's been steady and in a bear market since July, but yesterday's rapid descent was apparently too much, too soon.

At the Close, Tuesday, August 28, 2017:
Dow: 21,865.37, +56.97 (+0.26%)
NASDAQ: 6,301.89, +18.87 (+0.30%)
S&P 500: 2,446.30, +2.06 (+0.08%)
NYSE Composite: 11,791.88, -8.34 (-0.07%)

Tuesday, August 29, 2017

Stocks Flat, Gold, Silver, Bonds Explode Higher

Editor's Note: Money Daily is eventually going to move to its own server at dtmagazine.com, but issues implementing the blogging platform while integrating ad serving has kept the blog from being fully integrated. Thus, for the time being, until these issues resolved, the blog will appear here.

Stocks were relatively unmoved as the world's central bankers wrapped up their annual economic symposium at Jackson Hole, Wyoming over the weekend.

What did move were precious metals and bonds, both boosted by ambiguous speeches by Fed Chair, Janet Yellen, and ECB president, Mario Draghi.

Both speakers failed to address the bubbling equity markets, and instead opted for a can-kicking, all is well, "stay the course" approach. Markets were effectively unimpressed, though fixed investments saw massive gains.

The benchmark 10-year note was bid, knocking the yield down to 2.16, and to levels not seen since before last year's November elections, at 2.09% just prior to the Tuesday open.

Gold has blown through resistance at the psychologically-important $1300 level, kicking up to $1325 in early Tuesday futures trading. Silver also advanced, blasting through $17, hovering in the $17.60 range at this time.

Stock futures are down massively, setting Tuesday up for a massive downdraft.

With congress coming back to debate the debt ceiling and federal budget and the FOMC meeting in September, the final days of August appear to be presaging the volatile days and weeks ahead.

Hang on to your hats. This looks to be a wild ride.

At the Close, August 28, 2017:
Dow: 21,808.40, -5.27 (-0.02%)
NASDAQ: 6,283.02, +17.37 (+0.28%)
S&P 500: 2,444.24, +1.19 (+0.05%)
NYSE Composite: 11,800.22, -11.81 (-0.10%)

Friday, August 25, 2017

Stocks Continue Retreat

See full post HERE.

Thursday, August 24, 2017

Stocks Uncertain With Congress Due Back In Two Weeks

Continuing the migration to dtmagazine.com/money, today's post is available HERE.

Wednesday, August 23, 2017

Dow Up Most Since April On Bounce

Since Money Daily has been publishing on Google's blogspot platform for far too long, and, being unable to port this blog over to our own servers, we thank the giant Goog for their insouciance in allowing us to find the WordPress alternative.

This post can be seen in full at:
http://dtmagazine.com/money/index.php/2017/08/23/dow-up-most-since-april-on-bounce/

We will be moving this blog to the Downtown Magazine website over the next few weeks, though archives are likely to be retained by Blogger (owned by Google). Thanks to all our loyal readers.

Tuesday, August 22, 2017

Stocks Open Week With Sluggish Start

There wasn't anything important enough to move stocks substantially, as the markets opened the final full week of August.

This is probably as good a time as ever to take a few days off.

At the Close, Monday, August 21, 2017:
Dow: 21,703.75, +29.24 (+0.13%)
NASDAQ: 6,213.13, -3.40 (-0.05%)
S&P 500: 2,428.37, +2.82 (+0.12%)
NYSE Composite: 11,719.27, +19.44 (+0.17%)

Saturday, August 19, 2017

Stocks Close Week Trending Lower; Trouble Brewing

After Thursday's all-around rout, traders entered Friday's session with apprehension and doubt, pondering whether the recovery facade had finally been broken, exposing the wickedly overpriced nature of global equites, and especially US stocks.

After a sluggish start to trading, stocks eventually turned positive midday, but failed to keep an even keel as the major indices fell in unison for the second consecutive day, ending the week on an ominous note.

While Friday's losses were nothing compared to those from the day prior, they were, nevertheless, a continuation of the downdraft since last week's North Korea scare sent stocks well below their prior highs and, in the case of the S&P 500 and NASDAQ, below their 50-day moving averages.

In addition to the uniformity of the declines, stocks spent their second straight week on the downside for only the fourth time since the election of Donald Trump as president.

The Dow Jones Industrial Average, which had been the leader in the gains for the year, finished just above its 50-dma, the signs of slowing clearly evident.

With earnings reports from the second quarter winding down, analysts and traders will be focused on economic data, which has been - for years - less than stellar. Also of concern is the Federal Reserve's stance on tightening credit and unwinding their massive balance sheet, at the same time congress and the president will be engaging in budget and debt ceiling wrangling, making for a September to remember.

Still not an absolute trend - stocks are generally down only 2-3% the past two weeks - there will eventually come a time when the long bull run since March, 2009 will come to an end, and it figures not be be pretty. Anyone with short-term views will be taken aback at any sign of decay in the financial system, though, for those old enough and wizened enough to understand past history and general economics, a general pullback will be nothing more than the ordinariness of the business cycle, this one interrupted by the machinations and experimental policies of the global central bank cartel, led the the Fed, the ECB, the Bank of Japan (BOJ), and the People's Bank of China (PBOC), which together have stuffed more than $16 trillion onto their collective balance sheets.

Unwinding this massive spending spree without collateral damage will be a monumental task, even for those empowered to oversee the world's financial order.

Fireworks are coming. Stock up on adult beverages and snacks.

At the Close, Friday, August 18, 2017:
Dow: 21,674.51, -76.22 (-0.35%)
NASDAQ: 6,216.53, -5.39 (-0.09%)
S&P 500 2,425.55, -4.46 (-0.18%)
NYSE Composite: 11,699.83, -12.88 (-0.11%)

For the Week:
Dow: -183.81 (-0.84%)
NASDAQ: -40.03 (-0.64%)
S&P 500: -15.77 (-0.65%)
NYSE Composite: -63.38 (-0.54%)

Thursday, August 17, 2017

Stocks Wracked On Poor Industrial Production Data, Led by Lower Auto Sales

When the opening bell rang today on Wall Street, there wasn't realistically any cause for alarm, except the data on Industrial Production, which rose 0.2% on expectations of 0.3%, driven lower on a 3.6% drop in the automotive sector.

Car sales have slowed sharply from the record pace in 2016. Production of motor vehicles and parts has fallen in five months this year, and have dropped five percent in the latest 12 months.

That may have been cause for alarm, though not to the extent to which the major indices took it. Stocks had their worst session overall since mid-March, with the S&P 500 and NASDAQ falling below support at their respective 50-day moving averages.

Bond yields were slashed as investors rushed out of equities to the safety of credit. The 10-year note closed the day with a 2.18 handle and the 30-year bond the lowest in a week, at 2.78%.

Oil caught a weak-hand bid, pushing above $47/barrel, but not holding that level. Gold and silver, which had been bid up in prior sessions, held onto gains.

This is the second major loss in the last six session, which, if one is inclined to be seeking trends, could be one to watch. On the other hand, with the Fed having the market's back, continued weakness is considered unlikely.

It has been said that Wall Street is more of a casino than ever before. The past six or seven sessions are proving that the house doesn't always win.

At the Close, Thursday, August 17, 2017
Dow: 21,750.73, -274.14 (-1.24%)
NASDAQ 6,221.91, -123.19 (-1.94%)
S&P 500 2,430.01, -38.10 (-1.54%)
NYSE Composite: 11,712.72, -156.13 (-1.32%)

Wednesday, August 16, 2017

How to Make $10,000 in Six Hours Before FOMC Minutes Are Released

It helps to be an insider on Wall Street if you expect to make big money.

Just as a for instance, take the trade in gold today prior to the Fed releasing the FOMC minutes from July at 2:00 pm ET.

At 8:00 am ET, gold was sitting right around $1270 per troy ounce. Six hours later, prior to the release of the FOMC minutes, it was at $1280 or above.

If one was so inclined, one could have placed a futures bid at 8:00 am and sold it at 2:00 pm, for a profit of $10 per troy ounce. Since futures are dealt with in lots of 100s, one would have had to made the order for 100 futures contracts. It would have cost a fraction of the actual value of the gold involved, but, upon selling, the profits would have netted somewhere in the neighborhood of $10,000, less commissions, which, as an insider, would be minimal.

Also, as an insider, one could probably have bought the futures via a margin account, thus putting up even less actual money.

Nice way to make a living, you say?

Well, if the Fed is nothing more than a stealth conduit for the wealthy and well-connected, it would surprise nobody if the contents of the FOMC minutes were leaked or casually mentioned in private conversation.

That's how corrupted markets work, and there's nothing more corrupted than the gold and silver futures markets, except maybe, the US equity markets.

What was discovered - among many views and opinions - in the FOMC minutes was that various members expressed a need to tighten policy, in other words, raise rates and/or roll off some of the excessive assets held by the Federal Reserve.

Roughly the same trade could have been made in various commodities, especially by being on the short side in WTI crude oil futures, or stocks, or by going long bonds. The Dow was up 87 points early in the day before reversing - well before the FOMC minutes release - finally closing just short of 26 points to the upside.

It is a nice way to make a living, especially when one has friends in high places.

At the Close, Wednesday, August 16, 2017:
Dow: 22,024.87, +25.88 (+0.12%)
NASDAQ 6,345.11, +12.10 (+0.19%)
S&P 500 2,468.11, +3.50 (+0.14%)
NYSE Composite: 11,865.33, +21.85 (+0.18%)

Tuesday, August 15, 2017

Back to the Grind for Wall Street

All the blustering over nuclear war over, now replaced with frantic screaming about neo-Nazi and White Supremacy groups (what kind of media is this?) after demonstrations and bloodshed in Charlottesville over the weekend, Wall Street didn't seem to interested in anything in a typical mid-summer session.

Stocks kind of straddled the unchanged line, and the usual unusual of indices pointing in opposite directions was the result of a lackluster day of trading paper.

The only significant news was from retail, if it can be believed, as July retail sales showed a 0.6% improvement, mostly due to incentives on new car sales and leases.

It wasn't enough to send buyers into a panic of shopping for downtrodden mall rentiers, since everybody already knows that the half-life of most retailers is very short, due to the general slack demand in the economy and the Amazon effect of hovering up all latent shoppers to the internet.

So, since Americans killing other Americans is not apparently as sexy as Americans killing North Koreans, or vice-versa, not much on the rally front today.

At the Close, Tuesday, August 15, 2017:
Dow: 21,998.99, +5.28 (0.02%)
NASDAQ: 6,333.01, -7.22 (-0.11%)
S&P 500: 2,464.61, -1.23 (-0.05%)
NYSE Composite: 11,843.48, -12.58 (-0.11%)

War Talk Fading, Markets Rallying

As the sun breaks above the horizon in the Eastern US, it's becoming readily apparent that the recent war of words and threats between North Korea's Kim Jong-un and US President Trump were nothing more than well-orchestrated (either intended by the principals or promoted by the deep state) banter designed to allow release of a pressure point in the markets.

In other words, stocks were completely overpriced and the rally exhausted, so a selling excuse was necessary.

Nothing like the threat of a thermo-nuclear holocaust to clear the books.

With the main protagonists backing off their bellicose behavior, stocks rallied sharply on Monday and are prepared for another moon shot Tuesday.

Just in case one is unconvinced of the machinations of the deep state and international financiers, be reminded that markets worldwide - and not just equities - have been under the various thumbs of central bankers since the GFC of 2008-09.

As has been pointed out here more than a few times, nothing is as it seems. While the appearance of a roaring stock market is a great image to project, in all likelihood, that's all it is, an image. Thus, just about everything related to the mirage of a booming economy must be held in contempt as false.

Piling falsehood upon falsehood is not a great practice in the long run. It produces a massive complex of overlapping lies, or, as Sir Walter Scott wrote in the 19th century poem, Marmion :
Oh, what a tangled web we weave...when first we practice to deceive.
There is truth in life and in nature.

Nowhere in finance nor politics is more than a shred of honesty to be observed or heard.

The choices are simple: play along, play outside, or be played, but beware that there are no moral underpinnings in money or politics. That's been true for longer than anyone can remember.

Sadly, it remains the same today.

At the Close, 8/14/17:
Dow: 21,993.71, +135.39 (0.62%)
NASDAQ: 6,340.23, +83.68 (1.34%)
S&P 500: 2,465.84 +24.52 (1.00%)
NYSE Composite: 11,856.06, +92.85 (0.79%)

Saturday, August 12, 2017

Much Ado About Nothing As War Rhetoric Fades

Could anything less have been expected?

Since we have fake news, fake boobs, fake money, fake legislators making fake laws, and fake outrage, why not have a fake war?

North Korea's Kim Jong-un recent bombast directed at the United States was remarkable only in the way world markets reacted to it. The tin-horn, third world dictator has been test-firing missiles and boasting about bringing Western civilization to its knees for months, but only this week did his war-mongering behavior result in stock market losses, which, in the grand scheme of things, were minor.

While vacationing President Donald Trump made headlines with his responses, the markets did an abrupt about-face midweek, ending a streak of ten straight positive closes on the Dow Tuesday with a small skid to the red, followed Wednesday by a more broad decline and Thursday with a cascading sell-off, which sent the major indices down the most in three months or longer.

The Dow didn't suffer much damage, though it was the worst week in the past 12, but the narrow, 30-stock Dow Industrials are still up almost 10% on the year. Where the impact was greatest was on the broader measures, specifically, the NYSE Composite, which fell nearly two percent. By comparison, the Dow was off just more than one percent for the week.

With the finger-pointing and threatening behavior by various world leaders dropping off to background noise as the weekend approached, stocks in the US rebounded slightly, as expected, since few astute geo-political minds actually believe we're anywhere closer to war with North Korea than we have been for the past sixty years.

Thus, it is likely to be back to business as usual for the markets on Monday, though one side effect during the recent tantrum has been the rise of gold and silver as safety bets and the fall of the price of oil, as the global glut continues. Gold reached its highest point since June, closing out the week about ten dollars below $1300. Silver managed to stay above $17 for the first time in two months, but crude oil ended below $49 per barrel, a price seen by many as still too high considering the global oversupply.

At the Close, 8/11/17:
Dow: 21,858.32, +14.31 (0.07%)
NASDAQ: 6,256.56, +39.68 (0.64%)
S&P 500: 2,441.32, +3.11 (0.13%)
NYSE Composite: 11,763.21, -8.39 (-0.07%)

For the Week:
Dow: -234.49 (-1.06%)
NASDAQ: -95.01 (-1.50%)
S&P 500: -35.51 (-1.43%)
NYSE Composite: -221.68 (-1.85%)

Friday, August 11, 2017

Stocks Extend Slide Amid Noth Korea, US Bombast, But It's Not Serious

Just in case there needs to be an excuse to sell overpriced stocks, there's always North Korea and the nit-wit leader Kim Jong-un.

A bone fide nutjob, the second child of Kim Jong-il, 33-year-old Jong-un has, in his brief stint as self-appointed supreme leader of North Korea, managed to elevate himself and his gulag of a nation onto the global stage and capture the spotlight with various treats, missile launches, nuclear ambitions and plenty of help from international media seeking sensationalism with which to scare an unsuspecting public.

With bombastic President Trump entering the fray earlier this year, Jong-un has found the perfect Dean Martin straight man for his Jerry Lewis-like antics. A master of the tweet-storm, Trump takes Jong-un seriously, which helps amp up the rhetoric with bold statements and unveiled threats in response to Jong-un's madness. The two could make a fortune on the stages of Las Vegas, if only the State Department would allow Jong-un entry to the US mainland.

What the international war of words has to do with stocks is roughly nothing. Until actual bombs start raining down, the prattling between the leaders of the United States and North Korea is more about television and radio ratings than the prices of Apple, Alphabet, or Alcoa.

However, as stated at the top of this missive, Wall Street specialists are taking the opportunity to dump out of high-flying stocks with near-reckless abandon, sending the major indices to their biggest losses in six months on Thursday, extending the minor losses from Wednesday into something worth noticing.

The selling has also not been limited to just US stocks. As the talk has become more bellicose, the drops on major foreign markets in Europe, Asia, and the Americas have been extended. As of Friday morning in the US, most of Asia and Europe are suffering losses of between one and two percent, though the Nikkei 225 is bucking the trend, down only slightly, nearly flat on the day.

That brings up an interesting topic: if Japan's major market isn't taking this "international nuclear stand-off" with the requisite seriousness, should anybody else?

Probably not, but, this is as good a time as any to take profits. The congress and the president are pretty much on vacation until after Labor Day, but, when they get back to pretending they're doing something constructive, they'll be tackling the ticklish issues of the debt ceiling (along with the attendant threats of shutting down the government - yeah!) and coming up with something resembling a federal budget.

On the latter, hashing out a budget between the Trump administration and the overwhelmingly free-spending congress ought to be some serious comedy. Trump would love to balance the federal budget, but congress intends to drown the nation in even more debt. In case anybody is still keeping score, the federal debt burden stands at close to $20 billion, but, according to the US Debt Clock, it's been stuck there for a few months due to extraordinary measures taken by Treasury and some unforeseen savings on the administration's end.

The congress is not happy about this and will make sure to pile up more debt in the months ahead, making the budget process the go-to, must see entertainment venue for the fall TV season.

So, unless the bottom falls out of the market on Friday, August 11, this is nothing more than profit-taking by people who actually know what they're doing and don't respond in knee-jerk fashion to the pronouncements of madmen and the tweets of presidents.

Meantime, the recent news frame has been good for bonds, gold and silver, all of which have had three straight sessions of unimpeded gains. Gold is approaching $1300 an ounce, the 10-year note is yielding 2.21% and silver broke through $17 per ounce on Thursday. What is not working, still, is oil, which appears unable to pierce the $50/barrel level, which shouldn't be an issue. There remains a massive glut, oversupply, slack demand due to slow economic growth globally and no pricing power anywhere from Riyadh to Russia. Oil should be less than $40 per barrel, though resistance is great, led by the global energy cartel with the help from central bankers who simply cannot stomach any more deflation in anything.

With that, stocks in the US are setting up for another scary open to the downside, but it's probably nothing more than a bump in the road. The real action is still a month away, and even then, the Fed has Wall Street's back. Unless something really serious occurs, there's likely not to be any major turn in the stock markets, though the same cannot be assumed about commodities, bonds, precious metals, or even crypto-currencies like Bitcoin.

At the Close, 8/10/17:
Dow: 21,844.01, -204.69 (-0.93%)
NASDAQ: 6,216.87, -135.46 (-2.13%)
S&P 500: 2,438.21, -35.81 (-1.45%)
NYSE Composite: 11,771.60, -157.87 (-1.32%)

Wednesday, August 9, 2017

Stocks in Limited Slide on North Korea Threats, Trump's "Fire and Fury" Response

This is more kabuki theatre.

Trump cannot declare war on North Korea. According to the constitution (remember that?) only congress can declare war.

So forget it. The entire North Korea scenario is probably more deep state phoniness. The markets didn't seem to notice much, if at all.

Boorish, is what it all is.

At the Close, 8/9/17:
Dow: 22,048.70, -36.64 (-0.17%)
NASDAQ: 6,352.33, -18.13 (-0.28%)
S&P 500: 2,474.02, -0.90 (-0.04%)
NYSE Composite: 11,929.46, -20.50 (-0.17%)

10-Day Winning Streak on the Dow Industrials Ends With Whimper

With closing highs in the past ten straight sessions, the Dow Jones Industrial Average could well be expected to take a bit of a hit at some point, that point coming on Tuesday, though the hit was not substantial, as the Dow shed just 33 points.

Putting the past ten sessions in perspective, the Dow's winning streak began at just above 21,500, and, before retreating into the close, topped out at nearly 22,200, overall, a gain of almost 700 points, or 3.25%. Annualizing the results, if the Dow were to move in the same direction for a full year, the gain would be more than 33,000 points, resulting in a gain of more than 150%.

With those kinds of numbers nobody in their right mind with more than $40,000 of investible income would bother to work.

These mental gymnastics are brought to you by the Federal Reserve Bank, the Bank of Japan, the European Central Bank and the Swiss National Bank. All of these central banks other than the US Fed, have been and will continue to be openly investing in US equities and those in other developed nations.

There's a certain folly in expecting the central banks to continue supplying extraordinary gains in stocks, so distorted already are the equity - and many other - markets.

At the Close, 8/8/17:
Dow: 22,085.34, -33.08 (-0.15%)
NASDAQ: 6,370.46, -13.31 (-0.21%)
S&P 500: 2,474.92, -5.99 (-0.24%)
NYSE Composite: 11,949.98, -37.79 (-0.32%)

Tuesday, August 8, 2017

Another Day, Another Dow Record Close

Borrowing a line from "Seinfeld," serenity now, insanity later.

At the Close, 8/7/17:
Dow: 22,118.42, +25.61 (0.12%)
NASDAQ: 6,383.77, +32.21 (0.51%)
S&P 500: 2,480.91, +4.08 (0.16%)
NYSE Composite: 11,987.77, +2.89 (0.02%)

Monday, August 7, 2017

Dow Continues to Careen Higher as Other Indices Lag

Maybe the markets are broken by HFTs, computer algorithms, program trading, bid stuffing, and an assortment of hype, funny fiat money, low interest rates and the hunt for yield.

Maybe not, but, the week's look at the major indices indicates that only the Dow Jones Industrials posted solid gains (rising for the 9th straight session to another all-time high) while the other three major averages were essentially running in place, the NASDAQ actually posting a loss.

It's not unusual for one index to lead the market, but, since the 2008, stocks have made outsize gains and the darlings on the Dow have exceeded all expectations. Despite carrying some of the most obscenely-high P/E ratios in market history, traders continue to bang away at the McDonalds, Apples and Intels of the world, as though there is nothing other to buy.

These are the kinds of trading decisions which lead to apathy and eventual market convulsions. For now, however, there's nothing but the Dow Jones Industrial Average to prompt the cheerleading from everyone from the President of the United States on down.

Having a runaway stock market may be a sign of a strong economy, but, in this case, since it is so isolated, it should be viewed as a sign of imbalance.

At the Close, 8/4/17:
Dow: 22,092.81, +66.71 (0.30%)
NASDAQ 6,351.56, +11.22 (0.18%)
S&P 500 2,476.83, +4.67 (0.19%)
NYSE Composite: 11,984.89, +28.37 (0.24%)

For the Week:
Dow: +262.50 (1.20%)
NASDAQ: -23.11 (-0.36%)
S&P 500: +4.73 (0.19%)
NYSE Composite: +30.20 (0.25%)

Friday, August 4, 2017

Indices Split Again, Dow Only Gainer; NFP Shows 209,000 July Jobs

The rally fizzled badly on Thursday, but the market may get a boost from strong jobs data from the Bureau of Labor Statistics (BLS), which showed non-farm payrolls increasing by 209,000 in the month of July.

All the major index futures are showing plus signs prior to the opening bell on Wall Street. The official unemployment rate fell to 4.3%, matching the 16-year low set back in May.

With all this good news on the employment front, there seems to be nothing capable of holding back another rally on Wall Street to close out the week.

If all of this seems to be a trifle boring, it's because the Dow has now posted gains in each of the last eight sessions, rising from 21,500 to over 22,000 over that short span.

The other indices don't appear to share the enthusiasm for the Dow. The NASDAQ in particular has been down five of the last six sessions.

Perhaps this is just money moving from speculative tech stocks into solid dividend-paying stocks on the Dow, although Apple (AAPL), Microsoft (MSFT) and Intel (INTC) are all components of the 30 Dow Jones Industrials.

At the Close, 8/3/17:
Dow: 22,026.10, +9.86 (0.04%)
NASDAQ: 6,340.34, -22.30 (-0.35%)
S&P 500: 2,472.16, -5.41 (-0.22%)
NYSE Composite: 11,956.52, -22.85 (-0.19%)

Thursday, August 3, 2017

Dow Cracks 22,000

Putting the recent rise of the Dow Jones Industrial Average into perspective, on March 9, 2009, the index closed at 6,547.05, generally considered the bottom of the Great Financial Crisis (GFC). That's a gain of 236%, or, an average of nearly 30% per year in just over eight years. At that rate, compounded, $100,000 would have turned into over $800,000.

That's in an economy which hasn't had growth of more than 2.6% in any year since 2008.

That is not just absurd on the face, it's nearly impossible... unless the markets had help. Thank the Fed.

At the Close, 8/2/17:
Dow: 22,016.24, +52.32 (0.24%)
NASDAQ: 6,362.65, -0.29 (0.00%)
S&P 500: 2,477.57, +1.22 (0.05%)
NYSE Composite: 11,979.37, -20.65 (-0.17%)

Wednesday, August 2, 2017

Dow Set To Rise Over 22,000; ADP Report Shows 178,000 July Jobs

For a change, all of the major indices moved in the same direction on the day. While the Dow set a new closing all-time high, it fell short of the 22,000 milestone, though the NYSE Composite squeaked by the 12,000 mark by a mere 0.02 points.

With earnings news continuing to come out in fairly rosy fashion, the latest from Apple (AAPL), reporting better-than-expected iPhone sales, revenue and earnings per share.

As August rolls along, there appear to be few impediments to further gains in stocks. Earnings reports will begin to slow to a trickle, but there is no FOMC meeting this month, and congress is likely to take at least two weeks off after wasting the first two weeks of the month posturing and posing over health care and/or tax reform.

It's unlikely that congress will accomplish anything of import, as their record of accomplishments since Donald Trump became president is shallow and thin.

Of some significance is Friday's release of July non-farm payroll numbers. Wednesday morning, ADP released their proprietary payroll data for the month, showing 178,000 new private sector jobs created in July. Expectations were for 185,000, after June disappointed with just 158,000 jobs created.

The Bureau of Labor Statistics (BLS) publishes its data on the first Friday of the month, at 8:30 am ET.

Whether the jobs data is good or bad may be immaterial, as the market has a tendency to take either without much pause. Just about everybody knows the economy is stuck in low gear, with the Fed and other central banks' backing and active in the markets.

22,000 on the Dow is a no-brainer. Unless war is launched against North Korea or some other great geo-political development occurs, nothing significant is likely to happen until congress reconvenes in September and attempts to craft a budget and hurdle the debt ceiling.

If there's ever been a time to break out the "all clear" foghorn, this could be it.

Still, it's advisable to keep close stops on positions because surprises routinely occur when complacency is high.

At the Close, 8/1/17:
Dow: 21,963.92, +72.80 (0.33%)
NASDAQ: 6,362.94, +14.81 (0.23%)
S&P 500: 2,476.35, +6.05 (0.24%)
NYSE Composite: 12,000.02, +32.35 (0.27%)

Tuesday, August 1, 2017

Preparing for the Moonshot... Rammstein's Amerika

Stocks sent the last day of July and the first day of the week in typical manipulated fashion, with the indices split, the Dow and Composite on the upside and the NASDAQ and S&P suffering small losses.

As August opens for trading on Tuesday, what's expected is nothing less than a fireworks show, a moonshot, with futures pointing to an explosive opening. Once the insiders have their gains off the open, it's open season for stock speculation. Without a care in the world concerning geo-political events or massive, unfunded liabilities and fiat money debt, Wall Street is sure to ramp the Dow over the 22,000 mark on Tuesday and the NYSE Composite over 12,000.

Happy, happy, joy, joy.

At the Close, 7/31/17:
Dow: 21,891.12, +60.81 (0.28%)
NASDAQ: 6,348.12, -26.55 (-0.42%)
S&P 500: 2,470.30, -1.80 (-0.07%)
NYSE Composite: 11,967.67, +12.98 (0.11%)

Here's Rammstein: