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:

Saturday, July 29, 2017

More of the Same: Dow up, S&P, Comp., NASDAQ Down

The week came to an end with the usual split markets, a recurring motif of the current malaise in high finance.

Glancing at the figures below, we see that the Dow reached another new all-time closing high, while the weekly figures show the Dow putting on a good show with the other major indices pretty close to flat-lining.

In that this is not readily apparent as some kind of bias in the stock selection process, it is worth noting that market breadth has been breathtakingly narrow, with only a handful of NASDAQ stocks (particularly, the FAANGs) accountable for the bulk of recent advances.

Throwing the high tech stocks out of the mix would yield some rather mundane results in the NAZ, but the Dow, on the other hand, gets higher marks for its eclectic mix of dividend payers, stocks in favor throughout the low-interest rate environment of the past 17 years. It's no wonder that the Dow has exceeded all expectations when it comes to valuation, especially now that the "new normal" consists of stock buybacks and higher P/E ratios than in the latter decades of the 20th century.

Cold water should not be thrown upon the success of stock pickers and other erstwhile enthusiasts of paper promises and financial propaganda. Equity shares and fiat money are the currency of choice. Better to go with the flow than try to staunch the rising tide.

At the Close: 7/28/17:
Dow: 21,830.31, +33.76 (0.15%)
NASDAQ: 6,374.68, -7.51 (-0.12%)
S&P 500: 2,472.10, -3.32 (-0.13%)
NYSE Composite: 11,954.69, -8.54 (-0.07%)

For the Week:
Dow: +250.24 (1.61%)
NASDAQ: -13.08 (-0.20)
S&P 500: -0.44 (0.02%)
NYSE Composite: +30.09 (0.25%)

Thursday, July 27, 2017

Trouble In Wonderland; Amazon Drops On Disappointing 2Q Earnings

Nothing other than the usual dippity-doodle for these schizophrenic markets run almost entirely by computer algorithms as July draws to a close.

Apparently, all the new highs were just too much to handle, except in the case of the Dow, which is nearing orbital velocity, but all the other majors pulled back around midday.

The reasons for the collapse (the NASDAQ lost 130 points in roughly an hour and-a-half) were unclear, though the growing chorus of Wall Street analysts using words like bubble, overvalued, and crash may have something to do with it.

Also on the radar is tomorrow's first estimate (guess) of second quarter '17 GDP. The first quarter was nothing to scream about, at 1.6%, but there are plenty of prognosticators calling for upwards of 2.6% for the second quarter. Others remain skeptical, but the news will be released soon enough, prior to the opening bell on Friday.

After the close, Amazon released second quarter results, which were highly anticipated, but turned out to be a dud for investors.

Amazon (AMZN) reported Q2 net income of $197 million, or $0.40 per diluted share, down 77% from $857 million, or $1.78 in Q2 2016. This was on revenue of $37.955 billion, up 25% from the $30.4 billion a year ago, and above both the company's own expectations of $35.25-$37.75BN and consensus estimates of $37.18 billion. The company also reported operating margin of 1.7%, down from 2.8% last quarter and well below expectations.

Amazon was down two percent in after hours trading.

So why is everybody so skittish, or is it just the algos?

At the Close, 7/27/17:
Dow: 21,796.55, +85.54 (0.39%)
NASDAQ: 6,382.19, -40.56 (-0.63%)
S&P 500: 2,475.42, -2.41 (-0.10%)
NYSE Composite: 11,963.23, -1.68 (-0.01%)

Wednesday, July 26, 2017

Stocks Unimpressed With FOMC Decision; Dollar Dashed

The Fomc wrapped up a relatively uneventful meeting Wednesday, keeping rates unchanged and saying little to nothing about winding down the Fed's bloated balance sheet.

After two hikes already this year, rates will almost surely remain on hold until December and an announcement that the Federal Reserve is ready to shed assets may come at the September meeting, according to knowledgeable experts on the subject. Having been sufficiently prepped and prodded, the Fed can feel some confidence that a beginning of an asset unloading program won't upset the status quo too awfully much.

The one kicker is that the wildly out-of-control federal government faces a potentially debilitating debt ceiling debate and a testy budget process in September, but that will come only after congress has taken a month's vacation, pending Obamacare replace and/or repeal legislation currently under consideration in the Senate.

Nothing the Fed does can accurately predict what the paid lackeys... er, prostitutes, er, politicians will do when the rubber meets the road in terms of the soon-to-be $20 trillion national debt. Chances are good that they'll punt, laying one deep and long, giving themselves room to survive the midterm elections in 2018. One person who does not have to suffer any kind of electoral fate in that year is President Trump, who is almost certain to have boisterous opinions on the matter of the debt ceiling and federal government budget.

There are wild card outcomes which the Fed is unable to predict no matter how deep or thorough their modeling, which raises the possibility for abrupt changes in policy, and the jokers dealt by the government are not the only potential surprises. Geopolitics - specifically, North Korea, Ukraine, Iran, or Syria - may play a role in future policies, as could any number of scenarios, from ECB jump-starting their own tapering, Japan failing to follow through with continued buying of equities, or, perhaps a war between China and India stemming from border disputes in and near the Himalaya mountains. Go figure.

As far as stock movements and reactions to the FOMC nothing-burger issued today, the markets basically were held in suspended animation afterwards with a slight bias to the downside.

The outsize gains on the DJIA were largely the result of Boeing's (BA) monstrous 9.2% spike today (biggest day for BA since 10/28/08), responsible for 132 Dow points. So, essentially, the remainder of the Dow was lower, only lifted higher by the flighty airline manufacturer. Only 13 Dow components were higher, 17 lower, led down by Nike and McDonald's, the latter having made new all-time highs just yesterday, which is alarming, since what the company passes off for food has recently reached new lows. Must be their outstanding customer service or something else casual consumers just don't see or understand. Share of MCD are massively overpriced, with earnings per share of 6.25 and a stock price of roughly 156 translating to a P/E of 25. Shareholders and executives (neither of which actually eat at any of their own restaurants) are "loving' it."

The dollar got whiplashed lower, sending (alarm bells) gold and silver higher. Also on the run is the price of crude oil, as the latest reports showed a massive draw, though gasoline inventories were built. Once more, the people actually using the stuff - drivers - just don't get it, apparently.

At the Close, 7/26/17:
Dow: 21,711.01, +97.58 (0.45%)
NASDAQ: 6,422.75, +10.57 (0.16%)
S&P 500 2,477.83: 0.70 (0.03%)
NYSE Composite: 11,964.92, -0.80 (-0.01%)

Stocks Rock No Matter The News As Long As Central Banks Spend

Proof that you can't fight people who print their own money...

Courtesy of Bloomberg and various central banks, the correlation between central banks sucking up trillions in assets and gains in global stocks is remarkable.

So, anybody thinking they're a stock-picking genius over the past eight years really needs therapy for an over bloated ego, just as the bloat in central bank balance sheets gently guides shares of all companies higher.

The frightening parts of this scenario - shown without doubt in the chart - are what happens when these central banks begin unloading assets, and what will be the timing and nature of this asset disposal sale? Will they all sell at once, or will be it be of the Chinese water torture variety, with a slow, drip, drip, drip as equities reach for fair value, far below where they reside today.

What are the consequences of this massive liquidity injection, since it's clearly already established policy and responsible for massive gains over the past eight years.

The most obvious solution for people with plenty of paper wealth would be to convert it to real assets, in the form of real estate, machinery, gemstones, precious metals, art, collectibles, and, realistically, staples, like food and water.

If the wheels come off the global Ponzi, people will starve. Look no further than Venezuela for proof that economic implosion causes severe social repercussions.

Of course, the vast majority of people living on planet Earth will be unprepared, duped into trading worthless paper and empty promises for more worthless paper and even emptier promises. Peer into underfunded pension plans - like Detroit's public plans, for instance, or many corporate plans that went belly up - for proof of what exactly that looks like.

At the end of this grand experiment called "global fiat money" for lack of a better term, what will become of the global economy, the ECB, the World Bank, the IMF, the Federal Reserve, the most massive control frauds ever foisted upon an unsuspecting public? They, and their governors, directors, and executives will try to "save us" from the financial blight, when it is they themselves causing it.

And people will continue to be duped into lives of slavish devotion to false gods.

At The Close, 7/25/17:
Dow: 21,613.43, +100.26 (0.47%)
NASDAQ: 6,412.17, +1.37 (0.02%)
S&P 500: 2,477.13, +7.22 (0.29%)
NYSE Composite: 11,965.72, +61.01 (0.51%)

Monday, July 24, 2017

For US Markets, It's Splits-ville Again

Another day, another session punctuated by divergent indices.

The NASDAQ goes up; the Dow goes down, or vice versa. The S&P 500 and NYSE Composite seem to go their own ways, more often than not, separate. All of this reeks of manipulation, selectivity, goal-seeking, and just about anything other than rational investing.

Upon examination, the stock market is nothing more than pieces of paper representing shares in company X or Y or Z, being traded for other pieces of paper known as yen, dollars, euros or pesos. It's the ultimate paper chase, based entirely on faith and foolery of grand design by the world's central bankers. It's a confidence game being played at the highest levels of finance, a dangerous precedent for the entire planet.

Unless the public detaches from the fraud, it will continue. The unique phenomenon at work in today's financial arenas is commonly known to psychiatrists as normalcy bias. It is the belief that everything seems to be working all right, so the urge to change is minimized, which is precisely the condition present in the debt-infested governments, businesses, and households everywhere.

The ultimate fear is that confidence is lost in the fiat system. After eight long years of propping up governments, businesses, and households with freshly-printed-or-minted cash, confidence is still durable, thanks to normalcy bias.

But, there are canaries in the coal mine, so to speak. These are burgeoning, non-repayable government debt, underfunded pensions (especially public union pensions), slack demand, disinflation, demographics, and the undeniable eventuality of recession, either in the US, Europe, or globally.

Fighting these trends with some degree of success has been the role of the central banks, but they are running out of viable options to keep global finance operating while also quelling local discontent, which is growing rapidly.

Money Daily does not pretend to know who is buying stocks and/or causing the variations in the major indices, but it is apparent that some entity other than brokerages are buying and it is well known that the Bank of Japan (BOJ), Swiss National Bank (SNB), and European Central Bank (ECB) have been and will continue to be outright buyers of equities.

When these entities become sellers, there will be no bottom to the markets.

Caveat Emptor.

At the Close, 7/24/17:
Dow: 21,513.17, -66.90 (-0.31%)
NASDAQ: 6,410.81, +23.05 (0.36%)
S&P 500: 2,469.91, -2.63 (-0.11%)
NYSE Composite: 11,904.71, -19.89 (-0.17%)

Saturday, July 22, 2017

Small Pullback Friday; Stocks Mixed For Week

It was a week to forget.

Nothing much occurred during the week besides the usual NASDAQ pumping, zig-zagging indices and Thursday and Friday's minor profit-taking sessions.

Equities remain elevated, though a little movement in precious metals has the markets a bit on notice that the fiat Ponzi is still in quite a fragile state.

Not that it matters, but gold and silver remain real money, while the Janet Yellens and Mario Draghis of the world continue to print and talk endlessly, their blathering covering up a multitude of malinvestment sins around the world.

All the major indices finished in the red on Friday, a somewhat unusual set-up going into next week, which will be highlighted by a do-nothing-but-talk-a-good-game FOMC meeting which concludes Wednesday.

After that? Off to the races (Saratoga opened this weekend), or back to sleep until Labor Day? With congress failing to come to grips with reality, their August vacation in the balance, the betting is that nothing good gets done in Washington and that will be just fine with Wall Street.

Onward and upward!

At the Close, 7/21/17:
Dow: 21,580.07, -31.71 (-0.15%)
NASDAQ: 6,387.75, -2.25 (-0.04%)
S&P 500: 2,472.54, -0.91 (-0.04%)
NYSE Composite: 11,924.60, -19.90 (-0.17%)

For the week:
Dow: -57.67 (-0.27%)
NASDAQ: +75.29 (1.19%)
S&P 500: +13.27 (0.54%)
NYSE Composite: +27.29 (0.23%)

Thursday, July 20, 2017

Ice From The Sun; Who Was Bob White?

Fearless Rick, writing in the first person...

This is the first post from my new digs, actually just a $700 camper I purchased recently and added to my assets at Camp Alpha (the poor man's Trump Tower, but better in many ways).

I ran an extension cord from the camper outlet to my awesome Champion generator (runs on gasoline, whoda thunk it), fired it all up and got the refrigerator working, tested most of the outlets and lights, hooked up my $6.95 second-hand-store-bought SoundDesign dual cassette tape, AM/FM radio, record player and put on some old vinyl of 1930s and 40s jazz. It was a wonderful experience.

These markets are just crazy. Another day, another split decision. It's becoming quite annoying, so I'm trying not to pay much attention to it, since, after all, it's all funny money, conjured by the magicians at the Federal Reserve out of thin air.

Not all of us are taken in by the con. No siree!

At the Close, 7/20/17:
Dow: 21,611.78, -28.97 (-0.13%)
NASDAQ: 6,390.00, +4.96 (0.08%)
S&P 500: 2,473.45, -0.38 (-0.02%)
NYSE Composite: 11,944.50, +3.16 (0.03%)

The Dow is down, the NASDAQ is up, the S&P finishes with a fractional decline. Does anybody even care?

What interests me at the moment is the potential to make ice using solar power. It is doable, but, can it be profitable. I'm about to find out. Right at this moment, the generator has been running for about three hours on about two gallons of gas. This is not cost efficient because I've made three trays of ice cubes, re-frozen some chicken drumsticks and am in the process of freezing a trio of one liter plastic bottles filled with water (they're working).

The gas cost was about $6.00, because I use the good stuff (91+), but the solar solution is probably more cost-efficient. After the cost of the panels, batteries, connectors and the fridge/freezer, the sun does the heavy lifting, so to speak. I'll have more on this in upcoming, fantastic Money Daily posts, since the financial markets are giving me headaches.

Photos, too... but, listen to this piece by Benny Goodman from 1937, called Bob White. Nice, but, I have questions. Who was Bob White and why was the King of Swing giving him such a hard time?


BTW: the lilting vocals by Martha Tilton were her first recorded with Benny Goodman and his Orchestra.


All-Time Highs on S&P, NASDAQ, Dow Industrials, NYSE Composite

Thanks to central banks, all the major averages made new closing highs on Wednesday.

This is not investing. This is centralized control.

Nothing about these markets should be believed, especially since the money represented is conjured out of thin air by central bankers. Thinking people should question this unusual feature of money and markets. Most of the world is asleep, lulled into a trance by the power of money.

It's difficult to comprehend that all of the money flows are complete fiction, but that is the truth, unfortunately.

At the Close, 7/19/17:
Dow: 21,640.75, +66.02 (0.31%)
NASDAQ: 6,385.04, +40.74 (0.64%)
S&P 500: 2,473.83, +13.22 (0.54%)
NYSE Composite: 11,941.34, +63.92 (0.54%)

Wednesday, July 19, 2017

Mixed Markets are Sending Clear Message

As seems to be the norm lately, the major indices finished in mixed fashion Tuesday, with the NASDAQ and S&P finishing with gains, while the Dow and NYSE Composite took losses.

This repeating pattern may be confusing to some investors, but the trend seems pretty clear: there will be winners and losers on given days, often on the same days, and, while the general economy may have weak and strong sectors, the general trend is higher.

Nothing could be more obvious after chasing stocks since March of '09 has resulted in one of the greatest bull markets of any era. For the most part, it's been easy pickings for fund managers, hedgers (most of whom don't hedge at all), and even individuals investing in the market. An especially accommodative Federal Reserve has seen to that. Even today, with the federal funds rate at 1.00-1.25% - the highest in nine years - by historical standards it's still incredibly low.

Recent talk by Janet Yellen and other Fed members is leading the market to believe that this regime of low interest rates still has room to run. The FOMC has upped the federal funds rate twice already, but appears to be slowing its approach. Many believe they will only raise rates once more this year, likely in December.

Climbing the worry wall with the Fed, most of the Wall Street crowd seems convinced that the central bank has the stock market's back, despite political rhetoric and decades of denial. The Fed is supposed to control monetary policy, but, since the GFC, they certainly don't appear shy about meddling elsewhere, having sloshed bond and stock markets alike with wave after wave of fresh fiat.

Since the money is nothing more than paper with promises, it's what they can and will do. Until further notice, the Fed is in control of all money, yours, ours, theirs, and those of foreigners, dead people, and people not yet born.

It's probably a good thing that there's so much normalcy bias that hardly anyone cares that everything is completely fake.

Like the saying says, "fake it 'til you make it."

At The Close, 7/18/17:
Dow: 21,574.73, -54.99 (-0.25%)
NASDAQ: 6,344.31, +29.87 (0.47%)
S&P 500: 2,460.61, +1.47 (0.06%)
NYSE Composite: 11,877.42, -13.09 (-0.11%)

Tuesday, July 18, 2017

Stocks Flat on Monday, BofA, Goldman Sachs Report Improved Earnings

Stocks finished flat in a very dull session, which is not surprising following the blockbuster that was last week. With scant economic news, traders are likely looking forward to the FOMC meeting next week (Tuesday and Wednesday), the last one before September.

Corporate earnings will be taking the spotlight over the next two weeks, as the majority of companies will be reporting second quarter results.

Prior to the open on Tuesday, a couple of major financial institutions reported, with excellent results.

Bank of America (BAC) posted $5.3 billion in net income, up 10% from a year ago. BofA’s earnings per share for the quarter increased 12% to 46 cents. Analysts expected the bank to earn 43 cents per share.

Goldman Sachs (GS) EPS: $3.95 vs. $3.39 expected by analysts polled by Thomson Reuters. Revenue $7.89 billion vs. $7.521 billion expected by Reuters.

Despite those solid figures, futures on the main indices are drifting lower prior to Tuesday's opening bell.

At the close, 7/17/17:
Dow: 21,629.72, -8.02 (-0.04%)
NASDAQ: 6,314.43, +1.97 (0.03%)
S&P 500: 2,459.14, -0.13 (-0.01%)
NYSE Composite: 11,890.51, -6.80 (-0.06%)

Saturday, July 15, 2017

All Janet Yellen, All The Time Sends Stocks Soaring

“Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance.”
-- Janet Yellen, in prepared remarks to House Financial Services Committee, Wednesday, July 12, 2017

Since that statement, released prior to the opening bell on Wednesday, stocks have taken flight to new highs. For instance, the Dow Jones Industrial Average closed Tuesday at 21,409.07, and closed Friday at 21,637.74. A couple hundred points isn't bad, but check out the NASDAQ:
NASDAQ close 7/11/17: 6,193.30
NASDAQ close 7/14/17: 6,312.47

119 points in three days is OK work if you can get it, and Wall Street perfectly got it, interpreting Yellen's statement that the Fed's controlled federal funds interest rate would not be rising very quickly this year, if at all. Good news! Buy!

The soft underbelly of that statement is that the US - and by extension, the global - economy is not growing, inflation is not roaring (June CPI was flat, as in 0.0%, and the Fed is desperate for inflation), wages are not rising and employment is still flagging. Additionally, the number of people out of the labor force is enormous, pension plans in states such as Illinois, Connecticut, California and elsewhere are imploding, putting additional pressure on the Fed, Wall Street and the PPT to keep asset prices rising. Otherwise, the entire financial system collapses.

Also, P/E ratios on the S&P 500 are hovering around 25%, which is about 40% higher than the norm. The market badly needs to correct, but, thanks to Yellen and her cohorts, central banks continue to purchase assets at exorbitant prices.

What could go wrong?

Have a great weekend.

At the Close, 7/14/17:
Dow: 21,637.74, +84.65 (0.39%)
NASDAQ: 6,312.47, +38.03 (0.61%)
S&P 500: 2,459.27, +11.44 (0.47%)
NYSE Composite: 11,897.31, +52.69 (0.44%)

For the week:
Dow: +223.40 (1.04%)
NASDAQ: +159.39 (1.59%)
S&P 500: +34.09 (1.41%)
NYSE Composite: +144.33 (1.23%)

Friday, July 14, 2017

Wall Street To Yellen: We Love You, Janet

Wall Street's reaction to Fed Chairwoman Janet Yellen's appearance on Capitol Hill the past two days has been nothing short of a high school romance.

It's been impulsive, short and intense.

And now, with hope, it's over. Perhaps we'll all be spared the details of the jilting. Janet will probably say something about stocks being overvalued and the traders will quietly sulk away, probably over to the bond pits, where they know true love - albeit at low yields - can be found.

The idea that frumpy Janet Yellen can make the masters of industry and, say some, the universe, trip and fall over each other on their ways to buying stocks is as ludicrous as the entire idiocy of centralized financial planning by the Federal Reserve.

Since global finance and economics is vast and unpredictable, the power of the Fed to control it is diminished. Certainly, the Federal Reserve has tools at its disposal to direct policy actions which often translate into tangible results in the real world, but, more often than not, they cannot direct the actions of billions of individuals, millions of businesses, and trillions in currencies.

Those engaged in the business known as the financial industry would like to believe - and to pass that belief along to clients - that the Fed does have everything under control. The facts speak differently. In the fall of 2008, when Lehman Brothers collapsed, the Fed had lost control and they scrambled, along with their central banking brethren from other countries, to restore some sense of balance and sanity.

But, they were too late. Stocks crashed. Banks needed massive injections of liquidity (money) from taxpayers in the form of a $700 billion monstrosity known in the day as TARP. Strange as it may seem, TARP actually stood for Troubled Asset Relief Program. The troubled assets were mortgages. The relief was in the form of taxpayer money. Essentially, the crooked banking cabal tacked another $700 billion onto the trillions of debt already owed by the federal government, i.e., the citizens and businesses of the United States of America.

So, there's no wonder that Wall Street loves the Fed and the fair-haired Janet Yellen. They're assured that whatever numbskull trades or risky maneuvers the banks and financial institutions make will be promptly papered over by Janet and her gang of official-looking thieves.

The Federal Reserve has robbed Americans and the rest of the world since 1913. It has endured two World Wars, a massive global depression, countless smaller recessions, booms, busts, inflations, deflations, devaluations, the start and end of Bretton Woods, confiscation of gold, manipulation of silver and mostly, inflation that has devalued the US Dollar, the currency of the United States of America, by 97% over the past 104 years.

When the next financial crisis arrives - and it will, eventually - the Fed will be standing firm, looking cute and sweet, with a plan to revive the spirit and stability of the "system." When that time comes, Wall Street must be restrained by the public. They must be told, like the high school boys they imitate, "she's no good for you."

Investors and fund managers and pensioners must be told, "you're in an abusive relationship. You need to get out."

It's time to end the love affair with the Fed.

At the Close, 7/13/17:
Dow: 21,553.09, +20.95 (0.10%)
NASDAQ: 6,274.44, +13.27 (0.21%)
S&P 500: 2,447.83, +4.58 (0.19%)
NYSE Composite: 11,844.62, +18.73 (0.16%)

Thursday, July 13, 2017

What Janet Yellen Said To Congress...

Janet Yellen, Fed Chairwoman, blathered on about the economy, monetary and fiscal policy on Wednesday before the House Financial Services Committee, at one point saying that chances for the economy to improve or decline were roughly equal.

Those words set off the market like a bottle rocket, essentially painting the Fed as "dovish," meaning that both interest rate hikes and the winding down of its enormous balance sheet were subject to adjustments.

In other words, easy money as far as the eyes can see, and Wall Street took up the baton and ran with it, sending the Dow to new all-time highs and the NASDAQ up sharply.

Janet Yellen obviously doesn't know squat about the economy. Anybody capable of fogging a mirror could have made a statement such as hers, as in, "oh, sure, the economy might improve, or maybe not."

It's amazing that people put so much faith (and money matters) into the hands of fools such as Yellen and her fellow central bankers, all of whom have as their primary interest, themselves, not you, not the consumer, not the economy of any nation.

On Thursday, Yellen testifies before the Senate Banking Committee.


At the Close, 7/12/17:
Dow: 21,532.14, +123.07 (0.57%)
NASDAQ: 6,261.17, +67.87 (1.10%)
S&P 500: 2,443.25, +17.72 (0.73%)
NYSE Composite: 11,825.90, +81.13 (0.69%)

Tuesday, July 11, 2017

Bull or Bear? By October, It Probably Won't Matter

Another day, another boring stock market supposedly awaiting Janet Yellen's annual testimony before the the House Financial Services Committee on Wednesday and the Senate Finance Committee, Thursday.


Janet Yellen's words are worthless. She mouths big words like macro-prudential, as though she actually practices it while heads spin and eyes glaze over trying to comprehend its meaning.

In reality, the term refers to policy actions designed to mitigate systemic risk. It's rubbish. It's Fed-speak. While it sounds good on the surface, everything is at risk, including the entire global financial system that nearly imploded in 2008. If enough companies, or, heaven forbid, banks, default on their obligations, the risk is interconnected, and probably more so than in 2008-09.

There are no safeguards. There are only bigger bets, known as derivatives, credit default swaps (CDS), leverage, and arbitrage.

The system is as fragile now as it was just prior to the Great Financial Crisis (GFC) of 2008-09, and probably, it is even more fragile, simply because the Fed does not have the tools to fight back against deflation and recession, the dual threats to capitalism.

So, Janet Yellen will testify to congress on Wednesday and nothing at all will change. Meanwhile, markets are stuck in neutral, which means, in these absurd times, a tilt toward slightly positive.

Another big YAWN.

The big moves will be in September, when the laid-back congress will be forced to raise the debt ceiling and come up with another annual budget. It's likely to be a wild time, even for this do-nothing congress. President Trump will be holding both Republican and Democrat feet to various fires.

If not September, then October should be another possible meltdown time frame. It always has been, and, with the markets and economy showing severe signs of fraud and stress, a market "event" is long, long overdue.

At the Close, 7/11/17:
Dow: 21,409.07, +0.55 (0.00%)
NASDAQ: 6,193.30, +16.91 (0.27%)
S&P 500: 2,425.53, -1.90 (-0.08%)
NYSE Composite: 11,746.72, -5.07 (-0.04%)

Something To Do While Awaiting Speaking By Janet Yellen

Stocks were briefly lower, then higher, but finished split, almost even, for the day.

This is part of the effect of having globalists like Janet Yellen and the Federal Reserve controlling global economics. ON Monday, all of Wall Street is apparently waiting for the Fed Chairwoman's speech before congress on Wednesday and Thursday, or the release of the Fed's Beige Book of economic conditions on Wednesday.

Or the market is waiting for something else. Earnings, CPI, Industrial Production. It's always something, and it seems that the market is always waiting.

Over the past eight years this strategy has worked out pretty well for stock investors. Waiting has resulted in massive market gains over time, even though data has been less-than-splendid and often outrightly bad. That's where the "bad news is good news" meme came about: even though economic conditions were seen as negative, it was good for stocks because interest rates would remain low (making sure that stocks were the only game in town) and the free money from the Fed fountainhead would continue to flow.

Seriously, nobody is actually waiting for anything, no matter how much the TV and newspaper financial pundits like to propound on the topic. Investment decisions aren't exactly made based on data, at least not since the GFC. Stocks, and to a large extent, central banks and the Federal Reserve, have become disconnected from reality.

By almost all generally-accepted measures, stocks are overvalued. However, they remain the principal product of the Wall Street hucksters in terms of return. Bonds are returning little, and, if there is any appreciable inflation, they will return nothing in nominal value.

Stocks go up. They also go down. Some do better than others, but, to believe that the entire market is making a conscious choice to wait until Janet Yellen drools and stutters her way through her annual congressional hearings, is a monumental fraud in thinking.

Those who are buying are buying. The sellers are selling. Mostly, it's computers doing all the work and there's no good reason, presently, to make any meaningful changes in any meaningful portfolio.

At least that's what it looks like, but we'll wait and see.

At the Close, 7/10/17:
Dow: 21,408.52, -5.82 (-0.03%)
NASDAQ: 6,176.39, +23.31 (0.38%)
S&P 500 2,427.43, +2.25 (0.09%)
NYSE Composite: 11,751.79, -1.19 (-0.01%)

Saturday, July 8, 2017

Stocks Finish Week With Gains, Remain Range-Bound

If one were to view Friday's market action in a vacuum, without context, one would think everything is just peachy in Wall Street wonderland. The NFP jobs report for June was solid and the major indices put up strong gains to close out the week.

But, nothing exists in isolation.

Taking a little bit broader view, over the shortened, four-day week, all that Friday's gains managed to do was life all the major indices from red to green for the week, with the exception of the NYSE Composite, which finished just nine points underwater, but, not to worry, nobody pays attention to the "comp" anymore, even though it is the most diverse, broadest of the majors.

Fraud, manipulation, massive central bank intervention?

Yes, sure, of course. Since central banks have been the primary drivers of the eight year recovery since the GFC, why would anybody believe they have stopped their high-stakes involvement. Lowering interest rates - even to negative - didn't work. Massive injections of funny fiat money didn't work. Talking about how the labor market and the general economy was doing so great (it isn't) didn't work, so, why not resort to outright purchasing of equities in a vain attempt to create a "wealth effect?"

Of course, the Fed will never admit to such activity, but Switzerland (SNB), Japan (BOJ), and the European Central Bank (ECB) have all openly been buying stocks for the past few years, at least, and probably longer.

Therefore, the entire week of trading was a nonsensical, uneventful kabuki play, designed to give the impression that all is well and there's no reason to sell... anything... even though many did. As they say in the current newsspeak nomenclature, a major league nothing-burger.

Balderdash. You're being culled, cuckolded, marinated, stuffed, and baked by people who control your baseless currency when you could be using that same valueless "money" to purchase goods, food, machinery of trade, gold, silver (currently on sale, as it has been for four years running), land, land and more land, some with actual buildings erected.

But, no. Americans (not to the exclusion of Canadiens, Japanese, and Euroland dwellers) instead purchase garbage college educations for garbage jobs, cell phones, 70-inch TVs, overpriced cars (mainly on leases), and run up enormous amounts of credit card and other debt for baseball tickets and extraordinary "experiences."

With the US government $19.965 trillion in debt, something along the lines of 10,000 seniors retiring every day, underfunded pensions galore, and monstrous debt and unfunded liabilities under-and-overhanging nearly every developed nation...

Good luck with that.

At the Close, 7/7/17:
Dow: 21,414.34, +94.30 (0.44%)
NASDAQ: 6,153.08, +63.61 (1.04%)
S&P 500: 2,425.18, +15.43 (0.64%)
NYSE Composite: 11,752.98, +50.55 (0.43%)

For the week:
Dow: +64.71 (0.30%)
NASDAQ: +12.66 (0.21%)
S&P 500: +1.77 (0.07%)
NYSE Composite: -8.72 (-0.07)

Thursday, July 6, 2017

More NASDAQ Losses Cause For Concern

There are those in the financial hinterlands who believe that the latest bout of indigestion in equities is simply another round of petty games played by central bank elitists who continue to exert extreme control, especially at times when it seems a correction may be at hand.

There are others who believe that the entire eight years of QE-and-ZIRP-inspired gains have been the exclusive province of the central banks and that they are preparing to pull the proverbial rug out from under markets via interest rate hikes and a general cessation of currency creation.

Both parties may be right, insofar as the central banks have been the epicenter of all financial activity, surreptitiously aiding the money center banks and primary dealers closest to the Fed's largesse.

Thus, the declines on the NASDAQ - not just today, but for the past three weeks - are sending signals to smaller market participants and there has been the beginning of a realignment of asset allocations, from tech to cash, from consumer staples and cyclicals to dividend-payers and utilities.

The issue at present, as was the case in 2008-09 and most other major market corrections or reversals from bull to bear, is that nowhere is there a safe place to hide, though the usual standouts are cash, precious metals and treasuries. On the latter, the 10-year note continued its ascent, finishing the day at 2.37, a multi-month high. That's a notable move, signifying that money may be indeed becoming tighter, even though that is a relative term, heading north from a real rate approaching zero.

At this juncture, it's still too early to raise the alarm bells, though the heavily-leveraged may be getting margin calls in short order. The NAZ is closing in on a five percent decline from the June 9 high of 6341.70, currently at a level of -3.98%. The even one percent loss on the NASDAQ today was followed in close order by the other major indices.

Caution is advised. Do NOT buy this dip as there are far too many worrying factors in the mix.

At the Close, 7/6/17:
Dow: 21,320.04, -158.13 (-0.74%)
NASDAQ: 6,089.46, -61.39 (-1.00%)
S&P 500: 2,409.75, -22.79 (-0.94%)
NYSE Composite: 11,702.42, -107.07 (-0.91%)

Stocks Split, NASDAQ Gains, Dow Flat

There is a definite surreal feel to stocks these early days of summer. While the NASDAQ has generally been the whipping boy through the latter stages of June and into July, the reverse was true on Wednesday as traders returned from a truncated long weekend.

The NASDAQ tacked on 40 points, but the other broad measure, the NYSE Composite, fell 26. The Dow was off by one point, while the S&P added three-and-a-half.

While this appears to be sector rotation and stock picking, the unruly movements may portend something more sinister in the near future. It could be nothing, but split decisions on the major indices usually indicate market turmoil, not the calm, placid environment with low VIX which has been a feature of the long bull run since March of 2009.

The VIX has been elevated of late and spiked recently, but hovering around the 11-12 region is nothing alarming. Should the VIX begin to rise day-over-day, worries may emerge and turn reluctant buyers into outright sellers.

Whatever the financial pundits insist about the strength of the economy, there are troubles, as indicated by the FOMC minutes from June which were released on Wednesday. The members were split over inflation and increases in the federal funds rate, a strong indication that the Fed - which has been relied upon excessively to control the economy - may not have the tools with which to battle a recessionary environment, which many believe is overdue.

In any case, this shortened week may not be enough to develop any kind of trend, other than extending the weird trading patterns which are becoming more and more confounding to fundamental analysts.

At the Close, 7/5/17:
Dow: 21,478.17, -1.10 (-0.01%)
NASDAQ: 6,150.86, +40.80 (0.67%)
S&P 500: 2,432.54, +3.53 (0.15%)
NYSE Composite: 11,809.49, -26.23 (-0.22%)

Wednesday, July 5, 2017

NASDAQ Continues Short-Term Slide; Bond Yields Soar

Happy Independence Day!

While plenty of Americans were celebrating the founding of their nation, drinking cold ones and grilling hot ones, the elitist scum that wants to control everybody's lives couldn't take the hint - and a four-day weekend - returning to the trading desks Monday for another round of Sell That Tech Stock.

The major indices were all rising, with the notable exception of the NASDAQ, upon which the most speculative stocks are traded, closing down just shy of 1/2 percent on the day.

Closing below its 50-day moving average for the third straight session, the NASDAQ is exhibiting a unitary weakness, unshared by its cohorts. The last time the NASDAQ made such a breach was at the very end of December, 2016. Six months have passed since the end-of-year scare, so it is notable, but the index is only down 3.66% since the 6341.70 top on June 9.

The selling seems to not be abating any time soon. The NASDAQ has closed lower 11 of the last 17 sessions, inclusive of the June 9 FAANG debacle.

Obviously, a multi-day decline of less than four percent is alarming to almost nobody, though closer analysis does give one reason to pause and possibly for many to liquidate out of high-multiple, overpriced equities into the safety of dividend-paying plays such as those readily found on the Dow or within the higher echelons of the S&P.

Divergence of the NASDAQ from its close peers bears notice, as has been mentioned here at Money Daily on a number of occasions over the past few weeks. Since it is easily the most bloated of the indices, it is most vulnerable to sprees of selling, or, as may be the case, cyclical rotation.

With that in mind, it may be amusing to some that the Dow posted an all-time intra-day high on Monday, but closed below the record closing high, though that mark may be surpassed on Wednesday, with traders flush with renewed animal spirits.

Otherwise, the eight-year-old bull market seems to be running on fumes, badly in need of something other than fresh fiat from central banks, which has been the primary fuel for the record rise over the long span.

Also worthy of notice is the continued sell-off in the 10-year note, sending yields as high as 2.35. The condition has prevailed since just after the latest interest rate hike on June 14, putting the federal funds rate at a multi-year high of 1.00-1.25%. It's also a marvel that the FOMC of the Fed has changed the game somewhat, targeting the rate in a range rather than offering a solid number. It gives the fakery some wiggle room, though bond brokers seem to be reacting as the Fed would wish, even though rising rates in a declining economy - of which the signs of are lurking everywhere - is a classic misalignment.

Hang on, diversify, or get off. Those are the current choices, though for specs, the last of those choices seems to currently be the most favored plan.

At the Close, 7/3/17:
Dow: 21,479.27, +129.64 (0.61%)
NASDAQ: 6,110.06, -30.36 (-0.49%)
S&P 500: 2,429.01, +5.60 (0.23%)
NYSE Composite: 11,835.72, +74.02 (0.63%)

Saturday, July 1, 2017

Maine, Connecticut, Illinois, New Jersey Run Out of Time and Money

Stocks managed to end the week, and the month, without a complete and total collapse, with the Dow actually posting a substantial gain.

However, a Friday turned to Saturday and June to July, at least four states have failed to pass budgets, facing enormous deficits, the worst of the bunch being Illinois, currently with $15 billion in overdue payments backlogged.

In New Jersey and Maine, state governments went into shutdown mode, while Connecticut governor Dannel Malloy took over control of the state's spending after the legislature failed to pass a budget on time.p

In New Jersey, state parks and other public areas were closed on Saturday, sending a painful message to citizens of government overreach on a four-day Independence Day weekend supposedly celebrating freedom.

Illinois was dealt another crushing blow when US District Court Judge Joan Lefkow ruled that the state must begin making larger payments to Medicare providers that are owed billions of dollars.

These developments have been years in the making, from bloated statehouses, county, and city offices which overpay employees, offer golden medical and pension packages that the citizenry pays for in the form of higher taxes, and promotes schools that provide delicious salaries benefits for teachers while providing substandard education to forced-enrolled students.

Cops and firefighters collecting $100,000+ pensions are not unusual in any of these states, and the pensions and medical benefits of government employees overall have caused fiscal crises that could have - and should have - been handled years ago. None of this comes as a surprise, but the outcomes will be different from state to state. Some may plead to the federal government for a bailout of sorts, with the implied proviso that they will give up some of their sovereignty in the process.

Others may choose to raise taxes, implement austerity measures, but eventually, all of them will have to default on over-generous pension promises made to prior government employees. Many will also have to cut pay to current employees, which will prompt reactions from the public service unions, which should be outlawed under federal law, and eventually, if there is any sanity remaining in government at all, will be.

Enjoy what there is of your Independence Day weekend, but bear in mind, the United States of America has reached a turning point, a breaking point. States are reeling from decades of uncontrolled spending and liberal policies and the taxpayers are fleeing or simply giving up.

The policies of overspending which began in Washington, DC, and has trickled down to the states have bled the nation dry and hard choices are already at hand. Whether or not the politicians can muster the courage to make the needed changes - a dubious prospect at best - the American people must respond with vigor.

At the Close, 6/30/17:
Dow: 21,349.63, +62.60 (0.29%)
NASDAQ: 6,140.42, -3.93 (-0.06%)
S&P 500: 2,423.41, +3.71 (0.15%)
NYSE Composite: 11,761.70, +21.72 (0.18%)

Thursday, June 29, 2017

Which Way is Up? Stocks Battered Again; VIX, Bond Yields Exploding

Volatility is back, to the chagrin of equity investors who have enjoyed the easiest ride to Easy Street possibly in the history of the US stock market.

The VIX, a broad measure of market volatility, spiked today as high as 15.16, a huge move, considering the close on Wednesday was 10.03. That's better than a 50% move to the top, though the slaughter was interrupted and canceled midday, when it appeared the world was ending. No doubt, the PPT another central bank cohorts rushed to the aid of everybody in quelling the panic, sending the VIX back to 11.44 at the end of the session.

The Vix halting helped the major indices to some degree, though it could not stem the selling. The Dow melted down as low as 21,203, a full 250 points from the close on Wednesday. The NASDAQ was again hit full force, bottoming out at 6090, before receiving somewhat to close with a mere 90-point loss.

With the Federal Reserve's loose policy unchecked for eight years running, stock picking has been easier than throwing darts at a barn door. Despite the easy money, most hedge fund and money managers have failed to keep pace with simple indices, a shameful state of affairs for the people who are supposed to know what they're doing when it comes to investing. Now, as everything from the presidency to health care to the media and the future of the global economy is being questioned, the bifurcated reasoning of ultra-low interest rates and gambling recklessly in equities is beginning to lose some favor.

All of this came as the government reported, prior to the opening bell, first quarter GDP at a surprising 1.4% growth rate. This was the third estimate, after the first - back in April - came in at 0.7, and the second, in May, was better, at 1.2, were still below an acceptable range. Apparently, nobody is particularly interested in an economy that is growing at less than two percent, and maybe even less interested in the government's goal-seeking statistical chicanery.

It seems, from all appearances, that the Federal Reserve is being taken seriously about rising rates, if one agrees that bonds tell the real story. The rally in the 10-year note has been shunted, with yields spiking the past few days, opening at nearly 2.30%. The note closed at 2.267, a gain of better than two percent, a large move in treasuries.

Tech stocks were the usual suspects, as the FAANGs took the heat. Facebook, Apple, Amazon, Netflix, and Google all suffered losses on heavy volume.

So, is this the beginning of the end of the bull market?

Maybe. Maybe not. Nobody really would know, though there are those of the opinion that the market is vastly overextended and the core economy is under-performing and facing severe deflationary pressure.

What to watch now are the movie averages. The Dow is still gleefully above its 50-day moving average, but the NASDAQ closed precisely on its 50-day, as is the S&P. Further weakness could send sell signals and a plummet through the 50-day toward the 200-day.

Also to keep in mind is the rough guideline for correction territory, which is casually assumed to be a 10% decline.

The NASDAQ topped out at 6341.70, nearly three weeks ago. A quick look at a NASDAQ chart reveals the collapse on Friday, June 9, exactly three weeks ago as of tomorrow, as if somebody rang a bell, denoting the tippy-top of the market. A level of 5707 would have to be met for the NAZ to fall 10% and it is the most vulnerable index, having had the best run-up over the past three months.

Not that it would be a huge move, though significant in percentage terms, but it would erase gains all the way back to February 9, so just five months of lost appreciation.

Friday closes out not only the week, but the month and the quarter, so it should be instructive from a technical standpoint, if that actually matters any more.

Bull markets do not last forever, no matter how low interest rates are nor how easy money is to lend.

At the Close, 6/29/17:
Dow: 21,287.03, -167.58 (-0.78%)
NASDAQ Composite: 6,144.35, -90.06 (-1.44%)
S&P 500: 2,419.70, -20.99 (-0.86%)
NYSE Composite: 11,739.98, -72.82 (-0.62%)

Wednesday, June 28, 2017

Central Banks Exert Control By Boosting Prices Day After Huge Declines

As mentioned in the opener of yesterday's post, forget about trying to apply fundamentals to this market. It is hopelessly rigged.

A commentator on a message board elsewhere explained the phenomenon of yesterday's jawboning-inspired selloff aptly. To wit: it's a charade by the central bankers to provide an easier entry point for which to make even more money boosting overpriced stocks.

Ergo, today's whipsaw. If the reader has half a brain, no further explanation is necessary.

There will be no crash until deemed useful for the central bankers in charge of the stock market.

Cynical? Yes. On the mark? Likely.

At the Close, 6/28/17:
Dow: 21,454.61, +143.95 (0.68%)
NASDAQ: 6,234.41, +87.79 (1.43%)
S&P 500 2,440.69, +21.31 (0.88%)
NYSE Composite: 11,812.80, +95.88 (0.82%)

Tuesday, June 27, 2017

Fake News, Fake Markets, Fake Money: Big Losses As Central Bankers Talk Tightening

Good luck to anyone trying to do fundamental analysis in this market.

Jawboning by Fed officials and today, especially, the grand liar of Europe, Mario Draghi, led the assault on spec stocks and the market in general by threatening to take away the low interest rate punchbowl.

Draghi's comments came at an economic conference in Portugal, ECB President Mario Draghi said that as economic prospects improve in Europe, the ECB could make adjustments to its policies of sub-zero interest rates coupled with huge bond purchases.

As if that wasn't enough, a trio of Federal Reserve loudmouths set their jaws to yapping about asset values, cueing a collapse in the equity and bond markets.

Fed Chair, Janet Yellen, Vice-chair Stanley Fischer, and San Francisco Fed President John Williams all focused on high equity valuations in speeches at separate locales.

Thus, market participants wet their pants on the awful prospect that their enormous gains would somehow evaporate if the accommodative policies of the Federal Reserve were to be unwound. Of course, they're right. Almost all of the gains of the past eight years have been the result of loose monetary policy. Any tightening of such policies would mean that stocks might not be so easily gushed to higher levels.

Bond yield rose substantially, with the 10-year-note gaining to 2.19%, erasing all of June's gains.

Not that any of today's loose lip talking matters. Actions will determine the ultimate direction of the markets. While some degree of sanity and honest price discovery in markets would no doubt involve a lower rate of return than what's been considered normal since 2009, it also might result in crisis, as all manner of wealth is tied to stocks and their continued appreciation.

At the Close, 6/27/17:
Dow: 21,310.66, -98.89 (-0.46%)
NASDAQ: 6,146.62, -100.53 (-1.61%)
S&P 500 2,419.38, -19.69 (-0.81%)
NYSE Composite: 11,716.92, -41.94 (-0.36%)

Monday, June 26, 2017

Target Zero: NASDAQ Unlucky in Lift-Off Sell-Off (Pump and Dump)

It wasn't a very pretty day for the moneychangers traders of paper stocks.

Nor was it particularly pleasing for goldbugs to see the precious metals smashed down around 4:00 am ET, but, then again, when it comes to gold manipulation, it's best to do it when most people are sleeping.

Theses manipulated markets are nearing the end of their central bank lifelines, though it is difficult to comprehend how the Fed, ECB, SNB, BOJ and others would pull the proverbial rug out all at the same time.

Therefore, a crash probably isn't in the cards, unless one is playing the political angle. In that scenario, we have the media and Democrats losing their war against President Donald J. Trump, who continues to steamroll over the Washington insider elite as though they ceased to matter after January 20th of this year.

In some ways, the Donald is right. Washington insiders and the mainstream media don't matter in the grand scheme of things, most of which revolves around MONEY.

Regarding that, stocks ramped pre-market, then sold off throughout the session. Oil finished flat. Gold and silver were hammered, as mentioned above, in a pre-dawn raid of the phony futures market, but mostly recovered. The major equity indices finished flat on the main, except for the NASDAQ, which took on some water.

Macro data had US durable goods orders down 1.1% in May after a 0.9% loss in April. That, in part, spurred the sell-off after lift-off in stocks.

Stocks are certainly being kept afloat by central banks and crony commercial banks. There's nothing even remotely normal about how stocks have been behaving since the great recession off 2008-09, but just in case anybody asks, the spread on treasuries - 2s and 30s - tumbled again to 134bps - marking the flattest treasury yield curve since late 2007.

Recession is overdue, which means the US economy is probably already in one. Pension holders and 401k dreamers will be the last ones to know.

At The Close, 6/26/17:
Dow: 21,409.55, +14.79 (0.07%)
NASDAQ 6,247.15, -18.10 (-0.29%)
S&P 500 2,439.07, +0.77 (0.03%)
NYSE Composite: 11,758.86, +25.66 (0.22%)

Sunday, June 25, 2017

The Long and Short of the Approaching Recession (Depression)

For those out there reading this short missive, a warning that time and space are constraints upon the lives we live, the bread we bake, the food we eat, the products we produce, the jobs that sustain us and the government that pretends to cater to us.

Time and space - according to most adherents of pure physics - are not constraints upon thinking, thought, creativity and imagination.

Indulgence should be given more, in these days of financial peril and social inequality, to solutions derived in the mind, translated to the body by practicality and functionality.

In both the long and short discussions of current finance, there can be little doubt that the system of capitalism by which the developed world has grown and prospered is under severe strain and the solutions offered by the central bankers and government entities who pretend to know how it all works are nothing more than stop-gap measures intended solely to prevent, or at least, delay, a complete collapse of a fragile, human-made system.

Economics, being mostly theoretical, and therefore, unbound, unfortunately needs to operate in a closed, bound, system, restrained by those old devils of time and space. As has been frequently mentioned in higher-level economic discussions, "infinite growth is unsustainable in a finite world."

With that in mind, this weekend edition of Money Daily offers but a brief insight into the unraveling of the world order of finance already well underway.

On the whole, Friday was a washout to a week in which the major indices - with the notable exception of the NASDAQ - vacillated around the unchanged line. In the current nomenclature, stock indices - wherein the vast bulk of trading is performed by computer algorithms and central banks - are a control mechanism. So long as they are stable or going higher, the general population feels comforted and won't look around for cracks in the not-so-golden facade of global finance. As such, this week was very much like the previous six, or eight, or eighty. It was, in general terms, a big nothing-burger.

But, what does the outsize gain on the NASDAQ tell us, when the other indices were going exactly nowhere fast?

It says that the NASDAQ is where the speculation exists, where all the funny money or phony money is going to seek yield, mostly in tech-land, but also in energy stocks and in short-squeezes on the most-shorted list. It's how the game is being played at the top. If shorts are numerous on a particular equity, that where the money flow will be most pronounced, on the long side. Boom! Instant profits and a great weekend in the Hamptons awaits.

For the rest of us, we are placated with the rest of the market going sideways. At least - we comfort ourselves in saying - it didn't go down, much.

An expanded view looks at a couple of issues. Oil took another beating this week as the glut continues, though this fact is not to be promulgated to the general population. We are led to believe that oil is scarce and the price of gas with which to fill our cars should remain at elevated levels.

Nothing could be further from the truth. A variety of factors, including, but not limited to, better fuel consumption, an aging population, alternative energy sources, stagnant or slowing employment, and a more stay-at-home, economically-depressed middle America, is leading to the reality of oversupply meeting slack or declining demand. Oil will continue to fall until it becomes apparent that the big energy companies are squeezing every last nickel and dime out of consumers in the form of stubbornly high gas prices. At some point, the price of gasoline will merit a meeting with reality and then, gas will average, nationally, under $2.00 a gallon, notwithstanding the absurdly-high state and federal taxes on each and every gallon pumped. It's coming. It cannot be denied.

Overseas, the demise of two Italian banks on Friday was, typically, underreported. Banca Popolare di Vicenza and Veneto Banca, with combined assets of roughly 60 billion euros, were green-lighted by the ECB on Friday for liquidation. In other words, these banks are belly-up, bankrupt, kaput!

The Wall Street Journal, Reuters, Bloomberg, the AP, all reported the story. The mainstream media, such as ABC, NBC, CBS, CNN, et. al., i.e, the fake news propagandists, did not.

There you have it. The general public will not be told the truth about the fraility of the banking system for fears people would recall the horrors of the GFC of 2008-09.

Two Italian banks failing may not make the radar of disinterest parties such as the 98% of Americans who don't pay attention to nor understand economics or finance. Neither did the closure of two Bear Stearns funds back in the Spring of 2008. You are now forewarned and forearmed, with knowledge.

The world'd financial system is unwinding and the pace is quickening. Disruptions are already apparent in the forms of capital controls - mostly overseas, but heading to US shores soon - supply chain disorder, falling tax receipts, social unrest, and, most importantly and glaringly obvious, income disparity.

Stay informed, not from the mainstream sources, but from outside. The internet is s treasure trove of information that you're not supposed to know about. It will help you form opinions and strategies by which you can deal with the coming hard times.

Your thoughts and ideas have no limits. Time and space cannot prevent you from thinking, strategizing and planning for your won welfare.

At the Close, 6/23/17:
Dow: 21,394.76, -2.53 (-0.01%)
NASDAQ: 6,265.25, +28.56 (0.46%)
S&P 500: 2,438.30, +3.80 (0.16%)
NYSE Composite: 11,733.20, +20.68 (0.18%)

For the Week:
Dow: +10.48 (0.05%)
NASDAQ: +113.49 (1.84%)
S&P 500: +5.15 (0.21%)
NYSE Composite: -38.83 (-0.33%)

Friday, June 23, 2017

Mixed Stocks Ahead Of Quad-Witching; Fed Gearing Toward Recession

For the second straight session, stocks closed mixed, with the Dow and S&P finishing in the red while the NASDAQ and NYSE Composite registered marginal gains.

Essentially, markets were flat as the trudge through June continues.

As the week draws to a close, Friday looks to be a troublesome day, owing largely to options expiration and the fact that with the exception of the Dow, the major indices are right back where they began the month.

This condition - known as quadruple witching - may result in increased volatility, and, with prices flat, many stock options and futures may close without redemption, i.e., losses.

Quad witching is the simultaneous expiration of options and futures tied to individual stocks and stock indexes occurring on the last month of each quarter.

While the name may sound frightening, it often is not, especially when stocks are gaining, which, over the past eight years, has been more often than not. This quarter may prove a hurdle too high, sending stocks screaming lower.

Psychologically, losing money on a Friday sends traders home to unhappy weekends with thoughts of carnage fresh in their minds, so Monday's trading may prove more prescient in terms of market direction.

Meanwhile, bonds are telling. The 10-year note slipped to 2.15 on Thursday, with the 30-year bond holding steady at 2.72. The curve has continued to flatten, and that could actually be due to the Fed's tightening. With the overnight federal funds rate at 1.00-1.25 - the highest in nearly a decade - the Fed may be - inadvertently or otherwise - prompting the US economy into a recession.

GDP growth continues to flag and employment is stagnant. Raising rates during a period of slow to no growth makes sense only to Federal Reserve governors or others who bear no consequences for their actions.

Friday's action in the markets deserves close attention.

At the Close, 6/22/17:
Dow: 21,397.29, -12.74 (-0.06%)
NASDAQ 6,236.69, +2.73 (0.04%)
S&P 500 2,434.50, -1.11 (-0.05%)
NYSE Composite: 11,712.52, +16.24 (0.14%)

Thursday, June 22, 2017

Broken Markets Yield Strange Results

How does it happen that all the major indices closed lower on Wednesday, but the NASDAQ finished with a gain of nearly three-quarters of a percent, up 45 points on the day?

Algorithms gone wild, that's how.

With the computers cranked up to stuff speculative stocks with ever-high bids, the NASDAQ has been outperforming the other indices over the past year, but especially so in 2017. Over the past 12 months, the NAZ is up nearly 30%, the Dow gained by 21% and the S&P 18%.

In the past three months, the NASDAQ has improved by 7.59%, while the Dow is up a mere 3.58%, the S&P 500 up 3.92%. That substantial edge has begun slipping however, as the NASDAQ took a major hit on the 8th of June. Prior to that massive outflow, the index was up 9.10% since March 22.

Apparently, that was not to the liking of the speculative sorts populating the concrete canyons of lower Manhattan. That's how results such as Wednesday's occur. Given that computers do more than 60% of all trading, it's not a stretch to believe that certain goal-seeking altos could be cranked up by human hands behind the scenes and the screens.

Markets have been broken by computer-driven trading, lack of oversight by the SEC and meddling by central bankers and the Federal Reserve. With the Swiss National Bank (SNB), Bank of Japan (BOJ), and European Central Bank (ECB) all active purchasers of stocks (not sellers), such meddling behavior is bound to cause distortions such as seen on Wednesday and in a myriad of other sessions, issues, and especially in ETFs.

Stocks may be at or near all-time highs, but caution is urged in such a speculative, managed market. A misstep or fat finger could cause any manner of disorder.

At the Close, 6/21/17:
Dow: 21,410.03, -57.11 (-0.27%)
NASDAQ: 6,233.95, +45.92 (0.74%)
S&P 500: 2,435.61, -1.42 (-0.06%)
NYSE Composite: 11,696.28, -42.67 (-0.36%)

Tuesday, June 20, 2017

Stocks May Be Near Peak; Fed Plans Going Up in Flames

It's been a troublesome two weeks for stock jockeys. Even as the Dow and S&P have rocketed to new highs, the shakeout on the NASDAQ last Friday may have been a harbinger of things to come and the die came up snake-eyes on Tuesday as all of the major indices took losses which accelerated into the closing bell.

On the surface, everything seems to be going according to plan. The Fed continues to lie to themselves - and everybody else - that the solvency trap of the GFC of 2007-09 has been permanently put in the rear view mirror and the future offers nothing less than roses and unicorns, otherwise termed "normalcy." Real people know better. While the official unemployment figures approach fantasy levels of sub-four percent, those in and out of the workforce haven't had sustained economic prosperity since prior to 2000. Wages have been absolutely stagnant for the better part of 20 years, not only in the United States, but in established economies around the world.

Since debt had reached unsustainable (read: unpayable) levels during the housing crisis period, all the central bank could do was double down with easy money to banks and connected investors and financiers via QE and ZIRP while the bulk of the population got dosed with 22% interest rates on credit cards, ballooning college tuition costs and, the ultimate teaser, cheap credit on new car loans and leases.

Well, the carousel is slowing to a stop as the world demographic ages not-so-gracefully into their 50s, 60s and 70s, an age at which one does less of everything, including driving, eating, buying, spending, racking up credit card debt and buying bigger houses. This simple fact is probably not lost on the central bankers, but, being mired into last-century Keynesian economic theories and practices, there's little they could do except what they did last week, a desperate attempt to buy more time via higher federal funds rates, a plan that allows a small comfort zone to ease into the next recession, which seems to be gathering momentum daily.

Stocks have never told the entire story of a nation's economy and they won't this time either. While the power elite jiggle their algos to capture the little gains that remain, real estate prices have peaked and are heading lower in many locales, gold, silver, and especially, oil are displaying tendencies one would normally associate with a deflationary economy, which, actually is what has been the experience for much of the past eight years.

Tech stocks have outperformed and rightfully so, but what tech has proven to do time and again is lower costs and prices via efficiencies of scale and market. This time is no different, the recent acquisition of Whole Foods by internet giant, Amazon, offers yet another chilling reminder that the past is pretense and the future will be won by the fastest and most agile companies, individuals and, yes, governments.

The Federal reserve and their crony central bankers across the globe have painted themselves - and everyone else - into a no-win situation, thinking that inflation equals salvation, when, in fact, it is nothing more than gloss. Making matters even more untenable is the idea that the Fed has been trying to induce inflation for the past eight years, without success. They've pumped trillions into the global economy with nil effect because the two things most important to free, functioning markets - price discovery and an honest discounting mechanism - have been missing due to their constant fiddling and control fraud.

Thus, the world approaches another financial Waterloo, more serious than the last, as global credit creation has stalled with growth being nothing more today than amalgamated numbers which are fictitious in the main. The overhang of government debt, pension shortfalls and corporate insouciance have created the perfect scenario for calamity.

If the Fed, ECB, BOJ and other central banks are in search of drama, this summer is likely to be a grand provider of entertainment for all. With stocks overvalued close to the point of absurdity, the assets to be hoarded - if one is in a position to exit the Wall Street casino - are real estate, currencies, gold, silver, tools and machinery.

Since June 9, the NASDAQ has closed negatively six of eight sessions. The Fed finalized their rate hike on the 14th after weeks, if not months, of telegraphing their move. The weakness in the NASDAQ is not a coincidence, but rather, a distinct message from the market.

At The Close, 6/19/17:
Dow: 21,467.14, -61.85 (-0.29%)
NASDAQ: 6,188.03, -50.98 (-0.82%)
S&P 500 2,437.03, -16.43 (-0.67%)
NYSE Composite: 11,738.95, -94.39 (-0.80%)

Dow Sets New Record; NASDAQ Rebounds

Well, it's Monday, so stocks have to go up. It's some kind of rule.

There's no need for any comment on this. It's just part of the current theme.

At the Close, 6/19/17:
Dow: 21,528.99, +144.71 (0.68%)
NASDAQ 6,239.01, +87.25 (1.42%)
S&P 500: 2,453.46, +20.31 (0.83%)
NYSE Composite: 11,833.34, +61.32 (0.52%)

Monday, June 19, 2017

Stocks End Week Mixed, But Damage Has Been Done

While the Dow, S&P and NYSE Composite all gained slightly on the week, the NASDAQ, which ended lower Friday, registered its second straight week of losses.

The NASDAQ has finished in the red three straight sessions and five of the last six, beginning with last Friday's washout of the FAANG stocks (Facebook, Amazon, Apple, Netflix, Google, aka Alphabet).

While the NASDAQ may have hit a pocket of support for the time being, the intraday high of 6341.70 is now nearly 200 points off in the distance. Not that the venerable algos, computers and few human hands operating the machinery at the NAZ couldn't pull the index up and beyond that level in a matter of days, there still remains to be a reason for such a move.

With the calendar showing the middle of June, there may not be much in the way of stock-inspiring news until second quarter earnings begin being trotted out the second week of July. The Fed's rate hike is out of the way for now, and it's anticipated that the Fed won't make any significant moves until September at the earliest, and more likely December, if at all.

All markets remain bloated, just like government salary and benefit packages, while real Americans struggle to find and keep good jobs, pay bills and possibly save something for the future, be that retirement or college of kids.

The world's financial markets continue to be prodded and plotted by central bankers, which means there will be no abrupt collapse on their watch, or until they deem it advisable to crash the stock market by means of tight money or other policy initiatives.

Meanwhile, the NASDAQ bears watching, if anybody in the world still believes in technical analysis, because further weakness could portend a finish to the third longest bull run in market history, albeit with the lowest growth rate (2.0%). Those two historic marks are at opposition, and it will be interesting to see how long the fiat parade can continue without significant reckoning of reality.

At the Close, 6/16/17:
Dow: 21,384.28, +24.38 (0.11%)
NASDAQ: 6,151.76, -13.74 (-0.22%)
S&P 500: 2,433.15, +0.69 (0.03%)
NYSE Composite: 11,772.02, +31.50 (0.27%)

For the Week:
Dow: +112.31 (0.53%)
NASDAQ: -56.16 (0.90%)
S&P 500: +1.38 (0.06%)
NYSE Composite: +27.29 (0.23%)