Tuesday, January 15, 2019

Stocks Rise Despite Spate Of Bad News, Brexit No-Go Vote

Some are wondering whether the market is being run by computers or human operatives, or, worse yet, humans running computers front-running the market.

What may be happening is that humans are programming computer algorithms to react to fake news and the PPT is backstopping each and every tick lower by buying futures, resulting in the altos readjusting to buy more.

There was a good deal of bad news flow in the morning... and then just after 7:00 pm London time (2:00 pm ET), there was the Brexit vote.

Here's what passed across the wires prior to the opening bell and shortly thereafter:

  • Both Wells Fargo (WFC) and JP Morgan Chase (JPM) missed on both earnings per share and revenue.
  • Netflix (NFLX) announced the largest price increase in its 12-year history.
  • China's economy grew by 6.4%, the slowest rate in over a decade.
  • PPI cane in at -0.2%, a deflationary reading.
  • Delta Airlines (DAL) beat, but warned that the partial government shutdown would negatively impact earnings in the current quarter.
  • The Empire State Manufacturing Survey fell to a reading of 3.9 in January from an upwardly revised reading of 11.5 in December.
  • Goodyear Tire (GT) lowered its fourth quarter outlook and full year (2018) guidance.

With all this in the cooker, stocks opened higher and took off from there. The Dow exploded to a gain of 190 points just before noon. The NASDAQ was up nearly 120 points.

After noon, the markets went into a wait-and-see mood as the Brexit vote approached. In what has to be the most convoluted, time-wasting exercise in government over-reach (possibly challenged by the partial shutdown in the US), Britain has been wrangling over just how to depart from the European Union after a referendum passed nearly two-and-a-half years ago (June 23, 2016).

With different constituents vying for complete Brexit, partial Brexit with a backstop, no Brexit, and other variants, the argument over how to implement what was voted upon by the constituency has been nothing short of a disaster and an indictment against the effectiveness of government everywhere.

Somebody should point out - we will - that with all the Brexit juggling, partial US shutdown jousting, and continuing French protesting, governments in developed nations are proving to be at least cracked, if not nearly completely broken. Besides the fact that none of them can manage to spend less than what they receive through their extreme, excessive, heavy-handed taxation - which is over the top - it seems all they're capable of doing at the highest levels is fight for positioning and power, all to the detriment of the people they're supposed to be representing. Collectively, they pass no new legislation that is of benefit to the people. Other than President Trump's efforts, government is a massive, obvious failure of human capacity.

If ever there was a time for a global revolution (not a new concept), it would be now, though nobody has any contingency plans for how to deal with the dystopian aftermath that would surely follow.

Experience teaches us that disposing of scoundrels, deposing tyrants, or overthrowing governments only makes matters seem better for a short period of time. At least in the original American revolution, the patriots were separated from their tyrannical rulers by a vast ocean which technology hadn't quite conquered.

Today's intertwined system is different, close at hand, and the scoundrels much better disguised. There isn't going to be any overthrow of anything except morals and values, people's faith and judgment, which seem to be going in the direction of all flesh. Anger, the most palpable manifestation of displeasure, is boiling over in all facets of urban life. People are becoming more and more ill-mannered, short-tempered, self-absorbed, and intolerant toward the views and objectives of others. All of this adds up to uncivil activities, flouting of the law, violence and strife. Essentially, when ordinary people lose faith in a government that they had become accustomed to relying upon, all that's left is chaos, and that seems to be the direction in which we're inexorably, sadly, headed.

... and then came the Brexit vote in Britain's Parliament. Prime Minister Teresa May's government proposal was rounded defeated by a 432-202 vote in the House of Commons. On the news, the Dow tanked... briefly, the other indices slumped shortly, and then shot back to from whence they came.

It's all fake, people. There are no more free markets. Face it. All the geese been thoroughly cooked.

Dow Jones Industrial Average January Scorecard:

Date Close Gain/Loss Cum. G/L
1/2/19 23,346.24 +18.78 +18.78
1/3/19 22,686.22 -660.02 -641.24
1/4/19 23,433.16 +746.94 +105.70
1/7/19 23,531.35 +98.19 +203.89
1/8/19 23,787.45 +256.10 +459.99
1/9/19 23,879.12 +91.67 +551.66
1/10/19 24,001.92 +122.80 +674.46
1/11/19 23,995.95 -5.97 +669.49
1/14/19 23,909.84 -86.11 +583.38
1/15/19 24,065.59 +155.75 +739.13

At the Close, Tuesday, January 15, 2019:
Dow Jones Industrial Average: 24,065.59, +155.75 (+0.65%)
NASDAQ: 7,023.83, +117.92 (+1.71%)
S&P 500: 2,610.30, +27.69 (+1.07%)
NYSE Composite: 11,868.68, +69.57 (+0.59%)

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