Tuesday, August 30, 2016

Stocks Give Back On Tuesday After Explosive Market Monday

Following Monday's ramp-alooza based on absolutely nothing other than consumer spending hitting its target, stocks lost ground on Tuesday heading into the Labor Day holiday weekend.

Since this is absolutely the slowest week of the year for everybody except maybe vacation rentals, don't look for any kind of major move in either direction prior to next Tuesday.

A week of nothing, otherwise known as the pain trade. There should be some profit-taking and squaring down on risky positions, but, again, nothing overtly dramatic.

Everything has absolutely flattened out, except possibly the $/Yen pair, back up to 103 on the day.

Tuesday's Trauma:
Dow Jones Industrial Average
18,454.30, -48.69 (-0.26%)

5,222.99, -9.34 (-0.18%)

S&P 500
2,176.12, -4.26 (-0.20%)

NYSE Composite
10,797.10, -14.24 (-0.13%)

Saturday, August 27, 2016

Yellen Speaks, Markets More Confused After Comments By Fisher, Bullard, Lockhart

After a week-long wait for something of substance from Fed Chair Janet Yellen in her widely-anticipated speech at Jackson Hole Friday, markets were somewhat disappointed when what they got from the aging, dowdy Fed Chairwoman was more of the same, a garbled, directionless mumbling about a strengthening US economy and plenty of buts, ahs, and well maybes.

Yellen seemed to express that a rate hike was on the table in September - just as it was in February, June and July - but offered certain caveats, not the least of which was that unexpected events could derail any plans the Fed might have considered.

Adding to the dismay and confusion were three separate comments by Fed officials in the immediate aftermath of Yellen's speech.

Vice Chairman, Stanley Fischer first spoke up with a weak affirmation that a rate hike in September was possible, but quickly afterward, Atlanta president, Dennis Lockhart, and St. Louis president James Bullard offered a different view, questioning the wisdom of a rate hike in September or even December.

Since markets have been on a razor's edge since Brexit and will be until the presidential election in November, it does seem a stretch that the Fed would risk a market collapse triggered by a rate hike, such as what happened after their last 1/4 basis point increase last December.

The Fed being less stoic and more political than ever, risking injury to Hillary Clinton's election - the choice of the status quo - would be foolhardy and dangerous.

Not to say that the Fed is not both of those, but when there's a real risk that an outsider - Donald J. Trump - could ascend to the highest office in the land, the Fed will be watching its own best interests, which would imply that a federal funds rate increase in September is certainly a no-go.

Now that the Fed has wasted the better part of a month and delivered nearly nothing of substance, one wonders what they can do for an encore. Oh, that's right. Eight years of loose, experimental monetary policy and promises of more to come.

What fun.

Friday's Closing Data:
Dow Jones Industrial Average
18,395.40, -53.01 (-0.29%)

5,218.92, +6.71 (0.13%)

S&P 500
2,169.04, -3.43 (-0.16%)

NYSE Composite
10,749.33, -35.04 (-0.32%)

For the Week:
Dow 30: -157.17 (-0.85%)
S&P 500: -14.83 (0.68%)
NASDAQ: -19.46 (-0.37%)
NYSE Composite: -79.83 (-0.74%)

Thursday, August 25, 2016

Continued Sluggishness In Equity Markets Awaiting Janet Yellen At Jackson Hole

Investors (if that's what they're being called these days) are largely on hold in advance of Fed Chair Janet Yellen's speech at Jackson Hole tomorrow and a return to what passes for normal conditions following the Labor Day holiday.

Essentially, stocks have been treading water for the past month, since setting new all-time highs mid-July and making a double top earlier this month.

For whatever it's worth, the one bid by the Fed and its central bank allies has produced a very dull market, if that's what we're calling it these days.

Of particular note is the current odds for a rate hike in September, currently hovering around 18%. For a December rate hike, it's basically a 50-50 proposition, though neither is actually very likely considering the fragility of the global economy.

Thursday's Closing Prices:
Dow Jones Industrial Average
18,448.41, -33.07 (-0.18%)

NASDAQ Composite
5,212.20, -5.49 (-0.11%)

S&P 500
2,172.47, -2.97 (-0.14%)

NYSE Composite
10,780.23, -10.95 (-0.10%)

Tuesday, August 23, 2016

Stocks Stuck Until Labor Day

Editor's Note: Very rough schedule this and next week, so there may not be the usual market banter. For now, stocks seem stuck until after Labor Day. Of course, any big news will be reported upon. Enjoy the summer weather!

Nothing to write home about today, as stocks ramped early in the session and sold off the rest of the day. Sluggish is an appropriate way to call it.

Tuesday's Travails:
Dow Jones Industrial Average
18,547.30, +17.88 (0.10%)

S&P 500
2,186.90, +4.26 (0.20%)

5,260.08, +15.47 (0.30%)

NYSE Composite
10,847.49, +31.57 (0.29%)

Monday, August 22, 2016

Slow Week For Stocks Ends With Losses

Despite various new highs, stocks traded in a very tight range over the course of the week.

Not surprisingly, August is the most popular time for vacations, not exclusive of stock brokers, traders, managers and all those who participate in making the markets.

Friday's trading was particularly sluggish, with all the major averages finishing in the red, albeit, slightly.

The weekly figures were hardly encouraging to either bears or bulls, with the main indices offering losses or gains of fractions of one percentage point, the S&P the least affected, down 0.18 points.

Leading into the final full week of August trading, with monthly options already having expired (Friday), another week of widespread complacency is expected.

Figures for Friday:
Dow Jones Industrial Average
18,552.57, -45.13 (-0.24%)

5,238.38, -1.77 (-0.03%)

S&P 500
2,183.87, -3.15 (-0.14%)

NYSE Composite
10,829.15, -33.86 (-0.31%)

For the Week:
Dow: -23.90 (-0.13%)
S&P 500: -0.18 (-0.01%)
NASDAQ: +5.48 (0.10%)
NYSE Composite: +6.74 (0.06%)

Wednesday, August 17, 2016

Stocks Flail About As Investors Ponder September Rate Hike False Flag

Pretty ugly. The Dow round-tripped about 120 points, ending the session slightly on the positive side.

Fed minutes were released at 2:00 pm EDT, and offered little insight. The word is that they're going to raise rates in September.

Nonsense. They've already seen what a rate hike did to stocks the last time. They're not going to take that chance, unless they want to see Hillary lose the election come November.

Today was all about flailing about in an overpriced environment.

Wednesday's Wash:
Dow Jones Industrial Average
18,573.94, +21.92 (0.12%)

5,228.66, +1.55 (0.03%)

S&P 500
2,182.22, +4.07 (0.19%)

NYSE Composite
10,824.40, +14.66 (0.14%)

Tuesday, August 16, 2016

Fed's John Williams Strikes The Alarm Bell; Markets, Economists Respond With Aburptness, Gibberish

President and CEO of the San Francisco Federal Reserve Bank, John Williams, released a white paper on Monday that caught the attention of just about everybody even tangentially aligned with economics or finance called Monetary Policy in a Low R-star World.

Williams, who was Janet Yellen's chief researcher when she was head of the San Fran Fed, has, with the release of this paper, struck the alarm bell with an enormous policy mallet. In effect, he's telling the world that the central banks of the world - including our own, all-powerful Fed - that the past seven years of low interest or zero interest rates have not produced the desired results, which would be a robust economic climate coupled with adequate inflation.

What the Fed and other central banks consider adequate inflation is something of a mythical, though essential, concept in Keynesian economics. Central bankers talk of a target inflation rate, figuring that two percent is about the right level to keep GDP and the associated debt burden growing.

In essence, the concept that any level of inflation is good for anybody other than central bankers is complete and absolute buffoonery, designed only to perpetuate the counterfeit of fractional reserve banking and fiat money. It should be pointed out that true inflation is always and everywhere a monetary phenomenon, strictly defined as an increase in the money supply, that being debt in every case involving fiat money. What Williams is talking about is price inflation, an entirely different animal. A price inflation rate of two percent, over any expanse of time, be it 10, 20 or 50 years, does nothing but erode the value of the currency, increasing the price of everything and impoverishing the citizenry coerced into using said currency.

It's horribly bad policy for the bulk of the population, enriching the banks, distorting the natural business cycle and inducing government spending beyond its means, causing deficits and eventually, unpayable, unservicable debt burdens, the exact condition the entire global economy finds itself in today.

Williams chooses to blame all of the central bank policy errors on an amorphous concept known as the natural rate of interest, or R*, or R-star. The conceit of his missive is where he states, "While a central bank sets its short-term interest rate, r-star is a function of the economy that is beyond its influence."

In other words, Williams is conceding that the natural flow of economics is something a central bank cannot control, manipulate, massage, or otherwise rig. It's utter nonsense. The reason the mythical R-star is so low is because central banks worldwide have been dropping key interest rates to previously-unforeseen levels, in many cases (notably the BOJ and SNB) instituting negative interest rates. Central banks have caused the massive global economic problems and Williams' propose solutions indicate that the central bank models are broken beyond repair and that their only tools remaining are empty rhetoric and finger-pointing, obviously ill-suited to stave off recessions or induce growth and prosperity.

Williams wags his finger at governments, proposing that fiscal measures be taken to combat low inflation (eventually outright deflation) with more insanity such as targeting GDP or using some kind of sliding scale of taxation based on centrally-planned, goal-sought data points such as inflation and/or unemployment.

It this were a football game, Williams could be accused of punting on second down from his own goal line. He's given up, as he - and his central bank brethren - should have eight years ago at the height of the Great Financial Crisis (GFC), allowing the market to clear out the malinvestments, cripple the broken, over-leveraged banks and allow the economy to recover on its own terms, without the aid of central bank intervention. The associated pain might have been immense, but it would have been contained and recovery would have been swift.

Instead, Williams and the central bankers of the world have brought the global economy to the brink of a mammoth financial crisis, one in which entire nations' economies will be completely torn asunder. Williams and his friends have given us the most extreme policy initiatives the world has ever seen (ZIRP, NIRP, QE) and saddled governments, businesses and individuals with outrageous debt loads.

If ever the world has been at the cusp of a debt jubilee, this is it. The central banks have failed even themselves and their clandestine shareholders and its time they be relegated to the dustbin of history, along with other failed ideologies.

A return to gold and silver as base capital in a demand economy, various barter exchanges and fixed exchange rates in foreign currencies would be far better solutions than what Williams has proposed and eminently superior to the devilish constructs of the IMF, World Bank, the European Union, futures, derivatives, federal mandates, and other complexities of modern economics.

At the end of error-prone regimes, be they in finance or governance, wild, weird, unwieldy ideas will be promulgated by supposed "experts." Williams' institutional heresy is only the beginning of the coming madness. Expect even more desperate distortions and departures from reality from the very people who created the economic mess. They're uniquely positioned to cause nothing less than global economic, political and societal calamity.

Good luck.


The market response to San Fran Fed's Williams' policy punt has been swift and poignant. In Japan, the Nikkei fell 273 points. European markets were lower across the board, with the Dax, FTSE and France's CAC-40 each losing ground. US stocks opened lower and remained in the red through the session.

It worth noting that this is still August and most of Wall Street's heaviest hitters are still stupefied by drugs and booze out at their Hampton retreats. US markets hit all-time highs in recent days, akin to ringing a bell at the tippy-top of the market. Values are extreme and detached from fundamentals. The dollar was whacked and will likely continue to decline, and, as just about the only barely viable economy and bond market, US treasuries are about to head further toward zero and negative rates. The world is upside down, ripe for complete overhaul. What many have been predicting and anxiously awaiting for the past seven or eight years may finally be upon us.

Of course, to offset the negative effects of Williams' paper, NY Fed head, Bill Dudley trotted out a statement just prior to US markets opening, saying, in effect, that a September rate hike by the Fed is under consideration. There you have it: more jaw-boning and utter nonsense designed to alter perception. To say that the Fed is close to another rate hike is tantamount to thinking that the moon is about to tumble into the earth.

Gold and silver were each up sharply overnight and in early morning trading on the COMEX. Precisely at 8:00 am EDT, both were hammered lower, yet another signal that central bankers are desperate and nearly delusional.

Be prepared.

US Markets at 3:00 pm EDT (prior to close due to scheduling conflict)
Dow Jones Industrial Average
18,583.22, -52.83 (-0.28%)

5,237.45, -24.56 (-0.47%)

S&P 500
2,182.27, -7.88 (-0.36%)

NYSE Composite
10,825.95, -32.54 (-0.30%)

Monday, August 15, 2016

Mid-August Monday; Who Cares? More All-Time Highs

Your editor has been feverishly putting together a couple of boffo posts for later this week... maybe next week, so today is just a place-holder for markets which continue to set new all-time highs.

Yippie! Life can't get any better than this, can it?

Here's to hoping that previous statement isn't true, because there's a sneaking suspicion that, with $13.4 trillion worth of negative-yielding bonds now infecting the global investment landscape, somethng really, really bad is going to pop and there won't be any upside, for anybody.

So, keep wishing.

Monday Muddle:
Dow Jones Industrial Average
18,636.05, +59.58 (0.32%)

5,262.02, +29.12 (0.56%)

S&P 500
2,190.15, +6.10 (0.28%)

NYSE Composite
10,858.50, +36.08 (0.33)

Friday, August 12, 2016

Stock Market Losses Will Not Be Tolerated

In a world which is prodded, directed, managed, and ultimately controlled by central banks and government authoritarians, the narrative is often more important than the reality of life under the thumb.

A case in point comes today - a day after the NASDAQ, S&P 500, Dow Industrial Average each set new all-time highs - in which actual economic data diverged from the preferred narrative of "everything is peachy-keen."

Two important data sets were released prior to the opening of US equity markets, July PPI and July retail sales. Both were disappointing.

PPI came in at -0.4% and retail sales posted a sluggish 0.0% (zero) growth, with the core - ex-autos - down 0.3%. These figures not only suggest deflation, but are actually indicative of a deflationary environment, the sole condition which can awaken central bankers from sound sleep in cold sweats and is, at the same time, a relief for cash-strapped, income-stagnant workers and consumers.

According to the book of central bank policy, should one actually exist, the wants and needs of the average working Jane or Joe is to be disregarded in such an instance, preference given to fat-cat Wall Street types who do no work, produce nothing of value, but rake in billions of dollars in fees, profits, and commissions for their trading activities in the stock market casino.

So it came to be that since stocks had just made all-time highs, a major setback could not and would not be tolerated. The major indices slumped most of the session, but were boosted higher going into the close, with losses trimmed on the Dow and S&P, the NASDAQ actually closing positive, as deemed appropriate by the masters of the the universe.

The rigging of markets is never going to work out long term. Massive mis-allocation of capital has been taking place since the last financial crisis, setting the global economy up for a colossal, catastrophic, cataclysmic collapse. Maybe it won't be as bad as our alliterative case suggests, if only because ordinary people have had time to adjust and prepare, but, for anyone owning stocks at current altitudes, losses are nearly a certainty. That is, unless the entire world remains in a state of suspended animation, normalcy bias, and cognitive dissonance, and the wild-eyed central bankers of the world are allowed to continue their insane policies of negative interest rates, naked purchasing of equities (already a de facto policy of the BOJ and ECB, still a clandestine operation by the US Fed), stimulus, and maybe, if we're really lucky, helicopter money.

The week ended well for the titans of Wall Street. Have a (few, lots of, keg of) beers, enjoy the weekend, and sleep on it.

Friday's Figures:
Dow Jones Industrial Average
18,576.47, -37.05 (-0.20%)

5,232.89, +4.50 (0.09%)

S&P 500
2,184.05, -1.74 (-0.08%)

NYSE Composite
10,820.79, -15.26 (-0.14%)

The weekly figures weren't all that impressive, though the NASDAQ recorded its seventh consecutive weekly gain.

For the Week:
Dow: +32.94 (+0.18%)
NASDAQ: +11.77 (+0.23%)
S&P 500: +1.18 (+0.05%)
NYSE Comp.: +37.92 (+0.35%)

Thursday, August 11, 2016

S&P Rocks To Hew All-Time Highs; Oil Ramps Higher

So much for the doldrums of August.

Stocks soared to some of their highest levels ever, with the S&P 500 index closing at an all-time-high, achieving a new intra-day high (2,188.45) in the process.

There was little in the way of financial data to support the sudden spurt higher, so let it just be said that it was a decidedly rick-on session.

Macy's announced reasonably good quarterly results and pledged to close 100 stores. The stock soared by more than 17% on the day. It's getting so insane on Wall Street that even an expected earnings beat is cause for a massive uptick in share price.

S&P stocks are trading at a trailing P/E of roughly 25, approximately a 65% premium over traditional fair value.

This is truly a market only for the brave, the knave, or the naive.

Thursday's Closing Quotes:
Dow Jones Industrial Average
18,613.52, +117.86 (0.64%)

5,228.40, +23.81 (0.46%)

S&P 500
2,185.79, +10.30 (0.47%)

NYSE Composite
10,843.10, +68.12 (0.63%)

The Most Dangerous Market Of Your Lifetime

Investors in equities - those imaginary certificates that signify ownership of a portion of a company or corporation - are giddy.

Stocks are near all-time highs with prosperity and class envy writ large on every tick higher.

Sure enough, these investors are shrewd operators of finance and business, many having earned their degrees from the highest academic schools in the world, the diplomas proudly displayed on the walls of their hedge fund offices and trading areas.

So, why would they possibly be worried about anything, particularly, the value of their holdings?

Simply put, there just aren't enough of them partaking at the font of wealth pouring out of Wall Street. Making matters more complicated and distressed is that the executives of the companies in which their wealth is concentrated have been buying back their shares at an unprecedented rate, making the shares of stock available smaller and smaller, but also boosting the price of those available, traded shares.

It's an easy supply and demand formula: fewer shares available makes them more valuable. In effect, if companies are inclined to take back their shares at inflated prices (a de-issuance, if you will), those remaining shares have to represent the entire value of the company.

Thus, a company could theoretically buy back all the shares but one, leaving that one share of stock to account for the full value of the company. In the case of an Apple or Google or any of the thousands of billion-dollar market cap companies, that one share would be "valued" at some absurd number, like $285 billion.

In such a hypothetical case, the problem arises when the owner of that $285 billion share of stock wished to unload it, convert it to cash or some other assets. Who would be the buyer? And would they actually pay the offered price (the ask) in such an illiquid market?

Obviously, the seller of that massive share of stock might have to offer a discount, and a big one. Instead of $285 billion, the seller might be forced to accept $140 billion, or less, in event of a liquidity crisis, which, incidentally, is what stock buybacks are creating. Since there hasn't been adequate demand for shares since the financial crisis of 2008-09, companies have resorted to buybacks just to keep their companies afloat, many of them becoming less and less profitable over time, making the price of their stock even more ridiculously valued.

When the rush for the exits begins in earnest, the big-time hedgies and fund managers will be bidding directly against each other, each with the same goal, to dump corporate paper assets in exchange for something more sturdy, ostensibly government bonds or hard, cold cash.

The markdowns, margin calls and defaults will be spectacular and this market, this unsustainable fantasy created by zero and negative interest rates, central bank stimulus, and government dumbness and numbness will be exposed to real supply and demand economics in a swan song for greed, manipulation, and wealth concentration.

That this will occur is unmistakable. Everything does not go up in price all the time, forever. The business cycle has not been abolished, neither here in the US, nor in Japan, China, the Eurozone or anywhere else.

Central banks are currently backstopping the entire Ponzi scheme of the stock market with interest rate swaps, repos, direct investment, and options manipulation.

It can't continue forever, though it can continue for a long time. It's a deadly and dangerous game, putting at risk the entire economy of the planet, or, at least that portion of the planet that wants to play along.

Increasingly, the as the musical chairs are being removed one by one, players are opting out and moving elsewhere. Largely, the lower and middle classes aren't playing at all. They're invested in necessities, cash, maybe collectibles, precious metals, and real estate.

Eventually, the sheer volume of trade by the 99% not in the stock market and incensed by government policies which seek to impoverish them further, will outweigh the phony prices for stocks listed on the NYSE and NASDAQ.

The stock market will suffer a severe breakdown at some point. The trick is not to know when that breakdown will occur, but to continue to prepare for its inevitability.

Most will not be prepared. Those who have prepared may or may not proper at the expense of everyone else, because the chaos - political, economic, social - will be astonishing.

The Boy Scouts of America issued their motto many years ago and it applies today: Be Prepared.

Be a Boy Scout.

Wednesday's Washout:
Dow Jones Industrial Average
18,495.66, -37.39 (-0.20%)

5,204.58, -20.90 (-0.40%)

S&P 500
2,175.49, -6.25 (-0.29%)

NYSE Composite
10,774.98, -29.53 (-0.27%)

Tuesday, August 9, 2016

Stocks Ramp, Then Cramp In Late Selling

Looks like the consolidation continues. Anybody buying at these levels must be extremely selective or terminally insane.

The Day's Tally:
Dow Jones Industrial Average
18,533.05, +3.76 (0.02%)

5,225.48, +12.34 (0.24%)

S&P 500
2,181.74, +0.85 (0.04%)

NYSE Composite
10,804.51, +16.50 (0.15%)

That's two slow trading days in a row. Get used to it unless there's some unseen catalyst developing to upset the slow moving wagon train of declining profits and higher prices.

Not a pretty sight (unless you're a central banker).

Monday, August 8, 2016

Stocks Flat As Dog Days Drag

Considering the huge push Hillary Clinton got from the pollsters and media over the past week, it's a wonder the stock market wasn't off to the races come Monday morning.

Instead, stocks were marginally higher at the opening bell, but spent most of the session in the red. Since stocks are trading at or near all-time highs on the major averages, perhaps this wait-and-see action was the best approach.

Volatility was very low, with stocks trading in very tight ranges. The outlier was oil, as WTI crude ramped up more than a dollar, to $42.87, though this mini-bounce is not likely to be taken seriously or signal another run-up to $50 per barrel or higher. Oil's global glut is real and serious. Only a highly structured and skeptical futures market is keeping crude from collapsing to below $30 per barrel. For now, drivers are getting the benefit of lower gas prices, a condition which used to be associated with a burgeoning economy.

Oddly enough, because of excess debt in the system, stagnation with low inflation is about the best this economy can do. For the most part, individuals are doing better than they have the past few years, but high taxes and the rising cost of healthcare have put the brakes on personal spending.

Dow Jones Industrial Average
18,529.29, -14.24 (-0.08%)

5,213.14, -7.98 (-0.15%)

S&P 500
2,180.89, -1.98 (-0.09%)

NYSE Composite
10,788.01, 5.14 (0.05%)

Friday, August 5, 2016

Stocks Gallop Ahead On July Jobs Boost

While the consensus estimate was for July Non-Farm Payrolls to show a gain of 160,000, the BLS (aka Bureau of Lies and Salaciousness) blew away the number, showing the US economy grew by 255,000 jobs in the usually dolorous month of July. The unemployment rate remained unchanged at 4.9%.

That number sent the dollar screeching higher and stocks rocketing back toward or beyond (S&P 500) all-time highs.

The Dow Jones Industrial Average was up more than one percent, along with the NASDAQ, no doubt buoyed by the sensational jobs report and the trouncing Hillary Clinton was giving to Donald Trump in the majority of the latest polls. The elite status quo has their agenda in hand; Wall Street obviously a willing partner.

All major averages finished with modest gains for the week (with the exception of the NYSE Composite), despite the idea that a better economy - one that, say, produces 250,000+ jobs per month - might give the Federal Reserve cause to raise rates. For now, however, good news is good news.

On The Day:
Dow Jones Industrial Average
18,543.53, +191.48 (1.04%)

5,221.12, +54.87 (1.06%)

S&P 500
2,182.87, +18.62 (0.86%)

NYSE Composite
10,781.78, +75.74 (+0.71%)

For the Week:
Dow: +111.29, (+0.60%)
S&P 500: +9.27 (+0.43%)
NASDAQ: +58.99 (+1.14%)
NYA: -2.65 (-0.02)

Thursday, August 4, 2016

Stocks Drag Trhough Thursday Session; Oil Bounces

Sluggish would be a compliment to the manner of trading that took place on Thursday, with the major indices scratching out meager gains, with the exception of the Dow 30, which took it slightly on the chin but avoided a knockout blow.

Market participants are unaware of what to do without some form of guidance by or from the Fed or other central bankers. It's almost as though markets are locked up with nowhere to go, which actually might be the case as the slog through August continues.

If there was any bright spot for the markets it was in the oil patch, where WTI crude rallied off a low spot at $40 per barrel a few days ago and now sits closer to $42. It isn't much of a move, but nervous oil specs will take any gains they can get at this juncture. With crude spilling out of every known production facility at near record pace, the glut has only worsened over the summer as demand has not exactly been robust.

The price of crude - if not for material intervention by players of significant size - should be hovering closer to $30 than $40. Crude has fallen into a bear market, more than 20% off the recent artificial high of $50 per barrel, which didn't last for more than a nanosecond.

A serious sell-off in crude over the next few weeks or into October could be the catalyst for more selling of equities and another dip in the stock markets, though the power of the Fed and other central banks to prevent anything even resembling a correction before the November presidential election cannot be underestimated.

Dow Jones Industrial Average
18,352.05, -2.95 (-0.02%)

5,166.25, +6.51 (0.13%)

S&P 500
2,164.25, +0.46 (0.02%)

NYSE Composite
10,707.13, +11.99 (0.11%)

Wednesday, August 3, 2016

Dow Ends 7-Day Losing Streak, But Who's Watching The Transports And NYSE Composite?

Markets can seem exuberant, sometimes, even over-exuberant, as has lately been the case, without reason.

The current environment is one of those times by which market movements cannot be rationally explained, or as the Maestro himself - former Fed Chairman, Alan Greenspan - so aptly put it, the markets seem to be suffering from irrational exuberance.

This needs to be pointed out in the current context of manipulation and high-stakes politics between the Nah! Brexit vote and the very real threat that Donald Trump might somehow wrangle himself into the Oval Office come November... to the absolute terror of the elite status quo, including everyone from Warren Buffet to Mark Cuban to Janet Yellen and just about every member of congress and Wall Street hedge fund slickster.

Money Daily has recently been pointing out that the any positive developments by Mr. Trump are and have been met with scurrying, rat-like selling of shares on the equity markets by those with very thin, lizard-like skins, probably your average congressional insider and self-important hedge fund managers.

On the other side of the coin, there's the relentless marauding of the Fed, the central bank which is prohibited from buying or selling of equities (unlike the Bank of Japan, which is now a top 10 holder of 90% of the stocks listed on the NIKKEI 225), but which has ample resources by which to funnel money into stocks via proxies such as Goldman Sachs, JP Morgan Chase, and Merrill Lynch, the investment arm of Bank of America, or even the Bank of Japan, which, having run out of luck in the Nikkei, is probably more than willing to buy US stocks.

It's a safe bet that the Fed and their cronies halted and reversed the post-Brexit decline, sending the Dow and S&P 500 to all-time highs via options trading and positions on the VIX, the volatility index, widely parlayed by those in the hedging business.

In fact, days before the Brexit vote, heads of the Swiss, Canadian, US and Japanese central banks were already in collusion to overcome any nasty "turbulence" in the markets, as openly reported by none other than Bloomberg.

So, it shouldn't come as any stretch of the imagination that the same types who distort presidential polls and have the mainstream media wrapped around their little fingers should also keep stocks artificially high as long as it appears that Hillary Clinton will be elected president come November 8.

Once stocks got to extreme levels, a bell went off in the heads of the big traders, telling them to take profits, resulting in a seven-day sell-off (otherwise known as consolidation), culminating in Tuesday's near-100-point decline on the Dow.

Wednesday, the Dow just barely hung on for a small gain, as did the other indices, however, the recent highs achieved by the Dow can be seen as absolute phonies, when referenced to the Dow Jones Transportation Average (DJTA), which sold-off and rebounded like other indexes post-Brexit, but did not attain new all-time highs (for the record, neither did the NASDAQ, nor the NYSE Composite, the broadest index of US stocks).

The Transports had a good run of it, topping out at 8048.09, but were 100 points shy of the all-time record, set back in April, 2015, at 8149.00.

The same is true on the NYSE Composite (NYA), which topped out recently at 10815.43, a far cry from May 2015, when the index stood proudly at 11254.87.

Taking away from this divergence in major markets is the idea that central banks and their friends can only influence so much. They often (make that, ALWAYS) leave bits and pieces of evidence of foul play scattered about. 100 or so points on the Transportation Average and over 400 points on the Composite shows just how sloppy and misguided their adventures into manipulation of not just stocks, but perceptions, have become.

Everybody watches the Dow and S&P. The transports and composite indices, not so much, or so they believe.

Dow Jones Industrial Average
18,355.00, +41.23 (0.23%)

5,159.74, +22.00 (0.43%)

S&P 500
2,163.79, +6.76 (0.31%)

NYSE Composite
10,695.14, +34.01 (0.32%)

Monday, August 1, 2016

Tough Times For People Are Beginning To Appear

See-saw trading marked the first day of August, traditionally one of the quietest times for traders, so excuse your author for not offering a great deal of commentary as the "dog days" wear on through the hot month.

Stocks were up and down without direction. Japan's fiscal stimulus, largely expected to consist of some form of "helicopter money" (i.e., central bank largess via government spending and/or handouts), and, while there were some measures designed to prop up the poor and stimulate spending, it's more likely that - like everything else the BOJ has attempted the past 25 years - the plan will backfire because Japanese people are more concerned with squirreling away cash for rainy days than spending to keep the government promise of prosperity and growth.

It's the same all over the world. Governments and central banks have themselves painted into a not-so-agreeable corner, flanked by negative interest rates on one side, stagnant growth prospects on another, and a phalanx of QE, ficsal irresponsibility, crony capitalism, global income insecurity, and political instability dropping from the ceiling and oozing up through cracks in the floor.

While the political and business hoi poloi continue preaching the narrative of rosy economic successes, the average people have had enough of being lied to, cajoled and insulted by appeals by the financial authorities to their better interests, which, in truth are in nobody's good interest.

A couple of possible scenarios might emerge from the continuing diddling by the Fed and their crony central banker kin. One is that extreme lawlessness reigns, as laws are multiplied beyond the system's ability to prosecute them, or, political forces morph into ugly totalitarianism.

A good bet might be a hedge between the two, as both are already emerging in various forms, everywhere from dictatorships like the one evolving in Turkey, right down to the tin-horn generals at local levels who attempt to enforce zoning and municipal codes on wary citizens.

If there appears to be unease in every neighborhood, it's because below a calm surface is a boiling pot of anger, resentment, fear, and distrust.

Dow Jones Industrial Average
18,404.51, -27.73 (-0.15%)

5,184.20, +22.06 (0.43%)

S&P 500
2,170.84, -2.76 (-0.13%)

NYSE Composite
10,730.20, -55.31 (-0.51%)