Saturday, December 31, 2016

2016 Ends On Sour Tone As Stocks Sell Into Year-End Close

At the Close: 12/30/2016:
Dow: 19,762.60, -57.18 (-0.29%)
NASDAQ: 5,383.12, -48.97 (-0.90%)
S&P 500: 2,238.83, -10.43 (-0.46%)
NYSE Composite: 11,056.90, -17.43 (-0.16%)

Over the final three weeks of 2016, the financial community focused on not buying Christmas presents or planning a New Year's gala event, but boosting stocks to a point at which they could be sold for a tidy, late-year profit, and they did so by ramping up the Dow Jones Industrial Average to stratospheric levels before dumping the blue chip shares into the laps of terminally brain-dead bag holders, i.e., pension funds.

This maneuver was rather artfully crafted, with the financial media cheerleading the ascent to the magical "Dow 20,000" level, which, as most readers will note, is anything but magic. The figure is plainly something upon which ordinary people (pension fund managers) could focus their extremely short spans of attention. 20,000 points on the Dow can be compared to other nostalgic remnants of history, like 300 million Americans, 60 home runs, or five percent unemployment.

These are just numbers, and, while numbers themselves don't lie, when placed in a variety of contexts, the narratives blur the lines between fact and fantasy. To say that a certain level of unemployment is "maximum", or that another number is an historic record (and thus something to which others can aspire) reinforces the perceived value of such a figure. It does not change the fact that the number itself is innocuous, lonesome, and static.

Having control over vast swaths of money and capital, as do central bankers and their agents, allows considerable control over the flow. Stocks and commodities are easily controlled by such enormous hordes of cash and certificates; bonds and real estate less so. Thus it's no surprise that US stocks went into overdrive upon the election of Donald J. Trump as the 45th US president. This was after various implied warnings about a massive correction should the media star and real estate mogul win the election and was also on the heels of an enormous dumping in the futures market. Unwashed have limited insight, knowledge or memory of how large was the shift from futures to the US open on the day after the election and how well orchestrated was the late-stage rally from early November until just before Christmas.

From November 9 through December 13, the Dow added in excess of 1900 points (from 18,332.74 to 19,974.62), a gain of 1641 points, or, more than 8% in a period of less than seven weeks.

In other words, anybody who was right about Trump winning (not as out-of-the-question as the media had everybody believing) and wrong about the market outcome made a simple, inexcusable error of judgement. Those people trusted the same media narrative that was lying to them on both ends. As it turns out, Mr. Trump was a viable candidate capable of winning the election and the market was going to rally upon his victory, not drop into a sinkhole.

It was a great setup keyed by none other than everybody's favorite globalist central bankers and their agents at Goldman Sachs, the latter group eventually the recipient of more than just a few, token places inside the incoming Trump administration, but also the benefactor in a mammoth stock run which added significantly to the wealth of insiders at, or close to the center of the firm.

But Dow 20,000 was not to be. It was the cherry on top of the sundae meant for the little guy, but it was devoured by ravenous market forces otherwise known as naked short sellers, ostensibly, the large money crowd.

So, 2016 ends with a whimper rather than a shout. Delusional traders and hopeful investors will likely bear witness to more of the same chicanery in 2017. Nobody wants to admit that they're mere pawns on a global chessboard, therefore damming themselves behind a wall of self-doubt, misinformation, lies, and half-truths.

Happy New Year!

Week Ending 12/30/2016:
Dow: -171.21 (-0.86%)
NASDAQ: -79.57 (-1.46%)
S&P 500: -24.96 (-1.10%)
NYSE Composite: (-71.90, (-0.65%)

Thursday, December 29, 2016

Santa Claus Rally? Bah, Humbug; Dow Sheds 111 Points

After all the hoopla and expectations surrounding the magical "Dow 20,000" mark, it appears that some investors have made up their minds and are selling the rally, as any astute big hitter might.

While its fun to think that stocks will continue to reach ever higher and higher levels forever into the future - a reasonable strategy for those with a 20 or 30-year time horizon - it isn't exactly realistic to expect stocks that are already at historic levels to keep chasing higher.

The arguments in favor of a correction grow stronger with each passing month. The bearish position is bolstered by any number of factors, including:

Extreme valuations (stocks are trading well above the average P/E of 16)
Recent performance (prior to Wednesday's triple-digit decline, the Dow has gained nearly 2000 points (12%) since November 8)
Weak macro data including soft industrial production, capacity utilization, spotty data worldwide)
Strong dollar (normally bad for US exporters and thus, many US stocks)
Recent hike in the fed funds rate and the potential for continuing interest rate gains making bonds more attractive as an alternative to stocks
Zero to negative income growth for the majority of the population
Record stock buybacks reducing participation and making a mockery of EPS
Market timing vis-a-vis capital gains taxes (January is usually be a great time to book gains)

Chasing stocks at this juncture is a fool's errand, as it would amount to the inverse of the "buy low, sell high" adage that has guided even novice investors for eons.

There are more than a few out there reading the tea leaves for what they are rather than what they appear to be.

At the Close, Friday, December 28, 2016:
Dow: 19,833.68, -111.36 (-0.56%)
NASDAQ: 5,438.56, -48.89 (-0.89%)
S&P 500: 2,249.92, -18.96 (-0.84%)
NYSE Composite: 11,058.88, -87.52 (-0.79%)

Saturday, December 24, 2016

Nine Days And Counting: Dow Fails To Surpass 20,000; Luck Matters

Nine trading days have come and gone since the Dow surpassed the 19,900 mark with expectations that Dow 20,000 would soon be a number we'd be looking at in collected rear view mirrors. It was also the day before the FOMC of the Fed issued their well-telegraphed, monumental 25 basis point increase to the federal funds rate (AKA, the Go F Yourself rate for savers), a marketing stroke of genius by the self-appointed rulers of all marketplaces, everywhere, forever.

Well, what happened?

In technical terms, the Fed put the kibosh on stocks. 20,000 didn't happen, just like other sure things this year, such as Hillary Clinton winning the election to become America's 45th president (love that one, just can't give it up).

Other things didn't happen over the past nine trading days (plus one weekend) that were not nearly as important. Donald Trump didn't resign before taking the oath of office (sorry to the serially constipated never-Trumpers like Bill Kristol), nobody killed any special lions or panda bears, and no enormous meteors struck the earth ending the human species (really happy about that last one).

But, a few days ago (Wednesday, Dec. 21), Fearless Rick made possibly the most outrageous prediction of his inglorious career as writer, journalist, blogger and general miscreant. He touted his belief that the Dow would not break the 20,000 mark this year or at least until June, 2017. He mused that the Dow "may" not hit 20,000 until 2023.

Here's his exact quote:
The Dow isn't going to make it to 20,000 this year, and it won't make it by June of next year. In fact, it may not hit 20,000 until 2023. Book it.

So far he's right. But there's still five trading days left in 2016, so plenty of people are rooting against him, including some fat guy in a weird red suit promising some absurd thing known as a Santa Claus Rally. Good luck with that. Far fewer are betting against him, however, as the market in general, and the Dow in particular, seems to have peaked.

There's still plenty of time for him to be wrong. There's the six months until June, and the seven years until 2023. But, since one and seven are Fearless Rick's lucky numbers, he may eventually to be more lucky than good.

We shall see. In case one missed all the non-action of Friday's market churning, it went something like this: Down, slightly, sleepwalking though midday, rabid short-covering into the closing last ten minutes, boosting all the major indices into positive territory. We have all seen this play before. Yawn, and Merry Christmas.

At the Close, Friday, December 23, 2016:
Dow: 19,933.81, +14.93 (0.07%)
NASDAQ: 5,462.69, +15.27 (0.28%)
S&P 500: 2,263.79, +2.83 (0.13%)
NYSE Composite: 11,128.80, +14.66 (0.13%)

For the week:
Dow: +90.40 (+0.46%)
NASDAQ: +25.53 (+0.47%)
S&P 500: +5.72 (+0.25%)
NYSE Composite: +3.58 (+0.03%)

Thursday, December 22, 2016

Dow Misses Another Opportunity To Surpass 20,000; Rally May Not Have Legs

Now that the flirtation with 20,000 on the Dow is waning, perhaps the market and its participants will return to some semblance of regular trading as opposed to the mad year-end dash for cash following the election.

While financial pundits are still calling the recent burst higher the "Trump Rally," it probably has little or no relevance to the election of the real estate magnate as the 45th president of the United States. What it has to do with is window dressing for fund managers, loading up on hot stocks to adorn their year-end portfolio prospectuses.

Less realistic is the opportunity for the rally to continue, especially after the major league run-up and two straight days of losses on the main indices. Though not large, today's declines were in a very slight range, but interestingly, stocks fell behind the unchanged line at the open and stayed there throughout the session, indicative of a tired market, though perhaps Friday will provide some news and another boost for the Dow 20,000 hat crowd.

Even that possibility seems remote, as the quad witching expiry was last week and the closeout to this week will be more reminiscent of a dash out the door than a frenzied trading day. It is, after all, just one day prior to Christmas Eve, and, despite rumors to the contrary, even Wall Street traders are human.

There's also scant data coming forward and just about everything but kitchen sink futures have been priced in for the final week of 2016. Anybody seeking profits at this juncture has truly missed that boat.

So, Friday is going to be dull and the cries of "Dow 20,000" are not to be heard around these parts for a while. Taking a little off the top going into the new year isn't exactly a bad idea, and it seems to be catching on with more than a few.

There still is time for the annual Santa Claus rally, traditionally the final week of the year, but the Trump rally may have grounded old St. Nick. We'll find out next week.

At the Close 12/22/16:
Dow: 19,918.88, -23.08 (-0.12%)
NASDAQ: 5,447.42, -24.01 (-0.44%)
S&P 500: 2,260.96, -4.22 (-0.19%)
NYSE Composite: 11,113.04, -29.52 (-0.26%)

Wednesday, December 21, 2016

Seven Straight: Dow Misses 20,000 Mark Again; Stocks Slip; Fearless Rick Calls 20,000 In 2023

In what was the Dow's narrowest trading day since 2013, the widely-watched industrial average failed to ramp over the 20,000 mark. The DJIA fell on light volume, as did all other major indices, along with WTI crude, silver, gold and treasury yields.

Financials managed to hold green post-Fed but all other sectors are lower since the rate hike announcement a week ago. Speaking of lower, volume has completely dried up. Bonds got a small bid on the day, pushing yields slightly lower, the benchmark 10-year note was down 0.022, finishing at 2.546.

It was a day of reflecting on what has happened in 2016 and weighing the possibilities of the rally extension beyond the magical 20,000 number, which, in the long and short of it, is wholly psychological and largely meaningless unless one has invested heavily in "DOW 20,000" baseball caps.

This leaves managers with just seven more trading days to square their books for the year, something any smart (read: few, if any) player would have already accomplished prior to heading off for the holidays. Seven is also the number of days that people thought the Dow would breach 20,000. Something about that number...

A betting man would give good odds that the Dow won't break the 20,000 barrier this year and might get an even better shake on the Dow busting through by June of 2017, but it may be a bet worth taking. Failure of markets, especially after a long run-up and a bull market that's extremely overextended, is rather common. The chances of a pullback between now and February seem almost certain, especially beyond the rate hike and the obvious tax incentives to sell come January 3rd, the opening trading day of next year.

Since Money Daily publisher Fearless Rick has already established himself on two accounts lately (the Trump call in Ocotber and the more recent "silver under $16" post a week ago, he's ready to plunge headlong into this debate. Here's the call:
The Dow isn't going to make it to 20,000 this year, and it won't make it by June of next year. In fact, it may not hit 20,000 until 2023. Book it.

Obviously, our intrepid publisher is going out on a limb rather than risking one. He's currently long machinery and undeveloped real estate. Yikes!

At The Close, 12/21/16:
Dow: 19,941.96, -32.66 (-0.16%)
NASDAQ: 5,471.43, -12.51 (-0.23%)
S&P 500: 2,265.18, -5.58 (-0.25%)
NYSE Composite: 11,142.57, -29.62 (-0.27%)

Tuesday, December 20, 2016

Close, No Cigar: Dow Fails To Top 20,000

Just the facts, ma'am.

Well, maybe tomorrow.

Tuesday's Closing Quotes:
Dow: 19,974.62, +91.56 (0.46%)
MASDAQ: 5,483.94, +26.50 (0.49%)
S&P 500: 2,270.76, +8.23 (0.36%)
NYSE Composite: 11,172.20, +43.66 (0.39%)

As 2016 Winds Down With Stocks Up, What's In Store For 2017?

Recently, Americans and observes worldwide have been subjected to overreaction by lawmakers and media types over the "Russian hacking" of the recently-resolved US presidential elections and the possibility that certain electors in the electoral collage would bolt from the Trump camp in enough numbers to deny Donald Trump the needed 270 votes to certify him as America's 45th president.

As of 4:30 pm ET Monday, the electoral college did its job, giving Trump 306 votes, confirming his November victory and assuring the American public that all politics would proceed normally (we believe) for the foreseeable future.

Additionally, the over-hyped media and intelligence frenzy was revealed to have been yet another case of sour grapes and/or fake news fomented by the losers in the Democrat party and what appears to be rogue elements of the intelligence community. The good news is that Mr. Trump, once inaugurated on January 20, will be able to remove such rogue elements via his appointees to the CIA, FBI and other agencies. The bad news is that the sore loser Democrats and their media whores will remain, and they will likely continue to harass and object every effort Trump makes to "make America great again."

While almost nobody can reasonably oppose efforts to improve conditions for Americans, the Democrats will couch their objections in the most mealy-mouthed manners, with references to diversity, unfairness and vague commentaries on power and elitism.

Fortunately, the investor class has ignored most of the political squabbling and has moved on to increasing its wealth, with stocks up tremendously since election day. The bond markets have expressed acceptance of the Fed's minuscule rate hike of last week and have stabilized. Everything seems in place for a nice, year-end Santa Claus rally which will take the Dow Jones Industrial Average over the mythical 20,000 plateau.

The question to be asked at this juncture is, will the markets remain ebullient and bubbly into the New Year? With stocks hovering at or near all-time highs, and the bull run which began in 2009 extending into a ninth year, the answer should be obvious. Markets do not work one way (up) and corrections and bear markets often occur at what seems to be the most inopportune moments. With investor sentiment bullish to the extreme, the probability of a major correction in the first quarter of 2017 should be quite high, unless one adheres to the well-founded theory that the Fed has backstopped equity markets for years and will continue to do so. Doing otherwise, so the conventional wisdom tells, would be catastrophic, as though fair and open markets are inherently evil.

They are not, and it may be nigh on the eve of major changes in fiscal and monetary policy. On the fiscal side, Mr. Trump - a businessman with many years experience in all matters financial - the message is clear: he will do what it takes to get America on a path to prosperity for all levels of income, not just the crony capitalists and heavily financialized major corporations, but for individuals up and down the income ladder.

As for the Fed, one's guess is as good as another, but the genii inside the Fed seem intent on raising interest rates gradually in order to keep the US economy from overheating. As usual, they will be late to the party, but perhaps they can salve their damaged egos by reducing their bloated balance sheet in 2017 and leaving the number of interest rate hikes below three, ending the year around one percent, which, while traditionally absurdly low, would count as a major accomplishment since the Great Financial Crisis of the recent past.

Geopolitical events may overtake the Fed's view, however, as Japan and the Eurozone are well upon the road to financial ruin, and a crisis in either market (plus China) may cause extreme disruption to an orderly return to what is commonly referred to as "normalization."

A new administration hell-bent on returning America to greatness and leveling the playing field in international trade set against a backdrop of unelected financial and political operatives worldwide should make for an interesting, exciting, volatile year ahead.

As 2016 winds down, 2017 should present unique and various opportunities in all markets, requiring astute evaluation of not just balance sheets and P/E ratios, but insight into the political influence which has been and will continue to be exerted upon trade and commerce, globally.

At the Close: 12/19/2016
Dow: 19,883.06, +39.65 (0.20%)
NASDAQ: 5,457.44, +20.28 (0.37%)
S&P 500: 2,262.53, +4.46 (0.20%)
NYSE Composite: 11,128.54, +3.32 (0.03%)

Saturday, December 17, 2016

Market Week In Review: December 10-16, 2016; Stocks Moribund, Silver Slammed, Oil, Banks Up

Highlighted by Wednesday's (Dec. 14) FOMC rate policy announcement, the week as a whole saw its fair share of ups and downs, mostly confined to intra-day movement, but eventually ending mildly positive, at least for stocks.

The Dow recorded a pair of all-time closing highs on Monday and Tuesday, but failed to reach for the stars after the Fed announced a 0.25% hike in the federal funds rate, the first in exactly one year. The move from 0.25-0.50 to 0.50-0.75 triggered a sharp sell-off in Wednesday afternoon trading, though stocks recovered nicely on Thursday and ended flat on Friday.

If the week was uneventful for stocks, it was not the same for commodities, particularly silver and gold, or for the US dollar, which reached nearly-unprecedented highs over 102.20 on the Bloomberg dollar index. As the dollar gained, the precious metals were slammed, gold losing over $30 top to bottom, but eventually leveling off at $1134.60 at Friday's finish, a loss of just $26 from the rate announcement. Silver took a much harder hit, dropping in price on the COMEX from $17.10 an ounce on Wednesday to end the week about a buck lower, at $16.07, a six percent loss.

Following OPEC's announced production cuts for 2017, crude spiked over $55 per ounce, but retreated during the week, still ahead somewhat at 53.03 as the week's trading closed out. Despite the strong dollar - supposedly a brake on oil prices - oil managed to ramp up to the highest price in three years.

Financials and industrials led the way for US stocks, not surprisingly continuing the Dow rally spurred forward by notables Goldman Sachs, 3M, Boeing, and General Electric. The Dow Industrial Average being the only major index to finish in the green for the week, markets continue to show strength in only the largest of large caps while smaller stocks are only being nibbled upon and, in the main, sold. The fracturing of markets into large leaders and small losers cannot bode well for the continuation of any meaningful rally going forward.

Naturally, with the Fed hiking rates, if only modestly, Treasuries were sold, but mainly on the short-duration issues. The five-year note broke through the mythical 2.00% threshold this week (2.05%), while the 10-year popped briefly above 2.60%, clinging close to that level as markets went dark for the weekend (2.57%). A flattening yield curve was evident as the 30-year bond remained steady, at 3.16%, pushing down the spread between fives and thirties to a unitary 1.11%.

All of this came against a backdrop of national news media hyping futile and largely-baseless claims by the US intelligence community that Russia hacked the 2016 presidential election, somehow making Vladimir Putin responsible for the election of Donald J. Trump (who will be formally elected by the Electoral College on Monday) and the demise of Hillary Clinton, the choice of the much-discredited leftist status quo.

The folly of the intelligence claims was completely ignored by Wall Street, and rightly so. The last thing investors need is a fresh injection of political skullduggery, after slogging through nearly two years of endless campaign rhetoric from all sides.

With a week left before Christmas, retailers have yet to ring bells of any kind, neither of alarm or of joyous peals f profit. The Christmas shopping experience over the past decade has morphed from mad dashes on Black Friday to a controlled button-pushing event on computers nationwide, as the internet has revolutionized the retail buying experience and forever changed the shopping mall landscape and holiday experience.

With two weeks remaining in 2016, it's likely that markets will respond to calmer views going forward though a sharp Santa Claus rally, taking the Dow beyond 20,000, is a distinct possibility over the final ten trading days of the year.

At The Close: Friday, December 16
Dow: 19,848.60, -3.64 (-0.02%)
NASDAQ: 5,437.29, -19.56 (-0.36%)
S&P 500: 2,258.20, -3.83 (-0.17%)
NYSE Composite: 11,122.44, -9.46 (-0.08%)

For the Week:
Dow: +86.65 (0.44%)
NASDAQ: -7.34 (-0.13%)
S&P 500: -1.46 (-0.06%)
NYSE Composite: -66.57 (-0.59%)

Thursday, December 15, 2016

Fed Post-Mortem: Stocks Pop, Stop; China Bonds Crash; Silver Hits Target

After posting a duo of sentiments Wednesday, outlining the Money Daily "trade of the year," events escalated quickly following the Fed's federal funds interest rate hike of 0.25%.

Overnight, China treasury bonds crashed and trading in key futures were halted in an unprecedented move. Panicked investors sent yields soaring, the 10-year bond hitting a 16-month high of 3.4%. Elsewhere around the globe, the bond rout continued as yields spiked, reflecting the potential the Fed laid on the table for rising rates through 2020.

US stocks gained on the day, though the closing prices were less than half of what was achieved at midday.

As predicted, the silver price was clubbed like a baby seal, dropping to a high-15 handle early in the day and never recovering. Whether the move in silver (and gold) can be stemmed short term, it's likely that pricing will remain moribund unless further events occur to derail the massive spike in the US dollar.

The inverse relationship between the dollar and all commodities is especially pronounced in volatile silver. The Money Daily call to "buy at any price under $16/ounce has already been achieved, but indications are that it could continue as low as $14.75 the ounce.

Hang tight through tomorrow and the weekend, as Friday is a quad-witching day for options and futures expiry.

At the Close:
Dow: 19,852.24, +59.71 (0.30%)
NASDAQ: 5,456.85, +20.18 (0.37%)
S&P 500: 2,262.03, +8.75 (0.39%)
NYSE Composite: 11,131.85, +33.18 (0.30%)

Wednesday, December 14, 2016

Fed Hikes Fed Funds Rate 0.25%, Everything Gets Mashed In Panic Attack

You name it, stocks, bonds, oil, gold, silver, real estate, it all got smashed down pretty well after Janet Yellen and her central bank buddies decided to hike the federal funds rate by 1/4 point, from the unreasonably low figure of 0.25-0.50% to the nearly unreasonable low point of 0.50-0.75.

The only saving grace on the day was the dollar, which strengthened against almost every other currency, the dollar index quoting at 102.24 just after 4:00 pm ET.

While the FOMC move was well-telegraphed and supposedly baked into the markets, stocks still took a nosedive after the 2:00 pm announcement by the Fed. Though it's not much in terms of a rate hike and even less significant since he rate is still at historically low levels under one percent (absurd), perhaps driving the sell-off was the idea that the Fed predicted three rate hikes in 2017, which would ostensibly bring the federal funds rate to an area above one percent by this time next year. Three hikes would put the base rate at 1.25-1.50%. Optimistic, aren't they?

That's a doubtful prediction, however, as the Fed has continually over-promised and under-delivered when it comes to returning the US economy and interest rates to normalcy.

As pointed out in the previous post, the play of the day would have to be in silver and possibly gold, depending on how well-heeled and aristocratic one believes one to be. But not just yet. Wise traders will wait until the dust from this little market spasm settles and the new year selling begins on January 3rd (Yep, New Year's Day is on a Sunday, so Monday, January 2nd is a holiday. See, Trump's already making the country great again by giving everybody an extra day off).

Silver already dropped 30 cents per ounce since the FOMC announcement. Gold took a twenty dollar whacking, from $1160 to $1140. King Midas and the gold bugs are salivating! If there's one thing one can count on in this market is the pair trade on the downside. If stocks are going down, precious metals are going to get hammered, if for no good reason whatsoever. That's what happens when you trade as many contracts in a month as there is gold in the world. It's a fake, controlled, manipulated market, but, it has been steady if not profitable in recent years, once one learns the ins, outs, cheaters, liars and innuendos of playing with REAL MONEY.

Stay tuned to Money Daily as the trade of the year takes place. The few days or weeks wait will be well worth it.

Closing prices, Wednesday, December 14:
Dow: 19,792.53, -118.68 (-0.60%)
NASDAQ: 5,436.67, -27.16 (-0.50%)
S&P 500: 2,253.28, -18.44 (-0.81%)
NYSE Composite: 11,099.21, -137.96 (-1.23%)

Pre-FOMC Forecast: Stocks Steady, Sell Bonds, Buy Silver And Gold

There's an interesting set-up to today's expected FOMC 25 basis point (0.25%) hike in the federal funds rate.

The Yen has collapsed 19% in the last few months, the $USD is now at a 13-year high and stocks are at one of their most overbought levels in 100 years.

If that last statement about stocks being wildly overvalued doesn't give one pause, consider the situation the last time the Fed raised interest rates. It was a year ago, last December. On the day of the rate increase, December 16, the Dow Industrial Average closed at 17,749.09. The index dipped and dodged for two weeks, re-rallying back to close at 17,720.98, December 29, never quite getting back to previous highs.

But, when the new year dawned, the floodgates opened as sellers emerged from the shadows, many of them likely taking advantage of tax rules on profitable trades, mostly allowing those profits from 2015 to float tax-free until April of 2017 (the future) if sold in 2016. Tricky, allowable, rational and fully legal was this tactic which in effect dropped the Dow by a shade over 11 percent to a closing quote of 15,766.74 on January 20.

That was officially correction territory, and, while the rest of the trading community was wondering if this was going to be a 2008 redux, the Fed and its central banking brethren quietly began undermining market fundamentals (again, surprise!) by surreptitiously buying equities through proxies, particularly, the Bank of Japan, notorious for market meddling in everything from auto parts to currencies to yes, Virginia, stocks.

As it turned out, the trade was a worthwhile one for those central banking and insider trading folks. The Dow is now hurtling headlong towards 20,000, so, depending on which stocks the proxies were buying, they may have profited upwards of 25%.

Is the market rigged, or is it ready to face the awful reality of a federal funds rate at 0.50-0.75% The horror! One is amazed at not only the audacity of the central banking cartel, but also its awesome good fortune on all matters regarding their (your) money.

Getting back to the set-up from last year, the yen was down only 10% from September through December of 2015, about half of its decline this year. Can history repeat, and with even better results? That's one heck of a bet, if one is so inclined. For the rest of us, it looks like sitting on the sidelines for the rest of 2016 might turn out to be a profitable move.

It's of dubious probability that stocks are going to stage any kind of dramatic rally, so, what's the play, and when.

It's not often that Money Daily offers specific investment advice, but, taking a gander at what's happened to gold and silver the past few months (gold dropping from above $1300 to below $1160 and silver dipping from near $20 per ounce to around $17 currently), the opportunity is available to not necessarily make a killing, but to preserve some wealth in precious metals, you know, those things that have been considered money for thousands of years, gold and silver.

Being that Money Daily is more of a silver surfer than a gold bug, the recommendation is for silver at any price below $16.00. The market will not likely tolerate downside below $14.50, and the potential is there for a fabulous move upside, without the prerequisite dip.

So, here's the scenario. Stocks will remain steady or turn upwards for the remainder of December. After all, what's Christmas without a Santa Claus rally? Remember, stocks are wildly overpriced and overdue for some corrective medicine. The dollar should get a good, hard beating, but it probably won't because other major economies are in much worse shape.

It gets more complicated, because a strong dollar makes US goods more expensive overseas, and, if our newly-elected president has his way, imports are going to be heavily taxed, and soon. A trade war is likely to erupt by mid-2017.

Bond yields should benefit from rising interest rates, whereas gold and silver should see further price deterioration.

The wild cards are many, but the obvious one is inflation. If the Fed continues resolutely on course to foment inflation above two percent (impossible, say some, though the PPI came in today with a surprising gain of 0.4% for November, at the same time industrial production dipped 0.4% and capacity utilization also fell, to a six-month low of 75.0%.

While the majority of mainstream idiot economists pay scant attention to the latter two data points, CEOs and real economists take these numbers seriously. How is there going to be inflation when industrial production is slowing or stagnant and utilization is only 75% when the norm for growing economies is closer to 85%? Yet, there it is, with producer prices advancing at an annualized rate of 4.8%. Tomorrow's release of CPI for November will be the final nail in the coffin of controlled destruction economics engineered by the Fed and foreign central bank proxies.

Sorry if there's hardly anything positive in this report, but the era of central bank meddling, manipulating and needling intervention is in need of departure. They've managed to create an economy that benefits only those in the know, at the expense of taxpayers and citizens worldwide. It's like a giant plantation, with a healthy portion of worker paychecks - via taxes, fees, inflation and other theft - as the harvest.

You're being fattened and groomed for the slaughter or shearing, in a world which allows most to gain marginally but not substantially. Those without an escape hatch like a side business or secret gold vault are victims of mediocrity, though most will never notice and hardly ever complain.

So, off we go to FOMC land, with the big announcement (that's sarcasm, friend) fewer than two hours away.

Reiterating the call for silver surfing, WAIT. It's difficult with silver at such bargain levels, but it's almost sure to go lower, especialy if it goes a little higher. The central bankers - who hate competition from other forms of money - simply won't have it, and, since they have complete control over the paper silver market, they'll crush the price. If silver spikes above $19, it's a missed opportunity, but, bonus, your holdings are now worth more of those teeny-weeny Federal Reserve Notes.

The best timing may be the week between Christmas and New Year's Day, when nobody is paying much attention, or within the first three weeks of January. After the inauguration on the 20th, it's possible that markets will experience some serious turmoil, so there may be more time available to stock up on the stuff that powers solar panels and is the best electrical conductor in the universe, besides being the money of gentlemen.

“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.”
-- Norm Franz in his book Money and Wealth in the New Millennium (2001).

More after the market close.

Tuesday, December 13, 2016

Interest Rates Likely To Be Hiked Wednesday; For Now, Markets Don't Care

Remember how any time the Fed even hinted that they were going to raise interest rates (the fed funds rate, to be exact) the market would throw a hissy fit and drop 3-5% in a matter of days?

Well, that's ancient history, it appears, as the Dow smashes its way toward 20,000 with yet another all-time high, despite the Fed nearly certain to raise the Fed funds rate tomorrow (Wednesday, 2:00 pm).

For now, markets are completely out of control and have been since the election of one Donald J. Trump as president of the United States. If anybody believes his pledge to "make America great again," it sure seems like wizened traders on Wall Street do.

Hang tight. It's almost time to make a major move on silver and/or gold. The logic and reasoning for the buy will be explained right here at Money Daily in tomorrow's post-FOMC post.

Tuesday, Dec. 13, at the Closing Bell:
Dow: 19,911.21, +114.78 (0.58%)
NYSE Composite: 11,236.75, +59.47 (0.53%)
NASDAQ: 5,463.83, +51.29 (0.95%)
S&P 500: 2,271.72, +14.76 (0.65%)

Saturday, December 10, 2016

Stocks Continue Surging Into Year-End; Fed Rate Hike Baked In, Unsubstantial

He said, "Call the doctor. I think I'm gonna crash."
"The doctor say he's comin', but you gotta pay him cash."
They went rushin' down that freeway,
messed around and got lost
They didn't care they were just dyin' to get off

--Life in the Fast Lane, Eagles, 1976

Stocks careened higher on Friday, finishing off a week that saw increased investor buying virtually across the board. It was the best week for stocks, especially on the Dow, since the week immediately following the US elections, an odd scenario for analysts and talking media heads who predicted turmoil and collapse if anybody but Hillary Clinton was elected president.

Since the election of Donald Trump, we now know that what emerges from the mouths of Wall Street psychopaths and media slaves is usually incorrect, politically driven and nine times out of ten wrong. What we still don't understand is why the same people are relied upon for their opinions, having been proven completely wrong over and over again, the best examples of this kind of nepotistic following being seen regularly on the financial networks, Bloomberg, Fox, and notoriously, CNBC, which has its own designated cheerleader, Jim Cramer.

How could all of these pundits and overpaid professionals have gotten it so wrong? Easy. The chances of stocks advancing or declining is almost always a 50/50 proposition, but, anybody reading the tea leaves from leftover elections would have known that a Republican president following a lame duck incumbent makes for a major bull market (that's made up, but it's probably true anyhow, and, in the age of "fake news" all one needs is a headline and story, right?).

Maybe people with money think Donald Trump's various positions on trade, immigration, wages, borders and culture will usher in another gilded age of American exceptionalism. For the most part, anybody with half a brain still in working order would welcome such a change. More than likely, following the initial post-election stock surge the rest of the advances have been driven largely by herd behavior.

It should be widely accepted, though it isn't, that stocks are valued extremely high, but the right thing is that bonds have been collapsing over the past five weeks, at the same time stocks have been rising. That's not your run-of-the-mill pair trade, but it is imaginative. As bonds fall, yields rise, making them more attractive as safety plays. In the meantime, with interest rates largely remaining at bargain basement levels, stocks have continued to be the investment de jour.

If there's a cloudy lining inside the silver cloud of stocks, it's that a correction is long overdue. However, bears and shorts have been saying that for the better part of the past four years and it hasn't happened. Instead, we happen to be in the midst of a massive valuation expansion. Whether or not individual stocks are good or bad investments presently does not seem to matter. There's an explosion of cash coming into the market, the same cash that was being hoarded pre-election. Once that money is exploited and exposed, the intensity of the rally should subside, but probably not until the calendar turn to 2017, the attractiveness and continual pimping of the "Santa Claus Rally" expected to be the main driver over the remaining weeks of 2016.

So, if a crash is coming, January's your huckleberry, or, right after the Fed raises the federal funds rate next week, which has evolved from a possibility to a near-certainty. The Fed and their one quarter of one percent hike in overnight lending is more a canard than a reality. Only the monumentally stupid or disconnected will suffer on a small rate increase. It's so tiny that almost nobody will notice. Certainly, it's not the kind of event that will cause a run, a panic, a rout, so the best action for next week is probably inaction.

Crashes and sudden downturns in the market normally come from out of the blue, caused by forces to which nobody (or only a select, ridiculed few) had been paying attention. If there's going to be a turn, the most likely causes are going to come from Japan or China or Europe, possibly even Brazil or another major portion of Latin America. More likely is that after Mr. Trump is inaugurated, US markets stabilize and places such as those mentioned above suffer. Such is the way of the world. There will be winners and losers. If America is going to be "great again" other countries are going to be not so great. The market is economics in motion and the chances for a crash in America are minimal over the short term. Longer term, dependent on too many factors to delineate here, corrections and crashes are bound to occur. The truth of the matter, is that the usually-wrong analysis from Wall Street is actually right on this account: if your time horizon is 20 or more years, crashes and corrections are buying opportunities and nothing more. The world won't end tomorrow or the next day, or the next month or the next year.

Thus, the outlook for stocks remains fairly solid, albeit a bit on the high side right now. Since the election, the Dow is more than 1400 points higher, a gain of nearly eight percent. That's a pretty healthy gain for five weeks and something that should be taken into account whatever investment decision one is making or about to make.

Friday's Closing Quotes:
Dow: 19,756.85, +142.04 (0.72%)
S&P 500: 2,259.53. +13.34 (0.59%)
NASDAQ: 5,444.50, +27.14 (0.50%)
NYSE Composite: 11,191.79, +41.83 (0.38%)

For the Week Ending 12/09/16:
Dow: +586.43 (+3.06%)
S&P 500: +67.58 (+3.08%)
NASDAQ: +188.85 (+3.59%)
NYSE Composite: +353.21 (+3.26%)

Friday, December 2, 2016

December Jobs Report OK; Look For FedRes To Raise Rates

The U.S. economy added 178,000 net new jobs last month while the unemployment rate fell to 4.6%, the lowest since 2007, the Labor Department said Friday.

That's about all one needs to know about what the Fed may do at the next meeting of the FOMC in less than two weeks, December 13 and 14.

The economy seems to have picked up some confidence from the Trump election, and there's the possibility that the Fed may consider more rate hikes at a faster pace if economic conditions continue to improve (it's about time). what the Fed doesn't want to do is slam the door shut on any expansion by raising rates too quickly, but, after eight years of moribund global flim-flammery, it's apparent that the Fed doesn't want to do anything that might draw undue attention to itself.

As the year enters the final month of a very turbulent 2016, the signs are good that the eight years of non-recovery (except for stocks) may be about to usher in a new prosperity and at least a couple of good years for the US economy. While the rest of the world is in somewhat dubious condition, especially Japan and Europe, with their mountains of debt and negative interest rates, the US seems poised to again take the lead in economic matters.

It may take a while and it may take a pullback in stocks, which hasn't happened since '09, but things do seem to be on the improve.

Other than the Dow Industrials, stocks took a bit of a beating this week, ending on a down note as the Friday rally failed to maintain momentum. This could be the beginning of a Wall Street hissy fit over rate hikes. Then again, stocks are close to all-time highs.

Stay tuned and keep that power dry.

Closing Bell, Friday 12/02/16
Dow: 19,170.42, -21.51 (-0.11%)
NASDAQ: 5,255.65, +4.55 (0.09%)
S&P 500: 2,191.95, +0.87 (0.04%)
NYSE Composite: 10,841.64, +12.65 (0.12%)

For the week:

Dow: +18.28 (+0.10%)
NASDAQ: -143.27 (-2.65%)
S&P 500: -21.40 (-0.98%)
NYSE Composite: -38.98 (-0.36%)

Thursday, December 1, 2016

Is The Economy Changing? What To Buy Now

Since Donald Trump won the presidential election roughly a month ago, the reaction on Wall Street has been, in a word, enthusiastic.

The investing class is betting that Trump will have a positive impact on corporate bottom lines and all indications are that he will try to slash US corporation tax rates and repatriate corporate money from abroad to pump back into the US economy.

But, it's not at all that simple. Stocks are at record highs already, so, if you're invested in a 401k or other plan at work, sit tight. If you're one of the three dozen or so active individual investors out there still standing after years of mauling and manipulation, you have to notice that p/e ratios are at pretty high atmospheric levels.

Stocks are great if you have the patience and appetite for the ups and downs of active markets, but buying at these levels would seem a bit on the foolhardy side. There's likely to be a pullback if the business cycle still has any tethers to reality. Besides, the FOMC is going to raise interest rates, making bonds, gold and silver and other fixed investments appear more palatable.

Who knows? Banks might actually be offering 4-5% interest on savings in a few years, though it's a dubious call. A return to normalcy in markets and credit would cause the national debt to skyrocket immediately, as in "overnight," and that's not something a president Trump (or any other president for that matter) wants on his historical resume.

So, what's a bargain? As usual, the central banks and their cronies (yes, despite the Donald, there's still plenty of crony capitalism to go around. One is not going to destroy Rome in a day or even one term.) put the kibosh on the precious metals just after the election and they don't seem to be relenting at this point.

The world has changed, but it's probably too early to tell what effects those changes are going to have on businesses or investing or sectors or bonds or anything. Give it a little time, but bear in mind that the FOMC is meeting on the 13th and 14th of December and the odds are very, very good that they're going to hike the federal funds rate another 25 besis points or 0.25%, bringing the effective rate to 0.50-0.75.

Now, there's nothing special about those rates except that they're still historically low. The world is still recovering from the devastation from the crimes of 2008 that were never reconciled. It's unclear whether the Trump administration is going to get tougher on Wall Street shenanigans or allow them free reign, but either way, there's still a price ot be paid for recklessness. The trick is to know when the piper shows up and nobody is that good.

Until then, silver still looks like the bargain of the century, though leaning towards outright purchases of solar panels and the associated technology is still a viable plan.

At the bottom of it all, Americans should be investing in their own businesses. Run from home or a storefront or on a shoestring, we may be entering a time of unfettered capitalism from the ground up.

Go for it.

Closing Prices for Thursday, 12/01/16:
DOW: 19,191.93, +68.35 (0.36%)
NASDAQ: 5,251.11, -72.57 (-1.36%)
S&P 500: 2,191.08, -7.73 (-0.35%)
NYSE Composite: 10,821.85, -16.61 (-0.15%)