Stocks Bounce Higher After Long Weekend; Bond Yields Smashed

Apparently, there was so much pent up demand for overpriced stocks that all the major averages posted nearly one percent gains.

Surely, this has something to do with the failed North Korean missile launch on Sunday, though there might be some Russian involvement in stocks going higher.

Then again, it just might be that speculators are taking one final dive into equities before this year's official federal income tax deadline (April 18), getting all they can out of super low interest rates.

Speaking of interest rates, the officials over at the Federal Reserve must be highly perplexed, with the 10-year note resting comfortably at around 2.20% yield. Somebody's happy, but surely not the millions of retirees who pine for the days when banks paid five percent interest on savings.

Those days are long gone, but the party continues. Hyperinflation for the win?

At The Close, Monday, April 17, 2017:
Dow: 20,636.92, +183.67 (0.90%)
NASDAQ: 5,856.79, +51.64 (0.89%)
S&P 500: 2,349.01, +20.06 (0.86%)
NYSE Composite: 11,427.08 +102.55 (0.91%)

If The Fed Is Upset On The CPI Drop And Stubbornly-Low Interest Rates, It Must Be A Good Friday

It's Good Friday and some of us have just finished doing our taxes (such as this writer), so, some of us are wondering what's so good about this particular Friday.

Aside from the generally-obvious religious conventions (Shouldn't it be called Bad Friday because it's the day Jesus Christ was crucified, and that doesn't seem so good?), there probably are some good things afoot.

First, the financial markets are closed, always a bonus. Second, the Labor Department announced today that the Consumer Price Index (CPI) dropped 0.3 percent, the first decline since February 2016. They said that lower cell phone service and gasoline costs outpaced higher rents and a slight increase in food costs (0.3%).

If those food costs are to be believed, since the amount of food most people eat (and buy) can be self-regulated, higher food costs aren't really an issue at all, especially since practically nobody in America is starving at the present time.

This CPI number brings up some interesting possibilities. If the United States is actually experiencing deflation (or, as the TV pundits like to call it, because deflation is bad, you know, "disinflation") then prices are going down, everything is going to cost less. That's the bane of a strong dollar. Imports are cheaper, and, in an economy that relies on lots of imports, that drives domestically-produced goods and services down as well.

It's a win-win-win for everybody, except, possibly, the Federal Reserve, banks and bond investors who are getting anxious and perhaps a bit desperate for higher interest rates.

Well, crocodile tears are the order of the day for them. Higher interest rates are not going to happen unless the economy is strong, meaning many excess jobs are being created, pushing wages higher, and producers are experiencing strong pricing power. Both of those items - jobs and pricing - seem to be going in reverse over the short term. Bond prices have been soaring because yields have been stubbornly opposed to any kind of rise, the now nearly constant urging and jawboning from the genii at the Federal Reserve, Janet Yellen, Stanley Fisher, et. al. notwithstanding.

The 10-year note is hovering around 2.25% yield. That doesn't bode well for inflation. No, not at all.

Stocks were lower for the week, but they're still within a few percentage points of all-time highs. Rich people and people with 401k or pension plans are probably not very concerned with their stock holdings.

In conclusion, this may actually be a pretty good Good Friday after all. Cheaper gas and phone service is a plus and eating a little less is probably not a bad idea in a nation of fatties. Plus, if the people over at the Fed are perplexed or constipated or otherwise annoyed or agitated, that's a huge bonus.

Happy Easter. Don't eat too much ham, lamb, or hard-boiled eggs.

At The Close, Thursday, April 13, 2017:
Dow: 20,453.25, -138.61 (-0.67%)
NASDAQ: 5,805.15, -31.01 (-0.53%)
S&P 500: 2,328.95, -15.98 (-0.68%)
NYSE Composite: 11,324.53, -98.64 (-0.86%)

For the Week:
Dow: -202.85 (-0.98%)
NASDAQ: -72.66 (-1.24%)
S&P 500: -26.59 (-1.13)
NYSE Composite: -121.05 (-1.06%)

Dow At Record Highs 11 Staight Sessions; Eye On PPT, Central Bank Intervention

As has been the case for multiple sessions over many years, a rally in the final hour of trading pushed the Dow Jones Industrial Average to a new all-time high, with the NASDAQ and S&P averages also closing up, but short of record highs. They NYSE Composite was fractionally lower.

In the red the entire session, the Dow gained 70 points from 3:00 to 4:00 pm ET, with other major averages also gaining. This kind of activity has been a market feature since at least 2001, when the existence of the Plunge Protection Team (PPT) turned from urban myth to global reality. The PPT, created by Presidential Order #12631, signed on March 18, 1988 by President Ronald Reagan is also known as The Working Group on Financial Markets, is, in reality, a body of financial authorities consisting of:

• The Secretary of the Treasury, or his or her designee (as Chairperson of the Working Group);
• The Chairperson of the Board of Governors of the Federal Reserve System, or his or her designee;
• The Chairperson of the Securities and Exchange Commission, or his or her designee; and
• The Chairperson of the Commodity Futures Trading Commission

Writers such as John Crudele of the New York Post have been critical of the Working Group's market-bending actions and foreign journalists from the Daily Telegraph and The Observer have suggested that the group has often exceeded its mandate.

Thus, tin-foil-hat type conspiracies have continued to suggest that the Federal Reserve and other central banks have been manipulating markets higher for years, and, while such coordinated action has yet to be unearthed by the mainstream media, sites such as ZeroHedge.com and other fringe outlets report that while the PPT may or may not be always active in markets, there's no doubt that central banks, notable, the European Central Bank (ECB), Swiss National Bank (SNB) and Bank of Japan (BOJ) are heavily invested in US and other global equities, making a mockery of the global regime of fiat money.

There are those who say intervention by government-sponsored agencies is not altogether nefarious, and some who believe such market-rigging is a good and reliable replacement for Adam Smith's "invisible hand" of the markets, it cannot be understated adequately that such activity will eventually undermine the integrity of financial markets and instruments.

Being based almost entirely upon faith and trust, financial markets have become the backbone of the global economy. If that faith and trust is broken - an unlikely occurrence, as the central banks, governments, and major brokerages work hand-in-hand largely toward the same end (higher stock prices) - the fragile system would crumble. An antecedent (and, much larger market) to the inner workings of financial markets is the bond market, which has also been pistol-whipped regularly by central bank policy and directive. On Friday, the US Treasury 10-Year Note fell to its lowest level in nearly three months, closing out the week at 2.3170, a direct result of higher stock prices, also known in the investing world as TINA (There Is No Alternative... to stocks).

With central banks and government agencies regularly interjecting themselves and their policies into financial markets, the natural question becomes: how stable and trustworthy are these markets and who gains from such manipulation?

Answering the question bluntly, the markets are only as stable as the institutions behind them, which is today a matter of considerable conjecture and discordant viewpoints. Purists posit that the mountains of debt produced by individuals, businesses, and governments is simply unsustainable and that a rout and crash, while unpredictable, is inevitable. The obvious conclusion to the other half of the question "qui bono" (who gains) is those in power and in control of such vast swaths of money, the governments, oligarchs, commercial and central banks. Beyond that, those in power consider themselves to be benefactors of the millions who gain from higher stock prices, inflation and boosts to massively underfunded pension funds.

With this degree of chutzpah in and on the minds of the central bankers and government leaders of the world, there is little doubt that they believe their actions to be highly beneficial to the orderly running of global finances while also not taking into account the falsity and pervasive inequities that are given rise by those same actions. Those with power over financial markets hold an incredible degree of responsibility, a responsibility that seemingly has gone beyond the pale, over the moon and into its own orbit.

Essentially, those who have questioned or taken positions contrary to the policies of the Fed and their brethren central banks, especially since the GFC of 2008, have been serially decimated in the markets. With stock indices raging without underlying fundamental bases, the planet may have reached a point of no return, wherein all matters financial are no longer in the control of individuals, but, rather, controlled by an opaque group of self-appointed masters.

One can only hope that they are well-grounded and essentially good-natured, because the alternatives would be brazen in concept and bizarre in execution.

At The Close, 2.24.17:
Dow: 20,821.76, +11.44 (0.05%)
NASDAQ: 5,845.31, +9.80 (0.17%)
S&P 500: 2,367.34, +3.53 (0.15%)
NYSE Composite: 11,541.29, -14.87 (-0.02%)

For the Week:
Dow: +197.71 (0.96%)
NASDAQ: +6.73 (0.12%)
S&P 500: +16.18 (0.69%)
NYSE Composite: +30.38 (0.26)

The Rush To Safety Has Begun In Earnest; 10-Year Yields Drop to 2.41%

With one of the most amazing sporting spectacles - Super Bowl 51 (LI, for those of the Roman numeral persuasion) - behind, most people got back to work today, including the rabid money-grubbers of Wall Street, but all was not rosy and peachy after the New England Patriots won in overtime, 34-28, over the Atlanta Falcons.

As President Donald Trump continues to attempt to "make America great again," much of the focus on the first trading day of the week was not on stocks, but rather, bonds, most noticeably on the 10-year treasury note, which plummeted eight basis points on the day to produce the lowest yield in two weeks, to 2.41%.

That figure may not seem so attractive to the yield-seekers of the world, but to countless hedge and managed bond fund professionals, it was a pretty awesome start to the week. Prices - which preform in the opposite direction of yield - for the 10-year were rocketing higher and any continuation of the move over the next few days and through the week might make for a trend-setting reversion following weeks of speculation after the Fed hiked federal funds rates at the end of last year.

Stocks were down modestly, but that was antecedent to the speculative ride in bonds, which was focused on the long end, thereby flattening the curve. What is more than just passing interest in treasury bonds figures to keep a lid on stock prices for the near term, at least until the next Fed meeting, in mid-March, at which time the FOMC will likely keep interest rates at the same levels. It's simply going to be too early for the Fed to believe that the economy is on sound footing toward expansion, something they've been sniffing around for over the past eight years. To their dismay, and possible demise, the Fed hasn't found much in the data to suggest that the US economy is going to be great, again, or with any other adverbial disclaimer.

So, today can be summed up as bond traders getting calls to buy safety and executing on the wishes of their clients. Any assumption that the Trump rally or any other concoction of the news and financial media is going to send stocks even higher than the stratospheric levels they've already achieved in one of the longest multiple expansions in history may be similar to a dog whistle.

Dogs may hear it and lower-thinking humans might get a strange beeping sound, but long-term financial experts aren't going to notice. They've already made up their minds about where stocks are headed and, from today's indications, they're not going to a pleasant place.

Gird your loins and whatever else you might think appropriate for a trip of declining prices and some creative destruction in stocks. Hopefully, it won't be your money that's being lost.

At the Close, Monday, January 6, 2017:
Dow: 20,052.42, -19.04 (-0.09%)
NASDAQ: 5,663.55, -3.21 (-0.06%)
S&P 500: 2,292.56, -4.86 (-0.21%)
NYSE Composite: 11,264.11, -46.63 (-0.41%)

The Dow 20,000 Ceiling

After the release of the non-farm payroll data for December, futures rose on the news that the nation created 156,000 net new jobs in the month, just shy of consensus estimates for 170,000. What may have been the cause for optimism was the 0.4% increase in wages carried in the report. The unemployment rate rose a notch to 4.7%, but that was at 8:30 am ET, an hour before the market open.

The bigger event began hours later as the Dow Jones Industrial Average - with the other major indices in tow - powered higher, eventually getting to within 0.37 points of the mystical, magic mark of Dow 20,000. The stall occurred at 19,999,63, the high for the day, right around noon.

For roughly the next four hours, the Dow tantalized and amused traders and spectators alike, hovering just below 20,000, reaching to within single points on various occasions.

But it never made it, as though somebody had placed a lid on the market right at the 20,000 mark. The index struggled and failed, over and over again throughout the afternoon, to no avail. Finally, with less than ten minutes remianing in the trading day, all the stops apparently run, the ghost was given up and the Dow closed not only short of 20,000 but also shy of a new record, at 19,963.80, a few ticks short of the all-time high close made on December 20 of last year, 19,974.62.

Explanations abound as to why the Dow cannot break through this hysterical, purely-psychological number, the best of them probably involving program trading, as computer algos have been set to sell as the number is approached. If that is the case, there's more than a few sharpies on Wall Street thinking that stocks are severely overvalued, or that even if Dow 20,000 is pierced, it will not hold.

Stocks are severely overvalued, boosted over the past eight years by cheap funding courtesy of the Federal Reserve, whose pockets are being emptied, replaced by promises to pay in the form of treasury and mortgage bonds, many of them losing value.

This was a close call for sure, but the 20,000 mark still stands triumphant over a market that continues to show weakness and an unwillingness to carry through to even higher figures.

With this in mind, the question to be answered over the weekend is, will it do it on Monday? Tuesday? Ever?

From all appearances, with markets stretched to the breaking point, it's not a very good bet, no matter how close it gets.

Thus, the first trading week of the new year ends in tears, though it was a profitable one for stocks with the notable exception of the NYSE Composite, which closed down for the day. Gains were made on all major indices, but perhaps people should be paying more attention to interest rates, which, after an initial surge in yield following last month's 25 basis point hike in the federal funds rate, have fallen hard. The 10-year note yielded 2.418%, but closed Thursday at 2.368%, the lowest yield in a month. While the apparent reversal from the Fed's induced yield above 2.50% is not set in concrete, it is surely something which bears close inspection. Spreads have narrowed since the rate hike, an ominous sign of rough times ahead. If stocks falter, the stampede into bonds will be overwhelming, but possibly the move has already begun in anticipation of a stock market correction or reversal into a bear market.

However, elite traders can pat themselves on the back as they head home for the weekend. So far, January 2017 is looking good for equities, despite the obvious failure at Dow 20,000.

At the Close 1.6.16:
Dow: 19,963.80, +64.51 (0.32%)
NASDAQ: 5,521.06, +33.12 (0.60%)
S&P 500: 2,276.98, +7.98 (0.35%)
NYSE Composite: 11,237.63, -10.06 (-0.09%)

For the Week:
Dow: +201.20 (1.02%)
NASDAQ: +137.94 (2.56%)
S&P 500: +38.15 (1.70%)
NYSE Composite: +180.73 (1.63%)

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%)

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%)

SPX Near All-Time Highs On June Jobs Euphoria

On May 20, 2015, the S&P 500 index (SPX) reached an all-time intra-day high of 2,134.72. The following session, May 21, it set a closing record at 2,130.82.

This Friday, the S&P closed at 2,190.90, settling off the day's high of 2,131.71, so, no records were set in the first full trading week of July (when nobody's paying particular attention), but the major indices are now poised to run beyond their previous highs, set more than a year ago.

Thus, the banking and global finance cartel - which is in complete and unbreakable control of all "trading" markets - has waived any consideration that the third-longest equity bull market in the history of US stock markets was coming to an end.

Bears, those sadly depressed members of the pessimism society (this blog included) are never going to be satisfied it seems. Drops on the major indices of 10% or more (corrections) are not tolerated. 20% declines - bear markets by definition - are not open for discussion within the megalithic construct of global central bank monetarism.

Expect new all-time highs on the S&P promptly Monday morning, with the Dow soon to follow (all time highs of 18,351.36 intra-day and 18,312.39 closing, both on May 19, 2015). The NASDAQ has a bit further to travel, having made its all-time closing high of 5,153.97 on June 22, 2015, reaching its zenith two days later with an intra-day value of 5,164.36.

Whether these prices and averages are justified by fundamental measures of valuation is debatable. By many measures stocks are overpriced. The trading prices of some of the more popular stocks - especially those focused in the technology area (Facebook, Google, Amazon, Apple to name a few) - currently trade at nose-bleed valuations.

According to the financial press, what prompted the sudden jerk higher of US stock markets was Friday's non-farm payroll figures from June.

The Bureau of Labor Statistics (BLS) said non-farm payrolls rose to a seasonally adjusted 287K, from 11K in May, that figure revised lower, from 38K.

Analysts had expected U.S. non-farm payrolls to rise 175K last month, so the surprise factor was enormous. Muddying the waters beyond the mystifying May numbers as compared to June - the largest net gain in eight months, is that the BLS numbers are largely massaged, maneuvered, and mangled into whatever pretzel-logical outcome is desired at the moment.

In a word, the BLS numbers are untrustworthy.

David Rosenberg suggests that the month of June did not in fact show a massive gain, but employment actually declined by 119,000 during the month.

When the Household survey is put on the same comparable footing as the payroll series (the payroll and population-concept adjusted number), employment fell 119,000 in June — again calling into question the veracity of the actual payroll report — and is down 517,000 through this span. The six-month trend has dipped below the zero-line and this has happened but two other times during this seven-year expansion.

Here is another article (from February 2016) that breaks down the faulty, misleading methodology employed by the BLS.

David Stockman opines that the monthly BLS survey is mostly noise and needs to be veiwed over longer periods in order to offer convincing trends and that the May and June tallies, taken together, amount to nothing more than statistical numbness.

Effectively, the BLS survey figures move markets as the algos respond entirely to the headlines, which were out-of-the-park awesome in June. The details were more nuanced, but such does not have influence on stocks.

In any case, since, the Brexit vote, central banks and central planners have returned in force to control the narrative, which, in their view, must continue to be nothing but positive.

For an alternative view, look at the response of gold, silver and especially, government bonds, the 10-year note and 30-year bond in particular, both of which continued to make all-time lows this week.

For the week:
Dow: +197.37 (+1.10%)
S&P 500: +26.95 (+1.28%)
NASDAQ: +94.19 (+1.94%)

Friday's Fantasy:
S&P 500: 2,129.90, +32.00 (1.53%)
Dow: 18,146.74, +250.86 (1.40%)
NASDAQ: 4,956.76, +79.95 (1.64%)

Crude Oil 45.12 -0.04% Gold 1,367.40 +0.39% EUR/USD 1.1051 -0.09% 10-Yr Bond 1.37 -1.51% Corn 361.25 +3.66% Copper 2.12 +0.02% Silver 20.35 +2.58% Natural Gas 2.82 +1.44% Russell 2000 1,177.36 +2.40% VIX 13.20 -10.57% BATS 1000 20,677.17 0.00% GBP/USD 1.2952 +0.30% USD/JPY 100.4600 -0.27%

As Britain Votes To Leave European Union, The Establishment Is Losing Control

Just a few days ago, our Fearless Editor, Rick Gagliano, penned a post here at Money Daily espousing the belief that the Brexit/Bremain vote and the US presidential election were sideshows and being overblown in importance by the media. Perhaps it was a faux pas or even a veiled negotiation maneuver designed to keep "remain" voters away from the polls (we doubt the latter to be true). In any case, voters in Great Britain did - in establishment terms - the unthinkable, voted to depart from the European Union, and quite possibly delivered a verdict on the perilous future of the EU.

We now present the post mortem.

All hail Nigel Farage, head of the UKIP party and leader of the "Brexit" movement in Great Britain, for he has brought the nation out from under the Orwellian totalitarianism that is essentially the bloated bureaucracy of the European Union, and unshackled the common Briton from enslavement to the status quo.

Here is what Farage said as the tally was coming in, looking favorable for Britain exit from the EU:

If the predictions now are right, this will be a victory for real people, a victory for ordinary people, a victory for decent people. We have fought against the multinationals, we have fought against the big merchant banks, we have fought against big politics, we have fought against lies, corruption and deceit. And today honesty, decency and belief in nation, I think now is going to win. And we will have done it without having to fight, without a single bullet being fired…. Win or lose this battle tonight, we will win this war, we will get our country back, we will get our independence back and we will get our borders back.

Having fought the good fight as an MEP and a representative to the European Parliament for nearly two decades and yesterday, Farege's unwavering rhetoric for freedom and against oppression struck the first salvo for the people against the leading technocratic superstate of the EU, headquartered in Brussels.

For Farage, the victory may have greater consequences. With PM David Cameron admitting defeat and promising to step down come October, Farage figures to be a natural candidate for the vacated post of Prime Minister. Already the mainstream press has put the face of Boris Johnson, former mayor of London, front and center, ahead of Farage, who has said openly that he doesn't want to be Britain's PM.

That battle has a long way to go, but, for now, a rundown of just what Brexit has meant to markets around the world.

The Final Tally:
Leave
Vote share 51.9%
Votes 17,410,742 Votes

Remain
Vote share 48.1%
Votes 16,141,241 Votes

Stocks indices around the world were pounded:
ASIA:
Nikkei 225: 14,952.02, -1,286.33 (-7.92%)
Hang Seng Index: 20,259.13, -609.21 (-2.92%)
SSE Composite Index: 2,854.29, -37.67 (-1.30%)
Straits Times Index: 2,735.39, -58.46 (-2.09%)
S&P/ASX 200: 5,113.20, -167.50 (-3.17%)

EUROPE:
FTSE 100: 6,138.69, -199.41 (-3.15%)
DAX: 9,557.16, -699.87 (-6.82%)
CAC 40: 4,106.73, -359.17 (-8.04%)
EURO STOXX 50 Index: 2,776.09, -261.77 (-8.62%)
EURONEXT 100: 819.99, -59.09 (-6.72%)

Some other interesting notes from early after the voting:
British pound falls as much as 11 percent to $1.3229, weakest since 1985
Yield on 10-year Treasuries drops 29 basis points to 1.46 percent, set for biggest daily decline since 2009
New York crude oil retreats 5.1 percent to $47.56 a barrel, poised for biggest loss since February
Gold rallies as much as 8.1 percent to $1,358.54 an ounce, highest since March 2014

By the end of trading in the US, the day's damage had been assessed, though it was hardly what anybody would call a bloodbath. After all, this was only the first salvo against the establishment, though it does set in motion a complete disintegration of the EU and all of its strictures, laws, rules, regulations and burdensome bureaucracy.

For Americans, it's a good day to be a supporter of Donald Trump for the presidency. Much of what Mr. Trump has been campaigned for was contained in the Brexit platform: an end to open immigration, more civil liberties for common people, smaller federal government, less regulation, lower taxes, more power to people and localities (state's rights in the US).

While the damage to stocks was minimized, the press fell all about itself in once again over-hyping the damage. Britain and her people will not vanish from the earth. New trade arrangements will be made with the countries still remaining in the EU, but it is notable that more than a few EU member states are now calling for exit votes by the people, especially in France, Spain, Italy, the Czeck Republic, Hungary, and elsewhere.

The word on the European Union: Done. It's now become not a matter of if the EU will disintegrate, but when, and how. Those will be the real fireworks. But, between then and now, expect the establishment status quo to fight like mad dogs to retain and enhance their positions of power and prestige. In the end, they too will fail.

US stocks got mangled, with a hefty drop at the open and further displeasure for bulls in the late afternoon, with the Dow - just one day after it broke through the 18,000 upper barrier - closing below 17,500, the long-standing support threshold, on heavy volume. Losses were widespread; banks and financial stocks took the worst of it.

The Dow finished the week lower for the third time in the last four; the S&P and NASDAQ each notched their third straight week of decline.

US Stocks Got Socked:
S&P 500: 2,037.41, -75.91 (3.59%)
Dow: 17,400.75, -610.32 (3.39%)
NASDAQ: 4,707.98, -202.06 (4.12%)

Crude Oil 47.57 -5.07% Gold 1,319.10 +4.43% EUR/USD 1.1118 +0.13% 10-Yr Bond 1.58 -9.20% Corn 391.50 -1.57% Copper 2.11 -2.27% Silver 17.77 +2.40% Natural Gas 2.70 -1.32% Russell 2000 1,127.54 -3.81% VIX 25.76 +49.33% BATS 1000 20,677.17 0.00% GBP/USD 1.3684 +0.06% USD/JPY 102.2550 0.00%

For the Week:
Dow: -274.41 (-1.55%)
S&P 500: -33.81 (-1.63)
NASDAQ: -92.36 (1.92)

Topped Out? Stocks, Oil Fall On Stronger Dollar

Concerned over fears that the Fed might actually raise rates at the April FOMC meeting, investors took some long-overdue profits after five straight weeks of gains on the S&P and Dow Jones Industrials.

Nearly everything else was in the red on the day as the dollar strengthened against major currencies, most notably the British Pound, sent reeling over fears that UK residents might vote - in an upcoming June referendum - for Britain to leave the EU, a new poll showed.

Such cracks in the facade of the status quo are troubling for elite investors clinging to their one and two-percent dividends in stocks and bonds while the rest of the world crumbles under the weight of central bank intransigence.

Adding to the worries are the recent attacks by ISIS in the heart of the EU, Brussels, where Tuesday's terrorist bombings occurred at the airport and in a subway station just blocks from the EU parliament building.

Gold, silver, bond yields and oil also fell sharply on the day as a reassessment of priorities seems to be underway. The rout of Hillary Clinton by Idaho and Utah by insurgent candidate, Bernie Sanders, also weighed. Ted Cruz and Donald Trump split the vote on Tuesday, as Cruz captured all delegates in Utah and Trump took home the prize in Arizona's winner-take-all primary.

Oil stockpiles expanded for a fifth straight week, as the US glut expanded by 9.4 million barrels last week to 532.5 million barrels, an amount triple what analysts had expected.

While one day's slipshod results may not be nearly enough data to imply anything other than market noise, the alternative argument figures that, having made back all the losses for the year, it's time to book early profits and head for safer havens. Bonds, where yields fall as their price improves, seems to be wagging the tail of the stock market at present. The benchmark 10-year note has rallied for the better part of a month, though it still remains below two percent since dipping under that line on February 1st.

With the rest of the developed world embracing negative interest rates at the short end of the curve (though Japan's now-inverted curve has the ten-year JGB lower than the overnight rate), the Us continues to try to buck the trend by implying rate hikes ahead.

Nothing could be further from the truth. The Fed has already seen what a mere 25 basis point hike in the federal funds rate produced - a sharp decline in stock prices - and they're not about to embark upon that trip now that those losses have been retaken.

As many analysts have pointed out, the Fed is trapped, with an economy not strong enough to warrant rate increases and a base rate too low to offer any resistance to recessionary or deflationary forces. Their only resource available in the case that the economy creaks and cracks is negative rates, a subject they have already publicly broached.

Today's Setback:
S&P 500: 2,036.71, -13.09 (0.64%)
Dow: 17,502.59, -79.98 (0.45%)
NASDAQ: 4,768.86, -52.80 (1.10%)

Crude Oil 39.80 -3.98% Gold 1,220.80 -2.23% EUR/USD 1.1182 -0.32% 10-Yr Bond 1.88 -3.10% Corn 367.25 -0.74% Copper 2.24 -2.23% Silver 15.27 -3.90% Natural Gas 1.78 -4.29% Russell 2000 1,075.70 -1.97% VIX 14.94 +5.43% BATS 1000 20,682.61 0.00% GBP/USD 1.4116 -0.71% USD/JPY 112.4155 +0.07%

Stars Align for Markets Amid Super Tuesday March Madness

While the Dems and Reps fight in various primaries for the right to represent as a party leader of the USA, US equity markets calmly said adieu at the opening bell and never gave a backward glance.

Tuesday's advance was one of the top three of the year, pushing off from the 50-day moving average on the Dow, which may well have been the anointed starting point for this leg of the extended rally. The close today was at the best level in nearly two months, something of a needed salve for banged-up bulls.

While there was little in the way of encouraging news for stocks to sound off so vociferously, there was certainly no absence of chart-wise subjectivism from which to spark.

As for a relationship to Donald Trump's or Hillary Clinton's seemingly unstoppable rise to become the nominee of their respective parties, there is probably none, though wiser people have made dumber bets that Hillary will be the eventual next president and further take out the case that she will be good for the economy. That happens to be the confirmed thinking of the status quo, which sees more Clinton-esque policies as somehow good for Wall Street (note: big hitters on the street have given heartily to her campaign and to the Clinton Foundation, whereas Mr. Trump has been largely self-funded).

Even bonds were in alignment with the general mood, the 10-year note closing at a multi-week high of 1.83%.

S&P 500: 1,978.35, +46.12 (2.39%)
Dow: 16,865.08, +348.58 (2.11%)
NASDAQ: 4,689.60, +131.65 (2.89%)

Crude Oil 34.39 +1.90% Gold 1,236.60 +0.18% EUR/USD 1.0871 -0.12% 10-Yr Bond 1.83 +5.40% Corn 356.00 -0.28% Copper 2.15 +0.63% Silver 14.92 +0.01% Natural Gas 1.74 +1.46% Russell 2000 1,054.49 +1.99% VIX 17.70 -13.87% BATS 1000 20,677.17 0.00% GBP/USD 1.3950 +0.17% USD/JPY 113.9270 +1.32%

Stocks Finish Flat, But Internals Signal Something Is Seriously Wrong

US Stocks closed today marginally on the downside, though appearances can be deceiving, as there was outright catastrophe in Japan which spilled over into worried European markets.

With Chinese markets (including the SSE and Hang Seng) the Nikkei took a magnificent beating on Tuesday, losing 918 points, a 5.40% loss on the day, sending the main index of Japan further into bear market territory. Perhaps even more significant, the JCB 10-year note yield fell to a negative number, under ZERO, for the first time in history. This marks Japan and Switzerland as the only countries in the world with negative yields out to ten years, though other countries are rapidly approaching that benchmark, in particular, Germany.

European bourses all finished their session with losses of one percent or more, and, at the open in the US, the situation appeared dire, with Dow futures down more than 150 points. Stocks quickly gained traction, turned positive near midday, flirted with the unchanged line throughout the session until finally giving it up late in the day.

But, the story is not the minor loss the major indices took, but the skew of all manner of metrics toward the negative. Bond yields continued to collapse, with the ten-year down to 1.71%. The spread between the ten and two-year note compressed down to 1.04, something of a danger zone, as the two-year actually rose two bits, to yield 0.67%.

Bank stocks were unhappy spots, with Bank of America (BAC) closing at 12.20, a new 52-week and multi-year low.

Advancers were also far behind declining stocks by a margin of more than 2-to-1. Also of note, the number of new lows (NASDAQ and NYSE combined) dwarfed new highs, 812-70, with only six of those new highs on the Naz. The central planners at the central banks can pin their hats on the day as they successfully halted the manic rallies in silver and gold, for a day, anyway.

Additionally, oil was sent back well below the $30 mark, finishing in New York at $28.38 a barrel.

The VIX is also signaling more turbulence, hanging steadily in the mid-20s range.

The rout in stocks, however, like the gains for the metals, is far from over. Consensus view on Wall Street is still concerned, but not yet panicked. Stocks are still about 5-7% away from official bear market territory, though a few bad days could send the indices reeling in the wrong direction.

In a story by Bernard Condon (AP) about how much money companies have lost doing stock buybacks, we find that the stock buybacks which goosed the market and individual stocks higher over the past six to seven years has been nothing short of a colossal flop and threatens to become an even heavier weight stopped to the stock market.

What stock buybacks did accomplish was to allow executives to boost their companies' earnings without devoting capital to expansion, while at the same time justifying their extraordinary salaries and cashing out their outrageous stock options and/or bonuses.

Investors should be outraged, and righteously so, because these companies should have been either expanding their capital base or market share or distributing dividends to their shareholders. What these stock buyback kings have done is nothing short of a fiduciary failure, which in other industries would be cause for criminal indictments.

Of course, since this all occurred within the cozy regulatory environment that is Wall Street, nothing even close to that will happen. The executives who personally profited from corporate paper profits will walk away with their cash after hollowing out scores of once-healthy companies. It may turn out to be good overall, if a few of the giant multi-nationals like Wal-Mart, Yum Brands and ExxonMobil get cut down to more reasonable sizes and markets open up for more nimble - and honest - competitors.

Tuesday's Cracker-jack pot:
S&P 500: 1,852.21, -1.23 (0.07%)
Dow: 16,014.38, -12.67 (0.08%)
NASDAQ: 4,268.76, -14.99 (0.35%)

Crude Oil 28.38 -4.41% Gold 1,189.20 -0.73% EUR/USD 1.1294 +0.86% 10-Yr Bond 1.7290 -0.35% Corn 360.50 -0.48% Copper 2.04 -2.61% Silver 15.23 -1.30% Natural Gas 2.10 -2.01% Russell 2000 964.17 -0.53% VIX 26.71 +2.73% BATS 1000 20,030.11 -0.07% GBP/USD 1.4468 +0.29% USD/JPY 115.0020 -0.51%

Bank Stocks Lead Market Rout as Bond Yields Plummet; Gold, Silver Soar

If anyone critical of the US economy is - as the great and almighty economic genius, President Obama recently posited - "peddling fiction," then why is Wall Street peeling away from equity positions like it's the Tour de France?

Relentless selling was the order of the day, especially in financials, until the final hour, as specs stepped in or shorts covered, cutting losses by 1/3 to 1/2.

While fiction writers may not think the stock markets are the modern day equivalents of "Moby Dick," they do have something of a beached whale quality to them. Germany's DAX is already in a bear market, as is China's SSE and Japan's NIKKEI, and the US markets are catching down somewhat quickly, with all three major indices already in correction territory.

With no real catalyst to move stocks higher, the prognosis is for further losses through the first quarter.

Banks were particularly ugly today, with Deutschebank (DB, -8.00%) teetering on the brink of insolvency, and losses suffered by Bank of America (BAC, -5.25%), Goldman Sachs (GS, -4.61%), Citigroup (C, -5.14), Wells-Fargo (WFC, -2.84%), and JP Morgan Chase (JPM, -2.10%).

At issue, as usual with banks, is interest rates, which soared today, pushing the 10-year note to an 18-month low yield of 1.74%). Credit spreads also continued to narrow, forecasting a recession, if not this quarter (and possibly last quarter), then almost surely in Q2.

Underlying the banking sector are questions of general solvency, quality of collateral, and, the size of their respective derivative books. Deutsche has the largest, estimated to be a total exposure of $75 trillion, with the US banks heavily into the game. Derivatives - CDS and other "bad bets" are what nearly took the entire Western economic system down in 2008, and they haven't gone away. Bank balance sheets are larger now and filled with just as much, if not more, toxic derivative soup.

When the financials lead the market down, it's usually not a good sign. Bank of America, Goldman Sachs and Citi are already in bear markets (down more than 20%), while Wells-Fargo and JPM are within one percent of being in the same sinking vote.

Following the underwhelming jobs report Friday, stocks have done nothing but decline and that trend doesn't look to be about to change anytime soon.

The world may be months - if not weeks - away from complete capitulation in stock markets, the precursor to a global depression.

Another telling sign is the rise of gold and silver, two of the top-performing assets (along with bonds) for 2016. Both were up smartly again today and have broken through strong points of resistance.

The day's damage:
S&P 500: 1,853.44, -26.61 (1.42%)
Dow: 16,027.05, -177.92 (1.10%)
NASDAQ: 4,283.75, -79.39 (1.82%)

Crude Oil 30.11 -2.53% Gold 1,191.40 +2.91% EUR/USD 1.1193 +0.30% 10-Yr Bond 1.74 -6.11% Corn 362.00 -1.03% Copper 2.09 -0.52% Silver 15.35 +3.90% Natural Gas 2.13 +3.30% Russell 2000 969.34 -1.65% VIX 26.00 +11.21% BATS 1000 20,045.01 -1.29% GBP/USD 1.4432 -0.47% USD/JPY 115.8500 -0.93%

Stocks, Oil Whacked Again; 10-Year Note at 1.86%; Yellen's Fed in Shambles

It's official.

The groundhog didn't see his shadow, and Janet Yellen didn't see the recession just ahead, proving, within a shadow of doubt, that animals have better sense than most humans.

At least in the case of furry rodents versus doctors of economics, the rodentia class is in a class all its own. Punxsutawney Phil, the most famous of ground hog prognosticators, came outside this morning and reassured everybody in the Northeast that the most mild winter in decades would continue, and, to boot, be short-lived.

By not seeing his shadow, Phil assuaged the assembled crowd that what remains of winter would be over within two weeks, rather than the usual six week span that extends nearly to the first day of Spring, March 20.

Despite this being a leap year, which adds a full day to the cruel month of February, residents in the most densely-populated area of the country seem to be settled in for a short stay on the chilly side.

In upstate New York, there is little to no snow on the ground. What remains are a few remnants of shoveled piles that take a little longer to melt, though even that should be gone by tomorrow, as temperatures from Buffalo to Albany are expected to approach sixty degrees on Wednesday.

Similar circumstances prevail throughout the Mid-Atlantic region and into New York, Pennsylvania, New Jersey and Massachusetts. The milder-than-normal conditions have resulted in lower use of heating fuels such as oil and natural gas, both of which are hovering around decades-long lows.

As for the Federal Reserve and the captain of that sinking ship, Janet Yellen, she and her hench-fellows seem to be on the wrong side of economic history, considering that since their historic rate hike in mid-December, interest rates have gone in the opposite direction, the 10-year note today closing at 1.86%, as the winds of global deflation and tight labor conditions continue to push consumer demand and consumption lower and lower.

Compounding the complexity of the Fed's non-tenable situation are the twin engines of stocks and oil, both of which have hit stall speed in 2016. WTI crude close in New York within whispering distance of the $30 mark, while the major stock indices were battered into submission by a combination of reduced earnings capacity and a growing confidence gap from investors.

Even with last week's brave showing by the markets in the face of a 2015 fourth quarter that slipped to 0.7% growth, stocks were unable to regain the footing which took the Dow 400 points higher on Friday as the Bank of Japan endorsed negative interest rates on its treasury bonds extending though eight years.

Supposedly, cheap, easy money was good news for the stock market. However, with the BOJ cancelling a treasury auction today due to lack of interest (no pun intended) from selected participants, equity markets around the world backtracked towards the lows of January. Apparently, there aren't many out there who see it as a prudent idea to pay somebody to hold your money.

Negative interest rate policy, aka NIRP, is the death-knell of central bankers. Traditionally, banks paid OUT interest on savings, but, in this decade of upside-down economics, the glorious kings and queens of monetary policy are sticking to the belief that people are so afraid of losing what they've earned that they will pay to have the banks hold it for them.

Mattresses and shotguns are back in style, kids, but nobody seems to have told the central bankers. Everybody from simple savers to mega-millionaires are losing confidence in a clearly broken system, pulling their assets out and into cash, precious metals, gemstones, art, real estate, or other stores of value that have stood the test of time. The only buyers of government debt are governments, a condition which cannot be sustained long.

Truth be known, the Fed, the ECB, BOJ and PBOC are all aware of this condition and have yet to devise a strategy that will resolve the liquidity and solvency crunch with a minimum of pain. Pain will come to many, precisely those holding debt which cannot be repaid. Ideally, this epoch of economic history will see the end of central banking with fiat currencies and fractional reserves.

We may be within weeks or months of a global reset, a change in the nature of money which will tear at the fabric of society itself.

Stay tuned. This is only the middle of the show which started in 2008.

Today's crap shoot:
S&P 500: 1,903.03, -36.35 (1.87%)
Dow: 16,153.54, -295.64 (1.80%)
NASDAQ: 4,516.95, -103.42 (2.24%)

Crude Oil 30.02 -5.06% Gold 1,129.20 +0.11% EUR/USD 1.0920 +0.27% 10-Yr Bond 1.8640 -5.19% Corn 372.00 +0.20% Copper 2.05 -0.29% Silver 14.31 -0.26% Natural Gas 2.03 -5.81% Russell 2000 1,008.84 -2.28% VIX 21.98 +10.01% BATS 1000 20,356.76 -1.72% GBP/USD 1.4411 -0.10% USD/JPY 119.84

Stocks Bounce, Reasons Unknown, 10-Year Note Yield Below Two Percent

Stocks in the US had one of their best days of the new year on Thursday, though it's difficult to put a finger on exactly why that was the case.

Data from durable goods was weak and jobless claims (unemployment) were higher, so there must be an invisible hand (see PPT, for instance) pushing stocks up.

Other oddities on the day were oil gaining to close at 33.72 per barrel and the 10-year note closing below a two percent yield, at 1.985%, which normally would signal a rout in equities.

This is what one gets when markets are endlessly manipulated by government forces and the Federal Reserve.

Trade cautiously.

S&P 500: 1,893.36, +10.41 (0.55%)
Dow: 16,069.64, +125.18 (0.79%)
NASDAQ: 4,506.68, +38.51 (0.86%)

Crude Oil 33.72 +4.40% Gold 1,114.10 -0.15% EUR/USD 1.0940 +0.36% 10-Yr Bond 1.9850 -0.80% Corn 365.75 -0.95% Copper 2.05 -0.53% Silver 14.24 -1.48% Natural Gas 2.22 +3.15% Russell 2000 1,003.27 +0.05% VIX 22.42 -2.99% BATS 1000 20,209.43 +0.62% GBP/USD 1.4356 +0.77% USD/JPY 118.8150 +0.20%

Stocks Slammed Globally, S&P Under 1900; Dow Drops Below 16,000

Wall Street is, at last, getting the just desserts from seven years of Fed policies that have funneled trillions of dollars into the hands of the wealthiest people in the country.

The kicker is that the American public, the 65-70% that still works for a living, are going to get the worst of it.

Today's carnage in US equity markets was not an isolated event by any means. It began years ago, but, in its most current manifestation, the collapse began in China last night, when the SSE fell nearly 5% in its last session of the week.

The contagious selling fever spilled over into European markets, with the DAX, CAC-40, and FTSE-100 ending the day down by 2.54%, 2.38% and 1.93%, respectively.

Prior to markets opening in the US, however, there was a spate of poor economic data released.

Retail sales for December came in at -0.1. PPI went negative (deflation) in December, at -0.2%. Empire Manufacturing (a gauge for economic activity in the NY Fed district, collapsed from a reading of -6.2 in December, to a ghastly -19.4 in January.

Industrial Production fell 0.4%. Capacity Utilization slumped to 76.5%.

Then came the news from Wal-Mart that they would be closing 269 stores this year, with 154 of them in the United States. The full list of Wal-Mart store closings can be seen here.

By the time markets actually opened at 9:30 am ET, futures were showing the Dow down by more than 350 points and the indices all fell off a cliff at the sound of the opening bell.

By midday, the Dow was down more than 500 points, the NASDAQ had shed close to 150, and the S&P was sporting losses of more than 50 points.

While today's crashing stock indices were certainly bloody, they weren't even close to the 10 worst one-day Dow declines of all time, so all is not lost.

As the session wore on, the signs of a failing economy - both here in the US and globally - were everywhere. The 10-year note fell briefly below 2.00%. With 1/2 hour left to go, declining issues were leading advancers roughly 6:1. Intel (INTC) was down nine percent. Citigroup (C) was posting a 6% loss; Microsoft (MSFT) was clinging to a four percent downside. Bank of America (BAC), which was pushing 17 two weeks ago, sliced through 15 and was trading in the range of 14.40, down 4.0% on the day.

With more companies reporting Q4 and annual earnings next week, the action this week and today might just be an appetizer for what's about to come, and that might be a recession, collapsing corporate earnings, liquidations, bankruptcies and the wholesale destruction of pension funds - heavily invested in equities - nationwide.

For its part, the Fed trotted out William Dudley, president of the NY Fed and vice chairman of the FOMc, who noted that negative rates could be considered in light of the recent market volatility. His tongue-lapping of the markets didn't seem to carry much weight. Investors were only interested in getting out and limiting the damage prior to the long weekend.

The day's closing prices:
S&P 500: 1,880.28, -41.56 (2.16%)
Dow: 15,988.08, -390.97 (2.39%)
NASDAQ: 4,488.42, -126.59 (2.74%)

Crude Oil 29.67 -4.90% Gold 1,088.90 +1.43% EUR/USD 1.0920 +0.53% 10-Yr Bond 2.03 -3.10% Corn 362.50 +1.26% Copper 1.95 -1.57% Silver 13.90 +1.14% Natural Gas 2.10 -1.73% Russell 2000 1,005.44 -1.97% VIX 27.70 +15.66% BATS 1000 20,066.91 -1.99% GBP/USD 1.4255 -1.13% USD/JPY 117.0050 -0.97%

For the week:
S&P: -41.76 (-2.17)
Dow: -358.71 (-2.19)
NASDAQ: -155.21 (-3.34)

Money Daily TacklesThe Best Of Wall Street With 2016 Predictions; The Big Fail: S&P, Dow Finish Lower for 2015

Stocks took it on the chin on the last trading day of 2015, and the S&P and Dow Industrials ended the year with losses. Only the NASDAQ showed a gain for the year.

Closing prices for December 31, 2015:

S&P 500

2,043.94

-19.42 (0.94%)

Dow

17,425.03

-178.84 (1.02%)

Nasdaq

5,007.41

-58.44 (1.15%)

That's a wrap for the year. Read on, because 2016 is going to be even more interesting.

Picks for 2016

Courtesy of Barron's, here are some of Wall Street's top strategists picks to click in 2016:

Note the groupthink among these masters of the universe posers.

Aside from Steven Auth's outrageous call for 2500 (it might be a typo) the target for the S&P 500 ranges from 2100 to 2250. The expected 2016 GDP is all in a range from 1.9% to 2.8%. These are not the brave and the bold, that's for sure.

So, since Wall Street analysts have decided to continue with the false narrative that all is well, Money Daily offers the following set-up for what figures to be a downright fascinating year.

Since it's a presidential election year and the past two which marked the end of an eight-year presidency (Bush replaced Clinton in 2000, Obama replaced Bush in 2008) both were near-disasters for equity traders, 2016 promises to be an explosive twelve months.

Now that you've seen theirs - which, by the way, don't vary much - here is what Money Daily believes will work in the coming year.

First, the equity markets will absolutely tank.

Stocks Take a Beating

While it would be foolhardy to predict where whole indices will be trading at the end of the year 2016, it may be more instructive to offer a timeline. Since the S&P and Dow haven't made new highs since May of 2015 and both ended the year lower than they closed out 2014, the table has been set for an absolute bear-fest in the opening quarter of the year.

As bears emerge from a short hibernation due to climate change (one of the warmest winters on record in the Northeastern US), they will be hungry to take down entire sectors of the market. Hardest hit will be consumer goods, financials, health care, technology and services. No sector will be spared, but the safest havens will be in basic materials and utilities. The best place of all to be will be largely in cash or bonds. The 10-year note is likely to rally strongly as people flee to safety, and, despite the best efforts of Janet Yellen and the Federal Reserve to boost interest rates, the market will set the tone.

The major indices will be looking up at highs which will seem ridiculous by June. Taken on a monthly basis, January will see outright selling, putting the major indices into correction (-10%). February and March may be mild, but could be wild, depending on the direction of most of the well-followed indicators, like industrial production, capacity utilization, the various Fed surveys, factory orders, ISM manufacturing and services, and, of course, non-farm payrolls.

By April or May, the bloom will truly be off the rose, as first quarter GDP comes in below expectations or even shows up negative, the most likely culprit, warmer weather, as opposed to cold weather, which was blamed for the last two Q1 debacles.

Timing the return to a bear market can be tricky, so let it suffice to say that by June at the very latest, stocks will be down more than 20% overall, and the scare will be on.

At the bottom, which will be any time prior to election day, here's where Money Daily expects the major indices to be residing:

S&P 500: 1450
Dow: 12,400
NASDAQ: 3200

Bonds Will Be Wonderful

The 10-year note will trade higher from February through September, with the yield going below the two percent mark and staying there for an extended period, perhaps through the end of the year. Since stocks will offer only losses, lowered guidance and dividend cuts, the flight to bonds will be massive. The short end will be anathema; the 10-year and 30-year will be the bright spots.

GDP May Appear Recessionary

If 2016 results in any growth at all, it will be anemic, in the 1-1.5% range at best. With either the first and second or the second and third quarters putting up negative numbers, the odds for a true recession are high, and the Fed, without any interest rate cuts to counter the slack in the economy, will prove powerless.

The long look will be on currency collapse. After the massive gains in 2015 for the US dollar, that trade will likely reverse. Either that, or a global depression will be the order of the day.

Precious Metals Still Shine

While shunned with near-unaniminity on Wall Street, gold, silver, and platinum will hold their own and probably explode to the upside in the face of outright recession or depression. Gold and platinum could easily see 30-40% gains, while silver, the most-suppressed metal (and most important) could double by year-end, but all the metals will pull back in the early stages of the bear market in stocks.

Once a base is set for the precious metals, it will be off to the races in what will be the resumption of the decades-long bull market that began in 2000. The declines from 2012-2015 will be seen only as a cyclical bear correction amidst a secular bull.

Commodities Useful in Any Environment

So beaten down has been the commodity index, investors may be able to pick and choose from their choice of useful basic materials. Coal, iron, copper, zinc, lumber, oil and other fuels can be a boon in the best or worst of times.

Low prices in crude oil, natural gas and coal should remain in place for the entire year, and beyond. The usefulness of any commodity is, naturally, the selling point, but, in an oversupply environment, end users, rather than producers, will be the main beneficiaries.

An outright deflationary environment should prevail, a boon to cottage industries and small business, which is a welcome change from the repressed conditions of the previous decade. Anyone with the ability to store or make productive use of any manner of commodity should benefit greatly.

Real Estate As Investment Could Be Solid

There are three good reasons to own real estate. Living in a residential home, farming or mining, and renting on a commercial basis.

Since residential real estate is and has been in the stratosphere in many parts of the USA, it's likely to take a serious hit in 2016, with price declines of 10-30% in selected areas, more in others. Speculators and flippers will be fed to the sharks and there will be a slew of defaults in the REIT space.

Farmland, especially anything under 30 acres, which can be handled by a family or small enterprise, could be the best investment of the year. Productive land is usually safe, and besides, you can eat what you grow, which is always a concern.

Commercial real estate will go begging. It's massively overpriced and over-leveraged, due for a massive decline.

Conclusions

The US and global economies have been on a collision course between a massive debt bubble and a large pin. It all comes to a head in 2016, some of it pre-planned, much of it unrehearsed, unwanted and unnecessary.

Stocks will be hated, Wall Street bankers will once again be the object of derision (as they so rightly deserve to be), and politicians will be exposed as mere vassals to the deep state and the banking cartel.

The US will be lucky to avoid a major war, as the Military-Industrial-Congressional-Conplex (MICC) seeks a way out of debt crash and currency debauchery. There isn't one. Only systemic collapse can heal what's wrong in the economies of the world. Watch Japan closely, then Europe. They are the proverbial canaries in the coal mines. China will set its own course, but will continue to emerge as a world power.

The outlook isn't very rosy, admittedly, but, the great oligarchs of the day have made it so. Unmanageable levels of government, business and household debt are screaming for a reset, a break, a jubilee, and it very well could happen.

On the other side of a currency collapse is a bright future, but, if any of the outcomes predicted here actually occur, it will only be the beginning, and there will be more pain for the remainder of the decade. Until Americans and people around the world throw off the shackles of governments, replete with their laws, rules, regulations and onerous taxes, there will be no prosperity.

Donald Trump will win the presidency in November, a sign that the American people have had enough of the status quo.

Happy New Year!

Santa Takes a Little Off the Top

Stocks fell today, first hard, then made a daylong comeback to close near the unchanged mark.

It was rather a random day in the world of high finance. Ten-year and 30-year treasuries each closed off a pip, 2.21 and 2.93, respectively, while the 2-year note budged upward from 0.97 to 0.98, tightening and flattening the spread. It wasn't a monumental move, but noticeable to anyone paying attention. The market didn't really appreciate the boost in the fed funds rate and the displeasure is being voiced by various, subtle means, like the desperation in high yields, and the shut-off of the banking spigot that funded stock buybacks for most of the last five years.

It's probably better, right now, to keep a close eye on the bond market. It may turn out to be the place for volatility and profit in 2016, especially if the Federal Reserve follows through on their plans for three or four more rate hikes by this time next year. That is an unlikely event, though "normalization" is what the Fed continues to say they are aiming for, though a truly normal economy won't likely materialize for three or four more years, if they're lucky.

To have a 10-year treasury yielding 4-5% would be quite an accomplishment by 2019 or 2020, considering all the damage already done by over a decade of fed fund rates at one percent or lower.

Equity markets were decidedly dull, as there are few trades to be made of any importance this late in the game, though the markets are still well below all-time highs reached in May, especially the broad gauge of the S&P, which cannot seem to get out of its own way.

Today was mostly gibberish, as will likely be the case the remainder of the week, and the year. It's hard to draw any conclusions from the last week's trading in a calendar year. The first week of January will be much more insightful.

WTI crude was slapped back down from last week's euphoric and ridiculous closing level, finishing the day at 36.72/barrel. Anyone calling a bottom around here just hasn't considered the slack in the economy and the production glut facing producers. It's a huge problem, but nobody wants to cut production, even at these lower prices, constituting a possible new normal.

S&P 500, 2,056.50, -4.49 (0.22%)
Dow, 17,528.27, -23.90 (0.14%)
NASDAQ, 5,040.99, -7.51 (0.15%)

US Interest Rate Yields on Ten-Year Treasuries Will Go Lower

Money Daily stopped being a daily post blog in March, 2014. While the name remains the same, the posts are now on an intermittent basis, as conditions warrant, though it is advised to read the archives (from 2006-2014) regularly, even daily, for insights and historical perspective.

I wrote this post today in response to an article that said interest rates can't get any lower...(FR)

The 10-year treasury still has a long way down to go. Hell, we're still at 2.55% or thereabouts, while the Bund is hovering around 1.7%, and the Jap 10-year is fagedaboutit! like 0.6%. So, the US gov and the Fed and Wall St. still have more time to shake, rattle and roll that paper. QE has been winding down and the stock market keeps going up, so, the Fed must be happy with that, and, remember, now they can always unwrap a new round of QE, since the last few have worked out so well.

Just in case nobody's noticing, there are still a lot of (take your pick) well-off middle class retirees, pretty well-off working class stiffs (albeit fewer than before, and most of them are in the Public sector), welfare queens, idiots spending $XXXX to send their spoiled kids to school, mammoth tax receipts (wanna get sick, try a school district budget of $67 million to educate 3600 kids from K-12), car loans and leases, people buying houses at ridiculously-inflated prices.

OK, you get my drift. There's still lots of money floating around and the bankers, .gov and the Fed still have more to skim. Why would they willingly end this massive ponzi upon which they sit at the top? This is going to go on and on and on. It's been six years since the crash of '08, and nobody expected us to be where we are now, back then, so, I think nobody expects this to go on much longer, but normalcy bias and cognitive dissonance will outlast rational economic policies (already have).

Consider: Five years ago today, my father died. Left me his house and other assets. I stopped paying the mortgage immediately. Bank started foreclosure in March 2010, since then, crickets. I am still here. Bank knows the house is worth maybe 2/3rds or less of what they appraised it for in 2007. If they prevail in foreclosure, they lose. If they make a deal with me, they lose. If they keep the non-performing loan on their books at par: WIN, WIN, WIN, because they never have to realize the loss.

Some people ask me if it is stressful to live in a house I do not own (depends on how you look at it). I've rationalized that the bank (BofA) does not have any good solution. I also don't want to move, or pay, so, essentially, we're (the bank and me) both faking it, which makes certain sense, since the money is fake, the mortgage was based on fraud and all wealth is just more massive fakery.

Who's rich? I know a guy with $5-7 million in the bank and he doesn't know what the hell to do with it. He's still working at retirement age, for god's sake. I have almost nothing, and love my life, my little garden, fish ponds, a life of leisure and literature, could care less about money because it's all fake, and I've always been able to make as much as I need since I was 16 (now 60).

So, who's rich? The "wealthy" boob without a clue, or me, as I sit by the fish pond, reading Thoreau or Dante or Milton, in the sunshine as my garden grows by nature. The garden will sustain me. All the money in the world cannot buy that kind of security nor peace of mind.

You judge for yourself. Sure, I'd take that guy's $6 million, buy a big-assed piece of land and you'd never see me again. But this fool can't figure that far. I stopped working full time in 1999, because I always felt the rat race was just that: working just to pay bills. A fool's game. So, I don't have much in terms of money, but I have lots of physical assets which are either useful or valuable, tangible and intangible, no stress and much happiness.

Everybody talks about retirement, but what is the point? I know some idiots who retired and then got a job. WTF? My idea of retirement is what I do now. Work a little (I average about two hours a day), chill, drink, laugh. It's pretty easy.

OK, I'm rambling, but I keep thinking about that cryptic message by the IMF chief, Christine LaGarde,  about the number seven and 7/20/2014. Having studied numerology (did you know it was invented by Pythagoras? Yep, that guy!) I see it this way: If she was sending a message, well, too many people caught on, and, yeah, something may have been planned for that date, but plans change, and, things seem to be going pretty good for the status quo right now, so why mess with it? Something may happen this Sunday, but it probably won't be as dramatic as anyone expects. I'm thinking it's all hot air. Personally, I'm going to a party. Here's the video clip in question:

I believe the author of this youtube clip is overstating the case, taking too much for granted to make his point. There's no G7 or G20 meeting scheduled for that weekend, except for G20 meeting of trade ministers in Sydney, Australia on the 19th. So, if anything earth-shaking is to occur, it would likely come out of that meeting, so it's worth keeping an eye on. Just in case, I'll be pulling some cash out of my bank on Friday, especially if there are other clues, though, so far, none.

Try to change your lifestyle. Be more self-reliant. Try not driving for a day, a few days. Don't watch TV. Cook for yourself. It's refreshing.

Bernanke's Departure Marks the End of the Bull Market as Stocks Slump Again

There were so many moving parts to the economic and trading landscape since yesterday's close, it may be most instructive to review them in chronological order.

First, around 5:00 pm ET, the Turkish central bank raised overnight lending rates - along with all other key rates - from 7.75% to 12%. That's the overnight rate, the rate at which the central bank lends to member banks. Ouch! The move immediately sent US stock futures soaring, as though the global economy had been saved by this one clumsy, desperate stroke of policy.

At 9:00 pm ET, the impostor-in-chief, Barrack Obama, gave his fifth state of he union address, grossly misrepresenting the overall health and stability of the United States and glibly calling on American businesses to give employees a raise.

The euphoria spread to Asian markets, which were higher on the day, the Nikkei gaining more than 400 points on the session.

However, by the time the sun began to rise on Europe, the glad tidings had turned back to fear, as the Turkish Lira began to come under continued pressure from other currencies. Most European indices were trending lower, though marginally, with losses of under one percent on the majors.

By early morning in the US, the trend had completely reversed course, with stock futures deeply negative. At the open, the Dow Jones Industrials fell by roughly 120 points and held in that range until the 2:00 pm ET Fed policy announcement.

Widely expected to taper their bond purchases by another $10 billion per month, dropping the total to $65 billion, the Fed did exactly that, to the ultimate dismay of equity investors. Those who had made the correct call prior to the action continued pulling money out of stocks, rotating, as it seemed prudent, into bonds, which continued to fall in the aftermath of the Fed's announcement.

By the end of the session, stocks had put in severe losses once again, with the Dow leading the way lower. Bonds reacted by rallying sharply, the 10-year-note finishing at its lowest yield - 2.68% - in more than two months. In addition to bonds, the main beneficiary of the Fed's reckless monetary policy at this juncture were precious metals, as gold and silver rallied throughout the day.

What becomes of equities, sovereign currencies and the global economy as the Federal Reserve says good-bye to Ben Bernanke (this was his final FOMC meeting as Fed chairman) and hello to Janet Yellen, is now an open question, though with obvious clues.

If the Fed continues to taper its bond purchases by an additional $10 billion per month, they would be completely out of the market sometime around September, though it is unlikely that the Fed's path will be so resolute and straightforward. Already, it's apparent that stocks are going to suffer in the short term, while bonds enjoy a day or two in the sun. With returns on equities becoming more and more risky endeavors, bonds will appear as a safe have, forcing more investors to rush in, thus, sending yields lower.

While a crash in the equity market may not exactly be what the fed had in mind, it may be unavoidable, as there is no neat way to unwind their massive QE program which unfolded over the past five years and should come to an end. As reckless as was Bernanke's policy directives of QE and ZIRP, unwinding these programs is going to cause massive economic disruptions and further fuel a gathering global deflation trade. It only makes sense. If the Fed withdraws liquidity, economies will suffer. At least it's a plan that makes some sense, though nobody really wants to endure the pain that comes from such an unwinding. In the long run, it may be the only way back to something resembling normalcy.

The pain will be acute - and already has been so - in emerging markets, where most of the hot money had been headed during the Fed's money-printing spree. Look for developed nations to maintain an aura of stability, while the rest of the world, in places as diverse as South Africa, Turkey, Argentina, Brazil, Indonesia, Mexico, India and eventually, China, become somewhat ungled, economically-speaking.

With money fleeing these former hotbeds of investment, their currencies will devalue against the rest of the developed world, Japan, the US and Europe remaining as the centrist states and most stable currencies... for a while. The risk is contagion from the emerging markets into the developed, as the destruction of deflation engulfs the globe.

Bonds should fare well. An expectation of the US 10-year note below two percent would be rational. However, carry trades, such as a Euro-Yen or Dollar-Yen might lose much of their luster, the better plays to be short the emerging currencies.

Of course, with dislocations of capital everywhere, gold and silver should be afforded a top-shelf position, though their advance will, as always, be suppressed by the concerted efforts of the central banks. Still, in a devaluing environment, the ultimate price of the precious metals, as measured against various currencies, may indeed become a top choice for wealth preservation.

With the current path of the Fed set in place (for now, because they can, have, and will move the goal posts), it would be safe to conclude that the bull market in stocks has come to an abrupt end and money in 401k and other accounts of storage will become victims of a nasty, clawing bear that has no regard for the future, only a perception of the unfolding present, complete with companies that are presently overvalued, have limited earnings growth potential and have to be unwound.

Unless the major indices can find a way to turn the tide and rally past recent highs, the bull market, spurred on by vast wasted sums of money from the Federal Reserve and other sources, is over.

From a technical perspective, Wednesday's trade was an outright disaster. Declining issues led advancers by a 7:2 margin and new lows exceeded new highs for the third day in the last four.

DOW 15,738.79, -189.77 (-1.19%)
NASDAQ 4,051.43, -46.53 (-1.14%)
S&P 1,774.20, -18.30 (-1.02%)
10-Yr Note 100.26, +0.97 (+0.97%) Yield: 2.68%
NASDAQ Volume 2.05 Bil
NYSE Volume 3.93 Bil
Combined NYSE & NASDAQ Advance - Decline: 1289-4441
Combined NYSE & NASDAQ New highs - New lows: 66-128
WTI crude oil: 97.36, -0.05
Gold: 1,262.20, +11.40
Silver: 19.55, +0.049
Corn: 427.50, -4.50