Showing posts with label Brazil. Show all posts
Showing posts with label Brazil. Show all posts

Tuesday, December 3, 2019

Trade Uncertainty Tempers Markets on First Full Day of Holiday Trading

The first week of the final month of 2019 was a deviation from the general theme of 2019. Stocks were sold with reckless abandon, as were bonds, with the 10-year note bounding back to yield 1.83% - though higher during the day - a level not visited since mid-November.

The bond market felt more like churning than the start of actual long-term selling, but stocks had a different sense about them. Bad news on the US-China trade situation has the financial world in a near-panic as the deadline approaches for added tariffs to be applied on Chinese exports to the US. Additionally, President Trump reimposed tariffs on steel from Argentina and Brazil, citing the two South American countries' recent currency devaluations as reason for slapping on the tariffs "immediately."

While the steel tariffs boosted shares of US steel producers, it only exacerbated the unease surrounding the wider Chinese issue and sent stocks into a day-long tailspin. Selling was the order of the day globally, as bourses from Japan, China, Europe and the Americas all suffered declines with the sourness continuing into Tuesday as trade resumed Tuesday in international markets.

While the focus may currently be on trade and tariffs, there appears to be more to the sudden swing from buying to selling than just the movement of goods around the planet. Recall that Friday (ubiquitously know as Black Friday in the US) also witnessed declines, not the usual euphoria associated with the start of the holiday shopping season. Other concerns are various recent populist uprising in places as diverse as Hong Kong, Iran, Lebanon, India and elsewhere. Besides, it is December, so one can safely assume that any concerted selling is going to be enhanced by year-end profit-taking.

While the mainstream (now nearly completely fake) media will focus on the stock markets' generous advances during the year, they will also conveniently gloss over the dual declines from October and December of 2018, which, taken in such context, renders gains from September 2018 as practically nil.

The Dow Jones Industrial Average, for instance, is up only 1000 points since mid-September of 2018, accounting for a gain of less than a half percent. The NASDAQ has tacked on about 450 points since August of last year, while the S&P 500, at current levels, has added just 183 points over the past 15 months, the point being that stocks, though they've recently made new all-time highs, are really not much further ahead than they were more than a year ago, but the media will remind us only of what's happened in the current calendar year, which might be a tad misleading.

In any case, internationally, stocks are being whacked again Tuesday morning and US futures are looking pretty dismal, with Dow futures down nearly 300 points less than an hour prior to the opening bell.

Corporate profits have been underwhelming, to say the least, for the past few quarters, so some fundamental shift may be underway. If a flight into the safely of bonds develops, that will be a sign that the stock market is going to finish off the year on a negative note, though there's always the possibility of a Sant Calus rally the week between Christmas and New Year to save everybody's bacon.

At the Close, Monday, December 2, 2019:
Dow Jones Industrial Average: 27,783.04, -268.37 (-0.96%)
NASDAQ: 8,567.99, -97.48 (-1.12%)
S&P 500: 3,113.87, -27.11 (-0.86%)
NYSE Composite: 13,448.26, -96.95 (-0.72%)

Wednesday, September 5, 2018

Stocks Start September Slowly As Trade Wars Widen, Currencies Collapse In Emerging Markets

The late-summer rally that saw fresh record highs on the NASDAQ and S&P, adding 1600 points to the Dow Jones Industrial Average, may be coming to an abrupt end in September.

As the dollar has soared against emerging market currencies, US markets have become a favorite of foreign money, lifting individual stocks and entire indices from already-high valuations. However, blowback from collapsing economies in emerging markets such and Turkey, Argentina, Indonesia, Brazil, India, and China may become severe if market participants decide its time to repatriate their gains.

With President Trump on a tariff crusade, imports from foreign shores are rapidly becoming less valuable to the source exporters and governments are taking note of the erosion in not just their currencies but in their trade balances.

Stock markets in South American countries are being wrecked, with Argentina and Brazil already in bear markets. Exchanges in Japan, China, and most of Europe - especially the powerhouse Dax of Germany - are already in correction territory and not far from becoming full-blown panicked bear markets.

Thus far, the US has been the beneficiary of other nations' pain, but, there's no free lunch and companies with heavy investment outside the US may soonest profits declining in what were recently solid, growing markets for their goods and services.

How the combination of trade warfare and declining currency valuations will play out may prove to be disastrous to all participants. A great decline in international trade was partially responsible for the global Great Depression of the 1930s. History may soon be repeating if countries don't heed the warnings from prior episodes of trade antagonism.

Casualties are beginning to mount with the precious metals complex already heading past the correction phase and closer to bear market conditions. Gold has been trading in the $1190 per troy ounce range after reaching close to $1360 in March. Silver has collapsed from from a high above $18/ounce to $14.15 at the close on Tuesday. That is already in a bear market.

Reminiscent of September 2008, when investors dumped gold and silver holdings to meet margin requirements and governments scrambled to meet current obligations, the precious metals decline may be a harbinger of things to come for the broader markets.

Insofar as US stocks have performed brilliantly since the brief February correction, there exists a danger that stocks have reached a climax and are overdue for a massive selloff.

Speculation and conjecture being worth exactly nothing until real money is put into play, market participants may soon find out just how far a rally can go before everyone runs for the exits at once, desiring to not be left holding a bag half full.

Tuesday, the first trading day of September started with a steep decline at the open. Stocks gained ground gradually throughout the session, eventually posting minor losses. It could have been worse and it's likely not yet over. The rest of the week and the weeks heading toward the next FOMC meeting on September 25 and 26 will be volatile and potentially damaging to heavily-leveraged, diverse portfolios.

Dow Jones Industrial Average September Scorecard:

Date Close Gain/Loss Cum. G/L
9/4/18 25,952.48 -12.34 -12.34

At the Close, Tuesday, September 4, 2018:
Dow Jones Industrial Average: 25,952.48, -12.34 (-0.05%)
NASDAQ: 8,091.25, -18.29 (-0.23%)
S&P 500: 2,896.72, -4.80 (-0.17%)
NYSE Composite: 12,969.86, -47.03 (-0.36%)

Tuesday, July 3, 2018

Stocks Turn Ugly In Short Session: Time Out On Wall Street

The Dow took a nearly 300-point round trip from top to bottom on the second trading day of the third quarter, rising by more than 137 points before collapsing in the final hour to close 1/2 percent lower. The NASDAQ was beaten down further, off 65 points on the day (-0.86%).

Markets can become discouraged by many factors, but for this current one, it seems to be merely a matter of during out after nine-plus years of unprecedented fantasy. Speculators, those eager early-day traders who took it on the chin today as they have on many other recent sessions, have to be concerned that investors might catch on to the fact that the global economy is not all roses and unicorns, but rather a patchwork of central bank machinations that have distorted what used to be free markets into stealthy, clandestine, controlled entities.

If that becomes the case, the second leg of the bear market will commence in short order and likely not cease until well after the Dow falls 20% from the January 26 high (26,616.71), a process that could last anywhere from three to six months. This is shaping up to be a long drawdown of asset values, considering that the central bankers will not readily abandon their chosen "low unemployment and moderate inflation" narrative, of which practically everyone who matters is in disbelief already. The proof is in stock market and bond returns, both of which suggest contraction instead of a healthy growth environment.

July 4, Independence Day in the United States, will be an anchor on foreign markets because there will be no trading on the day. China has already intervened in their equity markets to stem the outflows. Italy, and thus, all of the EU, is staring directly at a major solvency crisis which could explode and uncouple the southern nation from the rest of Europe. Already, the new Italian government has ECB officials on edge.

Argentina is already a basket case, as is Venezuela, with Brazil close to chaos as well.

Maybe it's time the politicians in Washington stop focusing on the "evil" Russians (who are doing quite well, despite sanctions and expulsions of their diplomats by the US), and begin taking account of the rest of the world, which seems to be not right at all.

Dow Jones Industrial Average July Scorecard:

Date Close Gain/Loss Cum. G/L
7/2/18 24,307.18 +35.77 +35.77
7/3/18 24,174.82 -132.36 -96.59

At the Close, Tuesday, July 3, 2018:
Dow Jones Industrial Average: 24,174.82, -132.36 (-0.54%)
NASDAQ: 7,502.67, -65.01 (-0.86%)
S&P 500: 2,713.22, -13.49 (-0.49%)
NYSE Composite: 12,494.70, +9.12 (+0.07%)

Friday, June 1, 2012

Dow Erases All 2012 Gains; Global Depression Dead Ahead

T.G.I.F., or, more succinctly, thank God this Friday is over.

After the release of some really poor employment numbers in May's non-farm payroll report from the BLS, stocks fell off a cliff right from the open and continued to slide all day in the single worst trading session since last November.

With only 69,000 net new jobs created in May - well below the average estimate of 150,000 - the false "recovery" meme from just a few months ago was completely eviscerated as a rash of poor data which had been flowing to the market all week culminated in the worst employment figures in a year.

In addition to the unemployment rate rising to 8.2% - the first rise in over a year - March and April data were revised lower. March job growth total was reduced from 154,000 to 143,000 and the April number slashed from 115,000 to just 77,000.

While the US had its own woes, the deepening recession in Europe only made matters worse as Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) dropped to 45.1 in May from 45.9 in April, its lowest level since June 2009. The index's latest reading was all the more frightening as data showed manufacturing in France and Germany - supposedly the two strongest members of the EU - slowing at its fastest rate in nearly three years.

Even in developing nations like China, India and Brazil, growth has been slowing and the pace of decline continues to gather momentum. Since the economies of these and other developing nations depend greatly on exports to Europe and the US, the slowdown of the developed economies produces a knock-on effect to the exporters.

The only bright spot of the day came from automakers, which saw double-digit sales gains when compared to a year ago, though all of the US figures were below expectations. GM posted a gain of 11% from May of last year, Ford sales were up 13%, Chrysler, 30%, while Toyota, rebounding from the tsunami and Fukushima nuclear disaster of a year ago, saw a sales increase of 87%.

The Dow Jones Industrials and NYSE Composite index each saw all of 2012 advances wiped out as of the close today. The S&P 500 is just 20 points better than the close on December 30, 2011, while the NASDAQ still sports a gain for the year of better than 100 points. All but the NASDAQ closed today below their 200 day moving average, a sure sign that there is more downside to come.

Along with stocks hitting the skids hard on the day, the US 10-year note hit yet another historic low, ending the week at 1.45%. Its counterpart in Germany, the 10-year Bund, has also been chasing yield lower, with a reading of 1.12% seen today.

Gold had a rapid rise on the news, regaining its status as a safe-haven currency, along with silver, which also posted a healthy increase. Precious metals investors should not be fooled, however, by today's moves alone. During the crash of 2008, all asset classes were decimated, though the metals improved earlier and with more ferocity than equities.

All around, even though it was a shortened trading week, it was the worst of 2012 on the major indices. Internals are screaming correction in equities, while the price of oil continues to signal a cold, deflationary environment in the face of a rising dollar, which seems to be a silver lining to a worsening economy. Gas prices will be lower, though many will be unable to afford to go anywhere.

After governments and central banks have thrown trillions in quantitative easing and stimulus for bailouts and bank balance sheet bolstering, the global financial system seems on the verge of another major breakdown, one that may make 2008 look like a picnic by comparison. As all fiat money systems in the history of civilization have eventually failed, our current regime of "money from nothing" appears to be coming to a cataclysmic demise, and it is gaining momentum at a terrifying pace.

Eventually, all the bad debts run up by governments and financial institutions are going to result in ruination of the global system, to be replaced by some forms of gold and/or silver-backed currencies. Only then will the world's economies become honorable and stable once again.

Welcome back to the Greater Depression.

Dow 12,118.57, -274.88 (2.22%)
NASDAQ 2,747.48, -79.86 (2.82%)
S&P 500 1,278.04, -32.29 (2.46%)
NYSE Composite 7,292.25, -171.71 (2.30%)
NASDAQ Volume 1,875,578,750
NYSE Volume 4,605,786,000
Combined NYSE & NASDAQ Advance - Decline: 853-4802
Combined NYSE & NASDAQ New highs - New lows: 34-307
WTI crude oil: 83.23, -3:30
Gold: 1,622.10, +57.90
Silver: 28.51, +0.76

Tuesday, March 6, 2012

Individual Investors Not Buying Growth and Recovery Myths

Institutional investors, like hedge funds, mutual funds, retirement funds and the like, have a vested interest in keeping stock prices on the rise, such as has been seen in the first few months of this new year.

On the flip side, individual investors have shied away from equities in a meaningful way since the economic collapse of 2008 and few have ventured back. Their reasoning became evident today as stocks were hard-hit globally, beginning overnight in Asia and accelerating with large losses on the european exchanges. By the time the opening bell rang in New York, Wall Street was bracing for a world of hurt.

Remember that disturbing, repeating pattern mentioned at length here yesterday? The one in which stocks fell sharply at the open, only to gradually improve throughout the remainder of the session?

As it appears today, those dips and rises might have been nothing more than smart money getting out ahead of the carnage to come. The repeated attempts and failures for the Dow to close over 13,000 were at least a set-up for a trend top in stocks and may have signaled an impending correction or even outright rout.

The reasons for weakness in stocks could have been predicted by the constancy of low trading volumes, mixed to negative economic data and the non-confirmation by the transportation index. Wall Street's professional prostelitizing over the need for individuals to "get back into the market" or "stay invested" has been running contrary to evidence for quite some time, and it may finally begin to sink in that continual growth is an impossibility and the US "recovery" is nothing but a well-managed myth, propagated by the control freaks in Washington and New York and promulgated by the whores of the media.

Wall Street's five-month-long, liquidity-fueled bogus rally is coming to a quick end. All the cheerleaders for "dow 13,000" are going to look pretty stupid in coming weeks and months as the widely-watched average hovers closer to 12,000 and possibly even lower. How low it will go nobody knows for sure, though there are elements already in place, like Greece, Europe in recession, slowing economies in China, India and Brazil, high food and fuel prices, that could plunge the world into a re-enactment of the 2008 crash, only that this time, fed funds rates are already at zero and tens of trillions of dollars have been thrown at the problems without results.

Today's drop was the first triple-digit decline for the Dow of the new year and the largest percentage decline since November 23. That it comes a day before the release of the ADP private employment data report - which serves as a proxy for Friday's NFP call - is probably not a coincidence. Neither is it coincidental that private bond investors in the Greek bailout will vote on whether or not to accept the terms of a debt restructuring (read: haircut) on Thursday. Bad news might remain in the shadows for a while and might be purposely ignored, but eventually it surfaces, and by then it's usually worse than expected.

In the globally-connected world created by the Keynesian genii central bank economists, Greece's problems are Europe's and our own, and Chinas and everybody's. The contagion which will proceed from Europe will engulf all markets and all countries. Central bankers will have two options: lying and printing, which has been proven ineffective, or, bank liquidations, sovereign defaults and global deflation. They will likely opt for more "pretend and extend" tactics, leading to more inflation and more phony markets in which people of common sense will not participate. The other, proper, Austrian-style solution may be more painful at first for some, but once the toxic debts and zombie banks are flushed from the system, real recovery can begin.

This week and the next two may prove to be as pivotal in terms of the survivability for the entire global economic structure as any time in the last thirty years.

One should not be worried unless one has a job, a pension or most of one's wealth in stocks because the one-percenters of the world are about to become even more vilified than ever as the world's problems are brought out into the open and some may even join the ranks of the feeble top 20 percent. What the global nanking and political cartel has wrought will almost surely destroy more than a few ill-gotten fortunes and many more honestly-made ones, but, whatever path is taken, more economic pain is nearly assured, though this time it will be more evenly distributed.

In fact, those clinging to the bottom rungs of the economic ladder may fare best of all.

Dow 12,759.15, -203.66 (1.57%)
NASDAQ 2,910.32, -40.16 (1.36%)
S&P 500 1,343.36, -20.97 (1.54%)
NYSE Composite 7,920.13, -171.14 (2.12%)
NASDAQ Volume 1,870,041,375
NYSE Volume 4,171,692,250
Combined NYSE & NASDAQ Advance - Decline: 724-4956
Combined NYSE & NASDAQ New highs - New lows: 50-82 (flipped, finally)
WTI crude oil: 104.70, -2.02
Gold: 1,672.10, -31.80
Silver: 32.78, -0.91