Showing posts with label Capacity Utilization. Show all posts
Showing posts with label Capacity Utilization. Show all posts

Wednesday, February 15, 2017

Four Straight: All Major US Indices Close At Record Highs

Shades of the Weimar Republic, as all financial assets are becoming ridiculously overpriced.

As was the case in the Weimar, this may not end well. Inflation statistics from this morning's CPI reading showed January up 0.6% and the core CPI higher by some 0.3%. Meanwhile, capacity utilization fell 0.3 from December, to 75.3%.

Retail sales figures were also positive, showing a gain of 0.4%, after December's numbers were magically improved, revised from 0.6% to 1.0%. This as holiday sales gains from major retailers were modest or unreported, and large chains such as Sears and Macy's announced mass store closings coming throughout the year.

Global stock indices have also been ramping higher of late, an indication that the inflation, so often promised by endless rounds of quantitative easing (money printing) and an extended period (8 to 15 years) of low interest rates (some below zero) is finally occurring. What the globalists have been touting and predicting to happen can only lead to one logical conclusion: higher prices for consumers, a condition that will prove to impoverish the average citizenry of nearly every country in the world.

All of this may have something to do with the globalists running scared that their era of "free trade" and fiat money is about to meet its logical conclusion.

But it's all good for Wall Street, and that's what counts, to Wall Street.

At the Close, 2/15/17:
Dow: 20,618.98, +114.57 (0.56%)
NASDAQ: 5,821.62, +39.05 (0.68%)
S&P 500: 2,351.15, +13.57 (0.58%)
NYSE Composite: 11,510.34, +41.47 (0.36%)

Wednesday, December 14, 2016

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

More after the market close.

Tuesday, March 3, 2015

Are We Recovering Enough?

Editor's Note: Money Daily stopped being a daily post blog in March, 2014. Well, it's now March, 2015, and, after a year off, little has changed, but Fearless Rick is once again re-charged to begin making daily (Monday - Friday) posts. This is, with hope, the first of many...

The following list is courtesy of the good squids over at Goldman Sachs.

From the start of February through March 2, these are the misses and beats of various US macro data.


1. Personal Spending
2. Construction Spending
3. ISM New York
4. Factory Orders
5. Ward's Domestic Vehicle Sales
6. ADP Employment
7. Challenger Job Cuts
8. Initial Jobless Claims
9. Nonfarm Productivity
10. Trade Balance
11. Unemployment Rate
12. Labor Market Conditions Index
13. NFIB Small Business Optimism
14. Wholesale Inventories
15. Wholesale Sales
16. IBD Economic Optimism
17. Mortgage Apps
18. Retail Sales
19. Bloomberg Consumer Comfort
20. Business Inventories
21. UMich Consumer Sentiment
22. Empire Manufacturing
23. NAHB Homebuilder Confidence
24. Housing Starts
25. Building Permits
26. PPI
27. Industrial Production
28. Capacity Utilization
29. Manufacturing Production
30. Dallas Fed
31. Chicago Fed NAI
32. Existing Home Sales
33. Consumer Confidence
34. Richmond Fed
35. Personal Consumption
36. ISM Milwaukee
37. Chicago PMI
38. Pending Home Sales
39. Personal Income
40. Personal Spending
41. Construction Spending
42. ISM Manufacturing


1. Markit Services PMI
2. Nonfarm Payrolls
4. Case-Shiller Home Price
5. Q4 GDP Revision (but notably lower)
6. Markit Manufacturing PMI

OK, so the US economy is going backwards at a 7:1 ratio of Misses to Beats, but stocks, since the beginning of February, have been roaring (today excluded).

The point is that stocks are ignoring the somber truth that the US economy is running on fumes and Wall Street is running on pretty much less than nothing (kinda like the motto for the NY Lottery - a dollar and a dream).

There are collapsing scenarios unfolding everywhere, from the disgusting behavior of executives at Lumber Liquidators (LL), who were exposed on 60 Minutes this past Sunday. There, the CEO says he didn't now that the below-cost flooring coming out of China didn't meet California (and much of the rest of the US states) standards for toxic emissions, especially formaldehyde. Sad fact is that after being punched down on Monday, the stock rallied more than 5% on Tuesday, but, worry not, it was at nearly 70 about a week ago, and was punished well before the TV coverage, down to around 40 now. Somebody knew something and obviously was front-running. Nothing new there, move along...

The award for most disgusting public display over the past few days is split between three distinct candidates:

  • 1. The US congress, for cheering on the speech of Israeli Prime Minister, Benjamin Netanyahu, in a joint meeting.
  • 2. The utter stupidity of millions on Twitter over whether some dress was white and gold or blue and black. Hasn't anyone ever heard of distortion?
  • 3. The cops who shot the homeless guy in Los Angeles.

Like I said at the outset, not much has changed over the past year (or five years, for that matter). We're still kicking the can down the road, entrapped in a senseless bout of normalcy bias which is allowing the elite segment of society (Wall Street and DC, mostly) to trample on our freedoms and steal every last cent from the middle and lower classes, along with every shred of dignity.

Yep, like I said when I stopped writing daily diatribes a year ago, nothing is going to change until the Fed stops pumping money into the system. Well, they actually did stop, in the third quarter of last year, but the QE baton was quickly raised by Japan, and will shortly be taken up by the ECB, so, don't expect much to change any time soon. We've got at least a year and a half before the federal funds rate (you know, that one that seems to be permanently stuck between 0 and 0.25%, the rate at which the TBTF banks borrow) gets anywhere close to one percent, and even that could cause a panic in stocks.

In the meantime, the Baby Boomers are trying to figure out how to retire without any interest income, and that's an increasingly difficult trick, since the only reasonable yield one can get is at the far end of the curve, in 30-year bonds, currently hovering around 2.75%. $100,000 invested at that rate returns a whopping $2750 a year, so, you have to put up (and tie up) a million bucks just to live barely above the poverty level. Not much fun when you're 70 years old.

Deflation... it's what's for dinner (after the cat food).

Dow: 18,203.37, -85.26 (-0.47%)
S&P 500: 2,107.78, -9.61 (-0.45%)
Nasdaq 4,979.90, -28.20 (-0.56%)

More tomorrow...

Monday, September 16, 2013

Larry Summers Departs Fed Chairmanship Sweepstakes; Markets Jubilant

You'd never think that a man turning down chairmanship of the Federal Reserve could be such a positive development, but that's exactly what sent stocks soaring today, as Larry Summers announced - in a letter to the president - that he was withdrawing his name for consideration.

It's actually another bit of pretzel logic at play, because while Mr. Summers is the ultimate insider, some folks on the inside also thought he is a hawkish sort in terms of economic policy (how misguided!), and would be likely to pull back QE quicker than most other nominees to succeed chairman Ben Bernanke.

Thus, with fear of the economic spigot being turned off being muted by his withdrawal from consideration, for now, at least, the punchbowl that the Fed so lavishly entertains its Wall Street patrons has been kept in placed and fully spiked.

That, and a severe lack of volume (again, old story), led stocks to gallop out of the gate on Monday, drifting a bit to the downside in the afternoon, with the NASDAQ being pulled down by Apple (AAPL), whose shine has lost much of its luster since the untimely death of founder Steve Jobs. Apple is no longer innovative, forward-thinking or focused on individuality; it is becoming just another greedy corporate factory, outsourcing jobs to China while reaping huge profits here in the USA. The best days of Apple as a company are long past.

Otherwise, the shootings in Washington, DC, did little to stem the orderly flow, though one might be somewhat suspect of the rally continuing, with a FOMC announcement on Wednesday and economic data floundering.

The Empire Manufacturing Index (New York) fell to 6.3 for September after posting a downwardly-revised 8.2 in August, and industrial production missed expectations for the fifth straight month, registering a flaccid increase of jut 0.4%, though even that ws better than the July reading of 0.0%. August Capacity Utilization remained fairly stagnant at 77.8%. It was 77.6% in July.

With Summers and Syria off the front pages, the market can now go back to handicapping the size of the Fed taper to be announced on Wednesday; most estimates are for the Fed to reduce bond purchases by $10 billion a month, mostly in treasuries. They have little choice but to taper, as they are gobbling up more than a third of all issuance by Treasury, and, despite rumors to the contrary, the US Treasury cannot continue borrowing ad infinitum.

Well, maybe not. Infinity is, actually, a long way off.

Dow 15,494.78, -118.72 (0.77%)
Nasdaq 3,717.85, -4.34 (0.12%)
S&P 500 1,697.60, +9.61 (0.57%)
10-Yr Bond 2.87%, -0.02
NYSE Volume 3,344,441,000
Nasdaq Volume 1,476,599,875
Combined NYSE & NASDAQ Advance - Decline: 4173-2429
Combined NYSE & NASDAQ New highs - New lows: 430-38 (imbalance)
WTI crude oil: 106.59, -1.62
Gold: 1,317.80, +9.20
Silver: 22.01, +0.289

Wednesday, May 15, 2013

Stocks Rocket Higher as Government Begins Falling Apart; Warp Speed, Bennie!

OK, here are some facts and figures.

The White House is embroiled in three separate scandals (Benghazi, IRS, AP wiretaps), any one of which could be cause for impeachment (which is the preferred action, right now).

Attorney General Eric (Worthless) Holder testified and was grilled by congressmen before the House Judiciary Committee on a variety of issues, not the least of which were questions surrounding the wiretapping of AP reporters and editors. Holder, a typical administration slime-ball, who has prosecuted exactly zero criminal bankers, has recused himself from the AP investigation. How convenient!

The PPI for April was a massive misfire, signaling deflation in the face of the Fed's relentless, non-stop money printing. Expectations were for a reading of -0.5, which in itself would be anti-inflationary enough - and in direct opposition to the wishes of the Fed - but the number came in at a depressing -0.7.

Empire State Manufacturing was supposed to improve from a depression-era-level of 3.1 in April to 3.5 in May, but, surprise, manufacturing contracted in the New York region, dropping to -1.4.

April Industrial Production was off 0.5% and Capacity Utilization fell from 78.3 to 77.8%.

That's three scandals, each with its very own investigation about to be launched and four misses on economic data out of four. It's like a baseball hitter on steroids striking out four times and making three errors in the field. Not very impressive.

So, how do equity markets continue to march higher?

If anyone has answers please call 1-800-LUV-FRAUD, 1-866-2-WEIRD or 1-877-I-RIGGED.

A computer algorithm will answer your call and assimilate your responses, after which they will be discarded.

Thank you.

Dow 15,275.69, +60.44 (0.40%)
Nasdaq 3,471.62, +9.01 (0.26%)
S&P 500 1,658.78, +8.44 (0.51%)
NYSE Composite 9,551.32, +35.47(0.37%)
NYSE Volume 3,946,509,500
Nasdaq Volume 1,786,600,250
Combined NYSE & NASDAQ Advance - Decline: 3592-2883
Combined NYSE & NASDAQ New highs - New lows: 806-41 (!!!!!!)
WTI crude oil: 94.30, +0.09
Gold: 1,396.20, -28.30
Silver: 22.66, -0.721

Friday, November 16, 2012

John Boehner Rescues Markets... for Today

Stocks were slip-sliding away again on Friday until Speaker of the House, Republican John Boehner, emerged from a meeting with the president sounding very conciliatory and committed to a deal on the fiscal cliff issues facing the federal government.

Boehner spoke to the press just before noon, as stocks reached their lows of the day. Following his remarks that there was a "framework" in the negotiations - which include fellow Republican Mitch McConnell, Nancy Peolsi and Senate majority leader Harry Reid - stocks took off on a tear, with all the major indices quickly erasing losses and turing positive, where they remained, for the most part, into the close.

The Dow, which had been sporting a loss of 71 points, rallied 120 points in a matter of twenty minutes.

Boehner has a tricky path to navigate, between playing hard ball with Democrats while keeping his fellow Republicans - especially those of the Tea Party denomination - from mutiny and potentially blowing up negotiations, but for today, at least, he played the part of a Wall Street superhero.

A couple of other salient points on which to close out the week:

October industrial production dropped 0.4% and capacity utilization fell from 78.2 to 77.8, a significant decline, suggesting that the economy may not be just limping along, but actually slipping.

The advance-decline line was positive for the first time this week, though new lows were once again ahead of new highs, for the eighth consecutive session, or, for those cynics in our midst, since the re-election of President Obama.

It was a real downer of a week for the bulls, especially being options expiry on Friday, a day usually reserved for back-slapping and rounds of drinks over big scores. There was probably more crying into beers late this afternoon than glad-handing fellow insiders.

That's a wrap, and don't expect much next week, as the market faces a short week with a half-day session on Black Friday, the day after Thanksgiving. Additionally, President Obama will be visiting the Far East during the week, so no meaningful negotiations are likely until his return and after the weekend, leaving the politicians just about four weeks before Christmas to work things out.

Good luck with that.

Dow 12,588.31, +45.93 (0.37%)
NASDAQ 2,853.13, +16.19 (0.57%)
S&P 500 1,359.88, +6.55 (0.48%)
NYSE Composite 7,931.55, +34.67 (0.44%)
NASDAQ Volume 2,191,482,500
NYSE Volume 3,991,566,750
Combined NYSE & NASDAQ Advance - Decline: 3638-1796
Combined NYSE & NASDAQ New highs - New lows: 28-329
WTI crude oil: 86.67, +1.22
Gold: 1,714.70, +0.90
Silver: 32.37, -0.304

Wednesday, May 16, 2012

Volume Up, Stocks Down As Malaise in May Exhibits the Results of Bad Karma

With higher and higher volumes showing up on individual stocks as well as the major averages virtually every passing day, the idea that there's something basically wrong with the markets and the global economy is beginning to build into a self-defeating, repeating, cyclical tailspin.

The major indices did another midday about-face, in classic bear market fashion, even though economic data in the US was relatively positive.

Housing starts were up - at an annualized rate of 717K on expectations of 675K, though building permits were lower than anticipated. That stocks, especially those of home builders, would rally on such news was not unexpected, though just because somebody puts a shovel in the ground does not necessarily imply that these newly-constructed homes will eventually be bought, much less completed.

However, two more broad measures of the economy were also positive. Industrial production grew at a rate of 1.1% in April, while capacity utilization for the month printed at 79.2%, a very strong and encouraging number.

Investors simply cannot shake the co-mingled issues of Europe, especially Greece, the falling Euro and rising dollar, all of which contributes to what could be a tough state of affairs for many of the US markets' global entities, which ship and sell around the world. Exports from the US will be especially damaged as the weaker foreign currencies and stronger US dollar make for pricier goods in faraway markets where demand has been slowing.

Following along the same logic, commodity prices are trending lower as well, which would help companies' bottom line cost structures and help keep them competitive, though traders are not confident there will be strong enough demand to produce meaningful pricing power and sustainable profit margins.

Underlying all these concerns are three major issues: Greece and the Euro, the upcoming presidential and congressional elections, and, political implications of US policy: the expiration of tax cuts at the end of 2012 along with uncertainty regarding President Obama's health care bill (now in the hands of the US Supreme Court) and a closetful of unwritten regulations, many of them centered on the financial industry through the Dodd-Frank legislation.

Further below the surface lies the uncertainty regarding the Fed's next move, as Operation Twist, aka QE3, expires at the end of June. Thus far, Fed chair Ben Bernanke nor any of the Fed's governors have hinted whether further easing would be forthcoming, and, at the end of the day, that is simply a nightmare scenario for the general economy and the banks, because without easy money, the fears are that global commerce will grind to a halt.

Markets hate uncertainty, and there's an abundance of that commodity in the flow right now, so there's no reason to believe that stocks will do anything but decline as profits are taken and few new positions are being staked out until there is resolution on some of these issues.

In the meantime, consumers are enjoying a bit of relief at the pump, as oil has fallen in just the past two weeks to its lowest level since December of last year and show no signs of bottoming. At the same time, housing prices keep declining and therein lies the conundrum of deflation. Everything costs less, but nobody is willing to pay now, because prices will likely be lower in a few days, weeks or months.

Obviously, there's no quick fix to any of this and behind closed doors, the leaders of the world's great nations and their central bankers are scared stiff.

The bad karma that's been spread worldwide by the political and monetary leaders is coming full circle it seems.

Dow 12,598.55, -33.45 (0.26%)
NASDAQ 2,874.04, -19.72 (0.68%)
S&P 500 1,324.80, -5.86 (0.44%)
NYSE Composite 7,592.80, -43.01 (0.56%)
NASDAQ Volume 1,842,974,250
NYSE Volume 4,254,574,000
Combined NYSE & NASDAQ Advance - Decline: 1843-3756
Combined NYSE & NASDAQ New highs - New lows: 76-255
WTI crude oil: 92.81, -1.17
Gold: 1,536.60, -20.50
Silver: 27.20, -0.88

Tuesday, May 17, 2011

Poor Data Undermines Fed Pumping Effort

Well, there's nothing the Federal Reserve can do about a collapsing economy, after all.

Data from the housing sector today suggests that despite pumping literally trillions into the US financial system, the original canary in the coal mine, residential real estate, is still lying prone on the operating table, unable to move, dead as a doornail. And yet, the Fed and the federal government still insists that spending more money (creating more debt) is the ultimate fix-all.

One has to wonder just when the American public will have had enough of this disaster in centrally-planned economics. The banks have been spared, though they remain among the worst investments listed. The government has exceeded the debt limit (yesterday), and is now raiding the retirement funds of public employees. The federal employees are the first to be robbed. Next will be state pension funds, so you teachers out there, adjust your lifestyle pans accordingly as you're about to receive a very unwanted haircut.

The numbers coming from the real estate sector can be characterized as nothing less than a national disaster. Housing starts and building permits fell to unprecedented lows at 523,000 and 521,000 (annualized), respectively. The numbers for housing starts (new homes) represents a 23% decline from a year ago, while the permit figures for new home construction fell 4% from March.

All in all, it's simply horrible environment in which to be building new homes. The level of new home construction has been at the lowest level since the government began keeping track and continued to decline. There's simply too much shadow inventory being held onto by the banks, who don't want to realize losses on the many homes that are either already REO, in the foreclosure process or where the homeowner is already more than three months behind.

The market for new homes is absolutely the thinnest it's ever been and it doesn't appear to be getting any better.

Adding to the ongoing economic catastrophe were figures on industrial production - flat for April - and capacity utilization, which may have peaked in March, at 77%. April's figure came in at 76.9%, and will likely be revised lower.

Thus, we have a stalled industrial sector, a dead residential housing market, slow to no job creation and the recession was supposed to have ended more than two years ago.

Face it, folks, your government is not in favor of prosperity for the average American. If congress and the administration were serious about jobs and growth and not preoccupied with fighting wars on drugs and terror and meddling into the affairs of other countries, none of this would be happening. We've been sold out, lied to and yet there are fewer and fewer voices of protest. One supposes that Americans have had enough, yet are so worn down by joblessness, violence, foreclosures, regulations and intrusions that they haven't got the energy to complain.

Wall Street is feeling the stress as well. The Dow Jones Industrials were down a nifty 170 points in the early going, but, as usual, when the Fed money comes into play, reversed course and finished with a smaller loss. The other indices were down as well, except the NASDAQ, which posted a fractional gain, probably from being so viciously sold off the prior two sessions.

The "go away in May" crowd seems to have it about right. During the month - today being the 12th trading day in May of 21 total, so we're past the mid-point - the NASDQ is down 90 points, the Dow is off 330 and the S&P has shed some 34 points. It's not a great amount, yet, though it is already a 2-3% decline. Slow death. The S&P has been down eight of the 12 sessions in May. The correction is underway.

Dow 12,479.42, -68.95 (0.55%)
NASDAQ 2,783.21, +0.90 (0.03%)
S&P 500 1,328.98, -0.49 (0.04%)
NYSE Compos 8,333.07, -3.52 (0.04%)

Declining issues danced past advancers, 3815-2713. NASDAQ recorded just 28 new highs and 83 new lows, the second day in succession that the lows have been on the high side. The NYSE continues to resist flipping negative, as new highs outnumbered new lows, 80-47. Volume was moderate, another ominous signal on a down day.

NASDAQ Volume 2,190,797,000
NYSE Volume 4,459,555,500

WTI crude dropped 46 cents, to $96.91, though it traded significantly lower for much of the session. High gas prices, in spite of slack demand and 15% lower crude, persists, however, with the US average at $3.94, down only a few cents from its peak. Just a few hours ago, a group of Democratic Senators called for an FTC probe of oil refiners, suggesting that price-fixing has occurred. Rest assured that it is nothing more than a dog-and-pony show as the senators are merely grandstanding, knowing full well that their campaigns are largely financed by these very companies.

The hit squad was out in full riot gear in the metals markets, sending gold down $4.80, to $1485.00 and sending silver below $33/ounce, before it rebounded to post a gain of 35 cents, currently at $33.95. It should be apparent to all that the forced de-leveraging in precious metals is not about to abate, and prices could tumble quite a bit further, especially where gold is concerned.

A discussion is underway in Washington as to whether it would be prudent to sell some of the gold held at Fort Knox to keep the government running. Presidential candidate Ron Paul feels it's a good idea, though he faces opposition, notably from President Obama. The US gold reserves are valued presently at roughly $370 billion.

All along, the government sits back and watches in a silent stupor, as the United States of America, and its constitution, is slowly ground to dust. And not a word of protest was heard.

Wednesday, September 16, 2009

Stocks Continue to Pop on Production; Gold Soars

There was no slowing down the upside freight train as the major indices posted their 8th gain in the past 9 sessions and third straight winner at mid-week.

All sectors were positive, led by conglomerates, financials, basic materials and capital goods. Economic news included improved industrial production, up 0.8% in August, with capacity utilization gaining to 69.6% from a revised July figure of 69.0. CPI was benign, up 0.4%, with the core number up 0.1. Continuing a string of positive economic data, investors clambered back into the markets for more of the financial feast currently unfolding.

That this rally has not only legs, but now, euphemistically, wings, and is soaring, is remarkable considering where we were just a year ago, on the brink of global financial collapse. Through whatever means, the Fed and Treasury, working alongside central banks from countries around the globe, managed to avert severity and bring markets back to functional, realistic levels. How much further economic recovery can bring the market at this juncture is still a bit problematic and stressing, though the general consensus has now shifted to extreme positivism.

At some point, the market will balk and give back some share of profits, but timing that event is a foolhardy endeavor. Those who blanch at the first signs of weakness are likely to leave money on the table as any downturn will probably be short-lived and small. While some are calling this a stock-pickers market it appears to be anything but, as shares of just about anything have participated in this rally. Companies with clean balance sheets, strong management and stable product or service lines have fared the best. Companies are once again executing on their business plans with the worst fears behind them. Any money that has not participated as of yet has missed some of the most substantial gains though there are surely more to come.

The absence of any competition for stocks is also fueling the rally. So long as the Fed keeps rates at zero, this kind of activity in markets is to be expected. Money must go somewhere and the best returns are currently in equities.

Dow 9,791.71, +108.30 (1.12%)
NASDAQ 2,133.15, +30.51 (1.45%)
S&P 500 1,068.76, +16.13 (1.53%)
NYSE Composite 7,038.14, +121.07 (1.75%)

Simple indicators confirmed the headline numbers from the averages. Gainers beat losers by the widest margin in weeks, 5009-1499, while new highs ramped up dramatically, to another multi-year daily high of 586. There were 97 new lows. Those high-low numbers should begin to become even more dramatic, as stocks retrace the collapse of last year. This trend has completely reversed, signifying a new, healthy, bull market. Volume on the day was also at elevated levels. Stocks are close to overheating, though nobody will sound an alarm when they do. The risk of another tumultuous collapse has been all but washed out. Confidence is returning in a very big way.

NYSE Volume 1,581,164,000
NASDAQ Volume 2,738,888,000

Commodities also joined in the fun. Oil kicked up another $1.58 at $72.51, but the metals were the real story, with gold gaining $13.90, to $1,020.20, and silver up another 43 cents, to $17.43. Gold is once again being viewed as a solid hedge against the declining US currency and all the government deficits and guarantees of financial institutions that have fueled the comeback. Gold could easily top $1200 in coming months as there is still a good deal of work to be done on the overall global economy. Even eventual dollar stability should not be able to stop the run in gold and silver through the next 12-18 months.

This rally train left the station long ago, and it's running at nearly full speed. Options players have also enjoyed a heyday, with expiration on Friday. With that in mind, a slight pullback for profit-taking would not be surprising, though, honestly, in this environment, it may only last a manner of minutes.

Wednesday, August 12, 2009

Markets Regain Positive Tone on Fed Rate Decision

It may not have been just what the Federal Reserve's Open Market Committee did or said so much as a general mood that they wouldn't do anything to upset the rather delicate balancing act currently underway in world markets.

The Fed, as expected, kept the Federal Funds rate at 0 to .25%, and the discount rate at .50%, said more about improvements in markets than deterioration and slipped in a line or two suggesting that there was no more need for further quantitative easing - they've pledged to buy up to $300 billion in Treasury notes - after the end of October.

For a change, markets were markedly higher prior to the 2:15 pm announcement and changed little afterwards, with stocks more or less drifting at sustained levels into the close. This shows that Fed chairman Ben Bernanke understands the fragility of the situation and is very cautious about how Fed actions are explained to the markets and general public. Nearly a year after the worst financial shock since the Great Depression, Bernanke's Fed has provided leadership and persistence to bring the US and world economies back from the brink of disaster. Whether it's black magic or shrewd understanding of economics, he deserves credit for at least righting a ship that had gone seriously off course.

The next step is to bring back GDP growth, and jobs, no easy tasks, though today's response on the financial markets seem to indicate that the mood of investing professionals has definitely turned the most positive since September of 2008.

Dow 9,361.61, +120.16 (1.30%)
NASDAQ 1,998.72, +28.99 (1.47%)
S&P 500 1,005.81, +11.46 (1.15%)
NYSE Composite 6,538.87, +75.25 (1.16%)

Bolstering the optimistic tone was a return to advancing issues dominating decliners, 4690-1770, More new highs than new lows, 126-53, and a slight uptick in volume.

NYSE Volume 1,306,697,000
NASDAQ Volume 2,154,837,000

Commodities seemed to appreciate the mellow tone of the Fed announcement. Oil gained 71 cents, to $70.16; gold marked $4.90 higher, to $952.50, and silver gained 24 cents, to $14.59.

The Fed decision was crucial for the market to retain confidence. Next up is a broad survey of retail sales on Thursday, with preliminary CPI figures due out Friday, along with Capacity Utilization and Industrial Production reports for July.