WEEKEND WRAP: Another Shaky Week for Stocks; Bond, Gold, Silver Rallies Extend

As the global ponzi turns, the week now left behind shares a trails of tears and cheers, sadness for equity holders, joyous celebrations in the bond pits as US rates re-approach the zero-bound (despite the Fed's reluctance).

While stocks bounced like a rubber ball on a string, the losses were limited by some mysterious dip-buying mid-week as news flow changed not just by the day, but seemingly by the hour.

At the same time, the bond market in the US was mimicking Japan and Europe, grinding yields lower, with the 10-year note closing out the week at 1.74%, which is lower than the 1,2,3,6-month and one-year yields, making the case for an already inverted yield curve. The 2-year continues to be resilient, though one has to wonder how much longer it can hold the narrow margin below the 10-year, which is currently a scant 11 basis points (1.63%).

Precious metals have also benefitted from global uncertainty, with gold hovering around $1500 and silver teasing the $17.00 mark. Both are significantly higher from lows spotted in late May. The ascent of the metals has been swift and without any major pullback. If the metals are in an overbought condition, they certainly aren't showing any signs of it. As usual, however, the persistence of central banks to keep "real money" on its heels is probably keeping PMs from going vertical. That story seems to have no end, except that a hyperbolic rise in gold and silver would signal the death of not just the US dollar, but probably all fiat currencies in use by every nation, developed or not. After fiat finds its proper value (ZERO), barter will follow. It's a natural progression. The central question, as has been for centuries, is, "what do you give for a live chicken?"

Though it may appear that the global economy is about to implode, it's useful to be reminded that the Great Financial Crisis (GFC) is well beyond its 10th anniversary, thanks to massive infusions of counterfeit fiat ladled out to the unwashed by the BOJ, FRS, BOE, SNB, PBOC, ECB. Spelling out the acronyms somehow yields negative interest rates and the death of money. Nobody knows when this will occur, but it will, and the effects will devastate many. Think billions of people, not just millions.

In the interim, as the world is roiled by international, geopolitical events, the wall of worry is being built upon the current crises (not in any particular order):

• The Epstein "suicide"
• Honk Hong protests
• Brexit
• Trade War and tariffs
• Middle East tensions
• Mass Shootings, Gun Control Legislation, Red Flaw Laws (won't happen)
• 2020 presidential election hijinks
• Ongoing migrations (Africa to Europe, South America to North America, China to Africa)

That's more than enough to keep traders up at night and on their collective toes during the days ahead.

Incidentally, all of this anguish has shielded the markets somewhat from a less-than-rousing second quarter earnings season, even as the corporates float through the third quarter. The Dow Transports re-entered correction territory two weeks past week and extended it last week with the worst showing of all the US indices, by far.

Recession is almost a certainly, though it needn't be particularly horrible for the US, since employment is still strong, despite weakening earnings in the large cap corporate sector. Since the US is a very big country, different areas will be affected in different ways. Areas of the country that have been growing (most of the South, Midwest and Pacific Northwest) will continue to do so, albeit at a slower pace. Those areas in decline (Northeast cities, California, rural enclaves) will see conditions worsen. Those areas in decline will continue to do so through good times and bad and some may be exacerbated by outflows of high income individuals due to SALT taxes. It's a big country, a panacea for speculators with long time horizons.

At the Close, Friday, August 9:
Dow Jones Industrial Average: 26,287.44, -90.76 (-0.34%)
NASDAQ: 7,959.14, -80.02 (-1.00%)
S&P 500: 2,918.65, -19.44 (-0.66%)
NYSE Composite: 12,748.42, -80.38 (-0.63%)

For the Week:
Dow Industrials: -197.57 (-0.75%)
Dow Jones Transports: -167.22 (-1.61%)
NASDAQ: -44.93 (-0.56%)
S&P 500: -13.40 (-0.46%)
NYSE Composite: -91.08 (-0.71%)

Stocks Jittery On Trade, Economies, Recession

Still on the road...

Watching the various global indices, it's obvious that the markets are quite jittery. A single headline can move stocks up or down, depending on the news. It's very knee-jerk right now and not a good time to be taking positions, unless you're short some China-US trade and well-hedged.

The US and China are to going to work out their differences right away, so it's a good bet that President Trump's promised 10% tariffs on a wider range of imports will come to bear on September 1, which is just three weeks away.

In the meantime, European economies are looking very weak, with some countries on the verge of recession. Britain already announced a second quarter slowdown and more should be forthcoming from various parts of the continent. If Germany falls into recession, there will be a bloodbath in stocks and bonds yields could collapse even further into the negative.

All this suggests a global rout in the not-so-distant future.

It's been a hellish two weeks and Friday, August 9, is shaping up to be deadly for the long side.

At the Close, Thursday, August 8, 2019:
Dow Jones Industrial Average: 26,378.19, +371.09 (+1.43%)
NASDAQ: 8,039.16, +176.33 (+2.24%)
S&P 500: 2,938.09, +54.11 (+1.88%)
NYSE Composite: 12,828.82, +195.82 (+1.55%)

Panic Sets in as US-China Trade Spat Intensifies

On the road, so this will be a drive-by posting...

On Monday, stocks suffered their worst session of 2019 after China, without warning, devalued their currency, the yuan, in response to US demands for increased tariffs on imports.

President Trump announced that he would tack on a 10% tariff on a variety of Chinese goods - many of them consumer staples - on September first. The response from China was not entirely unexpected, though it took Wall Street and stock traders around the globe, mostly by surprise.

Intraday, the Dow was lower by more than 900 points, but rallied slightly into the close. It was still one of the worst days in recent memory for all US indices.

As Tuesday's trading approaches, US futures have turned positive as China pegged its currency at a higher level overnight, to everyone's relief.

While Monday's panic may appear to be a one-off, the trade war continues to roil markets on a regular basis. Until the two major trading partners agree to play nice and work out some kind of long-term deal, these kinds of shock events will continue to plague investors.

At the close, Monday, August 5, 2019:
Dow Jones Industrial Average: 25,717.74, -767.27 (-2.90%)
NASDAQ: 7,726.04, -278.03 (-3.47%)
S&P 500: 2,844.74, -87.31 (-2.98%)
NYSE Composite: 12,497.31, -342.20 (-2.67%)

Stocks Slammed As Trump Targets Tariffs At China; Gold Bid; Payrolls, Unemployment Steady

Stocks swooned for the second straight session after President Trump announced that he would be adding a 10% tariff on $300 billion of Chinese imports beginning September 1.

The president noted that China had backed down on previous commitments to purchase farm produce from US farmers and to stem the flow of fentanyl into the United States.

Markets reacted with the usual disfavor, erasing earlier gains and slumping deep into negative territory. Apparently, nothing can help the market disengage from negativity. Wednesday's 1/4-point easing of the federal funds rate caused a mini-crash and Thursday's small tariff hike sent dealers to the sell buttons.

On the same news, gold caught a tailwind, rising from a low of $1400 to nearly $1448 in just over seven hours. Silver also gained, but not nearly in the manner of gold. Silver was around $16.30 an ounce as US trading closed and has been trending lower early Friday morning.

WTI crude oil took a nosedive on Thursday, recording its worst one-day performance in four years, with futures dipping below $54 per barrel in late Thursday trading.

As US markets prepare for the final session of the week, Asian and European indices headed lower, with most of the major bourses down more than two percent. After European PMIs all showed contraction - and with the outlook for a "no deal" Brexit a real possibility by the end of October - traders on the continent are voting with their feet, leaving behind a wake of battered stock prices. Europe is most definitely headed for a recession soon, though a US recession is still not an apparent reality.

While the rest of the world struggles to maintain their economies, under the leadership of Donald Trump, the US appears to have a real advantage, the dollar strengthening while the bond market rallies. The US 10-year treasury blasted through the two percent line on Thursday, currently holding with a yield around 1.89%.

In breaking news, July non-farm payrolls came mostly in line with expectations at 164,000 new jobs added during the month. The unemployment rate held steady at 3.7% and year-over-year wages increased at a 3.2% rate.

Us stock futures are trending off their lows as the opening bell approaches.

At the close, Thursday, August 1, 2019:
Dow Jones Industrial Average: 26,583.42, -280.85 (-1.05%)
NASDAQ: 8,111.12, -64.30 (-0.79%)
S&P 500: 2,953.56, -26.82 (-0.90%)
NYSE COMPOSITE: 12,920.82, -145.78 (-1.12%)

Blood on the Tracks: Transportation Average in Correction

It's been a rough month for transportation stocks and Monday's tumble sent the Dow Jones Transportation Average back into correction territory, a condition unnoticed by financial pundits who are supposed to be on top of such events.

Maybe it's because the transports - and the rest of the stock universe - has had a happy 2019 thus far, but the previous high referenced by the ^DJT dates back to September 14.

The S&P and NASDAQ set new all-time highs earlier this month, but the Industrials, like the Trannys, harken back to 2018. October 3 to be precise.

While the other indices took sizable hits on Monday, they are each down around five to six percent, but the transports have been taking it on the chin of late, their pronounced decline due, no doubt, to ongoing trade tensions with China. Since trade and transportation are so heavily intertwined, it doesn't take a mastermind to figure why the transports have been treated so harshly.

With the trade scenario likely to continue devolving, expect no relief in the transport sector. The next key points for the average is around 9900 (the October lows) and 8637 (late December). Should the transports continue their descent from here, expect the other indices to follow suit, which means the peals of panic will be loud and sustained.

This entire exercise in trade trolling will eventually work itself out and the Chinese are likely to end up on the losing side. As President Trump never fails to highlight, they've been winning for decades, and it's time to turn the tables, at least a little bit. It's not like the Chinese empire will return to the 18th century, though, because they've got trade tentacles everywhere. The US is seeking better terms, and they're almost certain to get them because China will be pragmatic. They will not risk losing power control over trade with just one country, even though that country is their biggest customer.

China will politely bow, the president will rightly claim a victory, stocks will be lower, but they will spring back, like they always do. President Trump's trade policies are disruptive, but, they will benefit US business interests in the long term. They're nothing to be panicked about and certainly aren't going to threaten the US economy in any grand fashion.

In the meantime, however, the transports and industrials are probably going to take a significant hit. Figure another 15-20% on the trannys and 10-15% downside for the indys.

Dow Jones Industrial Average: 25,324.99, -617.38 (-2.38%)
NASDAQ: 7,647.02, -269.92 (-3.41%)
S&P 500: 2,811.87, -69.53 (-2.41%)
NYSE Composite: 12,526.71, -261.43 -2.04%
Dow Jones Transportation Average: 10,305.85, -296.34 (-2.80%)

WEEKEND WRAP: Stocks Wrecked, Bull Market Finished; Bears' Claws Are Out

If the week prior to last was characterized as one in which "the wheels fell off" (Money Daily, 12/16/18), the most recent week was nothing short of a full-blown train wreck.

Everything was on sale, but especially stocks, as the Fed raised rates, the US federal government ground to a halt over a $5 billion border wall, and investors were spooked by collapsing long-term interest rates and the specter of a recession in coming months.

More than anything else, however, stocks were on sale mostly because they were being perceived as overpriced, and by most accounts they were and still are. According to Robert Shiller's CAPE index, the week ended with the Shiller PE ratio for the S&P 500 at 26.75, down from the peak of 30 two weeks ago, but still well above the mean (16.59) and the median (15.69) levels.

Shiller PE ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10

This is how bubbles are pricked, and, as Doug Noland candidly attests, "There is never a good time to pierce a Bubble." More from Noland:

"Expiration for the aged “Fed put” was long past due. For too long it has been integral to precarious Bubble Dynamics. It has promoted speculation and speculative leverage. It is indispensable to a derivatives complex that too often distorts, exacerbates and redirects risk. The “Fed put” has been integral to momentous market misperceptions, distortions and structural maladjustment. It has been fundamental to the precarious “moneyness of risk assets,” the momentous misconception key to Trillions flowing freely into ETFs and other passive “investment” products and strategies. It was central to a prolonged financial Bubble that over time imparted major structural impairment upon the U.S. Bubble Economy."

Noland's entire Credit Bubble Bulletin commentary can be seen here.

If Noland's perception is accurate (and there's little reason to doubt it), this week's cascading declines are merely the end of the first act in what is likely a three-act drama to be played out over the next 12-18 months. Surely, the tremors from February and March were early warnings that the persistent bull market was coming to a conclusion.

October's declines were blamed by some analysts - incorrectly - on the lack of stock buybacks during the "quiet period," and were nothing about which to be worried. Obviously, that analysis was short-sigthed and based upon the bubble hypocrisy that has guided markets since the Great Financial Crisis of 2008-09.

December's nosedive was pretty predictable. Stocks hadn't shown any inclination toward the upside for months and there wasn't a good catalyst for investors, nothing even remotely resemblant of a buying opportunity. Of course, some too the "buy the dip" bait a few times this year and have been destroyed. That concept is a dead doornail for the time being. Selling into any strength is likely to be the prevailing rear-guard action.

Once 2018 comes to an end - in just five more trading days - there will be some regrouping, repositioning, but until there's resolution of some basic issues (the Wall, Brexit, China, tariffs), there isn't going to be any kind of rally. Gains will be hard-fought, and sellers will be eager on short-term wins. The second phase of the selloff will last well past January, into the summer and possibly the fall before the endgame commences, with sellers capitulating en masse. By this time next year it may be nearing a bottom some 40-60 percent below the all-time highs. Investor confidence will have been at first shaken, then eroded, and finally, shattered. Wall Street will have a crisis of its own making, and the economy will be embarking into recession.

Markets have come full circle. Central banks have decided that the experiments of QE, ZIRP, and NIRP which propelled stocks to dizzying heights, are over, their purpose achieved, and now comes the hard work of withdrawing some level of liquidity from markets in an attempt to normalize markets.

The problems lie in execution. It's not going to be easy to take corporations off the baby bottle of leveraged stock buybacks which blew up expectations and prices but caused serious long-term harm to capital structures. This current crisis may turn out to be worse than the sub-price fiasco or the dotcom malaise simply because it involves so many companies that have gutted their balance sheets and will have no other recourse than to slash production, wages, jobs, capital expenditures or all of the above.

This week was a full stop.

There aren't going to be any more bailouts, white knights, back-room deals or "Fed Put." The coming regime is going to be one of hard and cold capitalism, where the strong get stronger and the weak are slaughtered. Wall Street brokerages are sure to be among the most celebrated casualties when everybody realizes these heroes of the past ten years aren't all that bright and that there aren't that many good stock pickers in down markets. The financial industry, already under siege, is about to be breached and downsized to more human and humane proportions.

There's only so much one can say about stock routs. The numbers are there for perusal and they are horrifying enough all by themselves. Hashing over the events of the week, as stocks slid, then rallied and slid more, and finally crashed on a Friday afternoon would be little more than overkill.

It was a very, very bad week, the worst since 2008, and some say, since the Great Depression. It may not have been the worst we will witness however, as this is only the beginning of the bear market.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58
12/18/18	23,675.64	+82.66	-1862.92
12/19/18	23,323.66	-351.98	-2214.90
12/20/18	22,859.60	-464.06	-2678.96
12/21/18	22,445.37	-414.23	-3093.19

At the Close, Friday, December 21, 2018:
Dow Jones Industrial Average: 22,445.37, -414.23 (-1.81%)
NASDAQ: 6,332.99, -195.42 (-2.99%)
S&P 500: 2,416.62, -50.80 (-2.06%)
NYSE Composite: 11,036.84, -185.96 (-1.66%)

For the Week:
Dow: -1655.14 (-6.87%)
NASDAQ: -577.67 (-8.36%)
S&P 500: -183.33 (-7.05%)
NYSE Composite: -718.54 (-6.11%)

Everything was not gloom and doom, however. Here's Darlene Love, in one of her many appearances on the Late Show with David Letterman, performing "Chirstmas (Baby Please Come Home)." This is one of her best.

Stock Carnage Continues; NASDAQ Down 20%; Why It Is Happening

Stocks continued to sell off on Thursday, extending the December decline to dangerous levels.

The Dow has registered what is easily the worst month of 2018, while the NASDAQ joined the Dow Jones Transportation Index in bear market territory, down 20% from its August 29 high.

Pundits in the financial media are trying to assign blame wherever they can, on the Fed's recent rate hike, fear of a coming recession, the possible federal government partial shutdown, China's slump, a looming trade war. While those are contributing factors, the real culprits are the Federal Reserve and their cohorts in central banking in Japan, China, the ECB, the Bank of England and the Swiss National Bank.

These are the architects of the past decade's debacle of debt, beginning in the depths of 2008-09 and continuing through until today. Their schemes of zero interest rate policy (ZIRP), negative interest rate policy (NIRP) and quantitative easing (QE), which made money all-too-easily available to their willing friends in the C-suites of major corporations.

The corporations took the easy money, at rates of one to two percent or less, and repurchased their own corporate stock at inflated prices. Now that the executives have cashed out, milked dry their own businesses, they are upside-down, owning shares of stock purchased at 20, 30, 40 percent or more than they will sell for today.

2018 was the culmination of this global corporate theft, inspired by the gracious money printers at the Federal Reserve and other central banks. Over the past ten years, trillions of dollars, yen, yuan, euros, pounds and other currencies were brought into existence, lent to various large corporate interests in a variety of complex and/or simple transactions and now the gig is up, though one will never hear talk of this in the mainstream media.

What happens to a corporation that is holding shares it bought at $90, when the stock is selling for $60 and may be worth less than that? Nothing good, including cutbacks, rollbacks, layoffs, and the general demise of once-strong companies.

When these companies offer shares for sale - and they eventually will - they will realize losses and they will still have the loans from the central banking system to repay. Some will file for bankruptcy. Others will cut payrolls and expenses to the bone. The past ten years have been nothing short of complete and total corruption of the financial system, from top to bottom. This is why the selling has been intense and relentless and likely will not cease until stocks are 40 to 60 percent off the artificial highs created by reducing the number of shares available through stock buybacks.

It was a swell scheme that paid off handsomely for some of the top executives at many of the largest corporations, and the general public, the people with 401k or retirement or college funds tied to the stock market, are going to end up bag-holders, broke and dismayed, as well they should be.

If there is any justice in this world, the bankers will be fingered, the corporate executives tried and jailed, and money clawed back from their ill-gotten gains. But we all know from the 2008-09 experience that that will not happen. Nobody will be tried. Nobody will serve a single day in jail, and the Federal Reserve will continue on its merry way, inflating and deflating to their heart's content, stealing from the public as they have been since 1913.

That's all there is to it. Hopefully, you are not a victim, though in many ways, we all are.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58
12/18/18	23,675.64	+82.66	-1862.92
12/19/18	23,323.66	-351.98	-2214.90
12/20/18	22,859.60	-464.06	-2678.96

At the Close, Thursday, the solstice, December 20, 2018:
Dow Jones Industrial Average: 22,859.60, -464.06 (-1.99%)
NASDAQ: 6,528.41, -108.42 (-1.63%)
S&P 500: 2,467.42, -39.54 (-1.58%)
NYSE Composite: 11,222.79, -149.05 (-1.31%)

Global Stock Rout Deepens; Dow Loses Another 500 Points; NASDAQ Down 16.7% Since August

The pain is spreading, and it doesn't seem to be about to abate any time soon.

According to Dow Jones Market Data, the S&P 500 closed at its lowest level since October of 2017, the NASDAQ finished at its lowest since November of 2017, while the Dow closed at lowest level since March 23. Only a rally in the final 15 minutes of trading kept the Dow from closing at its lowest level of the year.

The Dow had plunged as low as 23,456.8 with just minutes to the closing bell, but short-covering boosted the industrials more than 100 points in the final minutes of trading. Not that it matters very much, but the closing low for the year was 23,533.20. Prior to that, the Dow closed at a low of 23,271.28 on November 15, 2017.

Both of those levels are likely to be subsumed, as the stock rout about to be hit with another dose of reality. Trumping anticipation, the Fed meeting which ends Wednesday afternoon at 2:00 pm ET, is almost certain to include a 25 basis point raise to the federal funds rate. On Friday, the federal government, unable to reach a suitable compromise on President Trump's border wall, will go into a partial shutdown.

Neither event - especially the federal shutdown - is of the earth-shattering variety, but they come at a very inopportune time for the market, which is struggling to find any good news upon which to hang a rally.

Europe is either in flames (France), in a bear market (Germany), or about to enter a recession thanks to the end of the ECB's brand of QE. Beyond that, there's the uncertainty of an orderly departure from the EU by Great Britain. The official date for Britain to separate itself from the EU is March, but there have been rumblings of an extension and more than just a little unrest from the island nation to the continent concerning what effect a member country departing will have on the solidarity of remaining members.

In China and Japan, an economic slowdown is already well underway, so it appears that the sellers have reason enough to move away from stocks, and rapidly. There are just too many negatives floating around geopolitical and financial circles for all of them to be resolved in the near term. Rather, these worries turn into realities which the market doesn't appreciate, such as the actual imposition of tariffs rather than mere rumors and threats of them. The same goes for the Fed's upcoming rate hike and the government shutdown. It's become a market that's twisted the old saw into "sell the rumor, sell the news." Everything is on sale and buyers have been heading to the sidelines beginning in February. Since October, the pace has picked up noticeably, but December threatens to be the worst month of the year for the Dow, at least.

For perspective, February's loss on the Dow was 1120.19 points.

March saw a decline of 926.09.

In October the Dow lost 1341.55 points.

So far this month, the Dow is lower by 1945.58 points, making the October through December (November's gain was 426.12 points) period worse than the February-March spasm.

The NASDAQ is down 16.7% since August 29. WTI Crude was seen at $49.45 per barrel, the lowest price since September, 2017.

Throughout the years of experimental financial chicanery of QE and ZIRP, and NIRP (negative interest rate policy) by the Federal Reserve and fellow central bankers following the Great Financial Crisis (GFC) of 2007-09, the question was always, "how is this all going to end?"

Now, we have the answer, firsthand, and, as many predicted, it's not pretty and likely to get worse.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58

At the Close, Monday, December 17, 2018:
Dow Jones Industrial Average: 23,592.98, -507.53 (-2.11%)
NASDAQ: 6,753.73, -156.93 (-2.27%)
S&P 500: 2,545.94, -54.01 (-2.08%)
NYSE Composite: 11,532.12, -223.27 (-1.90%)

Friday Meltdown Leaves Stocks Near Lowest Levels of Year; All Major Indices In Correction

After the first week of December ended in tears, there were glimmers of hope for a rebound in stocks as the clock ticked closer to Christmas and the end of the consumer shopping/spending season.

While retail sales - as especially so, online sales - continued strong, stocks suffered through another week of volatility, though it didn't actually present itself until the very end.

The Dow was up a bit over 200 points as of Thursday's close, but at the opening bell on Friday it was apparent those gains would not hold. In the end, the Dow lost nearly 500 points on the day, sent that index into correction, along with the S&P, joining the NASDAQ, NYSE Composite, and the Dow Jones Transportation Average.

The tailwinds of the recent selloff have its roots in October, when the Dow most a cumulative 1,345 points. November's gains were only 426, but the Dow is down another 1438 points in December, challenging the closing low of the year, 23,533.20 on March 23.

Besides the usual concern over profits and/or losses, financial markets have plenty of issues to keep investors up at night. There's the continuing Brexit issues, which nearly cost Prime Minister Teresa May her government, and coming up this week is the Fed's FOMC meeting in which the federal funds rate is supposed to be hiked another 25 basis points, along with the real possibility of a particle government shutdown over budget issues, primarily concerning President Trump's promised border wall, and the funding of such.

So, instead of being perplexed over dollars and cents, Wall Street seems more focused on politics and nonsense, as the relentless - mostly baseless - attacks on Mr. Trump continue to overhang every discussion policy and threaten to throw the entire country into chaos.

Form a technical point of view, stocks are in very dangerous territory. The dreaded "death cross," in which the 50-day moving average falls below the 200-day moving average, occurred last week on the S&P, had already happened in mid-November on the NYSE Composite Index, made its appearance the last day of November on the NASDAQ and is maybe two more days away from happening on the Dow.

It's a fairly obvious phenomenon, which points up near-term weakness. When both the 50 and 200-day moving averages point lower in such a condition, it doesn't take a genius to figure out that a hungry bear is roaming free in the forest.

Despite trading having been buoyant during most recent holiday seasons, this one appears to be rather different. There's a distinct possibility of a global slowdown, especially since retail sales and industrial production in China both slowed in November. While politically-oriented pundits will point to Trump's trade war with the Chinese as the culprit, the issue seems to be more complex and deep-seated than such a superficial analysis suggests. China's economy, built on massive credit expansion, ghost cities, and often spurious economic data, has been booming for 20 years and has been due for a slowdown, correction, or even recession. As is the case with the longest bull market in US history, nothing lasts forever.

Any gains in the coming weeks are likely to be eaten away rather quickly as profit-taking is followed by loss prevention. Even as the Fed raises rates, bond yields should continue trending lower as investors seek safety and shun profligate speculation.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95

At the Close, Friday, December 14, 2018:
Dow Jones Industrial Average: 24,100.51, -496.87 (-2.02%)
NASDAQ: 6,910.67, -159.67 (-2.26%)
S&P 500: 2,599.95, -50.59 (-1.91%)
NYSE Composite: 11,755.38, -180.82 (-1.51%)

For the Week:
Dow: -288.44 (-1.18%)
NASDAQ: -58.59 (-0.84%)
S&P 500: -33.13 (-1.26%
NYSE Composite: -186.55 (-1.56%)

Heads Up! Stocks Selling Off Worldwide; US Open Looking Ugly; Germany's DAX Nearing Bear Market

After an unscheduled day off for the Kumbayah TV presentation of George HW Bush's funeral Wednesday, the rest of the world's equity bourses took the day to vacillate, but Thursday looks to be a bloodbath of magnificent proportions.

Asian stocks were down broadly in Japan, Hong Won, China, and elsewhere, and European stocks opened lower and continued to descend. The DAX, Germany's main stock exchange, is approaching bear market status, down 19% from an all-time high of 13,478.86, reached on October 30, 2017. The DAX is currently trading around 10,940.

At this writing, Dow futures are off more than 450 points, S&P futures have fallen nearly 50, and NASDAQ futures are 115 points lower.

Money Daily will be monitoring events throughout the US session, as this current downdraft appears to be one without a bottom.

Stocks Spurt On Tariff Truce; 3-5 Yield Curve Inverts

There was good news on the trade front, but bad news concerning a possible recession.

At the conclusion of the G20 meeting in Buenos Aires, President Trump and his Chinese counterpart, Xi Jinping, announced a 90-day moratorium on tariffs set to take effect on January 1, 2019. Some of the tariffs already in place were set to increase while new tariffs on a variety of goods were to take effect on the new year, but the leaders of the world's two largest economies decided on a cooling-off period and further talks before proceeding.

That good news sent futures soaring in pre-market trading, the euphoria spilling over into the regular session. Barely noticed - and un-noted by the financial press - was a minor inversion in interest rates, with the yield on the 5-year note (2.83%) falling below that of the 3-year treasury note (2.84%).

Though it's not the inversion that most economists are looking for in terms of portending a recession, the minor inversion is a warning shot. The 2-year and 10-year notes are the fear standard, with an inverted curve of those rates consistently preceding every recession since 1955. Currently the 2-year note stands at a yield of 2.83%, while the 10-year holds at 2.98%, notably below 3.00%, after Fed Chairman Jerome Powell softened his stance on rate hikes last week.

Thus, there's a split narrative that threatens to put a lid on gains in the near term. Trade wars have been postponed, for now, but 90 days isn't long enough to establish new guidelines between China and the USA. With the Fed set to raise and check, interest rates are going to give them some maneuverability, though not much, with the federal funds rate settling in somewhere between 2.25 and 2.50%.

Bond vigilantes brought the 10-year note down below the Maginot Line of 3.0% on the first trading day of December. That's more than enough speculation as to where interest rates are headed. In a word, nowhere. The ancillary note is on growth - both domestic and global - which has had a bit of a bump thanks to US strength, but pockets of malaise are popping up everywhere. There seems to be no smooth path heading into 2019, so, after a boost from the Fed and another from the international trading community, this early December rally may not have enough gusto to carry it past the FOMC meeting and through the holidays.

Much emphasis will be put on consumer spending, though with an early Thanksgiving, holiday spending might just peter out a week before Christmas.

It's not all doom and gloom. It's more like murky, with a light at the end of some tunnel.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97

At the Close, Monday, December 3, 2018:
Dow Jones Industrial Average: 25,826.43, +287.97 (+1.13%)
NASDAQ: 7,441.51, +110.98 (+1.51%)
S&P 500: 2,790.37, +30.20 (+1.09%)
NYSE Composite: 12,577.54, +120.00 (+0.96%)

Crash Much? All 2018 Gains Wiped Out In Global Stock Rout

Where to begin?

Today's stock market rout was worldwide, starting in Japan, as the NIKKEI fell 238 points, the Hong Kong's Hang Sent slid 531 points and China's SSE Composite Index closed at 2,645.85, down 57.66 points, or -2.13%.

Europe was next up on the hit list, as the Germany's DAX was off 178.13 points (-1.58%), closing in on a 20% decline for the year. Other European stock indices were down between one and one-and-a-half percent.

As markets opened in the Western Hemisphere, the selling accelerated, sending the Dow down more than 400 points at the open and other North and South American indices falling sharply. By the end of the day, it was absolute carnage, a veritable sea of red. Every equity index on Yahoo's Major World Indices page was lower, save Malaysia's KLCI, which managed a 4-point, 0.25% gain.

Seriously, though, today's crash began in the fall of 2008, when stocks were wiped out in the face of the Lehman Brothers collapse and the sub-prime housing crisis, and also had roots from April 9, 2009, when stocks finally bottomed out as the FASB loosened accounting rules, issuing an official update to rule 157, allowing companies to deviate from standard mark-to-market principles in valuing assets.

The Fed and its central bank cohorts had their dirty little fingers in the dikes as well, conjuring up trillions of dollars in liquidity, effectively bailing out financial institutions that were, essentially, bankrupt. That's what brought us here today, ten years and trillions of dollars later. The everything bubble has finally popped.

This is a rolling crash, not a hard one, like on Black Tuesday in 1929. There have been - in just the past eight trading days - losses on the Dow of 201, 602, 100, 206, 395 points and today's 552. There were gains of 201 and 124 points on Thursday and Friday of last week, but the cumulative effect comes to a loss of 1731 points since November 8, roughly a seven percent dribble.

Tuesday's losses sent the S&P 500 hurtling toward correction territory. From the close of 2,930.75 on September 20 to today's finish at 2,641.89 is a 9.86% loss. For those in the rounding up-or-down crowd, that's 10 percent, or, close enough for horseshoes or hand grenades.

For those keeping score, the Dow is down 8.81% from it's closing high on October 3 (26,828.39). The NASDAQ, which has been in and out and back into correction since October 24, is still up on the year... a whopping five points and change. The index is down 14.82% since August 29. Albeit marginally, the Dow Industrials, S&P, NYSE Composite and the Dow Transports are all lower for the year.

The NYSE Composite which peaked at 13,637.02 on January 26 and never regained that height, is down 11.61%, reaching down to correction levels today, though, like the NASDAQ, it had breached the 10% down level on October 24 and since recovered.

Lastly, the Dow Jones Industrial Average finished today with a loss of 321.52 (-3.05%), at 10,212.94. That's an 11.74% drop from the all-time high close of 11,570.84, September 14.

In the commodity space, oil was crushed again today, as WTI crude futures ended at 53.22, down $3.98 per barrel (-6.94%). According to oilprice.com, that's the lowest price since mid-October of 2017.

Where do stocks go from here? That question almost answers itself.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78
11/20/18	24,465.64	-551.80	-650.58

At the Close, Tuesday, November 20, 2018:
Dow Jones Industrial Average: 24,465.64, -551.80 (-2.21%)
NASDAQ: 6,908.82, -119.65 (-1.70%)
S&P 500: 2,641.89, -48.84 (-1.82%)
NYSE Composite: 12,054.17, -226.74 (-1.85%)

Weekend Wrap: Myopic Markets Ignoring Broader, Global Issues

Extending declines from last Friday, stocks took a severe nose-dive on Monday and the carnage continued through to Wednesday, with the first three days of the week wiping out most, if not all market gains from earlier in the month.

The Dow Industrials were hit hardest. Even with winning sessions on Thursday and Friday to close out the week, the blue chips ended with one of the more serious declines of the year, a solid 2.22% rip. Though tech stocks were blamed for most of the drop, the price declines in oil and most of the other components contributed to send Dow stocks lower, as the price of WTI crude hit a year-old bottom on Wednesday before recovering the final two days of the trading week.

Chevron (CVX) and ExxonMobil (XOM), the two energy components in the Dow 30, took it on the chin early in the week, but Chevron actually finished the week about where it started and ExxonMobil ended the week down just two points, or, about 2.5%.

Apple (AAPL) was a big driver to the downside, down nearly five percent at week's end, though it was off about nine percent at the close on Wednesday. The early part of the week saw selling contributions from most of the component stocks and slight recoveries in the latter stages.

Once again, volatility was notable and seems not to be slacking. The widely-watched VIX popped well over 20 as the week progressed, but settled back in the high teems, closing at 18.14 on Friday. That is still an elevated level over the complacency of the past few years, which saw the VIX hanging solidly in the 10-13 range for extended periods.

On the international front, the usual knee-jerking on every utterance, press release, or rumor surrounding a trade deal-or-no-deal between the US and China continued. It's being set up as a foil to be used by the financial press to explain every up-and-down in markets, when in fact, trade with China is much less an issue than say, the Fed's relentless interest rate increases or the possibility of a looming Eurozone-wide recession.

Industrial production in Europe was anemic in the third quarter, with increases of 0.3, 1.1, and 0.9 for July, August and September. As compared to the same quarter in the prior year, the average of 0.77 is dwarfed by 2017's average of four percent. Such a huge decline cannot be taken lightly, though it is rarely - if ever - mentioned in US financial coverage. Contributing to the growing concerns in Europe is the recent Brexit proposal put up by Prime Minister Theresa May's administration. The deal was met with considerable resistance in the House of Commons and prompted some high-level resignations from May's cabinet. Chances of a deal being worked out for an orderly exit from the European Union are being viewed as iffy at best.

While Europe will live or die largely by its own restrictive and stifling internal policies, China and the United States should continue to roll right along, regardless of whether a deal is struck between the two countries. The next meeting between President Trump and china's president, Xi Jinping, is upcoming soon. The two leaders are reportedly planning to discuss trade as a side event at the next G20 meeting in Buenos Aires on November 30, but the two largest national economies in the world aren't about to be sidetracked by tariffs. China's growth is already slowing, but they have broad international initiatives beyond the United States. Ditto for the US, as President Trump extricates the country from one-sided trade deals that were the result of globalization efforts from previous administrations.

Putting the week into perspective, US equity markets are still generally myopic, ignorant of issues elsewhere in the world, though that may be changing. Many US companies are dynamic and have global footprints, so that, if other parts of the planet are suffering, the US, while somewhat insulated, is not completely immune. US expansion has been long, though not deep, but the housing market has peaked and is slowing and unemployment cannot stay at its current sweet spot indefinitely. Tech appears the weakest link presently, though its weakness is not pronounced. Stocks continue to vacillate, but are closer to recent lows than highs.

Recent trends have seen selling into rallies and quick rises off obvious inflection points. Even with what are still somewhat easy credit conditions and stock buybacks at elevated levels, stocks are failing to reach higher, the condition looking more like exhaustion rather than capitulation. Such a condition may take more than a few weeks or months to resolve. In the meantime, traders aren't seriously committed to positions.

Sentiment remains neutral with a slight downside bias.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00

At the Close, Friday, November 16, 2018:
Dow Jones Industrial Average: 25,413.22, +123.95 (+0.49%)
NASDAQ: 7,247.87, -11.16 (-0.15%)
S&P 500: 2,736.27, +6.07 (+0.22%)
NYSE Composite: 12,400.28, +38.76 (+0.31%)

For the Week:
Dow: -576.08 (-2.22%)
NASDAQ: -159.03 (-2.15%)
S&P 500: -44.74 (-1.61%)
NYSE Composite: -137.25 (-1.09%)

Stocks Rebound, 11 Major Stock Indices In Correction, Down 10% Or More

Knee-jerk. That's all today's trading was. It evolved as an opportunity to see how many trades could be made on the assumption that stocks will continue to rise, that they are still good values, that despite the fact that major indices of at least 10 different important countries are in correction (down 10%), the US is still the best dirty shirt in the laundry, or something like that.

Just to placate the unbelievers, here is a partial list of stock indices already in correction or worse:

• DAX, Germany
• FTSE, Great Britain
• CAC 40, France
• Nikkei 225, Japan
• Hang Seng, Hong Kong
• SSE Composite, China
• SENSEX, India
• KOSPI, South Korea
• Jakarta Composite, Indonesia
• MERVAL, Argentina
• IPC, Mexico

Ummm, that's 11, but who's counting?

Bear in mind, some of the biggest gains are made during periods of volatility and the beginnings of bear markets. For proof of that, just go back to the NASDAQ in 2000, or the Dow in October of 2008. There were plenty of big days to the upside. Unfortunately, for those taking positions in stocks during those periods, the downside prevailed, and in vey large ways.

Put in perspective, today's broad gains covered about 2/3rds of yesterday's losses. That's not enough, and there is absolutely no guarantee that tomorrow is going to be a repeat performance.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90
10/2/18	26,773.94	+122.73	+315.63
10/3/18	26,828.39	+54.45	+370.08
10/4/18	26,627.48	-200.91	+169.17
10/5/18	26,447.05	-180.43	-11.26
10/8/18	26,486.78	+39.73	+28.47
10/9/18	26,430.57	-56.21	-27.74
10/10/18	25,598.74	-831.83	-859.57
10/11/18	25,052.83	-545.91	-1,405.48
10/12/18	25,339.99	+287.16	-1,118.32
10/15/18	25,250.55	-89.44	-1,207.76
10/16/18	25,798.42	+547.87	-659.89
10/17/18	25,706.68	-91.74	-751.63
10/18/18	25,379.45	-327.23	-1,078.86
10/19/18	25,444.34	+64.89	-1,013.97
10/22/18	25,317.41	-126.93	-1,140.90
10/23/18	25,191.43	-125.98	-1,265.88
10/24/18	24,583.42	-608.01	-1,873.89
10/25/18	24,984.55	+401.13	-1,472.76

At the Close, Thursday, October 25, 2018:
Dow Jones Industrial Average: 24,984.55, +401.13 (+1.63%)
NASDAQ: 7,318.34, +209.94 (+2.95%)
S&P 500: 2,705.57, +49.47 (+1.86%)
NYSE Composite: 12,118.85, +149.11 (+1.25%)

Global Rout Continues; All 30 Dow Components Lower; China A 50% Loser Since 2015

Stocks took another beating on Thursday, though not quite as extensively on the tech side as was the case in Wednesday's rout. The Dow Industrials took another two percent hit, sending the 30 blue chips down another 546 points. The combined losses in the six sessions following the all-time high close of 26,828.39 on October 3rd at 1,775.56 or 6.69%, a figure that should not, in and of itself, inspire much fear, though the rapidity, persistency, and consistency of the losses are not exactly inspiring much in the way of investor confidence.

All 30 Dow stocks finished in the red. Spared from most of the carnage was Microsoft, which closed at 105.91, down a mere 0.25 points, or 0.24%. No other Dow issue reported a decline of less than one half percent. Leading the way down was Phizer, with a 3.82% loss. Other stocks finishing down three percent or more included JP Morgan Chase (3.00%), Traveler's (3.01%), Proctor and Gamble (3.16%), McDonald's (3.21%), Cisco Systems (3.31%), Chevron (3.40%) and Exxon Mobil (3.45%). The Dow's gain year-to-date is a now a mere 333 points, or less than two percent. There was nothing even approaching good news as third quarter reporting approaches.

The NASDAQ fared much better than the three percent decline it made on Wednesday, dropping less than 100 points, though that was hardly cause for optimism. Having reached a peak of 8102.04 on October 1, the index has shed some 673 points, putting it close to correction (-10%). NASDAQ shares are down a cumulative 8.3%.

On the S&P 500, the percentage decline was almost identical to that of the Dow, losing 57.31 points, down 2.06 percent. The losing streak of the S&P has now reached six straight days. It also closed at an all-time record of 2947.25 on October 1, but has since fallen 219 points, a 7.4% loss in just eight sessions.

Year-to-date, the S&P is up by only 55 points, a gain of just over two precent.

Stocks were also being sold off in droves on foreign exchanges. In Germany, the DAX continued its descent with a loss of 173.15, another 1.48% drop, sending it further into correction. Joining the DAX in the down 10 percent or more club was Britain's FTSE, losing 138.81 points (-1.94%). France's CAC 40 is teetering on the brink, down more than nine percent off recent highs.

On Pacific Rim exchanges, Japan's NIKKEI was down 3.89%, Hong Kong's Hang Seng lost 3.54%, but both were outdone by China, where the SSE Composite Index closed down 5.22%. China's stock market is the world's basket case, down a full 50% from its all-time high of 5,166.35 in June of 2015, the chart bearing a striking resemblance to the NASDAQ's dotcom bust of 2000. The SSE closed Thursday at 2,583.46.

What comes next for markets is anybody's guess. Analysts and economists range from complacency to panic and everything in between. The losses this week rival those from February of this year, when major US indices touched briefly into correction.

Bonds firmed on the day, with the 10-year note finishing with a yield of 3.13%. Oil was hit hard again, with WTI crude losing nearly three percent, closing just a shade under $71/barrel.

The only bright spots were in precious metals. Gold had its best day in months, gaining $34 to $1,227.70 per troy ounce. Silver followed along dutifully, picking up 28 cents per troy ounce, at $14.61.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90
10/2/18	26,773.94	+122.73	+315.63
10/3/18	26,828.39	+54.45	+370.08
10/4/18	26,627.48	-200.91	+169.17
10/5/18	26,447.05	-180.43	-11.26
10/8/18	26,486.78	+39.73	+28.47
10/9/18	26,430.57	-56.21	-27.74
10/10/18	25,598.74	-831.83	-859.57
10/11/18	25,052.83	-545.91	-1405.48

At the Close, Thursday, October 11, 2018:
Dow Jones Industrial Average: 25,052.83, -545.91 (-2.13%)
NASDAQ: 7,329.06, -92.99 (-1.25%)
S&P 500: 2,728.37, -57.31 (-2.06%)
NYSE Composite: 12,349.53, -272.61 (-2.16%)

Traders Shrug, Stocks Rip Higher

Bear market in Emerging Markets? No problem.

Upcoming Fed rate hike? Why worry?

Trade war with China? Nah.

The general attitude on Tuesday - following a somewhat dismal start to the week - seemed to be the old "buy the dip" mantra that boosted stocks high for most of the last ten years in the extended bull market.

As long as nothing major appears to disrupt the global money flow, traders in New York seem to be content buying stocks at just about any price, any multiple, any day, any time.

Tuesday's trading was a textbook example of momentum trading on the absence of news, good, bad, or otherwise. Stocks got off to a solid start and added to their gains throughout the session, with the markets in lockstep for a change.

The Dow was led higher by a wide swatch of companies, from Boeing (BA) to Nike (NKE), to Pfizer (PFE), Intel (INTC), and Home Depot (HD), all of which gained more than one percent on the day. 25 of 30 Dow components were winners, with just five losing ground.

Blue chips closed at their best level since the end of January, eclipsing the losses incurred in February and March, which are now fading into the deep recesses of trading memory. The Dow Jones Industrial Average is less than 400 points from making a new all-time high. Such a move would negate the Dow Theory bear market signal issued in April, as the Dow Transportation Index has already broken above its previous high.

Dow Jones Industrial Average September Scorecard:

Date	Close	Gain/Loss	Cum. G/L
9/4/18	25,952.48	-12.34	-12.34
9/5/18	25,974.99	+22.51	+10.17
9/6/18	25,995.87	+20.88	+31.05
9/7/18	25,916.54	-79.33	-48.28
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14

At the Close, Tuesday, September 18, 2018:
Dow Jones Industrial Average: 26,246.96, +184.84 (+0.71%)
NASDAQ: 7,956.11, +60.32 (+0.76%)
S&P 500: 2,904.31, +15.51 (+0.54%)
NYSE Composite: 13,091.98, +60.07 (+0.46%)

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%)

Stocks Take A Breather As Tariff Talk Toughens; Underground Economy, Self-Employment Rising Rapidly

This was not completely unexpected.

Markets have been absolutely on fire the past two weeks, and a pullback was inevitable. The culprit, as usual, will be Donald Trump, and his threat to slap tariffs on $200 billion of Chinese imports.

While the additional revenue will no doubt aid the fiscal formula of the federal government, the merger impact will be in the form of higher prices, though the effect will be spread out among America's 325 million populace.

Another way of looking at it is that $200 billion worth of Chinese goods spread among roughly 200 million adult Americans comes to $1000 per person. If you whack the goods another 25% with tariffs, it's another $250 per person. Over the course of six months or a year, it's not much, say five to 10 bucks a week.

Chump change... or maybe, Trump change.

An article that caught the eye today focused on the burgeoning self-employment movement in the United States, which has been growing at three times the rate of regular employment over the past three years.

Credit American ingenuity. Work is changing and more than a few people are trading in the nine-to-five grind for making their own hours, especially among Millennials and older, healthy retirees or semi-retired folks. With the burden of Obamacare taken off the backs of Americans, the workforce is free to follow the money, be it as a Uber driver, seller of goods on eBay, pushing online services, or a myriad of other self-employment opportunities, many of which are unregulated, untaxed, and unreported.

The so-called "underground economy" which the US government gave up trying to track in the mid-seventies, is enormous. Its presence and size puts to shame all the government employment statistics, especially the low "persons in the labor force" numbers that plagued the Obama years. Americans come in all stripes and flavors, from welfare recipients who do side jobs, to baby boomers who mow lawns for cash. Most of all, Americans are resourceful and many of them are overtaxed and seeking ways to increase their incomes without notifying the IRS or state governments.

It's working, and the money generated goes all through the economic powerhouse that is the US domestic economy. Governments - local, state, and federal - are all too big and they all waste people's time and money. The US population moved on years ago. Only now, it's getting to be so large that it's hard not to notice.

There probably aren't too many people who remember the years of Prohibition (1920-1933), when government over-reached, outlawing the sale and distribution of alcoholic beverages. By the mid 1920s, the "underground economy" of the day had exceeded the "official" government-tracked economy. We're on the same path today. People want more control of their lives and their money, and they're taking both back, with a vengeance.

No pension? No problem. Little league umpires make $30-60 per game and most of it is paid in cash. That's just one example.

Dow Jones Industrial Average August Scorecard:

Date	Close	Gain/Loss	Cum. G/L
8/1/18	25,333.82	-81.37	-81.37
8/2/18	25,326.16	-7.66	-89.03
8/3/18	25,462.58	+136.42	+55.05
8/6/18	25,502.18	+39.60	+94.65
8/7/18	25,628.91	+126.73	+221.38
8/8/18	25,583.75	-45.16	+176.22
8/9/18	25,509.23	-74.52	+101.70
8/10/18	25,313.14	-196.09	-94.39
8/13/18	25,187.70	-125.44	-219.83
8/14/18	25,299.92	+112.22	-107.61
8/15/18	25,162.41	-137.51	-245.12
8/16/18	25,558.73	+396.32	+151.20
8/17/18	25,669.32	+110.59	+261.79
8/20/18	25,758.69	+89.37	+351.16
8/21/18	25,822.29	+63.60	+414.76
8/22/18	25,733.60	-88.69	+326.07
8/23/18	25,656.98	-76.62	+249.45
8/24/18	25,790.35	+133.37	+382.82
8/27/18	26,049.64	+259.29	+642.11
8/28/18	26,064.02	+14.38	+656.49
8/29/18	26,124.57	+60.55	+717.04
8/30/18	25,986.92	-137.65	+579.39

At the Close, Thursday, August 30, 2018:
Dow Jones Industrial Average: 25,986.92, -137.65 (-0.53%)
NASDAQ: 8,088.36, -21.32 (-0.26%)
S&P 500: 2,901.13, -12.91 (-0.44%)
NYSE Composite: 13,039.93, -92.23 (-0.70%)

Change of Sentiment; Something Bad In Tech-land

As of a week ago, the leading index was the NASDAQ, up more than 11 percent on the year, as opposed to the Dow Industrials, which had been lagging. Prior to this week, the Dow was up less than four percent and it was down for the year much of the time between February and early July.

Something snapped in the minds of investors this week. Maybe it was the high valuations on some of the more speculative stocks sporting the NASDAQ. Perhaps, in the search for yield, investors sought the safety of dividend producers on the Dow. Whatever the case, the Dow, this past week, was up 1.41%, while the NASDAQ shed 0.29%. It was a radical shift that appeared, magically, Wednesday morning, when the Dow was trading below 24,000.

In a matter of less than three trading session, the Dow tacked on a whopping 687 points, much of it at the open on Thursday, when the Dow popped higher and stayed well into the green the rest of the day.

Skeptics of the market will point to the radical rise on Wednesday and Thursday as proof of manipulation, or even - everybody's favorite word this season - collusion, by central banks and their ancillary brokers, to boost the share prices of the staid and steady heavy industrials. Such speculation cannot be bought off easily in this environment. It's apparent to just about everybody that the Federal Reserve and their counterparts in Japan, China, and the European Union will not stomach a severe downturn, at least not at this time. The bull market is just a few trading days from becoming the longest in American history, something the head honchos at the Fed wish to pin on their beanies before they ride triumphantly into some economic sunset.

The shifting sentiment was stunning, however. As the Dow soared, the NASDAQ soured. Many of the grand tech bonanza stocks like Netflix (NFLX) and Telsa (TSLA) were down hard for the week. Netflix dropped nearly 10%, from 345 per share to 316 at the close of business Friday. From its peak just a month ago (July 11), Netflix is down more than 100 points.

Tesla is another story altogether. The darling little electric engine that could is rapidly approaching bear territory, down to 305 at the close Friday from 379 on August 7, a span of just nine trading sessions.

Facebook, everybody's favorite ranting and raving lunatic asylum, is already in bear territory, dropping from a high of 217.50 on July 25, to a close of 173.80 Friday afternoon. That's precisely a 20.1% decline. Be sure to post to your friends, family, and anybody who gives a hoot, rat's behind, or beaver dam.

None dare call is collusion, so maybe collision is the correct word for what happened on Wall Street this week. It was nothing short of a collision of rational thinking and emotional yield-chasing.

Next week may be more or less intriguing, but after Labor Day, this market is going to become very interesting indeed.

Dow Jones Industrial Average August Scorecard:

Date	Close	Gain/Loss	Cum. G/L
8/1/18	25,333.82	-81.37	-81.37
8/2/18	25,326.16	-7.66	-89.03
8/3/18	25,462.58	+136.42	+55.05
8/6/18	25,502.18	+39.60	+94.65
8/7/18	25,628.91	+126.73	+221.38
8/8/18	25,583.75	-45.16	+176.22
8/9/18	25,509.23	-74.52	+101.70
8/10/18	25,313.14	-196.09	-94.39
8/13/18	25,187.70	-125.44	-219.83
8/14/18	25,299.92	+112.22	-107.61
8/15/18	25,162.41	-137.51	-245.12
8/16/18	25,558.73	+396.32	+151.20
8/17/18	25,669.32	+110.59	+261.79

At the Close, Friday, August 17, 2018:
Dow Jones Industrial Average: 25,669.32, +110.59 (+0.43%)
NASDAQ: 7,816.33, +9.81 (+0.13%)
S&P 500: 2,850.13, +9.44 (+0.33%)
NYSE Composite: 12,908.26, +66.98 (+0.52%)

For the Week:
Dow: +356.18 (+1.41%)
NASDAQ: -22.78 (-0.29%)
S&P 500: +16.85 (+0.59%)
NYSE Composite: +64.77 (+0.50%)

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%)