"As January goes, so goes the year."
This tired line of non-logical thinking gets bantered about every year around this time, but is especially in vogue this year after the huge ramp-up in equities on January 2nd, when fresh bank capital (courtesy of the Fed) flowed into the markets in an effort to lure in retail investors.
It's not working.
Since the biggest gain on the Dow Industrials to start a new year (January 2nd, 2013... this year) stocks have gone, well, not very far. The total gain on the Dow over the past eight sessions, including today, is less than 100 points. Big Hooray!
On the S&P 500, the gain has been a whopping eight points. The NASDAQ? 5.24 points since the massive, 92-point gain of January 2nd.
So, the point is that while CNBC and Bloomberg have been crowing about the huge "inflows" to equity funds, the truth is that there has been a net outflow from equity funds )as it has been for the past two years), and the money-creation-machine known as the Fed and its primary dealers have rigged the market higher (as usual).
Today's bid-less action, including the absurd 60-point top-to-bottom range on the Dow, was driven primarily by a rumor that two private equity firms were interested in doing an LBO on Dell. The story, broken by Bloomberg and without any supporting evidence or data, shot Dell shares through the roof and triggered a circuit-breaking halting trading.
The story was likely pure fabrication, because the markets are so dead right now the algos needed a boost to get the indices off UNCH and got it from the Dell "rumor."
Nothing is moving. Volume on the NASDAQ - despite the Dell joke and Apple (AAPL) being sold down the river - was less than 3 billion shares, an oddity even in this low-volume regime. Nobody is trading - not retail investors, at least - because the fraud and rigging has finally reached a point at which the markets cannot be trusted at all. They are controlled by the same people and companies that brought us the sub-prime mess, resultant crash and the current, fudged "recovery."
Perception being more powerful than reality, there's a very good chance that the major indices could stagnate for the rest of the month and the same talking heads on the financial networks will tell us it's going to be a great year because January was positive.
It's. Not. Working.
Dow 13,507.32, +18.89 (0.14%)
NASDAQ 3,117.50, -8.13 (0.26%)
S&P 500 1,470.68, -1.37 (0.09%)
NYSE Composite 8,717.45, +5.05 (0.06%)
NASDAQ Volume 1,879,408,375
NYSE Volume 2,956,360,000
Combined NYSE & NASDAQ Advance - Decline: 3118-3099
Combined NYSE & NASDAQ New highs - New lows: 370-10 (ridiculous)
WTI crude oil: 94.14, +0.58
Gold: 1,669.40, +8.80
Silver: 31.11, +0.702
Showing posts with label Dell. Show all posts
Showing posts with label Dell. Show all posts
Monday, January 14, 2013
Friday, November 20, 2009
Stronger US Dollar Drags Down Stocks
This is an unusually strong market, even if volume indications do not verify such.
After a week of US Dollar jawboning and actual intervention, driving it off its lows against most of the raw material currencies - Brazil, Canada, Australia - and especially against the Euro, the US Dollar seems to have stabilized, taking US stock markets in the opposite direction.
There seems to be a concerted effort to eliminate the "risk trade" associated with the weak dollar, more than likely initiated by the Fed and US Treasury, under some darker moniker, no doubt, in advance of actual tightening by the Fed come this Spring or Summer at the latest. The risks associated with a weaker dollar are too great for the Fed and the rest of the developed nations to tolerate for long, so an unwinding of the carry trade has to be in the works, or so it seems.
Despite this effort, stocks barely stumbled in the week-long effort. There have been a number of casualties, but everybody with any experience in the markets knows that the liquidity-driven trade must be eventually replaced by a return to the normalcy of trading on fundamentals. The trick is to get it to happen somewhat seamlessly, without a huge downdraft in the already-heated markets.
The action this week kept the lid on stocks while giving quiet notice that the Fed and Treasury is not going to allow the US dollar to fall much further, if any.
Dow 10,318.16, -14.28 (0.14%)
NASDAQ 2,146.04, -10.78 (0.50%)
S&P 500 1,091.38, -3.52 (0.32%)
NYSE Composite 7,084.47, -33.17 (0.47%)
Stocks finished lower for the third straight session. Advancing issues were overshadowed by decliners, 3719-2713. It was the slightest margin of losers to winners of the past three days. New highs remained ahead of new lows, 127-64, which should be the case, as last year's ranges should not be difficult to beat. Highs should exceed lows all the way through March of next year and likely well beyond.
Volume was moderate, or, as the case may be, normal.
NYSE Volume 4,301,791,000
NASDAQ Volume 1,934,215,250
Once again, oil was caught up in the dollar trade, losing 74 cents, to $76.72. Gold continued on its own special track, now completely untethered from the dollar, up another $6.60, to $1,148.50, another closing high. Silver failed to keep pace, losing a penny, to $18.45.
The week was rather uneventful, though Dell's missing of targets and poor guidance was a highlight for the latter part of the week. The company seems to be in a very tight spot, with competition apparently eating into market share and margins, especially by HP, Acer and Toshiba.
Even after the small drop this week - between 1.25 and 2% on the major exchanges - the US stock rally that began in March of this year still appears to have some life remaining. Though stocks broke below the key 1100 mark on the S&P, that level should no longer provide strong resistance, since it was exceeded last week. While the skeptics will be weighing whether or not the rally has run out of steam, there's a pretty good bet that money managers will be diving right back in again on Monday, with money that needs to go to work. Unless the interventionists on the Dollar front overstep their mandate, stocks should continue apace until the end of the year.
After a week of US Dollar jawboning and actual intervention, driving it off its lows against most of the raw material currencies - Brazil, Canada, Australia - and especially against the Euro, the US Dollar seems to have stabilized, taking US stock markets in the opposite direction.
There seems to be a concerted effort to eliminate the "risk trade" associated with the weak dollar, more than likely initiated by the Fed and US Treasury, under some darker moniker, no doubt, in advance of actual tightening by the Fed come this Spring or Summer at the latest. The risks associated with a weaker dollar are too great for the Fed and the rest of the developed nations to tolerate for long, so an unwinding of the carry trade has to be in the works, or so it seems.
Despite this effort, stocks barely stumbled in the week-long effort. There have been a number of casualties, but everybody with any experience in the markets knows that the liquidity-driven trade must be eventually replaced by a return to the normalcy of trading on fundamentals. The trick is to get it to happen somewhat seamlessly, without a huge downdraft in the already-heated markets.
The action this week kept the lid on stocks while giving quiet notice that the Fed and Treasury is not going to allow the US dollar to fall much further, if any.
Dow 10,318.16, -14.28 (0.14%)
NASDAQ 2,146.04, -10.78 (0.50%)
S&P 500 1,091.38, -3.52 (0.32%)
NYSE Composite 7,084.47, -33.17 (0.47%)
Stocks finished lower for the third straight session. Advancing issues were overshadowed by decliners, 3719-2713. It was the slightest margin of losers to winners of the past three days. New highs remained ahead of new lows, 127-64, which should be the case, as last year's ranges should not be difficult to beat. Highs should exceed lows all the way through March of next year and likely well beyond.
Volume was moderate, or, as the case may be, normal.
NYSE Volume 4,301,791,000
NASDAQ Volume 1,934,215,250
Once again, oil was caught up in the dollar trade, losing 74 cents, to $76.72. Gold continued on its own special track, now completely untethered from the dollar, up another $6.60, to $1,148.50, another closing high. Silver failed to keep pace, losing a penny, to $18.45.
The week was rather uneventful, though Dell's missing of targets and poor guidance was a highlight for the latter part of the week. The company seems to be in a very tight spot, with competition apparently eating into market share and margins, especially by HP, Acer and Toshiba.
Even after the small drop this week - between 1.25 and 2% on the major exchanges - the US stock rally that began in March of this year still appears to have some life remaining. Though stocks broke below the key 1100 mark on the S&P, that level should no longer provide strong resistance, since it was exceeded last week. While the skeptics will be weighing whether or not the rally has run out of steam, there's a pretty good bet that money managers will be diving right back in again on Monday, with money that needs to go to work. Unless the interventionists on the Dollar front overstep their mandate, stocks should continue apace until the end of the year.
Thursday, November 19, 2009
Perverse Dollar Trade Sends Stocks South
The US Dollar was stronger against most world currencies on Thursday. Stocks fell.
If that sounds odd to you, it should. The normal relationship of a strong dollar to strong stocks has been undercut in recent days as the new carry trade of borrowing cheap dollars and investing in risky equities has produced one of the more remarkable rallies of the past 100 years.
Sadly, it cannot continue. Eventually, days like today, when the dollar strengthens and stocks are obliterated as traders are forced to liquidate out of positions, will proliferate, killing the stock market rally. Either that, or, stocks continue to climb while we kill the dollar. Today's trading may have been illustrative in just how perverse and destructive the inverse relationship has become. One way or another, somebody's got to lose, when the truth is that a stronger dollar should encourage more investment in stocks and US companies, rather than the reverse.
There's a bit of illogic to this trade, so excuse me for thinking out loud here. If it's true that many of the hedge funds are already out of this market, then today's trade would not have occurred. There would have been honest bets on stocks, not liquidity-driven hedge-type activity. So, that argument is probably full of large holes.
Then there's the idea of trillions on the sidelines - some say as much as $3 trillion invested in money market funds, some more in bond funds and plenty in cash. Just because those people don't want to engage in the high risk of equities, it does not necessarily follow that they'll want to jump in when stocks are cheaper. Were that the case, they had ample opportunity back in the Winter of 2009-10. So, toss that rationale.
What makes sense is that the dollar will continue to weaken until the Fed signals that they're going to begin raising interest rates. Estimates of when that might happen range from June 2010 to some time in 2011. What's certain is that the Fed cannot keep rates at "near-zero" for much longer. Other nations have already begun raising interest rates - Australia and Norway to name two - while more are hinting at doing the same. When the Fed decides to begin raising rates the dollar will stop sliding against other currencies. It will actually begin gaining when our blessed federal government decides to start acting like adults and do something about the enormous deficits they are running.
Both of those events - Fed tightening and government responsibility - are inevitably tied to politics, and, with mid-term elections upcoming in less than a year, there's a good bet that there will be action by then, in fact, 4-6 months before the elections. So, June sounds like the right time for the Fed to boost 25 basis points, maybe even 50. It's also likely that the federal budgeting process will begin sounding more Republican, even though it will be dominated by Democrats.
So, where does that leave stocks? Little changed until then. The bull market remains intact, the carry trade goes on for a few more months, because, as the market is the ultimate discounting mechanism, the Fed moves will be baked in long before they actually occur. The rally should run nicely through January, and even into Spring, with a small respite during the summer and glorioski! another rally just in time for the election!
That's one way to play it. Ignore all the talk and chatter about the carry trade, weaker dollar, etc. and focus on good companies making money. Sooner or later, fundamentals will be your friend, and, by all indications, they're not too bad right now. A year from now, the crash of 2008 will be a fast-fading memory.
Dow 10,332.44, -93.87 (0.90%)
NASDAQ 2,156.82, -36.32 (1.66%)
S&P 500 1,094.90, -14.90 (1.34%)
NYSE Composite 7,117.64, -109.07 (1.51%)
Today's final numbers could have been much worse. The dollar actually weakened throughout the session, and stocks pared their losses after 10:30 am. The Dow was down 170 in the early going and gained much of that back by the closing bell. At the end, declining issues outnumbered advancing ones, 5210-1381, or nearly 4:1. It was one of the more lopsided days in recent memory, though hardly a rally-killer. It should be noted that options expire tomorrow, so much of the trading had to do with gains and losses on option trades. There were only 108 new highs, as compared to 67 new lows. The indication is that stocks are weak, though this measure cannot be trusted on a one-day move. We'll need more evidence that the bears have control before changing strategy, which remains bullish with a target of 10700 on the Dow by year end.
NYSE Volume 4,909,767,500
NASDAQ Volume 2,148,559,000
Commodities would be expected to take a hit, especially oil, which fell by $2.12, to $77.46, but gold actually rose $1.00, to $1,142.20. Silver gained 5 cents, to $18.46 per ounce. The precious metals markets have shown a recent trend away from the dollar trade. They can now be considered almost anti-currency, as they act as a hedge against all fiat (paper-based) currencies, which just happens to be everywhere in the world.
Other then the dollar movement, there was a little bit of news that might have moved markets so severely. Tim Geithner testified to the committee looking into financial reform, and any time Timmy opens his mouth in congress, it's usually a bad thing. A couple of members actually think he should resign. Not surprisingly, most of those requests for Mr.Geithner to step aside came from Republicans.
Early in the day, the entire world was reminded that bureaucracies seldom function perfectly, as air traffic across the nation was grounded due to an FAA "glitch."
Unemployment claims data was benign, and the week come to an end with no important economic data due out on Friday, and just 35 days until Christmas.
Leading Indicators for October were down slightly, while the Philadelphia Fed index was up. We have reached what is known as an inflection point.
After the bell, Dell (DELL) announced 3rd quarter results below expectations. The stock was trading down about a point, or 6.5% in after-hours activity. Gap Stores (GPS) reported a 25% improvement in profits, but the stock was being sold off after-hours, down about 1/2 a point, or 2.5%. Shares of the retailer, which includes GAP stores and Old Navy, have more thn doubled since their lows in March.
If that sounds odd to you, it should. The normal relationship of a strong dollar to strong stocks has been undercut in recent days as the new carry trade of borrowing cheap dollars and investing in risky equities has produced one of the more remarkable rallies of the past 100 years.
Sadly, it cannot continue. Eventually, days like today, when the dollar strengthens and stocks are obliterated as traders are forced to liquidate out of positions, will proliferate, killing the stock market rally. Either that, or, stocks continue to climb while we kill the dollar. Today's trading may have been illustrative in just how perverse and destructive the inverse relationship has become. One way or another, somebody's got to lose, when the truth is that a stronger dollar should encourage more investment in stocks and US companies, rather than the reverse.
There's a bit of illogic to this trade, so excuse me for thinking out loud here. If it's true that many of the hedge funds are already out of this market, then today's trade would not have occurred. There would have been honest bets on stocks, not liquidity-driven hedge-type activity. So, that argument is probably full of large holes.
Then there's the idea of trillions on the sidelines - some say as much as $3 trillion invested in money market funds, some more in bond funds and plenty in cash. Just because those people don't want to engage in the high risk of equities, it does not necessarily follow that they'll want to jump in when stocks are cheaper. Were that the case, they had ample opportunity back in the Winter of 2009-10. So, toss that rationale.
What makes sense is that the dollar will continue to weaken until the Fed signals that they're going to begin raising interest rates. Estimates of when that might happen range from June 2010 to some time in 2011. What's certain is that the Fed cannot keep rates at "near-zero" for much longer. Other nations have already begun raising interest rates - Australia and Norway to name two - while more are hinting at doing the same. When the Fed decides to begin raising rates the dollar will stop sliding against other currencies. It will actually begin gaining when our blessed federal government decides to start acting like adults and do something about the enormous deficits they are running.
Both of those events - Fed tightening and government responsibility - are inevitably tied to politics, and, with mid-term elections upcoming in less than a year, there's a good bet that there will be action by then, in fact, 4-6 months before the elections. So, June sounds like the right time for the Fed to boost 25 basis points, maybe even 50. It's also likely that the federal budgeting process will begin sounding more Republican, even though it will be dominated by Democrats.
So, where does that leave stocks? Little changed until then. The bull market remains intact, the carry trade goes on for a few more months, because, as the market is the ultimate discounting mechanism, the Fed moves will be baked in long before they actually occur. The rally should run nicely through January, and even into Spring, with a small respite during the summer and glorioski! another rally just in time for the election!
That's one way to play it. Ignore all the talk and chatter about the carry trade, weaker dollar, etc. and focus on good companies making money. Sooner or later, fundamentals will be your friend, and, by all indications, they're not too bad right now. A year from now, the crash of 2008 will be a fast-fading memory.
Dow 10,332.44, -93.87 (0.90%)
NASDAQ 2,156.82, -36.32 (1.66%)
S&P 500 1,094.90, -14.90 (1.34%)
NYSE Composite 7,117.64, -109.07 (1.51%)
Today's final numbers could have been much worse. The dollar actually weakened throughout the session, and stocks pared their losses after 10:30 am. The Dow was down 170 in the early going and gained much of that back by the closing bell. At the end, declining issues outnumbered advancing ones, 5210-1381, or nearly 4:1. It was one of the more lopsided days in recent memory, though hardly a rally-killer. It should be noted that options expire tomorrow, so much of the trading had to do with gains and losses on option trades. There were only 108 new highs, as compared to 67 new lows. The indication is that stocks are weak, though this measure cannot be trusted on a one-day move. We'll need more evidence that the bears have control before changing strategy, which remains bullish with a target of 10700 on the Dow by year end.
NYSE Volume 4,909,767,500
NASDAQ Volume 2,148,559,000
Commodities would be expected to take a hit, especially oil, which fell by $2.12, to $77.46, but gold actually rose $1.00, to $1,142.20. Silver gained 5 cents, to $18.46 per ounce. The precious metals markets have shown a recent trend away from the dollar trade. They can now be considered almost anti-currency, as they act as a hedge against all fiat (paper-based) currencies, which just happens to be everywhere in the world.
Other then the dollar movement, there was a little bit of news that might have moved markets so severely. Tim Geithner testified to the committee looking into financial reform, and any time Timmy opens his mouth in congress, it's usually a bad thing. A couple of members actually think he should resign. Not surprisingly, most of those requests for Mr.Geithner to step aside came from Republicans.
Early in the day, the entire world was reminded that bureaucracies seldom function perfectly, as air traffic across the nation was grounded due to an FAA "glitch."
Unemployment claims data was benign, and the week come to an end with no important economic data due out on Friday, and just 35 days until Christmas.
Leading Indicators for October were down slightly, while the Philadelphia Fed index was up. We have reached what is known as an inflection point.
After the bell, Dell (DELL) announced 3rd quarter results below expectations. The stock was trading down about a point, or 6.5% in after-hours activity. Gap Stores (GPS) reported a 25% improvement in profits, but the stock was being sold off after-hours, down about 1/2 a point, or 2.5%. Shares of the retailer, which includes GAP stores and Old Navy, have more thn doubled since their lows in March.
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