Wall Street's reaction to Fed Chairwoman Janet Yellen's appearance on Capitol Hill the past two days has been nothing short of a high school romance.
It's been impulsive, short and intense.
And now, with hope, it's over. Perhaps we'll all be spared the details of the jilting. Janet will probably say something about stocks being overvalued and the traders will quietly sulk away, probably over to the bond pits, where they know true love - albeit at low yields - can be found.
The idea that frumpy Janet Yellen can make the masters of industry and, say some, the universe, trip and fall over each other on their ways to buying stocks is as ludicrous as the entire idiocy of centralized financial planning by the Federal Reserve.
Since global finance and economics is vast and unpredictable, the power of the Fed to control it is diminished. Certainly, the Federal Reserve has tools at its disposal to direct policy actions which often translate into tangible results in the real world, but, more often than not, they cannot direct the actions of billions of individuals, millions of businesses, and trillions in currencies.
Those engaged in the business known as the financial industry would like to believe - and to pass that belief along to clients - that the Fed does have everything under control. The facts speak differently. In the fall of 2008, when Lehman Brothers collapsed, the Fed had lost control and they scrambled, along with their central banking brethren from other countries, to restore some sense of balance and sanity.
But, they were too late. Stocks crashed. Banks needed massive injections of liquidity (money) from taxpayers in the form of a $700 billion monstrosity known in the day as TARP. Strange as it may seem, TARP actually stood for Troubled Asset Relief Program. The troubled assets were mortgages. The relief was in the form of taxpayer money. Essentially, the crooked banking cabal tacked another $700 billion onto the trillions of debt already owed by the federal government, i.e., the citizens and businesses of the United States of America.
So, there's no wonder that Wall Street loves the Fed and the fair-haired Janet Yellen. They're assured that whatever numbskull trades or risky maneuvers the banks and financial institutions make will be promptly papered over by Janet and her gang of official-looking thieves.
The Federal Reserve has robbed Americans and the rest of the world since 1913. It has endured two World Wars, a massive global depression, countless smaller recessions, booms, busts, inflations, deflations, devaluations, the start and end of Bretton Woods, confiscation of gold, manipulation of silver and mostly, inflation that has devalued the US Dollar, the currency of the United States of America, by 97% over the past 104 years.
When the next financial crisis arrives - and it will, eventually - the Fed will be standing firm, looking cute and sweet, with a plan to revive the spirit and stability of the "system." When that time comes, Wall Street must be restrained by the public. They must be told, like the high school boys they imitate, "she's no good for you."
Investors and fund managers and pensioners must be told, "you're in an abusive relationship. You need to get out."
It's time to end the love affair with the Fed.
At the Close, 7/13/17:
Dow: 21,553.09, +20.95 (0.10%)
NASDAQ: 6,274.44, +13.27 (0.21%)
S&P 500: 2,447.83, +4.58 (0.19%)
NYSE Composite: 11,844.62, +18.73 (0.16%)
Showing posts with label Fed. Show all posts
Showing posts with label Fed. Show all posts
Friday, July 14, 2017
Saturday, July 8, 2017
Stocks Finish Week With Gains, Remain Range-Bound
If one were to view Friday's market action in a vacuum, without context, one would think everything is just peachy in Wall Street wonderland. The NFP jobs report for June was solid and the major indices put up strong gains to close out the week.
But, nothing exists in isolation.
Taking a little bit broader view, over the shortened, four-day week, all that Friday's gains managed to do was life all the major indices from red to green for the week, with the exception of the NYSE Composite, which finished just nine points underwater, but, not to worry, nobody pays attention to the "comp" anymore, even though it is the most diverse, broadest of the majors.
Fraud, manipulation, massive central bank intervention?
Yes, sure, of course. Since central banks have been the primary drivers of the eight year recovery since the GFC, why would anybody believe they have stopped their high-stakes involvement. Lowering interest rates - even to negative - didn't work. Massive injections of funny fiat money didn't work. Talking about how the labor market and the general economy was doing so great (it isn't) didn't work, so, why not resort to outright purchasing of equities in a vain attempt to create a "wealth effect?"
Of course, the Fed will never admit to such activity, but Switzerland (SNB), Japan (BOJ), and the European Central Bank (ECB) have all openly been buying stocks for the past few years, at least, and probably longer.
Therefore, the entire week of trading was a nonsensical, uneventful kabuki play, designed to give the impression that all is well and there's no reason to sell... anything... even though many did. As they say in the current newsspeak nomenclature, a major league nothing-burger.
Balderdash. You're being culled, cuckolded, marinated, stuffed, and baked by people who control your baseless currency when you could be using that same valueless "money" to purchase goods, food, machinery of trade, gold, silver (currently on sale, as it has been for four years running), land, land and more land, some with actual buildings erected.
But, no. Americans (not to the exclusion of Canadiens, Japanese, and Euroland dwellers) instead purchase garbage college educations for garbage jobs, cell phones, 70-inch TVs, overpriced cars (mainly on leases), and run up enormous amounts of credit card and other debt for baseball tickets and extraordinary "experiences."
With the US government $19.965 trillion in debt, something along the lines of 10,000 seniors retiring every day, underfunded pensions galore, and monstrous debt and unfunded liabilities under-and-overhanging nearly every developed nation...
Good luck with that.
At the Close, 7/7/17:
Dow: 21,414.34, +94.30 (0.44%)
NASDAQ: 6,153.08, +63.61 (1.04%)
S&P 500: 2,425.18, +15.43 (0.64%)
NYSE Composite: 11,752.98, +50.55 (0.43%)
For the week:
Dow: +64.71 (0.30%)
NASDAQ: +12.66 (0.21%)
S&P 500: +1.77 (0.07%)
NYSE Composite: -8.72 (-0.07)
But, nothing exists in isolation.
Taking a little bit broader view, over the shortened, four-day week, all that Friday's gains managed to do was life all the major indices from red to green for the week, with the exception of the NYSE Composite, which finished just nine points underwater, but, not to worry, nobody pays attention to the "comp" anymore, even though it is the most diverse, broadest of the majors.
Fraud, manipulation, massive central bank intervention?
Yes, sure, of course. Since central banks have been the primary drivers of the eight year recovery since the GFC, why would anybody believe they have stopped their high-stakes involvement. Lowering interest rates - even to negative - didn't work. Massive injections of funny fiat money didn't work. Talking about how the labor market and the general economy was doing so great (it isn't) didn't work, so, why not resort to outright purchasing of equities in a vain attempt to create a "wealth effect?"
Of course, the Fed will never admit to such activity, but Switzerland (SNB), Japan (BOJ), and the European Central Bank (ECB) have all openly been buying stocks for the past few years, at least, and probably longer.
Therefore, the entire week of trading was a nonsensical, uneventful kabuki play, designed to give the impression that all is well and there's no reason to sell... anything... even though many did. As they say in the current newsspeak nomenclature, a major league nothing-burger.
Balderdash. You're being culled, cuckolded, marinated, stuffed, and baked by people who control your baseless currency when you could be using that same valueless "money" to purchase goods, food, machinery of trade, gold, silver (currently on sale, as it has been for four years running), land, land and more land, some with actual buildings erected.
But, no. Americans (not to the exclusion of Canadiens, Japanese, and Euroland dwellers) instead purchase garbage college educations for garbage jobs, cell phones, 70-inch TVs, overpriced cars (mainly on leases), and run up enormous amounts of credit card and other debt for baseball tickets and extraordinary "experiences."
With the US government $19.965 trillion in debt, something along the lines of 10,000 seniors retiring every day, underfunded pensions galore, and monstrous debt and unfunded liabilities under-and-overhanging nearly every developed nation...
Good luck with that.
At the Close, 7/7/17:
Dow: 21,414.34, +94.30 (0.44%)
NASDAQ: 6,153.08, +63.61 (1.04%)
S&P 500: 2,425.18, +15.43 (0.64%)
NYSE Composite: 11,752.98, +50.55 (0.43%)
For the week:
Dow: +64.71 (0.30%)
NASDAQ: +12.66 (0.21%)
S&P 500: +1.77 (0.07%)
NYSE Composite: -8.72 (-0.07)
Tuesday, June 20, 2017
Stocks May Be Near Peak; Fed Plans Going Up in Flames
It's been a troublesome two weeks for stock jockeys. Even as the Dow and S&P have rocketed to new highs, the shakeout on the NASDAQ last Friday may have been a harbinger of things to come and the die came up snake-eyes on Tuesday as all of the major indices took losses which accelerated into the closing bell.
On the surface, everything seems to be going according to plan. The Fed continues to lie to themselves - and everybody else - that the solvency trap of the GFC of 2007-09 has been permanently put in the rear view mirror and the future offers nothing less than roses and unicorns, otherwise termed "normalcy." Real people know better. While the official unemployment figures approach fantasy levels of sub-four percent, those in and out of the workforce haven't had sustained economic prosperity since prior to 2000. Wages have been absolutely stagnant for the better part of 20 years, not only in the United States, but in established economies around the world.
Since debt had reached unsustainable (read: unpayable) levels during the housing crisis period, all the central bank could do was double down with easy money to banks and connected investors and financiers via QE and ZIRP while the bulk of the population got dosed with 22% interest rates on credit cards, ballooning college tuition costs and, the ultimate teaser, cheap credit on new car loans and leases.
Well, the carousel is slowing to a stop as the world demographic ages not-so-gracefully into their 50s, 60s and 70s, an age at which one does less of everything, including driving, eating, buying, spending, racking up credit card debt and buying bigger houses. This simple fact is probably not lost on the central bankers, but, being mired into last-century Keynesian economic theories and practices, there's little they could do except what they did last week, a desperate attempt to buy more time via higher federal funds rates, a plan that allows a small comfort zone to ease into the next recession, which seems to be gathering momentum daily.
Stocks have never told the entire story of a nation's economy and they won't this time either. While the power elite jiggle their algos to capture the little gains that remain, real estate prices have peaked and are heading lower in many locales, gold, silver, and especially, oil are displaying tendencies one would normally associate with a deflationary economy, which, actually is what has been the experience for much of the past eight years.
Tech stocks have outperformed and rightfully so, but what tech has proven to do time and again is lower costs and prices via efficiencies of scale and market. This time is no different, the recent acquisition of Whole Foods by internet giant, Amazon, offers yet another chilling reminder that the past is pretense and the future will be won by the fastest and most agile companies, individuals and, yes, governments.
The Federal reserve and their crony central bankers across the globe have painted themselves - and everyone else - into a no-win situation, thinking that inflation equals salvation, when, in fact, it is nothing more than gloss. Making matters even more untenable is the idea that the Fed has been trying to induce inflation for the past eight years, without success. They've pumped trillions into the global economy with nil effect because the two things most important to free, functioning markets - price discovery and an honest discounting mechanism - have been missing due to their constant fiddling and control fraud.
Thus, the world approaches another financial Waterloo, more serious than the last, as global credit creation has stalled with growth being nothing more today than amalgamated numbers which are fictitious in the main. The overhang of government debt, pension shortfalls and corporate insouciance have created the perfect scenario for calamity.
If the Fed, ECB, BOJ and other central banks are in search of drama, this summer is likely to be a grand provider of entertainment for all. With stocks overvalued close to the point of absurdity, the assets to be hoarded - if one is in a position to exit the Wall Street casino - are real estate, currencies, gold, silver, tools and machinery.
Since June 9, the NASDAQ has closed negatively six of eight sessions. The Fed finalized their rate hike on the 14th after weeks, if not months, of telegraphing their move. The weakness in the NASDAQ is not a coincidence, but rather, a distinct message from the market.
At The Close, 6/19/17:
Dow: 21,467.14, -61.85 (-0.29%)
NASDAQ: 6,188.03, -50.98 (-0.82%)
S&P 500 2,437.03, -16.43 (-0.67%)
NYSE Composite: 11,738.95, -94.39 (-0.80%)
On the surface, everything seems to be going according to plan. The Fed continues to lie to themselves - and everybody else - that the solvency trap of the GFC of 2007-09 has been permanently put in the rear view mirror and the future offers nothing less than roses and unicorns, otherwise termed "normalcy." Real people know better. While the official unemployment figures approach fantasy levels of sub-four percent, those in and out of the workforce haven't had sustained economic prosperity since prior to 2000. Wages have been absolutely stagnant for the better part of 20 years, not only in the United States, but in established economies around the world.
Since debt had reached unsustainable (read: unpayable) levels during the housing crisis period, all the central bank could do was double down with easy money to banks and connected investors and financiers via QE and ZIRP while the bulk of the population got dosed with 22% interest rates on credit cards, ballooning college tuition costs and, the ultimate teaser, cheap credit on new car loans and leases.
Well, the carousel is slowing to a stop as the world demographic ages not-so-gracefully into their 50s, 60s and 70s, an age at which one does less of everything, including driving, eating, buying, spending, racking up credit card debt and buying bigger houses. This simple fact is probably not lost on the central bankers, but, being mired into last-century Keynesian economic theories and practices, there's little they could do except what they did last week, a desperate attempt to buy more time via higher federal funds rates, a plan that allows a small comfort zone to ease into the next recession, which seems to be gathering momentum daily.
Stocks have never told the entire story of a nation's economy and they won't this time either. While the power elite jiggle their algos to capture the little gains that remain, real estate prices have peaked and are heading lower in many locales, gold, silver, and especially, oil are displaying tendencies one would normally associate with a deflationary economy, which, actually is what has been the experience for much of the past eight years.
Tech stocks have outperformed and rightfully so, but what tech has proven to do time and again is lower costs and prices via efficiencies of scale and market. This time is no different, the recent acquisition of Whole Foods by internet giant, Amazon, offers yet another chilling reminder that the past is pretense and the future will be won by the fastest and most agile companies, individuals and, yes, governments.
The Federal reserve and their crony central bankers across the globe have painted themselves - and everyone else - into a no-win situation, thinking that inflation equals salvation, when, in fact, it is nothing more than gloss. Making matters even more untenable is the idea that the Fed has been trying to induce inflation for the past eight years, without success. They've pumped trillions into the global economy with nil effect because the two things most important to free, functioning markets - price discovery and an honest discounting mechanism - have been missing due to their constant fiddling and control fraud.
Thus, the world approaches another financial Waterloo, more serious than the last, as global credit creation has stalled with growth being nothing more today than amalgamated numbers which are fictitious in the main. The overhang of government debt, pension shortfalls and corporate insouciance have created the perfect scenario for calamity.
If the Fed, ECB, BOJ and other central banks are in search of drama, this summer is likely to be a grand provider of entertainment for all. With stocks overvalued close to the point of absurdity, the assets to be hoarded - if one is in a position to exit the Wall Street casino - are real estate, currencies, gold, silver, tools and machinery.
Since June 9, the NASDAQ has closed negatively six of eight sessions. The Fed finalized their rate hike on the 14th after weeks, if not months, of telegraphing their move. The weakness in the NASDAQ is not a coincidence, but rather, a distinct message from the market.
At The Close, 6/19/17:
Dow: 21,467.14, -61.85 (-0.29%)
NASDAQ: 6,188.03, -50.98 (-0.82%)
S&P 500 2,437.03, -16.43 (-0.67%)
NYSE Composite: 11,738.95, -94.39 (-0.80%)
Monday, June 19, 2017
Stocks End Week Mixed, But Damage Has Been Done
While the Dow, S&P and NYSE Composite all gained slightly on the week, the NASDAQ, which ended lower Friday, registered its second straight week of losses.
The NASDAQ has finished in the red three straight sessions and five of the last six, beginning with last Friday's washout of the FAANG stocks (Facebook, Amazon, Apple, Netflix, Google, aka Alphabet).
While the NASDAQ may have hit a pocket of support for the time being, the intraday high of 6341.70 is now nearly 200 points off in the distance. Not that the venerable algos, computers and few human hands operating the machinery at the NAZ couldn't pull the index up and beyond that level in a matter of days, there still remains to be a reason for such a move.
With the calendar showing the middle of June, there may not be much in the way of stock-inspiring news until second quarter earnings begin being trotted out the second week of July. The Fed's rate hike is out of the way for now, and it's anticipated that the Fed won't make any significant moves until September at the earliest, and more likely December, if at all.
All markets remain bloated, just like government salary and benefit packages, while real Americans struggle to find and keep good jobs, pay bills and possibly save something for the future, be that retirement or college of kids.
The world's financial markets continue to be prodded and plotted by central bankers, which means there will be no abrupt collapse on their watch, or until they deem it advisable to crash the stock market by means of tight money or other policy initiatives.
Meanwhile, the NASDAQ bears watching, if anybody in the world still believes in technical analysis, because further weakness could portend a finish to the third longest bull run in market history, albeit with the lowest growth rate (2.0%). Those two historic marks are at opposition, and it will be interesting to see how long the fiat parade can continue without significant reckoning of reality.
At the Close, 6/16/17:
Dow: 21,384.28, +24.38 (0.11%)
NASDAQ: 6,151.76, -13.74 (-0.22%)
S&P 500: 2,433.15, +0.69 (0.03%)
NYSE Composite: 11,772.02, +31.50 (0.27%)
For the Week:
Dow: +112.31 (0.53%)
NASDAQ: -56.16 (0.90%)
S&P 500: +1.38 (0.06%)
NYSE Composite: +27.29 (0.23%)
The NASDAQ has finished in the red three straight sessions and five of the last six, beginning with last Friday's washout of the FAANG stocks (Facebook, Amazon, Apple, Netflix, Google, aka Alphabet).
While the NASDAQ may have hit a pocket of support for the time being, the intraday high of 6341.70 is now nearly 200 points off in the distance. Not that the venerable algos, computers and few human hands operating the machinery at the NAZ couldn't pull the index up and beyond that level in a matter of days, there still remains to be a reason for such a move.
With the calendar showing the middle of June, there may not be much in the way of stock-inspiring news until second quarter earnings begin being trotted out the second week of July. The Fed's rate hike is out of the way for now, and it's anticipated that the Fed won't make any significant moves until September at the earliest, and more likely December, if at all.
All markets remain bloated, just like government salary and benefit packages, while real Americans struggle to find and keep good jobs, pay bills and possibly save something for the future, be that retirement or college of kids.
The world's financial markets continue to be prodded and plotted by central bankers, which means there will be no abrupt collapse on their watch, or until they deem it advisable to crash the stock market by means of tight money or other policy initiatives.
Meanwhile, the NASDAQ bears watching, if anybody in the world still believes in technical analysis, because further weakness could portend a finish to the third longest bull run in market history, albeit with the lowest growth rate (2.0%). Those two historic marks are at opposition, and it will be interesting to see how long the fiat parade can continue without significant reckoning of reality.
At the Close, 6/16/17:
Dow: 21,384.28, +24.38 (0.11%)
NASDAQ: 6,151.76, -13.74 (-0.22%)
S&P 500: 2,433.15, +0.69 (0.03%)
NYSE Composite: 11,772.02, +31.50 (0.27%)
For the Week:
Dow: +112.31 (0.53%)
NASDAQ: -56.16 (0.90%)
S&P 500: +1.38 (0.06%)
NYSE Composite: +27.29 (0.23%)
Friday, June 16, 2017
Stocks Collapse, Regain on Thursday, Post-Rate Hike by Fed
All indices finished lower on Thursday and the declines continued into Friday morning with all the majors down shortly after the open.
The continuing weakness in stocks was exacerbated by the FOMC raising the federal funds rate 25 basis points, to 1.00-1.25%. This tiny move seems to be too much for market participants to bear, given that this is the third increase in the past seven months.
The Fed appears intent - for now - to hold rates at this level, but also mentioned - in its press release and news conference following the rate decision - that they would begin addressing the balance sheet of nearly $4.5 trillion, by rolling off up to $10 billion a month in Treasury, agency, and mortgage-backed securities, a plan that would take roughly 30 years to complete.
While the media hasn't even taken up a position on the Fed's plans because no on-air personality even understands what it means and only one percent - being generous - of the general population has any idea of what the Federal Reserve actually does.
In essence, the rape of the global economy by central banks will continue until either the system implodes or the entire planet is enslaved by money-changers.
That's all for now. Make sure to check back over the weekend for the Money Daily weekly wrap-up.
The continuing weakness in stocks was exacerbated by the FOMC raising the federal funds rate 25 basis points, to 1.00-1.25%. This tiny move seems to be too much for market participants to bear, given that this is the third increase in the past seven months.
The Fed appears intent - for now - to hold rates at this level, but also mentioned - in its press release and news conference following the rate decision - that they would begin addressing the balance sheet of nearly $4.5 trillion, by rolling off up to $10 billion a month in Treasury, agency, and mortgage-backed securities, a plan that would take roughly 30 years to complete.
While the media hasn't even taken up a position on the Fed's plans because no on-air personality even understands what it means and only one percent - being generous - of the general population has any idea of what the Federal Reserve actually does.
In essence, the rape of the global economy by central banks will continue until either the system implodes or the entire planet is enslaved by money-changers.
That's all for now. Make sure to check back over the weekend for the Money Daily weekly wrap-up.
Wednesday, June 14, 2017
Dow, S&P Close At Record Levels; FOMC Set to Raise Rates
Unfazed and unaffected by the recent tech dip, the 30 blue chips of the Dow Jones Industrial Average and the S&P 500 each set new closing highs on Tuesday.
Stocks rebounded sharply after the surprise declines in the FAANG stocks Friday and aftershocks felt around the world in foreign tech markets.
Record highs are nothing notable in this market as stocks have been the (OGIT) only game in town for investors seeking profit and percentage gains.
The FOMC began their two-day meeting Tuesday, and wrap up Wednesday, with a policy announcement expected at 2:00 pm ET. It is anticipated that the board of governors will raise interest rates, but note that it may be the last raise in some time. The Fed may not increase the federal funds rate again until December or beyond.
At The Close, 6/13/17:
Dow: 21,328.47, +92.80 (0.44%)
NASDAQ: 6,220.37, 44.90 (0.73%)
S&P 500: 2,440.35, +10.96 (0.45%)
NYSE Composite: 11,796.79, +50.33 (0.43%)
Stocks rebounded sharply after the surprise declines in the FAANG stocks Friday and aftershocks felt around the world in foreign tech markets.
Record highs are nothing notable in this market as stocks have been the (OGIT) only game in town for investors seeking profit and percentage gains.
The FOMC began their two-day meeting Tuesday, and wrap up Wednesday, with a policy announcement expected at 2:00 pm ET. It is anticipated that the board of governors will raise interest rates, but note that it may be the last raise in some time. The Fed may not increase the federal funds rate again until December or beyond.
At The Close, 6/13/17:
Dow: 21,328.47, +92.80 (0.44%)
NASDAQ: 6,220.37, 44.90 (0.73%)
S&P 500: 2,440.35, +10.96 (0.45%)
NYSE Composite: 11,796.79, +50.33 (0.43%)
Wednesday, May 31, 2017
Stocks Gain, Bond Yields Continue Lower in Fed-inspired Environment
Opening the week with across-the-board losses, the major indices took a little off the top Tuesday, the penultimate trading day for the month of May.
The losses were limited in scope, however, as speculators seem reluctant to forego gains in a bull market that has shown few signs of slowing.
With optimism on Wall Street approaching a state irrational exuberance, the issue becomes one of not when the market will reverse course, but at what speed. A sharp downturn could expose many hedgers and options players, though the Fed and their cohorts at the ECB, BOJ, and the PPT would likely quash any rampant selling by putting an artificial floor on the market, a tactic they've employed over the last eight years of fake recovery.
Unlimited upside is the overarching theme of the decade, despite the Fed's promise to raise interest rates four times in 2017. Despite the threat of tighter money, the 10-year treasury note closed out the day at 2.22% and shows no sign of reacting negatively to any Fed jawboning nor actual policy directives.
While the bull market remains intact at eight years and running, the bond rally is at 30 years. Liquidity and solvency have been the main catalysts since 2009, with central banks coordinating bond (and equity) purchases in order to prevent a complete collapse of the global financial system, which almost fell apart in 2008-09.
Complete control of all markets being the ultimate goal of central banks, the money-printers are close to achieving just that. Even if economic data remains sluggish, weak, or troubling, the Fed and friends will be at the rescue. Stocks have been unable to extend any losing streak to frightful lengths, thanks to central bank intervention, fearing losing control.
Whatever the outcome of the June FOMC meeting, it's almost a slam-dunk that stocks will gain. It's simply the way the market is currently composed.
At the Close, 5/30/17:
Dow: 21,029.47, -50.81 (-0.24%)
NASDAQ: 6,203.19, -7.00 (-0.11%)
S&P 500: 2,412.91, -2.91 (-0.12%)
NYSE Composite: 11,601.31, -30.56 (-0.26%)
The losses were limited in scope, however, as speculators seem reluctant to forego gains in a bull market that has shown few signs of slowing.
With optimism on Wall Street approaching a state irrational exuberance, the issue becomes one of not when the market will reverse course, but at what speed. A sharp downturn could expose many hedgers and options players, though the Fed and their cohorts at the ECB, BOJ, and the PPT would likely quash any rampant selling by putting an artificial floor on the market, a tactic they've employed over the last eight years of fake recovery.
Unlimited upside is the overarching theme of the decade, despite the Fed's promise to raise interest rates four times in 2017. Despite the threat of tighter money, the 10-year treasury note closed out the day at 2.22% and shows no sign of reacting negatively to any Fed jawboning nor actual policy directives.
While the bull market remains intact at eight years and running, the bond rally is at 30 years. Liquidity and solvency have been the main catalysts since 2009, with central banks coordinating bond (and equity) purchases in order to prevent a complete collapse of the global financial system, which almost fell apart in 2008-09.
Complete control of all markets being the ultimate goal of central banks, the money-printers are close to achieving just that. Even if economic data remains sluggish, weak, or troubling, the Fed and friends will be at the rescue. Stocks have been unable to extend any losing streak to frightful lengths, thanks to central bank intervention, fearing losing control.
Whatever the outcome of the June FOMC meeting, it's almost a slam-dunk that stocks will gain. It's simply the way the market is currently composed.
At the Close, 5/30/17:
Dow: 21,029.47, -50.81 (-0.24%)
NASDAQ: 6,203.19, -7.00 (-0.11%)
S&P 500: 2,412.91, -2.91 (-0.12%)
NYSE Composite: 11,601.31, -30.56 (-0.26%)
Tuesday, May 30, 2017
Stocks Up for the Week; Murky Outlook Going Forward
The last full week of May was a solid one for stock pickers, with all the major averages posting excellent weekly gains, despite a somewhat subdued session Friday.
The NASDAQ and S&P notched new all-time highs a couple of times, though the question remains as to just how much higher stocks can ascend given the weakness in macro data and tension in geopolitics.
The start of June is generally a quiet time for markets, but, with central banks backstopping any selloff with unlimited funding, the fun may last some time longer. June's FOMC meeting has been heralded as one in which the Fed may raise the federal funds rate to 1.00-1.25%, which would be a high-water mark since the GFC of 2008-09.
Money Daily disputes to contention of many analysts - 83% of which see a June rate hike - that a rate hike is imminent, due to glaringly obvious poor results in housing, personal income and spending, and industrial production, to name just a few.
Futures are pointing to a negative open in this holiday-shortened week.
At The Close, 5/26/17:
Dow: 21,080.28, -2.67 (-0.01%)
NASDAQ 6,210.19, +4.94 (0.08%)
S&P 500: 2,415.82, +0.75 (0.03%)
NYSE Composite: 11,631.87, -7.43 (-0.06%)
For the week:
Dow: +275.44 (1.32%)
NASDAQ: +126.49 (2.08%)
S&P 500: +34.09 (1.43%)
NYSE Composite: +89.18 (0.77%)
The NASDAQ and S&P notched new all-time highs a couple of times, though the question remains as to just how much higher stocks can ascend given the weakness in macro data and tension in geopolitics.
The start of June is generally a quiet time for markets, but, with central banks backstopping any selloff with unlimited funding, the fun may last some time longer. June's FOMC meeting has been heralded as one in which the Fed may raise the federal funds rate to 1.00-1.25%, which would be a high-water mark since the GFC of 2008-09.
Money Daily disputes to contention of many analysts - 83% of which see a June rate hike - that a rate hike is imminent, due to glaringly obvious poor results in housing, personal income and spending, and industrial production, to name just a few.
Futures are pointing to a negative open in this holiday-shortened week.
At The Close, 5/26/17:
Dow: 21,080.28, -2.67 (-0.01%)
NASDAQ 6,210.19, +4.94 (0.08%)
S&P 500: 2,415.82, +0.75 (0.03%)
NYSE Composite: 11,631.87, -7.43 (-0.06%)
For the week:
Dow: +275.44 (1.32%)
NASDAQ: +126.49 (2.08%)
S&P 500: +34.09 (1.43%)
NYSE Composite: +89.18 (0.77%)
Wednesday, May 24, 2017
Stocks Rage into the Close; PPT Mentioned on CNBC
Good stuff on Zero Hedge, when Asher Edelman brought up the PPT (Plunge Protection Team) on CNBC's "Fast Money."
People really don't mention the Plunge Protection Team much anymore, ever since the Fed and their central bank cohorts began their financial asset buying spree in 2009. The Fed money-printing machine puts the PPT (otherwise known as the President's Working Group on Financial Markets) to shame.
The Federal Reserve added liquidity to markets by directly intervening through outright asset purchases of mortgage-backed securities and treasury bills and notes. Known as Qualitative Easing (QE), those in the know simply call it "money printing" or "creating money out of thin air." Both are correct, and, despite all the best intents of Keynesian economics, those actions are supposed to create inflation, which has occurred in stocks, housing and elsewhere, but not in the many and varied consumer staples and discretionary items.
Most consumer prices (and incomes) have somewhat stagnated since the Great Financial Crisis of 2008-09, and, with the Fed threatening another rate increase in June, they probably won't be moving soon. The dislocations in the housing market and the massive transfer of wealth from the poor and middle classes to the very rich, however, have been direct results of Fed action.
So, it's somewhat funny that the commentator would single out the PPT, though he's probably spot on in his general assessment. The bigger issue would be the almost total control of the equity markets by key players, notably, central banks and large commercial firms, i.e., Goldman Sachs, Morgan Stanley, et. al.
Whatever method was in play today, it certainly worked wonders as stocks levitated after 2:00 pm ET into the close.
At The Close, 5/24/17:
Dow: 21,012.42, +74.51 (0.36%)
NASDAQ: 6,163.02, +24.31 (0.40%)
S&P 500: 2,404.39, +5.97 (0.25%)
NYSE Composite: 11,621.23, +16.61 (0.14%)
People really don't mention the Plunge Protection Team much anymore, ever since the Fed and their central bank cohorts began their financial asset buying spree in 2009. The Fed money-printing machine puts the PPT (otherwise known as the President's Working Group on Financial Markets) to shame.
The Federal Reserve added liquidity to markets by directly intervening through outright asset purchases of mortgage-backed securities and treasury bills and notes. Known as Qualitative Easing (QE), those in the know simply call it "money printing" or "creating money out of thin air." Both are correct, and, despite all the best intents of Keynesian economics, those actions are supposed to create inflation, which has occurred in stocks, housing and elsewhere, but not in the many and varied consumer staples and discretionary items.
Most consumer prices (and incomes) have somewhat stagnated since the Great Financial Crisis of 2008-09, and, with the Fed threatening another rate increase in June, they probably won't be moving soon. The dislocations in the housing market and the massive transfer of wealth from the poor and middle classes to the very rich, however, have been direct results of Fed action.
So, it's somewhat funny that the commentator would single out the PPT, though he's probably spot on in his general assessment. The bigger issue would be the almost total control of the equity markets by key players, notably, central banks and large commercial firms, i.e., Goldman Sachs, Morgan Stanley, et. al.
Whatever method was in play today, it certainly worked wonders as stocks levitated after 2:00 pm ET into the close.
At The Close, 5/24/17:
Dow: 21,012.42, +74.51 (0.36%)
NASDAQ: 6,163.02, +24.31 (0.40%)
S&P 500: 2,404.39, +5.97 (0.25%)
NYSE Composite: 11,621.23, +16.61 (0.14%)
Monday, May 22, 2017
Despite Friday's Gains, Stocks Finish Week Lower; About To Get A Wedgie?
Major US equity indices finished the week strong, with solid gains across all, but the weekly view gives another picture, despite the NASDAQ diverging radically from the others.
Looking especially at the NYSE Composite, the broadest index available (also the one nobody ever mentions) a rising wedge pattern appears from a May (11,254.87) 2015 top, to a bottom (8937.99) in January 2016, to this week's close at 11,542.69. Though the overall gain from the bottom last January is massive - more than 2100 points), the overall increase from the top in 2015 is fewer than 300 points, a return of less than three percent over a two-year span.
Apparently, this is why no self-serving analyst or financial news commentator ever speaks of the "Comp" in glowing terms because it reveals the truth behind this runaway bull market: that it has been concentrated among a few select stocks, leaving the bulk of issues behind, in much the same manner as wealth is distributed among individuals. Most of the money goes to the top 5%, the rest lag behind.
None of the other indices present such a pattern. They are all higher by double digits over the same period. Thus, the market shows a heavy weight toward highly speculative tech stocks in the NASDAQ, dividend-payers in the DOW, and, naturally, the 500 largest US-based companies (S&P 500).
Breadth being a hidden issue, this central bank campaign of feeding the leaders should continue as we head into what are traditionally the weakest months of trading (i.e., sell in May and go away). Internal squabbling among the FOMC board members may address this issue as the approach to an expected rate hike increase in June quickens.
The Fed has more or less signaled three rate hikes this year, though this second of the proposed three may have to hold off until September, after second quarter GDP and earnings are revealed in the latter half of July and into August. May non-farm employment - which will be announced prior to the FOMC June meeting - will also have significant impact.
After two consecutive down weeks in the S&P, Comp., and Dow, the Fed, and the markets, can ill afford another week of losses, so close attention is warranted. This week may mark a true turning point, if there ever is one to be had.
At the Close, 5/19/17:
Dow: 20,804.84, +141.82 (0.69%)
NASDAQ: 6,083.70, +28.57 (0.47%)
S&P 500: 2,381.73 +16.01 (0.68%)
NYSE Composite: 11,542.69, +108.62 (0.95%)
For the Week:
Dow: -91.77 (-0.44%)
NASDAQ: -37.53 (-0.61%)
S&P 500: -9.17 (-0.38%)
NYSE Composite: -4.57 (-0.04)
Looking especially at the NYSE Composite, the broadest index available (also the one nobody ever mentions) a rising wedge pattern appears from a May (11,254.87) 2015 top, to a bottom (8937.99) in January 2016, to this week's close at 11,542.69. Though the overall gain from the bottom last January is massive - more than 2100 points), the overall increase from the top in 2015 is fewer than 300 points, a return of less than three percent over a two-year span.
Apparently, this is why no self-serving analyst or financial news commentator ever speaks of the "Comp" in glowing terms because it reveals the truth behind this runaway bull market: that it has been concentrated among a few select stocks, leaving the bulk of issues behind, in much the same manner as wealth is distributed among individuals. Most of the money goes to the top 5%, the rest lag behind.
None of the other indices present such a pattern. They are all higher by double digits over the same period. Thus, the market shows a heavy weight toward highly speculative tech stocks in the NASDAQ, dividend-payers in the DOW, and, naturally, the 500 largest US-based companies (S&P 500).
Breadth being a hidden issue, this central bank campaign of feeding the leaders should continue as we head into what are traditionally the weakest months of trading (i.e., sell in May and go away). Internal squabbling among the FOMC board members may address this issue as the approach to an expected rate hike increase in June quickens.
The Fed has more or less signaled three rate hikes this year, though this second of the proposed three may have to hold off until September, after second quarter GDP and earnings are revealed in the latter half of July and into August. May non-farm employment - which will be announced prior to the FOMC June meeting - will also have significant impact.
After two consecutive down weeks in the S&P, Comp., and Dow, the Fed, and the markets, can ill afford another week of losses, so close attention is warranted. This week may mark a true turning point, if there ever is one to be had.
At the Close, 5/19/17:
Dow: 20,804.84, +141.82 (0.69%)
NASDAQ: 6,083.70, +28.57 (0.47%)
S&P 500: 2,381.73 +16.01 (0.68%)
NYSE Composite: 11,542.69, +108.62 (0.95%)
For the Week:
Dow: -91.77 (-0.44%)
NASDAQ: -37.53 (-0.61%)
S&P 500: -9.17 (-0.38%)
NYSE Composite: -4.57 (-0.04)
Thursday, May 18, 2017
The Market as The Matrix; Most People Took The Blue Pill
In case you’re not sure just what a “dead cat bounce” is, imagine taking a dead cat up to the top of a three-story building and dropping it to the ground.
It will bounce, but not much. This is precisely what occurred in US stocks on Thursday, the market getting a reprieve after Wednesday’s bloodbath.
One can try mightily to dissect the various moving parts of the market and arrive at pure conjecture as to what is happening any given day, but these days, reality has become stranger than fiction by massive degrees, even in such hallowed enclaves as financial markets, supposedly not prone to manipulation, fakery, or thievery, but that’s exactly what is on the table.
To say that the Fed, in conjunction with other central banks and their commercial bank proxies, own the market is likely a basic truth. To think that once owned, these players would not mold the narrative and the movement to exactly their liking, is the essence of naivety.
Since 2000, the markets have been owned, even more so since the Great Financial Crisis (GFC) of 2008-09. Based on fiat money and dictates from money printers, the stock markets are the complete tool of enslavement. Governments, pensions, retirement funds, school districts, and all other manner of group investment are tied to “the market,” controlled by the Fed to never stop climbing, lest the debt-slavery of the American public become known.
If markets collapse, so to the deep state system of inflation and skimming, so don’t count on anything changing soon, President Trump or no President Trump, which is exactly why the deep state and the current residents of congress so oppose Mr/ Trump’s every move. He’s a threat to their control of the system.
It’s right out of the film, “The Matrix.” Most people took the blue pill.
Here's a short clip of Laurence Fishburne (Morpheus) explaining the Matrix to Keanu Reeves (Neo).
At The Close, 5/18/17:
Dow: 20,663.02, +56.09 (0.27%)
NASDAQ: 6,055.13, +43.89 (0.73%)
S&P 500: 2,365.72, +8.69 (0.37%)
NYSE Composite: 11,434.06, +10.53 (0.09%)
It will bounce, but not much. This is precisely what occurred in US stocks on Thursday, the market getting a reprieve after Wednesday’s bloodbath.
One can try mightily to dissect the various moving parts of the market and arrive at pure conjecture as to what is happening any given day, but these days, reality has become stranger than fiction by massive degrees, even in such hallowed enclaves as financial markets, supposedly not prone to manipulation, fakery, or thievery, but that’s exactly what is on the table.
To say that the Fed, in conjunction with other central banks and their commercial bank proxies, own the market is likely a basic truth. To think that once owned, these players would not mold the narrative and the movement to exactly their liking, is the essence of naivety.
Since 2000, the markets have been owned, even more so since the Great Financial Crisis (GFC) of 2008-09. Based on fiat money and dictates from money printers, the stock markets are the complete tool of enslavement. Governments, pensions, retirement funds, school districts, and all other manner of group investment are tied to “the market,” controlled by the Fed to never stop climbing, lest the debt-slavery of the American public become known.
If markets collapse, so to the deep state system of inflation and skimming, so don’t count on anything changing soon, President Trump or no President Trump, which is exactly why the deep state and the current residents of congress so oppose Mr/ Trump’s every move. He’s a threat to their control of the system.
It’s right out of the film, “The Matrix.” Most people took the blue pill.
Here's a short clip of Laurence Fishburne (Morpheus) explaining the Matrix to Keanu Reeves (Neo).
At The Close, 5/18/17:
Dow: 20,663.02, +56.09 (0.27%)
NASDAQ: 6,055.13, +43.89 (0.73%)
S&P 500: 2,365.72, +8.69 (0.37%)
NYSE Composite: 11,434.06, +10.53 (0.09%)
Monday, May 15, 2017
With the Fed Pledged to Complete Wall Street Backing, There's No Top In Sight
At the Close, 5/15/17:
Dow: 20,981.94, +85.33 (0.41%)
NASDAQ: 6,149.67, +28.44 (0.46%)
S&P 500: 2,402.32, +11.42 (0.48%)
NYSE Composite: 11,614.23, +67.18 (0.58%)
Welcome to the asylum.
Just for reference, a random look at stocks from a one-year perspective.
On May 16, 2016, here's where the major averages closed.
Dow: 17,500.94
NASDAQ: 4,769.56
S&P 500: 2,052.32
NYSE Composite: 10,250.49
OK, so those look like nice gains, right? How much, percentage-wise, through today's close:
Dow: 16.59%
NASDAQ: 22.45%
S&P 500: 14.58%
NYSE Composite: 11.75%
The obvious question is, how long, with the current bull market more than 8 years long (second longest in market history) can this continue?
Skeptics posit that the entire global financial structure is a massive Ponzi scheme based entirely on fiat money backed by nothing, while realists may refer the old "go with the flow" ideology.
With the Fed continuing to be accommodative via historically low interest rates and the continued buying of financial assets by central banks, there may be no better time to be in the market.
Whoever it was who coined the term, "don't fight the Fed," should be sainted immediately by Pope Francis. This bull market could last another two years or end in two weeks. For now, nearly the entire investment community (approaching 100%) is bullish on stocks, which typically signals a turn of fortune. However, this time truly is different. Never has there been the levels of accommodation and asset purchasing by central banks, who eventually, if current patterns play out, will own the entire market, at inflated prices.
Then what?
Global hyperinflation? It could happen, but that will take time.
Stay the course. This is the age of easy money.
Dow: 20,981.94, +85.33 (0.41%)
NASDAQ: 6,149.67, +28.44 (0.46%)
S&P 500: 2,402.32, +11.42 (0.48%)
NYSE Composite: 11,614.23, +67.18 (0.58%)
Welcome to the asylum.
Just for reference, a random look at stocks from a one-year perspective.
On May 16, 2016, here's where the major averages closed.
Dow: 17,500.94
NASDAQ: 4,769.56
S&P 500: 2,052.32
NYSE Composite: 10,250.49
OK, so those look like nice gains, right? How much, percentage-wise, through today's close:
Dow: 16.59%
NASDAQ: 22.45%
S&P 500: 14.58%
NYSE Composite: 11.75%
The obvious question is, how long, with the current bull market more than 8 years long (second longest in market history) can this continue?
Skeptics posit that the entire global financial structure is a massive Ponzi scheme based entirely on fiat money backed by nothing, while realists may refer the old "go with the flow" ideology.
With the Fed continuing to be accommodative via historically low interest rates and the continued buying of financial assets by central banks, there may be no better time to be in the market.
Whoever it was who coined the term, "don't fight the Fed," should be sainted immediately by Pope Francis. This bull market could last another two years or end in two weeks. For now, nearly the entire investment community (approaching 100%) is bullish on stocks, which typically signals a turn of fortune. However, this time truly is different. Never has there been the levels of accommodation and asset purchasing by central banks, who eventually, if current patterns play out, will own the entire market, at inflated prices.
Then what?
Global hyperinflation? It could happen, but that will take time.
Stay the course. This is the age of easy money.
Saturday, May 6, 2017
Stocks Rally Friday to End Week Positively
The reaction wasn't immediate, but Wall Street eventually responded to the April non-farm payroll result, registering solid gains into the close of trading Friday.
The BLS reported a gain of 211,000 jobs for the prior month, well above estimates which called for a figure of 180,000. Coupled with the Fed keeping interest rates on hold for the time being, stocks finished the week with solid gains, marking the third straight week that stocks finished positively.
Some skepticism remained as the March payroll numbers were downgraded further, from 98,000 to a disappointing 79,000.
Still, the solid showing on Friday put all the major indices into positive territory for the week, all closing near all-time highs.
How long the love-fest with stocks can continue is anybody's guess, but it appears nobody is giving up gains at this juncture.
At The Close, 5/5/17:
Dow: 21,006.94, +55.47 (0.26%)
NASDAQ: 6,100.76, +25.42 (0.42%)
S&P 500: 2,399.29, +9.77 (0.41%)
NYSE Composite: 11,615.61, +80.90 (0.70%)
For the Week:
Dow: +66.43 (0.32%)
NASDAQ: +53.15 (0.88%)
S&P 500: +15.09 (0.63%)
NYSE Composite: +79.51 (0.69%)
The BLS reported a gain of 211,000 jobs for the prior month, well above estimates which called for a figure of 180,000. Coupled with the Fed keeping interest rates on hold for the time being, stocks finished the week with solid gains, marking the third straight week that stocks finished positively.
Some skepticism remained as the March payroll numbers were downgraded further, from 98,000 to a disappointing 79,000.
Still, the solid showing on Friday put all the major indices into positive territory for the week, all closing near all-time highs.
How long the love-fest with stocks can continue is anybody's guess, but it appears nobody is giving up gains at this juncture.
At The Close, 5/5/17:
Dow: 21,006.94, +55.47 (0.26%)
NASDAQ: 6,100.76, +25.42 (0.42%)
S&P 500: 2,399.29, +9.77 (0.41%)
NYSE Composite: 11,615.61, +80.90 (0.70%)
For the Week:
Dow: +66.43 (0.32%)
NASDAQ: +53.15 (0.88%)
S&P 500: +15.09 (0.63%)
NYSE Composite: +79.51 (0.69%)
Saturday, April 22, 2017
Stocks Make Third Weekly Gain In Last Seven; Government Shutdown Looms; Central Banks On Buying Spree
Stocks fell softly to close out the week, but ended with the third weekly gain in the past seven, the major averages having hit something of a speed bump of late what with the wranglings and do-nothings in Washington DC, heightened military potentialities in the Mideast and Pacific Rim (North Korea), sloppy economic data, the passing of the income tax filing deadline, and the non-stop media parade of fake news mostly designed to undermine the presidency of one Mr. Donald J. Trump.
While the overall tone of the market is nothing to get aroused over, the upcoming week could bring some more sobering developments as congress returns from a two-week vacation (a vacation from doing nothing) coinciding with Spring Break. One wishes the congresspeople well enough, but actually doing something to benefit the American public for a change would be welcome. While President Trump is trying his level best, the Democrats and their trainers in the media complex are simply playing in an alternate universe and at times coming close to treasonous actions by working against the best interests of the Republic and focusing solely on what they consider the primary interest of their party.
As the coming week progresses, the level of rancor and obtuseness could reach a fever pitch as the government faces a deadline on April 28 for some kind of budget agreement, or, more likely, another in a too long series of continuing resolutions. Both sides of the debate over what to overspend upon are already well-suited in their peculiar ideological jumpsuits, the Democrats desperate to hold onto the last vestiges of failed socialism (called progressive by the liberal left and ultra-left media), the Republicans - in congress at least - looking to cement their dicey majorities in both houses.
At the outside looking in is the current administration, bent on keeping at least some of the promises Mr. Trump made during the campaign, though reneging against the American people has become so common in the post-Vietnam era that it's almost laughable that anyone would believe a word coming from the lips of any politician in Washington.
Thus, a government shutdown looms a real possibility, though more likely a dramatic, last-gasp, late-into-the-night-made-for-TV deal is probably what's driving the phony debate. As the politicians pose and posture, many American citizens are becoming keenly aware that federal government budgets are a laughable charade, being that deficits continue on and beyond the horizon, the national debt already within $16 billion of $20 trillion, a condition only humans could have created and something only a government with all the fiscal discipline of a 12-year-old with dad's credit card could continue.
At the end of the debate, shutdown, or partial farce, the world will continue spinning, Americans will be the bag-holders of the century and the central bank ponzi will continue.
Holders of stocks should worry the least, since the Bank of Japan (BOJ) and the European Central Bank (ECB) "invested" over ONE TRILLION US DOLLARS in global financial instruments in the first four months of the year, a record amount. Certainly, the Fed and Bank of England - not to mention the Swiss National Bank - are quietly doing their part to keep the liquidity flowing in the background, using all manner of underhanded tactics to undermine every national currency available.
The policy of central bank asset-grabbing is unprecedented in financial history, though rather a common theme since the meltdown of 2008-09.
In the end, 98% of the world's population will own almost none of the assets, the central banks having snatched up anything that hasn't already been bolted down, and they're sure to use wrenches and sledgehammers to take whatever remains as well.
Though the times are trying, central bankers continue buying.
At the Close, Friday, April 21, 2017:
Dow: 20,547.76 -30.95 (-0.15%)
NASDAQ: 5,910.52, -6.26 (-0.11%)
S&P 500: 2,348.69, +-7.15 (-0.30%)
NYSE Composite: 11,389.13, -37.78 (-0.33%)
For the week:
Dow: +94.51 (0.46%)
NASDAQ: +105.37 (1.82%)
S&P 500: +19.74 (0.85%)
NYSE Composite: +65.60 (0.57%)
While the overall tone of the market is nothing to get aroused over, the upcoming week could bring some more sobering developments as congress returns from a two-week vacation (a vacation from doing nothing) coinciding with Spring Break. One wishes the congresspeople well enough, but actually doing something to benefit the American public for a change would be welcome. While President Trump is trying his level best, the Democrats and their trainers in the media complex are simply playing in an alternate universe and at times coming close to treasonous actions by working against the best interests of the Republic and focusing solely on what they consider the primary interest of their party.
As the coming week progresses, the level of rancor and obtuseness could reach a fever pitch as the government faces a deadline on April 28 for some kind of budget agreement, or, more likely, another in a too long series of continuing resolutions. Both sides of the debate over what to overspend upon are already well-suited in their peculiar ideological jumpsuits, the Democrats desperate to hold onto the last vestiges of failed socialism (called progressive by the liberal left and ultra-left media), the Republicans - in congress at least - looking to cement their dicey majorities in both houses.
At the outside looking in is the current administration, bent on keeping at least some of the promises Mr. Trump made during the campaign, though reneging against the American people has become so common in the post-Vietnam era that it's almost laughable that anyone would believe a word coming from the lips of any politician in Washington.
Thus, a government shutdown looms a real possibility, though more likely a dramatic, last-gasp, late-into-the-night-made-for-TV deal is probably what's driving the phony debate. As the politicians pose and posture, many American citizens are becoming keenly aware that federal government budgets are a laughable charade, being that deficits continue on and beyond the horizon, the national debt already within $16 billion of $20 trillion, a condition only humans could have created and something only a government with all the fiscal discipline of a 12-year-old with dad's credit card could continue.
At the end of the debate, shutdown, or partial farce, the world will continue spinning, Americans will be the bag-holders of the century and the central bank ponzi will continue.
Holders of stocks should worry the least, since the Bank of Japan (BOJ) and the European Central Bank (ECB) "invested" over ONE TRILLION US DOLLARS in global financial instruments in the first four months of the year, a record amount. Certainly, the Fed and Bank of England - not to mention the Swiss National Bank - are quietly doing their part to keep the liquidity flowing in the background, using all manner of underhanded tactics to undermine every national currency available.
The policy of central bank asset-grabbing is unprecedented in financial history, though rather a common theme since the meltdown of 2008-09.
In the end, 98% of the world's population will own almost none of the assets, the central banks having snatched up anything that hasn't already been bolted down, and they're sure to use wrenches and sledgehammers to take whatever remains as well.
Though the times are trying, central bankers continue buying.
At the Close, Friday, April 21, 2017:
Dow: 20,547.76 -30.95 (-0.15%)
NASDAQ: 5,910.52, -6.26 (-0.11%)
S&P 500: 2,348.69, +-7.15 (-0.30%)
NYSE Composite: 11,389.13, -37.78 (-0.33%)
For the week:
Dow: +94.51 (0.46%)
NASDAQ: +105.37 (1.82%)
S&P 500: +19.74 (0.85%)
NYSE Composite: +65.60 (0.57%)
Wednesday, April 19, 2017
Stocks In Spring Funk, Well Off All-Time Highs
Monday's big rally failed to inspire much confidence as the major averages fell sharply on Tuesday, giving back most of the gains from the prior session.
If it seems that stocks have hit a wall or are in stall mode for the present, it's because they are. The last all-time high close on the Dow Jones Industrial Average was March 6, when the bellwether ended the day at 20,954.34.
The other averages have been in similar holding patterns, though the markets overall - despite their closeness to record levels - do not appear very fragile. It's just that there isn't very much velocity or volatility, and even with first quarter earnings thus far somewhat positive, they haven't supplied a catalyst to move stocks out of a Spring funk.
Without a clear case for an upside move, speculators may be looking more to politics for a positive tone, but the rancor in Washington has been at near-deafening levels since the inauguration of Donald Trump in January and the Democrats seem to be dug in to obstruct any and all of the President's agendas.
China and Russia moving troops to the borders of North Korea, along with US warships steaming towards its coast, probably has dampened investor appetite as well.
But that's all for the time being. Economic data is pointing to more of the same, a slow, dolorous economy that isn't making anybody happy, least of which are the governors of the Fed, who wish to see more robust job creation and some pricing power by corporations, but, exclusively in the latter case, are seeing the opposite. Consumers are no longer the suckers they once were, and are beginning to demand value for their dollars. Retailers and restaurants - the front lines for consumer inflation - have been feeling the pinch, with many regional and national chains already engaged in a pitched price war.
That kind of activity can only go one way, and it's not the way of inflation. Bond sellers are a happy bunch for this, with prices for their offerings high and yields down.
Trump may want to make America great again, but it may have to start with better deals for consumers.
At the Close, Tuesday, April 18, 2017:
Dow: 20,523.28, -113.64, (-0.55%)
NASDAQ: 5,849.47, -7.32 (-0.12%)
S&P 500: 2,342.19, -6.82 (-0.29%)
NYSE Composite: 11,378.58, -48.50 (-0.42%)
If it seems that stocks have hit a wall or are in stall mode for the present, it's because they are. The last all-time high close on the Dow Jones Industrial Average was March 6, when the bellwether ended the day at 20,954.34.
The other averages have been in similar holding patterns, though the markets overall - despite their closeness to record levels - do not appear very fragile. It's just that there isn't very much velocity or volatility, and even with first quarter earnings thus far somewhat positive, they haven't supplied a catalyst to move stocks out of a Spring funk.
Without a clear case for an upside move, speculators may be looking more to politics for a positive tone, but the rancor in Washington has been at near-deafening levels since the inauguration of Donald Trump in January and the Democrats seem to be dug in to obstruct any and all of the President's agendas.
China and Russia moving troops to the borders of North Korea, along with US warships steaming towards its coast, probably has dampened investor appetite as well.
But that's all for the time being. Economic data is pointing to more of the same, a slow, dolorous economy that isn't making anybody happy, least of which are the governors of the Fed, who wish to see more robust job creation and some pricing power by corporations, but, exclusively in the latter case, are seeing the opposite. Consumers are no longer the suckers they once were, and are beginning to demand value for their dollars. Retailers and restaurants - the front lines for consumer inflation - have been feeling the pinch, with many regional and national chains already engaged in a pitched price war.
That kind of activity can only go one way, and it's not the way of inflation. Bond sellers are a happy bunch for this, with prices for their offerings high and yields down.
Trump may want to make America great again, but it may have to start with better deals for consumers.
At the Close, Tuesday, April 18, 2017:
Dow: 20,523.28, -113.64, (-0.55%)
NASDAQ: 5,849.47, -7.32 (-0.12%)
S&P 500: 2,342.19, -6.82 (-0.29%)
NYSE Composite: 11,378.58, -48.50 (-0.42%)
Friday, April 14, 2017
If The Fed Is Upset On The CPI Drop And Stubbornly-Low Interest Rates, It Must Be A Good Friday
It's Good Friday and some of us have just finished doing our taxes (such as this writer), so, some of us are wondering what's so good about this particular Friday.
Aside from the generally-obvious religious conventions (Shouldn't it be called Bad Friday because it's the day Jesus Christ was crucified, and that doesn't seem so good?), there probably are some good things afoot.
First, the financial markets are closed, always a bonus. Second, the Labor Department announced today that the Consumer Price Index (CPI) dropped 0.3 percent, the first decline since February 2016. They said that lower cell phone service and gasoline costs outpaced higher rents and a slight increase in food costs (0.3%).
If those food costs are to be believed, since the amount of food most people eat (and buy) can be self-regulated, higher food costs aren't really an issue at all, especially since practically nobody in America is starving at the present time.
This CPI number brings up some interesting possibilities. If the United States is actually experiencing deflation (or, as the TV pundits like to call it, because deflation is bad, you know, "disinflation") then prices are going down, everything is going to cost less. That's the bane of a strong dollar. Imports are cheaper, and, in an economy that relies on lots of imports, that drives domestically-produced goods and services down as well.
It's a win-win-win for everybody, except, possibly, the Federal Reserve, banks and bond investors who are getting anxious and perhaps a bit desperate for higher interest rates.
Well, crocodile tears are the order of the day for them. Higher interest rates are not going to happen unless the economy is strong, meaning many excess jobs are being created, pushing wages higher, and producers are experiencing strong pricing power. Both of those items - jobs and pricing - seem to be going in reverse over the short term. Bond prices have been soaring because yields have been stubbornly opposed to any kind of rise, the now nearly constant urging and jawboning from the genii at the Federal Reserve, Janet Yellen, Stanley Fisher, et. al. notwithstanding.
The 10-year note is hovering around 2.25% yield. That doesn't bode well for inflation. No, not at all.
Stocks were lower for the week, but they're still within a few percentage points of all-time highs. Rich people and people with 401k or pension plans are probably not very concerned with their stock holdings.
In conclusion, this may actually be a pretty good Good Friday after all. Cheaper gas and phone service is a plus and eating a little less is probably not a bad idea in a nation of fatties. Plus, if the people over at the Fed are perplexed or constipated or otherwise annoyed or agitated, that's a huge bonus.
Happy Easter. Don't eat too much ham, lamb, or hard-boiled eggs.
At The Close, Thursday, April 13, 2017:
Dow: 20,453.25, -138.61 (-0.67%)
NASDAQ: 5,805.15, -31.01 (-0.53%)
S&P 500: 2,328.95, -15.98 (-0.68%)
NYSE Composite: 11,324.53, -98.64 (-0.86%)
For the Week:
Dow: -202.85 (-0.98%)
NASDAQ: -72.66 (-1.24%)
S&P 500: -26.59 (-1.13)
NYSE Composite: -121.05 (-1.06%)
Aside from the generally-obvious religious conventions (Shouldn't it be called Bad Friday because it's the day Jesus Christ was crucified, and that doesn't seem so good?), there probably are some good things afoot.
First, the financial markets are closed, always a bonus. Second, the Labor Department announced today that the Consumer Price Index (CPI) dropped 0.3 percent, the first decline since February 2016. They said that lower cell phone service and gasoline costs outpaced higher rents and a slight increase in food costs (0.3%).
If those food costs are to be believed, since the amount of food most people eat (and buy) can be self-regulated, higher food costs aren't really an issue at all, especially since practically nobody in America is starving at the present time.
This CPI number brings up some interesting possibilities. If the United States is actually experiencing deflation (or, as the TV pundits like to call it, because deflation is bad, you know, "disinflation") then prices are going down, everything is going to cost less. That's the bane of a strong dollar. Imports are cheaper, and, in an economy that relies on lots of imports, that drives domestically-produced goods and services down as well.
It's a win-win-win for everybody, except, possibly, the Federal Reserve, banks and bond investors who are getting anxious and perhaps a bit desperate for higher interest rates.
Well, crocodile tears are the order of the day for them. Higher interest rates are not going to happen unless the economy is strong, meaning many excess jobs are being created, pushing wages higher, and producers are experiencing strong pricing power. Both of those items - jobs and pricing - seem to be going in reverse over the short term. Bond prices have been soaring because yields have been stubbornly opposed to any kind of rise, the now nearly constant urging and jawboning from the genii at the Federal Reserve, Janet Yellen, Stanley Fisher, et. al. notwithstanding.
The 10-year note is hovering around 2.25% yield. That doesn't bode well for inflation. No, not at all.
Stocks were lower for the week, but they're still within a few percentage points of all-time highs. Rich people and people with 401k or pension plans are probably not very concerned with their stock holdings.
In conclusion, this may actually be a pretty good Good Friday after all. Cheaper gas and phone service is a plus and eating a little less is probably not a bad idea in a nation of fatties. Plus, if the people over at the Fed are perplexed or constipated or otherwise annoyed or agitated, that's a huge bonus.
Happy Easter. Don't eat too much ham, lamb, or hard-boiled eggs.
At The Close, Thursday, April 13, 2017:
Dow: 20,453.25, -138.61 (-0.67%)
NASDAQ: 5,805.15, -31.01 (-0.53%)
S&P 500: 2,328.95, -15.98 (-0.68%)
NYSE Composite: 11,324.53, -98.64 (-0.86%)
For the Week:
Dow: -202.85 (-0.98%)
NASDAQ: -72.66 (-1.24%)
S&P 500: -26.59 (-1.13)
NYSE Composite: -121.05 (-1.06%)
Tuesday, April 4, 2017
Stocks Stalled, Bonds Subdued, April Tax Deadline Extended
As the first week of April unfolds, there appears to be no stimulating feature to the equity markets overall, as stocks barely budged on Monday and are stalled near the UNCH line again on Tuesday.
It could be that there aren't many good values out there, or that the investor class is waiting on the political class to do something... anything, to get the economy moving, though that seems a long shot, as Democrats in the House and Senate seem to want nothing more than to waste everybody's time with a continuing assault - using fake news and innuendo as their battle-axes - against Presidnet Trump and any Republican agenda.
That particular skirmish aside, the lack of movement is stocks is probably due to the age-old waiting game, which is first and foremost awaiting the March non-farm payroll data on Friday, and, after that, a slew of earnings reports which will begin to flow to the street beginning next week.
Until such time, there simply isn't much to get excited about, except maybe that all Americans will have an additional three days to file their 2016 income taxes. Due to April 15 being on a Saturday and the Washington D.C. Emancipation Day holiday being observed on April 17 instead of April 16, 2017, Tax Day is on the following Tuesday, April 18.
OK, got that? Good.
In the meantime, bond traders are acting as though the Federal Reserve will never raise the federal funds rate again in their lifetimes, with the 10-year note sinking to a yield of just 2.35%.
The 10-year has gotten as high as 2.60% this year, but quickly retreated from that March 12 high and has remained subdued for most of the year, thus far. That could change, as the Fed has euphemistically suggested that more rate hikes would be forthcoming this year -- as many as three more.
We'll see about that.
It could be that there aren't many good values out there, or that the investor class is waiting on the political class to do something... anything, to get the economy moving, though that seems a long shot, as Democrats in the House and Senate seem to want nothing more than to waste everybody's time with a continuing assault - using fake news and innuendo as their battle-axes - against Presidnet Trump and any Republican agenda.
That particular skirmish aside, the lack of movement is stocks is probably due to the age-old waiting game, which is first and foremost awaiting the March non-farm payroll data on Friday, and, after that, a slew of earnings reports which will begin to flow to the street beginning next week.
Until such time, there simply isn't much to get excited about, except maybe that all Americans will have an additional three days to file their 2016 income taxes. Due to April 15 being on a Saturday and the Washington D.C. Emancipation Day holiday being observed on April 17 instead of April 16, 2017, Tax Day is on the following Tuesday, April 18.
OK, got that? Good.
In the meantime, bond traders are acting as though the Federal Reserve will never raise the federal funds rate again in their lifetimes, with the 10-year note sinking to a yield of just 2.35%.
The 10-year has gotten as high as 2.60% this year, but quickly retreated from that March 12 high and has remained subdued for most of the year, thus far. That could change, as the Fed has euphemistically suggested that more rate hikes would be forthcoming this year -- as many as three more.
We'll see about that.
Monday, February 6, 2017
The Rush To Safety Has Begun In Earnest; 10-Year Yields Drop to 2.41%
With one of the most amazing sporting spectacles - Super Bowl 51 (LI, for those of the Roman numeral persuasion) - behind, most people got back to work today, including the rabid money-grubbers of Wall Street, but all was not rosy and peachy after the New England Patriots won in overtime, 34-28, over the Atlanta Falcons.
As President Donald Trump continues to attempt to "make America great again," much of the focus on the first trading day of the week was not on stocks, but rather, bonds, most noticeably on the 10-year treasury note, which plummeted eight basis points on the day to produce the lowest yield in two weeks, to 2.41%.
That figure may not seem so attractive to the yield-seekers of the world, but to countless hedge and managed bond fund professionals, it was a pretty awesome start to the week. Prices - which preform in the opposite direction of yield - for the 10-year were rocketing higher and any continuation of the move over the next few days and through the week might make for a trend-setting reversion following weeks of speculation after the Fed hiked federal funds rates at the end of last year.
Stocks were down modestly, but that was antecedent to the speculative ride in bonds, which was focused on the long end, thereby flattening the curve. What is more than just passing interest in treasury bonds figures to keep a lid on stock prices for the near term, at least until the next Fed meeting, in mid-March, at which time the FOMC will likely keep interest rates at the same levels. It's simply going to be too early for the Fed to believe that the economy is on sound footing toward expansion, something they've been sniffing around for over the past eight years. To their dismay, and possible demise, the Fed hasn't found much in the data to suggest that the US economy is going to be great, again, or with any other adverbial disclaimer.
So, today can be summed up as bond traders getting calls to buy safety and executing on the wishes of their clients. Any assumption that the Trump rally or any other concoction of the news and financial media is going to send stocks even higher than the stratospheric levels they've already achieved in one of the longest multiple expansions in history may be similar to a dog whistle.
Dogs may hear it and lower-thinking humans might get a strange beeping sound, but long-term financial experts aren't going to notice. They've already made up their minds about where stocks are headed and, from today's indications, they're not going to a pleasant place.
Gird your loins and whatever else you might think appropriate for a trip of declining prices and some creative destruction in stocks. Hopefully, it won't be your money that's being lost.
At the Close, Monday, January 6, 2017:
Dow: 20,052.42, -19.04 (-0.09%)
NASDAQ: 5,663.55, -3.21 (-0.06%)
S&P 500: 2,292.56, -4.86 (-0.21%)
NYSE Composite: 11,264.11, -46.63 (-0.41%)
As President Donald Trump continues to attempt to "make America great again," much of the focus on the first trading day of the week was not on stocks, but rather, bonds, most noticeably on the 10-year treasury note, which plummeted eight basis points on the day to produce the lowest yield in two weeks, to 2.41%.
That figure may not seem so attractive to the yield-seekers of the world, but to countless hedge and managed bond fund professionals, it was a pretty awesome start to the week. Prices - which preform in the opposite direction of yield - for the 10-year were rocketing higher and any continuation of the move over the next few days and through the week might make for a trend-setting reversion following weeks of speculation after the Fed hiked federal funds rates at the end of last year.
Stocks were down modestly, but that was antecedent to the speculative ride in bonds, which was focused on the long end, thereby flattening the curve. What is more than just passing interest in treasury bonds figures to keep a lid on stock prices for the near term, at least until the next Fed meeting, in mid-March, at which time the FOMC will likely keep interest rates at the same levels. It's simply going to be too early for the Fed to believe that the economy is on sound footing toward expansion, something they've been sniffing around for over the past eight years. To their dismay, and possible demise, the Fed hasn't found much in the data to suggest that the US economy is going to be great, again, or with any other adverbial disclaimer.
So, today can be summed up as bond traders getting calls to buy safety and executing on the wishes of their clients. Any assumption that the Trump rally or any other concoction of the news and financial media is going to send stocks even higher than the stratospheric levels they've already achieved in one of the longest multiple expansions in history may be similar to a dog whistle.
Dogs may hear it and lower-thinking humans might get a strange beeping sound, but long-term financial experts aren't going to notice. They've already made up their minds about where stocks are headed and, from today's indications, they're not going to a pleasant place.
Gird your loins and whatever else you might think appropriate for a trip of declining prices and some creative destruction in stocks. Hopefully, it won't be your money that's being lost.
At the Close, Monday, January 6, 2017:
Dow: 20,052.42, -19.04 (-0.09%)
NASDAQ: 5,663.55, -3.21 (-0.06%)
S&P 500: 2,292.56, -4.86 (-0.21%)
NYSE Composite: 11,264.11, -46.63 (-0.41%)
Wednesday, February 1, 2017
Fed On Hold, Markets Steady In Dull Session After Shaky Start To Week
With the Federal Reserve deciding that there would be no raise to the federal funds rate, as expected, US indices finished the day modestly higher, though the S&P 500 struggled to gain and the NYSE Composite finished in the red.
That was about all there was to the day, as investors took a break from the rabid pace set largely by President Trump's first ten days in office.
The next FOMC rate policy meeting isn't until March 14-15, though analysts and economists are still relatively certain that the Fed will continue to leave rates unchanged.
At The Close, Wednesday, February 1, 2016:
Dow: 19,890.94, +26.85 (0.14%)
NASDAQ: 5,642.65, +27.86 (0.50%)
S&P 500: 2,279.55, +0.68 (0.03%)
NYSE Composite: 11,207.24, -15.71 (-0.14%)
That was about all there was to the day, as investors took a break from the rabid pace set largely by President Trump's first ten days in office.
The next FOMC rate policy meeting isn't until March 14-15, though analysts and economists are still relatively certain that the Fed will continue to leave rates unchanged.
At The Close, Wednesday, February 1, 2016:
Dow: 19,890.94, +26.85 (0.14%)
NASDAQ: 5,642.65, +27.86 (0.50%)
S&P 500: 2,279.55, +0.68 (0.03%)
NYSE Composite: 11,207.24, -15.71 (-0.14%)
Tuesday, December 20, 2016
As 2016 Winds Down With Stocks Up, What's In Store For 2017?
Recently, Americans and observes worldwide have been subjected to overreaction by lawmakers and media types over the "Russian hacking" of the recently-resolved US presidential elections and the possibility that certain electors in the electoral collage would bolt from the Trump camp in enough numbers to deny Donald Trump the needed 270 votes to certify him as America's 45th president.
As of 4:30 pm ET Monday, the electoral college did its job, giving Trump 306 votes, confirming his November victory and assuring the American public that all politics would proceed normally (we believe) for the foreseeable future.
Additionally, the over-hyped media and intelligence frenzy was revealed to have been yet another case of sour grapes and/or fake news fomented by the losers in the Democrat party and what appears to be rogue elements of the intelligence community. The good news is that Mr. Trump, once inaugurated on January 20, will be able to remove such rogue elements via his appointees to the CIA, FBI and other agencies. The bad news is that the sore loser Democrats and their media whores will remain, and they will likely continue to harass and object every effort Trump makes to "make America great again."
While almost nobody can reasonably oppose efforts to improve conditions for Americans, the Democrats will couch their objections in the most mealy-mouthed manners, with references to diversity, unfairness and vague commentaries on power and elitism.
Fortunately, the investor class has ignored most of the political squabbling and has moved on to increasing its wealth, with stocks up tremendously since election day. The bond markets have expressed acceptance of the Fed's minuscule rate hike of last week and have stabilized. Everything seems in place for a nice, year-end Santa Claus rally which will take the Dow Jones Industrial Average over the mythical 20,000 plateau.
The question to be asked at this juncture is, will the markets remain ebullient and bubbly into the New Year? With stocks hovering at or near all-time highs, and the bull run which began in 2009 extending into a ninth year, the answer should be obvious. Markets do not work one way (up) and corrections and bear markets often occur at what seems to be the most inopportune moments. With investor sentiment bullish to the extreme, the probability of a major correction in the first quarter of 2017 should be quite high, unless one adheres to the well-founded theory that the Fed has backstopped equity markets for years and will continue to do so. Doing otherwise, so the conventional wisdom tells, would be catastrophic, as though fair and open markets are inherently evil.
They are not, and it may be nigh on the eve of major changes in fiscal and monetary policy. On the fiscal side, Mr. Trump - a businessman with many years experience in all matters financial - the message is clear: he will do what it takes to get America on a path to prosperity for all levels of income, not just the crony capitalists and heavily financialized major corporations, but for individuals up and down the income ladder.
As for the Fed, one's guess is as good as another, but the genii inside the Fed seem intent on raising interest rates gradually in order to keep the US economy from overheating. As usual, they will be late to the party, but perhaps they can salve their damaged egos by reducing their bloated balance sheet in 2017 and leaving the number of interest rate hikes below three, ending the year around one percent, which, while traditionally absurdly low, would count as a major accomplishment since the Great Financial Crisis of the recent past.
Geopolitical events may overtake the Fed's view, however, as Japan and the Eurozone are well upon the road to financial ruin, and a crisis in either market (plus China) may cause extreme disruption to an orderly return to what is commonly referred to as "normalization."
A new administration hell-bent on returning America to greatness and leveling the playing field in international trade set against a backdrop of unelected financial and political operatives worldwide should make for an interesting, exciting, volatile year ahead.
As 2016 winds down, 2017 should present unique and various opportunities in all markets, requiring astute evaluation of not just balance sheets and P/E ratios, but insight into the political influence which has been and will continue to be exerted upon trade and commerce, globally.
At the Close: 12/19/2016
Dow: 19,883.06, +39.65 (0.20%)
NASDAQ: 5,457.44, +20.28 (0.37%)
S&P 500: 2,262.53, +4.46 (0.20%)
NYSE Composite: 11,128.54, +3.32 (0.03%)
As of 4:30 pm ET Monday, the electoral college did its job, giving Trump 306 votes, confirming his November victory and assuring the American public that all politics would proceed normally (we believe) for the foreseeable future.
Additionally, the over-hyped media and intelligence frenzy was revealed to have been yet another case of sour grapes and/or fake news fomented by the losers in the Democrat party and what appears to be rogue elements of the intelligence community. The good news is that Mr. Trump, once inaugurated on January 20, will be able to remove such rogue elements via his appointees to the CIA, FBI and other agencies. The bad news is that the sore loser Democrats and their media whores will remain, and they will likely continue to harass and object every effort Trump makes to "make America great again."
While almost nobody can reasonably oppose efforts to improve conditions for Americans, the Democrats will couch their objections in the most mealy-mouthed manners, with references to diversity, unfairness and vague commentaries on power and elitism.
Fortunately, the investor class has ignored most of the political squabbling and has moved on to increasing its wealth, with stocks up tremendously since election day. The bond markets have expressed acceptance of the Fed's minuscule rate hike of last week and have stabilized. Everything seems in place for a nice, year-end Santa Claus rally which will take the Dow Jones Industrial Average over the mythical 20,000 plateau.
The question to be asked at this juncture is, will the markets remain ebullient and bubbly into the New Year? With stocks hovering at or near all-time highs, and the bull run which began in 2009 extending into a ninth year, the answer should be obvious. Markets do not work one way (up) and corrections and bear markets often occur at what seems to be the most inopportune moments. With investor sentiment bullish to the extreme, the probability of a major correction in the first quarter of 2017 should be quite high, unless one adheres to the well-founded theory that the Fed has backstopped equity markets for years and will continue to do so. Doing otherwise, so the conventional wisdom tells, would be catastrophic, as though fair and open markets are inherently evil.
They are not, and it may be nigh on the eve of major changes in fiscal and monetary policy. On the fiscal side, Mr. Trump - a businessman with many years experience in all matters financial - the message is clear: he will do what it takes to get America on a path to prosperity for all levels of income, not just the crony capitalists and heavily financialized major corporations, but for individuals up and down the income ladder.
As for the Fed, one's guess is as good as another, but the genii inside the Fed seem intent on raising interest rates gradually in order to keep the US economy from overheating. As usual, they will be late to the party, but perhaps they can salve their damaged egos by reducing their bloated balance sheet in 2017 and leaving the number of interest rate hikes below three, ending the year around one percent, which, while traditionally absurdly low, would count as a major accomplishment since the Great Financial Crisis of the recent past.
Geopolitical events may overtake the Fed's view, however, as Japan and the Eurozone are well upon the road to financial ruin, and a crisis in either market (plus China) may cause extreme disruption to an orderly return to what is commonly referred to as "normalization."
A new administration hell-bent on returning America to greatness and leveling the playing field in international trade set against a backdrop of unelected financial and political operatives worldwide should make for an interesting, exciting, volatile year ahead.
As 2016 winds down, 2017 should present unique and various opportunities in all markets, requiring astute evaluation of not just balance sheets and P/E ratios, but insight into the political influence which has been and will continue to be exerted upon trade and commerce, globally.
At the Close: 12/19/2016
Dow: 19,883.06, +39.65 (0.20%)
NASDAQ: 5,457.44, +20.28 (0.37%)
S&P 500: 2,262.53, +4.46 (0.20%)
NYSE Composite: 11,128.54, +3.32 (0.03%)
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