Stocks Slammed After Fed Rate Hike; Dow Reaches Correction Level, More Pain Looms

Being as they are truly ugly - and predictable (see yesterday's post and many more before that for reference) - it might be appropriate to post just the numbers.

However, beyond the usual blathering nonsense from the financial "talking heads" in TV-land, it would be imprudent to not point out that the Dow Jones Industrial Average has fallen just into correction, down 10.30% from the all-time-high closing price of January 26 of this year.

With today's losses, the Dow is now down more than 1000 points for the month of March, after a collapse of 1100 points in February. This puts the blue chip average on track to reach bear market status by sometime between May 15 and June 21. The magic number for a 20% drop off the high is 21,293.37.

Think it can't happen? Reference the dotcom collapse of 2000, the GFC of 2008-09, or the crash in October 1929 whittled to the Great Depression.

Naturally, markets do not respond in straight lines, so there is the possibility of some gains between now and the next big political event, the mid-term elections in November. If the major averages are not in bear country by that time, there's something fundamentally wrong with any and all systems of market prediction.

The Dow has receded beyond the previous interim low, 24,538.04, and is very close to the absolute near-term bottom of February 8, of 23,860,46 (less than 100 points away).

Three of the four major averages are in the red for 2018, the lone survivor being the NASDAQ, sporting a gain of less than 300 points. With that in mind, further losses should be felt hardest in the NASDAQ, as it is front-loaded with tech and financial stocks. Being the most volatile of the indices, the NASDAQ could come under severe pressure as early as Friday (tomorrow), though a dead-cat bounce to end the week is also an understandable scenario.

with the Fed's rate hike being the proximate cause of the most recent selling, it's now behind the market, but so long as the Fed talks up rate increases and balance sheet unwinding it will bleed from stocks. The entirely false narrative of "recovery" and "growth" will become more vilified and ridiculed as weak economic data continues to roll forward. Estimates of first quarter GDP have fallen precipitously in recent days, as it is generally the worst period for GDP due largely to weather, and, this Winter has lingered longer than most (it's already Spring). There's snow on the ground and cold temperatures throughout the Northeast and into the Midwest.

The advance estimate of first quarter GDP will be announced the last week of April, on the 27th. It would be expected that any gains between here and then will be wiped away rather quickly when the figure comes in at something South of two percent.

Dow Jones Industrial Average March Scorecard:

Date	Close	Gain/Loss	Cum. G/L
3/1/18	24,608.98	-420.22	-420.22
3/2/18	24,538.06	-70.92	-491.14
3/5/18	24,874.76	+336.70	-154.44
3/6/18	24,884.12	+9.36	-145.08
3/7/18	24,801.36	-82.76	-227.84
3/8/18	24,895.21	+93.85	-133.99
3/9/18	25,335.74	+440.53	+306.54
3/12/18	25,178.61	-157.13	+149.41
3/13/18	25,007.03,	-171.58	-22.17
3/14/18	24,758.12	-248.91	-271.08
3/15/18	24,873.66	+115.54	-155.54
3/16/18	24,946.51	+72.85	-82.69
3/19/18	24,610.91	-335.60	-418.29
3/20/18	24,727.27	+116.36	-301.93
3/21/18	24,682.31	-44.96	-346.89
3/22/18	23,957.89	-724.42	-1071.31

At the Close, Thursday, March 22, 2018:
Dow Jones Industrial Average: 23,957.89, -724.42 (-2.93%)
NASDAQ: 7,166.68, -178.61 (-2.43%)
S&P 500: 2,643.69, -68.24 (-2.52%)
NYSE Composite: 12,377.39, -306.37 (-2.42%)

Troubling Midday Reversal Sends Dow Down Again

The roller coaster continues. Beginning February 1, there have been 27 trading days. Of those, on the Dow, 15 have finished positive, 12 negative. It's fair to say that this has been essentially a directionless market for nearly a month-and-a-half, unless one takes the view that it's the beginning stage of a greater, cyclical bear market.

The Dow Jones Industrial Average closed at 26,186.71 on February 1. Today's disappointing close was 25,178.61, a little short of an 1100 point decline, but barely a blip on a logarithmic chart, a mere four percent.

What's more troubling than the small decline over the past five weeks is the time it has taken for the Dow to recover, and it hasn't fully regained all of the losses.

The low point - 23,860.46 - was February 8, so the Dow has recovered more than 1400 points since then, but, for a market that until recently had been racking up wins faster than a track star on steroids, the performance of late has been a real disappointment.

While the main driver to the downside may be nothing more than simple overvaluation, that alone is a real problem which can only be fixed two ways: 1) higher profits (EPS), or; 2) lower price per share.

It appears that the trend-setters in market-land have chosen door number two, because, while there may be adequate rationale to take a positive view of the economy, stocks have pretty much priced themselves out of any further upside. Real earnings, from increased sales, sound management, new product cycles, higher profit margins - those things which exist in real economies - are not to be found in many mature companies these days. Easy credit and stock buybacks have boosted share prices by diminishing the number of shares outstanding, thus making earnings appear better because they are divided by fewer shares.

Essentially, Wall Street has been playing three-card monte with investors, buying back stock, enriching shareholders and executives while doing little to nothing to improve the business. Capital investment has been sullen for the past decade, and, if stocks begin to tailspin, don't look for companies to begin investing in better infrastructure, more R&D, or ramp up employment. The people running these companies read from the same playbook, and they're more likely to become more entrenched, slash costs and lay people off, a recipe for disaster and a longer downturn.

The next few trading days should be quite instructive as a short-term chart pattern is possibly emerging. A close above 25,709.27 (February 26) would signal a reversal from the downtrend. Anything approaching the interim low of 24,538.06 (March 2) could be cause for alarm, indicative of fourth declines.

At the end of all this is the FOMC meeting on March 20-21, at the end of which the Fed will likely announce another increase of 25 basis points to the federal funds rate, a move which will put the overnight lending rate at 1.50-1.75% and would be the fourth increase in the past 13 months. The Fed first raised rates off the "zero-bound" in December 2015, but moved cautiously, not raising again until December of 2016. Since then there have been three ore 25 basis point hikes, in March, June, and December of last year.

This expected hike could be one too many, and too soon. With the economy still doodling along at 2.3% for 2017, the Fed may be too far out in front of their inflation and expansion projections.

There is much to digest between today and the FOMC meeting, but it appears the Fed has already made up its mind.

At the Close, Monday, March 12, 2018:
Dow Jones Industrial Average: 25,178.61, -157.13 (-0.62%)
NASDAQ: 7,588.32, +27.51 (+0.36%)
S&P 500: 2,783.02, -3.55 (-0.13%)
NYSE Composite: 12,898.40, -20.42 (-0.16%)

US Equites In Danger Zone After Very Volatile Week

The US economy isn't exactly on its back, but it also isn't growing by the phony 3+ percent the government reported in the past two quarters.

Speaking strictly from an economist's perspective, the US government GDP figures include grossly-inflated government spending and just about every spare dollar their statisticians can unearth from the mainland, Alaska and Hawaii.

GDP-watching is a Wall Street phenomena, serving the interests of the corporatists who need to return dividends or share growth to stockholders. Thus, it adds impetus to the argument that investing in US corporations is a good idea. That may or may not be true, depending largely upon which corporation is attracting the investing dollars.

Obviously, the FAANGs (Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (Alphabet, GOOG) have been the most attractive of the past six to eight years, while quite a few have faltered. Most of the stocks making gains since the GFC of 2007-09 have been the result of massive stock buybacks, a dubious distinction, as these high-fliers are the ones most prone to collapse in the case of a market rout.

They've diluted their shares and have deployed capital in one of the worst ways, buying back shares in order to boost EPS (earnings per share). Having fewer shares available while keeping profits at roughly the same level improves EPS, but it does not expand the business potential. Banks and financials are especially guilty in this regard. They're over-leveraged and will pay a price, but their executives and shareholders are happy little clams, for now.

When the share price falls, and dividends are slashed, the shareholders will be singing a different tune. The executives will be long gone because they've proven to care only about their own pockets and bonuses.

In any case, stocks ran through a very volatile week, punctuated by a massive dead-cat-bounce rally on Thursday which stanched some of the losses incurred since all-time highs the previous Tuesday.

There could be a waterfall effect developing, because confidence is waning. The holiday shopping season - which is demonstrably longer than last year's - should provide a boost, but the economy is lurching closer to two important events: the December Fed meeting and the expected rate hike, and another round of negotiations in congress over the debt ceiling limit, both mid-month.

Elsewhere, oil remains at elevated levels, above $55/barrel for WTI crude, gold and silver were bounced around but appear ready for a breakout (as they have too many times in the past four years, with nothing to show), bonds were flatter still.

At the Close, Friday, November 17, 2017:
Dow: 23,358.24, -100.12 (-0.43%)
NASDAQ 6,782.79, -10.50 (-0.15%)
S&P 500: 2,578.85, -6.79 (-0.26%)
NYSE Composite: 12,302.89, -0.39 (0.00%)

For the Week:
Dow: -63.97 (-0.27%)
NASDAQ: +31.85 (+0.47%)
S&P 500: -3.45 (-0.13%)
NYSE Composite: -19.71 (-0.16%)

Stocks Rebound Thursday; 3rd Quarter GDP Increases 3%

Stocks bounced off of Wednesday's decline, with the Dow Industrials again leading the way on Thursday, shrugging off any suggestion that the economy or stock market was about to experience a slowdown.

On Friday morning, the Bureau of Economic Analysis (BEA) released the preliminary estimate of GDP for the third quarter, beating most of the positive projections, coming at at three percent growth.

Highlights of the report included a positive contribution from Personal Consumption Expenditures (PCE), offset by lower residential fixed investment and state and local government spending.

The 3.0% reading follows the second quarter's 3.1% advance, though the figures from the government are always subject to timely revisions (forever).

This should be good news for equity investors. The dollar is strengthening on the news.

Some are skeptical, however, noting that GDP is a very broad measure of economic strength or weakness and the fact that government spending is a component, which, at the federal level, is 40% borrowed money, making a mockery of the statistical importance of the data.

In other words, if a person borrowed $1000 to spend a total of $1800, one would not call that $1800 in spending, but $800 in real spending, plus $1000 in new debt, which, as everyone knows, should be repaid some day. As for the government and its $20 trillion - and growing - mountain of debt, that is probably never going to be repaid.

At the Close, Thursday, October 26, 2017:
Dow: 23,400.86, +71.40 (+0.31%)
NASDAQ: 6,556.77, -7.12 (-0.11%)
S&P 500: 2,560.40, +3.25 (+0.13%)
NYSE Composite: 12,352.43, +15.85 (+0.13%)

Has the United States Been in a Depression Since 2007?

We're going to dispense with the usual stock market blather today and promote an article posted on Zero Hedge titled, "We Are Already In Depression (If Borrowing Money Is Not Income) written by Baker & Company Advisory Group (Tim Baker).

The article is available HERE.

At the Close, Thursday, September 28, 2017:
Dow: 22,381.20, +40.49 (+0.18%)
NASDAQ: 6,453.45, +0.19 (0.00%)
S&P 500: 2,510.06, +3.02 (+0.12%)
NYSE Composite: 12,179.33, +21.68 (+0.18%)

Special: Fighting Fraud Starts With Skepticism Of Statistics Like GDP

Stocks sold off slightly on Thursday, but, over the past few days and weeks, the real money has been moving in bonds, which - in the case of the US and Germany, at least - are sporting yields at or near multi-year highs.

The cause is mostly FUD, the arcane acronym invented on the internet standing for Fear, Uncertainty, Doubt. When bond traders get riffed, the world should take note, but, since we are preconditioned to focus our collective attention on stocks, most people don't realize where money is moving and why until it's too late. Interest rates rise, money tightens and flows into bonds because they are considered more stable and safer than stocks. Businesses and consumers face higher lending costs, the economy stalls, stocks decline. The process takes many months, often years, before the eventual recession occurs. Fortunes are made and lost, mostly made by savvy bond specialists and lost by individuals and stock investors.

It's a royal screw job on the middle and upper-middle class (or what's left of it) by monetary authorities and governments that have been skimming off the top through inflation, deflation, fractional reserve banking, taxes, fees, and penalties. If you feel like you've been screwed by either banks or the government (village, city, county, state, or federal), it's because you have been... often overtly, but more often, quietly, covertly, under the cover of "we're doing what's best for you," or increased spending, deficit spending, capital "improvements" or budget windfalls to schools, tunnels, roads, bridges, fire departments, special tax districts, et cetera ad nauseum.

It's why people are voting for Trump. No kidding. American voting-age citizens fall today grossly into two broad categories: 1) Working people or retired on fixed income, getting nowhere fast, watching their incomes stagnate since 1999, paying more for everything from health care to property taxes to cell phone or internet service to utilities; 2) Welfare, SSI disability or other entitlement recipients, government employees who care not a whit that everything is going to hell in a handbasket because they either a) get a rent subsidy, food stamps, and other goodies no matter what, for doing nothing, or, b) are a government employee getting an automatic annual raise regardless of their job performance or the economic condition of the country.

In between or outside these two mega-groups are the upper-upper crust of one-percenters who make their money off interest on investments and the swath of social security and pension retirees who have maxed out on the system. That large last group vectors in and out of the working class spectrum to a large degree and some are being largely disenfranchised in the same ways that the middle class has been, especially since 2001, when interest rates began tanking and savings no longer provided a great enough return to outpace inflation.

Older folks will remember better days, when banks paid 5% interest on savings. Forget that. It's gone. Just like the social security fund, which faces default and bankruptcy within 15 years, our best days are behind us. Baby boomers will be the last generation to get ahold of the golden ring of social security. Generations X and Y will get less and millennials will likely get little to nothing. The system broke in the 80s, under Ronald Reagan (sorry, conservatives, but that's the truth), and it's just gotten worse as banking regulations were eased (Clinton and congress conspired to eviscerate Glass-Steagall leading to the global collapse) and every president since Carter has stolen from the social security fund to pay general obligations.

What's multiple times worse is that not only has the federal government stolen from the future, but they've managed to run up enormous deficits nearly every year and add to the debt at an exponential rate.

Here at Money Daily we don't expect everyone to understand economics, but we do strive to encourage people to exercise a little common sense and have basic math skills. Since what the government does with money (spend more than they take in), it doesn't take a Ph.D. in anything to discern that if you did the same, your financial condition would deteriorate, slowly at first, then all at once, sending you and yours to the poor house.

So, the government does better? How do they perform this magic? Lies and deception, mostly, through the issuance of bonds, sold to the Fed, parceled out to primary dealers and sold again to investors of all stripes. The Fed then prints more money, which is spent throughout the economy. Banks used to multiply the money supply via fractional reserve lending but they don't do much of that anymore. They use accounting tricks, balance sheets nobody can comprehend and investments form the ordinary to the arcane (CDOs, for instance) rather than functioning under some form of fiscal discipline. It's all too easy for the government and the banking system to defraud everyone. They've been doing it for centuries. It gets reset from time to time, but the same powers that were become the powers that be. It's history, if you know where to find it.

So, to the point: Just moments ago, the Deptartment of Commerce reported its first estimate of third quarter GDP, coming in at a robust 2.9%, more than double the second quarter's stumbling 1.4%, all smoke and mirrors designed to elect Hillary Clinton as president, keep the status quo firmly entrenched, and continue your existence as a docile, dumb serf. When the numbers are revised in a month, and again another month later, and again in two years, the number will be much lower, but, by that time the elections will be long over, the winners will be still partying, and you will be getting screwed, again, and again, and again.

Just wait until October's job numbers come out next Friday, the final, big lie prior to the elections. It should be awesome, but it will still be a lie.

If you aren't gardening, putting up solar panels, repairing an old car rather than buying a new one, scrimping and saving, buying gold and silver now, worry not, you soon will be.

Thursday's Tumble
Dow Jones Industrial Average
18,169.68, -29.65 (-0.16%)

NASDAQ Composite
5,215.97, -34.29 (-0.65%)

S&P 500
2,133.04, -6.39 (-0.30%)

NYSE COMPOSITE (DJ)
10,503.06, -25.13 (-0.24%)

End Of 3rd Quarter Comes With Window Dressing

Believe it or not, we're 3/4 through the year and with that Wall Street staged a rally Friday just to keep with the notion that the economy is at least strong enough (and well enough supported by the Federal Reserve) to warrant the buying of stocks with which to dress up tha many portfolios managed by multi-billion dollar funds.

Friday's economic data included numbers on personal income (up 0.2%), personal spending (flat... oops), core PCE prices (up 0.2%), Chicago PMI (54.2, ahead of forecasts) and the University of Michigan survey on consumer sentiment (91.2).

All right, then, everybody's content, including the Fed, which did not raise rates and won't until Decemebr at the earliest, if at all.

In this sweet spot economy, it's a numbers game and a day-trader's paradise. There's really no serious investment going on, just reshuffling of the deck of S&P 500 stocks to own.

The week was essentially flat, marginally to the upside, as the major averages just bounced between winning and losing all week long.

As Country Joe and the Fish might have said, "Whoopie! We're all gonna die."

Friday's Flash:
Dow Jones Industrial Average
18,308.15, +164.70 (0.91%)

NASDAQ
5,312.00, +42.85 (0.81%)

S&P 500
2,168.27, +17.14 (0.80%)

NYSE Composite
10,721.74, +78.22 (0.73%)

For the Week ended September 30:
Dow: +46.70 (+0.26%)
NASDAQ: +6.25 (+0.12%)
S&P 500: +3.58 (+0.17%)
NYSE Composite: +3.75 (+0.03%)

Stocks Slip In Afternoon Trading; Where's The Window Dressing?

Stocks continued their up-and-down action on Thursday, posting one of the larger losses of the season, something that's becoming more and more commonplace as the election nears.

Perhaps investors and speculators are playing a game of chicken, day-trading on quick profits (a likely scenario), or perhaps more are coming to the realization that all is not well in the US or global economy and shocks such as experienced by the recent Brexit vote could contribute to more disorder.

The Commerce Department today announced the third and final estimate for second quarter GDP, a disappointing 1.4%, another reminder that the economy is not picking up any steam and may be stuck in a semi-permanent state of stagnation and denial, with outright deflation lurking at every turn.

The reality of the situation is that Americans seem fairly content with the way things are economically, at least on the surface. However, good-paying, long-lasting jobs and careers are harder and harder to come by and what used to be fixed costs, such as utility bills, property taxes, and other fees for services (think health care) continue to ratchet higher in cost on an annual basis.

Also of concern are diminishing corporate profits, which have been heading south for the better part of two years. It's simply more difficult in a tight economy to wring out better and higher EPS and bottom line profits.

Market analysis being a somewhat difficult and thankless task, those are at least some of the potential catalysts for today's declines on the major indices. Tomorrow being the final day of the month and the quarter, one should be looking for "window dressing," wherein fund managers buy up stocks seemingly in favor to add to the portfolio and prospectus. Oddly enough, we may be witnessing window shading instead, as fund managers shed stocks that are under-performing, currently about 65% of the market.

With only a few key stocks keeping the averages afloat, the time for a major pullback has probably long past, since the Fed continues to prop up the market with its easy money.

Thursday Tumble:
Dow Jones Industrial Average
18,143.45, -195.79 (-1.07%)

NASDAQ
5,269.15, -49.39 (-0.93%)

S&P 500
2,151.13, -20.24 (-0.93%)

NYSE Composite
10,643.48, -109.97 (-1.02%)

Fed's John Williams Strikes The Alarm Bell; Markets, Economists Respond With Aburptness, Gibberish

President and CEO of the San Francisco Federal Reserve Bank, John Williams, released a white paper on Monday that caught the attention of just about everybody even tangentially aligned with economics or finance called Monetary Policy in a Low R-star World.

Williams, who was Janet Yellen's chief researcher when she was head of the San Fran Fed, has, with the release of this paper, struck the alarm bell with an enormous policy mallet. In effect, he's telling the world that the central banks of the world - including our own, all-powerful Fed - that the past seven years of low interest or zero interest rates have not produced the desired results, which would be a robust economic climate coupled with adequate inflation.

What the Fed and other central banks consider adequate inflation is something of a mythical, though essential, concept in Keynesian economics. Central bankers talk of a target inflation rate, figuring that two percent is about the right level to keep GDP and the associated debt burden growing.

In essence, the concept that any level of inflation is good for anybody other than central bankers is complete and absolute buffoonery, designed only to perpetuate the counterfeit of fractional reserve banking and fiat money. It should be pointed out that true inflation is always and everywhere a monetary phenomenon, strictly defined as an increase in the money supply, that being debt in every case involving fiat money. What Williams is talking about is price inflation, an entirely different animal. A price inflation rate of two percent, over any expanse of time, be it 10, 20 or 50 years, does nothing but erode the value of the currency, increasing the price of everything and impoverishing the citizenry coerced into using said currency.

It's horribly bad policy for the bulk of the population, enriching the banks, distorting the natural business cycle and inducing government spending beyond its means, causing deficits and eventually, unpayable, unservicable debt burdens, the exact condition the entire global economy finds itself in today.

Williams chooses to blame all of the central bank policy errors on an amorphous concept known as the natural rate of interest, or R*, or R-star. The conceit of his missive is where he states, "While a central bank sets its short-term interest rate, r-star is a function of the economy that is beyond its influence."

In other words, Williams is conceding that the natural flow of economics is something a central bank cannot control, manipulate, massage, or otherwise rig. It's utter nonsense. The reason the mythical R-star is so low is because central banks worldwide have been dropping key interest rates to previously-unforeseen levels, in many cases (notably the BOJ and SNB) instituting negative interest rates. Central banks have caused the massive global economic problems and Williams' propose solutions indicate that the central bank models are broken beyond repair and that their only tools remaining are empty rhetoric and finger-pointing, obviously ill-suited to stave off recessions or induce growth and prosperity.

Williams wags his finger at governments, proposing that fiscal measures be taken to combat low inflation (eventually outright deflation) with more insanity such as targeting GDP or using some kind of sliding scale of taxation based on centrally-planned, goal-sought data points such as inflation and/or unemployment.

It this were a football game, Williams could be accused of punting on second down from his own goal line. He's given up, as he - and his central bank brethren - should have eight years ago at the height of the Great Financial Crisis (GFC), allowing the market to clear out the malinvestments, cripple the broken, over-leveraged banks and allow the economy to recover on its own terms, without the aid of central bank intervention. The associated pain might have been immense, but it would have been contained and recovery would have been swift.

Instead, Williams and the central bankers of the world have brought the global economy to the brink of a mammoth financial crisis, one in which entire nations' economies will be completely torn asunder. Williams and his friends have given us the most extreme policy initiatives the world has ever seen (ZIRP, NIRP, QE) and saddled governments, businesses and individuals with outrageous debt loads.

If ever the world has been at the cusp of a debt jubilee, this is it. The central banks have failed even themselves and their clandestine shareholders and its time they be relegated to the dustbin of history, along with other failed ideologies.

A return to gold and silver as base capital in a demand economy, various barter exchanges and fixed exchange rates in foreign currencies would be far better solutions than what Williams has proposed and eminently superior to the devilish constructs of the IMF, World Bank, the European Union, futures, derivatives, federal mandates, and other complexities of modern economics.

At the end of error-prone regimes, be they in finance or governance, wild, weird, unwieldy ideas will be promulgated by supposed "experts." Williams' institutional heresy is only the beginning of the coming madness. Expect even more desperate distortions and departures from reality from the very people who created the economic mess. They're uniquely positioned to cause nothing less than global economic, political and societal calamity.

Good luck.

*************

The market response to San Fran Fed's Williams' policy punt has been swift and poignant. In Japan, the Nikkei fell 273 points. European markets were lower across the board, with the Dax, FTSE and France's CAC-40 each losing ground. US stocks opened lower and remained in the red through the session.

It worth noting that this is still August and most of Wall Street's heaviest hitters are still stupefied by drugs and booze out at their Hampton retreats. US markets hit all-time highs in recent days, akin to ringing a bell at the tippy-top of the market. Values are extreme and detached from fundamentals. The dollar was whacked and will likely continue to decline, and, as just about the only barely viable economy and bond market, US treasuries are about to head further toward zero and negative rates. The world is upside down, ripe for complete overhaul. What many have been predicting and anxiously awaiting for the past seven or eight years may finally be upon us.

Of course, to offset the negative effects of Williams' paper, NY Fed head, Bill Dudley trotted out a statement just prior to US markets opening, saying, in effect, that a September rate hike by the Fed is under consideration. There you have it: more jaw-boning and utter nonsense designed to alter perception. To say that the Fed is close to another rate hike is tantamount to thinking that the moon is about to tumble into the earth.

Gold and silver were each up sharply overnight and in early morning trading on the COMEX. Precisely at 8:00 am EDT, both were hammered lower, yet another signal that central bankers are desperate and nearly delusional.

Be prepared.

US Markets at 3:00 pm EDT (prior to close due to scheduling conflict)
Dow Jones Industrial Average
18,583.22, -52.83 (-0.28%)

NASDAQ
5,237.45, -24.56 (-0.47%)

S&P 500
2,182.27, -7.88 (-0.36%)

NYSE Composite
10,825.95, -32.54 (-0.30%)

Yellen And Fed Fail; Market Confidence Fades; Stockman Is Right; 13 Weeks On Dow Range

It's Friday, it's summer, so this recap of the events of the day and the week will be as brief as possible.

First up, the weekend's required reading is David Stockman's Abolish the FOMC, bring back the green eyeshades, in which the former Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan proposes an elegant yet simple solution to the current and ongoing tyranny of central bank incompetence.

In as few words as possible, Stockman proposes that the market set interest rates, pining for the halcyon days of true price discovery. The post is well worth twenty minutes of reading.

As for stocks, globally, the week was something of a disaster, with massive falls in Asia and Europe, though there was something of a rebound on Thursday. US indices struggled though the opacity of another FOMC policy decision (nothing) and fell into a funk on Thursday morning, with the Dow dipping below the magic 17,000 mark, but magically rallying for a noticeable gain for the day.

Friday was not so euphoric, with options expiration afoot (we suspect most of the big players cashed out on Thursday), though it was somewhat dramatic, as all three majors traded in the red the entire session. The Dow actually touched down just above 17,600, keeping the magical 500-point range (to 18,000 on the upside) intact for a thirteenth consecutive week.

This particular range-bound trading pattern does have a precedent, that being the 23-week span from February to early July of last year, when the blue chip index traded generally between 17,750 to 18,250, making an all-time high in the process (mid-May).

So, despite the two semi-corrections in August of 2015 and January of this year, the Dow has now settled into a regime just 250 points below the previous plateau. Welcome to the world of paper games.

Friday was simply get-away day, aided greatly by the NY Fed, which lowered its second and third quarter estimates for GDP growth to 2.1%, which is still probably too high. With that, unless the fourth quarter is gangbusters, along with the 0.7% rate of growth for GDP in the first quarter, it will be tough for GDP to hit the 2.0% target (that's a joke, right?) for this year.

Maybe the elections will trigger a change for 2017. Maybe not.

In any case, it's too far ahead to look. Brexit vote comes up Thursday, which could trigger fireworks, though some of the smart money is saying the vote will be for the UK to stay in the EU, and it will be rigged.

Happy hunting!

Friday's Fallout:
S&P 500: 2,071.22, -6.77 (0.33%)
Dow: 17,675.16, -57.94 (0.33%)
NASDAQ: 4,800.34, -44.58 (0.92%)

Crude Oil 48.07 +4.03% Gold 1,296.80 -0.12% EUR/USD 1.1279 +0.46% 10-Yr Bond 1.6180 +3.45% Corn 436.25 +2.59% Copper 2.05 +0.29% Silver 17.47 -0.78% Natural Gas 2.89 +1.16% Russell 2000 1,145.11 -0.27% VIX 19.28 -0.46% BATS 1000 20,677.17 0.00% GBP/USD 1.4355 +1.03% USD/JPY 104.2060 -0.10%

For the week:
Dow: -190.31, (-1.07%)
S&P 500: -24.85 (-1.19%)
NASDAQ: -94.21 (-1.92%)

All-Time Highs Likely Not Attainable, Nor Sustainable

Let's take a stroll down memory lane.

It's a short stroll, to just over a year ago, when the Dow, S&P and NASDAQ each made all-time highs.

The dates, and the levels are shown below:

S&P 500: 2134.28 (intra-day); 2130.82 (close), May 21, 2015 (both)
Dow Jones Industrials: 18,351.36 (intra-day); 18,312.39 (close), May 19, 2015 (both)
NASDAQ: 5164.36 (intra-day, June 24, 2015); 5160.09 (close, June 23, 2015)

For the first trading day of May, the forward move was largely based on nothing other than bad economic data (manufacturing output is at its lowest level since 2009), other than the "good" news that Atlantic City avoided defaulting on a $1.8 million bond obligation and possible bankruptcy.

When the Jersey shore city announced they were making good on their scheduled payment to creditors - right around noon - that was enough for the markets to get off the proverbial flat-line and go diagonal the rest of the session.

Stocks ended the day with solid gains, erasing nearly half the losses from the prior week, putting some skepticism to the time-worn "sell in May and go away" adage.

Anyone believing that the US averages are going to meet or exceed the all-time highs from one year ago are betting against the odds simply because the May through October time frame historically offers the lowest returns of any six-month period, based on data from 1928 to the present. [See chart at right]

Not only that, but the continued creep of deteriorating business conditions presages a continuation of the slow growth that's been typical for the past seven-plus years at best or a slide into outright recession, at worst. Recall that the first estimate of first quarter GDP was a disappointing 0.5%, which is pretty darn close to going backwards.

Thus, with the numbers above as targets, it is clear that the indices would have to move more than two percent between May and October - and sustain those levels - in order to attain and hold new all-time highs, an unlikely event.

For hard-core stock investors, this is a cold truth, one which promises to inflict a high degree of pain and loss for those who play against the odds.

Monday's Millings:
S&P 500: 2,081.43, +16.13 (0.78%)
Dow: 17,891.16, +117.52 (0.66%)
NASDAQ: 4,817.59, +42.24 (0.88%)

Crude Oil 44.77 -2.50% Gold 1,293.00 +0.19% EUR/USD 1.1533 +0.62% 10-Yr Bond 1.8650 +2.53% Corn 390.00 -0.45% Copper 2.26 -0.90% Silver 17.57 -1.40% Natural Gas 2.04 -6.57% Russell 2000 1,140.92 +0.89% VIX 14.68 -6.50% BATS 1000 20,677.17 0.00% GBP/USD 1.4674 +0.56% USD/JPY 106.3950 +0.08%

Fed Leaves Rates Unchanged; Market Loves When Doves Fly

With only one member of the FOMC voting to raise rates (Ester George), the Fed decided to keep the federal funds rate at 1/4 to 1/2 percent.

The 9-1 vote was the expected result, being that conditions haven't changed much in the US economy since the last policy meeting in March. If anything, economic conditions have deteriorated, though the FOMC statement is chock-full of ambiguity and stocked with trap doors for easy escape should their policy need to change in any manner.

To wit:

Information received since the Federal Open Market Committee met in March indicates that labor market conditions have improved further even as growth in economic activity appears to have slowed. Growth in household spending has moderated, although households' real income has risen at a solid rate and consumer sentiment remains high. Since the beginning of the year, the housing sector has improved further but business fixed investment and net exports have been soft.

The Fed is boxed in, unable to raise rates, and likely unwilling, given the most recent reaction to any rate hike: a massive selling spree of equities.

All the Fed can do right now is keep the policy somewhat coherent and hope the stock market continues to climb, despite all indications that the economy is very, very weak.

Tomorrow, prior to the market open, the initial estimate of first quarter GDP will be released, and, a week and a day later, non-farm payroll data for April will be announced. There's a solid chance that both numbers will be anemic, with GDP settling in a range somewhere between 0.5% and 1.0% and April jobs coming in somewhere south of 200,000.

But, according to the Fed, everything is simply wonderful. Carry on and don't fret. The next FOMC policy meeting isn't until June 14-15, so, there's a month-and-a-half before we all go through the dumbest guessing game ever... again. With such a short span between now and a potential rate increase, the odds of that happening are about the same as the federal funds rate, or, less than a one percent chance.

Thanks, Janet!
S&P 500: 2,095.15, +3.45 (0.16%)
Dow: 18,041.55, +51.23 (0.28%)
NASDAQ: 4,863.14, -25.14 (0.51%)

Crude Oil 45.31 +2.88% Gold 1,247.30 +0.31% EUR/USD 1.1323 +0.21% 10-Yr Bond 1.86 -3.68% Corn 384.25 -0.77% Copper 2.23 -0.67% Silver 17.25 +0.79% Natural Gas 2.15 -0.51% Russell 2000 1,154.15 +0.30% VIX 13.77 -1.36% BATS 1000 20,677.17 0.00% GBP/USD 1.4542 -0.22% USD/JPY 111.4850 +0.18%

Stocks Stall Ahead Of FOMC; Apple Bytes

Not much in the way of movement happened with stocks as participants were more than willing to wait for tomorrow's non-event from the FOMC, in which the Fed governors are likely to double-down on their dovish rate policy, owing either to market pressures or the near-undeniability that the global economy is defunct without further central bank stimulus.

It is what the banker mobs have wrought: an economy devoid of social or economic mobility, except to the downside, as government and ultra-national corporations crowds out any meaningful enterprise.

After hours, Apple (AAPL) reported earnings for the first quarter, missing on both the top and bottom line, adding more credence to the global slowdown meme. Shares were trading more than seven percent lower in the after-hours.

At 2:00 pm EDT, the FOMC will issue their rate policy decision, keeping the federal funds rate at 0.25-0.50%, which might produce some happiness for the Wall Streeters, however, considering the paucity of positive earnings results this quarter and the anticipation of an ugly first quarter GDP estimate on Thursday (8:30 am), there may be few players prepared to rally.

In all, it's a messy situation which cannot be solved by conventional means at this point, that point being one in which "emergency" measures have been stretched out to seven years. The global economy is beyond the scope of the central bankers' control, a condition that is probably, in the long run, for the best.

Tuesday's Tiptoe:
S&P 500: 2,091.70, +3.91 (0.19%)
Dow: 17,990.32, +13.08 (0.07%)
NASDAQ: 4,888.31, -7.48 (0.15%)

Crude Oil 44.04 +3.28% Gold 1,245.20 +0.40% EUR/USD 1.1301 +0.26% 10-Yr Bond 1.93 +1.52% Corn 385.00 +0.85% Copper 2.25 -0.07% Silver 17.16 +0.89% Natural Gas 2.16 -1.01% Russell 2000 1,150.73 +1.11% VIX 13.96 -0.85% BATS 1000 20,682.61 0.00% GBP/USD 1.4582 +0.68% USD/JPY 111.3150 +0.07%

Durable Goods Not So Good; Stocks End Five-Week-Long Rally; GDP Is Bogus

Markets are closed on Friday in observance of Good Friday (who said we weren't a religious nation?), so the paltry returns on equites ended a dull week in the red, the first time a week has ended negative since mid-February.

Prior to the open on Thursday, durable goods for February were released and the numbers were far from encouraging.

Durable Goods New Orders (Ex-Transports) fell 0.5% YoY, extending its losing streak to 13 months. All segments of the durable goods report saw negative month-over-month direction with headline -2.8%. Prior data was revised lower, Capital goods orders fell more than expected (-1.8% MoM).

Durable goods new orders down -2.8%, exp. -3.0%; prior revised down to 4.2% for Jan. from 4.7%
New orders ex-trans. down 1%, Exp. -0.3%; prior revised to 1.2% from 1.7%
Capital goods orders ex-aircraft down 1.8%, Exp. -0.5%, prior revised to 3.1% from 3.4%
Capital goods shipments ex-aircraft down 1.1%, Exp. +0.3%, prior revised to -1.3% from -0.4%

That was about all the market could stand and not puke up more gains.

On Friday, with markets closed, the government released the final estimate for 4th quarter 2015 GDP, posting a figure that was above all estimates, a suspicious gain of 1.4%. This spurious number followed a first estimate of 0.7% in January and a second estimate at an even 1.0% in February. Apparently, everything is improving in the alternate reality that is Washington D.C. (please, please, indict Hillary). It has been pointed out by various writers that GDP is a poor measurement of the health of an economy. Such as this current reading, which is heavily influenced by health care costs and soaring rents, in addition to the hedonic adjustments and other blunt instruments of deception, the numbers end up meaning little in terms of the common man, woman or family.

Lastly, we'd like to share this fine post from the blog Viable Opposition, with readers of Money Daily:

The Long Wave and the Failure of Central Banks. Highly recommended reading and a great chart at the end.

Posts such as this - and the general appeal of the blog overall - points up why the establishment is failing and fearful of the rising tide of populism. Bloggers don't get paid for appearances on CNBC or Bloomberg but their views and opinions are often superior, better researched, unbiased and non-political than what the mainstream media tries to sell as gospel.

God (or Donald Trump) save us.

For the week:
Dow: -86.57 (0.49%)
S&P 500: -13.64 (0.67%)
NASDAQ: -22.14 (0.46%)

Thursday's Finish:
S&P 500: 2,035.94, -0.77 (0.04%)
Dow: 17,515.73, +13.14 (0.08%)
NASDAQ: 4,773.50, +4.64 (0.10%)

Crude Oil 39.63 -0.40% Gold 1,217.20 -0.56% EUR/USD 1.1180 -0.02% 10-Yr Bond 1.90 +1.33% Corn 369.25 +0.20% Copper 2.24 -0.02% Silver 15.19 -0.57% Natural Gas 1.89 +1.12% Russell 2000 1,079.54 +0.36% VIX 14.73 -1.41% BATS 1000 20,682.61 0.00% GBP/USD 1.4152 +0.23% USD/JPY 112.8450 +0.42%

Tickle Me Elmo Version Of Durable Goods Sends Stocks Soaring

Reactions to this morning's January Durable Goods report ran from the mildly surprised to grossly exuberant, with the most apropos metaphor being the one in which the stock market is Christmas, the traders are children (not far from the truth) and the report was a Tickle Me Elmo doll.

The doll was immediately unwrapped, hugged and unconditionally loved by all the kids, who seemed to wish that Christmas would never end, sending the major indices solidly higher and yields on bonds noticeably lower.

It was as though the year was hard, winter came early and any present would have sufficed to ease some of the woes, though this particular gift was simply perfection, wiping away the past six weeks of anguish and anger, tears, fears and jeers. Even oil gained 2 1/2%, finishing just over $33/bbl.

For the record, the rise in durable goods was 4.9%, the best move in 10 months.

According to a one-time reading of the stock market (today), there are no longer any issues regarding ultra-low interest rates, the slowdown in China (the SSE slipped by 6.41% overnight), chaos in Europe, or the ongoing wars in Syria and Ukraine.

We know this is untrue, but today's action would have one believe that a bull market was in full gear, GDP was booming at 5% and peace had broken out around the globe. Such are the vicissitudes in a market driven solely by headlines and not by fundamentals, because, in reality, the problems have not been resolved - not the ones from last week, last month, last year, or even from 2008. The issues remain, as do the fast-buck artists populating the trading stations and computer terminals of the markets.

Tomorrow should prove more prescient, with the second estimate of 2015 4th quarter GDP hitting the wires at 8:30 am, a good hour prior to ringing the opening bell.

But today was an undoubted victory for the bulls. Let them celebrate tonight and face the music as time presses forward. The Gold Bugs and Silver Eagles continue to be constrained, shackled, handcuffed, quarantined.

Best quote of the day: "Nobody will see it coming." They usually don't.

Tickle These, Elmo:
S&P 500: 1,951.70, +21.90 (1.13%)
Dow: 16,697.29, +212.30 (1.29%)
NASDAQ: 4,582.21, +39.60 (0.87%)

Crude Oil 33.06 +2.83% Gold 1,235.30 -0.31% EUR/USD 1.1028 +0.09% 10-Yr Bond 1.6970 -2.58% Corn 360.25 -1.17% Copper 2.08 -0.86% Silver 15.15 -0.93% Natural Gas 1.79 -2.56% Russell 2000 1,031.58 +0.93% VIX 19.11 -7.77% BATS 1000 20,677.17 0.00% GBP/USD 1.3964 +0.22% USD/JPY 112.8855

Crash Is A Certainty Despite Today's Idiocy

Fundamentals - whether they be in individual stocks or the macro economy - have not mattered for a long time, but today's crash and dash was an epic.

Stocks fell out of bed at the open, with the major indices down one to 1 1/2 percent, and then gained for the remainder of the session ending marginally in the green.

On Friday, the second revision to fourth quarter 2015 GDP will be issued, after the first estimate was a gain of a paltry 0.7%. With proper accounting in place, the US economy likely shrank by 1.25%, but it's unlikely the correct data will show that. The criminal enterprise of government - from local to federal - is about to be hit by a typhoon otherwise known as an unhappy citizenry with a new hero in Donald Trump.

The status quo is about to become status done. It may not happen this week, or next, or for six months, but, rest assured, by this time next year (probably sooner) the United States is going to look very different from the mess the banks and politicians and Wall Street has produced.

Today's nonsense:
S&P 500: 1,929.80, +8.53 (0.44%)
Dow: 16,484.99, +53.21 (0.32%)
NASDAQ: 4,542.61, +39.02 (0.87%)

Crude Oil 32.26 +1.22% Gold 1,230.20 +0.62% EUR/USD 1.1011 -0.08% 10-Yr Bond 1.7420 -0.17% Corn 364.75 -0.55% Copper 2.12 +0.45% Silver 15.26 +0.10% Natural Gas 1.83 +0.27% Russell 2000 1,022.08 +0.98% VIX 20.72 -1.24% BATS 1000 20,677.17 0.00% GBP/USD 1.3925 -0.71% USD/JPY 112.1830 +0.14%

Stocks Retrace Lows, End Positive; Gold At Inflection Point

There wasn't much to talk about on the second trading day of 2016, except that stocks managed not to fall for the second consecutive day, thanks to late-day jacking by people who apparently haven't yet gotten the memo that Buying the Dip is so 2012-2015.

Rather than investors seeking bargains, today's late action was more or less a bailout by the NY Fed or the PPT (maybe the same entity) lest people get the idea that the markets are rigged and uncertain.

Surely, economic data and downgrades of the S&P by Citi and the US economy by Duetsche Bank couldn't support the irrational failing that typified the trading on the session.

All three major indices ended the day happily in the green after retracing their lows, giving the CNBC and Bloomberg talking heads a talking point to the effect of "bouncing off yesterday's lows" and being oversold and other such rubbish that is the mainstay of financial (sic) journalism these days.

Markets are likely to gyrate around until Friday, when December non-farm payrolls are announced. In the meantime, the ADP jobs survey kicks off tomorrow prior to the bell, a harbinger of things to come. It might be interesting enough to move markets a little, but probably not by much.

More interesting was the trade in WTI crude. The slippery stuff moved under $36/barrel, finishing at $35.95. Silver ended up some change, closing the NY session at an even $14 per troy ounce. Gold also gained, ending in the US at the statistically signficant 1078.10, which is roughly the delineation between support and resistance. If stocks stumble again this week, watch the PMs take off, as they've been mired in a bear market for more than three years and are viciously oversold.

S&P 500: 2,016.71, +4.05 (0.20%)
Dow: 17,158.66, +9.72 (0.06%)
NASDAQ: 4,891.43, -11.66 (0.24%)

Money Daily TacklesThe Best Of Wall Street With 2016 Predictions; The Big Fail: S&P, Dow Finish Lower for 2015

Stocks took it on the chin on the last trading day of 2015, and the S&P and Dow Industrials ended the year with losses. Only the NASDAQ showed a gain for the year.

Closing prices for December 31, 2015:

S&P 500

2,043.94

-19.42 (0.94%)

Dow

17,425.03

-178.84 (1.02%)

Nasdaq

5,007.41

-58.44 (1.15%)

That's a wrap for the year. Read on, because 2016 is going to be even more interesting.

Picks for 2016

Courtesy of Barron's, here are some of Wall Street's top strategists picks to click in 2016:

Note the groupthink among these masters of the universe posers.

Aside from Steven Auth's outrageous call for 2500 (it might be a typo) the target for the S&P 500 ranges from 2100 to 2250. The expected 2016 GDP is all in a range from 1.9% to 2.8%. These are not the brave and the bold, that's for sure.

So, since Wall Street analysts have decided to continue with the false narrative that all is well, Money Daily offers the following set-up for what figures to be a downright fascinating year.

Since it's a presidential election year and the past two which marked the end of an eight-year presidency (Bush replaced Clinton in 2000, Obama replaced Bush in 2008) both were near-disasters for equity traders, 2016 promises to be an explosive twelve months.

Now that you've seen theirs - which, by the way, don't vary much - here is what Money Daily believes will work in the coming year.

First, the equity markets will absolutely tank.

Stocks Take a Beating

While it would be foolhardy to predict where whole indices will be trading at the end of the year 2016, it may be more instructive to offer a timeline. Since the S&P and Dow haven't made new highs since May of 2015 and both ended the year lower than they closed out 2014, the table has been set for an absolute bear-fest in the opening quarter of the year.

As bears emerge from a short hibernation due to climate change (one of the warmest winters on record in the Northeastern US), they will be hungry to take down entire sectors of the market. Hardest hit will be consumer goods, financials, health care, technology and services. No sector will be spared, but the safest havens will be in basic materials and utilities. The best place of all to be will be largely in cash or bonds. The 10-year note is likely to rally strongly as people flee to safety, and, despite the best efforts of Janet Yellen and the Federal Reserve to boost interest rates, the market will set the tone.

The major indices will be looking up at highs which will seem ridiculous by June. Taken on a monthly basis, January will see outright selling, putting the major indices into correction (-10%). February and March may be mild, but could be wild, depending on the direction of most of the well-followed indicators, like industrial production, capacity utilization, the various Fed surveys, factory orders, ISM manufacturing and services, and, of course, non-farm payrolls.

By April or May, the bloom will truly be off the rose, as first quarter GDP comes in below expectations or even shows up negative, the most likely culprit, warmer weather, as opposed to cold weather, which was blamed for the last two Q1 debacles.

Timing the return to a bear market can be tricky, so let it suffice to say that by June at the very latest, stocks will be down more than 20% overall, and the scare will be on.

At the bottom, which will be any time prior to election day, here's where Money Daily expects the major indices to be residing:

S&P 500: 1450
Dow: 12,400
NASDAQ: 3200

Bonds Will Be Wonderful

The 10-year note will trade higher from February through September, with the yield going below the two percent mark and staying there for an extended period, perhaps through the end of the year. Since stocks will offer only losses, lowered guidance and dividend cuts, the flight to bonds will be massive. The short end will be anathema; the 10-year and 30-year will be the bright spots.

GDP May Appear Recessionary

If 2016 results in any growth at all, it will be anemic, in the 1-1.5% range at best. With either the first and second or the second and third quarters putting up negative numbers, the odds for a true recession are high, and the Fed, without any interest rate cuts to counter the slack in the economy, will prove powerless.

The long look will be on currency collapse. After the massive gains in 2015 for the US dollar, that trade will likely reverse. Either that, or a global depression will be the order of the day.

Precious Metals Still Shine

While shunned with near-unaniminity on Wall Street, gold, silver, and platinum will hold their own and probably explode to the upside in the face of outright recession or depression. Gold and platinum could easily see 30-40% gains, while silver, the most-suppressed metal (and most important) could double by year-end, but all the metals will pull back in the early stages of the bear market in stocks.

Once a base is set for the precious metals, it will be off to the races in what will be the resumption of the decades-long bull market that began in 2000. The declines from 2012-2015 will be seen only as a cyclical bear correction amidst a secular bull.

Commodities Useful in Any Environment

So beaten down has been the commodity index, investors may be able to pick and choose from their choice of useful basic materials. Coal, iron, copper, zinc, lumber, oil and other fuels can be a boon in the best or worst of times.

Low prices in crude oil, natural gas and coal should remain in place for the entire year, and beyond. The usefulness of any commodity is, naturally, the selling point, but, in an oversupply environment, end users, rather than producers, will be the main beneficiaries.

An outright deflationary environment should prevail, a boon to cottage industries and small business, which is a welcome change from the repressed conditions of the previous decade. Anyone with the ability to store or make productive use of any manner of commodity should benefit greatly.

Real Estate As Investment Could Be Solid

There are three good reasons to own real estate. Living in a residential home, farming or mining, and renting on a commercial basis.

Since residential real estate is and has been in the stratosphere in many parts of the USA, it's likely to take a serious hit in 2016, with price declines of 10-30% in selected areas, more in others. Speculators and flippers will be fed to the sharks and there will be a slew of defaults in the REIT space.

Farmland, especially anything under 30 acres, which can be handled by a family or small enterprise, could be the best investment of the year. Productive land is usually safe, and besides, you can eat what you grow, which is always a concern.

Commercial real estate will go begging. It's massively overpriced and over-leveraged, due for a massive decline.

Conclusions

The US and global economies have been on a collision course between a massive debt bubble and a large pin. It all comes to a head in 2016, some of it pre-planned, much of it unrehearsed, unwanted and unnecessary.

Stocks will be hated, Wall Street bankers will once again be the object of derision (as they so rightly deserve to be), and politicians will be exposed as mere vassals to the deep state and the banking cartel.

The US will be lucky to avoid a major war, as the Military-Industrial-Congressional-Conplex (MICC) seeks a way out of debt crash and currency debauchery. There isn't one. Only systemic collapse can heal what's wrong in the economies of the world. Watch Japan closely, then Europe. They are the proverbial canaries in the coal mines. China will set its own course, but will continue to emerge as a world power.

The outlook isn't very rosy, admittedly, but, the great oligarchs of the day have made it so. Unmanageable levels of government, business and household debt are screaming for a reset, a break, a jubilee, and it very well could happen.

On the other side of a currency collapse is a bright future, but, if any of the outcomes predicted here actually occur, it will only be the beginning, and there will be more pain for the remainder of the decade. Until Americans and people around the world throw off the shackles of governments, replete with their laws, rules, regulations and onerous taxes, there will be no prosperity.

Donald Trump will win the presidency in November, a sign that the American people have had enough of the status quo.

Happy New Year!

Stocks' Santa Rally Based On Nothing In Particular

The word for the day was "oversold," in essence green lighting all the algos on the belief that stocks were still undervalued, despite the S&P 500 average P/E of 22, when the norm is 15.

Whatever sparked the rally du jour must have been a highly-held secret, because nothing much has changed and today's economic news - third GDP revision for the 3rd quarter came in at an even 2%, and existing home sales were down 10.5% month-over-month (the lowest annualized rate since April 2014), and that was before the Fed and the banks hiked interest rates.

As for GDP, the third quarter reading was 0.1% lower than the previous estimate, and down sharply from the second quarter, when the economy supposedly grew at a mind-blowing 3.9%. Adding in the 1st quarter's decline of 0.7%, the fourth quarter will have to have grown by 2.8%, a seemingly reasonable quest, to get the entire year at a 2% growth rate. What a recovery!

Given that retail sales have been sluggish at best and inventories rising, it will be a struggle for the economy to show a gain of that size. However, the brilliant economists at the BLS certainly can massage the numbers enough to wring out nearly 3% growth, somehow.

So, Santa Claus has arrived on Wall Street. There are just two more days of trading this week and six total for the year, and stocks are showing that 2015 will end essentially flat.

Here are closing prices at the end of 2014:
S&P: 2,058.90
Dow: 17,823.07
NASDAQ: 4,736.05

The NAZ looks to have gains in the bag, while the S&P and Dow have some work left to do. Ho, ho, ho.

Today's closing numbers:
S&P 500: 2,038.97, +17.82 (0.88%)
Dow: 17,417.27, +165.65 (0.96%)
NASDAQ: 5,001.11, +32.19 (0.65%)

FOMC (in)Action Does Nothing for Wall Street; 1Q GDP Weak

Apologies again for the brevity of this missive. We are currently under severe time restraints, though the thought of a more regular schedule appears for next week. -Editor

The week can be summed up as "much ado about nothing," as the FOMC again held the federal fund rate at near-zero and stocks were more or less unresponsive over the course of the week.

A preliminary reading of first quarter GDP showed the economy nearly slipping into recession, growing at a rate of just 0.2% for the first three months of 2015. The outlier was a three percent inventory build, without which the number would have been negative. Naturally, naysayers on the economy contend that the recession for the US economy never ended after 2009, and that the United States has been mired in a deep depression since the implosion of the financial system back in the fall of 2008 and that only extreme dosages of liquidity supplied by the central bankers of the world have saves us all from misery.

Wall Street continues to hum along with record amounts of stock buybacks buoying share prices for many firms, with growth and capital expenditures now becoming things of the past.

The first three days of trading were somewhat lackluster, followed by a huge downdraft on Thursday and a dead-cat monster bounce-back on Friday, which kept the major indices from outright implosion. Analysts are keeping a keen eye on the German DAX, which is coming close to correction territory.

The NASDAQ was the worst-performer, dropping nearly two percent as biotechs imploded and speculative money was coming off the table at a rapid rate.

For the week ending May 1:

Dow: 18.024.06, -56.08 (-0.31)
S&P 500: 2,108.29, -9.40 (-0.44)
NASDAQ: 5,005.39, -86.69 (-1.70)