While no records were broken on Thursday, US stocks gave back most of the gains made on Wednesday, as volatility remained elevated. The most-widely quoted measure of volatility, the VIX, spiked to 46.25, a level not seen since the onset of the Great Financial Crisis (GFC) in October 2008. A normal range for the VIX is between 12 and 18. The measure is currently indicating extreme stress in equity markets.
Another gauge of how severe this latest foray into and out of correction territory is the treasury yield curve and individual duration yields. The benchmark of the treasury complex is the 10-year note, which continues to be bought, sending the yield spiraling downward to unprecedented levels.
On Thursday, yields across the treasury complex were hammered lower. The 10-year-note fell from 1.02% on Wednesday to as low as 0.87% on Thursday, finally settling at another new record low of 0.92%. As long as equities remain under pressure - a timeline which could extend not just days or weeks, but months - bonds will be the safe haven and yields will fall.
The 30-year bond, which began the year at 2.33% and was at 2.09% as recently as February 12, crashed another nine basis points on the day, to a record low 1.56%. Shorter duration bills and notes were also being bought, sending yields skidding. The 2-year note was yielding 1.44% a month ago, closed out Thursday at 0.59%. The 1-year continues to offer the lowest yield, 0.48%, while the shortest duration, the 1-month bill yields 0.92. The short end is inverted, signaling economic chokepoints dead ahead.
All of this market turmoil has been the cause of the widely-spread coronavirus, or COVID-19, its official name. With worldwide cases now over 100,000, deaths over 3,400, and the increase in daily infections outside of mainland China now surpassing those from inside China, there's little doubt that the pandemic has reached crisis proportions.
The current hotspots continue to be South Korea (6,593 cases), Iran (4,747) and Italy (3,858), though countries in Europe are beginning to spike higher, especially in Germany, France, Spain, and Switzerland.
The United States is currently reporting 233 cases, though the lack of preparedness and test kits assures that the number is higher by orders of magnitude. With an asymptomatic (not showing obvious symptoms of infection) period of up to 27 days in which the carrier can spread the virus, the number of cases in the United States - as wel as everywhere else - is likely to spike higher within the next week or two. While this is speculation, it is based upon recognizable patterns of the virus, from evidence gathered in South Korea, Italy and on the cruise ship, Diamond Princess, which was ported in Japan for a month and served as a kind of petri dish for study of the disease.
With quarantine the most effective measure to mitigate the spread of coronavirus, the fear in markets is that entire communities will become isolated, workplaces shuttered, large events cancelled. Those scenarios and more have already been evidenced in China, South Korea, Italy and elsewhere. There's no escaping the realities of this global outbreak.
Along the lines of seeking out safe havens, gold has been a superstar, at a seven year high, $1,686.30 per ounce. Silver has lagged, but continues to appreciate, the current price $17.46 per ounce.
Crude oil continues to languish as global demand has collapsed. Even after OPEC announced a cut of half a million barrels a day, the price of WTI crude oil slipped further, currently at $44.06 per barrel.
In what has to be the most inconsequential data release in recent memory, the Labor Department released the February non-farm payroll report, which showed employers added 273,000 jobs nationwide, dropping the unemployment rate to 3.5%, though all of this data is viewed through a lens that was looking prior to the extreme global outbreak of COVID-19.
Markets will remain unsettled as long as the virus remains in its virulent form. With no good remedies or a vaccine readily available, fear will dominate financial markets and it is more likely to get worse before it gets any better. The United States has not yet seen the effects of widespread outbreak, which is all but certain to occur.
Even with Thursday's large losses, stocks are still ahead for the week from two to three percent, depending on the index in question. Bank stocks have suffered tremendous losses, as have airlines, but the damage to stocks has been pretty much an all-in matter. 90% of stocks on the S&P 500 are trading below their 10-day moving averages.
As of Friday morning, the Dow is still ahead by 2.80% on the week, but the market is poised for another down day and the near-term bottom of 24,681.01 (intraday) is certain to be tested in short order.
The Federal Reserve, which cut the federal funds rate by 50 basis points in an emergency cut on Tuesday, meets on March 17-18, with the market calling for a 50 to 75 basis point cut, which would bring the rate down below one percent. Even though the Fed will likely cut the rate at the meeting - and again at its April meeting - it is unlikely to offer much in the way of relief. The Fed cannot print a vaccine, nor halt the spread of an invisible, virulent virus which is rampaging around the world.
At the Close, Thursday, March 5, 2020:
Dow Jones Industrial Average: 26,121.28, -969.58 (-3.58%)
NASDAQ: 8,738.59, -279.49 (-3.10%)
S&P 500: 3,023.94, -106.18 (-3.39%)
NYSE: 12,593.03, -416.93 (-3.20%)
Showing posts with label Iran. Show all posts
Showing posts with label Iran. Show all posts
Friday, March 6, 2020
Thursday, March 5, 2020
A Day Without Coronavirus Headlines Produces Massive Rally, But It's Probably False Hope
With much of the news focus on the results from Super Tuesday's Democrat primaries and the Fed's 50 basis point cut to the federal funds rate, for a day, market participants had their heads turned toward something other than the evolving coronavirus crisis.
That little bit of relief allowed stocks to rise by roughly four percent across the major indices. The gains were not record-breaking, but they were close. The NASDAQ's 334-point rise was the third-best on record; the Dow's gain exceeded only by the 1,293.96 rip on Monday. The S&P's number was also the second-best day ever.
These kinds of wild swings, to both the upside and down, have become a trademark for not just US markets but many international stock indices since the outbreak of COVID-19 in China, but especially so since the virus has spread beyond the borders of the world's most populous nation. Most developed nations are currently flirting with 10 percent drops off recent highs, crossing the point of correction level at various times, above and below it.
Following Wednesday's romp, news on the coronavirus front just got worse and worse as the day turned to night and night to Thursday morning. A health screener at LA-X in Los Angeles tested positive for the virus; in New York, six more cases emerged. Seattle is quickly becoming an epicenter for an outbreak, and by morning, California had declared an emergency due to the treat from the spreading infection. 1000 people in New York are being screened for possible infection.
Schools are closing in various places across the country, Amazon and Microsoft employees are being advised to work from home, soccer games in Europe are being played in stadia devoid of fans, Italy has urged anyone over the age of 60 to stay home as much as possible to avoid contracting the virus. Despite the WHO's failure to officially declare a pandemic, COVID-19 has swept around the planet and is showing no signs of abating.
As for the World Health Organization failing to label the current condition a pandemic (it is, even according to their own standards), the reason may lie more in the ghastly world of finance rather than health. Unconfirmed reports say there are "pandemic bonds," which are bets against a pandemic outbreak declaration. If the WHO declares COVID-19 a pandemic, it will trigger bets made on a pandemic, as credit default swaps (CDS), along the lines of those which paid off magnificently when the sub-prime crisis blew up, will explode, blowing up the underpinnings of global finance.
If true, it would prove not only that bankers and financiers on Wall Street and elsewhere learned nothing from prior default events, but that they continue to make sickening, revolting wagers on extreme events. When coronavirus destroys the economy, the usual suspects will be found in lower Manhattan, probably toasting their bonuses, as they have in previous episodes of moral bankruptcy.
That said, anybody who has not taken action to remove their investments from the stock market casino over the past few weeks (if not sooner) is likely to suffer in the most severe economic manner possible over the next six to 12 months. There is no evidence of containing the virus and only the hope that its viability will be reduced with the advent of warmer and more humid weather. Unfortunately, it's only March. Warm mid-Spring weather is still months away in much of the developed world.
According to the painfully-slow-to-react CDC, there are 13 states that have identified persons infected. Those are New York, Vermont, Massachusetts, Wisconsin, Illinois, North Carolina, Georgia, Florida, Texas, Arizona, California, Oregon, and Washington. Add Rhode Island, New Jersey and Utah as of today, making it 16 with more to come. Already an even 1/3 of mainland states, there are no physical barriers to where the virus can spread. Eventually, it's likely that there will be high incidence of the virus in every state, with the exception of Hawaii and Alaska, due to their unique locations, far from mainland populations.
News on COVID-19 is developing quickly and reported cases are mounting now nearly by the hour. According to John Hopkins, there are 159 cases in the United States. A week ago there were fewer than 25. The same pattern of doubling every two to three days - as was the case in China early on - is becoming evident in European countries, especially Italy, followed by France, Germany, Spain, Switzerland, the UK, and Norway. South Korea and Iran have become epicenter outbreak areas with the number of cases exploding higher every day.
As the disease progresses, the news is likely to be substantially worse before it gets even slightly better. While it is possible that the health outcomes may not be as severe as predicted, the economic pain is almost certain to be severe.
It was more than a week ago that Money Daily advised to Sell. Everything. Now. Wednesday's upswing provided a late get-out-of-jail-free card for procrastinators or non-believers. After Thursday, it may be too late. A 2000-point decline Thursday is more than a passing possibility.
Late edit: With so much happening, let's not forget that gold is rising, silver also, but not to any great degree, oil demand has plunged and will slide further. WTI crude oil prices are at $46 and change per barrel. Treasury yields were stable on long-dated maturities with yields on the 2-year through 30-year issues all rising or falling four basis points or fewer. The 10-year note stabilized at 1.02%, but is again below 1.00% (0.95%) prior to the opening bell (1/2 hour). The short end of the curve, 1, 2, 3, 6-month and one-year bills cratered, the one-year sporting the lowest yield on the entire complex, dropping for 0.73 to 0.59 on Thursday.
Initial claims for state unemployment benefits slipped 3,000 to a seasonally adjusted 216,000 for the week ended Feb. 29, the Labor Department said on Thursday. Data for the prior week was unrevised.
At the Close, Wednesday, March 4, 2020:
Dow Jones Industrial Average: 27,090.86, +1,173.45 (+4.53%)
NASDAQ: 9,018.09, +334.00 (+3.85%)
S&P 500: 3,130.12, +126.75 (+4.22%)
NYSE: 13,009.96, +467.22 (+3.73%)
That little bit of relief allowed stocks to rise by roughly four percent across the major indices. The gains were not record-breaking, but they were close. The NASDAQ's 334-point rise was the third-best on record; the Dow's gain exceeded only by the 1,293.96 rip on Monday. The S&P's number was also the second-best day ever.
These kinds of wild swings, to both the upside and down, have become a trademark for not just US markets but many international stock indices since the outbreak of COVID-19 in China, but especially so since the virus has spread beyond the borders of the world's most populous nation. Most developed nations are currently flirting with 10 percent drops off recent highs, crossing the point of correction level at various times, above and below it.
Following Wednesday's romp, news on the coronavirus front just got worse and worse as the day turned to night and night to Thursday morning. A health screener at LA-X in Los Angeles tested positive for the virus; in New York, six more cases emerged. Seattle is quickly becoming an epicenter for an outbreak, and by morning, California had declared an emergency due to the treat from the spreading infection. 1000 people in New York are being screened for possible infection.
Schools are closing in various places across the country, Amazon and Microsoft employees are being advised to work from home, soccer games in Europe are being played in stadia devoid of fans, Italy has urged anyone over the age of 60 to stay home as much as possible to avoid contracting the virus. Despite the WHO's failure to officially declare a pandemic, COVID-19 has swept around the planet and is showing no signs of abating.
As for the World Health Organization failing to label the current condition a pandemic (it is, even according to their own standards), the reason may lie more in the ghastly world of finance rather than health. Unconfirmed reports say there are "pandemic bonds," which are bets against a pandemic outbreak declaration. If the WHO declares COVID-19 a pandemic, it will trigger bets made on a pandemic, as credit default swaps (CDS), along the lines of those which paid off magnificently when the sub-prime crisis blew up, will explode, blowing up the underpinnings of global finance.
If true, it would prove not only that bankers and financiers on Wall Street and elsewhere learned nothing from prior default events, but that they continue to make sickening, revolting wagers on extreme events. When coronavirus destroys the economy, the usual suspects will be found in lower Manhattan, probably toasting their bonuses, as they have in previous episodes of moral bankruptcy.
That said, anybody who has not taken action to remove their investments from the stock market casino over the past few weeks (if not sooner) is likely to suffer in the most severe economic manner possible over the next six to 12 months. There is no evidence of containing the virus and only the hope that its viability will be reduced with the advent of warmer and more humid weather. Unfortunately, it's only March. Warm mid-Spring weather is still months away in much of the developed world.
According to the painfully-slow-to-react CDC, there are 13 states that have identified persons infected. Those are New York, Vermont, Massachusetts, Wisconsin, Illinois, North Carolina, Georgia, Florida, Texas, Arizona, California, Oregon, and Washington. Add Rhode Island, New Jersey and Utah as of today, making it 16 with more to come. Already an even 1/3 of mainland states, there are no physical barriers to where the virus can spread. Eventually, it's likely that there will be high incidence of the virus in every state, with the exception of Hawaii and Alaska, due to their unique locations, far from mainland populations.
News on COVID-19 is developing quickly and reported cases are mounting now nearly by the hour. According to John Hopkins, there are 159 cases in the United States. A week ago there were fewer than 25. The same pattern of doubling every two to three days - as was the case in China early on - is becoming evident in European countries, especially Italy, followed by France, Germany, Spain, Switzerland, the UK, and Norway. South Korea and Iran have become epicenter outbreak areas with the number of cases exploding higher every day.
As the disease progresses, the news is likely to be substantially worse before it gets even slightly better. While it is possible that the health outcomes may not be as severe as predicted, the economic pain is almost certain to be severe.
It was more than a week ago that Money Daily advised to Sell. Everything. Now. Wednesday's upswing provided a late get-out-of-jail-free card for procrastinators or non-believers. After Thursday, it may be too late. A 2000-point decline Thursday is more than a passing possibility.
Late edit: With so much happening, let's not forget that gold is rising, silver also, but not to any great degree, oil demand has plunged and will slide further. WTI crude oil prices are at $46 and change per barrel. Treasury yields were stable on long-dated maturities with yields on the 2-year through 30-year issues all rising or falling four basis points or fewer. The 10-year note stabilized at 1.02%, but is again below 1.00% (0.95%) prior to the opening bell (1/2 hour). The short end of the curve, 1, 2, 3, 6-month and one-year bills cratered, the one-year sporting the lowest yield on the entire complex, dropping for 0.73 to 0.59 on Thursday.
Initial claims for state unemployment benefits slipped 3,000 to a seasonally adjusted 216,000 for the week ended Feb. 29, the Labor Department said on Thursday. Data for the prior week was unrevised.
At the Close, Wednesday, March 4, 2020:
Dow Jones Industrial Average: 27,090.86, +1,173.45 (+4.53%)
NASDAQ: 9,018.09, +334.00 (+3.85%)
S&P 500: 3,130.12, +126.75 (+4.22%)
NYSE: 13,009.96, +467.22 (+3.73%)
Tuesday, February 25, 2020
Coronavirus (COVID-19) Takes a Bite Out of Europe and Wall Street
COVID-19 continues to rage, and on Monday, it took a bite out of global markets, especially in Europe and the Americas, with stock indices falling in a range around 3.5% on the day.
For the Dow Jones Industrial Average, it was the biggest decline in two years and the third biggest point drop in the history of the index, closing just short of the #2 all-time drop, −1,032.89 on February 8, 2018 a decline of 4.15%. Monday's rip was a 3.65% decline.
The S&P's 111.89-point loss was the second-worst ever on that index, nearly topping a 113.19 loss, also from February 8, 2018. The NASDAQ's 355.31-point decline was the second biggest on record. The worst day for the NASDAQ was on April 14, 2000, when the index plummeted nine percent, posting a loss of 355.49, kicking off what would be known as the dotcom bust.
There's a general theme around these kinds of outsized losses. Usually, there's follow-up, but it doesn't always come the very next day. It's usually another day later. That's likely because investors have become so accustomed to "buying the dip" that any major loss is seen as a buying opportunity, and this may well be, but it's probably going to be better to sit and watch on Tuesday and be ready to jump in (or out) on Wednesday or Thursday.
Another wave will come, and it's not going to be pretty. as pointed out in our Weekend Wrap, investors aren't concerned with the spread of the coronavirus per se, they're worried about the effect it is going to have on businesses, particularly, in this case, those with supply chains emanating out of mainland China, and there are plenty of them in addition to the airlines and cruise ship companies which have already been hard hit by the tail of the virus.
The after-effects from COVID-19 aren't going to emerge for months. Less than two months into the pandemic, the virus has yet to unleash its most virulent strain upon a host of countries outside China, but the list of countries seeing the number of new infections growing is getting larger. Italy, South Korea, Iran, Hong Kong, and Japan are the current hotspots, with cases doubling every day or two.
It will take some months for this to slow down and eventually be contained, but it's going to be very disruptive to the normal flow of business for some time. This is definitely not a time to be bullish, though the second half of the year may be.
With stocks battered around the world, bonds rallied, with yield on the 10-year note dropping eight basis points, from 1.46% to 1.38%. The 30-year bond hit another all-time low yield at 1.84%.
The yield curve remains inverted at the short to middle, with 1, 2, 3, and 6-month bills all posting yields higher than the 10-year, though the 2s-10s remained constant at a 12 basis point difference, the 2-year ending the day at 1.26. The curve is nearly flat, with 1.60% at one end (1-month) and 1.84% at the other, on the 30-year. A soft underbelly in the middle, with a 1.21% yield on the 3s and 5s, makes the entire trip one of just 63 basis points, or just more than one half of a percent. That's FLAT!
Oil hit the skids, with WTI dropping to 51.43 per barrel, though that's still higher than what is likely coming in months ahead, especially if widespread quarantines become fashionable in developed countries, particularly speaking of Europe and the USA.
Gold and silver were well bid, but smashed down at the end of the day. It's not yet the time for the almighty dollar to suffer. The yen and euro must submit first, along with China's yuan. When these fiat currencies are exposed, when negative interest rates are more an essential element than an experimental one, then the metals will soar. The world isn't there yet and nobody will be adequately prepared when that eventuality occurs, which could be six months from now or six years. It's looking like it may be closer to the latter, as the global machinery of finance isn't as fragile as it may appear on the surface.
Keeping a sharp eye out for emerging hotspots and especially on the US mainland, stocks ripe for shorting may be in the entertainment, hospitality, and dining segments.
At the Close, Monday, February 24, 2020:
Dow Jones Industrial Average: 27,960.80, -1,031.61 (-3.56%)
NASDAQ: 9,221.28, -355.31, (-3.71%)
S&P 500: 3,225.89, -111.86 (-3.35%)
NYSE: 13,534.12, -441.66 (-3.16%)
For the Dow Jones Industrial Average, it was the biggest decline in two years and the third biggest point drop in the history of the index, closing just short of the #2 all-time drop, −1,032.89 on February 8, 2018 a decline of 4.15%. Monday's rip was a 3.65% decline.
The S&P's 111.89-point loss was the second-worst ever on that index, nearly topping a 113.19 loss, also from February 8, 2018. The NASDAQ's 355.31-point decline was the second biggest on record. The worst day for the NASDAQ was on April 14, 2000, when the index plummeted nine percent, posting a loss of 355.49, kicking off what would be known as the dotcom bust.
There's a general theme around these kinds of outsized losses. Usually, there's follow-up, but it doesn't always come the very next day. It's usually another day later. That's likely because investors have become so accustomed to "buying the dip" that any major loss is seen as a buying opportunity, and this may well be, but it's probably going to be better to sit and watch on Tuesday and be ready to jump in (or out) on Wednesday or Thursday.
Another wave will come, and it's not going to be pretty. as pointed out in our Weekend Wrap, investors aren't concerned with the spread of the coronavirus per se, they're worried about the effect it is going to have on businesses, particularly, in this case, those with supply chains emanating out of mainland China, and there are plenty of them in addition to the airlines and cruise ship companies which have already been hard hit by the tail of the virus.
The after-effects from COVID-19 aren't going to emerge for months. Less than two months into the pandemic, the virus has yet to unleash its most virulent strain upon a host of countries outside China, but the list of countries seeing the number of new infections growing is getting larger. Italy, South Korea, Iran, Hong Kong, and Japan are the current hotspots, with cases doubling every day or two.
It will take some months for this to slow down and eventually be contained, but it's going to be very disruptive to the normal flow of business for some time. This is definitely not a time to be bullish, though the second half of the year may be.
With stocks battered around the world, bonds rallied, with yield on the 10-year note dropping eight basis points, from 1.46% to 1.38%. The 30-year bond hit another all-time low yield at 1.84%.
The yield curve remains inverted at the short to middle, with 1, 2, 3, and 6-month bills all posting yields higher than the 10-year, though the 2s-10s remained constant at a 12 basis point difference, the 2-year ending the day at 1.26. The curve is nearly flat, with 1.60% at one end (1-month) and 1.84% at the other, on the 30-year. A soft underbelly in the middle, with a 1.21% yield on the 3s and 5s, makes the entire trip one of just 63 basis points, or just more than one half of a percent. That's FLAT!
Oil hit the skids, with WTI dropping to 51.43 per barrel, though that's still higher than what is likely coming in months ahead, especially if widespread quarantines become fashionable in developed countries, particularly speaking of Europe and the USA.
Gold and silver were well bid, but smashed down at the end of the day. It's not yet the time for the almighty dollar to suffer. The yen and euro must submit first, along with China's yuan. When these fiat currencies are exposed, when negative interest rates are more an essential element than an experimental one, then the metals will soar. The world isn't there yet and nobody will be adequately prepared when that eventuality occurs, which could be six months from now or six years. It's looking like it may be closer to the latter, as the global machinery of finance isn't as fragile as it may appear on the surface.
Keeping a sharp eye out for emerging hotspots and especially on the US mainland, stocks ripe for shorting may be in the entertainment, hospitality, and dining segments.
At the Close, Monday, February 24, 2020:
Dow Jones Industrial Average: 27,960.80, -1,031.61 (-3.56%)
NASDAQ: 9,221.28, -355.31, (-3.71%)
S&P 500: 3,225.89, -111.86 (-3.35%)
NYSE: 13,534.12, -441.66 (-3.16%)
Wednesday, January 8, 2020
Here Comes A January Rally And New All-Time Highs
Stocks took a bit of a punch in the face on Tuesday, but nothing a good night's sleep wouldn't relieve.
Overnight, Iran fired missiles at a couple of American bases in Iraq, hit mostly sand and neither killed nor wounded any American soldiers, according to published reports. If that's the extent of Iranian retaliation for the killing of their top general, it would suggest that Iran's leaders are not stupid and don't want to go to war against the world's most well-equipped military force.
Nobody can blame Iran for not wanting a direct fight with the US military. It would more than likely be a losing battle from the start and end with devastation to much of Iran's infrastructure. Their leaders may have taken the high road by intentionally missing American barracks, showing a calm hand while demonstrating that they can, if need be, meet force with force.
Iran is better equipped to keep doing what they've been doing: supporting splinter groups and terrorist cells without direct involvement in any conflict. In that scenario, they at least afford themselves the opportunity to keep selling their oil to countries who won't respect the US trade sanctions and maybe find their way to a negotiating table to end years of struggle in the region.
Wall Street would likely be amenable to such an arrangement. Some sense of rationality would be a welcome relief to not just the oil market but to the global economies, which have more than their share of worries presently.
If it is indeed the case that hostilities in the Middle East may have reached a turning point, that's all well and good. Any continued sign that the US and Iran are at a safe distance from each other militarily can only be good for the stock market. Such an antecedent would prompt a sharp rally in stocks, which have been somewhat on hold since Christmas and are looking for reasons to break out to new highs.
It being a fresh year, there's plenty of money sloshing around, enough to propel stocks further into the stratosphere.
Unless something terrible happens in the Middle East or elsewhere, expect markets to glide higher and potentially explode though the remaining weeks of January. As everybody in the investment world knows, as January goes, so goes the rest of the year. That's been an accurate guide for about 85% of the time. Another banner year like 2019 may not be in the cards, but it's a near certainty that stocks are poised for another leg higher and continued strong performance.
At the Close, Tuesday, January 7, 2020:
Dow Jones Industrial Average: 28,583.68, -119.70 (-0.42%)
NASDAQ: 9,068.58, -2.88 (-0.03%)
S&P 500: 3,237.18, -9.10 (-0.28%)
NYSE Composite: 13,898.45, -43.35 (-0.31%)
Overnight, Iran fired missiles at a couple of American bases in Iraq, hit mostly sand and neither killed nor wounded any American soldiers, according to published reports. If that's the extent of Iranian retaliation for the killing of their top general, it would suggest that Iran's leaders are not stupid and don't want to go to war against the world's most well-equipped military force.
Nobody can blame Iran for not wanting a direct fight with the US military. It would more than likely be a losing battle from the start and end with devastation to much of Iran's infrastructure. Their leaders may have taken the high road by intentionally missing American barracks, showing a calm hand while demonstrating that they can, if need be, meet force with force.
Iran is better equipped to keep doing what they've been doing: supporting splinter groups and terrorist cells without direct involvement in any conflict. In that scenario, they at least afford themselves the opportunity to keep selling their oil to countries who won't respect the US trade sanctions and maybe find their way to a negotiating table to end years of struggle in the region.
Wall Street would likely be amenable to such an arrangement. Some sense of rationality would be a welcome relief to not just the oil market but to the global economies, which have more than their share of worries presently.
If it is indeed the case that hostilities in the Middle East may have reached a turning point, that's all well and good. Any continued sign that the US and Iran are at a safe distance from each other militarily can only be good for the stock market. Such an antecedent would prompt a sharp rally in stocks, which have been somewhat on hold since Christmas and are looking for reasons to break out to new highs.
It being a fresh year, there's plenty of money sloshing around, enough to propel stocks further into the stratosphere.
Unless something terrible happens in the Middle East or elsewhere, expect markets to glide higher and potentially explode though the remaining weeks of January. As everybody in the investment world knows, as January goes, so goes the rest of the year. That's been an accurate guide for about 85% of the time. Another banner year like 2019 may not be in the cards, but it's a near certainty that stocks are poised for another leg higher and continued strong performance.
At the Close, Tuesday, January 7, 2020:
Dow Jones Industrial Average: 28,583.68, -119.70 (-0.42%)
NASDAQ: 9,068.58, -2.88 (-0.03%)
S&P 500: 3,237.18, -9.10 (-0.28%)
NYSE Composite: 13,898.45, -43.35 (-0.31%)
Tuesday, January 7, 2020
War Is Good For the Market, So Is Peace, Or Baseball, Or Beer, Or...
Fearing that a possible escalation of hostilities in the Middle East could spill over to affect the US economy, stocks opened sharply lower on Monday. Gold, silver and crude oil futures were bid higher.
As the day wore on, stocks regained their footings, the precious metal and oil rallies evaporated and eventually all the US indices closed well into positive territory.
None of that was by accident.
Consider the stock market a proxy narrative for the American impulse emotions. Fear, greed, tranquility, volatility, are all rolled into one great tableau of the American experience, especially when there's trouble on the horizon. Monday's action consisted of mandatory panicked selling as the day began, the hand of calm mid-morning, and eventually the all-clear sign that nothing bad will happen, in a "we got this" kind of virtue-signal, sending stocks higher, where they're supposed to be going in our vast and glorious economy.
It all happens without public comment nor input because large shareholders control enormous amounts of stock and with that, the ability to move markets in whichever non-random ways they desire. A tweak to an algo here, a few well-timed block trades there, and entire averages can move in not-so-mysterious ways.
Especially since the disasters of the 2000 dot-com bust and the 2007-09 sub-prime implosion, there's been a vested interest in this country to keep the charts moving in a left to right, upward=headed, diagonal line.
That's not an accident, either.
Because there is so much wealth and so much of the future concentrated almost exclusively in stocks, the markets cannot be allowed to wither. We've witnessed this same happenstance over and over and over again, on a daily basis in times of crisis, and with a more elongated time expanse when it comes to policy issues like the direction of interest rates, presidential politics, tax cuts, or long-range unemployment trends.
If the US kills an Iranian general and some other people who happen to be in the wrong place at the right time, stocks may take a temporary hit. The Dow may drop 100 or 200 points, but it will be back on its game by the afternoon, or maybe within the next day or two.
If the US sends 200,000 troops to Iraq or Iran to squelch - once and for all - an evil regime, stocks may initially descend, but in the long term, they will outperform the underlying economy. See charts from 2003-2005 for example, of how the Gulf War boosted stocks out of a deep hole.
While it doesn't have to be this way, that's just the way it is, and the sooner one comes to the rationalization that the markets are handled, mangled, and managed, the sooner one can come to grips with the deficiencies in one's own portfolio.
Whether this is good or not is a debatable point, but what is not a subject ripe for speculation is the fact that holders of large amounts of underlying securities can make markets move in whatever direction they please. And for now, that direction - make no mistake about this - is up.
At the Close, Monday, January 6, 2020:
Dow Jones Industrial Average: 28,703.38, +68.50 (+0.24%)
NASDAQ: 9,071.46, +50.70 (+0.56%)
S&P 500: 3,246.28, +11.43 (+0.35%)
NYSE Composite: 13,941.80, +24.75 (+0.18%)
As the day wore on, stocks regained their footings, the precious metal and oil rallies evaporated and eventually all the US indices closed well into positive territory.
None of that was by accident.
Consider the stock market a proxy narrative for the American impulse emotions. Fear, greed, tranquility, volatility, are all rolled into one great tableau of the American experience, especially when there's trouble on the horizon. Monday's action consisted of mandatory panicked selling as the day began, the hand of calm mid-morning, and eventually the all-clear sign that nothing bad will happen, in a "we got this" kind of virtue-signal, sending stocks higher, where they're supposed to be going in our vast and glorious economy.
It all happens without public comment nor input because large shareholders control enormous amounts of stock and with that, the ability to move markets in whichever non-random ways they desire. A tweak to an algo here, a few well-timed block trades there, and entire averages can move in not-so-mysterious ways.
Especially since the disasters of the 2000 dot-com bust and the 2007-09 sub-prime implosion, there's been a vested interest in this country to keep the charts moving in a left to right, upward=headed, diagonal line.
That's not an accident, either.
Because there is so much wealth and so much of the future concentrated almost exclusively in stocks, the markets cannot be allowed to wither. We've witnessed this same happenstance over and over and over again, on a daily basis in times of crisis, and with a more elongated time expanse when it comes to policy issues like the direction of interest rates, presidential politics, tax cuts, or long-range unemployment trends.
If the US kills an Iranian general and some other people who happen to be in the wrong place at the right time, stocks may take a temporary hit. The Dow may drop 100 or 200 points, but it will be back on its game by the afternoon, or maybe within the next day or two.
If the US sends 200,000 troops to Iraq or Iran to squelch - once and for all - an evil regime, stocks may initially descend, but in the long term, they will outperform the underlying economy. See charts from 2003-2005 for example, of how the Gulf War boosted stocks out of a deep hole.
While it doesn't have to be this way, that's just the way it is, and the sooner one comes to the rationalization that the markets are handled, mangled, and managed, the sooner one can come to grips with the deficiencies in one's own portfolio.
Whether this is good or not is a debatable point, but what is not a subject ripe for speculation is the fact that holders of large amounts of underlying securities can make markets move in whatever direction they please. And for now, that direction - make no mistake about this - is up.
At the Close, Monday, January 6, 2020:
Dow Jones Industrial Average: 28,703.38, +68.50 (+0.24%)
NASDAQ: 9,071.46, +50.70 (+0.56%)
S&P 500: 3,246.28, +11.43 (+0.35%)
NYSE Composite: 13,941.80, +24.75 (+0.18%)
Tuesday, December 3, 2019
Trade Uncertainty Tempers Markets on First Full Day of Holiday Trading
The first week of the final month of 2019 was a deviation from the general theme of 2019. Stocks were sold with reckless abandon, as were bonds, with the 10-year note bounding back to yield 1.83% - though higher during the day - a level not visited since mid-November.
The bond market felt more like churning than the start of actual long-term selling, but stocks had a different sense about them. Bad news on the US-China trade situation has the financial world in a near-panic as the deadline approaches for added tariffs to be applied on Chinese exports to the US. Additionally, President Trump reimposed tariffs on steel from Argentina and Brazil, citing the two South American countries' recent currency devaluations as reason for slapping on the tariffs "immediately."
While the steel tariffs boosted shares of US steel producers, it only exacerbated the unease surrounding the wider Chinese issue and sent stocks into a day-long tailspin. Selling was the order of the day globally, as bourses from Japan, China, Europe and the Americas all suffered declines with the sourness continuing into Tuesday as trade resumed Tuesday in international markets.
While the focus may currently be on trade and tariffs, there appears to be more to the sudden swing from buying to selling than just the movement of goods around the planet. Recall that Friday (ubiquitously know as Black Friday in the US) also witnessed declines, not the usual euphoria associated with the start of the holiday shopping season. Other concerns are various recent populist uprising in places as diverse as Hong Kong, Iran, Lebanon, India and elsewhere. Besides, it is December, so one can safely assume that any concerted selling is going to be enhanced by year-end profit-taking.
While the mainstream (now nearly completely fake) media will focus on the stock markets' generous advances during the year, they will also conveniently gloss over the dual declines from October and December of 2018, which, taken in such context, renders gains from September 2018 as practically nil.
The Dow Jones Industrial Average, for instance, is up only 1000 points since mid-September of 2018, accounting for a gain of less than a half percent. The NASDAQ has tacked on about 450 points since August of last year, while the S&P 500, at current levels, has added just 183 points over the past 15 months, the point being that stocks, though they've recently made new all-time highs, are really not much further ahead than they were more than a year ago, but the media will remind us only of what's happened in the current calendar year, which might be a tad misleading.
In any case, internationally, stocks are being whacked again Tuesday morning and US futures are looking pretty dismal, with Dow futures down nearly 300 points less than an hour prior to the opening bell.
Corporate profits have been underwhelming, to say the least, for the past few quarters, so some fundamental shift may be underway. If a flight into the safely of bonds develops, that will be a sign that the stock market is going to finish off the year on a negative note, though there's always the possibility of a Sant Calus rally the week between Christmas and New Year to save everybody's bacon.
At the Close, Monday, December 2, 2019:
Dow Jones Industrial Average: 27,783.04, -268.37 (-0.96%)
NASDAQ: 8,567.99, -97.48 (-1.12%)
S&P 500: 3,113.87, -27.11 (-0.86%)
NYSE Composite: 13,448.26, -96.95 (-0.72%)
The bond market felt more like churning than the start of actual long-term selling, but stocks had a different sense about them. Bad news on the US-China trade situation has the financial world in a near-panic as the deadline approaches for added tariffs to be applied on Chinese exports to the US. Additionally, President Trump reimposed tariffs on steel from Argentina and Brazil, citing the two South American countries' recent currency devaluations as reason for slapping on the tariffs "immediately."
While the steel tariffs boosted shares of US steel producers, it only exacerbated the unease surrounding the wider Chinese issue and sent stocks into a day-long tailspin. Selling was the order of the day globally, as bourses from Japan, China, Europe and the Americas all suffered declines with the sourness continuing into Tuesday as trade resumed Tuesday in international markets.
While the focus may currently be on trade and tariffs, there appears to be more to the sudden swing from buying to selling than just the movement of goods around the planet. Recall that Friday (ubiquitously know as Black Friday in the US) also witnessed declines, not the usual euphoria associated with the start of the holiday shopping season. Other concerns are various recent populist uprising in places as diverse as Hong Kong, Iran, Lebanon, India and elsewhere. Besides, it is December, so one can safely assume that any concerted selling is going to be enhanced by year-end profit-taking.
While the mainstream (now nearly completely fake) media will focus on the stock markets' generous advances during the year, they will also conveniently gloss over the dual declines from October and December of 2018, which, taken in such context, renders gains from September 2018 as practically nil.
The Dow Jones Industrial Average, for instance, is up only 1000 points since mid-September of 2018, accounting for a gain of less than a half percent. The NASDAQ has tacked on about 450 points since August of last year, while the S&P 500, at current levels, has added just 183 points over the past 15 months, the point being that stocks, though they've recently made new all-time highs, are really not much further ahead than they were more than a year ago, but the media will remind us only of what's happened in the current calendar year, which might be a tad misleading.
In any case, internationally, stocks are being whacked again Tuesday morning and US futures are looking pretty dismal, with Dow futures down nearly 300 points less than an hour prior to the opening bell.
Corporate profits have been underwhelming, to say the least, for the past few quarters, so some fundamental shift may be underway. If a flight into the safely of bonds develops, that will be a sign that the stock market is going to finish off the year on a negative note, though there's always the possibility of a Sant Calus rally the week between Christmas and New Year to save everybody's bacon.
At the Close, Monday, December 2, 2019:
Dow Jones Industrial Average: 27,783.04, -268.37 (-0.96%)
NASDAQ: 8,567.99, -97.48 (-1.12%)
S&P 500: 3,113.87, -27.11 (-0.86%)
NYSE Composite: 13,448.26, -96.95 (-0.72%)
Monday, September 30, 2019
WEEKEND WRAP: Despite Impeachment Overhang, Wall Street Is Oddly Calm
By midweek, political events had overtaken actual financial news and numbers as House Democrats turned up the heat on yet another attempt to impeach President Trump.
People with intact frontal lobes understand that the Democrats have once again fabricated the "crime" committed by President Trump. Still, the mainstream mass media complex cannot help itself from flailing about furiously at the behest of their liberal handlers. Would the media actually be impartial, this farcical drama - and the Mueller investigation that yielded nothing - would never even see the light of day.
It's further proof that most Democrats in the House have nothing constructive to add to the national debate other than outsized hatred for President Trump and all of his millions of supporters. If there is justice in this insane world, the Democrats will be outed, joe Biden's son, Hunter, will be tried, convicted and imprisoned, and the Democrat party will implode entirely in the aftermath of a massive Trump landslide.
That's for the future to tell. For the present, Wall Street would rather focus on facts, reality, data, and numbers. Third quarter results for traded corporations will begin rolling out next week. Prior to that, September non-farm payroll data will be released on Friday of this week. Whether traders and speculators can divorce themselves from the kabuki theater that is Washington DC long enough to focus on true economic data is the big question. Fast-moving headlines pushing the impeachment narrative will be difficult to ignore in coming days.
For whatever it's worth, the US economy may not be exactly a juggernaut of capitalist endeavor, it is, however, firing on all cylinders, albeit at a slow pace. By the end of October the world will have the first estimate of third quarter GDP, a number that should make headlines, whether it is good (above 2.5%) or bad (below 2.0%). Anything in the range of 2.2-3.0% will be considered a win for the economy (and President Trump), while across the pond, Europe teeters on the brink of recession.
Also on the horizon is quietude from the Federal Reserve, as the next FOMC meeting is scheduled for October 29-30. Thus, the next possible federal funds rate cut will only be under consideration and newsworthy the last two weeks of the coming month. Should economic data and corporate third quarter earnings reports come in positively there would be a rationale for the Fed to just keep rates where they are. The economy isn't struggling, jobs seem to be still plentiful and inflation fears have been kept in check. The few scenarios under which a rate cut could be considered are, at this juncture, unlikely, including a banking blowup, or taking the impeachment folly as serious.
With all that could go wrong, the world continued to turn following the attack on Saudi oil installments a few weeks back. President Trump tactfully pulled the United States back from the brink of escalation against Iran, instead opting for increased sanctions and a peaceful resolution to never-ending mid-East fanaticism and the associated war-mongering by elements in the US and Israel.
Oil, the lifeblood of the global economy, retreated as the situation de-escalated, and may actually fall below $50 per barrel as winter season looms.
Bonds seem to have found a sweet spot, despite the continued inversion of the 3-month:10-year pair, with the 10-year settling into a range between 1.55 and 1.75%. Should that range prevail over the coming weeks and months, clear sailing for the US economy may be a prudent call. While stocks, still somewhat overvalued, continue to flirt with all-time levels, the NASDAQ notably took the brunt of the selling from last week. That's probably a positive, since the NASDAQ contains some of the more pricey shares of tech companies that may need to be tamped down.
Conclusively, the week was far short of either a disaster or a rousing rally. Could it be, for a change, that the most sane place on the planet was lower Manhattan?
These are indeed strange days.
At the Close, Friday, September 27, 2019:
Dow Jones Industrial Average: 26,820.25, -70.85 (-0.26%)
NASDAQ: 7,939.63, -91.03 (-1.13%)
S&P 500: 2,961.79, -15.83 (-0.53%)
NYSE Composite: 12,971.98, -56.72 (-0.44%)
For the Week:
Dow: -114.82 (-0.43%)
NASDAQ: -178.05 (-2.19%)
S&P 500: -30.28 (-1.01%)
NYSE Composite: -121.82 (-0.93%)
People with intact frontal lobes understand that the Democrats have once again fabricated the "crime" committed by President Trump. Still, the mainstream mass media complex cannot help itself from flailing about furiously at the behest of their liberal handlers. Would the media actually be impartial, this farcical drama - and the Mueller investigation that yielded nothing - would never even see the light of day.
It's further proof that most Democrats in the House have nothing constructive to add to the national debate other than outsized hatred for President Trump and all of his millions of supporters. If there is justice in this insane world, the Democrats will be outed, joe Biden's son, Hunter, will be tried, convicted and imprisoned, and the Democrat party will implode entirely in the aftermath of a massive Trump landslide.
That's for the future to tell. For the present, Wall Street would rather focus on facts, reality, data, and numbers. Third quarter results for traded corporations will begin rolling out next week. Prior to that, September non-farm payroll data will be released on Friday of this week. Whether traders and speculators can divorce themselves from the kabuki theater that is Washington DC long enough to focus on true economic data is the big question. Fast-moving headlines pushing the impeachment narrative will be difficult to ignore in coming days.
For whatever it's worth, the US economy may not be exactly a juggernaut of capitalist endeavor, it is, however, firing on all cylinders, albeit at a slow pace. By the end of October the world will have the first estimate of third quarter GDP, a number that should make headlines, whether it is good (above 2.5%) or bad (below 2.0%). Anything in the range of 2.2-3.0% will be considered a win for the economy (and President Trump), while across the pond, Europe teeters on the brink of recession.
Also on the horizon is quietude from the Federal Reserve, as the next FOMC meeting is scheduled for October 29-30. Thus, the next possible federal funds rate cut will only be under consideration and newsworthy the last two weeks of the coming month. Should economic data and corporate third quarter earnings reports come in positively there would be a rationale for the Fed to just keep rates where they are. The economy isn't struggling, jobs seem to be still plentiful and inflation fears have been kept in check. The few scenarios under which a rate cut could be considered are, at this juncture, unlikely, including a banking blowup, or taking the impeachment folly as serious.
With all that could go wrong, the world continued to turn following the attack on Saudi oil installments a few weeks back. President Trump tactfully pulled the United States back from the brink of escalation against Iran, instead opting for increased sanctions and a peaceful resolution to never-ending mid-East fanaticism and the associated war-mongering by elements in the US and Israel.
Oil, the lifeblood of the global economy, retreated as the situation de-escalated, and may actually fall below $50 per barrel as winter season looms.
Bonds seem to have found a sweet spot, despite the continued inversion of the 3-month:10-year pair, with the 10-year settling into a range between 1.55 and 1.75%. Should that range prevail over the coming weeks and months, clear sailing for the US economy may be a prudent call. While stocks, still somewhat overvalued, continue to flirt with all-time levels, the NASDAQ notably took the brunt of the selling from last week. That's probably a positive, since the NASDAQ contains some of the more pricey shares of tech companies that may need to be tamped down.
Conclusively, the week was far short of either a disaster or a rousing rally. Could it be, for a change, that the most sane place on the planet was lower Manhattan?
These are indeed strange days.
At the Close, Friday, September 27, 2019:
Dow Jones Industrial Average: 26,820.25, -70.85 (-0.26%)
NASDAQ: 7,939.63, -91.03 (-1.13%)
S&P 500: 2,961.79, -15.83 (-0.53%)
NYSE Composite: 12,971.98, -56.72 (-0.44%)
For the Week:
Dow: -114.82 (-0.43%)
NASDAQ: -178.05 (-2.19%)
S&P 500: -30.28 (-1.01%)
NYSE Composite: -121.82 (-0.93%)
Tuesday, May 8, 2018
Indecisive Market Flatlines On Slow News Day
Even with President Trump officially pulling out of the multi-nation Iran deal, stocks found no reason to go anywhere but sideways.
The Dow fell 146 points to the downside directly following the president's announcements, but a furious late-session rally brought it to a positive close.
Closing the book on the Obama administration's failed agreement with Iran, Trump plans to re-impose sanctions on Iran while working toward a more complete and lasting solution. while some panicky sellers showed their weak hands, short-covering picked up the pieces and left the markets just about where they started.
Outside of venal day-traders with some well-honed timing skills, nobody makes much on days like this, with volume hitting extremely low levels.
Dow Jones Industrial Average May Scorecard:
At the Close, Tuesday, May 8, 2018:
Dow Jones Industrial Average: 24,360.21, +2.89 (+0.01%)
NASDAQ: 7,266.90, +1.69 (+0.02%)
S&P 500 2,671.92, -0.71 (-0.03%)
NYSE Composite: 12,520.25, +0.50 (0.00%)
The Dow fell 146 points to the downside directly following the president's announcements, but a furious late-session rally brought it to a positive close.
Closing the book on the Obama administration's failed agreement with Iran, Trump plans to re-impose sanctions on Iran while working toward a more complete and lasting solution. while some panicky sellers showed their weak hands, short-covering picked up the pieces and left the markets just about where they started.
Outside of venal day-traders with some well-honed timing skills, nobody makes much on days like this, with volume hitting extremely low levels.
Dow Jones Industrial Average May Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 5/1/18 | 24,099.05 | -64.10 | -64.10 |
| 5/2/18 | 23,924.98 | -174.07 | -238.17 |
| 5/3/18 | 23,930.15 | +5.17 | -233.00 |
| 5/4/18 | 24,262.51 | +332.36 | +99.36 |
| 5/7/18 | 24,357.32 | +94.81 | +194.17 |
| 5/8/18 | 24,360.21 | +2.89 | +197.06 |
At the Close, Tuesday, May 8, 2018:
Dow Jones Industrial Average: 24,360.21, +2.89 (+0.01%)
NASDAQ: 7,266.90, +1.69 (+0.02%)
S&P 500 2,671.92, -0.71 (-0.03%)
NYSE Composite: 12,520.25, +0.50 (0.00%)
Tuesday, March 6, 2018
Stocks Bounce Back, Set To Continue Gains
After posting losses the first two trading days of March, stocks opened the new week with fresh gains, nearly erasing the red ink for the month. The Dow is still down more than 150 points for the month and much more than that from all-time highs (January 26 is looking smaller and smaller in the rear-view mirror), but stocks are poised to push higher on Tuesday on good news from the Korean Peninsula.
Talks between the North and South are apparently proceeding well, with the North - according to published reports - willing to denuclearize if the US and its allies can ensure its safety. The thought of nuking North Korea, being more of a paranoid construct in the mind of leader, Kim Jong-un, than any substantive reality, should not be a major obstacle should talks continue apace.
If the North and South states do eventually settle their differences, it would amount to nothing less than a complete coup for President Trump and his negotiating team, which has talked alternatively tough and sensible to the North Koreans. Resolution of the 65-year-old standoff would seem to be positive for all parties, depending on the terms of any definitive pact.
A re-emergence of North Korea into the union of so-called civilized nations might also pave the way for other countries, such as Ukraine and Iran, to proceed with normalization of policies, taking a step back from the brink of war or annihilation, nuclear or otherwise.
Dow Jones Industrial Average March Scorecard:
At the Close, Monday, March 5, 2018:
Dow Jones Industrial Average: 24,874.76, +336.70 (+1.37%)
NASDAQ: 7,330.70, +72.84 (+1.00%)
S&P 500: 2,720.94, +29.69 (+1.10%)
NYSE Composite: 12,680.73, +122.74 (+0.98%)
Talks between the North and South are apparently proceeding well, with the North - according to published reports - willing to denuclearize if the US and its allies can ensure its safety. The thought of nuking North Korea, being more of a paranoid construct in the mind of leader, Kim Jong-un, than any substantive reality, should not be a major obstacle should talks continue apace.
If the North and South states do eventually settle their differences, it would amount to nothing less than a complete coup for President Trump and his negotiating team, which has talked alternatively tough and sensible to the North Koreans. Resolution of the 65-year-old standoff would seem to be positive for all parties, depending on the terms of any definitive pact.
A re-emergence of North Korea into the union of so-called civilized nations might also pave the way for other countries, such as Ukraine and Iran, to proceed with normalization of policies, taking a step back from the brink of war or annihilation, nuclear or otherwise.
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 |
At the Close, Monday, March 5, 2018:
Dow Jones Industrial Average: 24,874.76, +336.70 (+1.37%)
NASDAQ: 7,330.70, +72.84 (+1.00%)
S&P 500: 2,720.94, +29.69 (+1.10%)
NYSE Composite: 12,680.73, +122.74 (+0.98%)
Friday, February 17, 2012
Freaky Friday: $6 Trillion In Fake Bonds, Euro-Greek Bond Swap; March 23rd Looking Grim
For a Friday, the news flow certainly was heavy.
The morning began with a report out of Italy, that $6 trillion worth of allegedly "fake" US Treasury bonds were seized by Italian police and the US Secret Service along with eight men involved in the counterfeiting and money laundering scam. Authorities said that the individuals arrested were planning to purchase plutonium from Nigeria, a story that has a familiar ring, last used as part of the pretense for going to war with Iraq after 9/11.
This story has all the markings of either a false flag event or wild conspiracy. Details are sketchy, though the assembled mainstream news media has already accepted the idea that the bonds are fakes. Don't expect to hear or see much more about this after today, except from bloggers and investigators outside the mainstream.
The European Central Bank (ECB) swapped its Greek bonds for new ones to ensure it isn’t forced to take losses in a debt restructuring. This story also greeted the morning in New York, without much fanfare, except for the press mimicking the officials at the ECB that Greece is moving closer to a resolution of its debt issues before the fateful date of March 20 arrives.
ZeroHedge has a pretty good take on the implications and possible illegalities of the move, which will apparently trigger the collective action clauses (CAC) and also Credit Default Swaps, as it would be a default event. Ooopsie. Could be a cascade coming.
Related, but unconfirmed, is a report that some banks already have documents detailing a March 23 default by Greece in which Greek banks will be closed, accounts frozen and Euro-denominated currency will become worthless in the land of Plato and Aristotle.
March 23 happens to be a Friday, which makes sense, since the report says the major credit agencies will declare Greece in default, and late Friday afternoons, after US markets have closed, seems to be the preferred time for any nasty news from the credit raters.
Late in the day, our normally-inept congress managed to PURPOSELY UNDERFUND THE SOCIAL SECURITY TRUST FUND by passing a bill to extend the roughly-30% cut to employees for the rest of the year and keep unemployment benefits flowing to the millions of Americans who just can't seem to find a good job.
Amid all of this, the stock market looked like a side show, with stocks limping along to yet another positive close - except for the NASDAQ, mostly because Apple finished down 0.09 - on horrifyingly-low volume.
It's tough to make this stuff up, but somebody must be, because financial markets are acting as if they're from another dimension or distant galaxy. The only reasonable correlation that can be assumed these days is that if the Euro is up, so will be US stocks. Oh, and any mention of Iran or the Strait of Hormuz is good for at least another 40-cent move higher in the price of crude, which has retail gasoline now priced at US record levels for February.
Hey, it's a three-day weekend. We can worry about Greece on Tuesday. But, don't drive too much. Could just wreck your budget.
Dow 12,950.10, +46.02 (0.36%)
NASDAQ 2,951.78, -8.07 (0.27%)
S&P 500 1,361.23, +3.19 (0.23%)
NYSE Composite 8,114.51, +22.32 (0.28%)
NASDAQ Volume 1,972,077,750
NYSE Volume 3,675,412,000
Combined NYSE & NASDAQ Advance - Decline: 3082-2535
Combined NYSE & NASDAQ New highs - New lows: 303-12 (0 new lows on NYSE. WOW!)
WTI crude oil: 103.24, +0.93
Gold: 1,725.90, -2.50
Silver: 33.22, -0.15
The morning began with a report out of Italy, that $6 trillion worth of allegedly "fake" US Treasury bonds were seized by Italian police and the US Secret Service along with eight men involved in the counterfeiting and money laundering scam. Authorities said that the individuals arrested were planning to purchase plutonium from Nigeria, a story that has a familiar ring, last used as part of the pretense for going to war with Iraq after 9/11.
This story has all the markings of either a false flag event or wild conspiracy. Details are sketchy, though the assembled mainstream news media has already accepted the idea that the bonds are fakes. Don't expect to hear or see much more about this after today, except from bloggers and investigators outside the mainstream.
The European Central Bank (ECB) swapped its Greek bonds for new ones to ensure it isn’t forced to take losses in a debt restructuring. This story also greeted the morning in New York, without much fanfare, except for the press mimicking the officials at the ECB that Greece is moving closer to a resolution of its debt issues before the fateful date of March 20 arrives.
ZeroHedge has a pretty good take on the implications and possible illegalities of the move, which will apparently trigger the collective action clauses (CAC) and also Credit Default Swaps, as it would be a default event. Ooopsie. Could be a cascade coming.
Related, but unconfirmed, is a report that some banks already have documents detailing a March 23 default by Greece in which Greek banks will be closed, accounts frozen and Euro-denominated currency will become worthless in the land of Plato and Aristotle.
March 23 happens to be a Friday, which makes sense, since the report says the major credit agencies will declare Greece in default, and late Friday afternoons, after US markets have closed, seems to be the preferred time for any nasty news from the credit raters.
Late in the day, our normally-inept congress managed to PURPOSELY UNDERFUND THE SOCIAL SECURITY TRUST FUND by passing a bill to extend the roughly-30% cut to employees for the rest of the year and keep unemployment benefits flowing to the millions of Americans who just can't seem to find a good job.
Amid all of this, the stock market looked like a side show, with stocks limping along to yet another positive close - except for the NASDAQ, mostly because Apple finished down 0.09 - on horrifyingly-low volume.
It's tough to make this stuff up, but somebody must be, because financial markets are acting as if they're from another dimension or distant galaxy. The only reasonable correlation that can be assumed these days is that if the Euro is up, so will be US stocks. Oh, and any mention of Iran or the Strait of Hormuz is good for at least another 40-cent move higher in the price of crude, which has retail gasoline now priced at US record levels for February.
Hey, it's a three-day weekend. We can worry about Greece on Tuesday. But, don't drive too much. Could just wreck your budget.
Dow 12,950.10, +46.02 (0.36%)
NASDAQ 2,951.78, -8.07 (0.27%)
S&P 500 1,361.23, +3.19 (0.23%)
NYSE Composite 8,114.51, +22.32 (0.28%)
NASDAQ Volume 1,972,077,750
NYSE Volume 3,675,412,000
Combined NYSE & NASDAQ Advance - Decline: 3082-2535
Combined NYSE & NASDAQ New highs - New lows: 303-12 (0 new lows on NYSE. WOW!)
WTI crude oil: 103.24, +0.93
Gold: 1,725.90, -2.50
Silver: 33.22, -0.15
Wednesday, February 15, 2012
Numbers Racket: Greece, Euro, Apple, Transports and 100 Dow Points
Let's get real here.
Raise your hand if you think Greece is NOT going to default.
Very well. Maybe the rest of you with hands on hips or in pockets will appreciate the news out of Europe this morning, which somehow managed to pump futures toward a strong positive opening.
What's that? Even though Dow futures were up more than 80 points before former Treasury Secretary Hank (martial law) Paulson appeared on CNBC for the usual softball interview and were up 47 points just seconds before the open, the Dow only managed an initial gain of... hmmmm, less than 20 points.
Eurozone's 17 nations' (non) growth rate for the 4th quarter of 2011 was -0.3, the only countries showing gains in GDP growth being France and Slovakia.
Five countries in europe are already in recession. No surprise here, as Greece, Belgium, the Netherlands, Portugal and Italy have experienced two consecutive quarters of GDP decline. The one country everyone has an eye on is Germany, where output for the quarter fell by 0.2%, because the Germans have been the only country in the region showing any sign of elasticity and ability to weather the financial storms.
However, the rest of the Eurozone is dragging Germany's usually strong industrial sector down with the rest of the continent, a development that could prove disastrous as the EU plods through a troubling 2012.
Stocks took a spanking today in the US after the aforementioned recession news and then the communique out of Brussels from the esteemed EU finance ministers (a Baptist minister, a Catholic priest and an EU finance minister walk into a bar... oh, never mind) reminded the assembled money watchers worldwide that they are experts at procrastination and posturing.
While yesterday's commitment letter from Greek conservative leader Antonis Samaras stated that he would go along with the proposed - and passed by the Greek parliament - austerity measures, the potential future leader of Greece (give him about 6 months before he is bought off and retires, if he even wins the April race for Premier) contained a small caveat, saying he might reconsider, once, of course, the authorities deliver the 130 billion (or maybe it's more like 202 billion) Euros promised by the supra-government of the EU.
What happened today could best be described as controlled demolition. While the Dow was subsumed, hovering from 15 to 35 points in the red, the NASDAQ was wildly positive, though 90% of the gain was due to just one stock, Apple (APPL), which exploded in a number of ways on the day.
First, Apple rocketed to an all-time high of 526.29, but closed the day at the somewhat pedestrian level of 497.67. That's a pretty big round-turn, even for a stock with such a heady valuation. The decline was magnificent, falling 20 points in just the noon hour, and stumbling to a nearly 12-point loss in the remainder of the day. Volume was more than four times the average daily volume (12 million shares) at 53,457,212.
But Apple was just the NASDAQ story. The Dow charted its own path, guided by the Euro-dollar trade. The Euro slumped and finished below the psychotic 131 level, a number which is absolutely meaningless unless you're swapping currencies or considering travel to the doomed continent. But, stocks have followed the Euro-Dollar relationship like clockwork this year. Euro up, US stocks up, with the converse also true. The real value of the ephemeral Euro is all in the mind and to which equally worthless paper currency to which you compare it. If one would be so bold to compare it to some commodity - say, gold - well, a Euro won't buy you a single grain and it's gotten worse throughout its 11+ year life with each turning of the calendar.
So, the Dow set down at the close with its worse loss of 2012, which is not so much a surprise, being that the index (and all the other majors) has overheated in what has been an unusually-warm winter. But the Dow could just not surrender 100 points on the day, despite it being down 125 points at its worst level and down 108 points only one minute prior to the close. Perhaps that number (-100) has meaning to some people, but for the rest of us, -97.33 will just have to do.
What is alarming and scary (like Europe isn't enough of a fear factor) is the action in the Dow Transports, which suffered a two percent decline on the day, easily outstripping the widely-followed indices.(please have a gander at the 1 year chart with the 80% down-spike in November)
Another unpleasant thought concerns the timing of this week's reversal of fortune, just two days prior to options expiry, normally the strongest and upward-tilted week of any month in this Ponzi-like market scheme. Today's volume was also quite strong across all indices.
If stocks aren't making gains just prior to options expiry, then something very wrong is happening behind the scenes. It could be as simple as the market being overbought, or waking up to the awful European reality or the threat of war with Iran which looms larger each passing day.
Then again, it could just be that the low level of market participation has the major traders now drooling over each other's lunches. US stocks have been on a tear since October and the time and sentiment are ripe for a nasty correction.
A clue could come the day the Dow closes with a loss of more than 100 points, though that might prove to be a day too late and many billions of dollars short. Today's near-100-point loss should provide more than enough caution to everyone.
Keep a close eye on gold, and especially, silver, which has underperformed for the past two weeks. Any sustained gains in the precious metals should serve notice that there's something big brewing.
Dow 12,780.95, -97.33 (0.76%)
NASDAQ 2,915.83, -16.00 (0.55%)
S&P 500 1,343.23, -7.27 (0.54%)
NYSE Composite 7,998.65, -30.97 (0.39%)
NASDAQ Volume 2,036,710,750
NYSE Volume 4,045,495,750
Combined NYSE & NASDAQ Advance - Decline: 2267-
Combined NYSE & NASDAQ New highs - New lows: 264-23
WTI crude oil: 101.80, +1.06
Gold: 1,728.10, +10.40
Silver: 33.41, +0.06
Raise your hand if you think Greece is NOT going to default.
Very well. Maybe the rest of you with hands on hips or in pockets will appreciate the news out of Europe this morning, which somehow managed to pump futures toward a strong positive opening.
What's that? Even though Dow futures were up more than 80 points before former Treasury Secretary Hank (martial law) Paulson appeared on CNBC for the usual softball interview and were up 47 points just seconds before the open, the Dow only managed an initial gain of... hmmmm, less than 20 points.
Eurozone's 17 nations' (non) growth rate for the 4th quarter of 2011 was -0.3, the only countries showing gains in GDP growth being France and Slovakia.
Five countries in europe are already in recession. No surprise here, as Greece, Belgium, the Netherlands, Portugal and Italy have experienced two consecutive quarters of GDP decline. The one country everyone has an eye on is Germany, where output for the quarter fell by 0.2%, because the Germans have been the only country in the region showing any sign of elasticity and ability to weather the financial storms.
However, the rest of the Eurozone is dragging Germany's usually strong industrial sector down with the rest of the continent, a development that could prove disastrous as the EU plods through a troubling 2012.
Stocks took a spanking today in the US after the aforementioned recession news and then the communique out of Brussels from the esteemed EU finance ministers (a Baptist minister, a Catholic priest and an EU finance minister walk into a bar... oh, never mind) reminded the assembled money watchers worldwide that they are experts at procrastination and posturing.
While yesterday's commitment letter from Greek conservative leader Antonis Samaras stated that he would go along with the proposed - and passed by the Greek parliament - austerity measures, the potential future leader of Greece (give him about 6 months before he is bought off and retires, if he even wins the April race for Premier) contained a small caveat, saying he might reconsider, once, of course, the authorities deliver the 130 billion (or maybe it's more like 202 billion) Euros promised by the supra-government of the EU.
What happened today could best be described as controlled demolition. While the Dow was subsumed, hovering from 15 to 35 points in the red, the NASDAQ was wildly positive, though 90% of the gain was due to just one stock, Apple (APPL), which exploded in a number of ways on the day.
First, Apple rocketed to an all-time high of 526.29, but closed the day at the somewhat pedestrian level of 497.67. That's a pretty big round-turn, even for a stock with such a heady valuation. The decline was magnificent, falling 20 points in just the noon hour, and stumbling to a nearly 12-point loss in the remainder of the day. Volume was more than four times the average daily volume (12 million shares) at 53,457,212.
But Apple was just the NASDAQ story. The Dow charted its own path, guided by the Euro-dollar trade. The Euro slumped and finished below the psychotic 131 level, a number which is absolutely meaningless unless you're swapping currencies or considering travel to the doomed continent. But, stocks have followed the Euro-Dollar relationship like clockwork this year. Euro up, US stocks up, with the converse also true. The real value of the ephemeral Euro is all in the mind and to which equally worthless paper currency to which you compare it. If one would be so bold to compare it to some commodity - say, gold - well, a Euro won't buy you a single grain and it's gotten worse throughout its 11+ year life with each turning of the calendar.
So, the Dow set down at the close with its worse loss of 2012, which is not so much a surprise, being that the index (and all the other majors) has overheated in what has been an unusually-warm winter. But the Dow could just not surrender 100 points on the day, despite it being down 125 points at its worst level and down 108 points only one minute prior to the close. Perhaps that number (-100) has meaning to some people, but for the rest of us, -97.33 will just have to do.
What is alarming and scary (like Europe isn't enough of a fear factor) is the action in the Dow Transports, which suffered a two percent decline on the day, easily outstripping the widely-followed indices.(please have a gander at the 1 year chart with the 80% down-spike in November)
Another unpleasant thought concerns the timing of this week's reversal of fortune, just two days prior to options expiry, normally the strongest and upward-tilted week of any month in this Ponzi-like market scheme. Today's volume was also quite strong across all indices.
If stocks aren't making gains just prior to options expiry, then something very wrong is happening behind the scenes. It could be as simple as the market being overbought, or waking up to the awful European reality or the threat of war with Iran which looms larger each passing day.
Then again, it could just be that the low level of market participation has the major traders now drooling over each other's lunches. US stocks have been on a tear since October and the time and sentiment are ripe for a nasty correction.
A clue could come the day the Dow closes with a loss of more than 100 points, though that might prove to be a day too late and many billions of dollars short. Today's near-100-point loss should provide more than enough caution to everyone.
Keep a close eye on gold, and especially, silver, which has underperformed for the past two weeks. Any sustained gains in the precious metals should serve notice that there's something big brewing.
Dow 12,780.95, -97.33 (0.76%)
NASDAQ 2,915.83, -16.00 (0.55%)
S&P 500 1,343.23, -7.27 (0.54%)
NYSE Composite 7,998.65, -30.97 (0.39%)
NASDAQ Volume 2,036,710,750
NYSE Volume 4,045,495,750
Combined NYSE & NASDAQ Advance - Decline: 2267-
Combined NYSE & NASDAQ New highs - New lows: 264-23
WTI crude oil: 101.80, +1.06
Gold: 1,728.10, +10.40
Silver: 33.41, +0.06
Tuesday, February 7, 2012
Light Volume, Low Volatility: Signs of Stagnation?
Since the dramatic rise to fresh multi-year highs this past Friday, the first tow days of this week have been nothing more than a major snooze-fest. Whatever the issue, stocks seemed stalled at these lofty levels, perhaps in anticipation of some new developments in the ongoing struggle to keep Greece functioning or possibly due to angst over the conditions in Iran, Syria, Egypt or some other place that seems ripe to explode.
The pattern for the last two days has been oddly similar, with stocks lower at the open, then a spike higher around 10:00 am ET, and a flattening out for the remainder of the session. The difference between yesterday and today is that yesterday's action kept the major indices in the red, while today's trade was mostly on the positive side of the ledger.
Tuesday was a little bit like Groundhog Day in that regard, and also due to Fed chairman Ben Bernanke delivering pretty much the same canned remarks to the Senate as he gave to the House last week.
A 24-hour general strike cripple Greece's already-impaired infrastructure so that negotiations on three fronts - dealing with private bondholders, dealing with funds from the troika, and acceptance of harsh austerity measures - were held mostly without much fanfare or publicity.
Greece's unity government (an oxymoron if ever there was one) needs to work out arrangements with each of their two parties of creditors, and with its own people, to secure another round of financing of 130 billion euro ($172 billion) before a scheduled March 20 payment on 14.5 billion euro of maturing debt.
Since it's obvious to everyone that Greece can't manage its own money, much less the bailout funds pumped into it just last Summer, the threat of default and expulsion from the Eurozone continues to weigh on Europe and the rest of the world.
It's a cruel game of chicken and Europe, in particular, is the worst for it.
One proposal that was floated by German Chancellor Angela Merkel is to force the Greek government to allocate interest payments into an escrow account, so their profligate ways won't threaten future debt payments, much like a teenager with a co-signer on an installment loan. If it wasn't so sadly true, such an attempt to reign in Greece's spendthrift ways might qualify as humor. Unfortunately, the tragedy that is 21st century Greece does not look like it's going to have a happy ending.
Dow 12,878.20, +33.07 (0.26%)
NASDAQ 2,904.08, +2.09 (0.07%)
S&P 500 1,347.05, +2.72 (0.20%)
NYSE Composite 8,069.70, +21.67 (0.27%)
NASDAQ Volume 1,784,894,750
NYSE Volume 3,727,102,750
Combined NYSE & NASDAQ Advance - Decline: 2959-2649
Combined NYSE & NASDAQ New highs - New lows: 249-7 (wow)
WTI crude oil: 98.41, +1.50
Gold: 1,748.40, +23.50
Silver: 34.19, +0.44
The pattern for the last two days has been oddly similar, with stocks lower at the open, then a spike higher around 10:00 am ET, and a flattening out for the remainder of the session. The difference between yesterday and today is that yesterday's action kept the major indices in the red, while today's trade was mostly on the positive side of the ledger.
Tuesday was a little bit like Groundhog Day in that regard, and also due to Fed chairman Ben Bernanke delivering pretty much the same canned remarks to the Senate as he gave to the House last week.
A 24-hour general strike cripple Greece's already-impaired infrastructure so that negotiations on three fronts - dealing with private bondholders, dealing with funds from the troika, and acceptance of harsh austerity measures - were held mostly without much fanfare or publicity.
Greece's unity government (an oxymoron if ever there was one) needs to work out arrangements with each of their two parties of creditors, and with its own people, to secure another round of financing of 130 billion euro ($172 billion) before a scheduled March 20 payment on 14.5 billion euro of maturing debt.
Since it's obvious to everyone that Greece can't manage its own money, much less the bailout funds pumped into it just last Summer, the threat of default and expulsion from the Eurozone continues to weigh on Europe and the rest of the world.
It's a cruel game of chicken and Europe, in particular, is the worst for it.
One proposal that was floated by German Chancellor Angela Merkel is to force the Greek government to allocate interest payments into an escrow account, so their profligate ways won't threaten future debt payments, much like a teenager with a co-signer on an installment loan. If it wasn't so sadly true, such an attempt to reign in Greece's spendthrift ways might qualify as humor. Unfortunately, the tragedy that is 21st century Greece does not look like it's going to have a happy ending.
Dow 12,878.20, +33.07 (0.26%)
NASDAQ 2,904.08, +2.09 (0.07%)
S&P 500 1,347.05, +2.72 (0.20%)
NYSE Composite 8,069.70, +21.67 (0.27%)
NASDAQ Volume 1,784,894,750
NYSE Volume 3,727,102,750
Combined NYSE & NASDAQ Advance - Decline: 2959-2649
Combined NYSE & NASDAQ New highs - New lows: 249-7 (wow)
WTI crude oil: 98.41, +1.50
Gold: 1,748.40, +23.50
Silver: 34.19, +0.44
Friday, January 6, 2012
Stocks Finish First Week of 2012 in Mixed Fashion, Though Higher for Week
Yesterday, a commenter on a popular blog site made the bold statement that we may have already seen the highs for the year - meaning 2012, just three trading days into the new year.
While this prognosis has already been proven wrong vis-a-vis the NASDAQ, which was the only major US index to finish with a gain today, he may actually have a point.
Holiday sales figures continue to trickle in, and, as expected, the optimistic gains predicted by the National Federation of Retailers (talk about having an agenda!) have been somewhat diminished. The International Council of Shopping Centers reported that November-December sales were up just 3.3%, as opposed to last year's 3.8% gain and less than the NFR's rosy 4.5% prediction.
While companies such as Limited Brands, Macy's and Nordstrom showed solid gains over last year, their revenue figures may have exacted a serious toll on their profit margins and earnings. Target, Kohl's, Best Buy and J.C. Penney have already slashed their 4th quarter estimates, citing warmer-than-usual weather and a tough economy (duh!) as the main factors contributing to a slowdown in holiday sales.
Wal-Mart, the nation's largest retailer by number of stores and gross sales volume does not report figures on a month-by-month basis, but was expected to have had a good, though not stellar, holiday sales season.
Bloomingdale's and Macy's have already announced planned store closures as America's appetite for non-stop spending on non-essentials seems to have fallen victim to real economic pain.
Today's release of the BLS' December non-farm payroll data put credence to the idea that Thursday's ADP announcement of 325,000 net new private sector jobs in the month was - as usual - coming from a separate reality, as the Labor Department reported 200,000 (a nice round number) new American jobs in December.
However, a number of analysts - notably those from Morgan Stanley - contend that the BLS figures, which are supposedly seasonally-adjusted, may not, in fact, have been adequately adjusted, citing the huge gains in transportation, particularly in the subset of couriers and messengers (+42,000), and retail (+28,000). Also, the construction industry gains of 20,000 were due to mild weather across most of the country, so the real figure, which will be eventually revised lower, though probably not down to its actual level, is likely somewhere in the neighborhood of 120,000.
Wall Street certainly wasn't buying any of it, as Thursday was mostly flat after the ADP report and Friday was a loser overall. Traders - those few remaining in the worst trading market in years - seemed more concerned about the weakening Euro and the prospects of an EU breakup prompted by any of a number of characters, from Greece to Italy, Spain, Hungary or Portugal.
So, could 2012 be a real downer for stocks? It's probably too early to tell, though there are signs from europe that nothing is fixed, which is similar to what happened in the US in the aftermath of the 2008 financial crisis. The banks were bailed out and business went on for many, almost as usual. The core issues plaguing both the US and Europe are still government-related. Huge bureaucracies spend too much money they don't have, tax rates can't get any higher and unfunded liabilities - primarily pensions and health care - continue to contribute to a growing mountain of debt.
It is too soon to tell, for sure, but no catalyst for positive gains is present or on the horizon. Earnings reports will start to trickle in beginning Monday and will become a deluge by mid-month, and that will provide some direction. Corporate profits have been solid, but 4th quarter results will be a key element moving forward.
There's a sense that solid 4th quarter results have already been priced in and any misses or near-misses will be dealt with severely. The remainder of January and early February may be a period in which companies are punished even for just meeting expectations as investors may view this time as the end of a virtuous profit cycle.
And, of course, there's always Iran, and China, and the ongoing continental problems in the European Union. Any gains will be indeed climbing a wall of real worry.
The first week of 2012 was positive, but marginally so. The Dow Industrials sported a gain of just 142 points, the S&P 500 was up 20 points, the NASDAQ gained 69 points and the NYSE Composite added 80. Volume remained at disinterested levels.
Dow 12,359.92, -55.78 (0.45%)
NASDAQ 2,674.22, +4.36 (0.16%)
S&P 500 1,277.81, -3.25 (0.25%)
NYSE Composite 7,557.68, -42.29 (0.56%)
NASDAQ Volume 1,706,200,875
NYSE Volume 3,544,665,750
Combined NYSE & NASDAQ Advance - Decline: 2524-3040
Combined NYSE & NASDAQ New highs - New lows: 138-47
WTI crude oil: 101.56, -0.25
Gold: 1,616.80, -3.30
Silver: 28.68, -0.61
While this prognosis has already been proven wrong vis-a-vis the NASDAQ, which was the only major US index to finish with a gain today, he may actually have a point.
Holiday sales figures continue to trickle in, and, as expected, the optimistic gains predicted by the National Federation of Retailers (talk about having an agenda!) have been somewhat diminished. The International Council of Shopping Centers reported that November-December sales were up just 3.3%, as opposed to last year's 3.8% gain and less than the NFR's rosy 4.5% prediction.
While companies such as Limited Brands, Macy's and Nordstrom showed solid gains over last year, their revenue figures may have exacted a serious toll on their profit margins and earnings. Target, Kohl's, Best Buy and J.C. Penney have already slashed their 4th quarter estimates, citing warmer-than-usual weather and a tough economy (duh!) as the main factors contributing to a slowdown in holiday sales.
Wal-Mart, the nation's largest retailer by number of stores and gross sales volume does not report figures on a month-by-month basis, but was expected to have had a good, though not stellar, holiday sales season.
Bloomingdale's and Macy's have already announced planned store closures as America's appetite for non-stop spending on non-essentials seems to have fallen victim to real economic pain.
Today's release of the BLS' December non-farm payroll data put credence to the idea that Thursday's ADP announcement of 325,000 net new private sector jobs in the month was - as usual - coming from a separate reality, as the Labor Department reported 200,000 (a nice round number) new American jobs in December.
However, a number of analysts - notably those from Morgan Stanley - contend that the BLS figures, which are supposedly seasonally-adjusted, may not, in fact, have been adequately adjusted, citing the huge gains in transportation, particularly in the subset of couriers and messengers (+42,000), and retail (+28,000). Also, the construction industry gains of 20,000 were due to mild weather across most of the country, so the real figure, which will be eventually revised lower, though probably not down to its actual level, is likely somewhere in the neighborhood of 120,000.
Wall Street certainly wasn't buying any of it, as Thursday was mostly flat after the ADP report and Friday was a loser overall. Traders - those few remaining in the worst trading market in years - seemed more concerned about the weakening Euro and the prospects of an EU breakup prompted by any of a number of characters, from Greece to Italy, Spain, Hungary or Portugal.
So, could 2012 be a real downer for stocks? It's probably too early to tell, though there are signs from europe that nothing is fixed, which is similar to what happened in the US in the aftermath of the 2008 financial crisis. The banks were bailed out and business went on for many, almost as usual. The core issues plaguing both the US and Europe are still government-related. Huge bureaucracies spend too much money they don't have, tax rates can't get any higher and unfunded liabilities - primarily pensions and health care - continue to contribute to a growing mountain of debt.
It is too soon to tell, for sure, but no catalyst for positive gains is present or on the horizon. Earnings reports will start to trickle in beginning Monday and will become a deluge by mid-month, and that will provide some direction. Corporate profits have been solid, but 4th quarter results will be a key element moving forward.
There's a sense that solid 4th quarter results have already been priced in and any misses or near-misses will be dealt with severely. The remainder of January and early February may be a period in which companies are punished even for just meeting expectations as investors may view this time as the end of a virtuous profit cycle.
And, of course, there's always Iran, and China, and the ongoing continental problems in the European Union. Any gains will be indeed climbing a wall of real worry.
The first week of 2012 was positive, but marginally so. The Dow Industrials sported a gain of just 142 points, the S&P 500 was up 20 points, the NASDAQ gained 69 points and the NYSE Composite added 80. Volume remained at disinterested levels.
Dow 12,359.92, -55.78 (0.45%)
NASDAQ 2,674.22, +4.36 (0.16%)
S&P 500 1,277.81, -3.25 (0.25%)
NYSE Composite 7,557.68, -42.29 (0.56%)
NASDAQ Volume 1,706,200,875
NYSE Volume 3,544,665,750
Combined NYSE & NASDAQ Advance - Decline: 2524-3040
Combined NYSE & NASDAQ New highs - New lows: 138-47
WTI crude oil: 101.56, -0.25
Gold: 1,616.80, -3.30
Silver: 28.68, -0.61
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