Following Friday's dismal non-farm payroll data for January, the subsequent scream higher in equity markets (stocks) and the Money Daily contention that the market was rigged and traditional valuation metrics useless, Monday brought some confirmation of our position, in that markets barely budged.
The generally-accepted theory - for today - is that markets and investors are awaiting Janet Yellen's testimony before congress Tuesday and Thursday. On Tuesday, the newest -and first - Fed chairwoman will appear before the House Financial Services Committee. On Thursday, she addresses and takes questions from the Senate Banking Committee.
We'll take a different approach: BULL-PUCKEY! The reason markets didn't do much today is because they have nowhere to go after the massive ramping Thursday and Friday, on nothing but bad news, and the insiders are awaiting the influx of suckers to keep the rally going, so said insiders can SELL, SELL, SELL the stocks bought (at the behest of the NY Fed and the PPT) they bought last week that kept the market from entering a 10% correction.
Now, those suckers will surely appear at some point, soon after which the insiders will be selling, though not all at once, so as not to produce a self-reinforcing selling loop. No the selling will be niggling, nibbling, small amounts, though large enough to keep stock prices moderately higher or lower, for a while.
The key question at this juncture is not whether the market is manipulated - as it has been clearly demonstrated that all financial markets are manipulated - because, if the Fed isn't manipulating markets by its dual policy of ZIRP and QE, then what should we call it? No, the key question is how long it will take for the major indices to return to and exceed their recent all-time highs?
A month? Two? Six? It matters little, unless stocks tumble below their recent lows, because then, the fraud will be crystal clear and a correction will be in force, followed by a primary bear market.
The numbers to watch are these:
Dow: High: 16,576.66; Low: 15,372.80
S&P 500: High: 1,848.36' Low: 1,741.89
NASDAQ: High: 4,176.59; Low: 3,996.96
All of these figures are closing highs and lows and they all occurred on the same dates, the highs on December 31, 2013, the lows on February 3, 2014. Everything else in between is nothing but noise, but, it should be pointed out that the Dow, in particular, is a long way from those all-time highs, about 775 points away, and that matters.
So, what will the sociopaths of Wall Street and the crony capitalists in Washington DC dream up to achieve the facade of "recovery" this time? Or will they fight to the death over the debt ceiling all month long, only to resolve it in a late-night session, and then have the markets zoom forward? Any way they slice it, it's still one big stick of baloney, and not a choice cut, to boot.
A couple of other indications that support the theory that Thursday and, especially, Friday's rally was fake, are the slump in yield on the 10-year note, back down to 2.67% and stellar movement in gold and silver. If everything is supposed to be so fine and dandy, why then were investors rushing to safe haven assets on Monday?
There are more questions than answers, but, when dealing with fraud and fixing at such a high and clandestine level, there is much that is unknown and unseen, but, we've seen enough to know not to buy the sizzle nor the steak at this juncture.
DOW 15,801.79, +7.71 (+0.05%)
NASDAQ 4,148.17, +22.31 (+0.54%)
S&P 1,799.84, +2.82 (+0.16%)
10-Yr Note 100.65, +0.47 (+0.47%) Yield: 2.67%
NASDAQ Volume 1.68 Bil
NYSE Volume 3.30 Bil
Combined NYSE & NASDAQ Advance - Decline: 3338-2348
Combined NYSE & NASDAQ New highs - New lows: 129-29
WTI crude oil: 100.06, +0.18
Gold: 1,274.70, +11.80
Silver: 20.11, +0.176
Corn: 443.00, -1.25
Showing posts with label Janet Yellen. Show all posts
Showing posts with label Janet Yellen. Show all posts
Monday, February 10, 2014
Monday, February 3, 2014
Wall Street Has a Problem, So Everybody Will Suffer; Stocks Smashed on Yellen's 1st Day
Fed Chairwoman, Janet Yellen, is just about to head home from her first day as head of the US Federal Reserve System. Judging by what happened on Wall Street, she's probably not going to cook herself a wholesome meal, but rather will order out, Chinese the most likely choice.
Stocks went absolutely South on the first day of February, largely in response to the Fed's decision to continue their asset purchase tapering, but moreso on US and China economic weakness.
China's PMI for January edged down to 50.5, the lowest level in six months, not exactly the kind of news Ms. Yellen was seeking. Making matters worse for the new Fed head, US ISM fell from 56.5 to 51.3, sending stocks, already down on the session, into a tailspin after their release at 10:00 am ET.
The lethal combination of the Fed cutting back on bond purchases, in the face of weakening data from the world's two largest economies, set the stage for a massive selloff on Wall Street and a flight to the safety of US treasury bonds, which closed at their lowest yield level - on the benchmark 10-year note - in three months.
The carnage on Wall Street was not isolated to just today, however. Stocks have been performing poorly all year, and the level of fear is perceptibly rising, with the Dow, NASDAQ and S&P 500 all closing down more than 2%, after the Nikkei fell 295 points and officially into a correction, down 10% off the recent highs.
The losses on Wall Street were monumental. For the Dow, it was the worst start to a month since 1982; for the NASDAQ, the losses were the worst since the inception of the index (1972).
Auto sales were down for January, with weather blamed for sluggish sales. Bond funds saw 20-30 time normal volume of inflows. The VIX has gone from the mid-12s to over 21 in a month, a 70%-plus rise in risk perception. Not only were stocks down, but volume was large, and has been throughout the slide which began in January.
The reaction in bond markets - sending the 10-year down to a yield of 2.58% - was perfectly rational. As risk assets (stocks) deteriorate, safety is sought, and there's nothing safer than US treasuries, or, maybe, German bunds, also lower during the past month and today.
Looking forward, Ms. Yellen should have expected this, or worse. After all, history tells us that all new Fed chairs inherit crises. as did Volker, Greenspan and Bernanke before her. Surely, the shared wisdom of decades of Federal Reserve actions will guide Ms. Yellen to a logical solution, stopping the slide in stocks while keeping the US economy growing.
Or will it?
Yellen is trapped. QE tapering is already the de facto standard policy. To reverse it would be to admit defeat, and possibly undermine any confidence left in the institution of the Federal Reserve, which, admittedly, isn't much. The true solution is for the Fed to stand back, watch the markets deteriorate, witness the destruction of the US and global economy over the near term and hope that people, individuals and businesses, will have enough of their wits remaining to muddle through a few years of truly hard times.
The Fed has no choice. Interest rates are already at zero and QE has had limited effect. It's time for the Fed to turn its back on the economy and the markets and let chips fall where they may. Any other action will only result in more asset dislocations, of which there are already too many.
For those of us who are not heavily invested in stocks (that leaves out anybody depending upon a pension, either now or in the future), SHORT AT WILL. This downward thrust will eventually manifest itself into a correction (the Dow is less than 500 points from it) and, by May or June or July, at the latest, a fully-blown bear market.
Bull markets do not last forever, and this current bull, which began in March, 2009, has reached its end. If proof is needed, check the highs on the indices from December and see how long it takes to get back to those levels. A reasonable guess, at this juncture, would be seven to ten years, maybe as long as 20.
The globalization experiment, as it always does, is failing. Economies must begin to fend for themselves and become more localized. Faith in Wall Street, which took a severe blow in 2008-09, will lose all credibility in coming months. Already, there are hordes of individuals who do not trust the wizards of Wall Street, as it was in the 1930s, during the Great Depression.
Wall Street will not respond well. Stocks will fall. Bond yields and mortgages will be even lower than in recent years. While those who have bought into the system - government employees, pensioners of many stripes, plain idiots and "investors" - will suffer, the prudent, the goldbugs, silverbugs and savers will eventually be rewarded for their patience and their frugality.
Put one's faith not in the data and derivatives of Wall Street, but in the strength of individuals, work ethic and survivability. That's a trade which has stood the test of time.
Note to Dan K (who may or may not be interested), and Adam Smith theorists, corn was up 0.40% today; silver gained 1.51%. Deflation.
DOW 15,372.80, -326.05 (-2.08%)
NASDAQ 3,996.96, -106.92 (-2.61%)
S&P 1,741.89, -40.70 (-2.28%)
10-Yr Note 101.48, +1.21 (+1.21%) Yield: 2.58%
NASDAQ Volume 2.41 Bil
NYSE Volume 4.72 Bil
Combined NYSE & NASDAQ Advance - Decline: 839-4976 (extreme)
Combined NYSE & NASDAQ New highs - New lows: 83-197 (trending)
WTI crude oil: 96.43, -1.06
Gold: 1,259.90, +20.10
Silver: 19.41, +0.289
Corn: 435.75, +1.75
Stocks went absolutely South on the first day of February, largely in response to the Fed's decision to continue their asset purchase tapering, but moreso on US and China economic weakness.
China's PMI for January edged down to 50.5, the lowest level in six months, not exactly the kind of news Ms. Yellen was seeking. Making matters worse for the new Fed head, US ISM fell from 56.5 to 51.3, sending stocks, already down on the session, into a tailspin after their release at 10:00 am ET.
The lethal combination of the Fed cutting back on bond purchases, in the face of weakening data from the world's two largest economies, set the stage for a massive selloff on Wall Street and a flight to the safety of US treasury bonds, which closed at their lowest yield level - on the benchmark 10-year note - in three months.
The carnage on Wall Street was not isolated to just today, however. Stocks have been performing poorly all year, and the level of fear is perceptibly rising, with the Dow, NASDAQ and S&P 500 all closing down more than 2%, after the Nikkei fell 295 points and officially into a correction, down 10% off the recent highs.
The losses on Wall Street were monumental. For the Dow, it was the worst start to a month since 1982; for the NASDAQ, the losses were the worst since the inception of the index (1972).
Auto sales were down for January, with weather blamed for sluggish sales. Bond funds saw 20-30 time normal volume of inflows. The VIX has gone from the mid-12s to over 21 in a month, a 70%-plus rise in risk perception. Not only were stocks down, but volume was large, and has been throughout the slide which began in January.
The reaction in bond markets - sending the 10-year down to a yield of 2.58% - was perfectly rational. As risk assets (stocks) deteriorate, safety is sought, and there's nothing safer than US treasuries, or, maybe, German bunds, also lower during the past month and today.
Looking forward, Ms. Yellen should have expected this, or worse. After all, history tells us that all new Fed chairs inherit crises. as did Volker, Greenspan and Bernanke before her. Surely, the shared wisdom of decades of Federal Reserve actions will guide Ms. Yellen to a logical solution, stopping the slide in stocks while keeping the US economy growing.
Or will it?
Yellen is trapped. QE tapering is already the de facto standard policy. To reverse it would be to admit defeat, and possibly undermine any confidence left in the institution of the Federal Reserve, which, admittedly, isn't much. The true solution is for the Fed to stand back, watch the markets deteriorate, witness the destruction of the US and global economy over the near term and hope that people, individuals and businesses, will have enough of their wits remaining to muddle through a few years of truly hard times.
The Fed has no choice. Interest rates are already at zero and QE has had limited effect. It's time for the Fed to turn its back on the economy and the markets and let chips fall where they may. Any other action will only result in more asset dislocations, of which there are already too many.
For those of us who are not heavily invested in stocks (that leaves out anybody depending upon a pension, either now or in the future), SHORT AT WILL. This downward thrust will eventually manifest itself into a correction (the Dow is less than 500 points from it) and, by May or June or July, at the latest, a fully-blown bear market.
Bull markets do not last forever, and this current bull, which began in March, 2009, has reached its end. If proof is needed, check the highs on the indices from December and see how long it takes to get back to those levels. A reasonable guess, at this juncture, would be seven to ten years, maybe as long as 20.
The globalization experiment, as it always does, is failing. Economies must begin to fend for themselves and become more localized. Faith in Wall Street, which took a severe blow in 2008-09, will lose all credibility in coming months. Already, there are hordes of individuals who do not trust the wizards of Wall Street, as it was in the 1930s, during the Great Depression.
Wall Street will not respond well. Stocks will fall. Bond yields and mortgages will be even lower than in recent years. While those who have bought into the system - government employees, pensioners of many stripes, plain idiots and "investors" - will suffer, the prudent, the goldbugs, silverbugs and savers will eventually be rewarded for their patience and their frugality.
Put one's faith not in the data and derivatives of Wall Street, but in the strength of individuals, work ethic and survivability. That's a trade which has stood the test of time.
Note to Dan K (who may or may not be interested), and Adam Smith theorists, corn was up 0.40% today; silver gained 1.51%. Deflation.
DOW 15,372.80, -326.05 (-2.08%)
NASDAQ 3,996.96, -106.92 (-2.61%)
S&P 1,741.89, -40.70 (-2.28%)
10-Yr Note 101.48, +1.21 (+1.21%) Yield: 2.58%
NASDAQ Volume 2.41 Bil
NYSE Volume 4.72 Bil
Combined NYSE & NASDAQ Advance - Decline: 839-4976 (extreme)
Combined NYSE & NASDAQ New highs - New lows: 83-197 (trending)
WTI crude oil: 96.43, -1.06
Gold: 1,259.90, +20.10
Silver: 19.41, +0.289
Corn: 435.75, +1.75
Friday, January 31, 2014
Stocks End January in Ugly Fashion with All Major Indices Down for the Month and Year
Whew!
Friday capped off an extremely volatile week in stocks and world economics, though astute investors and money managers should have known this kind of activity was coming all along, as soon as the Fed began reducing its bond purchases last month.
With January in the can, one might be obligated to kick it, for it was one of the worst months in some time, in fact, the January decline was the worst since February of 2009. It was also the first January decline for stocks since 2011, and that turned out to be a very rocky year, so caution is advised for those with a bullish bent. Fund flows from emerging market stock and bond funds were massive over the past two weeks, as were equity outflows in US-based funds.
What really troubled markets this morning, when the Dow fell by more than 220 points in early trading, were outflows of capital from emerging markets everywhere, from Russia, to Hungary, to Poland, South Africa, Turkey, Argentina, Indonesia, India, Brazil and China, and that's just a partial list.
Adding to the woes was an earnings warning from Wal-Mart (WMT), which is viewing the passage of the farm bill in the House of Representatives as very detrimental to their business, as it will strip out $8 billion in food stamps, the life-blood of the Wally World economy.
As the Fed is committed to slowing their bond purchases and eventually ending quantitative easing (QE) over the next six to eight months, it will be instructive to view the new chairmanship of Janet Yellen, who has inherited the legacy of Ben Bernanke's reckless money printing and zero-interest rate policies of the past five years. Yellen, who by some measures is even more dovish than the white-tailed Bernanke, will, as is usually the case with a new Fed head, have to deal with a crisis condition in her first days as chairwoman and beyond, and there's really no telling how she may react to financial upheaval in not only the emerging economies, but also the developed ones.
Looking forward to next week, markets will have to digest official China PMI, released later tonight, then work through central bank policy meetings in England, the EU, Australia, Poland and the Czeck Republic before dealing with the potentially-devastating January non-farm payroll report on US jobs, due prior to the bell on Friday, making the first week of February no less nerve-wracking than all of January.
Here's how the major averages ended the week:
Dow -180.26 (-1.14%)
S&P 500 -7.70 (-0.43%)
NASDAQ -24.29 (-0.59%)
...and the month:
Dow -877.81 (5.3%)
S&P 500 -65.77 (-3.6%)
NASDAQ -72.71 (-1.7%)
It's not pretty, and, as expressed through post after post on Money Daily this month, it's almost certain to get worse, as huge imbalances turn into ugly dislocations of capital in every nook and cranny of the finance. The Fed, in its infinite wisdom, has gone too far since 2009 in trying to fix things that were broken by covering them up with wild slugs of capital and debt. Now, it is time to pay the piper, so to speak.
View the video below for Jim Grant's explanation of how the Fed distorts markets. His simple explanations provide deep insight for anyone who believe Keynesian economics has met its match in Ben Bernanke and the current crop of central bank "experimenters."
While this short clip is indeed concise and to the point, perhaps the most eloquent statement made on live TV by Mr. Grant was when he chided the erstwhile Steve Liesman with this pithy piece of pragmatism: "The FED can change what things look like, but, the FED can never change what things are." Our hats are permanently tipped to Mr. Grant. And with that, enjoy the weekend and the Super Bowl. The world may look the same come Monday, but, if one could see through eyes unclouded by hubris and propaganda, what a wonderful world it might be. DOW 15,698.85, -149.76 (-0.94%) NASDAQ 4,103.88, -19.25 (-0.47%) S&P 1,782.59, -11.60 (-0.65%) 10-Yr Note 100.86 +0.71 (+0.71%) Yield: 2.66 NASDAQ Volume 2.09 Bil NYSE Volume 4.05 Bil Combined NYSE & NASDAQ Advance - Decline: 1941-3780 Combined NYSE & NASDAQ New highs - New lows: 129-128 WTI crude oil: 97.49, -0.74 Gold: 1,240.10, -2.10 Silver: 19.12, -0.006 Corn: 435.00, +0.50
Friday capped off an extremely volatile week in stocks and world economics, though astute investors and money managers should have known this kind of activity was coming all along, as soon as the Fed began reducing its bond purchases last month.
With January in the can, one might be obligated to kick it, for it was one of the worst months in some time, in fact, the January decline was the worst since February of 2009. It was also the first January decline for stocks since 2011, and that turned out to be a very rocky year, so caution is advised for those with a bullish bent. Fund flows from emerging market stock and bond funds were massive over the past two weeks, as were equity outflows in US-based funds.
What really troubled markets this morning, when the Dow fell by more than 220 points in early trading, were outflows of capital from emerging markets everywhere, from Russia, to Hungary, to Poland, South Africa, Turkey, Argentina, Indonesia, India, Brazil and China, and that's just a partial list.
Adding to the woes was an earnings warning from Wal-Mart (WMT), which is viewing the passage of the farm bill in the House of Representatives as very detrimental to their business, as it will strip out $8 billion in food stamps, the life-blood of the Wally World economy.
As the Fed is committed to slowing their bond purchases and eventually ending quantitative easing (QE) over the next six to eight months, it will be instructive to view the new chairmanship of Janet Yellen, who has inherited the legacy of Ben Bernanke's reckless money printing and zero-interest rate policies of the past five years. Yellen, who by some measures is even more dovish than the white-tailed Bernanke, will, as is usually the case with a new Fed head, have to deal with a crisis condition in her first days as chairwoman and beyond, and there's really no telling how she may react to financial upheaval in not only the emerging economies, but also the developed ones.
Looking forward to next week, markets will have to digest official China PMI, released later tonight, then work through central bank policy meetings in England, the EU, Australia, Poland and the Czeck Republic before dealing with the potentially-devastating January non-farm payroll report on US jobs, due prior to the bell on Friday, making the first week of February no less nerve-wracking than all of January.
Here's how the major averages ended the week:
Dow -180.26 (-1.14%)
S&P 500 -7.70 (-0.43%)
NASDAQ -24.29 (-0.59%)
...and the month:
Dow -877.81 (5.3%)
S&P 500 -65.77 (-3.6%)
NASDAQ -72.71 (-1.7%)
It's not pretty, and, as expressed through post after post on Money Daily this month, it's almost certain to get worse, as huge imbalances turn into ugly dislocations of capital in every nook and cranny of the finance. The Fed, in its infinite wisdom, has gone too far since 2009 in trying to fix things that were broken by covering them up with wild slugs of capital and debt. Now, it is time to pay the piper, so to speak.
View the video below for Jim Grant's explanation of how the Fed distorts markets. His simple explanations provide deep insight for anyone who believe Keynesian economics has met its match in Ben Bernanke and the current crop of central bank "experimenters."
While this short clip is indeed concise and to the point, perhaps the most eloquent statement made on live TV by Mr. Grant was when he chided the erstwhile Steve Liesman with this pithy piece of pragmatism: "The FED can change what things look like, but, the FED can never change what things are." Our hats are permanently tipped to Mr. Grant. And with that, enjoy the weekend and the Super Bowl. The world may look the same come Monday, but, if one could see through eyes unclouded by hubris and propaganda, what a wonderful world it might be. DOW 15,698.85, -149.76 (-0.94%) NASDAQ 4,103.88, -19.25 (-0.47%) S&P 1,782.59, -11.60 (-0.65%) 10-Yr Note 100.86 +0.71 (+0.71%) Yield: 2.66 NASDAQ Volume 2.09 Bil NYSE Volume 4.05 Bil Combined NYSE & NASDAQ Advance - Decline: 1941-3780 Combined NYSE & NASDAQ New highs - New lows: 129-128 WTI crude oil: 97.49, -0.74 Gold: 1,240.10, -2.10 Silver: 19.12, -0.006 Corn: 435.00, +0.50
Wednesday, January 29, 2014
Bernanke's Departure Marks the End of the Bull Market as Stocks Slump Again
There were so many moving parts to the economic and trading landscape since yesterday's close, it may be most instructive to review them in chronological order.
First, around 5:00 pm ET, the Turkish central bank raised overnight lending rates - along with all other key rates - from 7.75% to 12%. That's the overnight rate, the rate at which the central bank lends to member banks. Ouch! The move immediately sent US stock futures soaring, as though the global economy had been saved by this one clumsy, desperate stroke of policy.
At 9:00 pm ET, the impostor-in-chief, Barrack Obama, gave his fifth state of he union address, grossly misrepresenting the overall health and stability of the United States and glibly calling on American businesses to give employees a raise.
The euphoria spread to Asian markets, which were higher on the day, the Nikkei gaining more than 400 points on the session.
However, by the time the sun began to rise on Europe, the glad tidings had turned back to fear, as the Turkish Lira began to come under continued pressure from other currencies. Most European indices were trending lower, though marginally, with losses of under one percent on the majors.
By early morning in the US, the trend had completely reversed course, with stock futures deeply negative. At the open, the Dow Jones Industrials fell by roughly 120 points and held in that range until the 2:00 pm ET Fed policy announcement.
Widely expected to taper their bond purchases by another $10 billion per month, dropping the total to $65 billion, the Fed did exactly that, to the ultimate dismay of equity investors. Those who had made the correct call prior to the action continued pulling money out of stocks, rotating, as it seemed prudent, into bonds, which continued to fall in the aftermath of the Fed's announcement.
By the end of the session, stocks had put in severe losses once again, with the Dow leading the way lower. Bonds reacted by rallying sharply, the 10-year-note finishing at its lowest yield - 2.68% - in more than two months. In addition to bonds, the main beneficiary of the Fed's reckless monetary policy at this juncture were precious metals, as gold and silver rallied throughout the day.
What becomes of equities, sovereign currencies and the global economy as the Federal Reserve says good-bye to Ben Bernanke (this was his final FOMC meeting as Fed chairman) and hello to Janet Yellen, is now an open question, though with obvious clues.
If the Fed continues to taper its bond purchases by an additional $10 billion per month, they would be completely out of the market sometime around September, though it is unlikely that the Fed's path will be so resolute and straightforward. Already, it's apparent that stocks are going to suffer in the short term, while bonds enjoy a day or two in the sun. With returns on equities becoming more and more risky endeavors, bonds will appear as a safe have, forcing more investors to rush in, thus, sending yields lower.
While a crash in the equity market may not exactly be what the fed had in mind, it may be unavoidable, as there is no neat way to unwind their massive QE program which unfolded over the past five years and should come to an end. As reckless as was Bernanke's policy directives of QE and ZIRP, unwinding these programs is going to cause massive economic disruptions and further fuel a gathering global deflation trade. It only makes sense. If the Fed withdraws liquidity, economies will suffer. At least it's a plan that makes some sense, though nobody really wants to endure the pain that comes from such an unwinding. In the long run, it may be the only way back to something resembling normalcy.
The pain will be acute - and already has been so - in emerging markets, where most of the hot money had been headed during the Fed's money-printing spree. Look for developed nations to maintain an aura of stability, while the rest of the world, in places as diverse as South Africa, Turkey, Argentina, Brazil, Indonesia, Mexico, India and eventually, China, become somewhat ungled, economically-speaking.
With money fleeing these former hotbeds of investment, their currencies will devalue against the rest of the developed world, Japan, the US and Europe remaining as the centrist states and most stable currencies... for a while. The risk is contagion from the emerging markets into the developed, as the destruction of deflation engulfs the globe.
Bonds should fare well. An expectation of the US 10-year note below two percent would be rational. However, carry trades, such as a Euro-Yen or Dollar-Yen might lose much of their luster, the better plays to be short the emerging currencies.
Of course, with dislocations of capital everywhere, gold and silver should be afforded a top-shelf position, though their advance will, as always, be suppressed by the concerted efforts of the central banks. Still, in a devaluing environment, the ultimate price of the precious metals, as measured against various currencies, may indeed become a top choice for wealth preservation.
With the current path of the Fed set in place (for now, because they can, have, and will move the goal posts), it would be safe to conclude that the bull market in stocks has come to an abrupt end and money in 401k and other accounts of storage will become victims of a nasty, clawing bear that has no regard for the future, only a perception of the unfolding present, complete with companies that are presently overvalued, have limited earnings growth potential and have to be unwound.
Unless the major indices can find a way to turn the tide and rally past recent highs, the bull market, spurred on by vast wasted sums of money from the Federal Reserve and other sources, is over.
From a technical perspective, Wednesday's trade was an outright disaster. Declining issues led advancers by a 7:2 margin and new lows exceeded new highs for the third day in the last four.
DOW 15,738.79, -189.77 (-1.19%)
NASDAQ 4,051.43, -46.53 (-1.14%)
S&P 1,774.20, -18.30 (-1.02%)
10-Yr Note 100.26, +0.97 (+0.97%) Yield: 2.68%
NASDAQ Volume 2.05 Bil
NYSE Volume 3.93 Bil
Combined NYSE & NASDAQ Advance - Decline: 1289-4441
Combined NYSE & NASDAQ New highs - New lows: 66-128
WTI crude oil: 97.36, -0.05
Gold: 1,262.20, +11.40
Silver: 19.55, +0.049
Corn: 427.50, -4.50
First, around 5:00 pm ET, the Turkish central bank raised overnight lending rates - along with all other key rates - from 7.75% to 12%. That's the overnight rate, the rate at which the central bank lends to member banks. Ouch! The move immediately sent US stock futures soaring, as though the global economy had been saved by this one clumsy, desperate stroke of policy.
At 9:00 pm ET, the impostor-in-chief, Barrack Obama, gave his fifth state of he union address, grossly misrepresenting the overall health and stability of the United States and glibly calling on American businesses to give employees a raise.
The euphoria spread to Asian markets, which were higher on the day, the Nikkei gaining more than 400 points on the session.
However, by the time the sun began to rise on Europe, the glad tidings had turned back to fear, as the Turkish Lira began to come under continued pressure from other currencies. Most European indices were trending lower, though marginally, with losses of under one percent on the majors.
By early morning in the US, the trend had completely reversed course, with stock futures deeply negative. At the open, the Dow Jones Industrials fell by roughly 120 points and held in that range until the 2:00 pm ET Fed policy announcement.
Widely expected to taper their bond purchases by another $10 billion per month, dropping the total to $65 billion, the Fed did exactly that, to the ultimate dismay of equity investors. Those who had made the correct call prior to the action continued pulling money out of stocks, rotating, as it seemed prudent, into bonds, which continued to fall in the aftermath of the Fed's announcement.
By the end of the session, stocks had put in severe losses once again, with the Dow leading the way lower. Bonds reacted by rallying sharply, the 10-year-note finishing at its lowest yield - 2.68% - in more than two months. In addition to bonds, the main beneficiary of the Fed's reckless monetary policy at this juncture were precious metals, as gold and silver rallied throughout the day.
What becomes of equities, sovereign currencies and the global economy as the Federal Reserve says good-bye to Ben Bernanke (this was his final FOMC meeting as Fed chairman) and hello to Janet Yellen, is now an open question, though with obvious clues.
If the Fed continues to taper its bond purchases by an additional $10 billion per month, they would be completely out of the market sometime around September, though it is unlikely that the Fed's path will be so resolute and straightforward. Already, it's apparent that stocks are going to suffer in the short term, while bonds enjoy a day or two in the sun. With returns on equities becoming more and more risky endeavors, bonds will appear as a safe have, forcing more investors to rush in, thus, sending yields lower.
While a crash in the equity market may not exactly be what the fed had in mind, it may be unavoidable, as there is no neat way to unwind their massive QE program which unfolded over the past five years and should come to an end. As reckless as was Bernanke's policy directives of QE and ZIRP, unwinding these programs is going to cause massive economic disruptions and further fuel a gathering global deflation trade. It only makes sense. If the Fed withdraws liquidity, economies will suffer. At least it's a plan that makes some sense, though nobody really wants to endure the pain that comes from such an unwinding. In the long run, it may be the only way back to something resembling normalcy.
The pain will be acute - and already has been so - in emerging markets, where most of the hot money had been headed during the Fed's money-printing spree. Look for developed nations to maintain an aura of stability, while the rest of the world, in places as diverse as South Africa, Turkey, Argentina, Brazil, Indonesia, Mexico, India and eventually, China, become somewhat ungled, economically-speaking.
With money fleeing these former hotbeds of investment, their currencies will devalue against the rest of the developed world, Japan, the US and Europe remaining as the centrist states and most stable currencies... for a while. The risk is contagion from the emerging markets into the developed, as the destruction of deflation engulfs the globe.
Bonds should fare well. An expectation of the US 10-year note below two percent would be rational. However, carry trades, such as a Euro-Yen or Dollar-Yen might lose much of their luster, the better plays to be short the emerging currencies.
Of course, with dislocations of capital everywhere, gold and silver should be afforded a top-shelf position, though their advance will, as always, be suppressed by the concerted efforts of the central banks. Still, in a devaluing environment, the ultimate price of the precious metals, as measured against various currencies, may indeed become a top choice for wealth preservation.
With the current path of the Fed set in place (for now, because they can, have, and will move the goal posts), it would be safe to conclude that the bull market in stocks has come to an abrupt end and money in 401k and other accounts of storage will become victims of a nasty, clawing bear that has no regard for the future, only a perception of the unfolding present, complete with companies that are presently overvalued, have limited earnings growth potential and have to be unwound.
Unless the major indices can find a way to turn the tide and rally past recent highs, the bull market, spurred on by vast wasted sums of money from the Federal Reserve and other sources, is over.
From a technical perspective, Wednesday's trade was an outright disaster. Declining issues led advancers by a 7:2 margin and new lows exceeded new highs for the third day in the last four.
DOW 15,738.79, -189.77 (-1.19%)
NASDAQ 4,051.43, -46.53 (-1.14%)
S&P 1,774.20, -18.30 (-1.02%)
10-Yr Note 100.26, +0.97 (+0.97%) Yield: 2.68%
NASDAQ Volume 2.05 Bil
NYSE Volume 3.93 Bil
Combined NYSE & NASDAQ Advance - Decline: 1289-4441
Combined NYSE & NASDAQ New highs - New lows: 66-128
WTI crude oil: 97.36, -0.05
Gold: 1,262.20, +11.40
Silver: 19.55, +0.049
Corn: 427.50, -4.50
Wednesday, December 18, 2013
Fed Tapers Bond Purchases, Loosens Policy Guidance; Markets Love It
In a masterstroke of monetary legerdemain, outgoing Federal Reserve chairman Ben Bernanke delivered a final, resonant chord to his easy money policy of the past five years, announcing a reduction in the level of MBS and treasury bond purchases while simultaneously changing the guidance for rate policy going forward.
What the Fed has decided to do was to strike a delicate balance between the two policy initiatives currently employed. Bond purchases will henceforth be reduced from $85 billion to $75 Billion per month, shaving $5 billion from MBS and $5 billion from treasury purchases.
In its policy statement, however, the Fed took a different direction, emphasizing that the federal funds rate would remain at zero to 0.25% beyond the time at which unemployment falls below 6.5%. In other words, the Fed, as is their usual mode of operation, changed the game or moved the goal posts in terms of policy in order to accommodate a lower amount of bond purchases, in effect, maintaining equilibrium.
What the Fed is saying, somewhat tongue in cheek, is that their bond purchasing program (QE) has not quite brought about the desired results. The economy is not improving as rapidly as they anticipated, if at all, but, in order to not upset capital and equity markets with their bond purchase "tapering," they decided to loosen the language surrounding any future decision to raise interest rates.
It was quite the nifty move by the hands at the Fed, and both bond and stock markets behaved well along the lines anticipated by the manipulators of the world's money supply.
Stocks rose gratuitously, with the Dow and S&P closing at all-time highs; bonds remained distinctly calm. It was the perfect end to a reign of easy money that Bernanke has overseen, and gave the next man up, Janet Yellen, direction in which to pursue the Fed's policy directives.
The long and short of all the hype and hoopla over this final Fed meeting of the year and the last press conference by Mr. Bernanke is that the status quo was maintained and will be maintained for the foreseeable future. During his presser, the Chairman spoke of low inflation through 2016, with unemployment coming down gradually over a similar time period.
While the inflation expectations are well below what the Fed desires (2-2 1/2%), the 6.5% unemployment threshold has essentially been removed from all future Fed calculus.
When the world completes a couple more trips around the sun, at this time two years from now, it's expected that the Fed will no longer be purchasing bonds to the excessive degree it is today, and that unemployment will be much closer to "normalcy" at or near five percent.
In the real world, should everything proceed as the Fed anticipates, the economy, with interest rates still moored at zero, with 5% unemployment, the economy would be growing at a ripping rate so rapid that inflation would once again become a real problem.
Would it be so. The chances of everything working in straight lines toward a normalized economy is nothing more than a Fed fantasy. There will be disruptions and distortions and quite possibly another recession. Additionally, believing that pressures and changes from other parts of the planet would not be disruptive, is the purest height of folly.
The Fed hasn't really changed much at all. Reducing bond purchases by $10 billion per month is nothing more than a rounding error in the larger scheme of things. The punchbowl of free fiat has been left at the Wall Street party. Nothing has changed other than possibly, perception, and the person sitting in the Fed chair will be different.
The monetary can just got kicked down the road quite a stretch further. The new normal gets extended until something breaks.
DOW 16,167.97, +292.71 (+1.84%)
NASDAQ 4,070.06, +46.38 (+1.15%)
S&P 1,810.65, +29.65 (+1.66%)
10-Yr Note 98.78, -0.29 (-0.29%) Yield: 2.89%
NASDAQ Volume 1.83 Bil
NYSE Volume 3.74 Bil
Combined NYSE & NASDAQ Advance - Decline: 4252-1467
Combined NYSE & NASDAQ New highs - New lows: 311-112
WTI crude oil: 97.80, +0.58
Gold: 1,235.00, +4.90
Silver: 20.06, +0.219
Corn: 425.00, -1.75
What the Fed has decided to do was to strike a delicate balance between the two policy initiatives currently employed. Bond purchases will henceforth be reduced from $85 billion to $75 Billion per month, shaving $5 billion from MBS and $5 billion from treasury purchases.
In its policy statement, however, the Fed took a different direction, emphasizing that the federal funds rate would remain at zero to 0.25% beyond the time at which unemployment falls below 6.5%. In other words, the Fed, as is their usual mode of operation, changed the game or moved the goal posts in terms of policy in order to accommodate a lower amount of bond purchases, in effect, maintaining equilibrium.
What the Fed is saying, somewhat tongue in cheek, is that their bond purchasing program (QE) has not quite brought about the desired results. The economy is not improving as rapidly as they anticipated, if at all, but, in order to not upset capital and equity markets with their bond purchase "tapering," they decided to loosen the language surrounding any future decision to raise interest rates.
It was quite the nifty move by the hands at the Fed, and both bond and stock markets behaved well along the lines anticipated by the manipulators of the world's money supply.
Stocks rose gratuitously, with the Dow and S&P closing at all-time highs; bonds remained distinctly calm. It was the perfect end to a reign of easy money that Bernanke has overseen, and gave the next man up, Janet Yellen, direction in which to pursue the Fed's policy directives.
The long and short of all the hype and hoopla over this final Fed meeting of the year and the last press conference by Mr. Bernanke is that the status quo was maintained and will be maintained for the foreseeable future. During his presser, the Chairman spoke of low inflation through 2016, with unemployment coming down gradually over a similar time period.
While the inflation expectations are well below what the Fed desires (2-2 1/2%), the 6.5% unemployment threshold has essentially been removed from all future Fed calculus.
When the world completes a couple more trips around the sun, at this time two years from now, it's expected that the Fed will no longer be purchasing bonds to the excessive degree it is today, and that unemployment will be much closer to "normalcy" at or near five percent.
In the real world, should everything proceed as the Fed anticipates, the economy, with interest rates still moored at zero, with 5% unemployment, the economy would be growing at a ripping rate so rapid that inflation would once again become a real problem.
Would it be so. The chances of everything working in straight lines toward a normalized economy is nothing more than a Fed fantasy. There will be disruptions and distortions and quite possibly another recession. Additionally, believing that pressures and changes from other parts of the planet would not be disruptive, is the purest height of folly.
The Fed hasn't really changed much at all. Reducing bond purchases by $10 billion per month is nothing more than a rounding error in the larger scheme of things. The punchbowl of free fiat has been left at the Wall Street party. Nothing has changed other than possibly, perception, and the person sitting in the Fed chair will be different.
The monetary can just got kicked down the road quite a stretch further. The new normal gets extended until something breaks.
DOW 16,167.97, +292.71 (+1.84%)
NASDAQ 4,070.06, +46.38 (+1.15%)
S&P 1,810.65, +29.65 (+1.66%)
10-Yr Note 98.78, -0.29 (-0.29%) Yield: 2.89%
NASDAQ Volume 1.83 Bil
NYSE Volume 3.74 Bil
Combined NYSE & NASDAQ Advance - Decline: 4252-1467
Combined NYSE & NASDAQ New highs - New lows: 311-112
WTI crude oil: 97.80, +0.58
Gold: 1,235.00, +4.90
Silver: 20.06, +0.219
Corn: 425.00, -1.75
Wednesday, November 13, 2013
Stocks Rock; Yellen Ready to Kiss Up to Congress
Nice gains for the Dow and S&P, which both set new all-time high closes. The party won't stop, according to sources close to Mr. Yellen, who is expected to convince congress that the Fed needs to continue manipulating markets and driving the purchasing power of the dollar into oblivion with even more intervention and easy money policies.
Life , for working Americans, could be wonderful if the Fed can figure out how to induce any kind of wage inflation.
We are a hopeful nation.
Dow 15,821.63, +70.96 (0.45%)
S&P 1,782.00, +14.31 (0.81%)
Nasdaq 3,965.58, +45.66 (1.16%
10-Year Note: 2.68%, -0.05 (-1.83%)
NYSE Volume: 3,320,000
NASDAQ Volume: 1,769,363,821
Combined NYSE & NASDAQ Advance - Decline: 3777-1858
Combined NYSE & NASDAQ New highs - New lows: 323-93
WTI crude oil: 93.88, +0.84
Gold: 1,268.40, -2.80, -0.336
Silver: 429.75, -2.50
Life , for working Americans, could be wonderful if the Fed can figure out how to induce any kind of wage inflation.
We are a hopeful nation.
Dow 15,821.63, +70.96 (0.45%)
S&P 1,782.00, +14.31 (0.81%)
Nasdaq 3,965.58, +45.66 (1.16%
10-Year Note: 2.68%, -0.05 (-1.83%)
NYSE Volume: 3,320,000
NASDAQ Volume: 1,769,363,821
Combined NYSE & NASDAQ Advance - Decline: 3777-1858
Combined NYSE & NASDAQ New highs - New lows: 323-93
WTI crude oil: 93.88, +0.84
Gold: 1,268.40, -2.80, -0.336
Silver: 429.75, -2.50
Thursday, November 7, 2013
Wall Street Pouts Despite Twitter IPO; Jobs Data on Deck
Busy day today for the gods of greed, buyers of bluster, falcons of fraud, purveyors of prevarication.
Wall Street was all a-twitter over the IPO of Twitter (TWTR), the latest Web 2.0 mega-fad company gone public, which opened today on the NYSE with a bang. The stock was issued at 26, but opened at 44, quickly ramped up above 50 per share and closed at 44.90, good for a 78% gain. The company - based on "tweets" of 140 characters - is valued at about 29 times sales, pretty rich, especially for a enterprise that's still losing money. Well, at least the founders are now billionaires... on paper.
Prior to the opening bell, there was a flurry of activity from across the Atlantic pond, as Europe's Mario Draghi, ECB president extraordinaire, announced key rate cuts of 25 basis points, leaving the base rate at .25 and the key lending rate at .50. Observers in America wondered what took the Euros so long, though one must consider that they have been in the business of wrecking their own economies and fleecing the public a lot longer than their American counterparts, so they can kick the old can-can a lot longer and down an even shorter road without causing much of a stir.
The response from traders across the continent and in the UK was resoundingly mixed, with the German DAX higher, Britain's FTSE lower and the French CAC-40 barely changed. Don't these people understand the concept of cheap money? Pikers, the lot of them, except, of course, for the stodgy, stingy, and oh-so-proper Germans.
At 8:30 am ET, the US blasted off a couple of economic indicators, releasing the first reading on third quarter GDP at a robust 2.8%, a ribald lie if ever there was one, but enough to scare the few remaining hairs off the head of Lloyd Blankfien and others of his balding ilk. Good news is once again bad news, it appears, and any growth approaching three percent in the US sends shivers up the spineless bankers' backs, because they believe their buddies, Mr. Bernanke and the incoming Mr. Yellen, may cease the easy money programs that has catapulted every dishonest banker into ever-higher tax brackets.
The most recent initial unemployment claims - which were down 9,000 from the previous week, at 336,000, remained stubbornly high, though apparently not quite high enough for the barons of buyouts. These dopes saw this as another sign of a strengthening US economy, so, shortly after the opening bell, stocks did an abrupt about-face and trended lower throughout the session, with little respite.
In other news, Goldman Sachs is under investigation for rigging foreign exchange (FOREX) trading and just about everything else they do, and, yesterday, the Blackstone Group began pitching its rent-backed securities.
Really. They did. And some people actually bought them.
The advance-decline line cratered, with losers leading gainers by a 7:2 ratio, and new lows continue to close the gap on daily new highs, a trend metric that may just flip over if today's losses are indeed presaging something un-funny about tomorrow's delayed October non-farm jobs data, due out an hour before the opening bell. The way to read this is that the government is likely to report that something in the range of 120-150,000 new jobs were created during the month, which would be more proof of economic improvement, exactly what the market doesn't want. Either that, or it's going to be a real stink-bomb, because the forecast is only for 100,000.
Business as usual, my friends. Monkey business, that is.
Dow 15,593.98, -152.90 (0.97%)
Nasdaq 3,857.33, -74.61 (1.90%)
S&P 500 1,747.15, -23.34 (1.32%)
10-Yr Bond 2.61%, -0.03
NYSE Volume 4,092,416,000
Nasdaq Volume 2,196,542,750
Combined NYSE & NASDAQ Advance - Decline: 1276-4371
Combined NYSE & NASDAQ New highs - New lows: 197-101
WTI crude oil: 94.20, -0.60
Gold: 1,308.50, -9.30
Silver: 21.66, -0.111
Corn: 420.50, -0.75
Wall Street was all a-twitter over the IPO of Twitter (TWTR), the latest Web 2.0 mega-fad company gone public, which opened today on the NYSE with a bang. The stock was issued at 26, but opened at 44, quickly ramped up above 50 per share and closed at 44.90, good for a 78% gain. The company - based on "tweets" of 140 characters - is valued at about 29 times sales, pretty rich, especially for a enterprise that's still losing money. Well, at least the founders are now billionaires... on paper.
Prior to the opening bell, there was a flurry of activity from across the Atlantic pond, as Europe's Mario Draghi, ECB president extraordinaire, announced key rate cuts of 25 basis points, leaving the base rate at .25 and the key lending rate at .50. Observers in America wondered what took the Euros so long, though one must consider that they have been in the business of wrecking their own economies and fleecing the public a lot longer than their American counterparts, so they can kick the old can-can a lot longer and down an even shorter road without causing much of a stir.
The response from traders across the continent and in the UK was resoundingly mixed, with the German DAX higher, Britain's FTSE lower and the French CAC-40 barely changed. Don't these people understand the concept of cheap money? Pikers, the lot of them, except, of course, for the stodgy, stingy, and oh-so-proper Germans.
At 8:30 am ET, the US blasted off a couple of economic indicators, releasing the first reading on third quarter GDP at a robust 2.8%, a ribald lie if ever there was one, but enough to scare the few remaining hairs off the head of Lloyd Blankfien and others of his balding ilk. Good news is once again bad news, it appears, and any growth approaching three percent in the US sends shivers up the spineless bankers' backs, because they believe their buddies, Mr. Bernanke and the incoming Mr. Yellen, may cease the easy money programs that has catapulted every dishonest banker into ever-higher tax brackets.
The most recent initial unemployment claims - which were down 9,000 from the previous week, at 336,000, remained stubbornly high, though apparently not quite high enough for the barons of buyouts. These dopes saw this as another sign of a strengthening US economy, so, shortly after the opening bell, stocks did an abrupt about-face and trended lower throughout the session, with little respite.
In other news, Goldman Sachs is under investigation for rigging foreign exchange (FOREX) trading and just about everything else they do, and, yesterday, the Blackstone Group began pitching its rent-backed securities.
Really. They did. And some people actually bought them.
The advance-decline line cratered, with losers leading gainers by a 7:2 ratio, and new lows continue to close the gap on daily new highs, a trend metric that may just flip over if today's losses are indeed presaging something un-funny about tomorrow's delayed October non-farm jobs data, due out an hour before the opening bell. The way to read this is that the government is likely to report that something in the range of 120-150,000 new jobs were created during the month, which would be more proof of economic improvement, exactly what the market doesn't want. Either that, or it's going to be a real stink-bomb, because the forecast is only for 100,000.
Business as usual, my friends. Monkey business, that is.
Dow 15,593.98, -152.90 (0.97%)
Nasdaq 3,857.33, -74.61 (1.90%)
S&P 500 1,747.15, -23.34 (1.32%)
10-Yr Bond 2.61%, -0.03
NYSE Volume 4,092,416,000
Nasdaq Volume 2,196,542,750
Combined NYSE & NASDAQ Advance - Decline: 1276-4371
Combined NYSE & NASDAQ New highs - New lows: 197-101
WTI crude oil: 94.20, -0.60
Gold: 1,308.50, -9.30
Silver: 21.66, -0.111
Corn: 420.50, -0.75
Friday, October 25, 2013
Sluggish Session Sends S&P to All-Time Highs in Final Half-Hour
The headline tells almost the whole story. Stocks languished in a narrow trading range all day until doubling gains in the final half hour. There was absolutely nothing newsworthy by which to move stocks in any particular direction.
All hail day-traders and Mr. Janet Yellen. Oh, and Twitter, the money-losing company with an estimated IPO value of $16 billion.
Cheers.
Dow 15,570.28, +61.07 (0.39%)
Nasdaq 3,943.36, +14.40 (0.37%)
S&P 500 1,759.77, +7.70 (0.44%)
10-Yr Bond 2.50%, -0.02
NYSE Volume 3,102,796,500
Nasdaq Volume 2,119,699,000
Combined NYSE & NASDAQ Advance - Decline: 2948-2668 (breadth, anyone?)
Combined NYSE & NASDAQ New highs - New lows: 472-29 (mark-to-fantasy)
WTI crude oil: 97.85, +0.74
Gold: 1,352.50, +2.20
Silver: 22.64, -0.183
Corn: 440.00, -0.25
All hail day-traders and Mr. Janet Yellen. Oh, and Twitter, the money-losing company with an estimated IPO value of $16 billion.
Cheers.
Dow 15,570.28, +61.07 (0.39%)
Nasdaq 3,943.36, +14.40 (0.37%)
S&P 500 1,759.77, +7.70 (0.44%)
10-Yr Bond 2.50%, -0.02
NYSE Volume 3,102,796,500
Nasdaq Volume 2,119,699,000
Combined NYSE & NASDAQ Advance - Decline: 2948-2668 (breadth, anyone?)
Combined NYSE & NASDAQ New highs - New lows: 472-29 (mark-to-fantasy)
WTI crude oil: 97.85, +0.74
Gold: 1,352.50, +2.20
Silver: 22.64, -0.183
Corn: 440.00, -0.25
Friday, October 18, 2013
With Nothing Holding Them Back Stocks Will Keep Rising
Now that the government shutdown is over, there is no longer a debt ceiling - that's been suspended - the Fed is ramming $85 billion a month into the system and we're soon to have a Fed Chairwoman, Janet Yellen, who will print so much money as to make Ben Bernanke look like he was standing still the past five years.
Despite what the media says, Janet Yellen saw no danger from a housing bubble back in 2005, 2006, 2007 or 2008. It was only when it imploded did she consider it a problem. Hopefully, Mrs. Yellen will be the last Fed Chairman (or woman) ever, as she guides the global economy further into indebtedness which will never be repaid.
Then, when she is gone and the world's currencies are rest to something more reasonable, maybe we will have sane markets, free markets and stable economies, not the bloated wastelands that we are currently supposed to accept as "normal."
Since the Fed's relentless, continuous, non-stop money creation out of thin air is the only thing that matters, stocks are the place to be. Someday, they will be the place nobody wants to be, so, the question is, do you feel lucky, punk?
Do you?
Dow 15,399.65, +28.00 (0.18%)
Nasdaq 3,914.28, +51.13 (1.32%)
S&P 500 1,744.50, +11.35 (0.65%)
10-Yr Bond 2.59% 0.00
NYSE Volume 3,625,746,000
Nasdaq Volume 1,854,716,125
Combined NYSE & NASDAQ Advance - Decline: 3911-1727
Combined NYSE & NASDAQ New highs - New lows: 852-32 (now, THAT's extreme)
WTI crude oil: 100.81, +0.14
Gold: 1,314.60, -8.40
Silver: 21.91, -0.034
Corn: 441.50, -1.50
Despite what the media says, Janet Yellen saw no danger from a housing bubble back in 2005, 2006, 2007 or 2008. It was only when it imploded did she consider it a problem. Hopefully, Mrs. Yellen will be the last Fed Chairman (or woman) ever, as she guides the global economy further into indebtedness which will never be repaid.
Then, when she is gone and the world's currencies are rest to something more reasonable, maybe we will have sane markets, free markets and stable economies, not the bloated wastelands that we are currently supposed to accept as "normal."
Since the Fed's relentless, continuous, non-stop money creation out of thin air is the only thing that matters, stocks are the place to be. Someday, they will be the place nobody wants to be, so, the question is, do you feel lucky, punk?
Do you?
Dow 15,399.65, +28.00 (0.18%)
Nasdaq 3,914.28, +51.13 (1.32%)
S&P 500 1,744.50, +11.35 (0.65%)
10-Yr Bond 2.59% 0.00
NYSE Volume 3,625,746,000
Nasdaq Volume 1,854,716,125
Combined NYSE & NASDAQ Advance - Decline: 3911-1727
Combined NYSE & NASDAQ New highs - New lows: 852-32 (now, THAT's extreme)
WTI crude oil: 100.81, +0.14
Gold: 1,314.60, -8.40
Silver: 21.91, -0.034
Corn: 441.50, -1.50
Wednesday, October 9, 2013
Government Shutdown Day 9: Wall Street Still Skeptical or In Denial
As is usually the case with the Wall Street racketeers traders, they continue to play their stock and options games despite the shenanigans going about in Washington DC.
One can hardly blame them, because if the government were to actually shut down or default on debt obligations (a very low probability of that ever happening, despite scare tactics by liberal news outlets), the businesses they routinely trade in and around would become even less-encumbered by laws and regulations and gain even more outsized market share than many already have.
It's the oddity of the Wall Street/Washington connection: The crooks on wall Street don't really need the criminals in Washington; they more or less use them, via campaign contributions, to enact legislation that either enhances their market/tax/competitive position or cripples others who might think about competing with them. Washington politicians have become so overly dependent upon Wall Street and their highly-paid K Street lobbyists for campaign and other favoritism money and gifts that they will do just about anything to please them, including shutting the entire federal government down, thus removing themselves from their vaunted positions of power. As foolish as that may sound, that's exactly what the politicians in Washington are doing at the present time.
They probably don't need to worry, however. The elections are bought and sold by the power brokers on Wall Street, the results easily manufactured to produce any outcome they desire via their control over the electronic voting machines.
If all of this sounds like the stuff of conspiracy, well, that's because it is. Big business, the media and the federal government have been in bed with each other so long, it's almost incestuous. Politicians have long ago given up on the idea of representing their geographically-assigned constituents; they are aligned with special interests and businesses who best line their pockets.
And that is why nothing much happened today in Washington or on Wall Street, though behind the scenes, bond markets are beginning to look a little worried, stretched, and, in some cases, like at the low end of the yield curve, inverted, which, as anyone with historical knowledge will readily affirm, is a 100% sure sign of an oncoming recession.
That's somewhat of a bad joke, since many people believe we're already in a recession, having never recovered from the financial tsunami that came about in the fall of 2008. There's a distinct term for what heppens when a recession occurs within an ongoing recession.
It's called a depression, and ours is just about to get started.
Not to be overlooked, President Obama officially nominated Janet Yellen - known as the most dovish of the dove-laden Federal Reserve board of governors - to be the next Chairwoman of the Federal Reserve. Good riddance to Ben Bernanke, and thanks for fu--ing up our country.
And, yes, the number of new highs was eclipsed by new lows for the second straight session. Hold onto your hats, ladies and gentlemen. This is going to be one wild ride!
Dow 14,802.98, +26.45 (0.18%)
Nasdaq 3,677.78, -17.06 (0.46%)
S&P 500 1,656.40, +0.95 (0.06%)
10-Yr Bond 2.65%, +0.01
NYSE Volume 3,566,030,500
Nasdaq Volume 2,159,485,000
Combined NYSE & NASDAQ Advance - Decline: 2541-2985
Combined NYSE & NASDAQ New highs - New lows: 60-137
WTI crude oil: 101.61, -1.88
Gold: 1,307.20, -17.40
Silver: 21.89, -0.552
Corn: 443.50, +1.75
One can hardly blame them, because if the government were to actually shut down or default on debt obligations (a very low probability of that ever happening, despite scare tactics by liberal news outlets), the businesses they routinely trade in and around would become even less-encumbered by laws and regulations and gain even more outsized market share than many already have.
It's the oddity of the Wall Street/Washington connection: The crooks on wall Street don't really need the criminals in Washington; they more or less use them, via campaign contributions, to enact legislation that either enhances their market/tax/competitive position or cripples others who might think about competing with them. Washington politicians have become so overly dependent upon Wall Street and their highly-paid K Street lobbyists for campaign and other favoritism money and gifts that they will do just about anything to please them, including shutting the entire federal government down, thus removing themselves from their vaunted positions of power. As foolish as that may sound, that's exactly what the politicians in Washington are doing at the present time.
They probably don't need to worry, however. The elections are bought and sold by the power brokers on Wall Street, the results easily manufactured to produce any outcome they desire via their control over the electronic voting machines.
If all of this sounds like the stuff of conspiracy, well, that's because it is. Big business, the media and the federal government have been in bed with each other so long, it's almost incestuous. Politicians have long ago given up on the idea of representing their geographically-assigned constituents; they are aligned with special interests and businesses who best line their pockets.
And that is why nothing much happened today in Washington or on Wall Street, though behind the scenes, bond markets are beginning to look a little worried, stretched, and, in some cases, like at the low end of the yield curve, inverted, which, as anyone with historical knowledge will readily affirm, is a 100% sure sign of an oncoming recession.
That's somewhat of a bad joke, since many people believe we're already in a recession, having never recovered from the financial tsunami that came about in the fall of 2008. There's a distinct term for what heppens when a recession occurs within an ongoing recession.
It's called a depression, and ours is just about to get started.
Not to be overlooked, President Obama officially nominated Janet Yellen - known as the most dovish of the dove-laden Federal Reserve board of governors - to be the next Chairwoman of the Federal Reserve. Good riddance to Ben Bernanke, and thanks for fu--ing up our country.
And, yes, the number of new highs was eclipsed by new lows for the second straight session. Hold onto your hats, ladies and gentlemen. This is going to be one wild ride!
Dow 14,802.98, +26.45 (0.18%)
Nasdaq 3,677.78, -17.06 (0.46%)
S&P 500 1,656.40, +0.95 (0.06%)
10-Yr Bond 2.65%, +0.01
NYSE Volume 3,566,030,500
Nasdaq Volume 2,159,485,000
Combined NYSE & NASDAQ Advance - Decline: 2541-2985
Combined NYSE & NASDAQ New highs - New lows: 60-137
WTI crude oil: 101.61, -1.88
Gold: 1,307.20, -17.40
Silver: 21.89, -0.552
Corn: 443.50, +1.75
Tuesday, September 17, 2013
Tick Tock... Waiting on the FOMC to Send the World into the Abyss
We all know what's going on here.
The markets are in virtual limbo, as the world awaits tomorrow's action by the Federal Reserve, due out with an FOMC policy decision (rates won't change) and an announcement that they will begin tapering their bond purchases.
That they'll make an announcement is known. Whether they decide to cut back on Treasuries or MBS is still an open question, though the smart money is on $10-15 billion less in Treasuries, beginning no later than December (possibly October or November).
The mortgage-backed portion of the portfolio will probably not be changed, as the Fed is the first and last buyer of MBS, the market having collapsed in 2008 when Fannie and Freddie went belly-up and the rest of the nasty stuff of the great collapse happened.
Until then, volume has been dead, though there's still plenty of speculation to the upside, in the clustered thinking that any Fed move has already been priced in (ha, ha, ha). How one prices in liquidity compression with stocks at all-time highs and at nosebleed valuations is a matter for market historians to ponder. While we certainly live in interesting times, they are also warped by the interventionist policies of central banks, who are losing their grip on the global economy, their long-standing franchise of greed over the whole of humanity.
The taper will occur, but the next best question is who will succeed Ben Bernanke on the sinking ship that is the global banking cartel. Since Larry Summers pulled his name from consideration to the top money-man post in the world and sharp-tongued politicians have recently decried the relative value of QE and zero-bound interest rates, a sacrificial lamb must be chosen by President Obama, and that choice is likely to be Janet Yellen, sure to be confirmed by the Senate because she is as clueless about economic policy as all of her predecessors and will be unlikely to make independent decisions, since she has never done so heretofore.
We anxiously await the Fed's announcement that the economy is trudging valiantly toward self-sustainability and that monetary stimulus by the Federal Reserve can thus be gradually wound down.
The time is upon us. Our breath may be baited, though the collective thirst has not been sated.
Dow 15,529.73, +34.95 (0.23%)
Nasdaq 3,745.70, +27.85 (0.75%)
S&P 500 1,704.76, +7.16 (0.42%)
10-Yr Bond 2.85%, -0.02
NYSE Volume 2,971,334,750
Nasdaq Volume 1,480,300,875
Combined NYSE & NASDAQ Advance - Decline: 4406-2182 (2:1)
Combined NYSE & NASDAQ New highs - New lows: 286-50
WTI crude oil: 105.42, -1.17
Gold: 1,309.40, -8.40
Silver: 21.78, -0.225
The markets are in virtual limbo, as the world awaits tomorrow's action by the Federal Reserve, due out with an FOMC policy decision (rates won't change) and an announcement that they will begin tapering their bond purchases.
That they'll make an announcement is known. Whether they decide to cut back on Treasuries or MBS is still an open question, though the smart money is on $10-15 billion less in Treasuries, beginning no later than December (possibly October or November).
The mortgage-backed portion of the portfolio will probably not be changed, as the Fed is the first and last buyer of MBS, the market having collapsed in 2008 when Fannie and Freddie went belly-up and the rest of the nasty stuff of the great collapse happened.
Until then, volume has been dead, though there's still plenty of speculation to the upside, in the clustered thinking that any Fed move has already been priced in (ha, ha, ha). How one prices in liquidity compression with stocks at all-time highs and at nosebleed valuations is a matter for market historians to ponder. While we certainly live in interesting times, they are also warped by the interventionist policies of central banks, who are losing their grip on the global economy, their long-standing franchise of greed over the whole of humanity.
The taper will occur, but the next best question is who will succeed Ben Bernanke on the sinking ship that is the global banking cartel. Since Larry Summers pulled his name from consideration to the top money-man post in the world and sharp-tongued politicians have recently decried the relative value of QE and zero-bound interest rates, a sacrificial lamb must be chosen by President Obama, and that choice is likely to be Janet Yellen, sure to be confirmed by the Senate because she is as clueless about economic policy as all of her predecessors and will be unlikely to make independent decisions, since she has never done so heretofore.
We anxiously await the Fed's announcement that the economy is trudging valiantly toward self-sustainability and that monetary stimulus by the Federal Reserve can thus be gradually wound down.
The time is upon us. Our breath may be baited, though the collective thirst has not been sated.
Dow 15,529.73, +34.95 (0.23%)
Nasdaq 3,745.70, +27.85 (0.75%)
S&P 500 1,704.76, +7.16 (0.42%)
10-Yr Bond 2.85%, -0.02
NYSE Volume 2,971,334,750
Nasdaq Volume 1,480,300,875
Combined NYSE & NASDAQ Advance - Decline: 4406-2182 (2:1)
Combined NYSE & NASDAQ New highs - New lows: 286-50
WTI crude oil: 105.42, -1.17
Gold: 1,309.40, -8.40
Silver: 21.78, -0.225
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