Showing posts with label Janet Yellen. Show all posts
Showing posts with label Janet Yellen. Show all posts

Monday, June 13, 2016

Markets Lower On Brexit And Rate Hike Fears

Of the various events that might cause investors to give pause to buying stocks, or, worse, start selling en masse, the two most terrifying are probably the threat of the UK leaving the European Union (aka, Brexit) and the ongoing dialogue from the Federal Reserve concerning raising the federal funds rate.

Between the two, a 25 basis point rise in rates is likely the more disruptive, but it is also the least plausible, at least for the foreseeable future.

The Fed meets on Tuesday and Wednesday, delivering their rate announcement at 2:00 pm EDT Wednesday, after which will be a press conference with Chair Janet Yellen. This figures to be an absolute snoozer, since the May non-farm payroll disaster - a meager 38,000 jobs - pretty much put the kibosh on any rate hikes this month.

As for the Brexit, the fears are real, though the people most affected will not be Americans nor Brits, but the technocrats which comprise the burdensome bureaucratic behemoth of the EU apparatus and its various rules, regulations, and assorted busy work.

For Britain to exit the European Union would be a bold maneuver for the people of the island nation, freeing them from outside influence and regaining a smidgen of national identity, something that has been seriously eroded since adoption of the Maastricht Treaty in 1992.

What it would do for business is unknown, though Britain could conceivably become a trading partner with the EU, as is the USA and many other nations, rather than a member. Years would pass before all the effects are known and felt, but the fear mongering by Prime Minister David Cameron and others who wish to keep the status quo alive and well are largely overblown.

There, however, is the proverbial rub. The elites in control don't want to give up their power and a Brexit is seen as a direct assault on the powers that be. Common people would be wise to vote to leave the EU, eliminating a large, burdensome bureaucratic malaise. The referendum for Great Britain is to take place on Thursday, June 23. Polls show those favoring leaving and those favoring staying in the EU about even and that has people on Wall Street jumping out of their pants... for no good reason.

Fear and Loathing Monday:
S&P 500: 2,079.06, -17.01 (0.81%)
Dow: 17,732.48, -132.86 (0.74%)
NASDAQ: 4,848.44, -46.11 (0.94%)

Crude Oil 48.58 -1.00% Gold 1,287.10 +0.88% EUR/USD 1.1291 +0.37% 10-Yr Bond 1.62 -1.40% Corn 429.75 +1.60% Copper 2.05 +1.13% Silver 17.43 +0.61% Natural Gas 2.92 +0.24% Russell 2000 1,150.70 -1.14% VIX 20.97 +23.14% BATS 1000 20,677.17 0.00% GBP/USD 1.4247 +0.05% USD/JPY 106.1975 -0.56%

Monday, June 6, 2016

Janet Yellen And The Fed Are Dangerous To Your Well-Being

Apologies for the blaring headline, but this is getting a bit ridiculous. Truthfully, the headline suggested by our ace writer, Fearless Rick, had a definite Donald Trump tone to it, so it was scrapped in favor of the watered-down version.

For seven years - since the great collapse of 2008-09 - we've been listening to the babble coming out of the mouths of various Federal Reserve governors, and none of it was believable nor helpful. The US economy is circling the toilet drain, and various economies around the globe have already been flushed down the sinkhole of fetid monetary policy.

Here is just one quote from Janet Yellen in her address to the World Affairs Council (another bunch of clueless monetarists) that speaks volumes about what she knows and doesn't know:

I see good reason to expect that the positive forces supporting employment growth and higher inflation will continue to outweigh the negative ones.

If Mrs. Yellen would care to elaborate on just what those positive forces could be, it's expected that almost nothing would come out of her mouth, because she's doing what she does best, spout nonsense, in the best tradition of the Maestro himself, the venerable former Fed Chairman, Alan Greenspan. In all honesty, just what positive forces are there supporting employment growth after last week's disastrous non-farm payroll report for May, in which the US economy created a paltry 38,000 jobs when 164,000 were expected.

Additionally, Chair Yellen believes inflation is good for the economy, when most people in the real world would like to see some softening of prices and/or an increase in their wages. On the one hand, deflation in consumer prices stretches one's money; on the other, wage hikes usually occur when the economy is growing robustly. Since Americans can't have both at once, it is supposed that we'll get the former, and like it.

Naturally, the bozos on Wall Street took all of it in stride and just bought more overpriced stocks:


S&P 500: 2,109.41, +10.28 (0.49%)
Dow: 17,920.33, +113.27 (0.64%)
NASDAQ: 4,968.71, +26.20 (0.53%)

Crude Oil 49.69 +2.20% Gold 1,247.70 +0.39% EUR/USD 1.1362 -0.02% 10-Yr Bond 1.72 +1.12% Corn 426.75 +2.03% Copper 2.12 +0.31% Silver 16.49 +0.73% Natural Gas 2.81 +1.41% Russell 2000 1,176.62 +1.07% VIX 13.61 +1.04% BATS 1000 20,677.17 0.00% GBP/USD 1.4455 -0.14% USD/JPY 107.6200 +1.10%

Friday, May 27, 2016

The Federal Reserve Faces Insolvency As It Attempts Impossibile Rate Hikes

As has been posited here on Money Daily and elsewhere, the Federal Reserve is facing a severe solvency crisis, due primarily to the bank bailouts from 2008-09.

In a headline story on - of all places - Yahoo! Finance, the Fed faces a real, dangerous situation if and when they try to normalize rates - something many economists say is nearly impossible to do without destroying the entire monetary system of the United States, and, ostensibly, the world.

The article fleshes out how US taxpayers could be on the hook for the Fed's bad debts, stemming from overpayment on mortgage and treasury note, bills and bonds in years past, specifically during the various QE sessions from 2009-2014.

It's long been held that the Fed was buying bad mortgage notes and bonds at par, when the true value of these slips of counterfeit are more than 30-70% lower. This effectively puts the Fed itself in a condition known to many in the world of finance as either insolvent or bankrupt.

Insolvent is the operative term here, since there is no functioning body by which the Fed can go to for a reorganization or liquidation, as do businesses or individuals in bankruptcy.

The solution would be to dissolve the Federal Reserve, extinguish all debts (which is anything numerated in US dollars), and have the US government - as is required by the constitution - issue a new currency, with gold and/or silver as backing, as opposed to the "full faith and credit" backing to which Americans have become accustomed.

This, as the presidential race looks to be one which a certain maverick billionaire, Donald J. Trump, has a solid chance of winning, could be the beginning of the end to the financial repression initiated by the Fed and its member banks and a start toward a return to honest money.

Capping off the week was a speech by Fed Chair Janet Yellen, characterized by the media as being "hawkish" for a rate hike in June or July.

Apparently, investors either disagreed or threw caution to the wind in the face of the three-day Memorial Day weekend, boosting stocks late in the session, ending what was a banner week for US stocks, especially the high-leverage, high-flying NASDAQ.

On the week:
Dow: +372.28 (+2.13%)
S&P 500: +46.74 (+2.28%)
NASDAQ: +163.95 (+3.44%)

For the day:
S&P 500: 2,099.06, +8.96 (0.43%)
Dow: 17,873.22, +44.93 (0.25%)
NASDAQ: 4,933.50, +31.74 (0.65%)

Crude Oil 49.42 -0.12% Gold 1,213.20 -0.78% EUR/USD 1.1114 -0.71% 10-Yr Bond 1.85 +1.54% Corn 412.25 +0.98% Copper 2.11 +0.38% Silver 16.21 -0.81% Natural Gas 2.16 +0.65% Russell 2000 1,150.45 +0.94% VIX 13.08 -2.61% BATS 1000 20,677.17 0.00% GBP/USD 1.4613 -0.37% USD/JPY 110.3725 +0.56%

Thursday, May 26, 2016

Flat Is Good Says Yahoo! Finance, Which Should Know



"Why a flat day is good for the markets"
screams the headline on Yahoo! Finance at the close of trading on Thursday.

Of course closing flat is good. Up is good, down is good, flat is good. Darn, the markets are even good when they're closed.

It's all about the narrative, with the financial media desperately trying to keep convincing an ever-shrinking number of "home-gamers" (trtaders with their own individual accounts), 401k holders, and other interested parties that the economy - and the stock market in particular - have never been better, or at least to convince themselves that they are convincing somebody.

It's a complete crock.

The global economy is, and has been, on its knees since the fall of 2008. Everything after that is a facade, made possible by trillions of dollars spent by the Federal Reserve and matching amounts of yen, yuan, euros and rupees by corresponding central banks, stock buybacks, income sheet fraud, mark-to-fantasy accounting, high valuations and the lack of any real price discovery mechanism.

It's a sham.

Central bankers are idiots who have walled themselves off from the general population and can't seem to find their way out of the boxed-in condition they've created for themselves.

So, we have Trump and Sanders (forget Clinton, she's a has-been, and a poor candidate who cannot win in a general election) vying to be the most powerful man in the world (don't tell Mario Draghi or Janet Yellen, though), an economy that can't produce nominal growth of more then two percent, stupid wars, uncontrollable mass migration, and a host of other problems.

But, a flat day is all good, all the time. Glad Yahoo Got the memo. They've been flat (or down) for a long time. Love ya some Marissa Mayer (Yahoo CEO). She's cute. She's smart. She's blonde. She's... no, don't go there.

She's an idiot, a poser, a fraud. Just take a look at Yahoo's performance since she became CEO. Courtiers to the company are looking at a take-under sometime late this year or early next. The $35-ish share price is a bit rich for their tastes. Something more like $18-24 may be more like it.

Flat Is In... Again!
S&P 500: 2,090.10, -0.44 (0.02%)
Dow: 17,828.29, -23.22 (0.13%)
NASDAQ: 4,901.77, +6.88 (0.14%)

Crude Oil 49.33 -0.46% Gold 1,220.00 -0.31% EUR/USD 1.1193 +0.31% 10-Yr Bond 1.82 -2.51% Corn 407.75 +0.74% Copper 2.10 -0.05% Silver 16.34 +0.52% Natural Gas 2.15 -1.51% Russell 2000 1,140.39 -0.06% VIX 13.67 -1.65% BATS 1000 20,677.17 0.00% GBP/USD 1.4665 -0.25% USD/JPY 109.7650 -0.39%

Wednesday, May 25, 2016

Smooth Sailing As Stocks Approach Top Of Range

It's such a sham, there's little to say other than 18,000 on the Dow approaches, a level the genii marketeers have yet been able to surpass.

The likelihood is that any rally over 18,000 will be sold off within days, if not minutes.

Tomorrow's headline will scream about the Fed raising rates, thus scaring investors. Friday, Federal Reserve Chairwoman, Janet Yellen, speaks at Harvard, which should provide what the talking heads are calling "clarity."

Harumph.

Happy Motoring!
S&P 500: 2,090.54, +14.48 (0.70%)
Dow: 17,851.51, +145.46 (0.82%)
NASDAQ: 4,894.89, +33.84 (0.70%)

Crude Oil 49.74 +2.30% Gold 1,224.20 +0.03% EUR/USD 1.1154 -0.03% 10-Yr Bond 1.87 +0.59% Corn 404.00 +1.64% Copper 2.10 +0.02% Silver 16.33 +0.42% Natural Gas 2.16 +0.75% Russell 2000 1,141.02 +0.50% VIX 13.90 -3.61% BATS 1000 20,677.17 0.00% GBP/USD 1.4701 -0.01% USD/JPY 110.2160 +0.01%

Monday, April 18, 2016

Dow Tops 18,000. Why?

Just guessing, but the last time the Dow was trading at or above 18,000 was sometime in the summer of 2015, probably prior to August.

Be that as it may, having the Dow trading at the level it was nine months ago means that something must have been amiss, because, certainly, the indices are always rising, aren't they?

The number 18,000 poses more questions than answers, to which Money Daily offers none, only more questions as to the sustainability of such an awesome, inspired number, fully without any kind of fundamental support, since the quality of corporate earnings has been disintegrating at an astonishing rate.

Not only that, but the obfuscation and sheer audacity of the lies and pro forma earnings releases (as opposed to the traditionally well-favored GAAP) leads one to believe that the market has lost all bearings and is about to crash upon some unseen shoals while the cruiser's captain is nodded out, asleep at the wheel.

Alas, the market has no captain, as contrary to the desires of the Janet Yellens, Mario Draghis or even George Soroses (some kind of disease, there) of the world might think otherwise.

No, the market is a mechanism of many moving parts, and, being such, can be wound to whatever pulsation or amplitude any broken parts may render it. Make no mistake, there are many broken parts to the market, especially when it comes to equity markets, where valuations have been so absurdly distorted as to become meaningless in a value-oriented frame of mind.

Nevertheless, here we are, so break out the party hats?

Next up: the NASDAQ blasts through the 5,000 barrier.

Really?
S&P 500: 2,094.34, +13.61 (0.65%)
Dow: 18,004.16, +106.70 (0.60%)
NASDAQ: 4,960.02, +21.80 (0.44%)

Crude Oil 41.28 -1.03% Gold 1,230.30 -0.38% EUR/USD 1.1310 -0.02% 10-Yr Bond 1.77 +1.20% Corn 380.50 -0.13% Copper 2.16 -0.02% Silver 16.19 -0.36% Natural Gas 1.94 +1.84% Russell 2000 1,139.28 +0.74% VIX 13.35 -1.98% BATS 1000 20,682.61 0.00% GBP/USD 1.4290 +0.10% USD/JPY 109.1170 +0.26%

Thursday, April 14, 2016

Stocks Topped Out Again? Bank Earnings A Mixed Picture

After racking up impressive gains the first three days of the week, stocks took Thursday off, trading in a narrow range that may suggest to some that another topping pattern is forming.

The Dow, in particular, is retesting the highs from the end of October, when the index failed at a run to 18,000, and began a slow descent that accelerated in January to near full-blown panic.

As for the S&P, it remains just above water for the year, although analysts have repeatedly stressed the area of 2080-2090 as a key resistance level.

With another FOMC meeting in less than than two weeks (April 26-27), traders may be suffering from a case of frayed nerves, though considering the dovish tone coming from Fed Chair, Janet Yellen, any fears of a rate hike before June - at the earliest - seem unfounded.

Bank stocks have done well, with JP Morgan Chase (JPM) and Bank of America (BAC) both reporting earnings in line or above estimates, though revenues have fallen short for both firms.

Wells Fargo also reported before the open on Thursday, citing loan loss reserves in their energy portfolio putting a damper on first quarter profits. That was perhaps the souring tone the street did not expect nor want to hear.

Citigroup reports prior to the opening bell on Friday, looking for 1.03 per share for the quarter.

S&P 500: 2,082.78, +0.36 (0.02%)
Dow: 17,926.43, +18.15 (0.10%)
NASDAQ: 4,945.89, -1.53 (0.03%)

Crude Oil 41.43 -0.79% Gold 1,229.30 -1.52% EUR/USD 1.1265 -0.07% 10-Yr Bond 1.78 +1.08% Corn 373.50 0.00% Copper 2.17 0.00% Silver 16.18 -0.86% Natural Gas 1.96 -3.83% Russell 2000 1,128.59 -0.12% VIX 13.72 -0.87% BATS 1000 20,682.61 0.00% GBP/USD 1.4154 -0.37% USD/JPY 109.4000 +0.10%

Friday, April 8, 2016

Stocks Stage Brave Friday Rally, Fall For Week As Yellen Denies Bubble

Janet Yellen, April 7, 2016:

"So I would say the US economy has made tremendous progress in recovering from the damage from the financial crisis. Uh, slowly but surely the labor market is healing. Um, for well over a year we’ve averaged about 225,000 jobs a month. The unemployment rate now stands at 5%. So, we’re coming close to our assigned congressional goal of maximum employment. Um, inflation which, um, my colleagues here Paul [Volker] and Alan [Greenspan]
um, spent much of their time as chair um, bringing inflation down from unacceptably high levels. For a number of years now inflation has been running under our 2% goal and we’re focused on moving it up to 2%. Um, but we think that it’s partly transitory influences, namely declining oil prices, and uh, the strong dollar that are responsible for pulling inflation below the 2% level we think is most desirable. So, I think we’re making progress there as well, and this is an economy on a solid course, um, not a bubble economy. Um, we tried carefully to look at evidence of potential financial instability that might be brewing and some of the hallmarks of that, clearly overvalued asset prices, high leverage, rising leverage, and rapid credit growth. We certainly don’t see those imbalances. And so although interest rates are low, and that is something that could encourage reach for yield behavior, I wouldn’t describe this as a bubble economy."
Janet Yellen; Stupid or insincere?
So, apparently, April Fool's Day has been extended to April Fool's Week. The Chairwoman's comment was made in response to a question of whether the US economy was in a bubble.

It has become increasingly obvious to more than just high-rollers on Wall Street, that the occupants of various ivory towers in the Eccles Building are either clueless or lying, and, whichever camp one adheres to, the idea that their economic policies have been detrimental to the common good is without doubt.

Friday's action was nothing more than a dead cat bounce, with all three major indices ripping at the open, but running stagnant as the session wore on, finally ending with small gains.

For the week the degradation was uniform, the Dow lost 215.79 (-1.21%), the S&P shed 25.18 points (-1.21%), while the exuberant NASDAQ dropped 63.85 (-1.30%) points.

Oil gained six percent on the day, followed by more stable precious metals, particularly silver, which has rebounded nicely from a recent smack down.

Friday's Pop and Flop:
S&P 500: 2,047.60, +5.69 (0.28%)
Dow: 17,576.96, +35.00 (0.20%)
NASDAQ: 4,850.69, +2.32 (0.05%)

Crude Oil 39.51 +6.04% Gold 1,241.70 +0.34% EUR/USD 1.1395 +0.18% 10-Yr Bond 1.72 +1.71% Corn 362.00 +0.14% Copper 2.09 +0.48% Silver 15.37 +1.40% Natural Gas 1.99 -1.49% Russell 2000 1,097.31 +0.41% VIX 15.36 -4.95% BATS 1000 20,682.61 0.00% GBP/USD 1.4128 +0.51% USD/JPY 108.1670 -0.08%

Wednesday, April 6, 2016

Resistance Is Palpable For Dow, S&P; Trades Dying Slow Death

Taking a look at the weekly chart of the Dow and the S&P, it becomes evident why the averages haven't been able to break through this current range to new, higher highs.

The congestion and resistance at 17,900-18,000 on the Dow, and 2090-2120 on the S&P are as plain as a bright summer day, and thus, what had been considered a Fed-driven market has now become a chartist's nightmare.

Unless there's some good reason for the averages to go higher - and currently there isn't - there's only one way for stocks to go, and that direction would not be in the best interest of most investors, fund managers or pension hopefuls.

Naturally, the market continues to look to the Fed for comfort and trading rationale, but it is becoming more and more difficult for the monetary magicians in the Eccles Building to conjure up increasingly complicated arguments to support an economy (US and global) that, for all intents and purposes, looks to be standing on a foundation built of sand.

In other words, the market is about to go somewhere shortly, and bets are good that it will not be much higher. Earnings have begun to trickle in for the first quarter, and expectations are for another sequential decline in overall top-and-bottom line growth.

Then again, Janet Yellen is god, right?

With the Dollar/Yen carry trade nearing extinction (109.7450), perhaps one should consider a world in which there are no winning trades, such as is the fate of many so-called "home-gamers."

With volatility being wrung out of markets on a regular basis through HFT, that is a consideration that must be taken seriously.

Fraud is on sale, but it cannot be had cheaply.


S&P 500 Futures: 2,059.25, +20.50 (1.01%)
Dow Futures: 17,623.00, +96.00 (0.55%)
NASDAQ Futures: 4,532.00, +62.50 (1.40%)

Crude Oil 37.76 +5.21% Gold 1,224.00 -0.46% EUR/USD 1.1399 +0.04% 10-Yr Bond 1.75 +1.62% Corn 358.00 +0.35% Copper 2.14 +0.21% Silver 15.06 -0.34% Natural Gas 1.90 -2.66% Russell 2000 1,108.81 +1.18% VIX 14.09 -8.63% BATS 1000 20,682.61 0.00% GBP/USD 1.4131 +0.08% USD/JPY 109.7450 -0.01%

Tuesday, April 5, 2016

Fizzle, No Sizzle As Stocks Dump For Second Straight Session

Just maybe, somebody out there is reading the data rather than listening to the coo-cooing of Janet Yellen.

If so, somebody was in multiples on Tuesday, selling shares of just about everything as the Dow took a triple-digit loss, coming on the heels of Monday's sombre session.

Stocks backed off in a big way, with winners outpacing losers by a margin of better than 2:1. While the past two days may be nothing more than average market noise, there have been more voices of discontent airing their views of late, adding to the chorus of naysayers who say 23x earnings on the S&P is simply not sustainable, nor suitable for investment.

In an average environment, stocks should be sporting a 14-16 multiple. That has been the norm for the past 50 years, and there's sufficient data for which to back up those claims.

There is a possibility, albeit a minor one, that more than a few of the higher-profile analysts and brokers are quietly telling their clients that the market is overheating, especially at a time in which data points have not been particularly encouraging.

Add to the mix the recent decline in oil and the messy bond market (10-year note down again today), recent highs, and the conditions are ripe for a substantial decline.

What market-watchers gasped at in January of this year may be about to return. If that's the case, there's little the Fed can do - or say - to keep stocks at their current nosebleed levels.

They will try, though, that's for certain.

S&P 500: 2,045.17, -20.96 (1.01%)
Dow: 17,603.32, -133.68 (0.75%)
NASDAQ: 4,843.93, -47.86 (0.98%)

Crude Oil 36.47 +2.16% Gold 1,232.90 +1.12% EUR/USD 1.1382 -0.08% 10-Yr Bond 1.73 -2.92% Corn 355.75 +0.35% Copper 2.14 +0.12% Silver 15.14 +1.31% Natural Gas 1.94 -3.00% Russell 2000 1,095.85 -1.14% VIX 15.42 +9.21% BATS 1000 20,682.61 0.00% GBP/USD 1.4158 -0.77% USD/JPY 110.3350 -0.88%

Tuesday, March 29, 2016

Yellen Spikes The Punch Bowl With Dovish Comments

In a midday speech before the Economic Club of New York, Janet Yellen's comments included comments concerning weak growth abroad, low oil prices and uncertainty over China, saying that the Federal Reserve would proceed "cautiously" on further rate hikes this year.

At their March meet two weeks ago, the FOMC of the Fed lowered the number of expected rate hikes from four to two for 2016, and Yellen's speech today was the first public commentary form the Fed Chair since that time.

Other members had voiced opinions which could be considered mildly hawkish, but Yellen was decidedly dovish in today's prepared remarks.

Obviously, Wall Street was rather pleased with the Fed Chair's stock market elixir, sending the S&P 500 to its highest level of 2016. Stocks ended a five-week streak of positive gains with a lower close last week, but Yellen and her friends at the Fed apparently didn't want the market to turn down again.

With the kind of policy the Fed has been brandishing for the past seven years, stocks should be headed back toward all-time highs in due time, likely within the next few months. With the Dow running up a spectacular 2000 points in the last six-plus weeks, the DJIA stands just more than 700 points from the record set last year (May: 18,351.36).

The S&P needs to gain another 80 points to surpass the all-time high of last May (2134.72).

Party on, Janet!

S&P 500: 2,055.01, +17.96 (0.88%)
Dow: 17,633.11, +97.72 (0.56%)
NASDAQ: 4,846.62, +79.84 (1.67%)

Crude Oil 38.49 -2.28% Gold 1,242.50 +1.84% EUR/USD 1.1293 +0.87% 10-Yr Bond 1.81 -2.99% Corn 372.25 +0.47% Copper 2.21 -1.49% Silver 15.36 +1.12% Natural Gas 1.98 +2.38% Russell 2000 1,109.08 +2.67% VIX 13.82 -9.32% BATS 1000 20,682.61 0.00% GBP/USD 1.4387 +0.92% USD/JPY 112.6685 -0.69%

Monday, March 28, 2016

Provable Nixed Markets: VIX or Natural Gas, Take Your Pick

Noting that markets are in a near-trance module of late (thank you, Janet Yellen and central bankers everywhere), it has occurred to financial followers that possibly one could track the big movers of the day in an effort to ferret out any semblance of a pattern in the current conundrum.

With that, taken from the list below are the (un)usual suspects, the venerable VIX, which moved up by 3.39% on the session, and natty natural gas, ahead by 2.71%.

Actually, these moves tells nobody nothing (or, perhaps, everybody everything they need to know), since the VIX, a supposed measure of volatility, moved in such a manner as to suggest, well, volatility, when none existed.

As for natural gas, the price alone dictates large moves in percentage terms. With the price generally below two dollars for the past two years, a twenty-cent move is automatically good for 10%. Thus, today's gain of 2.71% was the result of a price move of roughly five cents. So, just because it is expected to be a little cooler than normal in Nashua, NH, next week, it does not automatically imply that the price of natural gas will be necessarily higher, nor does it mean that the price will stay there for any reasonable expectation of time.

Thus, the discovery du jour isn't so much based on any magic or even logical formula, but simple understanding of markets and central bank control through various proxies: markets are in a semi-permanent state of broken, and there's little any concerted effort by any group of individuals, investors, or fund managers can do about it. A volatility index moves when there is no volatility present, and a five-cent move in the price of natural gas won't set the commodity world afire.

In just a few words, these are not real markets, and you only need to have your eyes open to realize that.

Today's Laughable, Lamentable Louse:
S&P 500: 2,037.05, +1.11 (0.05%)
Dow: 17,535.39, +19.66 (0.11%)
NASDAQ: 4,766.79, -6.72 (0.14%)

Crude Oil 39.39 -0.18% Gold 1,220.10 -0.12% EUR/USD 1.1196 +0.28% 10-Yr Bond 1.87 -1.58% Corn 371.25 +0.34% Copper 2.24 +0.63% Silver 15.20 +0.01% Natural Gas 1.93 +2.71% Russell 2000 1,080.23 +0.06% VIX 15.24 +3.39% BATS 1000 20,682.61 0.00% GBP/USD 1.4255 +0.92% USD/JPY 113.3830 +0.08%

Thursday, February 11, 2016

How To Tell The Economy Is Really Horrible

A number of interesting developments highlighted today's off-the-street action concerning US stock markets and the general global economy. They were all internet-related, but have nothing to do with the share prices of the companies affected, but first, let's take a recap of the actual carnage in the markets today.

Asia was awash in red ink, as Japan circles the monetary drain (must be Adam Smith's "invisible hand" pulling the plug) sending the Nikkei down to new depths, as noted below, along with Hong Kong's Hang Seng Index, which suffered an even more severe loss in points and percentage:
Nikkei 225: 15,713.39, -372.05, -2.31%
Hang Seng Index 18,545.80, -742.37, -3.85%

With China's markets closed for the week as the country celebrates Chinese New Year, over in Hong Kong, it was back to work after a three-day hiatus. The HSI fell out at the open and never recovered. As many in the US apparently do not know, all of Asia's major markets - including Australia, recently - are in bear market territory. The Hang Seng topped out at 28,588 in late April, 2015. Today's loss puts it down 35% from its highs.

While the Asian markets were spitting up blood, Europe opened with a bang to the downside, as Sweden announced its central bank was cutting interest rates further into the negative. Sweden’s Riksbank cut its benchmark interest rate from -0.35% to -0.5%. So, theoretically, anyone wishing to keep 100,000 Krona in a Swedish bank has the awesome privilege of paying the bank 500 of those Krona for the year.

That, in addition to the ongoing banking collapse (Duetshe Bank, in particular), sent Euro stock bourses reeling. Germany's DAX was off 2.93%. In England, the FTSE was down 2.36%. France's CAC 40 fell by 4.05%, and the Euro Stoxx 50 was battered some 108 points, a 3.90% downside.

US traders left no stone unturned, sending the markets close to the August lows and the NASDAQ within 50 points of the magic bear market line (-20%), until a spurious story about Saudi oil cuts saved the day around 2:30 pm. The Dow was down more than 400 points at the lows, and there was some talk about the S&P bouncing off a key level at 1812. Truth be told, key levels and support lines aren't going to matter much in coming days, weeks and months, because there is growing evidence that recession has arrived in the US, just as it has washed up on the shores of Asia and Europe.

Now, back to those off-Wall Street developments that offer many clues on how to know the economy isn't doing very well.

First, there was the outage at ZeroHedge.com just as the market was opening. Anybody who wants the straight, uncensored, bearish view of markets instinctively heads for "the Hedge" as it is known, the site famous for it's inveterate grinding on the wheels of finance. An apparent DDOS attack took the site offline for about 30 minutes and was the second such attack in as many weeks.

While the culprit is unknown, tin-foil cap types point to the NSA or another government agency which wishes to keep at least a leash on the unruly junkyard dog.

Second, MSN Money disabled comments on all its stories. While news of this was not reported widely, its unknown exactly when the company decided it didn't want to hear from its readers. MSN Money follows the lead of Bloomberg, which disabled commenting across its web properties last year. Censorship. It's what's for dinner, and you can't complain about it.

Third, Janet Yellen completed her annual testimony to congress today with a visit to the Senate Banking Committee, chaired by Richard Shelby (R-AL), and failed to goose the markets. When the Fed Chair has less influence on markets than a teen beauty queen at a gay pride rally, take that as a sign markets are more than a little jittery.

Gold and silver continued to rally, with gold up more than $50 at one point in the day. Silver was fast approaching $16/oz. It was under $15 as of Monday's fix. The two precious metals are the best-performing assets (along with select bonds) of 2016.

And finally, Yahoo Editor-in-Chief, Andy Serwer, had to pen this little gem of statist nonsense, explaining that nobody knows why stocks are going down. Server proves that he has quit an imagination, or none.

All in all, it appears the media, government, and the financial world are not about ready to let the muppets get a feeling that something bad is heading their way, despite Yellen fielding questions about the Fed being "out of bullets" and negative interest rates.

The status quo is getting very, very nervous and it's beginning to show. With the US heading into a three-day weekend (Monday is President's Day. In case your boss didn't tell you, you don't have to come in.) and China's markets re-opening on Monday, tomorrow's trading might be more than just a little interesting. The week has gone badly so far, and it is doubtful many will want to head into the break long.



Hate Crime for Thursday:
S&P 500: 1,829.08, -22.78 (1.23%)
Dow: 15,660.18, -254.56 (1.60%)
NASDAQ: 4,266.84, -16.76 (0.39%)

Crude Oil 27.30 -0.55% Gold 1,247.00 +4.39% EUR/USD 1.1316 +0.32% 10-Yr Bond 1.64 -3.58% Corn 360.00 -0.07% Copper 2.01 -0.72% Silver 15.80 +3.36% Natural Gas 1.99 -2.79% Russell 2000 953.72 -1.01% VIX 28.14 +7.04% BATS 1000 19,734.69 -1.33% GBP/USD 1.4484 -0.35% USD/JPY 112.5900 -0.01%

Tuesday, February 2, 2016

Stocks, Oil Whacked Again; 10-Year Note at 1.86%; Yellen's Fed in Shambles

It's official.

The groundhog didn't see his shadow, and Janet Yellen didn't see the recession just ahead, proving, within a shadow of doubt, that animals have better sense than most humans.

At least in the case of furry rodents versus doctors of economics, the rodentia class is in a class all its own. Punxsutawney Phil, the most famous of ground hog prognosticators, came outside this morning and reassured everybody in the Northeast that the most mild winter in decades would continue, and, to boot, be short-lived.

By not seeing his shadow, Phil assuaged the assembled crowd that what remains of winter would be over within two weeks, rather than the usual six week span that extends nearly to the first day of Spring, March 20.

Despite this being a leap year, which adds a full day to the cruel month of February, residents in the most densely-populated area of the country seem to be settled in for a short stay on the chilly side.

In upstate New York, there is little to no snow on the ground. What remains are a few remnants of shoveled piles that take a little longer to melt, though even that should be gone by tomorrow, as temperatures from Buffalo to Albany are expected to approach sixty degrees on Wednesday.

Similar circumstances prevail throughout the Mid-Atlantic region and into New York, Pennsylvania, New Jersey and Massachusetts. The milder-than-normal conditions have resulted in lower use of heating fuels such as oil and natural gas, both of which are hovering around decades-long lows.

As for the Federal Reserve and the captain of that sinking ship, Janet Yellen, she and her hench-fellows seem to be on the wrong side of economic history, considering that since their historic rate hike in mid-December, interest rates have gone in the opposite direction, the 10-year note today closing at 1.86%, as the winds of global deflation and tight labor conditions continue to push consumer demand and consumption lower and lower.

Compounding the complexity of the Fed's non-tenable situation are the twin engines of stocks and oil, both of which have hit stall speed in 2016. WTI crude close in New York within whispering distance of the $30 mark, while the major stock indices were battered into submission by a combination of reduced earnings capacity and a growing confidence gap from investors.

Even with last week's brave showing by the markets in the face of a 2015 fourth quarter that slipped to 0.7% growth, stocks were unable to regain the footing which took the Dow 400 points higher on Friday as the Bank of Japan endorsed negative interest rates on its treasury bonds extending though eight years.

Supposedly, cheap, easy money was good news for the stock market. However, with the BOJ cancelling a treasury auction today due to lack of interest (no pun intended) from selected participants, equity markets around the world backtracked towards the lows of January. Apparently, there aren't many out there who see it as a prudent idea to pay somebody to hold your money.

Negative interest rate policy, aka NIRP, is the death-knell of central bankers. Traditionally, banks paid OUT interest on savings, but, in this decade of upside-down economics, the glorious kings and queens of monetary policy are sticking to the belief that people are so afraid of losing what they've earned that they will pay to have the banks hold it for them.

Mattresses and shotguns are back in style, kids, but nobody seems to have told the central bankers. Everybody from simple savers to mega-millionaires are losing confidence in a clearly broken system, pulling their assets out and into cash, precious metals, gemstones, art, real estate, or other stores of value that have stood the test of time. The only buyers of government debt are governments, a condition which cannot be sustained long.

Truth be known, the Fed, the ECB, BOJ and PBOC are all aware of this condition and have yet to devise a strategy that will resolve the liquidity and solvency crunch with a minimum of pain. Pain will come to many, precisely those holding debt which cannot be repaid. Ideally, this epoch of economic history will see the end of central banking with fiat currencies and fractional reserves.

We may be within weeks or months of a global reset, a change in the nature of money which will tear at the fabric of society itself.

Stay tuned. This is only the middle of the show which started in 2008.

Today's crap shoot:
S&P 500: 1,903.03, -36.35 (1.87%)
Dow: 16,153.54, -295.64 (1.80%)
NASDAQ: 4,516.95, -103.42 (2.24%)

Crude Oil 30.02 -5.06% Gold 1,129.20 +0.11% EUR/USD 1.0920 +0.27% 10-Yr Bond 1.8640 -5.19% Corn 372.00 +0.20% Copper 2.05 -0.29% Silver 14.31 -0.26% Natural Gas 2.03 -5.81% Russell 2000 1,008.84 -2.28% VIX 21.98 +10.01% BATS 1000 20,356.76 -1.72% GBP/USD 1.4411 -0.10% USD/JPY 119.84

Thursday, December 31, 2015

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

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

Closing prices for December 31, 2015:


2,043.94
-19.42 (0.94%)

Chart for ^GSPC


17,425.03
-178.84 (1.02%)

Chart for ^DJI


5,007.41
-58.44 (1.15%)

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

Picks for 2016

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



Note the groupthink among these masters of the universe posers.

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

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

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

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

First, the equity markets will absolutely tank.

Stocks Take a Beating

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

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

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

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

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

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

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

Bonds Will Be Wonderful

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

GDP May Appear Recessionary

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

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

Precious Metals Still Shine

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

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

Commodities Useful in Any Environment

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

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

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

Real Estate As Investment Could Be Solid

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

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

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

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

Conclusions

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

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

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

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

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

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

Happy New Year!

Thursday, December 17, 2015

Yellen's Rate Hike Timing Might Be A Little Off... Like Five, Six Or Seven Years

Now that the Fed has restored its own venerable credibility, the markets seem to think, "well, yeah, the fed is credible, but still wrong." Fed Chairwoman, Janet Yellen, will go down in history as the worst chairperson in the 102-year history of the Federal Reserve, followed closely by her predecessor, Ben Bernanke.

Hiking the federal funds rate even a measly 1/4%, as they did on Wednesday, seems to be anathema to all kinds of markets, except maybe the dollar index, which, unlike just about everything else, rallied today.

Stocks erased all of yesterday's gains and then some, sending the Dow Jones Industrials and S&P 500 into the red for the year. For investors of all stripes (and most importantly, hedge fund managers, who have gotten murdered this year), what's worse is that the year is almost over and there doesn't seem to be a catalyst available to overcome what damage the Fed has done with its unmistakable policy error.

Anybody with brain cells saw this coming well in advance. The global economy is virtually on its knees and the Fed thought it was time for a hike in interest rates. The hike amounted to the political equivalent of a punt. There was nowhere else to go, so they went through the only door open. Bad mistake, especially since that door had been open since 2009.

What were they thinking? Maybe the question should be "what were they not thinking?" because they ignored the obvious signs of slowing, not only in emerging markets, but in commodities, high yield bonds, corporate profits, sales, housing, and a plethora of other indicators that were signaling recession ahead rather than recovery accomplished.

The Federal Reserve is comprised of some of the worst thinkers on the planet, whose sole interest is in keeping their credibility intact, and they are quickly losing control over that. They've managed, in the short span of seven years - thanks to their dual policies of zero interest rate policy (ZIRP) and quantitative easing (QE) to completely dismantle the fabric of capitalism, enriching only the upper, upper crust of wealthy individuals while dashing the hopes and savings of millions of would-be retirees.

With any luck, the Fed's failed policies will lead to outright rejection of the currency, not just around the world, but right here in the United States as well. These are control freaks, and they've lost control, implying simply that worse decisions are already in the making.

In case anybody's paying attention, the Federal Reserve is busy wrecking what's left of the global economy by bringing the US economy into line with the rest of the world, which, if one would like to take a look at Argentina, Brazil, and Mexico, is already suffering deeply.

Global depression and a debt jubilee are on the plate for 2016. You can have it served directly or order it to go. Zombie banks, which should have gone out of business in 2008, don't deserve to be repaid again, as they've already stolen so much taxpayer money that they've bankrupted the US government.

It's a good thing there's only a few weeks left in the year, because the losses for 2015 will stop suddenly on December 31.

Sadly, those losses will resume promptly, when markets reopen on January 4, 2016.

In advance, Happy New Year (if we make it).

Tuesday, December 15, 2015

Last Dance Before Yellen's Rate Hike; Stocks at the High End... with Tom Petty Video

In tribute to today's madcap stock rally in the face of tomorrow's FOMC policy rate decision, we present Tom Petty and the Heartbreakers classic, "Mary Jane's Last Dance."

Picture Mary Jane as Wall Street, High Yield Bonds, the global economy, or all three. Tom Petty is the Federal Reserve. That's all for today. Tomorrow's a big one.

Wednesday, March 18, 2015

Fed's Yellen, FOMC Spark Enormous Rally on Dow, Nearly 380+ Points, Oil Up Too

Seriously, this is just plain nonsense.

Print money out of thin air, issue it as debt, give some to the nation's biggest banks and return 1/2% to them on Billions of dollar in excess reserves, constipate the entire lending transmission function, make minute, detailed changes to your statement every month or so, trot out your Chairwoman - who looks like your grandmother - every three months, keep the federal funds rate at ZERO and continuing raping the wealth and resources of your country, forcing everybody into stocks (mostly), bonds and commodities.

It's absolutely brilliant. The banks don't have to pay interest on savings (whatever that old, quaint concept happens to be), and everybody except the general population goes home happy.

The Fed won't raise the federal funds rate for at least six more months, and probably not until 2017. Seriously. It's broken. Grag some gold, guns and land and head for the hills, unless you are a welfare (FSA) mooch, then, live in a city slum, or a suburban slum, which are popping up all over the country.

What a monstrously sad joke is being played on the American public. Too bad it's not funny.

Whether you're old or young, you're getting taken to the cleaners and it's not about to change any time soon.

The Dow Jones Industrials were off by more than 130 points just prior to the FOMC statement at 2:00 pm EDT. It closed up 227.

WTI Crude oil - of which there is an historic oversupply - was under $42/barrel in the morning. By the end of the trading session it was approaching $47/barrel. Supply and demand, my BEHIND.

Dow 18,076.19, +227.11 (1.27%)
S&P 500 2,099.42, +25.14 (1.21%)
NASDAQ 4,982.83, +45.39 (0.92%)

Thursday, July 3, 2014

In Celebration of Dow 17,000 and a Boffo NFP Report, the Yellen Shriek

Money Daily stopped being a daily post blog in March, 2014. While the name remains the same, the posts are now on an intermittent basis, as conditions warrant, though it is advised to read the archives (from 2006-2014) regularly, even daily, for insights and historical perspective.

A stroke of brilliance this morning:

The Lord's Prayer, revised as "The Yellen Shriek" for Wall Street:

Our fiat,
Which art in dollars,
hollow be thy worth.
Thy stocks go up,
thy vix be down
on CBOE as it is on Wall Street.
Give plebes this day their daily crumb of bread
and deliver us thy dividends,
as we distribute to the one percent.
And lead us not into recession,
but deliver us more POMO,
for the kingdom and the power,
and the glory resides at the Fed,
QE forever and ever,
Amen.


Go viral, and, have a Happy 4th of July, AKA, INDEPENDENCE DAY!

Tuesday, February 11, 2014

Wall Street Goes Ga-Ga Over Fed Chair, Janet Yellen

Janet Yellen's testimony to congress and the subsequent question-answer period was a rather revolting display of crony capitalism in its most blatant form. Legislators swooned over the new Fed Chair (as she is now to be known), and Wall Street sent stocks to the moon, again.

Yellen's prepared testimony to the House Financial Services Committee:

Yellen Speech Feb 11



Bear in mind, these are the people/drones/robots elected/appointed to rule/run/govern the country/world/universe.

Hedge accordingly... or, just kill yourself now.

DOW 15,994.77, +192.98 (+1.22%)
NASDAQ 4,191.05, +42.87 (+1.03%)
S&P 1,819.75, +19.91 (+1.11%)
10-Yr Note 100.23, +0.01 (+0.01%) Yield: 2.72%
NASDAQ Volume 1.86 Bil
NYSE Volume 3.68 Bil
Combined NYSE & NASDAQ Advance - Decline: 3228-1494
Combined NYSE & NASDAQ New highs - New lows: 190-32
WTI crude oil: 99.94, -0.12
Gold: 1,289.80, +15.10
Silver: 20.15, +0.041
Corn: 441.50, -1.50