From the land that gave us the Volvo and Greta Thunberg, comes news that the nation of Sweden has abandoned its five-year-long experiment with negative interest rates.
The news is actually about a week old, but, being that there was so much going on between the impeachment of President Trump, the China trade deal, and the public's general disinterest with anything not related to either the NFL or Christmas, that the Riksbank raising its overnight repo interest rate from -0.25% to 0.0% hardly warranted notice.
Nonetheless, the global response was as expected from the groupthink of the central bank community. Rates instantly rose, and a chorus of seemingly smart-sounding people recited verses calling for fiscal measures to be undertaken immediately, to counteract the anti-stimulative effect of cancelling out the negative rates that are, in turn, cancelling out currencies around the globe.
According to the central banking community, debt and spending must be promoted by governments as the bankers have done all they could do to alter the flow of goods and services and money in a positive direction. The Swedes have failed, and with that, so too the central banks of the Europe Union nations, Japan, Denmark, Hungary, and Switzerland.
What comes now is general consensus on the direction of economies and globalized financial repression. More spending must be undertaken by governments, on infrastructure, military hardware, green initiatives, social programs and anything else the politicians can get behind and garner more votes for themselves, virtue-signaling that they are the saviors of the free and not-so-free world.
Such a plan could not be concocted by a more smarmy gaggle of decrepit geezers and their enabling political hacks. The worldwide crackdown on savings was not efficient enough to erase decades of excess and misanthropic misadventures into economic dystopia. Now the banking and political community will expose the world to even more egregious profligate spending that will no doubt benefit few, mostly politicians and bankers.
While the Riksbank ponders life in the frozen wasteland formerly recognizable as a stable nation, the rest of the world trudges dangerously close to the financial abyss that negative interest rates have created. Reversing interest rates to a standard resembling something almost normal might prove a costly enterprise. After all, most corporations have been feasting upon low rates for so long, buying back their own stock and artificially raising equity share prices by a process of market starvation, a change that will ultimately cost more could very likely corrupt the process and actually foment a global recession.
Not to worry. The central bankers will no doubt have a solution for that as well while pointing their gnarly fingers the way of their political cronies as world economies lurch from bad policies to worse. With Christine Lagarde recently replacing Mario Draghi as president of the ECB, there's little doubt that the failed policies of her predecessor will be enhanced by more high-sounding rhetorical nonsense that will help speed the spiraling down of society into an inescapable morass.
Well, how about that. It's Christmas!
At the Close, Monday, December 23, 2019:
Dow Jones Industrial Average: 28,551.53, +96.44 (+0.34%)
NASDAQ: 8,945.65, +20.69 (+0.23%)
S&P 500: 3,224.01, +2.79 (+0.09%)
NYSE Composite: 13,899.99, +10.74 (+0.08%)
Showing posts with label Mario Draghi. Show all posts
Showing posts with label Mario Draghi. Show all posts
Tuesday, December 24, 2019
Thursday, September 12, 2019
Global Banker Duplicity: Draghi Cuts ECB Overnight Rate to -0.50%
At Thursday's announcement, the ECB's Chief Governing Council (sounds impressive, doesn't it?) cut the bank’s overnight deposit rate, trimmed by 10 basis points, to −0.50%, meaning that commercial banks must effectively pay just a little bit more to the ECB to hold their excess cash balances overnight.
There were other policy moves, such as a restart to the ECB's Asset Purchase Program, otherwise known as QE, with an unlimited timeline. The bank will purchase assets at a rate of 20 billion euros per month, until they see inflation begin to tick up, so, essentially, forever, or, until the currency is completely worthless or eviscerated by the continuous destruction of capital by negative interest rates.
It would be easy to say that the central bankers don't know what they're doing, because all of the stimulus applied to economies around the world for the past ten years hasn't produced anything close to a desired result, either increased inflation (which isn't good, by the way), or rising GDP in developed nations.
What the ECB and other central banks like the BoJ and the US Federal Reserve are doing is choking down the currency in desperate, disparate attempts to conceal the rot within the system, which essentially imploded in 2008.
Nothing has been done at the micro level to induce business formation. It's all been macro level stuff, aiding governments and big corporations, which have a stranglehold on the most profitable franchises worldwide.
This is apparently good for asset prices in risky segments, such as stocks, but also for gold and silver, which have popped on the news, but will no doubt retreat.
The end game is a global depression, which some claim we've been in since 2008, but that's splitting hairs. The final blow comes when currencies backed by nothing are thrown out with the bathwater by populations tired of being taxed to death and dragged roundly their ears and noses with shifting central bank tricksterism.
Negative interest rates, if they prevail, will destroy all fiat currency. It's just math.
At the Close, Wednesday, September 11, 2019:
Dow Jones Industrial Average: 27,137.04, +227.64 (+0.85%)
NASDAQ: 8,169.68, +85.52 (+1.06%)
S&P 500: 3,000.93, +21.54 (+0.72%)
NYSE Composite: 13,082.41, +88.41 (+0.68%)
There were other policy moves, such as a restart to the ECB's Asset Purchase Program, otherwise known as QE, with an unlimited timeline. The bank will purchase assets at a rate of 20 billion euros per month, until they see inflation begin to tick up, so, essentially, forever, or, until the currency is completely worthless or eviscerated by the continuous destruction of capital by negative interest rates.
It would be easy to say that the central bankers don't know what they're doing, because all of the stimulus applied to economies around the world for the past ten years hasn't produced anything close to a desired result, either increased inflation (which isn't good, by the way), or rising GDP in developed nations.
What the ECB and other central banks like the BoJ and the US Federal Reserve are doing is choking down the currency in desperate, disparate attempts to conceal the rot within the system, which essentially imploded in 2008.
Nothing has been done at the micro level to induce business formation. It's all been macro level stuff, aiding governments and big corporations, which have a stranglehold on the most profitable franchises worldwide.
This is apparently good for asset prices in risky segments, such as stocks, but also for gold and silver, which have popped on the news, but will no doubt retreat.
The end game is a global depression, which some claim we've been in since 2008, but that's splitting hairs. The final blow comes when currencies backed by nothing are thrown out with the bathwater by populations tired of being taxed to death and dragged roundly their ears and noses with shifting central bank tricksterism.
Negative interest rates, if they prevail, will destroy all fiat currency. It's just math.
At the Close, Wednesday, September 11, 2019:
Dow Jones Industrial Average: 27,137.04, +227.64 (+0.85%)
NASDAQ: 8,169.68, +85.52 (+1.06%)
S&P 500: 3,000.93, +21.54 (+0.72%)
NYSE Composite: 13,082.41, +88.41 (+0.68%)
Sunday, June 17, 2018
Weekend Wrap: Trump Tariffs, Fed Funds, Draghi and ECB Dominate Markets
The prior week was expected to produce shock waves in markets, but on the US stock exchanges, the reaction was rather muted.
While the Dow put in a loss for the week, the NASDAQ surged to new all-time highs and the S&P 500 finished the week nearly unchanged.
Most of the reactive trading happened elsewhere, in the forex, bond, and commodity markets, which witnessed major swings in the aftermath of a rate hike by the Federal Reserve and an announcement of the end of QE by Mario Draghi of the ECB. The latter seemed to cause more impact, as Draghi set a timetable for the end of monetary easing at the end of 2018.
All of the European bourses closed lower on Friday in response to Draghi's announcement.
The dual central bank announcements overshadowed President Trump's successful negotiation with North Korea. Trump's meeting with Kim Jong-un resulted in an agreement between the two countries for more normalized relations, setting a framework for denuclearization by the North Koreans and suspension of war games conducted jointly by South Korea and the US.
Also igniting markets was President Trump's refusal to sign off on the G7 memorandum, following a meeting with "friendly" nations in which Trump promised tariffs on all manner of imports from the likes of Italy, Germany, Japan, Canada, France and Great Britain. Before that news even died down, with the other G7 nations promising retaliatory tariffs, the President slapped another $50 billion in tariffs on China, with the Chinese responding with tariffs on US imports.
With so much news crowding into one week, it was not easy for investors to find a path of least resistance. Along with Europe, US stocks fell off sharply on Friday, but recovered most of the losses by the close of trading for the week.
After the Fed raised the federal funds rate by 25 basis points on Wednesday, the yield on the 10-year note briefly crossed the 3.00% line, closing at 2.98 on the 13th, but falling back to 2.93% by Friday, the 15th of June. More importantly, the spread between the five-year and the 10 dropped to just 12 basis points, as the five-year note finished the week at 2.81.
Spreads were compressed, with the 2s-10s at 38 basis points and 2s-30s at 50. The 5s-30s spread was 23 basis points. These are the lowest spreads recorded since 2007, just prior to the Great Financial Crisis.
The Euro got crushed in currency markets, while gold and silver - both of which had been rallying all week - were crushed during Friday's COMEX session, with silver taking the brunt of the selling, off four percent, from a high of 17.30 per troy ounce on Thursday to a low at 16.40 on Friday before recovering slightly to close at 16.54. Gold was over $1300 per ounce on Thursday, but was slammed to a six month low at $1275 on Friday.
For more detail on the explosive week in precious metals and beyond, Ed Steer's weekly commentary can be found at the GoldSeek site, here.
Doug Noland's weekly Credit Bubble Bulletin commentary, detailing the recent movements in credit and currencies is titled "The Great Fallacy".
Dow Jones Industrial Average June Scorecard:
At the Close, Friday, June 15, 2018:
Dow Jones Industrial Average: 25,090.48, -84.83 (-0.34%)
NASDAQ: 7,746.38, -14.66 (-0.19%)
S&P 500: 2,779.42, -3.07 (-0.11%)
NYSE Composite: 12,734.63, -37.32 (-0.29%)
For the Week:
Dow: -226.05 (-0.89%)
NASDAQ: +100.87 (+1.32%)
S&P 500: +0.63 (+0.02%)
NYSE Composite: -97.43 (-0.76%)
While the Dow put in a loss for the week, the NASDAQ surged to new all-time highs and the S&P 500 finished the week nearly unchanged.
Most of the reactive trading happened elsewhere, in the forex, bond, and commodity markets, which witnessed major swings in the aftermath of a rate hike by the Federal Reserve and an announcement of the end of QE by Mario Draghi of the ECB. The latter seemed to cause more impact, as Draghi set a timetable for the end of monetary easing at the end of 2018.
All of the European bourses closed lower on Friday in response to Draghi's announcement.
The dual central bank announcements overshadowed President Trump's successful negotiation with North Korea. Trump's meeting with Kim Jong-un resulted in an agreement between the two countries for more normalized relations, setting a framework for denuclearization by the North Koreans and suspension of war games conducted jointly by South Korea and the US.
Also igniting markets was President Trump's refusal to sign off on the G7 memorandum, following a meeting with "friendly" nations in which Trump promised tariffs on all manner of imports from the likes of Italy, Germany, Japan, Canada, France and Great Britain. Before that news even died down, with the other G7 nations promising retaliatory tariffs, the President slapped another $50 billion in tariffs on China, with the Chinese responding with tariffs on US imports.
With so much news crowding into one week, it was not easy for investors to find a path of least resistance. Along with Europe, US stocks fell off sharply on Friday, but recovered most of the losses by the close of trading for the week.
After the Fed raised the federal funds rate by 25 basis points on Wednesday, the yield on the 10-year note briefly crossed the 3.00% line, closing at 2.98 on the 13th, but falling back to 2.93% by Friday, the 15th of June. More importantly, the spread between the five-year and the 10 dropped to just 12 basis points, as the five-year note finished the week at 2.81.
Spreads were compressed, with the 2s-10s at 38 basis points and 2s-30s at 50. The 5s-30s spread was 23 basis points. These are the lowest spreads recorded since 2007, just prior to the Great Financial Crisis.
The Euro got crushed in currency markets, while gold and silver - both of which had been rallying all week - were crushed during Friday's COMEX session, with silver taking the brunt of the selling, off four percent, from a high of 17.30 per troy ounce on Thursday to a low at 16.40 on Friday before recovering slightly to close at 16.54. Gold was over $1300 per ounce on Thursday, but was slammed to a six month low at $1275 on Friday.
For more detail on the explosive week in precious metals and beyond, Ed Steer's weekly commentary can be found at the GoldSeek site, here.
Doug Noland's weekly Credit Bubble Bulletin commentary, detailing the recent movements in credit and currencies is titled "The Great Fallacy".
Dow Jones Industrial Average June Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 6/1/18 | 24,635.21 | +219.37 | +219.37 |
| 6/4/18 | 24,813.69 | +178.48 | +397.85 |
| 6/5/18 | 24,799.98 | -13.71 | +384.14 |
| 6/6/18 | 25,146.39 | +346.41 | +730.55 |
| 6/7/18 | 25,241.41 | +95.02 | +825.57 |
| 6/8/18 | 25,316.53 | +75.12 | +900.69 |
| 6/11/18 | 25,322.31 | +5.78 | +906.47 |
| 6/12/18 | 25,320.73 | -1.58 | +904.89 |
| 6/13/18 | 25,201.20 | -119.53 | +785.36 |
| 6/14/18 | 25,175.31 | -25.89 | +759.47 |
| 6/15/18 | 25,090.48 | -84.83 | +674.64 |
At the Close, Friday, June 15, 2018:
Dow Jones Industrial Average: 25,090.48, -84.83 (-0.34%)
NASDAQ: 7,746.38, -14.66 (-0.19%)
S&P 500: 2,779.42, -3.07 (-0.11%)
NYSE Composite: 12,734.63, -37.32 (-0.29%)
For the Week:
Dow: -226.05 (-0.89%)
NASDAQ: +100.87 (+1.32%)
S&P 500: +0.63 (+0.02%)
NYSE Composite: -97.43 (-0.76%)
Tuesday, August 29, 2017
Stocks Flat, Gold, Silver, Bonds Explode Higher
Editor's Note: Money Daily is eventually going to move to its own server at dtmagazine.com, but issues implementing the blogging platform while integrating ad serving has kept the blog from being fully integrated. Thus, for the time being, until these issues resolved, the blog will appear here.
Stocks were relatively unmoved as the world's central bankers wrapped up their annual economic symposium at Jackson Hole, Wyoming over the weekend.
What did move were precious metals and bonds, both boosted by ambiguous speeches by Fed Chair, Janet Yellen, and ECB president, Mario Draghi.
Both speakers failed to address the bubbling equity markets, and instead opted for a can-kicking, all is well, "stay the course" approach. Markets were effectively unimpressed, though fixed investments saw massive gains.
The benchmark 10-year note was bid, knocking the yield down to 2.16, and to levels not seen since before last year's November elections, at 2.09% just prior to the Tuesday open.
Gold has blown through resistance at the psychologically-important $1300 level, kicking up to $1325 in early Tuesday futures trading. Silver also advanced, blasting through $17, hovering in the $17.60 range at this time.
Stock futures are down massively, setting Tuesday up for a massive downdraft.
With congress coming back to debate the debt ceiling and federal budget and the FOMC meeting in September, the final days of August appear to be presaging the volatile days and weeks ahead.
Hang on to your hats. This looks to be a wild ride.
At the Close, August 28, 2017:
Dow: 21,808.40, -5.27 (-0.02%)
NASDAQ: 6,283.02, +17.37 (+0.28%)
S&P 500: 2,444.24, +1.19 (+0.05%)
NYSE Composite: 11,800.22, -11.81 (-0.10%)
Stocks were relatively unmoved as the world's central bankers wrapped up their annual economic symposium at Jackson Hole, Wyoming over the weekend.
What did move were precious metals and bonds, both boosted by ambiguous speeches by Fed Chair, Janet Yellen, and ECB president, Mario Draghi.
Both speakers failed to address the bubbling equity markets, and instead opted for a can-kicking, all is well, "stay the course" approach. Markets were effectively unimpressed, though fixed investments saw massive gains.
The benchmark 10-year note was bid, knocking the yield down to 2.16, and to levels not seen since before last year's November elections, at 2.09% just prior to the Tuesday open.
Gold has blown through resistance at the psychologically-important $1300 level, kicking up to $1325 in early Tuesday futures trading. Silver also advanced, blasting through $17, hovering in the $17.60 range at this time.
Stock futures are down massively, setting Tuesday up for a massive downdraft.
With congress coming back to debate the debt ceiling and federal budget and the FOMC meeting in September, the final days of August appear to be presaging the volatile days and weeks ahead.
Hang on to your hats. This looks to be a wild ride.
At the Close, August 28, 2017:
Dow: 21,808.40, -5.27 (-0.02%)
NASDAQ: 6,283.02, +17.37 (+0.28%)
S&P 500: 2,444.24, +1.19 (+0.05%)
NYSE Composite: 11,800.22, -11.81 (-0.10%)
Saturday, July 22, 2017
Small Pullback Friday; Stocks Mixed For Week
It was a week to forget.
Nothing much occurred during the week besides the usual NASDAQ pumping, zig-zagging indices and Thursday and Friday's minor profit-taking sessions.
Equities remain elevated, though a little movement in precious metals has the markets a bit on notice that the fiat Ponzi is still in quite a fragile state.
Not that it matters, but gold and silver remain real money, while the Janet Yellens and Mario Draghis of the world continue to print and talk endlessly, their blathering covering up a multitude of malinvestment sins around the world.
All the major indices finished in the red on Friday, a somewhat unusual set-up going into next week, which will be highlighted by a do-nothing-but-talk-a-good-game FOMC meeting which concludes Wednesday.
After that? Off to the races (Saratoga opened this weekend), or back to sleep until Labor Day? With congress failing to come to grips with reality, their August vacation in the balance, the betting is that nothing good gets done in Washington and that will be just fine with Wall Street.
Onward and upward!
At the Close, 7/21/17:
Dow: 21,580.07, -31.71 (-0.15%)
NASDAQ: 6,387.75, -2.25 (-0.04%)
S&P 500: 2,472.54, -0.91 (-0.04%)
NYSE Composite: 11,924.60, -19.90 (-0.17%)
For the week:
Dow: -57.67 (-0.27%)
NASDAQ: +75.29 (1.19%)
S&P 500: +13.27 (0.54%)
NYSE Composite: +27.29 (0.23%)
Nothing much occurred during the week besides the usual NASDAQ pumping, zig-zagging indices and Thursday and Friday's minor profit-taking sessions.
Equities remain elevated, though a little movement in precious metals has the markets a bit on notice that the fiat Ponzi is still in quite a fragile state.
Not that it matters, but gold and silver remain real money, while the Janet Yellens and Mario Draghis of the world continue to print and talk endlessly, their blathering covering up a multitude of malinvestment sins around the world.
All the major indices finished in the red on Friday, a somewhat unusual set-up going into next week, which will be highlighted by a do-nothing-but-talk-a-good-game FOMC meeting which concludes Wednesday.
After that? Off to the races (Saratoga opened this weekend), or back to sleep until Labor Day? With congress failing to come to grips with reality, their August vacation in the balance, the betting is that nothing good gets done in Washington and that will be just fine with Wall Street.
Onward and upward!
At the Close, 7/21/17:
Dow: 21,580.07, -31.71 (-0.15%)
NASDAQ: 6,387.75, -2.25 (-0.04%)
S&P 500: 2,472.54, -0.91 (-0.04%)
NYSE Composite: 11,924.60, -19.90 (-0.17%)
For the week:
Dow: -57.67 (-0.27%)
NASDAQ: +75.29 (1.19%)
S&P 500: +13.27 (0.54%)
NYSE Composite: +27.29 (0.23%)
Tuesday, June 27, 2017
Fake News, Fake Markets, Fake Money: Big Losses As Central Bankers Talk Tightening
Good luck to anyone trying to do fundamental analysis in this market.
Jawboning by Fed officials and today, especially, the grand liar of Europe, Mario Draghi, led the assault on spec stocks and the market in general by threatening to take away the low interest rate punchbowl.
Draghi's comments came at an economic conference in Portugal, ECB President Mario Draghi said that as economic prospects improve in Europe, the ECB could make adjustments to its policies of sub-zero interest rates coupled with huge bond purchases.
As if that wasn't enough, a trio of Federal Reserve loudmouths set their jaws to yapping about asset values, cueing a collapse in the equity and bond markets.
Fed Chair, Janet Yellen, Vice-chair Stanley Fischer, and San Francisco Fed President John Williams all focused on high equity valuations in speeches at separate locales.
Thus, market participants wet their pants on the awful prospect that their enormous gains would somehow evaporate if the accommodative policies of the Federal Reserve were to be unwound. Of course, they're right. Almost all of the gains of the past eight years have been the result of loose monetary policy. Any tightening of such policies would mean that stocks might not be so easily gushed to higher levels.
Bond yield rose substantially, with the 10-year-note gaining to 2.19%, erasing all of June's gains.
Not that any of today's loose lip talking matters. Actions will determine the ultimate direction of the markets. While some degree of sanity and honest price discovery in markets would no doubt involve a lower rate of return than what's been considered normal since 2009, it also might result in crisis, as all manner of wealth is tied to stocks and their continued appreciation.
At the Close, 6/27/17:
Dow: 21,310.66, -98.89 (-0.46%)
NASDAQ: 6,146.62, -100.53 (-1.61%)
S&P 500 2,419.38, -19.69 (-0.81%)
NYSE Composite: 11,716.92, -41.94 (-0.36%)
Jawboning by Fed officials and today, especially, the grand liar of Europe, Mario Draghi, led the assault on spec stocks and the market in general by threatening to take away the low interest rate punchbowl.
Draghi's comments came at an economic conference in Portugal, ECB President Mario Draghi said that as economic prospects improve in Europe, the ECB could make adjustments to its policies of sub-zero interest rates coupled with huge bond purchases.
As if that wasn't enough, a trio of Federal Reserve loudmouths set their jaws to yapping about asset values, cueing a collapse in the equity and bond markets.
Fed Chair, Janet Yellen, Vice-chair Stanley Fischer, and San Francisco Fed President John Williams all focused on high equity valuations in speeches at separate locales.
Thus, market participants wet their pants on the awful prospect that their enormous gains would somehow evaporate if the accommodative policies of the Federal Reserve were to be unwound. Of course, they're right. Almost all of the gains of the past eight years have been the result of loose monetary policy. Any tightening of such policies would mean that stocks might not be so easily gushed to higher levels.
Bond yield rose substantially, with the 10-year-note gaining to 2.19%, erasing all of June's gains.
Not that any of today's loose lip talking matters. Actions will determine the ultimate direction of the markets. While some degree of sanity and honest price discovery in markets would no doubt involve a lower rate of return than what's been considered normal since 2009, it also might result in crisis, as all manner of wealth is tied to stocks and their continued appreciation.
At the Close, 6/27/17:
Dow: 21,310.66, -98.89 (-0.46%)
NASDAQ: 6,146.62, -100.53 (-1.61%)
S&P 500 2,419.38, -19.69 (-0.81%)
NYSE Composite: 11,716.92, -41.94 (-0.36%)
Tuesday, July 5, 2016
Markets Becoming More Volatile By The Day; Italian Banks, British Real Estate Hit Hard
It's getting a little scary out there in finance-land.
Following the epic exercise in individual democracy in Great Britain, the world's elitist bankers and political forces have been scampering from one impaired asset class to another, the latest and most prominent being Italian banks and British Real Estate Investment Trusts (REITs).
Since Monday, three separate REITs in Britain have shut down redemptions in the wake of panicked outflows since the Brexit vote.
As for the Italian banking sector (recall that Mario Draghi, current head of the ECB, mismanaged most of Italy's financial escapades a decade ago), FUGGEDABOUTIT!
Just today, short-selling was banned in shares of Banca Monte dei Paschi di Siena, Italy's third-largest bank. Other banks in Italy are in crisis mode, with a huge amount of non-performing loans hanging over a weakening economic picture.
Here in the new world, stocks were slammed as investors suddenly noticed that the major indices were once again closing in on all-time highs. Realizing that the fundamentals didn't support such extreme valuations, it was risk off all day, with the three biggies spending the entire session in the red.
Silver continued its impressive run, closing at 19.91 in New York (where the manipulation occurs, though lately isn't working), but gunning up as trading opened in the Far East.
Here are the results, suckers:
S&P 500: 2,088.55, -14.40 (0.68%)
Dow: 17,840.62, -108.75 (0.61%)
NASDAQ: 4,822.90, -39.67 (0.82%)
Crude Oil 46.65 +0.11% Gold 1,364.10 +0.40% EUR/USD 1.1061 -0.05% 10-Yr Bond 1.37 -6.11% Corn 356.75 -0.35% Copper 2.18 -0.21% Silver 20.28 +1.87% Natural Gas 2.78 +0.43% Russell 2000 1,139.45 -1.50% VIX 15.58 +5.48% BATS 1000 20,677.17 0.00% GBP/USD 1.2961 -0.45% USD/JPY 101.1910 -0.51%
Following the epic exercise in individual democracy in Great Britain, the world's elitist bankers and political forces have been scampering from one impaired asset class to another, the latest and most prominent being Italian banks and British Real Estate Investment Trusts (REITs).
Since Monday, three separate REITs in Britain have shut down redemptions in the wake of panicked outflows since the Brexit vote.
On Tuesday, Standard Life and Aviva both halted redemptions in their U.K.-focused property funds, which are pooled investments that hold real estate, similar to a REIT. Later in the day, M&G Investments joined them.
As for the Italian banking sector (recall that Mario Draghi, current head of the ECB, mismanaged most of Italy's financial escapades a decade ago), FUGGEDABOUTIT!
Just today, short-selling was banned in shares of Banca Monte dei Paschi di Siena, Italy's third-largest bank. Other banks in Italy are in crisis mode, with a huge amount of non-performing loans hanging over a weakening economic picture.
Here in the new world, stocks were slammed as investors suddenly noticed that the major indices were once again closing in on all-time highs. Realizing that the fundamentals didn't support such extreme valuations, it was risk off all day, with the three biggies spending the entire session in the red.
Silver continued its impressive run, closing at 19.91 in New York (where the manipulation occurs, though lately isn't working), but gunning up as trading opened in the Far East.
Here are the results, suckers:
S&P 500: 2,088.55, -14.40 (0.68%)
Dow: 17,840.62, -108.75 (0.61%)
NASDAQ: 4,822.90, -39.67 (0.82%)
Crude Oil 46.65 +0.11% Gold 1,364.10 +0.40% EUR/USD 1.1061 -0.05% 10-Yr Bond 1.37 -6.11% Corn 356.75 -0.35% Copper 2.18 -0.21% Silver 20.28 +1.87% Natural Gas 2.78 +0.43% Russell 2000 1,139.45 -1.50% VIX 15.58 +5.48% BATS 1000 20,677.17 0.00% GBP/USD 1.2961 -0.45% USD/JPY 101.1910 -0.51%
Sunday, April 24, 2016
Stocks Finish Week In Volatile, Split Fashion; FOMC, BOJ To Drive Markets Last Week Of April
Nothing monumental was happening in the markets on Friday, but the mood was decidedly risk-averse heading into the weekend. The week as a whole mirrored Friday, with the Dow and S&P showing small gains while the NASDAQ took on water.
For the week:
DOW: +106.29 (0.59%)
S&P 500: +10.85 (0.52%)
NASDAQ: -31.99 (0.65%)
The week was among the lesser moves of the year, though it became apparent that the markets were testing the upper limits of their recent range. While the Dow managed to finish just above the 18,000 mark, the S&P remained at a critical inflection point at 2091-2092, almost by magic. Moving above the 2100 mark - which the SPX accomplished mid-week - may prove to be short-lived if investors take recent earnings weakness seriously, though that position is still debatable, considering the virtually unlimited power of the Fed and associated central banks in Japan (BOJ) and Europe (ECB) to print, cajole and promote inflationary, free-money policies.
Central banks cannot, however, remain the only vital force in the markets forever. More and more voices are beginning to openly question the intelligence of placing blind faith in the currency-controllers and are advising that a return to "normalcy" is something the Fed cannot and probably will not approach in the near term. Among them David Stockman, Jeff Gundlach, Bill Gross have been the latest to scoff at the Fed's financially-repressive control policies.
Notwithstanding the naysayers, the Fed, BOJ and ECB continue to stay the course. While Mario Draghi of the ECB didn't move markets one iota with his stand pat position this week, the Fed will likely accomplish little with their FOMC meeting this week (Tuesday and Wednesday), though the BOJ is considering lowering its key interest rate further into the red. The BOJ's next two-day policy review ends on April 28 (Thursday).
The coming week will be focused on central bank nothingness rather than fundamentals, which is what the complainers have been howling about for some time.
Expect their voices to become more numerous and louder if the global economy continues to sputter and stall.
FRIDAY'S FUMBLING:
S&P 500: 2,091.58, +0.10 (0.00%)
Dow: 18,003.75, +21.23 (0.12%)
NASDAQ: 4,906.23, -39.66 (0.80%)
Crude Oil 43.71 +1.23% Gold 1,234.90 -1.23% EUR/USD 1.1228 -0.55% 10-Yr Bond 1.89 +0.96% Corn 378.25 -2.95% Copper 2.27 +0.93% Silver 16.97 -0.73% Natural Gas 2.26 +2.13% Russell 2000 1,144.24 +0.75% VIX 13.34 -4.37% BATS 1000 20,682.61 0.00% GBP/USD 1.4413 +0.63% USD/JPY 111.6330 +2.02%
For the week:
DOW: +106.29 (0.59%)
S&P 500: +10.85 (0.52%)
NASDAQ: -31.99 (0.65%)
The week was among the lesser moves of the year, though it became apparent that the markets were testing the upper limits of their recent range. While the Dow managed to finish just above the 18,000 mark, the S&P remained at a critical inflection point at 2091-2092, almost by magic. Moving above the 2100 mark - which the SPX accomplished mid-week - may prove to be short-lived if investors take recent earnings weakness seriously, though that position is still debatable, considering the virtually unlimited power of the Fed and associated central banks in Japan (BOJ) and Europe (ECB) to print, cajole and promote inflationary, free-money policies.
Central banks cannot, however, remain the only vital force in the markets forever. More and more voices are beginning to openly question the intelligence of placing blind faith in the currency-controllers and are advising that a return to "normalcy" is something the Fed cannot and probably will not approach in the near term. Among them David Stockman, Jeff Gundlach, Bill Gross have been the latest to scoff at the Fed's financially-repressive control policies.
Notwithstanding the naysayers, the Fed, BOJ and ECB continue to stay the course. While Mario Draghi of the ECB didn't move markets one iota with his stand pat position this week, the Fed will likely accomplish little with their FOMC meeting this week (Tuesday and Wednesday), though the BOJ is considering lowering its key interest rate further into the red. The BOJ's next two-day policy review ends on April 28 (Thursday).
The coming week will be focused on central bank nothingness rather than fundamentals, which is what the complainers have been howling about for some time.
Expect their voices to become more numerous and louder if the global economy continues to sputter and stall.
FRIDAY'S FUMBLING:
S&P 500: 2,091.58, +0.10 (0.00%)
Dow: 18,003.75, +21.23 (0.12%)
NASDAQ: 4,906.23, -39.66 (0.80%)
Crude Oil 43.71 +1.23% Gold 1,234.90 -1.23% EUR/USD 1.1228 -0.55% 10-Yr Bond 1.89 +0.96% Corn 378.25 -2.95% Copper 2.27 +0.93% Silver 16.97 -0.73% Natural Gas 2.26 +2.13% Russell 2000 1,144.24 +0.75% VIX 13.34 -4.37% BATS 1000 20,682.61 0.00% GBP/USD 1.4413 +0.63% USD/JPY 111.6330 +2.02%
Thursday, April 21, 2016
With Central Banks Losing Control, Markets Begin Wild Gyrations
In the aftermath of the Deustche Bank revelations that they and other banking concerns engaged in explicit manipulation of gold and silver prices and markets (assuredly, among others), and in anticipation of various central bank announcements, proclamations and policy nonsense, as of today, markets seem to have become somewhat disjointed and erratic.
Witness the madness in precious metals that began in earnest with the opening of the Shanghai Gold Exchange (SGE) daily gold fix priced in yuan, the price of gold shot up $20 when ECB President Mario Draghi left European markets with no new monetary ammunition, and then retreated without reason, ostensibly the controllers in the West reacting to the challenge having been thrown down by the Chinese.
It was a somewhat similar condition in the silver price, which whipped up to $17.65 in early morning trading, only to be slammed down moments later on the NYMEX, below $17. The prices of both gold and silver recovered, but the message is clear: the London gold fixers and those in China are at odds over what should be the true price of precious metals.
There is a solution to this, and that would be to allow markets to work, by outlawing naked shorting, bid stuffing on the CME, high frequency trading and other tools of manipulation. Letting the market decide on the price would be a satisfactory conclusion to what is rapidly turning into an economic war zone, but it is also quite possible the opposing parties could begin using actual guns, bullets, warships and bombs to settle their differences. It is evident that the long-established edge of US monetary hegemony, via the dollar as reserve currency, is coming to an end, and with that, the era of unbacked, unsound money (fiat).
The easiest and most prudent advice to investors at this juncture would be to buy gold - and more importantly silver, since it has been so viciously violated by the bankers over the years - as quickly as possible, and in as much quantity as one can reasonably afford.
US stocks also experienced something of a double dip, once in the early trading and again just before and after noon, which ended up being the move of the day, as the Dow suffered its worst day in three weeks, with the major indices backing off from recent highs, promoted via vapid and obfuscated corporate earnings reports. While the media has been largely hushed over first quarter earnings, the truth of the matter is that most companies are not keeping up with projections, though they are beating lowered expectations. Many companies are reporting positive earnings, no doubt, but they are also lower than what they reported in the year-ago period. Once again, gains in stock prices can generally be attributed to easy monetary policy, cartel-like trading (the same big banks that brought us the last financial crash in 2008-09), and an astounding amount of group-think, wherein nobody bothers with fundamental analysis, but relies more on the whims of the moment, otherwise known as momentum trading.
Get ready for more volatility, as more and more students of the markets realize just how distorted the policies of the various powerful central banks have been.
Today's Closing Numbers:
S&P 500: 2,091.48, -10.92 (0.52%)
Dow: 17,982.52, -113.75 (0.63%)
NASDAQ: 4,945.89, -2.24 (0.05%)
Crude Oil 43.43 -1.70% Gold 1,250.10 -0.02% EUR/USD 1.1289 0.00% 10-Yr Bond 1.87 +0.86% Corn 394.00 +1.09% Copper 2.25 +0.07% Silver 17.03 -0.35% Natural Gas 2.06 -0.43% Russell 2000 1,135.77 -0.57% VIX 13.95 +5.05% BATS 1000 20,682.61 0.00% GBP/USD 1.4317 -0.04% USD/JPY 109.4370 +0.02%
Witness the madness in precious metals that began in earnest with the opening of the Shanghai Gold Exchange (SGE) daily gold fix priced in yuan, the price of gold shot up $20 when ECB President Mario Draghi left European markets with no new monetary ammunition, and then retreated without reason, ostensibly the controllers in the West reacting to the challenge having been thrown down by the Chinese.
It was a somewhat similar condition in the silver price, which whipped up to $17.65 in early morning trading, only to be slammed down moments later on the NYMEX, below $17. The prices of both gold and silver recovered, but the message is clear: the London gold fixers and those in China are at odds over what should be the true price of precious metals.
There is a solution to this, and that would be to allow markets to work, by outlawing naked shorting, bid stuffing on the CME, high frequency trading and other tools of manipulation. Letting the market decide on the price would be a satisfactory conclusion to what is rapidly turning into an economic war zone, but it is also quite possible the opposing parties could begin using actual guns, bullets, warships and bombs to settle their differences. It is evident that the long-established edge of US monetary hegemony, via the dollar as reserve currency, is coming to an end, and with that, the era of unbacked, unsound money (fiat).
The easiest and most prudent advice to investors at this juncture would be to buy gold - and more importantly silver, since it has been so viciously violated by the bankers over the years - as quickly as possible, and in as much quantity as one can reasonably afford.
US stocks also experienced something of a double dip, once in the early trading and again just before and after noon, which ended up being the move of the day, as the Dow suffered its worst day in three weeks, with the major indices backing off from recent highs, promoted via vapid and obfuscated corporate earnings reports. While the media has been largely hushed over first quarter earnings, the truth of the matter is that most companies are not keeping up with projections, though they are beating lowered expectations. Many companies are reporting positive earnings, no doubt, but they are also lower than what they reported in the year-ago period. Once again, gains in stock prices can generally be attributed to easy monetary policy, cartel-like trading (the same big banks that brought us the last financial crash in 2008-09), and an astounding amount of group-think, wherein nobody bothers with fundamental analysis, but relies more on the whims of the moment, otherwise known as momentum trading.
Get ready for more volatility, as more and more students of the markets realize just how distorted the policies of the various powerful central banks have been.
Today's Closing Numbers:
S&P 500: 2,091.48, -10.92 (0.52%)
Dow: 17,982.52, -113.75 (0.63%)
NASDAQ: 4,945.89, -2.24 (0.05%)
Crude Oil 43.43 -1.70% Gold 1,250.10 -0.02% EUR/USD 1.1289 0.00% 10-Yr Bond 1.87 +0.86% Corn 394.00 +1.09% Copper 2.25 +0.07% Silver 17.03 -0.35% Natural Gas 2.06 -0.43% Russell 2000 1,135.77 -0.57% VIX 13.95 +5.05% BATS 1000 20,682.61 0.00% GBP/USD 1.4317 -0.04% USD/JPY 109.4370 +0.02%
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%
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, March 10, 2016
Key Reversal As Dow Candlestick Engulfs Previous Four Sessions; ECB's Draghi To Blame
Money Daily been covering about this rally for the past two weeks but really didn't see the handwriting on the wall throughout. While saying the market would continue to rally at least until the ECB rate announcement by Mario Draghi (today), and possibly Yellen and the FOMC (on the 16th), there was no way to know when exactly it would stop or why.
But, now we all know. It was "buy the rumor, sell the news," all along. Everybody figured Draghi would go all in on QE and lowering the reserve rate (rumor) and he did (news), so, therein lies the reasons for first the pump in stocks and then the midday dump as Draghi then backtracked at his press conference, saying not to expect more over-the-top policy moves anytime soon.
Why? Draghi was giving Yellen and the Fed cover to keep rates where they are, for at least another month or meeting.
The main aspects of Draghi's "bazooka" approach are:
-- The key interest rate is dropped from 0.05% to ZERO.
-- Cut its deposit rate by 10 basis points, further into negative territory to -0.4%
-- The marginal lending rate, paid by banks to borrow from the ECB overnight, was cut from 0.3% to to 0.25%
-- Expanded the QE programme to €80bn (£61bn) a month, up from €60n
-- Expanded the LTRTO, offering more easy loans to Eurozone banks
Then we saw the usual late-day comeback, leaving US equity markets virtually unchanged, on a day that was arguably noteworthy and newsworthy. The markets, the speculators, had all of this priced in, and the gyrations were only to square their winners and losers.
This is the game. It's nothing more than a game, has no root in reality, fundamentals, supply/demand or any other tired metric of what we used to fondly call "analysis."
Markets are nothing more than tools for public entertainment and consumption. The central bankers, so long as they have the power to conjure endless amounts of fiat out of thin air, have complete control over all markets.
Finally, we are beginning to see the light at the end of the tunnel, though it appears to be just a flickering candle about to be snuffed out.
As far as technical analysis is concerned - again, giving the CNBC types and the marketeers sufficient cover - the Dow candlestick chart shows today as a key reversal day, with today's action - up, then down, then back up - engulfing the previous four sessions on the Dow. Interesting also is the pint at which the rally ended, almost exactly at the 200-day moving average. It's almost as if it was planned, though that kind of statement might brand one as a wearer of tin-foil hats and a believer in astrology or Scientology.
These kinds of "outside" reversals almost always signal a change in direction, so, outside of more malignant market manipulation, stocks should head south on Friday and continue in that general direction heading up to the FOMC meeting Tuesday and Wednesday of next week.
Upon the Fed keeping rates unchanged, it will be "mission accomplished" for the time being. multiple flavors of options expire on Friday, so expect volatility heading into the end of next week.
Then again, one could hold real assets outside the system, those being anything raised without the assistance of fiat money (think animal husbandry, vegetable gardening and barter), or the hated precious metals and/or gemstones.
In he end, people use money or currency to buy the things they need to lead free, comfortable lives. If one were to master the ability to minimize dependence on the fiat money system and maximize the ability to produce energy, food and goods, there would be little need for any kind of currency except that controlled by the actual buyers and sellers.
There, the survivalist, off-the-grid types make perfect sense.
Thursday's Round-trip Extravaganza:
S&P 500: 1,989.57, +0.31 (0.02%)
Dow: 16,995.13, -5.23 (0.03%)
NASDAQ: 4,662.16, -12.22 (0.26%)
Crude Oil 37.88 -1.07% Gold 1,271.90 +1.15% EUR/USD 1.1179 +1.64% 10-Yr Bond 1.9290 +1.96% Corn 363.00 +0.97% Copper 2.23 -0.31% Silver 15.59 +1.43% Natural Gas 1.80 +3.03% Russell 2000 1,063.99 -0.82% VIX 18.05 -1.58% BATS 1000 20,677.17 0.00% GBP/USD 1.4282 +0.49% USD/JPY 113.2420
But, now we all know. It was "buy the rumor, sell the news," all along. Everybody figured Draghi would go all in on QE and lowering the reserve rate (rumor) and he did (news), so, therein lies the reasons for first the pump in stocks and then the midday dump as Draghi then backtracked at his press conference, saying not to expect more over-the-top policy moves anytime soon.
Why? Draghi was giving Yellen and the Fed cover to keep rates where they are, for at least another month or meeting.
The main aspects of Draghi's "bazooka" approach are:
-- The key interest rate is dropped from 0.05% to ZERO.
-- Cut its deposit rate by 10 basis points, further into negative territory to -0.4%
-- The marginal lending rate, paid by banks to borrow from the ECB overnight, was cut from 0.3% to to 0.25%
-- Expanded the QE programme to €80bn (£61bn) a month, up from €60n
-- Expanded the LTRTO, offering more easy loans to Eurozone banks
Then we saw the usual late-day comeback, leaving US equity markets virtually unchanged, on a day that was arguably noteworthy and newsworthy. The markets, the speculators, had all of this priced in, and the gyrations were only to square their winners and losers.
This is the game. It's nothing more than a game, has no root in reality, fundamentals, supply/demand or any other tired metric of what we used to fondly call "analysis."
Markets are nothing more than tools for public entertainment and consumption. The central bankers, so long as they have the power to conjure endless amounts of fiat out of thin air, have complete control over all markets.
Finally, we are beginning to see the light at the end of the tunnel, though it appears to be just a flickering candle about to be snuffed out.
As far as technical analysis is concerned - again, giving the CNBC types and the marketeers sufficient cover - the Dow candlestick chart shows today as a key reversal day, with today's action - up, then down, then back up - engulfing the previous four sessions on the Dow. Interesting also is the pint at which the rally ended, almost exactly at the 200-day moving average. It's almost as if it was planned, though that kind of statement might brand one as a wearer of tin-foil hats and a believer in astrology or Scientology.
These kinds of "outside" reversals almost always signal a change in direction, so, outside of more malignant market manipulation, stocks should head south on Friday and continue in that general direction heading up to the FOMC meeting Tuesday and Wednesday of next week.
Upon the Fed keeping rates unchanged, it will be "mission accomplished" for the time being. multiple flavors of options expire on Friday, so expect volatility heading into the end of next week.
Then again, one could hold real assets outside the system, those being anything raised without the assistance of fiat money (think animal husbandry, vegetable gardening and barter), or the hated precious metals and/or gemstones.
In he end, people use money or currency to buy the things they need to lead free, comfortable lives. If one were to master the ability to minimize dependence on the fiat money system and maximize the ability to produce energy, food and goods, there would be little need for any kind of currency except that controlled by the actual buyers and sellers.
There, the survivalist, off-the-grid types make perfect sense.
Thursday's Round-trip Extravaganza:
S&P 500: 1,989.57, +0.31 (0.02%)
Dow: 16,995.13, -5.23 (0.03%)
NASDAQ: 4,662.16, -12.22 (0.26%)
Crude Oil 37.88 -1.07% Gold 1,271.90 +1.15% EUR/USD 1.1179 +1.64% 10-Yr Bond 1.9290 +1.96% Corn 363.00 +0.97% Copper 2.23 -0.31% Silver 15.59 +1.43% Natural Gas 1.80 +3.03% Russell 2000 1,063.99 -0.82% VIX 18.05 -1.58% BATS 1000 20,677.17 0.00% GBP/USD 1.4282 +0.49% USD/JPY 113.2420
Wednesday, March 9, 2016
Oil Glut Yet Prices Higher; Gold, Silver Demand Up, Prices Down
There is a serious disturbance in the Farce called the global economy, and it is the role of central bankers who create absurd amounts of fiat currencies, literally out of thin air.
Policies adopted by the financial elite experts who control nearly all currencies worldwide have caused markets to virtually stop functioning. After seven years of base interest rates at near zero - and recently, below zero - endless stimulus programs otherwise known by the catchy name, quantitative easing, and a serious lack of transparency, regulation, and discipline in all markets, global growth is a non-starter for 2016 and the foreseeable future.
Businesses, fed a diet of easy money for nearly a decade (two decades, if one includes the Greenspan "put" years) are loathe to spend on capital improvements, labor or infrastructure. Businesses are, so to speak, "living off the land," by cutting budgets while fattening the salaries and bonuses of crony CEOs and others occupying the executive suites and boards of directors.
It's a horrible condition, with disinflation and outright deflation popping up in pockets like food production, energy, and most hard commodities (see natural gas and copper). Price discovery has become a function less of supply and demand and more driven by derivative bets, options, credit default swaps, and hedging. Over-finacialization of nearly all markets that matter has turned fundamentals on their heads and what once were functional markets into nothing more than trap-laden casinos. The effect has been to alienate a generation of investors (millenials), impoverish another (retirees) and overburden those not yet ready to enter the economy (the youth). In the middle is generation X, condemned to toil away towards an uncertain future.
The argument that fundamental supply and demand is defunct rests largely on the oil market, currently carrying the largest global glut on record, yet pushed to levels indicative of a shortage. Oil was ranging toward $25 per barrel just a month or so ago; today it is approaching $40, mostly a function of short-covering and naked short selling.
Much the same can be said of the markets for precious metals, the price held down by nefarious forces while the demand continues to expand. In many quarters, gold, silver, and gemstones are considered the only investments worth having and holding. They carry no counterparts risk, are relatively easy to transport and can be converted into money or any other asset with relative ease.
As Bill Bonner and his enlightened crew love to postulate, a day of reckoning is coming, though just exactly when that day arrives and how it is manifested are known to exactly nobody.
It's a mess. Better to put money in a mattress or buy canned goods than risk in capital markets, as moribund and compromised as they are. US equity indices peaked in May of 2015. It's nearly a year from the all-time highs without any rally catalysts in sight.
All eyes and ears will be tuned to the ECB tomorrow, when Mario Draghi does what he can only do, signal more easing, more fraud, and more of the relentless can-kicking that has typified the past seven years.
Nobody is holding his or her breath on this coming non-event because there is no longer any air to breathe.
Wednesday's Wackiness:
S&P 500: 1,989.26, +10.00 (0.51%)
Dow: 17,000.36, +36.26 (0.21%)
NASDAQ: 4,674.38, +25.55 (0.55%)
Crude Oil 38.23 +4.74% Gold 1,253.90 -0.71% EUR/USD 1.1001 -0.06% 10-Yr Bond 1.8920 +3.28% Corn 360.25 -0.07% Copper 2.23 +0.54% Silver 15.31 -0.52% Natural Gas 1.76 +2.92% Russell 2000 1,072.77 +0.46% VIX 18.34 -1.77% BATS 1000 20,677.17 0.00% GBP/USD 1.4217 +0.03% USD/JPY 113.3350 +0.60%
Policies adopted by the financial elite experts who control nearly all currencies worldwide have caused markets to virtually stop functioning. After seven years of base interest rates at near zero - and recently, below zero - endless stimulus programs otherwise known by the catchy name, quantitative easing, and a serious lack of transparency, regulation, and discipline in all markets, global growth is a non-starter for 2016 and the foreseeable future.
Businesses, fed a diet of easy money for nearly a decade (two decades, if one includes the Greenspan "put" years) are loathe to spend on capital improvements, labor or infrastructure. Businesses are, so to speak, "living off the land," by cutting budgets while fattening the salaries and bonuses of crony CEOs and others occupying the executive suites and boards of directors.
It's a horrible condition, with disinflation and outright deflation popping up in pockets like food production, energy, and most hard commodities (see natural gas and copper). Price discovery has become a function less of supply and demand and more driven by derivative bets, options, credit default swaps, and hedging. Over-finacialization of nearly all markets that matter has turned fundamentals on their heads and what once were functional markets into nothing more than trap-laden casinos. The effect has been to alienate a generation of investors (millenials), impoverish another (retirees) and overburden those not yet ready to enter the economy (the youth). In the middle is generation X, condemned to toil away towards an uncertain future.
The argument that fundamental supply and demand is defunct rests largely on the oil market, currently carrying the largest global glut on record, yet pushed to levels indicative of a shortage. Oil was ranging toward $25 per barrel just a month or so ago; today it is approaching $40, mostly a function of short-covering and naked short selling.
Much the same can be said of the markets for precious metals, the price held down by nefarious forces while the demand continues to expand. In many quarters, gold, silver, and gemstones are considered the only investments worth having and holding. They carry no counterparts risk, are relatively easy to transport and can be converted into money or any other asset with relative ease.
As Bill Bonner and his enlightened crew love to postulate, a day of reckoning is coming, though just exactly when that day arrives and how it is manifested are known to exactly nobody.
It's a mess. Better to put money in a mattress or buy canned goods than risk in capital markets, as moribund and compromised as they are. US equity indices peaked in May of 2015. It's nearly a year from the all-time highs without any rally catalysts in sight.
All eyes and ears will be tuned to the ECB tomorrow, when Mario Draghi does what he can only do, signal more easing, more fraud, and more of the relentless can-kicking that has typified the past seven years.
Nobody is holding his or her breath on this coming non-event because there is no longer any air to breathe.
Wednesday's Wackiness:
S&P 500: 1,989.26, +10.00 (0.51%)
Dow: 17,000.36, +36.26 (0.21%)
NASDAQ: 4,674.38, +25.55 (0.55%)
Crude Oil 38.23 +4.74% Gold 1,253.90 -0.71% EUR/USD 1.1001 -0.06% 10-Yr Bond 1.8920 +3.28% Corn 360.25 -0.07% Copper 2.23 +0.54% Silver 15.31 -0.52% Natural Gas 1.76 +2.92% Russell 2000 1,072.77 +0.46% VIX 18.34 -1.77% BATS 1000 20,677.17 0.00% GBP/USD 1.4217 +0.03% USD/JPY 113.3350 +0.60%
Tuesday, March 8, 2016
Oil Beaten Down Along With Gold, Silver, Stocks
After yesterday's run-up in crude, the obligatory return to red was the order of the day as WTI crude ended below $37/barrel. Not to be missed were the turn-about in gold and silver, but stocks remain mostly on hold for Mario Draghi and the ECB's rate announcement on Thursday.
This is what happens when the entire world revolves around central bankers: lots of nothing, and all investment vehicles returning essentially zero returns on capital, unless one's timing is extraordinary, you're a professional horse handicapper turned day-trader, or one of the various front-running HFTs.
Speaking of timing, Money Daily editor, Fearless Rick, has called out Dennis Gartman of the Gartman Letter, and his somewhat flimsy assertion that his proprietary fund is up 12.3% year-to-date. Mr. Rick emailed Gartman (see here), and tried to get a subscription to his newsletter, but has heard nothing yet. Money Daily will update with any developments (some interesting information on Mr. Gartman has already been discovered on the internet and a file is being updated... stay tuned)
Today's Mangled Mess:
S&P 500: 1,979.26, -22.50 (1.12%)
Dow: 16,964.10, -109.85 (0.64%)
NASDAQ: 4,648.82, -59.43 (1.26%)
Crude Oil 36.46 -3.80% Gold 1,263.20 -0.06% EUR/USD 1.1006 -0.08% 10-Yr Bond 1.8320 -3.68% Corn 360.75 +0.49% Copper 2.22 -2.89% Silver 15.43 -1.33% Natural Gas 1.72 +1.54% Russell 2000 1,068.18 -2.37% VIX 18.75 +8.07% BATS 1000 20,677.17 0.00% GBP/USD 1.4215 -0.33% USD/JPY 112.6420
This is what happens when the entire world revolves around central bankers: lots of nothing, and all investment vehicles returning essentially zero returns on capital, unless one's timing is extraordinary, you're a professional horse handicapper turned day-trader, or one of the various front-running HFTs.
Speaking of timing, Money Daily editor, Fearless Rick, has called out Dennis Gartman of the Gartman Letter, and his somewhat flimsy assertion that his proprietary fund is up 12.3% year-to-date. Mr. Rick emailed Gartman (see here), and tried to get a subscription to his newsletter, but has heard nothing yet. Money Daily will update with any developments (some interesting information on Mr. Gartman has already been discovered on the internet and a file is being updated... stay tuned)
Today's Mangled Mess:
S&P 500: 1,979.26, -22.50 (1.12%)
Dow: 16,964.10, -109.85 (0.64%)
NASDAQ: 4,648.82, -59.43 (1.26%)
Crude Oil 36.46 -3.80% Gold 1,263.20 -0.06% EUR/USD 1.1006 -0.08% 10-Yr Bond 1.8320 -3.68% Corn 360.75 +0.49% Copper 2.22 -2.89% Silver 15.43 -1.33% Natural Gas 1.72 +1.54% Russell 2000 1,068.18 -2.37% VIX 18.75 +8.07% BATS 1000 20,677.17 0.00% GBP/USD 1.4215 -0.33% USD/JPY 112.6420
Thursday, January 21, 2016
Stocks Bounce After Draghi Jawboning But Finish Poorly
For the most part, stocks were better behaved on Thursday than they have been almost any day in this new year, but that's hardly any consolation for investors and holders of 401k products, who have seen roughly 10% of their portfolios wiped out over the better part of the past three weeks.
European Central Bank Chairman, Mario Draghi, made brief headlines prior to the US market open, hinting to anybody within earshot that the ECB would review its policy in March. Market watchers, or, more specifically, alogrithms which control the direction of trading these days, took that to be a positive sign, so stocks flow higher and remained in positive territory for the entire session.
European stocks also finished green, though Asian markets had spooked the altos earlier, with the Shangai Stock Exchange down more than three percent, to 2880, its lowest level in over a year. The Nikkei shed another 2.5% and the Hang Seng was down nearly two percent.
While Draghi's comments to the press may have soothed some nerves for now, markets remain under pressure and without upside catalysts. The world is entering what appears to be a prolonged decline, prompted by years of overfunding of easy money by central banks globally.
With options expiring on Friday, both bulls and bears have been well-served this week. The closing session for the week may be on the tame side, if only due to stocks being overextended short-term to the downside and general exhaustion, though longer term, earnings of companies reporting thus far don't seem to hold much promise for a quick, lasting rebound.
If there was any disappointment on the day, it was into the close, which was unremarkably weak, the NASDAQ finishing within a hair's breath of going down the tubes.
Today's closing figures:
S&P 500: 1,868.99, +9.66 (0.52%)
Dow: 15,882.68, +115.94 (0.74%)
NASDAQ: 4,472.06, +0.37 (0.01%)
Crude Oil 29.70 +4.76% Gold 1,100.80 -0.49% EUR/USD 1.0876 -0.14% 10-Yr Bond 2.0190 +1.76% Corn 367.50 -0.34% Copper 1.99 +1.58% Silver 14.10 -0.39% Natural Gas 2.15 +1.61% Russell 2000 997.34 -0.20% VIX 26.69 -3.26% BATS 1000 19,915.85 +0.62% GBP/USD 1.4221 +0.23% USD/JPY 117.7250 +0.67%
European Central Bank Chairman, Mario Draghi, made brief headlines prior to the US market open, hinting to anybody within earshot that the ECB would review its policy in March. Market watchers, or, more specifically, alogrithms which control the direction of trading these days, took that to be a positive sign, so stocks flow higher and remained in positive territory for the entire session.
European stocks also finished green, though Asian markets had spooked the altos earlier, with the Shangai Stock Exchange down more than three percent, to 2880, its lowest level in over a year. The Nikkei shed another 2.5% and the Hang Seng was down nearly two percent.
While Draghi's comments to the press may have soothed some nerves for now, markets remain under pressure and without upside catalysts. The world is entering what appears to be a prolonged decline, prompted by years of overfunding of easy money by central banks globally.
With options expiring on Friday, both bulls and bears have been well-served this week. The closing session for the week may be on the tame side, if only due to stocks being overextended short-term to the downside and general exhaustion, though longer term, earnings of companies reporting thus far don't seem to hold much promise for a quick, lasting rebound.
If there was any disappointment on the day, it was into the close, which was unremarkably weak, the NASDAQ finishing within a hair's breath of going down the tubes.
Today's closing figures:
S&P 500: 1,868.99, +9.66 (0.52%)
Dow: 15,882.68, +115.94 (0.74%)
NASDAQ: 4,472.06, +0.37 (0.01%)
Crude Oil 29.70 +4.76% Gold 1,100.80 -0.49% EUR/USD 1.0876 -0.14% 10-Yr Bond 2.0190 +1.76% Corn 367.50 -0.34% Copper 1.99 +1.58% Silver 14.10 -0.39% Natural Gas 2.15 +1.61% Russell 2000 997.34 -0.20% VIX 26.69 -3.26% BATS 1000 19,915.85 +0.62% GBP/USD 1.4221 +0.23% USD/JPY 117.7250 +0.67%
Thursday, March 5, 2015
Mario Draghi's Bold QE, Bank Stress Tests and February Payrolls
Thursday was a fascinating day for the world of finance ad markets (what's left of them), kicked off by the ECB rate announcement and finished up by US bank stress tests, released, cynically, after the close of equity markets.
And, the markets were largely unresponsive to what was happening in Europe because of their anticipatory stance toward the February Non-farm Payroll data due out on Friday.
Consequently, there were no major catalysts to propel markets in either direction generally, though, if one were to believe in the gospel according to Draghi (Mario Draghi, head of the ECB), al of Europe should be celebrating the prospect of EQE (European Quantitative Easing), because Draghi ad his cohorts see inflation rising by 1.5% in 2016 and GDP in the eurozone galloping ahead once the bond flow gets eaten entirely by the ECB.
This view is highly ignorant of facts, despite Draghi and the ECB having access to the best data in the world outside the Federal Reserve. First, the ECB should be well aware that QE has not driven either growth or inflation either in the United States or Japan (where they've been QE-ing it up for 20 years). Second, the amount of issuance of sovereign debt that the ECB proposes to purchase from the various government comprising the Eurozone might cause some significant crowding out of legitimate buyers of such debt.
QE is nothing more than a classic Ponzi scheme, with some big, fat-cat organization - be it the Fed, the BOJ or the ECB - striding atop government cash calls (bonds=debt). The central banks distribute the proceeds back into the system in whatever haphazard ways they can, the usual transmission mechanism being repos and open market "operations" directly to primary dealers (TBTF banks) that ends up in equity markets.
Presto! Government expands, stocks soar, while the general economy flummoxes, falters and fails. As is the usual case with all Ponzi schemes, everywhere and always, the last "investors" are left holding the bags of worthless paper. With the massive bond-buying monetization of government debt, the eventual losers will be regular people, whose pensions will be raided, whose cost of living will be untenable, whose lifestyles will be unstable, whose bank accounts will be bailed-in, whose futures will be null and void.
So, pay close attention to what's happening in Europe and Japan, because it eventually will find its way across both big ponds to the shores of North America. There is no doubt that QE and its after-effects will be crushing to ordinary people. The worst part of the story is that there will be nowhere on the planet to hide.
Well beyond the close of the moribund US equity markets, the Federal Reserve unleashed the current round of stress tests for the significant financial institutions.
All 31 banks passed. Halelujah!
These "tests" are nothing more than job security for CFOs and other executive who hang out in cushy corner offices. They are completely meaningless, especially since bank balance sheets are so opaque nothing of substance can be seen.
As far as the February, 2015 Non-farm Payrolls (due out at 8:30 am on Friday) are concerned, they'll contian the usual lies nd obfuscations that the BLS has become so famous for over the years. Ideally, the US will be shown to have created a couple zillion new jobs, but everybody will know that the numbers are wholly fiction and the economy is on its last legs. Wall Streeters will rejoice and send the major indices into the stratosphere, so that Fed Chair Janet Yellen can echo Greenspan and Bernanke by proclaiming the goodness of the "wealth effect."
Of course, most Americans will hardly notice said effect, as they struggle to make car and tuition payments.
Dow Jones 18,135.72, +38.82 (0.21%)
S&P 500 2,101.04, +2.51 (0.12%)
Nasdaq, 4,982.81, +15.67 (0.32%)
And, the markets were largely unresponsive to what was happening in Europe because of their anticipatory stance toward the February Non-farm Payroll data due out on Friday.
Consequently, there were no major catalysts to propel markets in either direction generally, though, if one were to believe in the gospel according to Draghi (Mario Draghi, head of the ECB), al of Europe should be celebrating the prospect of EQE (European Quantitative Easing), because Draghi ad his cohorts see inflation rising by 1.5% in 2016 and GDP in the eurozone galloping ahead once the bond flow gets eaten entirely by the ECB.
This view is highly ignorant of facts, despite Draghi and the ECB having access to the best data in the world outside the Federal Reserve. First, the ECB should be well aware that QE has not driven either growth or inflation either in the United States or Japan (where they've been QE-ing it up for 20 years). Second, the amount of issuance of sovereign debt that the ECB proposes to purchase from the various government comprising the Eurozone might cause some significant crowding out of legitimate buyers of such debt.
QE is nothing more than a classic Ponzi scheme, with some big, fat-cat organization - be it the Fed, the BOJ or the ECB - striding atop government cash calls (bonds=debt). The central banks distribute the proceeds back into the system in whatever haphazard ways they can, the usual transmission mechanism being repos and open market "operations" directly to primary dealers (TBTF banks) that ends up in equity markets.
Presto! Government expands, stocks soar, while the general economy flummoxes, falters and fails. As is the usual case with all Ponzi schemes, everywhere and always, the last "investors" are left holding the bags of worthless paper. With the massive bond-buying monetization of government debt, the eventual losers will be regular people, whose pensions will be raided, whose cost of living will be untenable, whose lifestyles will be unstable, whose bank accounts will be bailed-in, whose futures will be null and void.
So, pay close attention to what's happening in Europe and Japan, because it eventually will find its way across both big ponds to the shores of North America. There is no doubt that QE and its after-effects will be crushing to ordinary people. The worst part of the story is that there will be nowhere on the planet to hide.
Well beyond the close of the moribund US equity markets, the Federal Reserve unleashed the current round of stress tests for the significant financial institutions.
All 31 banks passed. Halelujah!
These "tests" are nothing more than job security for CFOs and other executive who hang out in cushy corner offices. They are completely meaningless, especially since bank balance sheets are so opaque nothing of substance can be seen.
As far as the February, 2015 Non-farm Payrolls (due out at 8:30 am on Friday) are concerned, they'll contian the usual lies nd obfuscations that the BLS has become so famous for over the years. Ideally, the US will be shown to have created a couple zillion new jobs, but everybody will know that the numbers are wholly fiction and the economy is on its last legs. Wall Streeters will rejoice and send the major indices into the stratosphere, so that Fed Chair Janet Yellen can echo Greenspan and Bernanke by proclaiming the goodness of the "wealth effect."
Of course, most Americans will hardly notice said effect, as they struggle to make car and tuition payments.
Dow Jones 18,135.72, +38.82 (0.21%)
S&P 500 2,101.04, +2.51 (0.12%)
Nasdaq, 4,982.81, +15.67 (0.32%)
Thursday, February 14, 2013
St. Valentine's Day Mascara
No, that's not a misprint in the headline. The word is "mascara" - the stuff women apply to darken, thicken, lengthen, and/or define their eyelashes. It's a cosmetic, as in rouge, or lipstick, as in lipstick on a pig, which is exactly what the algos and buy-siders did to today's undeniably weak, directionless market.
Face it, Europe is a bona-fide basket case, Japan is devaluing its currency so fast that George Soros made nearly a billion dollars on the trade in just over three months.
The news coming out of Euro-fantasy-land was less than encouraging. Eurozone fourth quarter 2012 GDP fell by 0.6%.
Making matters a little more interesting - and more frightening - were the figures for the zone's three largest economies - Germany, France and Italy - whose own GDP fell by 0.6%, 0.3% and 0.9%, respectively.
The Eurozone, even after all the bank and sovereign bailouts, pledges of doing everything possible to promote growth by the likes of Germany's Angela Merkel and EU President Mario Draghi, has resulted in three consecutive quarters of negative GDP. Europe is already in the throes of an economic collapse, thanks largely to protectionism for banks and excessive liquidity from European central bankers (most of whom are Goldman Sachs alum, BTW).
While the GDP numbers may be bad enough, consider youth unemployment (ages 15-25) in the Eurozone to be spreading like the bubonic plague. Greece reported youth unemployment over 60%; Spain over 50% and Portugal just topped 40%. Thirteen of the 27 EU member states are reporting youth unemployment over 25%. Austerity: it's what's for dinner.
Europe is solid proof that the elite class is making up the rules as they go along, and the general public is viewed as collateral damage only. Here in the good old USA, we have our own concerns with the sequestration schedule to commence March 1, which will result in massive federal budget cuts. The president and congress haven't even begun to discuss how they'll handle that, though they uniformly say that sequestration (it doesn't rhyme with castration for no reason) is something they'd prefer to avoid.
Have they acted? No. Will they? Probably, but, like the fiscal cliff deal this past December, it will be a stop-gap measure and cost taxpayers more. Nobody ever cuts anything in Washington, only the rate of growth of programs, because what's important to them is keeping lobbyists and voters (government employees and beneficiaries of government largesse) dumb and happy.
So, on what does this algo-concocted market focus? Berkshire Hathaway's buyout of Heinz. Poor suckers that Americans are, they put ketchup on their chicken and pork hot dogs on day old buns while Uncle Warren reaps the profits. If ever there was a crony capitalist, Warren Buffet's picture belongs next to the definition.
Sure, unemployment claims were down - from 368K to 341K - but aren't those figures still too high? The new normal means just doing better than expectations, even if those expectations are sub-par. It's akin to taking your kid out for ice cream because he got a C in math instead of a D. As a nation, we've lowered our standards in everything from our political leaders to what passes for entertainment.
Along with everything else, we've lowered our standards for rational markets. Today's split decision is just another shining example of the truth hiding in plain sight. Sooner or later, even the talking heads on CNBC are going to come to the realization that making new all-time highs with a -0.1% GDP and unemployment at eight percent doesn't really pass the smell test. Someday. Maybe. Note the video below with Rick Santelli, everyone's favorite financial ranter, extrapolating out on what we've been saying nearly every day on this blog: that being a trader is nearly impossible under current conditions.
And, just as a side note, New York Mayor Bloomberg, who first banned drink containers larger than 16 ounces, has proposed a ban on styrofoam containers, and... it's likely to pass his rubber stamp city council.
Let's see, smokes are $10-12 a pack in NY, you can't smoke in any of the bars, night clubs or public buildings; you must drink from small containers and those soon cannot be made of styrofoam. All this makes one pine for the good old days of the seventies. Ed Koch was mayor. Son of Sam was shooting kids in parking lots. Reggie Jackson was blasting balls out of the original Yankee Stadium and you could buy just about any kind of drug - from weed to cocaine - on just about any street corner. Bloomberg. He's just not a fun guy.
Dow 13,973.39, -9.52 (0.07%)
NASDAQ 3,198.66, +1.78 (0.06%)
S&P 500 1,521.38, +1.05 (0.07%)
NYSE Composite 8,951.33, -4.27 (0.05%)
NASDAQ Volume 1,884,832,750
NYSE Volume 3,867,864,500
Combined NYSE & NASDAQ Advance - Decline: 3259-3130
Combined NYSE & NASDAQ New highs - New lows: 505-39
WTI crude oil: 97.31, +0.30
Gold: 1,635.50, -9.60
Silver: 30.35, -0.516
Face it, Europe is a bona-fide basket case, Japan is devaluing its currency so fast that George Soros made nearly a billion dollars on the trade in just over three months.
The news coming out of Euro-fantasy-land was less than encouraging. Eurozone fourth quarter 2012 GDP fell by 0.6%.
Making matters a little more interesting - and more frightening - were the figures for the zone's three largest economies - Germany, France and Italy - whose own GDP fell by 0.6%, 0.3% and 0.9%, respectively.
The Eurozone, even after all the bank and sovereign bailouts, pledges of doing everything possible to promote growth by the likes of Germany's Angela Merkel and EU President Mario Draghi, has resulted in three consecutive quarters of negative GDP. Europe is already in the throes of an economic collapse, thanks largely to protectionism for banks and excessive liquidity from European central bankers (most of whom are Goldman Sachs alum, BTW).
While the GDP numbers may be bad enough, consider youth unemployment (ages 15-25) in the Eurozone to be spreading like the bubonic plague. Greece reported youth unemployment over 60%; Spain over 50% and Portugal just topped 40%. Thirteen of the 27 EU member states are reporting youth unemployment over 25%. Austerity: it's what's for dinner.
Europe is solid proof that the elite class is making up the rules as they go along, and the general public is viewed as collateral damage only. Here in the good old USA, we have our own concerns with the sequestration schedule to commence March 1, which will result in massive federal budget cuts. The president and congress haven't even begun to discuss how they'll handle that, though they uniformly say that sequestration (it doesn't rhyme with castration for no reason) is something they'd prefer to avoid.
Have they acted? No. Will they? Probably, but, like the fiscal cliff deal this past December, it will be a stop-gap measure and cost taxpayers more. Nobody ever cuts anything in Washington, only the rate of growth of programs, because what's important to them is keeping lobbyists and voters (government employees and beneficiaries of government largesse) dumb and happy.
So, on what does this algo-concocted market focus? Berkshire Hathaway's buyout of Heinz. Poor suckers that Americans are, they put ketchup on their chicken and pork hot dogs on day old buns while Uncle Warren reaps the profits. If ever there was a crony capitalist, Warren Buffet's picture belongs next to the definition.
Sure, unemployment claims were down - from 368K to 341K - but aren't those figures still too high? The new normal means just doing better than expectations, even if those expectations are sub-par. It's akin to taking your kid out for ice cream because he got a C in math instead of a D. As a nation, we've lowered our standards in everything from our political leaders to what passes for entertainment.
Along with everything else, we've lowered our standards for rational markets. Today's split decision is just another shining example of the truth hiding in plain sight. Sooner or later, even the talking heads on CNBC are going to come to the realization that making new all-time highs with a -0.1% GDP and unemployment at eight percent doesn't really pass the smell test. Someday. Maybe. Note the video below with Rick Santelli, everyone's favorite financial ranter, extrapolating out on what we've been saying nearly every day on this blog: that being a trader is nearly impossible under current conditions.
And, just as a side note, New York Mayor Bloomberg, who first banned drink containers larger than 16 ounces, has proposed a ban on styrofoam containers, and... it's likely to pass his rubber stamp city council.
Let's see, smokes are $10-12 a pack in NY, you can't smoke in any of the bars, night clubs or public buildings; you must drink from small containers and those soon cannot be made of styrofoam. All this makes one pine for the good old days of the seventies. Ed Koch was mayor. Son of Sam was shooting kids in parking lots. Reggie Jackson was blasting balls out of the original Yankee Stadium and you could buy just about any kind of drug - from weed to cocaine - on just about any street corner. Bloomberg. He's just not a fun guy.
Dow 13,973.39, -9.52 (0.07%)
NASDAQ 3,198.66, +1.78 (0.06%)
S&P 500 1,521.38, +1.05 (0.07%)
NYSE Composite 8,951.33, -4.27 (0.05%)
NASDAQ Volume 1,884,832,750
NYSE Volume 3,867,864,500
Combined NYSE & NASDAQ Advance - Decline: 3259-3130
Combined NYSE & NASDAQ New highs - New lows: 505-39
WTI crude oil: 97.31, +0.30
Gold: 1,635.50, -9.60
Silver: 30.35, -0.516
Friday, November 9, 2012
Wall Street Peers Over Fiscal Cliff, Likes the View, Maybe
Only in the Wall Street casino can such madness prevail.
When the S&P 500 index closes almost exactly on its 200-day moving average on a day in which it was down, then up sharply, then down, then up again and finally closing almost where it started, one has a sense of the level of manipulation designed to produce the maximum level of uncertainty.
It's working.
The day started with stocks down sharply, but slowly advancing in anticipation of Rep. John Boehner's brief news conference shortly after 11:00 am ET, during which it sold off slightly before rising - after his very abrupt departure - to what would turn out to be the highs of the day, up 78 points on the Dow, just before President Obama made prepared remarks at 1:07 pm. During and just after the president's appearance, the Dow lost all of its gains and fell briefly into negative territory, a move of 103 points in just under an hour.
Stocks spent the rest of the afternoon folling along the line of unchange, with a couple of sharp rises just to keep things interesting.
Naturally, the final hour turned into a circus microcosm of the day, with the Dow up, down, up, down and eventually closing with a gain of four points.
So much for resolution.
The dueling parties in Washington preened and postured for the cameras and microphones while the wise guys in New York pushed buy and sell buttons with just enough pressure to keep markets in suspended animation for the full session, miraculously ending with gains of less than 10 points on all exchanges (four or less excluding the NASDAQ).
It was politico-socio-psycho-econo theater at its best.
There's surely more to come from the recently-re-anointed crowd in Washington and the usual suspects in New York as we end our way through the final seven weeks of 2012.
While the news and financial networks scramble and flail about trying to explain the undesirable effects of falling over the "fiscal cliff," though Wall Streeters seem perfectly at ease tip-toeing along the precipice. One gets the distinct feeling that the deal has already been struck and the rest is just for show.
How to trade it? Well, one can take the virtuous route and ignore it all, or play along with the pros and prepare to be beaten by their wickedly swift HFT algos which scan and skim every trade.
Bottom line is that there is no actual bottom line, so long as Ben Bernanke sits quietly in the background, his finger poised to punch up another couple hundred billion dollars as needed, along with his counterpart, Mario Draghi, in Europe.
Did somebody mention Europe? That place where equally nothing matters? Yes, they're still out there, kicking their own can further down the road to perdition.
With the elections in the US over and done with, it's back to business as usual, wherein neither the politicians nor the bankers can lose.
For all you poker fans, the market did leave a couple of "tells." Gold and silver notched nice gains again, and, for the third day in a row, new lows slaughtered new highs, 231-76.
That's a pretty fat slice of salami laying out there, Wall Street. Some of us actually notice... and our appetite is good.
Dow 12,815.39, +4.07(0.03%)
NASDAQ 2,904.87, +9.29(0.32%)
S&P 500 1,379.85, +2.34(0.17%)
NYSE Composite 8,053.56, +2.74(0.03%)
NASDAQ Volume 1,802,865,630
NYSE Volume 3,572,545.750
Combined NYSE & NASDAQ Advance - Decline: 2707-2778
Combined NYSE & NASDAQ New highs - New lows: 76-231
WTI crude oil: 86.07, +0.98
Gold: 1,730.90, +4.90
Silver: 32.60, +0.359
When the S&P 500 index closes almost exactly on its 200-day moving average on a day in which it was down, then up sharply, then down, then up again and finally closing almost where it started, one has a sense of the level of manipulation designed to produce the maximum level of uncertainty.
It's working.
The day started with stocks down sharply, but slowly advancing in anticipation of Rep. John Boehner's brief news conference shortly after 11:00 am ET, during which it sold off slightly before rising - after his very abrupt departure - to what would turn out to be the highs of the day, up 78 points on the Dow, just before President Obama made prepared remarks at 1:07 pm. During and just after the president's appearance, the Dow lost all of its gains and fell briefly into negative territory, a move of 103 points in just under an hour.
Stocks spent the rest of the afternoon folling along the line of unchange, with a couple of sharp rises just to keep things interesting.
Naturally, the final hour turned into a circus microcosm of the day, with the Dow up, down, up, down and eventually closing with a gain of four points.
So much for resolution.
The dueling parties in Washington preened and postured for the cameras and microphones while the wise guys in New York pushed buy and sell buttons with just enough pressure to keep markets in suspended animation for the full session, miraculously ending with gains of less than 10 points on all exchanges (four or less excluding the NASDAQ).
It was politico-socio-psycho-econo theater at its best.
There's surely more to come from the recently-re-anointed crowd in Washington and the usual suspects in New York as we end our way through the final seven weeks of 2012.
While the news and financial networks scramble and flail about trying to explain the undesirable effects of falling over the "fiscal cliff," though Wall Streeters seem perfectly at ease tip-toeing along the precipice. One gets the distinct feeling that the deal has already been struck and the rest is just for show.
How to trade it? Well, one can take the virtuous route and ignore it all, or play along with the pros and prepare to be beaten by their wickedly swift HFT algos which scan and skim every trade.
Bottom line is that there is no actual bottom line, so long as Ben Bernanke sits quietly in the background, his finger poised to punch up another couple hundred billion dollars as needed, along with his counterpart, Mario Draghi, in Europe.
Did somebody mention Europe? That place where equally nothing matters? Yes, they're still out there, kicking their own can further down the road to perdition.
With the elections in the US over and done with, it's back to business as usual, wherein neither the politicians nor the bankers can lose.
For all you poker fans, the market did leave a couple of "tells." Gold and silver notched nice gains again, and, for the third day in a row, new lows slaughtered new highs, 231-76.
That's a pretty fat slice of salami laying out there, Wall Street. Some of us actually notice... and our appetite is good.
Dow 12,815.39, +4.07(0.03%)
NASDAQ 2,904.87, +9.29(0.32%)
S&P 500 1,379.85, +2.34(0.17%)
NYSE Composite 8,053.56, +2.74(0.03%)
NASDAQ Volume 1,802,865,630
NYSE Volume 3,572,545.750
Combined NYSE & NASDAQ Advance - Decline: 2707-2778
Combined NYSE & NASDAQ New highs - New lows: 76-231
WTI crude oil: 86.07, +0.98
Gold: 1,730.90, +4.90
Silver: 32.60, +0.359
Wednesday, November 7, 2012
Obama Wins; Stock Market Sinks on Tax Hike, Fiscal Cliff Fears, Europe
Tuesday was an early night in terms of presidential politics as President Barack Obama was elected overwhelmingly to a second term, whipping Republican challenger in almost every battleground state and winning the popular vote handily.
With the vote in Florida still being tallied (anybody surprised?), the Sunshine State turned out to be mostly inconsequential as the president swept the key states of Virginia, Ohio, Wisconsin, Iowa, Pennsylvania (which never really was in play), New Hampshire, Colorado and Nevada. Romney's sole win in the so-called "swing states" was in North Carolina, a state which Obama took by a narrow 0.3% in 2008.
Once the midwest states of Wisconsin, Iowa and Ohio were declared for Obama, the race was over, but it wasn't until after midnight in the East that Mitt Romney gave his concession speech and later, President Obama gave a ripping, rhetorical speech extolling the virtues of freedom of choice, tolerance and working together toward shared goals and the great creation of our founders, the United States of America, individual states bound together by social compact.
In the House and Senate races, the makeup of congress remained largely the same, with Republicans dominating the House and Democrats strengthening their grip on the senate, winning key races in Virginia, Florida, and, especially, Massachusetts, where Elizabeth Warren, the fiery consumer rights advocate, took the seat away from Republican incumbent Scott Brown, in a major setback for big banks.
Warren, who worked on TARP and other reforms in Washington, especially the implementation of a consumer protection division at the Federal Reserve, will likely end up on the Senate banking Committee, possibly winning the chairmanship.
Another critical Senate race was won in Connecticut by Christopher Murphy, who defeated Linda McMahon, who wrestling millionaire who spent $100 million on her own campaign.
Jon Tester retained his Senate seat from Montana in a close race with Republican challenger Denny Rehberg, keeping the balance of power firmly in their control with 55 seats, along with one independent, Bernie Sanders of Vermont. The Democrats likely gained another ally when former governor, independent Angus King of Maine, won an open Senate seat that had been held by Republican Olympia Snowe. King has not indicated which party he would caucus with, though most believe it will be with Democrats. King won on the simple idea of making filibusters less of an effective measure in killing legislation, believing that excessive filibustering by Senate Republicans had blocked almost all significant legislation over the past four years.
There was little change in the House, as Reublicans retained control with 232 seats to 191 held by Democrats with a number of vacancies.
It wasn't long before other voices began to be heard, especially those on Wall Street who had been counting on a win by Republican Romney. Before the market opened, futures began a steep decline, though the catalyst may have nad more to do with comments by ECB president Mario Draghi and some dismal production figures from Germany, regarded as a stronghold in the recession-plagued continent.
Shortly after Germany's industrial production was reported to have fallen 1.2% in September, Draghi said that the crisis in Europe was beginning to take its toll on the industrial powerhouse that is the German economy.
Heading into the first post-election session, Dow futures were pointing toward a loss of more than 100 points at the open, and the result was worse, with the 132-point gain from Tuesday wiped out in the opening minute.
Stocks continued their descent until bottoming out just before noon, down 369 points, the biggest decline of the year, though some strengthening took all of the indices off their lows as the day progressed.
Still, the losses were dramatic and especially in the banking sector, where ank of America (BAC), Goldman Sachs (GS), JP Morgan Chase (JPM) and other big bank concerns were off more than five percent. All 10 S&P sectors finished in the red, the S&P could not defend the 1400 level and nearly bounced off its 200-day moving averages, the NASDAQ - aided by Apple's continued decline into bear market territory - broke down below its 200-DMA and the Dow closed below its 200-DMA for the first time since the beginning of June.
In Greece, rioters threw fire bombs at police in anticipation of another vote on austerity measures designed to pave the way for another round of financing from the troika of the IMF, EU and ECB. The vote, scheduled for midnight in Greece (5:00 pm ET), is expected to pass, though the populace has seemingly had enough of policies dictated by outsiders.
For Wall Street, the day presented a perfect storm of disappointment, fears of higher taxes on dividends, tighter regulations of banks, uncertainty over tax and spending policies heading into 2013, and renewed concerns over our trading partners in Europe.
The steep declines may have only been a beginning, however, as no policies have changed, and, actually, the political makeup in Washington remained the same as it had been the day before. The continued gridlock coming from the White House and Capitol Hill may be the most disconcerting factor of all.
Some internal damage was done to markets, with the advance-decline line showing a nearly 5-1 edge for losers and new highs being surpassed by new lows, 94-174.
With none of the important initiatives nearing resolution, there seems to be nowhere for the market to go but down, now that the election is over, earnings season is just about finished and the market must focus on fundamentals and locking in gains for the year. The remainder of 2012 may prove to be quite challenging to investors.
Dow 12,932.73, -312.95 (2.36%)
NASDAQ 2,937.29, -74.64 (2.48%)
S&P 500 1,394.53, -33.86 (2.37%)
NYSE Composite 8,138.80, -173.55 (2.09%)
NASDAQ Volume 4,322,112,500
NYSE Volume 2,059,028,750
Combined NYSE & NASDAQ Advance - Decline: 961-4613
Combined NYSE & NASDAQ New highs - New lows: 94-174
WTI crude oil: 84.44, -4.27
Gold: 1,714.00, -1.00
Silver: 31.66, -0.373
With the vote in Florida still being tallied (anybody surprised?), the Sunshine State turned out to be mostly inconsequential as the president swept the key states of Virginia, Ohio, Wisconsin, Iowa, Pennsylvania (which never really was in play), New Hampshire, Colorado and Nevada. Romney's sole win in the so-called "swing states" was in North Carolina, a state which Obama took by a narrow 0.3% in 2008.
Once the midwest states of Wisconsin, Iowa and Ohio were declared for Obama, the race was over, but it wasn't until after midnight in the East that Mitt Romney gave his concession speech and later, President Obama gave a ripping, rhetorical speech extolling the virtues of freedom of choice, tolerance and working together toward shared goals and the great creation of our founders, the United States of America, individual states bound together by social compact.
In the House and Senate races, the makeup of congress remained largely the same, with Republicans dominating the House and Democrats strengthening their grip on the senate, winning key races in Virginia, Florida, and, especially, Massachusetts, where Elizabeth Warren, the fiery consumer rights advocate, took the seat away from Republican incumbent Scott Brown, in a major setback for big banks.
Warren, who worked on TARP and other reforms in Washington, especially the implementation of a consumer protection division at the Federal Reserve, will likely end up on the Senate banking Committee, possibly winning the chairmanship.
Another critical Senate race was won in Connecticut by Christopher Murphy, who defeated Linda McMahon, who wrestling millionaire who spent $100 million on her own campaign.
Jon Tester retained his Senate seat from Montana in a close race with Republican challenger Denny Rehberg, keeping the balance of power firmly in their control with 55 seats, along with one independent, Bernie Sanders of Vermont. The Democrats likely gained another ally when former governor, independent Angus King of Maine, won an open Senate seat that had been held by Republican Olympia Snowe. King has not indicated which party he would caucus with, though most believe it will be with Democrats. King won on the simple idea of making filibusters less of an effective measure in killing legislation, believing that excessive filibustering by Senate Republicans had blocked almost all significant legislation over the past four years.
There was little change in the House, as Reublicans retained control with 232 seats to 191 held by Democrats with a number of vacancies.
It wasn't long before other voices began to be heard, especially those on Wall Street who had been counting on a win by Republican Romney. Before the market opened, futures began a steep decline, though the catalyst may have nad more to do with comments by ECB president Mario Draghi and some dismal production figures from Germany, regarded as a stronghold in the recession-plagued continent.
Shortly after Germany's industrial production was reported to have fallen 1.2% in September, Draghi said that the crisis in Europe was beginning to take its toll on the industrial powerhouse that is the German economy.
Heading into the first post-election session, Dow futures were pointing toward a loss of more than 100 points at the open, and the result was worse, with the 132-point gain from Tuesday wiped out in the opening minute.
Stocks continued their descent until bottoming out just before noon, down 369 points, the biggest decline of the year, though some strengthening took all of the indices off their lows as the day progressed.
Still, the losses were dramatic and especially in the banking sector, where ank of America (BAC), Goldman Sachs (GS), JP Morgan Chase (JPM) and other big bank concerns were off more than five percent. All 10 S&P sectors finished in the red, the S&P could not defend the 1400 level and nearly bounced off its 200-day moving averages, the NASDAQ - aided by Apple's continued decline into bear market territory - broke down below its 200-DMA and the Dow closed below its 200-DMA for the first time since the beginning of June.
In Greece, rioters threw fire bombs at police in anticipation of another vote on austerity measures designed to pave the way for another round of financing from the troika of the IMF, EU and ECB. The vote, scheduled for midnight in Greece (5:00 pm ET), is expected to pass, though the populace has seemingly had enough of policies dictated by outsiders.
For Wall Street, the day presented a perfect storm of disappointment, fears of higher taxes on dividends, tighter regulations of banks, uncertainty over tax and spending policies heading into 2013, and renewed concerns over our trading partners in Europe.
The steep declines may have only been a beginning, however, as no policies have changed, and, actually, the political makeup in Washington remained the same as it had been the day before. The continued gridlock coming from the White House and Capitol Hill may be the most disconcerting factor of all.
Some internal damage was done to markets, with the advance-decline line showing a nearly 5-1 edge for losers and new highs being surpassed by new lows, 94-174.
With none of the important initiatives nearing resolution, there seems to be nowhere for the market to go but down, now that the election is over, earnings season is just about finished and the market must focus on fundamentals and locking in gains for the year. The remainder of 2012 may prove to be quite challenging to investors.
Dow 12,932.73, -312.95 (2.36%)
NASDAQ 2,937.29, -74.64 (2.48%)
S&P 500 1,394.53, -33.86 (2.37%)
NYSE Composite 8,138.80, -173.55 (2.09%)
NASDAQ Volume 4,322,112,500
NYSE Volume 2,059,028,750
Combined NYSE & NASDAQ Advance - Decline: 961-4613
Combined NYSE & NASDAQ New highs - New lows: 94-174
WTI crude oil: 84.44, -4.27
Gold: 1,714.00, -1.00
Silver: 31.66, -0.373
Monday, September 10, 2012
Stocks Drop on Fears of NO QE by Fed
Nothing but headlines and rumors are moving the markets these days - and, incidentally, it's Monday, so stocks must go down - and, since Europe's already been sated by ECB president Mario Draghi's new proposal to bail out all sovereign nations in need by purchasing one, two and three year bond issues in exchange for said nations' acceptance of "conditions," all eyes have turned to the two-day FOMC meeting at which Chairman Ben Bernanke is supposed to announce his own version of bond-buying (AKA, QE3).
But, as with all things Ponzi-oriented and subject to whims, official data and sentiment - to say nothing of the upcoming presidential election - speculators, insiders, hedge fund managers and other market participants are a little nervous about what's to come on Wednesday afternoon, when the FOMC will surely announce no chance in policy, keeping rates at zero, and after that...
Chairman Bernanke may well hint at new stimulative measures or actually set a date for a plan to proceed, or, he may weigh all the factors, including Friday's uninspired non-farm payroll data, and do nothing (which would be, historically speaking, the correct path).
If that's the case - and that's what had investors worried in the final hour of trade today - then expect a sharp pull-back from the currently-inflated levels on the major indices. Additionally, the German high court is set to rule, earlier in the day on Wednesday, on the constitutionality of the ESM, and that could be an even bigger deal.
Some 70% or more of the German populace is opposed to the ESM, the funding mechanism that is supposed to - just like all other failed plans - save the Euro, because the bulk of the fund would be bourn by Germany and the good people of that country who pay taxes, which are already viewed as too high. The thought of more taxation in Germany, one of the highest-taxed nations in the world, is unpalatable to most, but taxpayers, alas, do not have a vote. The ruling will come at about the time markets open in the US, setting up for what could be a wicked roller coaster ride.
Thus, there's enough nervousness on Wall Street to make even the coolest of operators break into a cold sweat these days, as uncertainty exists at all levels of economies globally and in the political world.
Today's double digit losses on the major exchanges could be nothing more than profit-taking, or a precursor to some terrible future without government stimulus on both the European and American continents.
How sad. Brokers and dealers might actually have to do some fundamental analysis for a change instead of depending on round after round of money printing to keep the stock markets at nose-bleed levels. Time will tell, and the time is nigh.
Dow 13,254.29, -52.35 (0.39%)
NASDAQ 3,104.02, -32.40 (1.03%)
S&P 500 1,429.08, -8.84 (0.61%)
NYSE Composite 8,192.40, -42.11 (0.51%)
NASDAQ Volume 1,578,686,000
NYSE Volume 3,213,290,000
Combined NYSE & NASDAQ Advance - Decline: 2228-3284
Combined NYSE & NASDAQ New highs - New lows: 332-38
WTI crude oil: 96.54, +0.12
Gold: 1,731.80, -8.70
Silver: 33.63, -0.06
But, as with all things Ponzi-oriented and subject to whims, official data and sentiment - to say nothing of the upcoming presidential election - speculators, insiders, hedge fund managers and other market participants are a little nervous about what's to come on Wednesday afternoon, when the FOMC will surely announce no chance in policy, keeping rates at zero, and after that...
Chairman Bernanke may well hint at new stimulative measures or actually set a date for a plan to proceed, or, he may weigh all the factors, including Friday's uninspired non-farm payroll data, and do nothing (which would be, historically speaking, the correct path).
If that's the case - and that's what had investors worried in the final hour of trade today - then expect a sharp pull-back from the currently-inflated levels on the major indices. Additionally, the German high court is set to rule, earlier in the day on Wednesday, on the constitutionality of the ESM, and that could be an even bigger deal.
Some 70% or more of the German populace is opposed to the ESM, the funding mechanism that is supposed to - just like all other failed plans - save the Euro, because the bulk of the fund would be bourn by Germany and the good people of that country who pay taxes, which are already viewed as too high. The thought of more taxation in Germany, one of the highest-taxed nations in the world, is unpalatable to most, but taxpayers, alas, do not have a vote. The ruling will come at about the time markets open in the US, setting up for what could be a wicked roller coaster ride.
Thus, there's enough nervousness on Wall Street to make even the coolest of operators break into a cold sweat these days, as uncertainty exists at all levels of economies globally and in the political world.
Today's double digit losses on the major exchanges could be nothing more than profit-taking, or a precursor to some terrible future without government stimulus on both the European and American continents.
How sad. Brokers and dealers might actually have to do some fundamental analysis for a change instead of depending on round after round of money printing to keep the stock markets at nose-bleed levels. Time will tell, and the time is nigh.
Dow 13,254.29, -52.35 (0.39%)
NASDAQ 3,104.02, -32.40 (1.03%)
S&P 500 1,429.08, -8.84 (0.61%)
NYSE Composite 8,192.40, -42.11 (0.51%)
NASDAQ Volume 1,578,686,000
NYSE Volume 3,213,290,000
Combined NYSE & NASDAQ Advance - Decline: 2228-3284
Combined NYSE & NASDAQ New highs - New lows: 332-38
WTI crude oil: 96.54, +0.12
Gold: 1,731.80, -8.70
Silver: 33.63, -0.06
Thursday, September 6, 2012
Draghi Delivers Win-Win for Europe, Stocks
ECB president Mario Draghi pleased just about everyone when he unveiled the latest bond-purchasing scheme by the European Central Bank at a news conference early this morning. Stocks rose across Europe and the Americas with the NASDAQ reaching 11 1/2 year highs.
Portions of the new ECB bond purchase program, which is designed to purchase sovereign bonds with maturities of 1, 2, and 3 years, were purposely leaked to the press in the days and weeks prior to the official announcement, which came after the ECB's rate policy meeting (kept the official bank lending rate at 0.75%), during afternoon trading on European bourses and prior to the open of trading in New York.
The plan, called by Draghi, Outright Monetary Transactions (OMT) rests on five main pillars: 1) Strict conditionality will be applied to bond purchases 2) There will be unlimited purchases of bonds with a maturity of one to three years 3) The ECB will not have seniority 4) All transactions will be 'sterilized' 5) Purchases will be reported monthly.
Countries wishing to participate (notably Spain and Italy) will have to make a formal application and adhere to conditions, mostly in the form of austerity measures, something at which many governments have balked.
While the stock markets advanced broadly, the S&P reaching a four-year high there are some land-mines over which the ECB will have to traverse in order to make the program a success.
First, there is the matter of legality, upon which the German high court will rule on Wednesday, September 12. The court is reviewing previous bond-buying programs by the ECB, such as the ESM, to determine if such plans comply the rigors of the German constitution. If the court decides against such plans, everything in Europe will be thrown into chaos, as Germany is the major funder of bailout programs.
The matter of nations applying for funding is another sticking point. Spain and Italy are in fiscal crises, but the political leaders are wary of conditionality, submitting their government to severe austerity measures, such as the recently-proposed six-day work week for Greeks. Additionally, sticking to the conditions ofthe loans is often difficult if not impossible, though the OMT specifically says that bond purchases will be curtailed if conditions are not met.
with the ECB now in the Fed's arena of massive money printing, what lies ahead for the US and global economies is next week's FOMC meeting, at which it is widely believed Fed chairman Ben Bernanke will unveil some new liquidity program of his own, commonly called QE3, though recent economic data, such as today's August ADP employment report and the ISM Services data would seem to indicate that further easing by the Fed is not warranted nor wise at this juncture.
Thus, positive economic data, a recovering economy and anything outside the stock market viewed as positive to growth will be viewed by Wall Street as an impediment to more easy money, likely causing a sell-off in equities.
Tomorrow's non-farm payroll report for August is the linchpin to Fed action. Anything over 150,000 net new jobs may cause the Fed to hold back from further easing. There's also widespread belief that the Fed will be reluctant to move so close to the US presidential elections, not wishing to be perceived as a political entity.
Next week is shaping up to be epic, one way or the other.
Dow 13,292.00, +244.52 (1.87%)
NASDAQ 3,135.81, +66.54 (2.17%)
S&P 500 1,432.12, +28.68 (2.04%)
NYSE Composite 8,160.40, +168.39 (2.11%)
NASDAQ Volume 1,883,115,000
NYSE Volume 3,919,524,250
Combined NYSE & NASDAQ Advance - Decline: 4360-1203
Combined NYSE & NASDAQ New highs - New lows: 494-39
WTI crude oil: 95.53, +0.17
Gold: 1,705.60, +11.60
Silver: 32.67, +0.35
Portions of the new ECB bond purchase program, which is designed to purchase sovereign bonds with maturities of 1, 2, and 3 years, were purposely leaked to the press in the days and weeks prior to the official announcement, which came after the ECB's rate policy meeting (kept the official bank lending rate at 0.75%), during afternoon trading on European bourses and prior to the open of trading in New York.
The plan, called by Draghi, Outright Monetary Transactions (OMT) rests on five main pillars: 1) Strict conditionality will be applied to bond purchases 2) There will be unlimited purchases of bonds with a maturity of one to three years 3) The ECB will not have seniority 4) All transactions will be 'sterilized' 5) Purchases will be reported monthly.
Countries wishing to participate (notably Spain and Italy) will have to make a formal application and adhere to conditions, mostly in the form of austerity measures, something at which many governments have balked.
While the stock markets advanced broadly, the S&P reaching a four-year high there are some land-mines over which the ECB will have to traverse in order to make the program a success.
First, there is the matter of legality, upon which the German high court will rule on Wednesday, September 12. The court is reviewing previous bond-buying programs by the ECB, such as the ESM, to determine if such plans comply the rigors of the German constitution. If the court decides against such plans, everything in Europe will be thrown into chaos, as Germany is the major funder of bailout programs.
The matter of nations applying for funding is another sticking point. Spain and Italy are in fiscal crises, but the political leaders are wary of conditionality, submitting their government to severe austerity measures, such as the recently-proposed six-day work week for Greeks. Additionally, sticking to the conditions ofthe loans is often difficult if not impossible, though the OMT specifically says that bond purchases will be curtailed if conditions are not met.
with the ECB now in the Fed's arena of massive money printing, what lies ahead for the US and global economies is next week's FOMC meeting, at which it is widely believed Fed chairman Ben Bernanke will unveil some new liquidity program of his own, commonly called QE3, though recent economic data, such as today's August ADP employment report and the ISM Services data would seem to indicate that further easing by the Fed is not warranted nor wise at this juncture.
Thus, positive economic data, a recovering economy and anything outside the stock market viewed as positive to growth will be viewed by Wall Street as an impediment to more easy money, likely causing a sell-off in equities.
Tomorrow's non-farm payroll report for August is the linchpin to Fed action. Anything over 150,000 net new jobs may cause the Fed to hold back from further easing. There's also widespread belief that the Fed will be reluctant to move so close to the US presidential elections, not wishing to be perceived as a political entity.
Next week is shaping up to be epic, one way or the other.
Dow 13,292.00, +244.52 (1.87%)
NASDAQ 3,135.81, +66.54 (2.17%)
S&P 500 1,432.12, +28.68 (2.04%)
NYSE Composite 8,160.40, +168.39 (2.11%)
NASDAQ Volume 1,883,115,000
NYSE Volume 3,919,524,250
Combined NYSE & NASDAQ Advance - Decline: 4360-1203
Combined NYSE & NASDAQ New highs - New lows: 494-39
WTI crude oil: 95.53, +0.17
Gold: 1,705.60, +11.60
Silver: 32.67, +0.35
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