Thanksgiving Is Not For Giving Money To Brokers; Dow Slides Into Weakened Holiday Close

All the stocks you bought last year are worth less this year.

Big deal, right? You still have the same stocks and they'll come back. The stock market always goes higher.

That seems to be the common wisdom, or at least a salve for wounds incurred during the recent downturn, and such thinking is especially appropriate for the millions of small investors who have their money locked up in 401k plans, IRAs or other retirement or long-range investment vehicles. These folks aren't as nimble nor as knowledgeable as the pros on Wall Street or even their local corner store stock broker. They're stuck. They're what's known in the industry as bag-holders, and, as mentioned above, there are millions of them.

The way average consumers - as investors, per se - are treated by the large funds and brokerages who manage their money is tantamount to a skimming operation, not unlike the protection rackets made famous by mob bosses from the 20s, 30s and 40s.

You give the fund your money, and they make sure nothing bad happens to it, suggesting that they will invest it wisely, and, for that privilege, you pay them a fee. If things go wrong, and your money diminishes, your account balance declines, the fund is not held responsible. Too bad. Tough break. "We don't control the market," they'll tell you.

The willingness with which people turn over hard-earned money to managers to invest is a concept that has baffled and befuddled psychologists and entrepreneurs for time immemorial. The generations who were adults during the ravages of the Great Depression - though most of them have passed away - and anyone who lost money in the dotcom bust or the Great Financial Crisis (GFC) of 2007-09, have been rightfully skeptical of the suggestions and promises made by the hawkers of stocks and bonds, the skimmers of fees, the suit-and-tie, computer-aided experts who are allowed to handle everybody else's money.

Does the small investor ever ponder what the broker does with his money? Is he or she investing in the same stocks as the general public he or she is serving? That question is seldom asked, and even more infrequently, answered. And when stocks start to slide, what does the broker do? Is he or she holding steady, as the clients are told to do, or has he or she jumped ship, pulling all the profits out of the stocks he or she owns? These are interesting questions, which, unfortunately, are not required to be answered by individual brokers or their companies. The fiduciary aspects of the brokerage business leaves much to be desired in terms of consumer protection. In brief, consumers are NOT protected and never have been. When one hands over money to a broker, they also give the right for the broker to do whatever he or she wishes with those funds.

This is not an indictment of any broker or investment house. There are many good ones, more good than bad, by a long shot. However, they all share a few common traits: they routinely under-perform the general indices (the most-often quoted statistic being behind the S&P), and, they have zero accountability when they lose money for their clients.

So, this Thanksgiving, be thankful you have money that you can spread around for brokers to manage for you, because, apparently, you're not confident enough nor smart enough to manage it yourself. And then you pay taxes, if you have any gains.

Now, to those uppity markets...

Stocks were floating along a sugar high on the day before Thanksgiving until the rush of a dead-cat rally wore off around 2:00 pm ET., and in an especially large manner on the Dow in the final hour of trading (by this time, your broker was already over the river and through the woods, on his way to Grandmother's house).

The Dow dropped 200 points in those final two hours of trading, the bulk of it (185 points) in the final hour. The other indices lost ground, though not to the degree that the Dow Industrials slumped. A lot of the loss was in Apple, the stock that has been largely blamed for Tuesday's selling.

Finally, the Dow ended with a loss of less than one point. Ouch. Stocks will be on sale again on Black Friday, in a shortened session which ends at 1:00 pm ET.

Happy Thanksgiving!

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78
11/20/18	24,465.64	-551.80	-650.58
11/21/18	24,464.69	-0.95	-651.53

At the Close, Wednesday, November 21, 2018:
Dow Jones Industrial Average: 24,464.69, -0.95 (0.00%)
NASDAQ: 6,972.25, +63.43 (+0.92%)
S&P 500: 2,649.93, +8.04 (+0.30%)
NYSE Composite: 12,123.34, +74.69 (+0.62%)

Fed Signals More Rate Increases; Market Dynamics Favor Investment Diversity

In what can be characterized as more of a sigh than a panicked scream, stocks sold off Thursday afternoon when the Fed wrapped up its November FOMC meeting, announcing that they had no intention of changing plans for a fourth federal funds rate increase this year and at least three more in 2019.

Of the four major insides, only the Dow managed to post a gain, though it was minuscule, at a mere 10 points.

Fears that the Fed might put some kind of kibosh on the Trump expansion have been stocked by the president himself, who would prefer lower interest rates in order to keep the punch bowl of cheap money full. It's unlikely President Trump will get his wish, because the Fed plan has been in place for years, is currently being executed and seems - despite pullbacks in stocks in February and again in October - to be working as well as can be expected.

The US economy has roared back to life over the past year, thanks in part to Trump's individual and corporate tax cuts, repatriation of foreign funds by companies, and still fairly easy policy by the Fed.

While the stock market does not provide complete portfolio of the US economy, it does act as a kind of proxy. Stocks generally gain when the economy is doing well, and falls when recessions hit or external events cause disruptions to the usual flow of funds into equities.

Buybacks have been providing an inordinate amount of upside for the general markets. 2018 is on pace to set a record for corporate stock buybacks, which has an immediate effect on valuations by reducing the number of shares outstanding. To the general public, stock buybacks look like regular buying, as they operate in the background and the actual buyers are not disclosed. It's assumed that as companies buy their own stock rather than reinvest in equipment, facilities, workers, or expansion of their businesses, the sellers are funds and/or large stakeholders, reaping profits and moving on to the next apple ripe for picking.

Generally seen as good practice, stock buybacks don't actually add value, though in terms of shareholder value, they do return more profits in higher share price and, often, increased dividends. It's a great panacea for stockholders, who merely have to hold shares and profit. This scenario has been unprecedented, but has lasted since the Great Financial Crisis of 2008-09 and continues to provide a backstop to stocks. When the buybacks stop, so will the easy money for shareholders, but, the practice still appears to have more to run, though the pace has slowed over the past three to six months.

All of this has created a very dynamic and fluid market, in which all manner of investment strategies can produce solid results. With wild swings on nearly a daily basis, individual stocks or sectors (via ETFs) can be either held, sold short or bought. The current environment is likely a major boon to brokers such as Merrill Lynch, Schwab, eTrade and others in the game, who undoubtably will be seeing increased trading in an active, unbridled market.

Thus, the answer to the age-old question, "Buy, sell, or hold?" might today be answered correctly by responding, "all of the above."

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46

At the Close, Thursday, November 8, 2018:
Dow Jones Industrial Average: 26,191.22, +10.92 (+0.04%)
NASDAQ: 7,530.88, -39.87 (-0.53%)
S&P 500: 2,806.83, -7.06 (-0.25%)
NYSE Composite: 12,622.04, -57.06 (-0.45%)

Slowly Goes Wall Street (Remember, It's May)

Equity markets were rather dull today, on exceptionally low volume - which is saying a lot, since volume left the building years ago.

Dull, boring, inconsequential, however, is how financial markets are supposed to be, or, that is at least how they used to be before the advent of personal computers, CNBC and individually-managed accounts. Today's go-go markets are driven by extra doses of liquidity, courtesy of the Fed (as much as readers hate reading that over and over and over again, the author hates having to mention it even more), HFTs, flash crashes, breaking news (why doesn't somebody fix it?), surprises, tweets, scandals, ponzi schemes, dotcoms, options, derivatives, swaps, repos and hot money flowing from carry trades into equities and back out again.

One can only wonder how many times the same money is re-invested, re-invented, re-created, re-hypothecated, recycled, rinsed and repeated. It seems sometimes that one need only a brokerage account and a pair of fast hands to tip-type your way into the wondrous world of high finance. If only such were true, we'd all be traders and multi-millionaires just like the guys on the infomercials telling you that NOW is the time to FLIP THAT HOUSE!

Alas, investing is boring and unexciting, and well it should be, though Americans, driven by media, need the big splash, the dazzle of bright lights and the promise of easy money to be enticed. Sadly for the marketeers and their media whores, more Americans play the ponies, gamble at casinos or play the lottery than invest in stocks, bonds or commodities. We've been programmed to be risk-takers and the stock market - try as it might - just seems to many to be a rigged game for rich guys in suits and ties and fancy women in shiny, tight-fitting business suits.

Thus, we have these dull markets, in which the major brokerages make war with each other via the computer algos, following each other into what eventually becomes a black hole, a void, a nonsensical, immaterial, valueless dump. That's what our stock markets have devolved into, especially after the crash of 2008-09. The major indices may have come all the way back in the four-to-five years since then, but all that money has been sucked out of the market by the brokerages and hedge funds via bonuses. It's common knowledge that the average investor usually gets screwed unless he/she is either very careful or very smart. There's just no way to win a rigged game. As the old adage goes, "if you're playing a game of poker and you don't know who the mark is, chances are it's probably you."

The general American public is simply not that stupid. After being burned by the high-tech Wall Street crooks in 2000, 2001 and again in 2008, they have not returned. Some maybe, but they're a small minority, mostly younger folks who don't know better or older people with money to burn, potentially. Paper losses still sting, and, if there's another severe downturn in the markets any time soon - an event long, long overdue, according to fundamentals - they'll be gone for good as well.

With all the scams, crimes and untold misdeeds that have become all-too-common on Wall Street - without, incidentally, any criminal prosecutions - is there any wonder that average people with money are still shy about investing in stocks? In a perverse way, thats why this market must and will likely continue to defy gravity and levitate to higher and higher levels: because another crash would destroy what little bit of confidence is left in the ultimate confidence game.

So, now that the banks are all sufficiently recapitalized (supposedly) and everything in America is just hunky-dorey, Wall Street may be looking itself in the mirror and wondering if they've taken too many scalps over the past few years. Maybe they'll keep the liquidity-driven, non-fundamental, irrational exuberance going for a while longer, but slowly, much more slowly.

Or is it time to turn it over again? Wash, rinse, repeat...

Dow 15,091.68, -26.81 (0.18%)
NASDAQ 3,438.79, +2.21 (0.06%)
S&P 500 1,633.77, +0.07 (0.00%)
NYSE Composite 9,437.17, -5.59 (0.06%)
NASDAQ Volume 1,605,809,375
NYSE Volume 3,124,652,250
Combined NYSE & NASDAQ Advance - Decline: 2673-3792
Combined NYSE & NASDAQ New highs - New lows: 475-30
WTI crude oil: 95.17, -0.87
Gold: 1,434.30, -2.30
Silver: 23.70, +0.038

15 Global Banks Downgraded by Moody's; Stocks Rally (Really!)

Wrapping up the week that was, it can truly be said that the level of fraud and deceit by the banks and brokerages is matched only by the complacency of the general public.

Fifteen major global banks were downgraded by Moody's late Thursday afternoon - after markets had closed, though news of the downgrades had been leaking out all say - setting up denial central, in which the very banks' downgraded criticized Moody's for being, among other things, "unwarranted," "arbitrary," and "backward-looking." Too bad these scammers can't take honest medicine, even from a firm that is purportedly "one of their own."

Readers should recall that during the sub-prime scams of 2005-09, Moody's was one of the select ratings firms that deemed the obtuse and overtly fraudulent residential MBS as AAA-rated.

In an outlandish market reaction, financials led Friday's early advance. So much for fundamental analysis. Ratings, upgrades and downgrades now count for about as much as Jamie Dimon's hat size, which we have heard is rather enormous.

The list of downgrades (which took more than a half hour's time to locate) includes Bank of America, Barclays, Citigroup, JP Morgan Chase, Credit Suisse Group AG, HSBC Holdings, Morgan Stanley, Goldman Sachs, Deutsche Bank, Royal Bank of Scotland Group, BNP Paribas, Credit Agricole, Royal Bank of Canada, Societe Generale and UBS AG. That's all 15, though Moody's website features a grand runaround to find the list including the actual levels of downgrades (we gave up because apparently, this information is not conducive to the free flow of information and markets).

In a fitting riposte, Max Keiser channels Friedrich Neitzsche in this interview, intoning, in the finest guttural indignation, "Banks are Dead!"



Stocks registered broad gains during the session, especially on the NASDAQ, which outpaced the other indices handily. Volume was heavy.

In closing, our steadfastness in calling banking and financial institutions criminal enterprises is often chided, but sometimes brought to light as truth. In a fascinating story by Matt Taibbi of Rolling Stone, the details of how Wall Street gangsters (dressed like bankers) skimmed millions of dollars from states, cities, towns and villages all across America is revealed.

OK, just one more: Our friends at Zero Hedge report that the ECB Officially Announces Easing Of Collateral Rules, essentially confirming that Europe has run out of assets.

Go easy on the champagne, kids, and have a great weekend!

Dow 12,640.78, +67.21 (0.53%)
NASDAQ 2,892.42, +33.33 (1.17%)
S&P 500 1,335.02, +9.51 (0.72%)
NYSE Composite 7,616.59, +50.48 (0.67%)
NASDAQ Volume 2,801,777,000
NYSE Volume 4,210,423,500
Combined NYSE & NASDAQ Advance - Decline: 3892-1703
Combined NYSE & NASDAQ New highs - New lows: 117-81
WTI crude oil: 79.76, +1.56
Gold: 1,566.90, +1.40
Silver: 26.66, -0.18