Shifting forces were at work the second last week of July, and while the winds of change didn't quite blow stocks away, the dollar's value, precious metals and bond yields saw wild swings.
Bloomberg's dollar index finished the week at 94.435, edging below the level seen at the trough of the March stock market lows (94.895), and lower for the year (96.389, 12/31/19). It was also the lowest recorded reading since September 2018 (94.220).
While the dollar may have been reeling against competing fiat currencies, it was dealt a knockdown blow by precious metals, especially silver, which had it's best week in more than 40 years. Spot Silver closed at 19.33 per ounce on July 17, traded as high as 23.00 on July 22 before settling into a close at 22.77 on the 24th, a gain of 17.80% in just five trading days.
Gold was also making headlines, with spot gold closing out the week at 1,902.02, a record closing price, surpassing the previous high in US$ of 1895.60 from 2011. While the dollar's weakness was a contributing factor in the rise of precious metals, it wasn't the only one. Continued strong demand, which many dealers are calling "unprecedented", massive purchases by the gold and silver ETF funds, and shortages due to mining shutdowns over the past four months have all been weighing on gold and silver prices.
With faith in fiat currencies and the governments that rule by them weakening, gold, silver, and other hard assets are beginning to be looked upon more favorably as the global economy melts away, multi-national protests persist, and unemployment rages. The first rise in initial weekly US unemployment claims in nearly four months sent shock waves across markets and had a dampening effect on stocks in particular.
WTI crude oil, which had remained moored around the $40/barrel mark for most of the month, was bid slightly higher during the week, closing above $41 for the first time since March. Producers, desperate for higher prices see the falling dollar as an aid to their plight. Global prices are in flux, especially with China buying directly from many producers, including Russia and Iran, bypassing the long-standing dollar hegemony completely. If the dollar continues to decline, the price of oil will certainly rise, affecting just about every finished product in some manner. The condition appears ripe for $50 oil and $2.00 gas at the pump though seasonal demand could keep a lid on prices through the fall.
Treasury yields fell on the long end, with the 30-year taking the brunt of the action, closing out the week at 1.23%, a decline of a full 10 basis points from the previous Friday reading. The benchmark 10-year note slipped from 0.64% to 0.59%, and persisted through Thursday and Friday at that level. Even the one-month maturity bill fell from 0.11 to 0.10%, cramming the entire complex into a 113 basis point box.
The shift in sentiment from bullish on stocks to mildly bearish was, in the main, attributable to the decimation in second quarter earnings as companies lost ground across the equity spectrum. Tech, energy, finance, consumer, and industrial sectors were all affected by the shutdowns and stay-at-home orders prevalent during the second quarter and that was reflected in some very dismal reports, especially from banks and finance stocks, which were forced to add significantly to credit loss reserves over the quarter.
With the reopening of most state economies in the US, there was hope for some relief and a return to pre-COVID conditions, but the recent rise of infections in many states has caused a reversal of the reopening protocols and has tempered enthusiasm for a quick recovery. The COVID crisis seems to have a long-lasting effect, not just on people's health but on the economy in general. The outlook for the fall is not particularly promising either.
Wrapping up this Weekend Wrap, here are the most current prices - including shipping - for select precious metal items on eBay:
Item: Low / High / Average / Median
1 oz silver coin: 27.11 / 46.85 / 35.34 / 34.97
1 oz silver bar: 28.00 / 51.95 / 34.33 / 33.75
1 oz gold coin: 1,850.00 / 2,045.42 / 1,982.27 / 1,995.10
1 oz gold bar: 1,985.22 / 2,019.69 / 2,006.68 / 2,010.15
At the Close, Friday, July 24, 2020:
Dow: 26,469.89, -182.44 (-0.68%)
NASDAQ: 10,363.18, -98.24 (-0.94%)
S&P 500: 3,215.63, -20.03 (-0.62%)
NYSE: 12,461.78, -49.09 (-0.39%)
For the Week:
Dow: -202.06 (-0.76%)
NASDAQ: -140.01 (1.33%)
S&P 500: -9.10 (-0.28%)
NYSE: +59.04 (+0.48%)
Showing posts with label earnings. Show all posts
Showing posts with label earnings. Show all posts
Sunday, July 26, 2020
Sunday, November 3, 2019
WEEKEND WRAP: Fed Delivers, S&P, NASDAQ Make All-Time Highs
With the FOMC decision Wednesday to reduced the federal funds overnight lending rate another 25 basis points, to a range of 1.50-1.75%, stocks took a the rest of decision day and Thursday to digest the news, then ramped stocks on Friday, sending the NASDAQ and S&P 500 to record closings and the Dow Jones Industrials and NYSE Composite near all-time highs.
While the third consecutive rate cut was able to reawaken some of Wall Street's animal spirits, it may be the last one for a while. Changing the wording in some parts of their statement, the Fed took on a more hawkish stance concerning rates going forward. Fed policy will remain data dependent, but not necessarily active. That didn't bother stock traders, who saw the opportunity to ignite what may extend into a holiday rally, and ran with it.
Wall Street's enthusiasm came a day after the US House of Representatives voted along strict party lines to make their impeachment inquiry against President Trump just a little more public than it has been up to this point, wherein Democrats, led by Chairman of the Permanent Select Committee on Intelligence, Adam Schiff, held secret, closed door depositions and heard hearsay testimony from various witnesses in connection with a phone call the president made to Ukraine President Volodymyr Zelensky back in July.
The charges the Democrats have alleged against Mr. Trump may be scurrilous at worst and inconsequential at best, but that hasn't prevented the Democrats to continue to spread stories to their friends in the corrupt mainstream media to smear the president in the run-up to the 2020 election. Not a single Republican voted in favor of the resolution which formally enshrined the inquiry and expanded it to other committees.
Washington being thus rendered impotent as it wastes the taxpayer dime on ridiculous accusations and pointless investigations - along the same lines as the 2+ years of the infamous Mueller probe - it does give Wall Street some relief, understanding that the government will be introducing no new laws or regulations that might impede the current, long-standing bull run.
Elsewhere, outside the United States, the world is burning, either through popular strife in countries and places as diverse as Chile, Hong Kong, and Spain (Catalonia), or by economic policy, especially the brunt instrumentality of negative interest rates, in many European countries.
China's economic slowdown became an issue this week as well, demonstrating that the Chinese hard-line stance on trade negotiations with the United States is a charade. The Chinese government knows full well that it needs cooperation with its main trading partner, but insists on slow-walking any formal agreement. President Trump is well aware of China's condition and has maintained his equally-tough positions through whatever negotiations have been made or planned. China is eventually going to lose its grip and be forced to come to terms with the United States or risk popular uprisings of its own people.
Ignoring the background noise of geopolitics, companies continued to roll out third quarter earnings reports which were modest, but nowhere near disastrous. Additionally, US GDP came in at a stronger-than-expected 1.9% in the first estimate, and October job growth was muted, but well beyond expectations, delivering a non-farm payroll report that saw job gains of 128,000, following an upwardly revised 180,000 increase in September, easily beating market expectations of 89,000. Even though the BLS report is a damaged documentary on true economic growth, the trading community saw this as a positive one and responded accordingly.
Bonds rallied. The yield curve, having un-inverted in early August, continued to steepen, with the 10-year note at 1.69% on Thursday before closing out the week at 1.73%. The longer-duration, 30-year bond, which had fallen under two percent in July, and was being sold off until this week, rallied sharply, with yields falling from 2.34% on Monday to 2.17% on Thursday, settling on Friday at 2.21%.
Gold and silver were also bid, gold regaining the $1500 per ounce level and silver shooting beyond $18 per ounce.
The week ahead features more madness from Washington, a slew of earnings reports, including some popular names like Shake Shack, Uber, UnderArmor, Sprint, Hertz, Groupon, Mariott (Monday), Chesapeake Energy and Newmont Mining (Tuesday), Roku, CVS Health, Square, Humana, Qualcom (Wednesday), Teva, Planet Fitness, AMC Entertainment, Cardinal Health, Stamps.com (Thursday), and Duke Energy and US Concrete (Friday). The Walt Disney Company (DIS), a Dow component, reports Thursday.
Barring any unforeseen negative developments like bank runs (China), riots and street killings (Hong Kong), or desultory commentary on negative interest rates (Denmark), all appears to be smooth sailing through Black Friday, which approaches rapidly, just 19 trading days hence.
Happy Holidays? Too soon?
At the Close, Friday, November 1, 2019:
Dow Jones Industrial Average: 27,347.36, +301.13 (+1.11%)
NASDAQ: 8,386.40, +94.04 (+1.13%)
S&P 500: 3,066.91, +29.35 (+0.97%)
NYSE Composite: 13,300.27, +128.46 (+0.98%)
For the Week:
Dow: +389.30 (+1.44%)
NASDAQ: +143.28 (+1.74%)
S&P 500: +29.35 (+0.97%)
NYSE Composite: +154.03 (+1.17%)
The following is dedicated to California Rep. Adam Schiff:
While the third consecutive rate cut was able to reawaken some of Wall Street's animal spirits, it may be the last one for a while. Changing the wording in some parts of their statement, the Fed took on a more hawkish stance concerning rates going forward. Fed policy will remain data dependent, but not necessarily active. That didn't bother stock traders, who saw the opportunity to ignite what may extend into a holiday rally, and ran with it.
Wall Street's enthusiasm came a day after the US House of Representatives voted along strict party lines to make their impeachment inquiry against President Trump just a little more public than it has been up to this point, wherein Democrats, led by Chairman of the Permanent Select Committee on Intelligence, Adam Schiff, held secret, closed door depositions and heard hearsay testimony from various witnesses in connection with a phone call the president made to Ukraine President Volodymyr Zelensky back in July.
The charges the Democrats have alleged against Mr. Trump may be scurrilous at worst and inconsequential at best, but that hasn't prevented the Democrats to continue to spread stories to their friends in the corrupt mainstream media to smear the president in the run-up to the 2020 election. Not a single Republican voted in favor of the resolution which formally enshrined the inquiry and expanded it to other committees.
Washington being thus rendered impotent as it wastes the taxpayer dime on ridiculous accusations and pointless investigations - along the same lines as the 2+ years of the infamous Mueller probe - it does give Wall Street some relief, understanding that the government will be introducing no new laws or regulations that might impede the current, long-standing bull run.
Elsewhere, outside the United States, the world is burning, either through popular strife in countries and places as diverse as Chile, Hong Kong, and Spain (Catalonia), or by economic policy, especially the brunt instrumentality of negative interest rates, in many European countries.
China's economic slowdown became an issue this week as well, demonstrating that the Chinese hard-line stance on trade negotiations with the United States is a charade. The Chinese government knows full well that it needs cooperation with its main trading partner, but insists on slow-walking any formal agreement. President Trump is well aware of China's condition and has maintained his equally-tough positions through whatever negotiations have been made or planned. China is eventually going to lose its grip and be forced to come to terms with the United States or risk popular uprisings of its own people.
Ignoring the background noise of geopolitics, companies continued to roll out third quarter earnings reports which were modest, but nowhere near disastrous. Additionally, US GDP came in at a stronger-than-expected 1.9% in the first estimate, and October job growth was muted, but well beyond expectations, delivering a non-farm payroll report that saw job gains of 128,000, following an upwardly revised 180,000 increase in September, easily beating market expectations of 89,000. Even though the BLS report is a damaged documentary on true economic growth, the trading community saw this as a positive one and responded accordingly.
Bonds rallied. The yield curve, having un-inverted in early August, continued to steepen, with the 10-year note at 1.69% on Thursday before closing out the week at 1.73%. The longer-duration, 30-year bond, which had fallen under two percent in July, and was being sold off until this week, rallied sharply, with yields falling from 2.34% on Monday to 2.17% on Thursday, settling on Friday at 2.21%.
Gold and silver were also bid, gold regaining the $1500 per ounce level and silver shooting beyond $18 per ounce.
The week ahead features more madness from Washington, a slew of earnings reports, including some popular names like Shake Shack, Uber, UnderArmor, Sprint, Hertz, Groupon, Mariott (Monday), Chesapeake Energy and Newmont Mining (Tuesday), Roku, CVS Health, Square, Humana, Qualcom (Wednesday), Teva, Planet Fitness, AMC Entertainment, Cardinal Health, Stamps.com (Thursday), and Duke Energy and US Concrete (Friday). The Walt Disney Company (DIS), a Dow component, reports Thursday.
Barring any unforeseen negative developments like bank runs (China), riots and street killings (Hong Kong), or desultory commentary on negative interest rates (Denmark), all appears to be smooth sailing through Black Friday, which approaches rapidly, just 19 trading days hence.
Happy Holidays? Too soon?
At the Close, Friday, November 1, 2019:
Dow Jones Industrial Average: 27,347.36, +301.13 (+1.11%)
NASDAQ: 8,386.40, +94.04 (+1.13%)
S&P 500: 3,066.91, +29.35 (+0.97%)
NYSE Composite: 13,300.27, +128.46 (+0.98%)
For the Week:
Dow: +389.30 (+1.44%)
NASDAQ: +143.28 (+1.74%)
S&P 500: +29.35 (+0.97%)
NYSE Composite: +154.03 (+1.17%)
The following is dedicated to California Rep. Adam Schiff:
Wednesday, October 23, 2019
Earnings Not Carrying Stocks Higher
US companies are making money, just not enough to satisfy the investing appetites at this stage of the expansion.
Traders have been poring over third quarter reports for the better parts of two weeks now, and what they're seeing is unimpressive. Gone are the heady days of the early internet boom, when companies reported growth at torrid paces. Today's market is mundane, predictable, and eventually more conditioned to move on Fed-speak, rate moves, or geopolitics, rather than fundamentals, those boring profit statements from multi-nationals.
The good news is that stocks aren't experiencing another October like the last, when the indices tumbled day after day, wiping out most of the annual gains from 2018. That underlying fear of having a rug pulled out from under may be why nobody is either irrational or exuberant at this juncture.
This and next week are the busiest reporting weeks of the month. Unless there are some big negative surprises, one can reasonably expect markets to simply glide along until the Fed meeting at the end of October, when another 25 basis point cut in the federal funds rate is expected.
At the Close, Tuesday, October 22, 2019:
Dow Jones Industrial Average: 26,788.10, -39.54 (-0.15%)
NASDAQ: 8,104.30, -58.69 (-0.72%)
S&P 500: 2,995.99, -10.73 (-0.36%)
NYSE Composite: 13,071.86, -16.76 (-0.13%)
Traders have been poring over third quarter reports for the better parts of two weeks now, and what they're seeing is unimpressive. Gone are the heady days of the early internet boom, when companies reported growth at torrid paces. Today's market is mundane, predictable, and eventually more conditioned to move on Fed-speak, rate moves, or geopolitics, rather than fundamentals, those boring profit statements from multi-nationals.
The good news is that stocks aren't experiencing another October like the last, when the indices tumbled day after day, wiping out most of the annual gains from 2018. That underlying fear of having a rug pulled out from under may be why nobody is either irrational or exuberant at this juncture.
This and next week are the busiest reporting weeks of the month. Unless there are some big negative surprises, one can reasonably expect markets to simply glide along until the Fed meeting at the end of October, when another 25 basis point cut in the federal funds rate is expected.
At the Close, Tuesday, October 22, 2019:
Dow Jones Industrial Average: 26,788.10, -39.54 (-0.15%)
NASDAQ: 8,104.30, -58.69 (-0.72%)
S&P 500: 2,995.99, -10.73 (-0.36%)
NYSE Composite: 13,071.86, -16.76 (-0.13%)
Monday, September 30, 2019
WEEKEND WRAP: Despite Impeachment Overhang, Wall Street Is Oddly Calm
By midweek, political events had overtaken actual financial news and numbers as House Democrats turned up the heat on yet another attempt to impeach President Trump.
People with intact frontal lobes understand that the Democrats have once again fabricated the "crime" committed by President Trump. Still, the mainstream mass media complex cannot help itself from flailing about furiously at the behest of their liberal handlers. Would the media actually be impartial, this farcical drama - and the Mueller investigation that yielded nothing - would never even see the light of day.
It's further proof that most Democrats in the House have nothing constructive to add to the national debate other than outsized hatred for President Trump and all of his millions of supporters. If there is justice in this insane world, the Democrats will be outed, joe Biden's son, Hunter, will be tried, convicted and imprisoned, and the Democrat party will implode entirely in the aftermath of a massive Trump landslide.
That's for the future to tell. For the present, Wall Street would rather focus on facts, reality, data, and numbers. Third quarter results for traded corporations will begin rolling out next week. Prior to that, September non-farm payroll data will be released on Friday of this week. Whether traders and speculators can divorce themselves from the kabuki theater that is Washington DC long enough to focus on true economic data is the big question. Fast-moving headlines pushing the impeachment narrative will be difficult to ignore in coming days.
For whatever it's worth, the US economy may not be exactly a juggernaut of capitalist endeavor, it is, however, firing on all cylinders, albeit at a slow pace. By the end of October the world will have the first estimate of third quarter GDP, a number that should make headlines, whether it is good (above 2.5%) or bad (below 2.0%). Anything in the range of 2.2-3.0% will be considered a win for the economy (and President Trump), while across the pond, Europe teeters on the brink of recession.
Also on the horizon is quietude from the Federal Reserve, as the next FOMC meeting is scheduled for October 29-30. Thus, the next possible federal funds rate cut will only be under consideration and newsworthy the last two weeks of the coming month. Should economic data and corporate third quarter earnings reports come in positively there would be a rationale for the Fed to just keep rates where they are. The economy isn't struggling, jobs seem to be still plentiful and inflation fears have been kept in check. The few scenarios under which a rate cut could be considered are, at this juncture, unlikely, including a banking blowup, or taking the impeachment folly as serious.
With all that could go wrong, the world continued to turn following the attack on Saudi oil installments a few weeks back. President Trump tactfully pulled the United States back from the brink of escalation against Iran, instead opting for increased sanctions and a peaceful resolution to never-ending mid-East fanaticism and the associated war-mongering by elements in the US and Israel.
Oil, the lifeblood of the global economy, retreated as the situation de-escalated, and may actually fall below $50 per barrel as winter season looms.
Bonds seem to have found a sweet spot, despite the continued inversion of the 3-month:10-year pair, with the 10-year settling into a range between 1.55 and 1.75%. Should that range prevail over the coming weeks and months, clear sailing for the US economy may be a prudent call. While stocks, still somewhat overvalued, continue to flirt with all-time levels, the NASDAQ notably took the brunt of the selling from last week. That's probably a positive, since the NASDAQ contains some of the more pricey shares of tech companies that may need to be tamped down.
Conclusively, the week was far short of either a disaster or a rousing rally. Could it be, for a change, that the most sane place on the planet was lower Manhattan?
These are indeed strange days.
At the Close, Friday, September 27, 2019:
Dow Jones Industrial Average: 26,820.25, -70.85 (-0.26%)
NASDAQ: 7,939.63, -91.03 (-1.13%)
S&P 500: 2,961.79, -15.83 (-0.53%)
NYSE Composite: 12,971.98, -56.72 (-0.44%)
For the Week:
Dow: -114.82 (-0.43%)
NASDAQ: -178.05 (-2.19%)
S&P 500: -30.28 (-1.01%)
NYSE Composite: -121.82 (-0.93%)
People with intact frontal lobes understand that the Democrats have once again fabricated the "crime" committed by President Trump. Still, the mainstream mass media complex cannot help itself from flailing about furiously at the behest of their liberal handlers. Would the media actually be impartial, this farcical drama - and the Mueller investigation that yielded nothing - would never even see the light of day.
It's further proof that most Democrats in the House have nothing constructive to add to the national debate other than outsized hatred for President Trump and all of his millions of supporters. If there is justice in this insane world, the Democrats will be outed, joe Biden's son, Hunter, will be tried, convicted and imprisoned, and the Democrat party will implode entirely in the aftermath of a massive Trump landslide.
That's for the future to tell. For the present, Wall Street would rather focus on facts, reality, data, and numbers. Third quarter results for traded corporations will begin rolling out next week. Prior to that, September non-farm payroll data will be released on Friday of this week. Whether traders and speculators can divorce themselves from the kabuki theater that is Washington DC long enough to focus on true economic data is the big question. Fast-moving headlines pushing the impeachment narrative will be difficult to ignore in coming days.
For whatever it's worth, the US economy may not be exactly a juggernaut of capitalist endeavor, it is, however, firing on all cylinders, albeit at a slow pace. By the end of October the world will have the first estimate of third quarter GDP, a number that should make headlines, whether it is good (above 2.5%) or bad (below 2.0%). Anything in the range of 2.2-3.0% will be considered a win for the economy (and President Trump), while across the pond, Europe teeters on the brink of recession.
Also on the horizon is quietude from the Federal Reserve, as the next FOMC meeting is scheduled for October 29-30. Thus, the next possible federal funds rate cut will only be under consideration and newsworthy the last two weeks of the coming month. Should economic data and corporate third quarter earnings reports come in positively there would be a rationale for the Fed to just keep rates where they are. The economy isn't struggling, jobs seem to be still plentiful and inflation fears have been kept in check. The few scenarios under which a rate cut could be considered are, at this juncture, unlikely, including a banking blowup, or taking the impeachment folly as serious.
With all that could go wrong, the world continued to turn following the attack on Saudi oil installments a few weeks back. President Trump tactfully pulled the United States back from the brink of escalation against Iran, instead opting for increased sanctions and a peaceful resolution to never-ending mid-East fanaticism and the associated war-mongering by elements in the US and Israel.
Oil, the lifeblood of the global economy, retreated as the situation de-escalated, and may actually fall below $50 per barrel as winter season looms.
Bonds seem to have found a sweet spot, despite the continued inversion of the 3-month:10-year pair, with the 10-year settling into a range between 1.55 and 1.75%. Should that range prevail over the coming weeks and months, clear sailing for the US economy may be a prudent call. While stocks, still somewhat overvalued, continue to flirt with all-time levels, the NASDAQ notably took the brunt of the selling from last week. That's probably a positive, since the NASDAQ contains some of the more pricey shares of tech companies that may need to be tamped down.
Conclusively, the week was far short of either a disaster or a rousing rally. Could it be, for a change, that the most sane place on the planet was lower Manhattan?
These are indeed strange days.
At the Close, Friday, September 27, 2019:
Dow Jones Industrial Average: 26,820.25, -70.85 (-0.26%)
NASDAQ: 7,939.63, -91.03 (-1.13%)
S&P 500: 2,961.79, -15.83 (-0.53%)
NYSE Composite: 12,971.98, -56.72 (-0.44%)
For the Week:
Dow: -114.82 (-0.43%)
NASDAQ: -178.05 (-2.19%)
S&P 500: -30.28 (-1.01%)
NYSE Composite: -121.82 (-0.93%)
Tuesday, July 10, 2018
Stock Investors Taking Advantage Of Calm Conditions
So much for summer doldrums.
In the first six trading days of July, the Dow Industrials have tacked on a hefty 648 points, leading many to begin believing that the minor correction from February was just that, minor, and now stocks are ready to be bought again nilly-willy. There has been only one negative close for the Dow this month and that came on the shortened session on the Tuesday prior to the Independence Day holiday.
For the past few days, an odd dynamic has taken place, with the Dow leading the other indices - especially out-performing the NASDAQ - which may be signaling a reversal from the prior three months. This change probably has little to do with the recent favorite whipping-boy: tariffs, but, there is the possibility that after closer analysis, many of the Dow stocks may be in position to benefit.
This is at least what seems to be occurring, though another possibility is that NASDAQ stocks have been overbought while the Dow was being oversold, thus the change in positions.
Whatever the case, investors in blue chips have been enjoying excellent gains and nobody is going to complain about that. With earnings about to take center stage in the Wall Street drama, Dow stocks may continue to rise, given optimistic projections for second quarter GDP and the part Dow stocks have played in this mini-rally.
Realistically, geopolitics have calmed for the time being, though under the surface there are relevant issues, not the least of which being England's struggle with post-Brexit negotiations, which has left Prime Minister Teresa May in quite the quandary.
May is promising a "soft Brexit" plan, due to be announced on Thursday via a white paper outlining the plan. Whatever May offers is sure to anger many and placate few, as nobody appears to be happy with half-measures, which has been the norm since the vote to leave the European Union two years ago. Not much has changed on the island nation and the process has been slow, disorderly, and generally lacking direction.
Look for the story to take on new life later in the week.
Back in the United States, President Trump seems to have thwarted almost all of his opponents, especially the ill-concieved Mueller investigation into Russia collusion in the 2016 presidential election. The entire affair is nothing but a complete farce, and the tide has turned against the special prosecutor and any friends he many have left in the deep state, liberal, leftist, obstructionist Democrats in congress.
With mid-term elections less than four months ahead, desperate Democrats have tried every conceivable attack on Trump and have come up empty-handed, even with a compliant press corps which seems also intent on demonizing Mr. Trump.
Meanwhile, some tariffs have already gone into effect, though the real implications are unlikely to be felt for some time, giving traders, fund managers and speculators ample time to play whatever games they feel fit to capture gains in this see-saw market.
If there is trouble ahead, it hasn't yet materialized, as unemployment remains low and the economy continues to show nascent signs of improvement. Inflation also has not truly had much effect, though the Federal Reserve's simultaneous deleveraging and rate hiking could cause significant problems.
For now, the market is maintaining a good demeanor and bonds are behaving, despite the ever-flattening yield curve. 2s-10s persist at 28 basis points, while 5s-10s and 10s-30s each sport a decade-low 10 basis point spread.
The summer may turn out to be one of pleasant recreation, though veteran traders and market analysts should be always vigilant for abrupt changes in sentiment.
Right now, it's smooth sailing and everybody's along for the ride.
Dow Jones Industrial Average July Scorecard:
At the Close, Tuesday, July 10, 2018:
Dow Jones Industrial Average: 24,919.66, +143.07 (+0.58%)
NASDAQ: 7,759.20, +3.00 (+0.04%)
S&P 500: 2,793.84, +9.67 (+0.35%)
NYSE Composite: 12,814.64, +37.71 (+0.30%)
In the first six trading days of July, the Dow Industrials have tacked on a hefty 648 points, leading many to begin believing that the minor correction from February was just that, minor, and now stocks are ready to be bought again nilly-willy. There has been only one negative close for the Dow this month and that came on the shortened session on the Tuesday prior to the Independence Day holiday.
For the past few days, an odd dynamic has taken place, with the Dow leading the other indices - especially out-performing the NASDAQ - which may be signaling a reversal from the prior three months. This change probably has little to do with the recent favorite whipping-boy: tariffs, but, there is the possibility that after closer analysis, many of the Dow stocks may be in position to benefit.
This is at least what seems to be occurring, though another possibility is that NASDAQ stocks have been overbought while the Dow was being oversold, thus the change in positions.
Whatever the case, investors in blue chips have been enjoying excellent gains and nobody is going to complain about that. With earnings about to take center stage in the Wall Street drama, Dow stocks may continue to rise, given optimistic projections for second quarter GDP and the part Dow stocks have played in this mini-rally.
Realistically, geopolitics have calmed for the time being, though under the surface there are relevant issues, not the least of which being England's struggle with post-Brexit negotiations, which has left Prime Minister Teresa May in quite the quandary.
May is promising a "soft Brexit" plan, due to be announced on Thursday via a white paper outlining the plan. Whatever May offers is sure to anger many and placate few, as nobody appears to be happy with half-measures, which has been the norm since the vote to leave the European Union two years ago. Not much has changed on the island nation and the process has been slow, disorderly, and generally lacking direction.
Look for the story to take on new life later in the week.
Back in the United States, President Trump seems to have thwarted almost all of his opponents, especially the ill-concieved Mueller investigation into Russia collusion in the 2016 presidential election. The entire affair is nothing but a complete farce, and the tide has turned against the special prosecutor and any friends he many have left in the deep state, liberal, leftist, obstructionist Democrats in congress.
With mid-term elections less than four months ahead, desperate Democrats have tried every conceivable attack on Trump and have come up empty-handed, even with a compliant press corps which seems also intent on demonizing Mr. Trump.
Meanwhile, some tariffs have already gone into effect, though the real implications are unlikely to be felt for some time, giving traders, fund managers and speculators ample time to play whatever games they feel fit to capture gains in this see-saw market.
If there is trouble ahead, it hasn't yet materialized, as unemployment remains low and the economy continues to show nascent signs of improvement. Inflation also has not truly had much effect, though the Federal Reserve's simultaneous deleveraging and rate hiking could cause significant problems.
For now, the market is maintaining a good demeanor and bonds are behaving, despite the ever-flattening yield curve. 2s-10s persist at 28 basis points, while 5s-10s and 10s-30s each sport a decade-low 10 basis point spread.
The summer may turn out to be one of pleasant recreation, though veteran traders and market analysts should be always vigilant for abrupt changes in sentiment.
Right now, it's smooth sailing and everybody's along for the ride.
Dow Jones Industrial Average July Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 7/2/18 | 24,307.18 | +35.77 | +35.77 |
| 7/3/18 | 24,174.82 | -132.36 | -96.59 |
| 7/5/18 | 24,345.44 | +181.92 | +85.33 |
| 7/6/18 | 24,456.48 | +99.74 | +185.07 |
| 7/9/18 | 24,776.59 | +320.11 | +505.18 |
| 7/10/18 | 24,919.66 | +143.07 | +648.25 |
At the Close, Tuesday, July 10, 2018:
Dow Jones Industrial Average: 24,919.66, +143.07 (+0.58%)
NASDAQ: 7,759.20, +3.00 (+0.04%)
S&P 500: 2,793.84, +9.67 (+0.35%)
NYSE Composite: 12,814.64, +37.71 (+0.30%)
Tuesday, April 24, 2018
Stocks Tumble As Investors Flee Overvalued Stocks
Today was yet another example of the kind of days which are typical in a bear market, and make no mistake, this is the early phase of what could become a raging bear which will strip stocks of 40-60% of their valuations. Stocks were higher in the early trading and slumped in the afternoon, with the Dow Industrials closing at its lowest level in three weeks.
With today's losses, the Dow has plunged into negative territory for the month, following back-to-back declines for February and March. Even earning reports are not enough to keep stocks elevated, especially after Alphabet (parent of Google, GOOG) posted what appeared to be strong numbers only to reveal increasing expenses, crushing profit margins.
Dow component 3M (MMM) led the decline after posting earnings per share of $2.50, which missed analyst estimates of $2.52, and were 16% higher than the $2.16 posted in the year-ago period. The stock was blasted, losing 14.77 points (-6.84%) to end the day at 201.11.
Caterpillar was close behind in the loss column, down -9.80 points (-6.36%).
Alphabet dropped a stunning -47.47 (-4.45%) to close out the session at 1,019.98.
Only six of 30 Dow stocks managed gains on the day. The NASDAQ and other major indices were also badly damaged.
The prevailing trend this earnings season has been that whatever a company posts, it's probably not good enough for anybody seeking to get out of a position, as risk aversion has suddenly become popular once again, especially with yields on the ten-year-note approaching three percent and precious metals (gold, silver) at bargain basement prices.
Dow Jones Industrial Average April Scorecard:
At the Close, Tuesday, April 24, 2018:
Dow Jones Industrial Average: 24,024.13, -424.56 (-1.74%)
NASDAQ: 7,007.35, -121.25 (-1.70%)
S&P 500: 2,634.56, -35.73 (-1.34%)
NYSE Composite: 12,513.91, -96.87 (-0.77%)
With today's losses, the Dow has plunged into negative territory for the month, following back-to-back declines for February and March. Even earning reports are not enough to keep stocks elevated, especially after Alphabet (parent of Google, GOOG) posted what appeared to be strong numbers only to reveal increasing expenses, crushing profit margins.
Dow component 3M (MMM) led the decline after posting earnings per share of $2.50, which missed analyst estimates of $2.52, and were 16% higher than the $2.16 posted in the year-ago period. The stock was blasted, losing 14.77 points (-6.84%) to end the day at 201.11.
Caterpillar was close behind in the loss column, down -9.80 points (-6.36%).
Alphabet dropped a stunning -47.47 (-4.45%) to close out the session at 1,019.98.
Only six of 30 Dow stocks managed gains on the day. The NASDAQ and other major indices were also badly damaged.
The prevailing trend this earnings season has been that whatever a company posts, it's probably not good enough for anybody seeking to get out of a position, as risk aversion has suddenly become popular once again, especially with yields on the ten-year-note approaching three percent and precious metals (gold, silver) at bargain basement prices.
Dow Jones Industrial Average April Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 4/2/18 | 23,644.19 | -458.92 | -458.92 |
| 4/3/18 | 24,033.36 | +389.17 | -69.75 |
| 4/4/18 | 24,264.30 | +230.94 | +161.19 |
| 4/5/18 | 24,505.22 | +240.92 | +402.11 |
| 4/6/18 | 23,932.76 | -572.46 | -170.35 |
| 4/9/18 | 23,979.10 | +46.34 | -134.01 |
| 4/10/18 | 24,407.86 | +428.76 | +294.66 |
| 4/11/18 | 24,189.45 | -218.55 | +76.11 |
| 4/12/18 | 24,483.05 | +293.60 | +369.71 |
| 4/13/18 | 24,360.14 | -122.91 | +247.80 |
| 4/16/18 | 24,573.04 | +212.90 | +460.70 |
| 4/17/18 | 24,786.63 | +213.59 | +674.29 |
| 4/18/18 | 24,748.07 | -38.56 | +635.73 |
| 4/19/18 | 24,664.89 | -83.18 | +552.55 |
| 4/20/18 | 24,462.94 | -201.95 | +350.60 |
| 4/23/18 | 24,448.69 | -14.25 | +336.35 |
| 4/24/18 | 24,024.13 | -424.56 | -88.21 |
At the Close, Tuesday, April 24, 2018:
Dow Jones Industrial Average: 24,024.13, -424.56 (-1.74%)
NASDAQ: 7,007.35, -121.25 (-1.70%)
S&P 500: 2,634.56, -35.73 (-1.34%)
NYSE Composite: 12,513.91, -96.87 (-0.77%)
Monday, March 12, 2018
Troubling Midday Reversal Sends Dow Down Again
The roller coaster continues. Beginning February 1, there have been 27 trading days. Of those, on the Dow, 15 have finished positive, 12 negative. It's fair to say that this has been essentially a directionless market for nearly a month-and-a-half, unless one takes the view that it's the beginning stage of a greater, cyclical bear market.
The Dow Jones Industrial Average closed at 26,186.71 on February 1. Today's disappointing close was 25,178.61, a little short of an 1100 point decline, but barely a blip on a logarithmic chart, a mere four percent.
What's more troubling than the small decline over the past five weeks is the time it has taken for the Dow to recover, and it hasn't fully regained all of the losses.
The low point - 23,860.46 - was February 8, so the Dow has recovered more than 1400 points since then, but, for a market that until recently had been racking up wins faster than a track star on steroids, the performance of late has been a real disappointment.
While the main driver to the downside may be nothing more than simple overvaluation, that alone is a real problem which can only be fixed two ways: 1) higher profits (EPS), or; 2) lower price per share.
It appears that the trend-setters in market-land have chosen door number two, because, while there may be adequate rationale to take a positive view of the economy, stocks have pretty much priced themselves out of any further upside. Real earnings, from increased sales, sound management, new product cycles, higher profit margins - those things which exist in real economies - are not to be found in many mature companies these days. Easy credit and stock buybacks have boosted share prices by diminishing the number of shares outstanding, thus making earnings appear better because they are divided by fewer shares.
Essentially, Wall Street has been playing three-card monte with investors, buying back stock, enriching shareholders and executives while doing little to nothing to improve the business. Capital investment has been sullen for the past decade, and, if stocks begin to tailspin, don't look for companies to begin investing in better infrastructure, more R&D, or ramp up employment. The people running these companies read from the same playbook, and they're more likely to become more entrenched, slash costs and lay people off, a recipe for disaster and a longer downturn.
The next few trading days should be quite instructive as a short-term chart pattern is possibly emerging. A close above 25,709.27 (February 26) would signal a reversal from the downtrend. Anything approaching the interim low of 24,538.06 (March 2) could be cause for alarm, indicative of fourth declines.
At the end of all this is the FOMC meeting on March 20-21, at the end of which the Fed will likely announce another increase of 25 basis points to the federal funds rate, a move which will put the overnight lending rate at 1.50-1.75% and would be the fourth increase in the past 13 months. The Fed first raised rates off the "zero-bound" in December 2015, but moved cautiously, not raising again until December of 2016. Since then there have been three ore 25 basis point hikes, in March, June, and December of last year.
This expected hike could be one too many, and too soon. With the economy still doodling along at 2.3% for 2017, the Fed may be too far out in front of their inflation and expansion projections.
There is much to digest between today and the FOMC meeting, but it appears the Fed has already made up its mind.
At the Close, Monday, March 12, 2018:
Dow Jones Industrial Average: 25,178.61, -157.13 (-0.62%)
NASDAQ: 7,588.32, +27.51 (+0.36%)
S&P 500: 2,783.02, -3.55 (-0.13%)
NYSE Composite: 12,898.40, -20.42 (-0.16%)
The Dow Jones Industrial Average closed at 26,186.71 on February 1. Today's disappointing close was 25,178.61, a little short of an 1100 point decline, but barely a blip on a logarithmic chart, a mere four percent.
What's more troubling than the small decline over the past five weeks is the time it has taken for the Dow to recover, and it hasn't fully regained all of the losses.
The low point - 23,860.46 - was February 8, so the Dow has recovered more than 1400 points since then, but, for a market that until recently had been racking up wins faster than a track star on steroids, the performance of late has been a real disappointment.
While the main driver to the downside may be nothing more than simple overvaluation, that alone is a real problem which can only be fixed two ways: 1) higher profits (EPS), or; 2) lower price per share.
It appears that the trend-setters in market-land have chosen door number two, because, while there may be adequate rationale to take a positive view of the economy, stocks have pretty much priced themselves out of any further upside. Real earnings, from increased sales, sound management, new product cycles, higher profit margins - those things which exist in real economies - are not to be found in many mature companies these days. Easy credit and stock buybacks have boosted share prices by diminishing the number of shares outstanding, thus making earnings appear better because they are divided by fewer shares.
Essentially, Wall Street has been playing three-card monte with investors, buying back stock, enriching shareholders and executives while doing little to nothing to improve the business. Capital investment has been sullen for the past decade, and, if stocks begin to tailspin, don't look for companies to begin investing in better infrastructure, more R&D, or ramp up employment. The people running these companies read from the same playbook, and they're more likely to become more entrenched, slash costs and lay people off, a recipe for disaster and a longer downturn.
The next few trading days should be quite instructive as a short-term chart pattern is possibly emerging. A close above 25,709.27 (February 26) would signal a reversal from the downtrend. Anything approaching the interim low of 24,538.06 (March 2) could be cause for alarm, indicative of fourth declines.
At the end of all this is the FOMC meeting on March 20-21, at the end of which the Fed will likely announce another increase of 25 basis points to the federal funds rate, a move which will put the overnight lending rate at 1.50-1.75% and would be the fourth increase in the past 13 months. The Fed first raised rates off the "zero-bound" in December 2015, but moved cautiously, not raising again until December of 2016. Since then there have been three ore 25 basis point hikes, in March, June, and December of last year.
This expected hike could be one too many, and too soon. With the economy still doodling along at 2.3% for 2017, the Fed may be too far out in front of their inflation and expansion projections.
There is much to digest between today and the FOMC meeting, but it appears the Fed has already made up its mind.
At the Close, Monday, March 12, 2018:
Dow Jones Industrial Average: 25,178.61, -157.13 (-0.62%)
NASDAQ: 7,588.32, +27.51 (+0.36%)
S&P 500: 2,783.02, -3.55 (-0.13%)
NYSE Composite: 12,898.40, -20.42 (-0.16%)
Tuesday, April 5, 2016
Fizzle, No Sizzle As Stocks Dump For Second Straight Session
Just maybe, somebody out there is reading the data rather than listening to the coo-cooing of Janet Yellen.
If so, somebody was in multiples on Tuesday, selling shares of just about everything as the Dow took a triple-digit loss, coming on the heels of Monday's sombre session.
Stocks backed off in a big way, with winners outpacing losers by a margin of better than 2:1. While the past two days may be nothing more than average market noise, there have been more voices of discontent airing their views of late, adding to the chorus of naysayers who say 23x earnings on the S&P is simply not sustainable, nor suitable for investment.
In an average environment, stocks should be sporting a 14-16 multiple. That has been the norm for the past 50 years, and there's sufficient data for which to back up those claims.
There is a possibility, albeit a minor one, that more than a few of the higher-profile analysts and brokers are quietly telling their clients that the market is overheating, especially at a time in which data points have not been particularly encouraging.
Add to the mix the recent decline in oil and the messy bond market (10-year note down again today), recent highs, and the conditions are ripe for a substantial decline.
What market-watchers gasped at in January of this year may be about to return. If that's the case, there's little the Fed can do - or say - to keep stocks at their current nosebleed levels.
They will try, though, that's for certain.
S&P 500: 2,045.17, -20.96 (1.01%)
Dow: 17,603.32, -133.68 (0.75%)
NASDAQ: 4,843.93, -47.86 (0.98%)
Crude Oil 36.47 +2.16% Gold 1,232.90 +1.12% EUR/USD 1.1382 -0.08% 10-Yr Bond 1.73 -2.92% Corn 355.75 +0.35% Copper 2.14 +0.12% Silver 15.14 +1.31% Natural Gas 1.94 -3.00% Russell 2000 1,095.85 -1.14% VIX 15.42 +9.21% BATS 1000 20,682.61 0.00% GBP/USD 1.4158 -0.77% USD/JPY 110.3350 -0.88%
If so, somebody was in multiples on Tuesday, selling shares of just about everything as the Dow took a triple-digit loss, coming on the heels of Monday's sombre session.
Stocks backed off in a big way, with winners outpacing losers by a margin of better than 2:1. While the past two days may be nothing more than average market noise, there have been more voices of discontent airing their views of late, adding to the chorus of naysayers who say 23x earnings on the S&P is simply not sustainable, nor suitable for investment.
In an average environment, stocks should be sporting a 14-16 multiple. That has been the norm for the past 50 years, and there's sufficient data for which to back up those claims.
There is a possibility, albeit a minor one, that more than a few of the higher-profile analysts and brokers are quietly telling their clients that the market is overheating, especially at a time in which data points have not been particularly encouraging.
Add to the mix the recent decline in oil and the messy bond market (10-year note down again today), recent highs, and the conditions are ripe for a substantial decline.
What market-watchers gasped at in January of this year may be about to return. If that's the case, there's little the Fed can do - or say - to keep stocks at their current nosebleed levels.
They will try, though, that's for certain.
S&P 500: 2,045.17, -20.96 (1.01%)
Dow: 17,603.32, -133.68 (0.75%)
NASDAQ: 4,843.93, -47.86 (0.98%)
Crude Oil 36.47 +2.16% Gold 1,232.90 +1.12% EUR/USD 1.1382 -0.08% 10-Yr Bond 1.73 -2.92% Corn 355.75 +0.35% Copper 2.14 +0.12% Silver 15.14 +1.31% Natural Gas 1.94 -3.00% Russell 2000 1,095.85 -1.14% VIX 15.42 +9.21% BATS 1000 20,682.61 0.00% GBP/USD 1.4158 -0.77% USD/JPY 110.3350 -0.88%
Thursday, May 23, 2013
US Stocks Reverse Early Losses; How Buy-Backs Distort Corporate Earnings; John Cleese Plays Merchant Banker
After yesterday's Fed comments, overnight, Japan got whipsawed, with the Nikkei down more than 7% on the session. Markets in Europe also tanked, but here in America, where any news is regarded as good, markets erased massive losses garnered out of the gate (Dow was down 127 points early in the session) and finished nearly flat, though the major indices finished in the red (not enough POMO, one assumes).
What a horrible joke this market continues to be. It is amazing and disgusting at the same time. No matter what, however, it will never go down until the big players deem it is time to do so, and, obviously, today was not that time.
Today brings more information about how the rally in equities has been manufactured by corporations buying back record amounts of stock and thusly skewing earnings reports, making them appear positive when they are nothing but figments of creative accounting.
For simplicity purposes, when a company buys back its own stock, it takes it out of circulation, lowering the number of shares by which earnings are gauged, i.e., EPS or "earnings per share."
So, if Corporation A has 1000 shares outstanding, and profits of $2000, their EPS is calculated thus, $2000 (earnings) divided by 1000 (shares) = $2.00 earnings per share.
When corporation A buys back 100 shares and actually does a little worse, with profits of $1900, this looks positive because EPS is up, because $1900 in earnings is now divided by just 900 shares, not 1000, so the resultant EPS is now $2.11, even though the company is actually shrinking.
This will only become a huge problem when people en masse realize that most corporate profits these days are nothing more than financial trickery, though that could be a long time coming, considering how 95% of America is financially illiterate.
Bottom line, this will eventually be a great thing for America, when the fraud and rot is finally rooted out, because most of these giant corporations will be nothing but hollowed out shells and real Americans can begin rebuilding a real economy.
Max Keiser has the rundown in today's edition of the Keiser Report:
Here's a a comment from ZH, that explains a simple philosophy of life (with a few edits) in response to a comment to this article:
Having wasted the time it took to read most of this article, I found your example to be most profound and gave you the second up arrow. If I could somehow bestow more "ups" I would, but the point is that the article bases the plight of an entire generation - X, in this case - on luck, timing and the evils of the "system."
The article, like most presented by CHS, is more socialist bullcrap and your comment proves him 100% wrong. Anyone with initiative and a little bit of smarts and some skills can become self-sufficient and perhapes even "wealthy" or prosperous, as is the ongoing discussion with MachoMan.
Here's how I define prosperous (for myself, and I think I'm the richest guy in the world): No debt, paid-in-full domicile, with enough land to grow enough food for 1/2 a year for self or family. Steady income stream, few, or no employees. Obviously, I run my own business.
There are many ways to make more money - and keep almost all of it out of the hands of the government leeches - than having a "job." A job or career is like a yoke around one's neck; one is forever tied to that particular skill set. When that skill set becomes antiquated or overtaken by technology, one immediately becomes lost. Those who do for themselves almost never reach this state; instead, they find new ways to do things, are constantly in search of better ways to escape the tyranny of the system. Stay in the system and your life gets ruled by it. You become a slave to debt, government or keeping up with your peers, any one of which will suck the life out of you.
Stop measuring success by money and you'll find a richness of life right in your own back yard. I strongly recommend reading anything by Gene Langsdon, but especially the Contrary Farmer's Invitation to Gardening. Lots of insight on life, living and growing stuff you can EAT.
As an aside, I broke up with a gal eight months ago who was totally materialistic, to whom nothing mattered except how much one made, how new one's car was and how many cool gadgets you had. Life is so much richer since I began reading Langsdon (last year) and left that simple-minded troll behind. (And, no, I'm not bitter. I am justified.)
Bottom line, ditch that dead-end job and become your own boss. Take some responsibility for your own life and stop whining. You'll feel better and might just thrive on your own.
Since it's only Thursday and the major indices are already staring at losses for the week, a bit of humor at the expense of bankers seems most appropriate, as in the clip below wherein Monty Python's John Cleese plays Merchant Banker.
Dow 15,294.50, -12.67 (0.08%)
NASDAQ 3,459.42, -3.88 (0.11%)
S&P 500 1,650.51, -4.84 (0.29%)
NYSE Composite 9,466.81, -41.24 (0.43%)
NASDAQ Volume 1,720,003,000
NYSE Volume 4,272,195,500
Combined NYSE & NASDAQ Advance - Decline: 2807-3659
Combined NYSE & NASDAQ New highs - New lows: 85-59
WTI crude oil: 94.25, -0.03
Gold: 1,391.80, +24.40
Silver: 22.51, 0.036
What a horrible joke this market continues to be. It is amazing and disgusting at the same time. No matter what, however, it will never go down until the big players deem it is time to do so, and, obviously, today was not that time.
Today brings more information about how the rally in equities has been manufactured by corporations buying back record amounts of stock and thusly skewing earnings reports, making them appear positive when they are nothing but figments of creative accounting.
For simplicity purposes, when a company buys back its own stock, it takes it out of circulation, lowering the number of shares by which earnings are gauged, i.e., EPS or "earnings per share."
So, if Corporation A has 1000 shares outstanding, and profits of $2000, their EPS is calculated thus, $2000 (earnings) divided by 1000 (shares) = $2.00 earnings per share.
When corporation A buys back 100 shares and actually does a little worse, with profits of $1900, this looks positive because EPS is up, because $1900 in earnings is now divided by just 900 shares, not 1000, so the resultant EPS is now $2.11, even though the company is actually shrinking.
This will only become a huge problem when people en masse realize that most corporate profits these days are nothing more than financial trickery, though that could be a long time coming, considering how 95% of America is financially illiterate.
Bottom line, this will eventually be a great thing for America, when the fraud and rot is finally rooted out, because most of these giant corporations will be nothing but hollowed out shells and real Americans can begin rebuilding a real economy.
Max Keiser has the rundown in today's edition of the Keiser Report:
Here's a a comment from ZH, that explains a simple philosophy of life (with a few edits) in response to a comment to this article:
Having wasted the time it took to read most of this article, I found your example to be most profound and gave you the second up arrow. If I could somehow bestow more "ups" I would, but the point is that the article bases the plight of an entire generation - X, in this case - on luck, timing and the evils of the "system."
The article, like most presented by CHS, is more socialist bullcrap and your comment proves him 100% wrong. Anyone with initiative and a little bit of smarts and some skills can become self-sufficient and perhapes even "wealthy" or prosperous, as is the ongoing discussion with MachoMan.
Here's how I define prosperous (for myself, and I think I'm the richest guy in the world): No debt, paid-in-full domicile, with enough land to grow enough food for 1/2 a year for self or family. Steady income stream, few, or no employees. Obviously, I run my own business.
There are many ways to make more money - and keep almost all of it out of the hands of the government leeches - than having a "job." A job or career is like a yoke around one's neck; one is forever tied to that particular skill set. When that skill set becomes antiquated or overtaken by technology, one immediately becomes lost. Those who do for themselves almost never reach this state; instead, they find new ways to do things, are constantly in search of better ways to escape the tyranny of the system. Stay in the system and your life gets ruled by it. You become a slave to debt, government or keeping up with your peers, any one of which will suck the life out of you.
Stop measuring success by money and you'll find a richness of life right in your own back yard. I strongly recommend reading anything by Gene Langsdon, but especially the Contrary Farmer's Invitation to Gardening. Lots of insight on life, living and growing stuff you can EAT.
As an aside, I broke up with a gal eight months ago who was totally materialistic, to whom nothing mattered except how much one made, how new one's car was and how many cool gadgets you had. Life is so much richer since I began reading Langsdon (last year) and left that simple-minded troll behind. (And, no, I'm not bitter. I am justified.)
Bottom line, ditch that dead-end job and become your own boss. Take some responsibility for your own life and stop whining. You'll feel better and might just thrive on your own.
Since it's only Thursday and the major indices are already staring at losses for the week, a bit of humor at the expense of bankers seems most appropriate, as in the clip below wherein Monty Python's John Cleese plays Merchant Banker.
Dow 15,294.50, -12.67 (0.08%)
NASDAQ 3,459.42, -3.88 (0.11%)
S&P 500 1,650.51, -4.84 (0.29%)
NYSE Composite 9,466.81, -41.24 (0.43%)
NASDAQ Volume 1,720,003,000
NYSE Volume 4,272,195,500
Combined NYSE & NASDAQ Advance - Decline: 2807-3659
Combined NYSE & NASDAQ New highs - New lows: 85-59
WTI crude oil: 94.25, -0.03
Gold: 1,391.80, +24.40
Silver: 22.51, 0.036
Friday, October 19, 2012
Reality Catching Up to Wall Street on Earnings Misses, Fears
Around June, this author told a particularly self-absorbed, furtive individual that there would be a market "event" shortly before the presidential election, designed to offer the impression that the economy, under president Obama, was failing in multitudinous ways, designed to usher in Mitt Romney as the next occupant of the White House.
Until today, that prediction seemed somewhat unreasonable, as stocks have risen sharply during the summer months, but, as third quarter earnings - in addition to various warnings from the likes of the IMF and World Bank - are proving, the US and global economies are far from what anyone would consider healthy.
Today's sharp sell-off was the product of many misses and warnings by huge multi-national companies that either missed earnings and/or revenue estimates or issued warnings for the months ahead.
Among those companies that fell short of Wall Street's lowered estimates after Thursday's close and prior to Friday's open were McDonald's (MCD), Microsoft (MSFT), Google (GOOG), high-flying Chipolte Mexican Grill (CMG), and General Electric (GE). The misses came behind similar poor showings from Intel (hit a 52-week low today) and IBM, earlier in the week and proved quite a few sell-side analysts correct in predicting that this quarter would be very rough from an earnings perspective.
Truth be told, even those companies beating earnings estimates are not beating by much, with some exceptions, and are generally hitting targets that are lower than the previous years numbers, which, as the market is a continuous-discounting mechanism, means stocks are going in reverse, with earnings falling, not growing.
That alone should explain today's deep, across-the-board, declines, but also brings into question the entire philosophy behind central bank easing and money printing on a global scale. Sure enough, easy money has propped up banks and companies and a multitude of stocks and indices, but the end result of funny fiat money always reverts to a point at which currencies become worthless and derivative instruments, such as stocks, and, further out, bonds, lose value and we could be nearing the conclusion of the failed stimulative experiment that's fixed nothing since the crash of 2008.
Speaking of crashes, today's drop pales by comparison to what occurred 25 years ago to the day, the well-known stock market crash of 1987, when the Dow Jones Industrial Average fell by 23%. It was a seminal market event that will probably (hopefully) never be repeated, as there are supposedly more safeguards and triggers - to say nothing of the PPT - to prevent such a disastrous one-day event.
That is not to say that markets, stocks and indices cannot fall hard over periods of time, though it is far too soon to call today's action the beginning of such a a downward spiral. However, with tech stocks and industrials feeling the heat from investors in an earnings season that has been short on enthusiasm and long on fear, the coming weeks, especially with the November elections as a backdrop, could produce some calamities such as have already been seen in individual stocks, many of which were grossly overvalued and highly speculative, Chipolte and Apple come immediately to mind.
Checking the charts, it's useful to point out that the Dow and S&P broke through their 50-day moving averages and closed just about right on them, a position last seen a week ago, before Monday and Tuesday's "savior" rallies pushed equities back to something of a triple top, which has now broken down in a dramatic reversal. Today's declines on the two indices were the worst since mid-June. Shortly thereafter, both indices progressed above their 50-day MA, but have now returned to the roost, setting up a very unsettling weekend and a potential breakdown on Monday or further on during the week.
As for the NASDAQ, today's worst percentage loser, that index has been screaming red for a month, having busted through its 50-day MA eight sessions ago. Any further deterioration in the beloved NAZ could trigger a serious correction, as it is already down 7% in the past month.
Looking ahead to next week, earnings reports are due out on some big names, such as Cattepillar (CAT), Las Vegas Sands (LVS), Yahoo (YHOO) and Texas Instruments (TXN) on Monday; 3M (MMM), Coach (COH), Facebook (FB) and United Parcel Service (UPS) on Tuesday; and, on Wednesday, Boeing (BA), Eli Lilly (LLY), General Dynamics (GD), Lockheed Martin (LMT) and O'Reilly Automotive (ORLY).
Those mentioned above are but a smattering of companies reporting, in what will be the busiest week of earnings season. CNBC and Bloomberg will be looking for rays of hope, while investors may have a more wary eye toward more companies missing on earnings and revenue.
One economic data point worth noting was existing home sales for September, falling 1.7% to an annual run rate of 4.75 million, well below most estimates.
Until then, the long weekend waiting game, and, on Monday night, the final presidential debate, followed on Wednesday another FOMC rate policy decision, which will probably be nothing more than a formality.
Naturally, there will be the usual can-kicking and posturing from Europe, which still cannot come up with plans for either Greece or Spain, which may or may not be part of the plan to hold off the bad news until after our elections. One can hardly wait.
That is all... for now.
Dow 13,343.51, -205.43 (1.52%)
NASDAQ 3,005.62, -67.25 (2.19%)
S&P 500 1,433.19, -24.15 (1.66%)
NYSE Composite 8,324.14, -118.68 (1.41%)
NASDAQ Volume 2,194,602,500.00
NYSE Volume 3,851,036,250
Combined NYSE & NASDAQ Advance - Decline: 1168-4339
Combined NYSE & NASDAQ New highs - New lows: 166-117
WTI crude oil: 90.05, -2.05
Gold: 1,724.00, -20.70
Silver: 32.10, -0.771
Until today, that prediction seemed somewhat unreasonable, as stocks have risen sharply during the summer months, but, as third quarter earnings - in addition to various warnings from the likes of the IMF and World Bank - are proving, the US and global economies are far from what anyone would consider healthy.
Today's sharp sell-off was the product of many misses and warnings by huge multi-national companies that either missed earnings and/or revenue estimates or issued warnings for the months ahead.
Among those companies that fell short of Wall Street's lowered estimates after Thursday's close and prior to Friday's open were McDonald's (MCD), Microsoft (MSFT), Google (GOOG), high-flying Chipolte Mexican Grill (CMG), and General Electric (GE). The misses came behind similar poor showings from Intel (hit a 52-week low today) and IBM, earlier in the week and proved quite a few sell-side analysts correct in predicting that this quarter would be very rough from an earnings perspective.
Truth be told, even those companies beating earnings estimates are not beating by much, with some exceptions, and are generally hitting targets that are lower than the previous years numbers, which, as the market is a continuous-discounting mechanism, means stocks are going in reverse, with earnings falling, not growing.
That alone should explain today's deep, across-the-board, declines, but also brings into question the entire philosophy behind central bank easing and money printing on a global scale. Sure enough, easy money has propped up banks and companies and a multitude of stocks and indices, but the end result of funny fiat money always reverts to a point at which currencies become worthless and derivative instruments, such as stocks, and, further out, bonds, lose value and we could be nearing the conclusion of the failed stimulative experiment that's fixed nothing since the crash of 2008.
Speaking of crashes, today's drop pales by comparison to what occurred 25 years ago to the day, the well-known stock market crash of 1987, when the Dow Jones Industrial Average fell by 23%. It was a seminal market event that will probably (hopefully) never be repeated, as there are supposedly more safeguards and triggers - to say nothing of the PPT - to prevent such a disastrous one-day event.
That is not to say that markets, stocks and indices cannot fall hard over periods of time, though it is far too soon to call today's action the beginning of such a a downward spiral. However, with tech stocks and industrials feeling the heat from investors in an earnings season that has been short on enthusiasm and long on fear, the coming weeks, especially with the November elections as a backdrop, could produce some calamities such as have already been seen in individual stocks, many of which were grossly overvalued and highly speculative, Chipolte and Apple come immediately to mind.
Checking the charts, it's useful to point out that the Dow and S&P broke through their 50-day moving averages and closed just about right on them, a position last seen a week ago, before Monday and Tuesday's "savior" rallies pushed equities back to something of a triple top, which has now broken down in a dramatic reversal. Today's declines on the two indices were the worst since mid-June. Shortly thereafter, both indices progressed above their 50-day MA, but have now returned to the roost, setting up a very unsettling weekend and a potential breakdown on Monday or further on during the week.
As for the NASDAQ, today's worst percentage loser, that index has been screaming red for a month, having busted through its 50-day MA eight sessions ago. Any further deterioration in the beloved NAZ could trigger a serious correction, as it is already down 7% in the past month.
Looking ahead to next week, earnings reports are due out on some big names, such as Cattepillar (CAT), Las Vegas Sands (LVS), Yahoo (YHOO) and Texas Instruments (TXN) on Monday; 3M (MMM), Coach (COH), Facebook (FB) and United Parcel Service (UPS) on Tuesday; and, on Wednesday, Boeing (BA), Eli Lilly (LLY), General Dynamics (GD), Lockheed Martin (LMT) and O'Reilly Automotive (ORLY).
Those mentioned above are but a smattering of companies reporting, in what will be the busiest week of earnings season. CNBC and Bloomberg will be looking for rays of hope, while investors may have a more wary eye toward more companies missing on earnings and revenue.
One economic data point worth noting was existing home sales for September, falling 1.7% to an annual run rate of 4.75 million, well below most estimates.
Until then, the long weekend waiting game, and, on Monday night, the final presidential debate, followed on Wednesday another FOMC rate policy decision, which will probably be nothing more than a formality.
Naturally, there will be the usual can-kicking and posturing from Europe, which still cannot come up with plans for either Greece or Spain, which may or may not be part of the plan to hold off the bad news until after our elections. One can hardly wait.
That is all... for now.
Dow 13,343.51, -205.43 (1.52%)
NASDAQ 3,005.62, -67.25 (2.19%)
S&P 500 1,433.19, -24.15 (1.66%)
NYSE Composite 8,324.14, -118.68 (1.41%)
NASDAQ Volume 2,194,602,500.00
NYSE Volume 3,851,036,250
Combined NYSE & NASDAQ Advance - Decline: 1168-4339
Combined NYSE & NASDAQ New highs - New lows: 166-117
WTI crude oil: 90.05, -2.05
Gold: 1,724.00, -20.70
Silver: 32.10, -0.771
Monday, October 8, 2012
Markets Close Down 17th Time in Last 19 Mondays
The headline says all you need to know.
Stocks spent the entire day languishing in a narrow, negative range, on really ugly volume (it was, after all, a (half)holiday, Columbus Day), but pared early losses to finish marginally down, except for the NASDAQ, which was dragged down considerably by Apple (AAPL).
Other than the usual Monday blues, there was no economic data to report as traders await third quarter earnings reports, which will be kicked off by Alcoa (AA) Tuesday after the bell.
There's some noise coming from Europe, which may not be all good. The first meeting of the ESM was today, though the ministers spent most of the time arguing about just how big Europe's main bailout fund should be.
Here's a clue for them all: whatever you decide on, it will not be enough.
Dow 13,583.65, -26.50 (0.19%)
NASDAQ 3,112.35, -23.84 (0.76%)
S&P 500 1,455.88, -5.05 (0.35%)
NYSE Composite 8,358.86, -25.21 (0.30%)
NASDAQ Volume 1,173,675,250
NYSE Volume 2,305,869,000
Combined NYSE & NASDAQ Advance - Decline: 2020-3386
Combined NYSE & NASDAQ New highs - New lows: 174-51
WTI crude oil: 89.33, -0.55
Gold: 1,775.70, -5.10
Silver: 34.02, -0.555
Stocks spent the entire day languishing in a narrow, negative range, on really ugly volume (it was, after all, a (half)holiday, Columbus Day), but pared early losses to finish marginally down, except for the NASDAQ, which was dragged down considerably by Apple (AAPL).
Other than the usual Monday blues, there was no economic data to report as traders await third quarter earnings reports, which will be kicked off by Alcoa (AA) Tuesday after the bell.
There's some noise coming from Europe, which may not be all good. The first meeting of the ESM was today, though the ministers spent most of the time arguing about just how big Europe's main bailout fund should be.
Here's a clue for them all: whatever you decide on, it will not be enough.
Dow 13,583.65, -26.50 (0.19%)
NASDAQ 3,112.35, -23.84 (0.76%)
S&P 500 1,455.88, -5.05 (0.35%)
NYSE Composite 8,358.86, -25.21 (0.30%)
NASDAQ Volume 1,173,675,250
NYSE Volume 2,305,869,000
Combined NYSE & NASDAQ Advance - Decline: 2020-3386
Combined NYSE & NASDAQ New highs - New lows: 174-51
WTI crude oil: 89.33, -0.55
Gold: 1,775.70, -5.10
Silver: 34.02, -0.555
Thursday, July 22, 2010
Stocks Explode to Upside on Earnings
Well, apparently whatever it was that Ben Bernanke said on Wednesday to the Senate Committee, spooking the markets into an immediate and swift pullback, was not all that important because prior to the opening bell three Dow components - 3M (MMM), AT&T (T) and Caterpillar (CAT) - released second quarter earnings above expectations and sent stocks off to a roaring start.
The enthusiasm for equities was not in the least tempered by higher initial unemployment claims, which came in at 464,000, well ahead of last week's 427,000. So long as companies were turning sizable profits, nothing was holding back investors from buying.
Even existing home sales being down 5.1% for June or the Index of Leading Indicators dipping 0.2% had no effect on the rush to buy into the good news from corporate earnings.
Dow 10,322.30, +201.77 (1.99%)
NASDAQ 2,245.89, +58.56 (2.68%)
S&P 500 1,093.67, +24.08 (2.25%)
NYSE Composite 6,901.91, +170.75 (2.54%)
Advancing issues reversed Wednesday's drubbing, leading decliners, 5498-1017, and new highs soared ahead of new lows, 278-82. On a day which held such unbridled enthusiasm, there were more new highs (46) on the NASDAQ than new highs (39), reversing a three-day counter-trend. Volume was roughly at the same level as the previous session, though for bulls, it was a positive sign.
NASDAQ Volume 2,264,130,750
NYSE Volume 5,504,649,500
Oil futures were really the big winner on the day, with the September contract rising $2.74, to $79.30, the basis for which was unknown. Gold and silver were ahead only slightly, with gold gaining $3.90, to $1,195.50, and silver up 32 cents, to $18.12.
Every sector showed positive results as earnings season finally produced some results on which traders could trust with their money.
Despite the high quality of earnings, the major indices have yet to break through their 200-day moving averages, which are providing fairly stiff resistance, though corporate earnings continue to defy economic indicators.
At some point, possibly as early as tomorrow, stocks should break out from their recent range, tossing aside the cockeyed government reports and focusing on profits and valuations, like today.
Anecdotally, valuations may be as rich as they may get. For instance, 3M, which reported earnings of $1.54 for the most recent quarter, is trading at a multiple of 16.5 times trailing earnings, fairly rich.
AT&T is trading at 11.5 times earnings, while Caterpillar sports an ultra-rich multiple of 25.75 times earnings.
Traditionally, stocks trade in a range of 12-15 times earnings. Considering the headwinds into which companies are running, the low end of that range may be more appropriate at the present. That kind of metric is keeping a lid on stocks currently.
The enthusiasm for equities was not in the least tempered by higher initial unemployment claims, which came in at 464,000, well ahead of last week's 427,000. So long as companies were turning sizable profits, nothing was holding back investors from buying.
Even existing home sales being down 5.1% for June or the Index of Leading Indicators dipping 0.2% had no effect on the rush to buy into the good news from corporate earnings.
Dow 10,322.30, +201.77 (1.99%)
NASDAQ 2,245.89, +58.56 (2.68%)
S&P 500 1,093.67, +24.08 (2.25%)
NYSE Composite 6,901.91, +170.75 (2.54%)
Advancing issues reversed Wednesday's drubbing, leading decliners, 5498-1017, and new highs soared ahead of new lows, 278-82. On a day which held such unbridled enthusiasm, there were more new highs (46) on the NASDAQ than new highs (39), reversing a three-day counter-trend. Volume was roughly at the same level as the previous session, though for bulls, it was a positive sign.
NASDAQ Volume 2,264,130,750
NYSE Volume 5,504,649,500
Oil futures were really the big winner on the day, with the September contract rising $2.74, to $79.30, the basis for which was unknown. Gold and silver were ahead only slightly, with gold gaining $3.90, to $1,195.50, and silver up 32 cents, to $18.12.
Every sector showed positive results as earnings season finally produced some results on which traders could trust with their money.
Despite the high quality of earnings, the major indices have yet to break through their 200-day moving averages, which are providing fairly stiff resistance, though corporate earnings continue to defy economic indicators.
At some point, possibly as early as tomorrow, stocks should break out from their recent range, tossing aside the cockeyed government reports and focusing on profits and valuations, like today.
Anecdotally, valuations may be as rich as they may get. For instance, 3M, which reported earnings of $1.54 for the most recent quarter, is trading at a multiple of 16.5 times trailing earnings, fairly rich.
AT&T is trading at 11.5 times earnings, while Caterpillar sports an ultra-rich multiple of 25.75 times earnings.
Traditionally, stocks trade in a range of 12-15 times earnings. Considering the headwinds into which companies are running, the low end of that range may be more appropriate at the present. That kind of metric is keeping a lid on stocks currently.
Tuesday, October 13, 2009
Slow Day, But Intel, CSX Movers After Hours
Stocks largely marked time on Tuesday as investors awaited third quarter earnings results from Intel (INTC), the world's largest chip maker, and CSX (CSX), one of the nation's largest freight railway operators.
After something of a disappointment from Johnson & Johnson (JNJ) before the bell, stocks sold off at the open and struggled close to break even throughout the rest of the day. It was apparent that there would be no major movement in the indices until the Intel announcement.
Dow 9,871.06, -14.74 (0.15%)
NASDAQ 2,139.89, +0.75 (0.04%)
S&P 500 1,073.18, -3.01 (0.28%)
NYSE Composite 7,031.87, -19.29 (0.27%)
Decliners beat advancers, though not broadly, 2808-3571. New highs continued to outperform new lows, 312-56. Volume was expectedly moderate.
NYSE Volume 5,026,830,000
NASDAQ Volume 2,052,388,000
Most of the real action that will affect markets for the near term occurred after the closing bell, when CSX reported 3rd quarter earnings results.
Net income from continuing operations was $293 million, or 0.74 cents per share. CSX said revenue in the quarter fell 23 percent to $2.3 billion, in line with analysts' expectations. The earnings beat expectations by .03 cents per share. The stock, which was traded lower by 63 cents during the regular session, was up sharply - +1.24, to $45.52 - in after hours trading.
Just minutes after CSX reported, Intel blew away estimates in all areas, reporting 3rd quarter earnings of $1.9 billion or 33 cents per share, compared with a net profit of $2.01 billion, or 35 cents per share, in the year ago period.
Revenue also beat forecasts handily, at $9.4 billion when expectations were set at $9.06 billion. After being halted pending the release, the stock soared nearly 6% in after hours trading, gaining more than $1.00 per share, pushing the stock above 21.50, a new 52-week-high. Significantly, Intel's earnings boosted a slew of other stocks after the close, including many in the tech and computer sector. Companies like Apple (APPL), Hewlett Packard (HPQ), Google (GOOG) and Cisco (CSCO) all gained in after-hours trading.
Commodities were solid during the session, with oil up 88 cents, to $74.15; gold up to a new record high of $1,065.00 on a gain of $7.50. Silver lagged somewhat, picking up 2 cents, to $17.84.
With real news coming both from the base (CSX) and the top (Intel) of the economy, unless there's some kind of disaster between here and the opening bell on Wednesday (retail sales for September are due out at 8:30 am), stocks should soar at the open, led by technology.
After something of a disappointment from Johnson & Johnson (JNJ) before the bell, stocks sold off at the open and struggled close to break even throughout the rest of the day. It was apparent that there would be no major movement in the indices until the Intel announcement.
Dow 9,871.06, -14.74 (0.15%)
NASDAQ 2,139.89, +0.75 (0.04%)
S&P 500 1,073.18, -3.01 (0.28%)
NYSE Composite 7,031.87, -19.29 (0.27%)
Decliners beat advancers, though not broadly, 2808-3571. New highs continued to outperform new lows, 312-56. Volume was expectedly moderate.
NYSE Volume 5,026,830,000
NASDAQ Volume 2,052,388,000
Most of the real action that will affect markets for the near term occurred after the closing bell, when CSX reported 3rd quarter earnings results.
Net income from continuing operations was $293 million, or 0.74 cents per share. CSX said revenue in the quarter fell 23 percent to $2.3 billion, in line with analysts' expectations. The earnings beat expectations by .03 cents per share. The stock, which was traded lower by 63 cents during the regular session, was up sharply - +1.24, to $45.52 - in after hours trading.
Just minutes after CSX reported, Intel blew away estimates in all areas, reporting 3rd quarter earnings of $1.9 billion or 33 cents per share, compared with a net profit of $2.01 billion, or 35 cents per share, in the year ago period.
Revenue also beat forecasts handily, at $9.4 billion when expectations were set at $9.06 billion. After being halted pending the release, the stock soared nearly 6% in after hours trading, gaining more than $1.00 per share, pushing the stock above 21.50, a new 52-week-high. Significantly, Intel's earnings boosted a slew of other stocks after the close, including many in the tech and computer sector. Companies like Apple (APPL), Hewlett Packard (HPQ), Google (GOOG) and Cisco (CSCO) all gained in after-hours trading.
Commodities were solid during the session, with oil up 88 cents, to $74.15; gold up to a new record high of $1,065.00 on a gain of $7.50. Silver lagged somewhat, picking up 2 cents, to $17.84.
With real news coming both from the base (CSX) and the top (Intel) of the economy, unless there's some kind of disaster between here and the opening bell on Wednesday (retail sales for September are due out at 8:30 am), stocks should soar at the open, led by technology.
Friday, October 9, 2009
Blowing The Top Off
On strength in the health care and technology sectors, US equities managed to finish one of their best weeks of the year with a strongly positive session. IBM led the Dow to new 52-week and 2009 highs, while the S&P finished just .17 short of its high for the year, set back on September 22 (1071.66). The NASDAQ also closed within shouting distance of its 200 closing high, just 7 points short of 2146.30, also the close on September 22.
The major indices closed higher every day this week except for the Dow, which posted a 6-point loss on Wednesday. This sets up an interesting scenario for the first big week of earnings season. A number of highly-traded stocks report next week, including Charles Schwab (SCHW) on Monday; Intel (INTC) and Johnson & Johnson (JNJ) on Tuesday; JP Morgan Chase (JPM) on Wednesday; Citigroup (C), Cypress Semi (CY), Goldman Sachs (GS), Google (GOOG), IBM (IBM) and Nokia (NOK) on Thursday; and Bank of America (BAC) and General Electric (GE) on Friday.
Dow 9,864.94, +78.07 (0.80%)
NASDAQ 2,139.28, +15.35 (0.72%)
S&P 500 1,071.49, +6.01 (0.56%)
NYSE Composite 7,015.54, +24.87 (0.36%)
Advancing issues beat decliners, 3942-2445, though the gains were not as broadly-based as earlier in the week. New highs beat new lows, 482-45. Volume was significantly below the levels of the rest of the week, but nobody seemed to care, with stocks soaring, even on a day in which the markets decoupled from the dollar trade, which was strengthened through intervention by the Bank of Japan and some veiled comments from the Fed Chairman, friendly uncle Ben Bernanke.
NYSE Volume 4,310,388,500
NASDAQ Volume 1,900,588,625
Due to the strong dollar, moves in the commodity markets were muted, though oil managed to gain 8 cents, to $71.77. Gold kicked back from its three-day record run, losing $7.70, to $1,048.60. Silver relinquished 13 cents to close at $17.69.
Considering the conditions in the market, it was something magnificent to see the Dow soar to a new closing high, but the US economy appears to be something of a coiled spring, about to explode with growth in all directions. Companies have cut the workforce to the bone while recovering from the worst financial crisis since the Great Depression. While there are still voices of macro-economics who believe that our debt levels are too high (they are) and the banking sector too weak (probably not in comparison to the rest of the world) to promote significant expansion, companies and investors are not convinced. Most of the working population is working, though this latest recession and the accompanying stimulus may have created an even larger underclass of unproductive cretins living off the earnings of the producers.
The big fear is that unemployment stays at elevated levels for too long a period. The government, by its actions such as extending unemployment benefits and increasing welfare payments only serves to exacerbate the condition, and washington must reign in its own profligacy. Otherwise, the massive spending the feds have thrown at the problem will create an ever more severe economic crisis in which the government cannot meet the demands of the people it is sworn to serve.
It's likely a very positive development that the dollar exhibited some strength and that bonds have sold off, increasing yields. If anything, the market, especially bond yields, will telegraph the next Fed move to raise interest rates, which seems to be coming sooner rather than later, and would be a good sign of real recovery and strength.
What most economics fail to include in their calculations are the robust dynamics of the US economy and the magic of innovation, which usually serves as a spur to both economic and job growth. The government jawboning about clean and green energy is a step in the right direction, but the markets will be the ultimate arbitrageur of what works and what doesn't. New products continue to come to market, and that builds economic activity more than any feeble weak-dollar trade ever could.
The US economy appears poised to break out into a new era of prosperity and the market is forecasting that development. As trite and cliche as it may sound, those who say that it's a mistake to bet against the US economy are probably dead right.
The major indices closed higher every day this week except for the Dow, which posted a 6-point loss on Wednesday. This sets up an interesting scenario for the first big week of earnings season. A number of highly-traded stocks report next week, including Charles Schwab (SCHW) on Monday; Intel (INTC) and Johnson & Johnson (JNJ) on Tuesday; JP Morgan Chase (JPM) on Wednesday; Citigroup (C), Cypress Semi (CY), Goldman Sachs (GS), Google (GOOG), IBM (IBM) and Nokia (NOK) on Thursday; and Bank of America (BAC) and General Electric (GE) on Friday.
Dow 9,864.94, +78.07 (0.80%)
NASDAQ 2,139.28, +15.35 (0.72%)
S&P 500 1,071.49, +6.01 (0.56%)
NYSE Composite 7,015.54, +24.87 (0.36%)
Advancing issues beat decliners, 3942-2445, though the gains were not as broadly-based as earlier in the week. New highs beat new lows, 482-45. Volume was significantly below the levels of the rest of the week, but nobody seemed to care, with stocks soaring, even on a day in which the markets decoupled from the dollar trade, which was strengthened through intervention by the Bank of Japan and some veiled comments from the Fed Chairman, friendly uncle Ben Bernanke.
NYSE Volume 4,310,388,500
NASDAQ Volume 1,900,588,625
Due to the strong dollar, moves in the commodity markets were muted, though oil managed to gain 8 cents, to $71.77. Gold kicked back from its three-day record run, losing $7.70, to $1,048.60. Silver relinquished 13 cents to close at $17.69.
Considering the conditions in the market, it was something magnificent to see the Dow soar to a new closing high, but the US economy appears to be something of a coiled spring, about to explode with growth in all directions. Companies have cut the workforce to the bone while recovering from the worst financial crisis since the Great Depression. While there are still voices of macro-economics who believe that our debt levels are too high (they are) and the banking sector too weak (probably not in comparison to the rest of the world) to promote significant expansion, companies and investors are not convinced. Most of the working population is working, though this latest recession and the accompanying stimulus may have created an even larger underclass of unproductive cretins living off the earnings of the producers.
The big fear is that unemployment stays at elevated levels for too long a period. The government, by its actions such as extending unemployment benefits and increasing welfare payments only serves to exacerbate the condition, and washington must reign in its own profligacy. Otherwise, the massive spending the feds have thrown at the problem will create an ever more severe economic crisis in which the government cannot meet the demands of the people it is sworn to serve.
It's likely a very positive development that the dollar exhibited some strength and that bonds have sold off, increasing yields. If anything, the market, especially bond yields, will telegraph the next Fed move to raise interest rates, which seems to be coming sooner rather than later, and would be a good sign of real recovery and strength.
What most economics fail to include in their calculations are the robust dynamics of the US economy and the magic of innovation, which usually serves as a spur to both economic and job growth. The government jawboning about clean and green energy is a step in the right direction, but the markets will be the ultimate arbitrageur of what works and what doesn't. New products continue to come to market, and that builds economic activity more than any feeble weak-dollar trade ever could.
The US economy appears poised to break out into a new era of prosperity and the market is forecasting that development. As trite and cliche as it may sound, those who say that it's a mistake to bet against the US economy are probably dead right.
Wednesday, July 22, 2009
NASDAQ Extends Streak, Earnings Up and Down
Editor's Note: I sincerely apologize for the last two days in which I have not posted as I regularly do. Unfortunately, events of the past few days have completely overwhelmed my usual habits, as my father passed away on Thursday of last week and the wake (Monday), funeral (Tuesday) and other family affairs have been very time-consuming. It is my sincere hope to get back onto my regular schedule as of today.
The markets continue to gyrate around second quarter earnings news and reports from a wide variety of companies. While the majority of companies have met or exceeded - mostly-lowered - expectations, a number of major firms have posted shoddy numbers, reflecting the struggles being felt across the US economy.
By the close, the only index posting a gain was the NASDAQ, extending its own winning streak to twelve days. The Dow ended an eight-day run of positive finishes with a modest loss.
That the NASDAQ has been a best-performer over the past few weeks should come as no surprise. Many of the companies comprising the index are younger and leaner, without many of the legacy costs and high debt loads usually associated with the companies on the Dow, for instance.
Apple (AAPL) and Starbucks (SBUX), both listed on the NASDAQ reported solid earnings for the quarter, while Advanced Micro Devices (AMD) and Wells-Fargo (WFC), two NYSE stocks, posted steep losses for the quarter.
Dow 8,881.26, -34.68 (0.39%)
NASDAQ 1,926.38, +10.18 (0.53%)
S&P 500 954.07, +0.51 (0.05%)
NYSE Composite 6,151.40, -2.99 (0.05%)
Market internals were in-line with the headline numbers. Advancers finished well ahead of losing issues, 3779-2585, while new highs continued their winning streak over new lows, finishing ahead, 142-96. Volume was very strong on the NASDAQ, but continued to slump on the NYSE, barely making it past the benchmark of 1 billion shares traded.
NYSE Volume 1,079,660,000
NASDAQ Volume 2,371,615,000
Commodities traded all over the map. September crude finished 21 cents lower, at $65.40, while the metal shone, with gold gaining $6.40, to $953.30 and silver up 22 cents to $13.70. Grains and livestock were mixed.
Earnings reports will keep investors on their toes Thursday, with nearly 300 companies reporting. Some of the bigger names include United Parcel Service (UPS), Raytheon (RTN), KLA-Tencor (KLAC), 3M (MMM), Burlington Northern (BNI), Capital One (COF), Credit Suisse (CS), McDonald's (MCD) and Microsoft (MSFT).
The markets continue to gyrate around second quarter earnings news and reports from a wide variety of companies. While the majority of companies have met or exceeded - mostly-lowered - expectations, a number of major firms have posted shoddy numbers, reflecting the struggles being felt across the US economy.
By the close, the only index posting a gain was the NASDAQ, extending its own winning streak to twelve days. The Dow ended an eight-day run of positive finishes with a modest loss.
That the NASDAQ has been a best-performer over the past few weeks should come as no surprise. Many of the companies comprising the index are younger and leaner, without many of the legacy costs and high debt loads usually associated with the companies on the Dow, for instance.
Apple (AAPL) and Starbucks (SBUX), both listed on the NASDAQ reported solid earnings for the quarter, while Advanced Micro Devices (AMD) and Wells-Fargo (WFC), two NYSE stocks, posted steep losses for the quarter.
Dow 8,881.26, -34.68 (0.39%)
NASDAQ 1,926.38, +10.18 (0.53%)
S&P 500 954.07, +0.51 (0.05%)
NYSE Composite 6,151.40, -2.99 (0.05%)
Market internals were in-line with the headline numbers. Advancers finished well ahead of losing issues, 3779-2585, while new highs continued their winning streak over new lows, finishing ahead, 142-96. Volume was very strong on the NASDAQ, but continued to slump on the NYSE, barely making it past the benchmark of 1 billion shares traded.
NYSE Volume 1,079,660,000
NASDAQ Volume 2,371,615,000
Commodities traded all over the map. September crude finished 21 cents lower, at $65.40, while the metal shone, with gold gaining $6.40, to $953.30 and silver up 22 cents to $13.70. Grains and livestock were mixed.
Earnings reports will keep investors on their toes Thursday, with nearly 300 companies reporting. Some of the bigger names include United Parcel Service (UPS), Raytheon (RTN), KLA-Tencor (KLAC), 3M (MMM), Burlington Northern (BNI), Capital One (COF), Credit Suisse (CS), McDonald's (MCD) and Microsoft (MSFT).
Monday, July 13, 2009
Financials Fun or Another Sucker Rally?
With 2nd quarter earnings about to begin rolling out tomorrow, Monday's movement in the markets was something to ponder befor possibly jumping into the breach. Leading the way were financials, the very same banks that caused huge financial failures less than a year ago.
Are the banks fully rejuvenated? Can they be trusted as guardians of important capital - for mortgages, college, retirement, etc. - or have investors forgotten so soon how cavalier these same bankers were with other people's money. Sadly, I am of the camp that says they cannot be trusted. Every time financial stocks lead rallies, I see the same fraudulent faces, the same lying CEOs, none of whom have been rightfully indicted, prosecuted and jailed for their various crimes: collusion, delusion, evasion and deceit.
After falling for four straight weeks, maybe the market was prime for gains, but one must bear in mind where we are in the greater cycle. Stocks are just coming off highs, and, with the economy still struggling, one has to question the wisdom of jumping in at this particular juncture. Maybe for short term profits, this is the right move, but longer term, stocks could easily become cheaper in months ahead. If this is a short term timing rally and an in-and-out play, which is predominantly what our markets have become, this may be worthwhile, but waiting until the first few days' worth of earnings results come to the fore seems to be a more prudent position.
In any case, stocks were brought higher by the banks, which lifted every sector by at least 1%.
Dow 8,331.68, +185.16 (2.27%)
NASDAQ 1,793.21, +37.18 (2.12%)
S&P 500 901.05, +21.92 (2.49%)
NYSE Composite 5,761.37, +133.85 (2.38%)
The movement was broad based, with advancing issues beating out decliners, 4980-1400. New lows, however, maintained their edge over new highs, 79-40. Volume was nothing about which to get excited, another indication that not all hands are on board with this move. Weak volume has been an consistent feature marking the end of the rally and the beginning of the correction four weeks ago.
NYSE Volume 1,189,460,000
NASDAQ Volume 1,921,335,000
Commodities were all over the map. Those in the energy-related sector followed oil's downward draft of 20 cents, closing at $59.69. The metals were all up, with gold higher by $10.00, to $922.50, and silver up 14 cents, to $12.79. Livestock and foodstuffs finished in mixed fashion.
Banks will be in focus the rest of this week as a number of big names announce earnings. Goldman Sachs, a particularly important bellwether, reports tomorrow.
Are the banks fully rejuvenated? Can they be trusted as guardians of important capital - for mortgages, college, retirement, etc. - or have investors forgotten so soon how cavalier these same bankers were with other people's money. Sadly, I am of the camp that says they cannot be trusted. Every time financial stocks lead rallies, I see the same fraudulent faces, the same lying CEOs, none of whom have been rightfully indicted, prosecuted and jailed for their various crimes: collusion, delusion, evasion and deceit.
After falling for four straight weeks, maybe the market was prime for gains, but one must bear in mind where we are in the greater cycle. Stocks are just coming off highs, and, with the economy still struggling, one has to question the wisdom of jumping in at this particular juncture. Maybe for short term profits, this is the right move, but longer term, stocks could easily become cheaper in months ahead. If this is a short term timing rally and an in-and-out play, which is predominantly what our markets have become, this may be worthwhile, but waiting until the first few days' worth of earnings results come to the fore seems to be a more prudent position.
In any case, stocks were brought higher by the banks, which lifted every sector by at least 1%.
Dow 8,331.68, +185.16 (2.27%)
NASDAQ 1,793.21, +37.18 (2.12%)
S&P 500 901.05, +21.92 (2.49%)
NYSE Composite 5,761.37, +133.85 (2.38%)
The movement was broad based, with advancing issues beating out decliners, 4980-1400. New lows, however, maintained their edge over new highs, 79-40. Volume was nothing about which to get excited, another indication that not all hands are on board with this move. Weak volume has been an consistent feature marking the end of the rally and the beginning of the correction four weeks ago.
NYSE Volume 1,189,460,000
NASDAQ Volume 1,921,335,000
Commodities were all over the map. Those in the energy-related sector followed oil's downward draft of 20 cents, closing at $59.69. The metals were all up, with gold higher by $10.00, to $922.50, and silver up 14 cents, to $12.79. Livestock and foodstuffs finished in mixed fashion.
Banks will be in focus the rest of this week as a number of big names announce earnings. Goldman Sachs, a particularly important bellwether, reports tomorrow.
Monday, July 9, 2007
Markets Move Forward in Cautious Session
With 2nd-quarter corporate earnings reports on the horizon this week (Alcoa announced after the close, posting earnings of 81 cents per share, in line with estimates, but down 4 cents from the same period in 2006), investors took a cautiously-positive tone in a session characterized by sluggish trade and squaring widely-held positions. There was little in the way of speculation, as most of the action over the next few weeks will have earnings as a catalyst.
Dow 13,649.97 +38.29; NASDAQ 2,670.02 +3.51; S&P 500 1,531.85 +1.41; NYSE Composite 10,099.60 +24.21
This is a very heady time for the market and one in which savvy players will make significant plays on stocks. The most animated of the trading will likely be next week, when the bulk of the S&P 500 stocks report and options expire (July 20).
New highs were again well ahead of new lows, 564-100, though advancers and decliners were virtually in a dead heat. Once again, these internals demonstrate that investors are buying stocks that are already showing gains, and shedding losers, though at a reduced rate. We're almost certain to see more of a leveling between the new highs and lows as the quarterlies flow to the market and the media.
With more than 5500 stocks on the NYSE and NASDAQ not represented in the daily high-low numbers, a smart strategy at this juncture would be to go long on companies approaching their 52-week high and either avoid, short-sell or buy puts on those nearing the bottoms of their ranges. You're likely to find winners on both sides of the trade, depending on how much risk you can maintain and how far you wish to spread your money. a few big winners could give the usually pedestrian month of July a bit of luster.
Oil actually fell back a bit today, down 72 cents to $72.19, though it is still extraordinarily high. Oil futures prices have yet to be reflected in pain at the pump, but it's certainly coming, probably right around the time of the Labor Day holiday weekend, which falls on September 1, 2 and 3 this year, coinciding with back-to-school, one of the busiest driving seasons of the year. It hopefully will be Big Oil's last gasp, as the political storm currently percolating in Washington, DC should be blowing its top at that time.
Naturally, politics don't make markets, but some swing in the consensus - especially concerning Iraq - could foment radical changes in corporate governance and oversight down the road. It may be wishful thinking by liberals and free-marketers alike, but change has been in the winds for months. Watch the month of August for signs that the bull is about to wind down or make a significant correction.
Gold and silver made gains today, though they're almost certain to give them back during the course of the week, if not tomorrow.
Dow 13,649.97 +38.29; NASDAQ 2,670.02 +3.51; S&P 500 1,531.85 +1.41; NYSE Composite 10,099.60 +24.21
This is a very heady time for the market and one in which savvy players will make significant plays on stocks. The most animated of the trading will likely be next week, when the bulk of the S&P 500 stocks report and options expire (July 20).
New highs were again well ahead of new lows, 564-100, though advancers and decliners were virtually in a dead heat. Once again, these internals demonstrate that investors are buying stocks that are already showing gains, and shedding losers, though at a reduced rate. We're almost certain to see more of a leveling between the new highs and lows as the quarterlies flow to the market and the media.
With more than 5500 stocks on the NYSE and NASDAQ not represented in the daily high-low numbers, a smart strategy at this juncture would be to go long on companies approaching their 52-week high and either avoid, short-sell or buy puts on those nearing the bottoms of their ranges. You're likely to find winners on both sides of the trade, depending on how much risk you can maintain and how far you wish to spread your money. a few big winners could give the usually pedestrian month of July a bit of luster.
Oil actually fell back a bit today, down 72 cents to $72.19, though it is still extraordinarily high. Oil futures prices have yet to be reflected in pain at the pump, but it's certainly coming, probably right around the time of the Labor Day holiday weekend, which falls on September 1, 2 and 3 this year, coinciding with back-to-school, one of the busiest driving seasons of the year. It hopefully will be Big Oil's last gasp, as the political storm currently percolating in Washington, DC should be blowing its top at that time.
Naturally, politics don't make markets, but some swing in the consensus - especially concerning Iraq - could foment radical changes in corporate governance and oversight down the road. It may be wishful thinking by liberals and free-marketers alike, but change has been in the winds for months. Watch the month of August for signs that the bull is about to wind down or make a significant correction.
Gold and silver made gains today, though they're almost certain to give them back during the course of the week, if not tomorrow.
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