WEEKEND WRAP: Powell Puts Positive Spin On Rates, Economy; Stocks Respond With Banner Gains

As much as stocks were flattened last week, they gained back this week, and then some, rebounding mainly off the lips of Fed Chairman Jerome Powell, who uttered two words which are sure to become ensconced within the annuls of great Fed Chairman one liners, such as Alan Greenspan's notorious "irrational exuberance."

Having a way with words, especially concise two-word constructs, Powell uttered, in a speech at the Economic Club of New York, that interest rates were "just below" neutral, sending stocks spiraling upwards on Wednesday.

Those gains followed two prior sessions with more pedestrian advances, the Wednesday push a 617-point blast on the Dow which sent the industrials into positive territory not only for the month, but for the year as well. The week's gains were capped off by a window-dressing close on Friday, with the Dow posting a nearly 200-point gain, all of which came after 1:30 pm ET.

Events of the week - from Powell's speech to Trump's dealings at the G20 in Buenos Aires - managed to put a positive spin on the outlook for stocks going into the final month of the year and the holiday shopping season.

Effectively, what Powell's statement on interest rates did was virtually assure a 25 basis point hike in the federal funds rate and then a pause at what would have been the next logical rate increase, at the March FOMC meeting, and beyond. Whether the Fed's members actually believes that an overnight rate of 2.25-2.50% neither hinders nor aids the US economy is a question open for debate, as most believed that more rate hikes were necessary per the minutes of the last FOMC meeting earlier in November.

That sentiment put a bit of a damper on the market when released on Thursday, but, as Wall Street memories seem exceedingly short these days, the flattish close didn't have any lasting effect.

Once into 2019, the Fed is likely to continue to spin positively, as Janet Yellen's honorable mention entry in the two-word scrabble that is Fedspeak, "data dependent" should be rolling off the lips of more than a few Fed officials in the cold months of winter.

Undeniably, a dovish Federal Reserve can be nothing but good for stocks, which are the de facto underpinning of the US economy. The Fed - and Powell in particular - may have been taking a sideways glance at the housing market as well, another pillar in the economic construct. Rising mortgage rates have shut down advances in new and existing home sales, punishing home builder stocks like Lennar (LEN), D.R. Horton (DHI), and KB Home (KBH). A stagnant housing market may have been instrumental in the formation of Powell's suddenly-accomodative stance.

Even with the rebound this week, stocks still have a pretty large slope to scale to get back to September or October's all-time highs. The NASDAQ still has issues with falling tech stocks and GM's announcement that it was shuttering five factories and laying off 14,000 workers had a chilling effect on what was an overwhelmingly positive week.

Elsewhere, oil continued to hover at the $50 level for WTI crude, precious metals remained flat to negative, but other global markets perked up a bit.

When the FOMC meets on December 18-19, there will be little doubt about their direction. A rate hike of 0.25% is practically baked into the cake. After that, however, it certainly appears the Fed will consider its work done, for now, at least. The next rate hike - and there is almost certainly to be one or two in the next 12-18 months - will probably come after some gaudy economic data or fresh highs in the stock market.

Until then, the skies are blue and smooth sailing is ahead.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78
11/20/18	24,465.64	-551.80	-650.58
11/21/18	24,464.69	-0.95	-651.53
11/23/18	24,285.95	-178.74	-830.27
11/26/18	24,640.24	+354.29	-475.98
11/27/18	24,748.73	+108.49	-367.49
11/28/18	25,366.43	+617.70	+250.21
11/29/18	25,342.72	-23.71	+226.50
11/30/18	25,538.46, +199.62	-23.71	+426.12

At the Close, Friday, November 30, 2018:
Dow Jones Industrial Average: 25,538.46, +199.62 (+0.79%)
NASDAQ: 7,330.54, +57.45 (+0.79%)
S&P 500: 2,760.17, +22.41 (+0.82%)
NYSE Composite: 12,457.55, +68.18 (+0.55%)

FOR THE WEEK:
Dow: +1,252.51 (+5.16%)
NASDAQ: +391.55 (+5.64%)
S&P 500: +127.61 (+4.85%)
NYSE Composite: +421.31 (+3.%0%)

Fed Chair Powell Currys Favor With Wall Street: Rates "Just Below" Neutral

In what can only be considered an obvious and well-intentioned nod to Wall Street, Federal Reserve Chairman Jerome Powell, speaking at the prestigious Economic Club of New York, noted that the federal funds rate is "just below" the level that economists consider neutral, neither encouraging risk nor dissuading it.

Powell's remarks sparked a rally on Wall Street that was the best in eight months, and probably put to rest any ideas investors may have had of a bear market developing in stocks.

The Fed chairman is no doubt a stock picker and investor himself, so he's well aware of the kind of volatility that has been plaguing stocks in recent weeks. He also may have taken a bit of a queue from President Trump, who has been consistently complaining about the pace of recent Fed rate hikes.

What this means for interest rates is likely that the Fed will go ahead, as expected, and raise the federal funds and prime rates once more in December, and then take a wait-and-see approach going forward. The Fed had been expected to raise rates three more times in 2019, though that approach was largely nixed by Powell's dovish remarks today.

At the most, the Fed might raise rates twice in the coming year, though once or none at all might be closer to the mark. Fueled by easy money policies the past ten years, the stock market, being a key cog in the US economy, would be hard set if low lending rates were curtailed further.

While Wall Street cheered the development, the biggest winners should be consumers, who are addicted to credit and have seen credit card interest rates soar over the past two years as the Fed, like clockwork every quarter, raised rates to which many credit accounts are tied. A cessation of the rate hikes will come as a relief to anybody carrying a credit card balance.

Combined with gains from Monday and Tuesday, today's positive close pushed the Dow back into the green for the month, and the year.

Who said the Fed doesn't pay attention to the stock market?

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78
11/20/18	24,465.64	-551.80	-650.58
11/21/18	24,464.69	-0.95	-651.53
11/23/18	24,285.95	-178.74	-830.27
11/26/18	24,640.24	+354.29	-475.98
11/27/18	24,748.73	+108.49	-367.49
11/28/18	25,366.43	+617.70	+250.21

At the Close, Wednesday, November 28, 2018:
Dow Jones Industrial Average: 25,366.43, +617.70 (+2.50%)
NASDAQ: 7,291.59, +208.89 (+2.95%)
S&P 500: 2,743.79, +61.62 (+2.30%)
NYSE Composite: 12,417.63, +229.56 (+1.88%)

Fed Signals More Rate Increases; Market Dynamics Favor Investment Diversity

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

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

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

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

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

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

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

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

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

Dow Jones Industrial Average November Scorecard:

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

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

Weekend Wrap: Stocks Suffer Worst Week Since February As Earnings Arrive

What should be front of mind for investors this weekend and heading into the third trading week of the fourth quarter is whether the massive slip-sliding of the past week was, a) rehearsal for a full blown bear market; b) beginnings of a normal correction; or, c) a buying opportunity.

Pessimists amongst us will surely side with answer (a), noting that the bull market, now the longest ever, has to come to an end at some point, and that the various factors leading to its demise are obvious (rising interest rates, global contagion, trade and tariff paroxysm, currency confusion and convulsion).

Realists might prefer answer (b), because inflation is still tame, jobs are plentiful, unemployment is low, and interest rates are still below historical averages.

Optimists obviously will go with answer (c) because, well, you know, the market always goes up and there's money to be made.

There's a very good chance that the optimists are over-optimistic after US markets nose-dived through the worst week since February, wiping out almost all third quarter gains, leaving investors with the kind of feeling one gets about an hour after eating at McDonald's (if you've never done it, don't start now), a blase, indecisive feeling in the pit of one's stomach, as though eating was not what one should have done. In this case, that feeling may have come on Wednesday or Thursday, with Friday providing something of an Alka-Seltzer relief rally.

Even with the sizable gains to close out the week, all of the major averages suffered badly, and the condition may only be at a beginning. It would be difficult to pinpoint an exact culprit for the crime of this week's market turbulence, though the Federal Reserve is always a convenient scapegoat. Just ask President Trump, who said that the esteemed central bankers had gone crazy.

While adding 25 basis points to the federal funds rate every quarter - especially after they'd been affixed to near-zero for seven years - may not exactly define madness, there are those (such as Money Daily) who believe the Fed has overstepped its escape from years of the other madness now known as saving the global financial system from the ruinous aspects of the 2008-09 collapse.

Certainly, credit is excessive, especially the funding of corporate stock buybacks, which have reached a crescendo this annum, with more than a trillion dollars worth of corporate malinvestment on tap. The federal government has binged on debt to ungodly proportions and is getting even worse, while your average, everyday consumer has also ratcheted up the mortgage, student loan, car payment, and credit card bills to historic heights.

One could posit the expression, "nothing says white trash like a blue tarp" has an ancillary phrase in, "nothing says bubble like a new car in front of a new house with kids in college wearing new shoes."

Have we cumulatively reached the end of the road? Probably not. But, if last week's savviest stock sellers were on their marks, the road is likely to be a bumpy one through to the end of the year.

What was witnessed not just in US markets but around the world last week raised a fair share of eyebrows and lowered even more expectations. With earnings cranking up this coming week if will be most instructive to see which companies are punished, which ones prevail, and which ones offer excuses and/or outlooks suggesting more trouble ahead.

There's a lot of money sloshing around, and none of it is without a debt burden attached to it. There will be winners and losers in the fourth quarter, and, from the looks of it, tech, financials, and consumer stocks may tend to pull all the other sectors down with them.

Or, it just could be a buying opportunity, just five percent off of all-time highs, a dubious prospect.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90
10/2/18	26,773.94	+122.73	+315.63
10/3/18	26,828.39	+54.45	+370.08
10/4/18	26,627.48	-200.91	+169.17
10/5/18	26,447.05	-180.43	-11.26
10/8/18	26,486.78	+39.73	+28.47
10/9/18	26,430.57	-56.21	-27.74
10/10/18	25,598.74	-831.83	-859.57
10/11/18	25,052.83	-545.91	-1405.48
10/12/18	25,339.99	+287.16	-1118.32

At the Close, Friday, October 12, 2018:
Dow Jones Industrial Average: 25,339.99, +287.16 (+1.15%)
NASDAQ: 7,496.89, +167.83 (+2.29%)
S&P 500: 2,767.13, +38.76 (+1.42%)
NYSE Composite: 12,439.42, +89.89 (+0.73%)

For the Week:
Dow: -1107.06 (-4.19%)
NASDAQ: -291.55 (-3.74%)
S&P 500: -118.44 (-4.10%)
NYSE Composite: -552.53 (-4.25%)

Weekend Wrap: Stocks Slip, Yields Rise, Precious Metals Bid

Stocks closed out the week n subdued fashion, with the major averages hugging the unchanged line throughout most of Friday's session.

Overall, the close-out of the quarter was less dramatic than usual, with little to no "window dressing" done by traders and/or speculators. Stocks were generally down for the week, with the notable exception of the NASDAQ, which was the only one of the major indices to post a weekly gain.

Other than Tesla (TSLA), in which, over the weekend, CEO Elon Musk's deal with the SEC on the heels of their lawsuit, there was little to hang a trade on in the final week of the month. Musk agreed to pay a $20 million fine and the same amount from company coffers. While Musk was stripped of his role as chairman of the Tesla board of directors for three years, he will continue on as CEO.

Stocks remained near all-time highs, and October usually brings additional volatility, such with elections on the horizon and third quarter earnings trickling out after the first week of the month.

After the Fed's FOMC raised the federal funds rate to 2.00-2.25% on Wednesday, stocks fell somewhat out of favor, as bond yields continue to attract large, safety-seeking money. The 10-year note finished the week comfortably above the 3.00% demarkation line, at 3.056%, a number some analysts suggest may cause the demise of some stocks, especially the more speculative variety (read: tech) and those that do not offer a steady dividend.

Crude oil was higher for the week, with WTI topping out over $73 per barrel, a four-year high. Pinching drivers at the pump may not be conducive to gains in equity prices. High gas prices act as a tax on all consumers, but affect the poor and middle class the hardest.

Gold and silver caught some bids late in the week though they continue to wallow in a prolonged slump near three-year lows. Inflation, being still somewhat tame, will likely keep a lid on the prices of precious metals and commodities overall.

Dow Jones Industrial Average September Scorecard:

Date	Close	Gain/Loss	Cum. G/L
9/4/18	25,952.48	-12.34	-12.34
9/5/18	25,974.99	+22.51	+10.17
9/6/18	25,995.87	+20.88	+31.05
9/7/18	25,916.54	-79.33	-48.28
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16
9/21/18	26,743.50	+86.52	+778.68
9/24/18	26,562.05	-181.45	+597.23
9/25/18	26,492.21	-69.84	+527.39
9/26/18	26,385.28	-106.93	+420.46
9/27/18	26,439.93	+54.65	+475.11
9/28/18	26,458.31	+18.38	+493.49

At the Close, Friday, September 28, 2018:
Dow Jones Industrial Average: 26,458.31, +18.38 (+0.07%)
NASDAQ: 8,046.35, +4.38 (+0.05%)
S&P 500: 2,913.98, -0.02 (0.00%)
NYSE Composite: 13,082.52, -23.20 (-0.18%)

For the Week:
Dow: -285.19 (-1.07%)
NASDAQ: +59.40 (+0.74%)
S&P 500: -15.69 (-0.54%)
NYSE Composite: -153.92 (-1.16%)

Dow Lower Again As Investors Ponder Fed Wisdom

Well, if you're content with having a bunch of highly-paid academics controlling your finances, you're in luck. The Federal Reserve has been hard at work for over 100 years to guarantee that they get a cut of everybody's money, mostly because they create it themselves, out of thin air, with no backing with tangible assets, like gold, or silver, or anything like that.

As it says on their debt instruments, full faith and credit.

Therein lies the problem. Most people, if they understood how the Federal Reserve operates - mostly in secret, and outside the boundaries of government (it is a private banking system, after all. Shhh!) - would pine for foregone days when gold and silver were the coin of the realm, so to speak, when people and businesses weren't amortized and taxed to the bare bones of their existence.

Full faith is something the Fed takes for granted, assuming that 99% of the public has no idea how money works. Credit is their life blood. Every dollar created by the Fed is a debt, which is why the so called "national debt" can never be repaid. If it was, there would be no money. Everybody would be broke.

Is that what is occupying the minds of the great investors and traders of Wall Street and their bankers, brokers, cronies and insiders? Probably not. They're more interested in getting and keeping as much of the Federal Reserve money they can, investing it in more stocks, bonds, debentures, options, futures and maybe along the way, some real assets like real estate, gold, silver, art, vehicles, machinery.

Almost nobody really cares about how the Fed or other central banks operate. It's a fact. Most people are caught up in the matrix of jobs, bills, rents, taxes, and debt. They don't have time to study the intricate workings of central banks, which, of course, is how the central bankers wish. The less scrutiny on them, the more they and their member banks (all the big ones) make, unaudited and without interference.

What the traders on the exchanges today were contemplating was whether or not the Fed will actually raise the federal funds rate (the rate banks charge each other for overnight loans) to 2.00-2.25% tomorrow at 2:00 pm EDT when the FOMC policy rate decision is announced.

The simple answer is that they almost certainly will. The market has priced this in. At the least, the 10-year treasury note has gotten the memo. It's holding pretty steady at 3.10% yield, anticipating the Fed's very well-telegraphed interest rate ploy.

To many of the top traders and investors, the Fed's bold actions, in the face of a somewhat gradual economic improvement, are already too much and too soon. Some analysts are suggesting that with the 10-year note over three percent, big money will forego the risks inherent in the stock market and shift more money into bonds. The 10-year is a benchmark. Better returns can be made in corporate debt offerings, junk bonds, shorter term offerings, or munis, all of which carry more risk, but not significantly so.

Thus, the market will tell everybody, including the wizened old men and women at the Fed, what the federal funds rate should be by voting with their feet. If stocks continue to rise, it gives the Fed a free pass to increase rates another 25 basis points in December. If the market declines, the Fed will be on its own.

The Fed has raised rates at a very steady pace since December 2016, adding 0.25% every quarter, in March, June, September, and December. They may be nearing a point at which they need to take a break.

The questions are whether or not they will see it, understand it, and how they will act upon it.

Dow Jones Industrial Average September Scorecard:

Date	Close	Gain/Loss	Cum. G/L
9/4/18	25,952.48	-12.34	-12.34
9/5/18	25,974.99	+22.51	+10.17
9/6/18	25,995.87	+20.88	+31.05
9/7/18	25,916.54	-79.33	-48.28
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16
9/21/18	26,743.50	+86.52	+778.68
9/24/18	26,562.05	-181.45	+597.23
9/25/18	26,492.21	-69.84	+527.39

At the Close, Tuesday, September 25, 2018:
Dow Jones Industrial Average: 26,492.21, -69.84 (-0.26%)
NASDAQ: 8,007.47, +14.22 (+0.18%)
S&P 500: 2,915.56, -3.81 (-0.13%)
NYSE Composite: 13,161.64, -0.42 (0.00%)

Weekend Wrap: Dow, S&P At Record Levels, Tech Shunned, Fed To Raise Rates

This was a banner week for the Dow Jones Industrial Average, ramping nearly 590 points - the most since late March - and eclipsing the old record high close from January 26 (26,616.71) and leaving it in the dust.

While the Dow and S&P set records, tech stocks didn't fare as well, closing down for the week as investors continued to shed shares of some of the more widely-held US companies, like Facebook (FB), Netflix (NFLX), Alphabet, nee Google (GOOG), Amazon (AMZN), and Apple (AAPL).

The biggest losers were Amazon (-55.18, -2.80%) and Apple (-6.18, -2.76%) as traders recorded record volume on the AA's of the so-called FAANGs.

Bond yields spiked, with the 10-year note rising beyond the Maginot line of 3.00%, ending the week with a yield of 3.07%.

Precious metals continued to remain in the doldrums, with gold and silver still hovering just above three-year lows.

The week ahead should provide some volatility as the Fed's FOMC policy meeting convenes Tuesday and Wednesday, with a policy announcement set for Wednesday afternoon which is anticipated to raise the federal funds rate for the seventh consecutive quarter, to 2.00-2.25%.

Playing a dangerous game of chicken with the market, the Fed continues its attempt to pour cold water on the emerging strong economy and the even-stronger US dollar, which has smashed currencies in countries from Turkey to Argentina into financial chaos.

The Fed insists upon rate increases to slow the economy, though it's unclear that the US economy is expanding at anything approaching red-hot status. While second quarter GDP came in higher than expectations, at 4.2 percent annualized, the three prior readings, from the third and fourth quarters of 2017 and the 2018 first quarter were still cool, at 2.8%, 2.3%, and 2.2%, respectively.

GDP in the second quarter was the highest since the third quarter of 2014. More than a few analysts and economists have expressed fears of a second half downturn in GDP growth. Should their forecasts come to fruition it would be seen as a strike against the aggressive Fed rate-hiking and an appeal for them to stop before they crush the nascent American expansion.

After the Fed's policy announcement this week, the third estimate of GDP growth will be revealed on Thursday, September 27.

Dow Jones Industrial Average September Scorecard:

Date	Close	Gain/Loss	Cum. G/L
9/4/18	25,952.48	-12.34	-12.34
9/5/18	25,974.99	+22.51	+10.17
9/6/18	25,995.87	+20.88	+31.05
9/7/18	25,916.54	-79.33	-48.28
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16
9/21/18	26,743.50	+86.52	+778.68

At the Close, Friday, September 21, 2018:
Dow Jones Industrial Average: 26,743.50, +86.52 (+0.32%)
NASDAQ: 7,986.96, -41.28 (-0.51%)
S&P 500: 2,929.67, -1.08 (-0.04%)
NYSE Composite: 13,236.44, +11.33 (+0.09%)

For the Week:
Dow: +588.83 (+2.25%)
NASDAQ: -23.09 (-0.29%)
S&P 500: +24.69 (+0.85%)
NYSE Composite: +185.92 (+1.42%)

Blue Chips Gain, Dow, S&P Closing In On Records

As the Dow zipped ahead Wednesday, tech stocks on the NASDAQ were shunned and the S&P 500 was nearly flat, though approaching its all-time high (2,914.04, August 29).

The highly-anticipated trade wars touted by the Trump-hating press have yet to materialize, and multi-national corporations are adjusting to the new world of tariffs as opposed to the falsely-defined "free trade" policies of the past three decades.

With President Trump rewriting the parameters of global commerce, US companies are, as they should, making adjustments to currency distortions and disputes arising from the sudden departure from the past. That being the case, Dow stocks are performing favorably, while tech vacillates. The key to direction seems to be headed by the banking and financial sectors, which underpin all commercial activity.

Seeking to normalize interest rates, the Fed is set to raise the federal funds rate again in less than a week, at their September 25-26 FOMC meeting. Bank stocks have been largely untouched by any kind of organized selling pressure, which leads to complacency on trading desks and within investor portfolios. Passive index funds continue to perform well, despite perceived distress over presidential policies and political hijinks.

There's so much bullishness apparent that contrary practitioners have toes in the water, many of them already burned by bounces in the market structure. This is not an environment in which one would readily short stocks, as the bull market rages on without so much as a five percent pullback since the lows of February and March.

The money is out there, most funds fully invested without a worry in the world. That's a condition that usually leads to disaster, though this time looks to be truly different. If President Trump MAGA promise can be gauged at all, the stock market might be a proxy for the health of the American economy and it is doing quite well.

The Dow has posted gains in six of the last seven sessions, adding nearly 550 points over that span.

Dow Jones Industrial Average September Scorecard:

Date	Close	Gain/Loss	Cum. G/L
9/4/18	25,952.48	-12.34	-12.34
9/5/18	25,974.99	+22.51	+10.17
9/6/18	25,995.87	+20.88	+31.05
9/7/18	25,916.54	-79.33	-48.28
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94

At the Close, Wednesday, September 19, 2018:
Dow Jones Industrial Average: 26,405.76, +158.80 (+0.61%)
NASDAQ: 7,950.04, -6.07 (-0.08%)
S&P 500: 2,907.95, +3.64 (+0.13%)
NYSE Composite: 13,121.97, +29.99 (+0.23%)

Dow Backtracks As Fed Holds Rates Steady

The two probably aren't related, but the Federal Reserve held the federal funds rate steady at 1.75-2.00 percent and the Dow lost 81 points.

On the other hand, the NASDAQ gained 35 points, also likely unrelated to anything.

With the FOMC set to meet again September 25-26, there's nearly two months for the market to grasp what's happening in the global scheme of things. There's nearly unanimous opinion that the Fed will increase rates another 25 basis points at that time.

Dow Jones Industrial Average August Scorecard:

Date	Close	Gain/Loss	Cum. G/L
8/1/18	25,333.82	-81.37	-81.37

At the Close, Wednesday, August 1, 2018:
Dow Jones Industrial Average: 25,333.82, -81.37 (-0.32%)
NASDAQ: 7,707.29, +35.50 (+0.46%)
S&P 500: 2,813.36, -2.93 (-0.10%)
NYSE Composite: 12,902.39, -60.89 (-0.47%)

Weekend Wrap: Trump Tariffs, Fed Funds, Draghi and ECB Dominate Markets

The prior week was expected to produce shock waves in markets, but on the US stock exchanges, the reaction was rather muted.

While the Dow put in a loss for the week, the NASDAQ surged to new all-time highs and the S&P 500 finished the week nearly unchanged.

Most of the reactive trading happened elsewhere, in the forex, bond, and commodity markets, which witnessed major swings in the aftermath of a rate hike by the Federal Reserve and an announcement of the end of QE by Mario Draghi of the ECB. The latter seemed to cause more impact, as Draghi set a timetable for the end of monetary easing at the end of 2018.

All of the European bourses closed lower on Friday in response to Draghi's announcement.

The dual central bank announcements overshadowed President Trump's successful negotiation with North Korea. Trump's meeting with Kim Jong-un resulted in an agreement between the two countries for more normalized relations, setting a framework for denuclearization by the North Koreans and suspension of war games conducted jointly by South Korea and the US.

Also igniting markets was President Trump's refusal to sign off on the G7 memorandum, following a meeting with "friendly" nations in which Trump promised tariffs on all manner of imports from the likes of Italy, Germany, Japan, Canada, France and Great Britain. Before that news even died down, with the other G7 nations promising retaliatory tariffs, the President slapped another $50 billion in tariffs on China, with the Chinese responding with tariffs on US imports.

With so much news crowding into one week, it was not easy for investors to find a path of least resistance. Along with Europe, US stocks fell off sharply on Friday, but recovered most of the losses by the close of trading for the week.

After the Fed raised the federal funds rate by 25 basis points on Wednesday, the yield on the 10-year note briefly crossed the 3.00% line, closing at 2.98 on the 13th, but falling back to 2.93% by Friday, the 15th of June. More importantly, the spread between the five-year and the 10 dropped to just 12 basis points, as the five-year note finished the week at 2.81.

Spreads were compressed, with the 2s-10s at 38 basis points and 2s-30s at 50. The 5s-30s spread was 23 basis points. These are the lowest spreads recorded since 2007, just prior to the Great Financial Crisis.

The Euro got crushed in currency markets, while gold and silver - both of which had been rallying all week - were crushed during Friday's COMEX session, with silver taking the brunt of the selling, off four percent, from a high of 17.30 per troy ounce on Thursday to a low at 16.40 on Friday before recovering slightly to close at 16.54. Gold was over $1300 per ounce on Thursday, but was slammed to a six month low at $1275 on Friday.

For more detail on the explosive week in precious metals and beyond, Ed Steer's weekly commentary can be found at the GoldSeek site, here.

Doug Noland's weekly Credit Bubble Bulletin commentary, detailing the recent movements in credit and currencies is titled "The Great Fallacy".

Dow Jones Industrial Average June Scorecard:

Date	Close	Gain/Loss	Cum. G/L
6/1/18	24,635.21	+219.37	+219.37
6/4/18	24,813.69	+178.48	+397.85
6/5/18	24,799.98	-13.71	+384.14
6/6/18	25,146.39	+346.41	+730.55
6/7/18	25,241.41	+95.02	+825.57
6/8/18	25,316.53	+75.12	+900.69
6/11/18	25,322.31	+5.78	+906.47
6/12/18	25,320.73	-1.58	+904.89
6/13/18	25,201.20	-119.53	+785.36
6/14/18	25,175.31	-25.89	+759.47
6/15/18	25,090.48	-84.83	+674.64

At the Close, Friday, June 15, 2018:
Dow Jones Industrial Average: 25,090.48, -84.83 (-0.34%)
NASDAQ: 7,746.38, -14.66 (-0.19%)
S&P 500: 2,779.42, -3.07 (-0.11%)
NYSE Composite: 12,734.63, -37.32 (-0.29%)

For the Week:
Dow: -226.05 (-0.89%)
NASDAQ: +100.87 (+1.32%)
S&P 500: +0.63 (+0.02%)
NYSE Composite: -97.43 (-0.76%)

Stocks Slide After FOMC Raises Federal Funds Rate

As was widely expected, the Federal Open Market Committee (FOMC) of the Federal Reserve issued a policy directive to increase the federal funds rate to 1.75-2.00%, marking the seventh rate hike in the current cycle, bringing interest rates further toward normalcy while inching the economy closer to recession.

As every recession one the past 40 years has at least partially been aided by Fed rate increases, this time is no different, as the FOMC issued the second 25 basis point increase of the year, with prospects of another 50 basis point increase through the end of the year.

Conjecture has been steady that the Fed would hike rates either three or four times in 2018. Today's hawkish tone indicated that four equal 25 basis point increases is the most likely outcome, with 25 basis point hikes in September and December.

Stocks were wary going into the June meeting, which concluded today at 2:00 pm EDT and was followed by a press briefing from Fed Chairman Jay Powell, who did little to allay fears that the Fed would continue its reckless path in the face of what can best be called tepid economic data.

After the first rate hike in February, stocks nosedived, and they did a prelude to an encore performance after the announcement, though the losses were contained and ganged into the final few minutes of trading, the Dow suffering the biggest percentage decline and a nearly 120-point selloff.

The bond market took the news in stride, with the 10-year note barely budging, continuing to nose around the 3.00% yield level. Silver was the unanimous winner of the day, as gold's little sister initially fell, but then shot up 25 cents, ending the day one $17.00 the ounce for the first time since mid-April.

What lies ahead for markets the remainder of the week is an assessment of inflation (both CPI and PPI were up sharply in the most recent disclosures) and the overall economy. With trade wars looming larger than ever and productivity stalled, there exists a very good chance that a recession could be in the cards within the next six to 12 months, while scores of analysts weigh in on the dubious nature of the government's official gauges of inflation, unemployment and GDP.

Thursday's trade promises to be choppy, as sentiment is leaning toward being equally split between a bullish and bearish stance on stocks. Valuations maintain their loftiness, but money has to flow somewhere, and there are still plenty of fund managers looking for further gains this year.

Dow Jones Industrial Average June Scorecard:

Date	Close	Gain/Loss	Cum. G/L
6/1/18	24,635.21	+219.37	+219.37
6/4/18	24,813.69	+178.48	+397.85
6/5/18	24,799.98	-13.71	+384.14
6/6/18	25,146.39	+346.41	+730.55
6/7/18	25,241.41	+95.02	+825.57
6/8/18	25,316.53	+75.12	+900.69
6/11/18	25,322.31	+5.78	+906.47
6/12/18	25,320.73	-1.58	+904.89
6/13/18	25,201.20	-119.53	+785.36

At the Close, Wednesday, June 13, 2018:
Dow Jones Industrial Average: 25,201.20, -119.53 (-0.47%)
NASDAQ: 7,695.70, -8.09 (-0.11%)
S&P 500: 2,775.63, -11.22 (-0.40%)
NYSE Composite: 12,785.75, -58.96 (-0.46%)

FOMC On Deck: Stock Rally Should End at 2:00 pm EDT

Void of volatility the past two days, US and global stock markets are about to get shock treatment courtesy of the Federal Reserve's FOMC, which will almost certainly increase the federal funds rate by 25 basis points, to 1.75-2.00%, the highest rate in well over a decade.

While the expected rate hike is well-anticipated, priced in (according to the usual suspect sources), and measured (one 25 BP hike per quarter is the new normal), markets will still see the rising rate environment for what it is: an economy killer, attracting all money to US treasuries and out of competing negative or near-zero-interest-paying bills, notes and bonds in other countries.

When the FOMC announces its policy decision at 2:00 pm EDT, the world will change in some small but all bad ways. Credit card payers will see their required monthly debt installments rise, any interest-rate sensitive debt obligations (most of it) will become more expensive, and, perhaps most important of all, stock buybacks will no longer appear to be the bargain they once were, when companies could borrow at extremely low interest rates to repurchase their own stock, rather than invest in capital equipment and labor.

The elephant in the room is the buyback scheme, one which has boosted stock prices to dizzying levels, based largely on lowered expectations via reducing the number of shares outstanding. Companies which had chosen to engage in the dumbest money move in recent history will still be clueless about how to expand their existing businesses. They will not invest in their own operations. They will not increase wages nor hire more human capital. They will continue their cowardly retreat into self-interested stock incentive bonuses for key executives, as if those people are the only ones in the organization who matter.

Sadly, US corporations are badly managed and have been for quite some time. The rot within the boardrooms and executive suites began many decades ago and has only accelerated though the first two decades of the new century, long after the "Greed is Good" Gordon Gecko exclamation point from the 90s.

Today, the fictional Mr. Gecko would be ridiculed for his naivety, modesty, and restraint by the avaricious purveyors of corporate theft currently occupying the positions of CEO and CFO at many major corporations traded globally.

As corporate executives continue to be glorified as champions of free enterprise and business leaders, elevated to the level of gods and goddesses, the corruption that has engulfed the entire political and economic spectrum will come to full bloom, the excesses and poor decisions exacerbated by tightening finial conditions. Just when everything becomes more dear and out of reach to the ordinaries, the wealthy and connected will resort to outright, in-your-face larceny, justified by an entitled mindset.

Once it begins to get worse, the levels of lawlessness, greed, immorality, and corruption will become unbearable, but, as it was in 2008 and 2009, none of the most obvious criminals will go to jail. Few will even be indicted.

When it's obvious that stocks are going to continue devaluing - a condition that's probably well-understood already by the elite - the rats will jump ship en masse along with their ill-gotten gains.

The short-term rally that began on June 1 may not end immediately after the FOMC decision, but it almost certainly will end shortly thereafter. The NASDAQ made a new all-time high on Tuesday while the Dow languished with a minor loss, ending a four-day win streak as it reached the upper band of its recent trend line.

Now comes the losing.

Next comes the lying.

Dow Jones Industrial Average June Scorecard:

Date	Close	Gain/Loss	Cum. G/L
6/1/18	24,635.21	+219.37	+219.37
6/4/18	24,813.69	+178.48	+397.85
6/5/18	24,799.98	-13.71	+384.14
6/6/18	25,146.39	+346.41	+730.55
6/7/18	25,241.41	+95.02	+825.57
6/8/18	25,316.53	+75.12	+900.69
6/11/18	25,322.31	+5.78	+906.47
6/12/18	25,320.73	-1.58	+904.89

At the Close, Tuesday, June 12, 2018:
Dow Jones Industrial Average: 25,320.73, -1.58 (-0.01%)
NASDAQ: 7,703.79, +43.87 (+0.57%)
S&P 500: 2,786.85, +4.85 (+0.17%)
NYSE Composite: 12,844.72, -12.24 (-0.10%)

Dow Turns Positive With Just 10 Minutes Left In Session; Thanks to Fed Minutes?

OK, lemmings, your nightly stock market news byte tells you that the Dow was up a whopping 52 points.

That's all you need to know, unless you want to know that the Dow and the other indices were down most of the day, with the industrials turning positive with just 10 minutes left in the trading day.

No need to worry about that 167-point drop by midday. By 4:00 pm EDT, that was ancient history because - according to the official narrative - the stock gurus were thrilled by the Fed Minutes from the May 2nd FOMC meeting.

Somehow, broad approval of two percent inflation and continued hiking of the federal funds rate (the betting is for four rate increases this year; one already in January) is good for the economy.

Just for fun, try out this nifty inflation calculator. You might be surprised to find that the cumulative rate of inflation since 1990 (28 years ago) is 91.7%, meaning the value of your dollars have decreased by nearly half. A $20 item in 1990 would cost $38.34 today.

Convinced that 2% inflation (about what it's been for the last 30 years) is a good thing? Think again. The Fed's mandate was to maintain stable prices, not constantly increasing prices. They've failed.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06
5/9/18	24,542.54	+182.33	+379.39
5/10/18	24,739.53	+196.99	+576.38
5/11/18	24,831.17	+91.64	+668.02
5/14/18	24,899.41	+68.24	+736.26
5/15/18	24,706.41	-193.00	+543.26
5/16/18	24,768.93	+62.52	+605.78
5/17/18	24,713.98	-54.95	+550.73
5/18/18	24,715.09	+1.11	+551.84
5/21/18	25,013.29	+298.20	+850.04
5/22/18	24,834.41	-178.88	+671.16
5/23/18	24,886.81	+52.40	+723.56

At the Close, Wednesday, May 23, 2018:
Dow Jones Industrial Average: 24,886.81, +52.40 (+0.21%)
NASDAQ: 7,425.96, +47.50 (+0.64%)
S&P 500: 2,733.29, +8.85 (+0.32%)
NYSE Composite: 12,743.40, -23.25 (-0.18%)

Stocks' Bounce Not Very Convincing; Bears Taking Control Of Market Sentiment

The Industrials ended a five-session losing streak on Wednesday, but, as dead cat bounces go, it didn't even register on the Boo-Boo Kitty scale, leaving the Dow Jones Industrial Average in the red for the month of April and still within whistling distance of correction territory (23,954).

If it hasn't become obvious to just about everyone on Wall Street that stocks are in some serious trouble after nine years of relentless stock buybacks and jerking up by Fed policies of ZIRP and QE, it should be quite clear now. With earnings season winding down, there's going to be nothing with which to prop up stocks - other than the usual central bank manipulation and other wily shenanigans - from the first week off May until the next FOMC meeting in June.

Stocks and the Fed are playing a dangerous game of chicken. If the Federal Reserve insists upon its path of raising interest rates every three or four meetings, stocks are going to tank. From the Fed's point of view, it probably doesn't matter what they do in the interest rate scheme, since they consider the business cycle to be at an end. That kind of thinking gives them full reign to raise rates, crash the markets, send the economy into recession (late 2018 or early 2019), so that they have sufficient ammunition to battle the downturn they created. It's a sickening policy from the prior century that badly needs replacing in the 21st.

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
4/25/18	24,083.83	+59.70	-28.51

At the Close, Wednesday, April 25, 2018:
Dow Jones Industrial Average: 24,083.83, +59.70 (+0.25%)
NASDAQ: 7,003.74, -3.62 (-0.05%)
S&P 500: 2,639.40, +4.84 (+0.18%)
NYSE Composite: 12,517.86, +3.87 (+0.03%)

Weekend Wrap: First Week of 2nd Quarter Losing, Just Like February and March

This edition of the weekend wrap begins with a comment to an article on ZeroHedge

One need not read the article in question, only question the conclusion.

• markets have started pricing in a Fed policy mistake, or 
• markets have started pricing in end-of-cycle dynamics.

BOTH, FTW, or, I'll take policy mistake and end-of-cycle dynamics for $1000, Alex.

​​​​​​​This article ignores the obvious.

The policy mistake was the March rate hike. It was either too soon, or completely mis-timed. One can assert, dependent upon where one is positioned, that any and all of the Fed's policies are mistakes, but that may be significantly overstating the case.

End-of-cycle dynamics? Give us all a break. The bull market began on March 9, 2009. It's now been nine years and one month, or 119 months, whichever you prefer. Nothing lasts forever, especially bull and/or bear markets.

The Dow Transportation Index (^DJT) is all one has to watch, since the Industrials have already broken below the Feb. 8 closing low.

According to Dow Theory - which, in matters of primary trends, has a track record approaching 100% - the transports need to confirm, and that number is 10,136.61 (yes, you should have that number memorized).

Where did the transportation Index close on Friday? 10,146.37. 10 points is all there is separating this market from turning bull to bear.

After Friday's mini-crash, stocks ended the week with a significant loss from where it started the week, the month, and the quarter, predictably, the NASDAQ being the worst performer.

Forget articles, commentary, and mainstream analysis. It's all noise. The Fed has made one policy error after another (keeping rates too low, too long, and, trying to raise rates in a weakened economy) and the bull market is ending. The close on the transports below 10,136.61 will tell you exactly when the market has turned, but it's not quite there yet. It could make the move on Monday, the 9th of April, but keen minds are looking at late may or June for the turn. Either way, the bull will be dead.

While there may be a bounce in the aftermath, it will not last and there is a good likelihood of a corollary recession 6-12 months beyond the turn.

That's all one needs to know.

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

At the Close, Friday, April 6, 2018:
Dow Jones Industrial Average: 23,932.76, -572.46 (-2.34%)
NASDAQ: 6,915.11, -161.44 (-2.28%)
S&P 500: 2,604.47, -58.37 (-2.19%)
NYSE Composite: 12,349.11, -222.83 (-1.77%)

For the Week:
Dow: -170.35 (-0.71%)
NASDAQ: -148.33 (-2.10%)
S&P 500: -36.40 (-1.38%)
NYSE Composite: -102.95 (-0.83%)

Weekly Recap: Stocks Get a Boost to End Month, But Still Finish Down for March

Call it window dressing, because that's pretty much what the final trading day of March will amount to, being that the markets have been battered and buffeted up and down - mostly down - for the past two months, gains on the Thursday prior to a three-day weekend should be considered a non-event.

As the March scorecard below shows, the big losses on the 22nd and 23rd could not be recouped, despite a bounce-back on Monday, the 26th, of nearly 670 Dow points. Combining the February and March declines, the Dow lost more than 200 points in those two months, and ends March more than 2500 points off the January 26 all-time high (26,616.71).

Of particular focus now are the declines following the most recent federal funds rate hike from Wednesday, March 21. Just after the 2:00 pm EDT announcement that day, the Dow rose to 24,977.65, making the drop post-FOMC a full 874 points, despite the bounce-back Monday (26th) and the close-out dead-cat-like bounce on Thursday, the 29th.

Also, keeping the chartists busy is the Dow Jones Transportation Index (^DJT), which nearly signaled bear market conditions on Wednesday, the 28th, three times dipping below the magic mark indicated by the February 8 close of 10,136.61 before finishing up with a slight positive bent. Thursday's 200+ point gain on the transports was more window dressing, short covering or outright central bank dip buying, giving the market some degree of confidence, even though there realistically should be little.

Anybody with an eye on the chart of the Transportation Index sold be keenly aware of the intra-day low on February 8, an awe-inspiring bottom at 9,806.79. Likewise, the intra-day low on the Industrial side was a jaw-dropping 23,360.29, on February 9.

The Industrials have already surpassed the February closing low of 23,860.46, finishing March 23 at 23,533.20. Therefore, according to Dow Theory, the only element missing from calling this market a bear - signifying a primary directional change - is for the Transportation Index to close below it's recent low to confirm.

As arcane and confusing as that may sound, the rigors of Dow Theory are almost never wrong when it comes to indicating primary changes. One only need check the stats from 2000 and 2008 (and many times before that) to see how that this signal is very accurate.

Not to say that the Dow and even more so, individual stocks, can't continue to dive to lower and lower depths, but it would be hard to see such a scenario developing without a significant slide on the Transportation Index.

Putting March in perspective, the losses here are notable, as March is traditionally a strong month for investors, with an average gain on the S&P 500 - according to this calculator - of 1.11% from 1950 to the present, outdone only by the months of April (1.34%), November (1.39%) and December (1.53%). If equities continue to show weakness through April it might come as a surprise, but, even if it doesn't, the months of May through September are traditionally the weakest, with cumulative returns of just 0.22% over that 1950-2017 span. August and September are actually negative for that time period, posting losses of 0.27% and 0.64%, respectively.

While those figures are for the S&P, they serve as something of a proxy for the Dow, so if a bear market is to eventually emerge (and these things often take some time to develop), there's a high probability that the bull could hang on until August, significant, as the first estimate of Q2 GDP would print late July.

For the week, the NASDAQ was by far the weak performer, the only index incapable of exceeding a two percent gain over the four-day period. It wasn't even close, as the NASDAQ gained only 1.01%, unsurprising, since the NASDAQ had been significantly out-performing the other indices.

All of this number-churning should come as a relief for both bulls and bears. As April unfolds, there may be an easing up in volatility, and some gains to be had, but the ominous signs of an overpriced and subsequently weakening stock market are proliferating, the general economy notwithstanding. This offers some time to adjust strategies before what seems to be an obvious downdraft coming this summer.

That may be a huge speculation, but that's what makes a market.

Dow Jones Industrial Average March Scorecard:

Date	Close	Gain/Loss	Cum. G/L
3/1/18	24,608.98	-420.22	-420.22
3/2/18	24,538.06	-70.92	-491.14
3/5/18	24,874.76	+336.70	-154.44
3/6/18	24,884.12	+9.36	-145.08
3/7/18	24,801.36	-82.76	-227.84
3/8/18	24,895.21	+93.85	-133.99
3/9/18	25,335.74	+440.53	+306.54
3/12/18	25,178.61	-157.13	+149.41
3/13/18	25,007.03,	-171.58	-22.17
3/14/18	24,758.12	-248.91	-271.08
3/15/18	24,873.66	+115.54	-155.54
3/16/18	24,946.51	+72.85	-82.69
3/19/18	24,610.91	-335.60	-418.29
3/20/18	24,727.27	+116.36	-301.93
3/21/18	24,682.31	-44.96	-346.89
3/22/18	23,957.89	-724.42	-1071.31
3/23/18	23,533.20	-424.69	-1496.00
3/26/18	24,202.60	+669.40	-826.60
3/27/18	23,857.71	-344.89	-1171.49
3/28/18	23,848.42	-9.29	-1180.78
3/29/18	24,103.11	+254.69	-926.09

At the Close, Thursday, March 29, 2018:
Dow Jones Industrial Average: 24,103.11, +254.69 (+1.07%)
NASDAQ: 7,063.44, +114.22 (+1.64%)
S&P 500: 2,640.87, +35.87 (+1.38%)
NYSE Composite: 12,452.06, +143.17 (+1.16%)

For the Week:
Dow: +569.91 (+2.42%)
NASDAQ: +70.78 (+1.01%)
S&P 500: +52.61 (+2.03%)
NYSE Composite: +274.36 (+2.25%)

Stocks Crash Post-Fed Rate Hikes, But The Media Will Still Falsely Blame President Trump

Here are just a few of the headline items for the week that ended with two disastrous days after the FOMC policy rate decision to raise the federal funds rate to 1.50-1.75%, the sixth rate hike in the last 27 months and probably the one largest policy mistake in the history of the Federal Reserve System, an unconstitutional private banking system that has wreaked havoc on not only the economy of the United States of America, but of the entire planet.

Dow Jones Industrial Average fell 426 points, closing out the week at it's lowest level since November 22, 2017. The Dow is off nearly 1500 points for the month of March, a worse decline than that of February. In just the past week, the Dow has shed some 1410 points, a 5.67% drop.

The S&P 500 fell 5.9% on the week, the biggest drop in more than two years.

The NASDAQ 100 plunged 7.3% in the week, the most since August 2015. All of the major averages are negative for the year, except for the NASDAQ.

Scapegoating the tariffs put forward by President Trump has been the sport of the week on the likes of CNN, NBC, CBS, ABC. Surely, the Sunday talk shows will be hooting and hollering over what bad judgement the president has shown, when, in fact, it is the Federal Reserve's radical policies over the past ten years that have caused major distortions on Wall Street, a false sense of security in stocks as sound investments, impoverishment of many retirees who were denied any meaningful interest income on their savings due to the Fed's zero interest rate policy that prevailed from 2008 though 2015.

Meanwhile, the Fed, in a position to cause much further damage to the economy by raising rates while the nation is heavily indebted, has done just so, and has not backed off from its planned position to unwind its bloated balance sheet, and actually increase its sales of securities in the second half of 2008.

While the tariffs President Trump has put forward are certain to cause some disruption in some segments of the economy, they are not, on their own merit, the ultimate cause for a stock market collapse, such as is occurring presently.

There can be no other culprit than the Federal Reserve for the recent stock market volatility and massive outflows from stocks. Their policies have been the guiding force before, during and after the Great Financial Crisis of 2007-09, so there should be no doubting that their policies are still guiding investment decisions.

The entire global economic structure is currently under assault by coordinated central bank intervention, ongoing massive stock and bond buying and selling beyond their charters, and the continuing issuance of debt as fiat money on a global basis.

From the US federal government to individual citizens, the signs of financial stress are at breaking points. The federal government, already "officially" $21 trillion in debt, on Friday passed an omnibus spending bill of $1.3 trillion, causing further debt issuance and higher debt servicing costs thanks to the Fed's rate increases.

Corporations, which have binged on stock buybacks since 2009 and most recently increased their level of indebtedness and slothful management with the recent repatriation of an estimated $2 trillion based on the tax reform enacted by congress and singed into law by the president recently.

Individuals are more indebted than ever before, with credit card and student debt at all-time highs, variable rate mortgages increasingly difficult to service while incomes have barely budged for the past 20 years.

Additionally, the tax burden on some of the wealthiest Americans, with incomes over $100,000 per year, is upwards of 50%, enslaving these people to endless payments for governments (local, state, and federal) that have displayed absolutely no fiscal restraint.

Continued declines in the stock market are going to impact pension funds throughout the world, both pubic and private. Most public pension funds are massively underfunded, and heavily invested in stocks. A severe downturn - which has just begun - will bankrupt these entities, causing them to renew on promises made to workers.

A heavily-concentrated media will assure the public that the stock market collapse is entirely the fault of one man, President Donald J. Trump, while the true criminals of extortion and debt slavery are the central banks and their private, unconstitutional banking system, which has been favored and kept afloat by a supine congress.

Dow Jones Industrial Average March Scorecard:

Date	Close	Gain/Loss	Cum. G/L
3/1/18	24,608.98	-420.22	-420.22
3/2/18	24,538.06	-70.92	-491.14
3/5/18	24,874.76	+336.70	-154.44
3/6/18	24,884.12	+9.36	-145.08
3/7/18	24,801.36	-82.76	-227.84
3/8/18	24,895.21	+93.85	-133.99
3/9/18	25,335.74	+440.53	+306.54
3/12/18	25,178.61	-157.13	+149.41
3/13/18	25,007.03,	-171.58	-22.17
3/14/18	24,758.12	-248.91	-271.08
3/15/18	24,873.66	+115.54	-155.54
3/16/18	24,946.51	+72.85	-82.69
3/19/18	24,610.91	-335.60	-418.29
3/20/18	24,727.27	+116.36	-301.93
3/21/18	24,682.31	-44.96	-346.89
3/22/18	23,957.89	-724.42	-1071.31
3/22/18	23,533.20	-424.69	-1496.00

At the Close, Friday, March 23, 2018:
Dow Jones Industrial Average: 23,533.20, -424.69 (-1.77%)
NASDAQ: 6,992.67, -174.01 (-2.43%)
S&P 500: 2,588.26, -55.43 (-2.10%)
NYSE Composite: 12,177.70, -199.69 (-1.61%)

For the Week:
Dow: -1413.31 (-5.67%)
NASDAQ: -489.32 (-6.54%)
S&P 500: -163.75 (-5.95%)
NYSE Composite: -606.68 (-4.75%)

Stocks Slammed After Fed Rate Hike; Dow Reaches Correction Level, More Pain Looms

Being as they are truly ugly - and predictable (see yesterday's post and many more before that for reference) - it might be appropriate to post just the numbers.

However, beyond the usual blathering nonsense from the financial "talking heads" in TV-land, it would be imprudent to not point out that the Dow Jones Industrial Average has fallen just into correction, down 10.30% from the all-time-high closing price of January 26 of this year.

With today's losses, the Dow is now down more than 1000 points for the month of March, after a collapse of 1100 points in February. This puts the blue chip average on track to reach bear market status by sometime between May 15 and June 21. The magic number for a 20% drop off the high is 21,293.37.

Think it can't happen? Reference the dotcom collapse of 2000, the GFC of 2008-09, or the crash in October 1929 whittled to the Great Depression.

Naturally, markets do not respond in straight lines, so there is the possibility of some gains between now and the next big political event, the mid-term elections in November. If the major averages are not in bear country by that time, there's something fundamentally wrong with any and all systems of market prediction.

The Dow has receded beyond the previous interim low, 24,538.04, and is very close to the absolute near-term bottom of February 8, of 23,860,46 (less than 100 points away).

Three of the four major averages are in the red for 2018, the lone survivor being the NASDAQ, sporting a gain of less than 300 points. With that in mind, further losses should be felt hardest in the NASDAQ, as it is front-loaded with tech and financial stocks. Being the most volatile of the indices, the NASDAQ could come under severe pressure as early as Friday (tomorrow), though a dead-cat bounce to end the week is also an understandable scenario.

with the Fed's rate hike being the proximate cause of the most recent selling, it's now behind the market, but so long as the Fed talks up rate increases and balance sheet unwinding it will bleed from stocks. The entirely false narrative of "recovery" and "growth" will become more vilified and ridiculed as weak economic data continues to roll forward. Estimates of first quarter GDP have fallen precipitously in recent days, as it is generally the worst period for GDP due largely to weather, and, this Winter has lingered longer than most (it's already Spring). There's snow on the ground and cold temperatures throughout the Northeast and into the Midwest.

The advance estimate of first quarter GDP will be announced the last week of April, on the 27th. It would be expected that any gains between here and then will be wiped away rather quickly when the figure comes in at something South of two percent.

Dow Jones Industrial Average March Scorecard:

Date	Close	Gain/Loss	Cum. G/L
3/1/18	24,608.98	-420.22	-420.22
3/2/18	24,538.06	-70.92	-491.14
3/5/18	24,874.76	+336.70	-154.44
3/6/18	24,884.12	+9.36	-145.08
3/7/18	24,801.36	-82.76	-227.84
3/8/18	24,895.21	+93.85	-133.99
3/9/18	25,335.74	+440.53	+306.54
3/12/18	25,178.61	-157.13	+149.41
3/13/18	25,007.03,	-171.58	-22.17
3/14/18	24,758.12	-248.91	-271.08
3/15/18	24,873.66	+115.54	-155.54
3/16/18	24,946.51	+72.85	-82.69
3/19/18	24,610.91	-335.60	-418.29
3/20/18	24,727.27	+116.36	-301.93
3/21/18	24,682.31	-44.96	-346.89
3/22/18	23,957.89	-724.42	-1071.31

At the Close, Thursday, March 22, 2018:
Dow Jones Industrial Average: 23,957.89, -724.42 (-2.93%)
NASDAQ: 7,166.68, -178.61 (-2.43%)
S&P 500: 2,643.69, -68.24 (-2.52%)
NYSE Composite: 12,377.39, -306.37 (-2.42%)

Fed Has Ventured Into Dangerous Territory With Most Recent Rate Hike

Whether Wednesday's 25 basis point hike in the federal funds rate will eventually become a seminal moment in economic history, only time will tell. On the surface, there are a good number of indications that the Fed, by increasing the overnight lending rate to 1.50-1.75%, may have finally blundered into a crucial policy error.

The hike being the sixth such rate increase of 0.25% in the past 27 months, the Federal Reserve has ventured into an area which has the potential to do more harm than good, as evidenced by the sudden turnabout in stocks after the rate decision was announced, and, more to the point, during Fed Chairman Jerome Powell's first press conference.

Stocks initially rose on the release, but gave back all of the gains, finally ending with complete capitulation as the trading day drew to a close, turning what was a brief 250-point gain into a lasting 45-point loss at the close.

What has equity investors puzzled and anguished is the Fed's insistence on their continued insistence on higher interest rates, despite economic data that shows quite clearly that inflation is nascent and growth largely a chimera, a construct of rose-colored projections of the general economy added to massive increases in government spending, which is, in the end, fully lacking in productive qualities.

Governors of the Federal Reserve, ensconced, as they are, within their cocoons of smug condescension, are either uninformed to the realities of life in the real world or purposely interpreting their trumped-up economic data as reflective of a booming economy.

The other possibility is that the Fed officials know that the economy - both domestic and global - is headed for recession, and they are preparing for the worst, employing the only tool they believe effective, the varying of interest rates with the intent to either slow lending and economic activity by raising them, or increase the same by lowering them.

Sadly, the Fed has the cart well out in front of the horse. Their rate increases will slow the economy, precisely at a time in which they should be doing nothing. Eventually, the Fed will have to reverse the direction of their myopic monetary monopoly, as the economy - which has been limping along at two percent growth or less for the past ten years - and lower rates, ushering in another era of mad money machinations, sending valuations of stocks out into the cosmos, while the public watches the explosion of wealth inequality soar to unimagined heights.

Besides the folly of raising rates in a weak economic environment, the Fed continues to preach that they are decreasing their massive balance sheet, rolling off their horde of somewhat dubious mortgage-backed securities and treasury bills, notes and bonds.

Having taken a path toward a rather rapid depletion of liquidity, Mr. Powell and his cohorts will soon find that themselves vilified and, with any hope, bankrupt.

Their continuing charade of being the "best and brightest" know-it-alls in the financial universe must come to an end soon, lest the entire global economic structure be collapsed into one giant heap of unplayable debt, impoverishing the world's billions of citizens while laying bare their own conceit, deceit, and utter depravity.

Dow Jones Industrial Average March Scorecard:

Date	Close	Gain/Loss	Cum. G/L
3/1/18	24,608.98	-420.22	-420.22
3/2/18	24,538.06	-70.92	-491.14
3/5/18	24,874.76	+336.70	-154.44
3/6/18	24,884.12	+9.36	-145.08
3/7/18	24,801.36	-82.76	-227.84
3/8/18	24,895.21	+93.85	-133.99
3/9/18	25,335.74	+440.53	+306.54
3/12/18	25,178.61	-157.13	+149.41
3/13/18	25,007.03,	-171.58	-22.17
3/14/18	24,758.12	-248.91	-271.08
3/15/18	24,873.66	+115.54	-155.54
3/16/18	24,946.51	+72.85	-82.69
3/19/18	24,610.91	-335.60	-418.29
3/20/18	24,727.27	+116.36	-301.93
3/21/18	24,682.31	-44.96	-346.89

At the Close, Wednesday, March 21, 2018:
Dow Jones Industrial Average: 24,682.31, -44.96 (-0.18%)
NASDAQ: 7,345.29, -19.02 (-0.26%)
S&P 500: 2,711.93, -5.01 (-0.18%)
NYSE Composite: 12,683.76, +20.12 (+0.16%)

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%)