Showing posts with label financials. Show all posts
Showing posts with label financials. Show all posts

Tuesday, November 13, 2018

Dow Down 100, NASDAQ Up 0.01; Crude Oil the Culprit

From the You Can't Make This Stuff Up Department:

The Dow was down 100 points (and 69 cents, but who's counting), while the NASDAQ finished a hectic day of trading with a gain of 0.01. All told, this was a losing session, as both the S&P 500 and NYSE Composite ended the day underwater.

One might have assumed that Tuesday's losses were an extension from Monday, with Apple leading stocks lower, but, even though the Cupertino computer colossus did finish lower by an even one percent, the biggest losers on the Dow were energy companies ExxonMobil and Chevron, which bracketed Boeing (BA), a 2.11% loser. XOM lost 2.29%. CVX was down 1.74%.

Volatility in stocks is making everybody crazy. The Dow was up 1075 points over the first six sessions in November, but has given back 905 in the past three sessions, leaving it up a mere 170 points for the month, one which traditionally is among the best for long players.

Thus, the answer to the question of what moved markets today is simple: the price of oil, as WTI crude lost ground for the 12th straight day. At $55.19, it's at the lowest level since November last year. Tuesday's decline was also the largest during the recent rout, down nearly eight percent.

Saudi Arabia reduced its estimate for global demand from two million barrels per day to 1.29 million, sending the price sharply lower. Oil peaked on October 3rd, above $76/barrel, and has been on a diagonal course lower since, now officially in a bear market.

While the Saudi's may be fretting over demand and promising production cuts in the near future, the real villain in the oil patch is supply. There's been a glut of oil forever, and the only movement in price was due to artificial crises, forced production cuts, and pure speculation. In June of 2017, WTI crude oil was going for $46/barrel, but was bumped up continuously over the next 16 months before the recent setback. From all indications, reduced demand and oversupply could push prices down below $50/barrel before Thanksgiving and further declines might be a welcome Christmas present for drivers and those who heat their homes with oil.

A lower price for oil, and, consequently, for gasoline and other derivatives, should act to boost the general economy, allowing consumers more disposable income to spend on necessities and/or holiday splurges, all of which should be positive for markets. However, the math isn't quite so simple, as Americans, beset with record credit card and other debt, might tighten their collective belts and pay down some of those nasty, recurring, monthly bills on credit cards with interest rates well beyond what used to be considered usury.

For the pair traders out there, that would mean shorting oil stocks and financials while buying consumer staples and cyclicals.

Fun for everyone.

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

At the Close, Tuesday, November 13, 2018:
Dow Jones Industrial Average: 25,286.49, -100.69 (-0.40%)
NASDAQ: 7,200.88, +0.01 (0.00%)
S&P 500: 2,722.18, -4.04 (-0.15%)
NYSE Composite: 12,328.23, -15.28 (-0.12%)

Monday, April 11, 2016

Amid Economic Unease, Former Fed Chair Bernanke Proposes MFFP (aka Helicopter Money)

We must be nearing the end of the current monetary system, since there is no growth, no prospects, and the entirety of the future has been mortgaged to the tune of $19 Trillion in US debt, and much, much more in unfunded liabilities via entitlement programs such as Social Security and Medicare/Medicaid.

Adding to the belief that the end is nigh, former Fed chairman, Ben Bernanke, now working for the Brookings Institute, penned a blog post today entitled, What tools does the Fed have left? Part 3: Helicopter money, wherein he openly advances the idea of direct money drops to the public. That would, ideally, include you, me, your poor uncle Tony, aunt Gracie, your neighbors, the weird guy in the run-down house on the corner, and everybody else who could use a few extra c-notes in the mail, ostensibly, tomorrow, and maybe, a few times a year, or month, or maybe even weekly...

You see where this is going, right? Bernanke is not convinced that US economic growth is kaput, yet he throws this out there for public consumption because, well, maybe he's grown weary of downloading porn, or he has to do something to make him seem relevant to the people paying his salary, or, perhaps he actually believes this is a realistic solution should the US economy completely stall out, or, heaven forbid, enter recession (like the one we've been in for the past eight years).

Not to make too much fun of the poor, old coot, but Bernanke was the Fed chairman during the last financial crisis, and his policies didn't do much to relieve anybody but the one percenters from economic repression, so it's unlikely that anything he suggests in his new role as wizened sage overseeing the global economy from some ivory tower will accomplish anything more than perverting the economy more than it already has been.

The most favored paragraph from Bernanke's flight of fancy is this one:
In more prosaic and realistic terms, a “helicopter drop” of money is an expansionary fiscal policy—an increase in public spending or a tax cut—financed by a permanent increase in the money stock. [4] To get away from the fanciful imagery, for the rest of this post I will call such a policy a Money-Financed Fiscal Program, or MFFP.

Yes, he coined a new acronym, MFFP, which I, Fearless Rick, a junior economist at best, reconfigured to mean Mother-(a vulgar word for copulating)-Foolish-Policy, and I think my naming makes more sense than anything any former Fed chairman could conjure. After all, I have been a writer for newspapers and blogs for many years, while Fed-heads only talk about money, interest rates, and other arcane foibles of economics. They're not very creative; I have to be (or I'll die, but that's another issue for another time).

So, choose whichever wording your little heart desires, I think Bernanke's just another old fart with a Ph.D., which these days are a dine a dozen. Being a doctor of anything these days isn't what it used to be. Doctors don't make that much, especially since the US has adopted a socialized system of medicine, which you all know and swear at when you receive your monthly health care statement, as Obamacare.

Being a doctor is over-rated. So is the Fed. What a bunch of morons. Seriously.

My point is simple. Handing out money, no matter to whom you bequest, or whatever you call it, or whatever cutesy acronym you paint on it, or whichever "mechanism" you use to do it, is just bad policy, and just plain stupid.

Moreover, Bernanke exposes himself as a completely dull ignoramus for even suggesting "money drops," not once, not twice, but now at least three times in his esteemed career as a monetary theorist. As Mark Twain once said,
It's better to keep your mouth shut and appear stupid than open it and remove all doubt.

I guess Bernanke never read that line, or worse, failed to understand it.

Geez. Just put your hand out. Somebody will magically fill it with cash. Yeah, and the queen of England is a babe.




Today's market noise:
S&P 500: 2,041.99, -5.61 (0.27%)
Dow: 17,556.41, -20.55 (0.12%)
NASDAQ: 4,833.40, -17.29 (0.36%)

Crude Oil 40.38 +1.66% Gold 1,259.40 +1.25% EUR/USD 1.1408 +0.05% 10-Yr Bond 1.72 +0.23% Corn 356.75 -1.52% Copper 2.08 -0.19% Silver 15.93 +3.55% Natural Gas 1.93 -3.07% Russell 2000 1,094.34 -0.27% VIX 16.26 +5.86% BATS 1000 20,682.61 0.00% GBP/USD 1.4233 +0.77% USD/JPY 107.9395 -0.11%

Wednesday, April 3, 2013

Something's Up... and it's Not the Stock Market

Intuition is vastly underrated by the scientific or technological community.

Understanding that the twinge of doubt or "gut feeling" is more than just an emotional reaction but in reality a hot process of accumulated experiences - some deeply-rooted and ancestral, others from immediate life experience - raises the process of intuitive thinking to a better standing, one that can assimilate data in microseconds and respond with appropriate action.

It's something along the lines of survival instinct in animals, who will move quickly at the rustling of leaves or changes in the flow of a stream. Humans, plugged into cell phones, iPods and a dizzying array of self-created distractions often don't have access to their own intuitiveness in the way other creatures do, but, sometimes, the clues are just too obvious to miss.

Such was the case with today's market action.

First, the ADP employment report for March, released prior to the opening bell, offered the second of three straight data point this week that was of a negative nature. The creation of 158,000 new jobs in the month was well short of the anticipated 197,000, and a precursor to Friday's "all-important" Non-farm payroll data from the BLS.

The other two data points on the negative side were the drop in the ISM index on Monday and the ISM Services index drop at 10:00 am EDT, that showed a slowdown to 54.4 from 56.0 in February.

Those were the catalysts to some pretty serious selling in equities, but also in gold, silver, oil, copper, corn, financial stocks, and a boost in bonds that sent yields lower, a trend that seems to be quite well-entrenched of late.

By midday, it was fairly obvious that everything was falling at the same time, which is not normal. On top of the usual market issues, the North Korean nut case keeps ramping up the rhetoric - the US responding with ongoing escalation - and the vision of depositor funds being vanished from bank accounts in Cyprus still fresh, the notion that things were fast unraveling was hard to miss.

Analysts of various stripes have been warning about a downturn in the markets for weeks, if not months, and the 100+ point decline on the Dow may serve notice that the top is in and everything from here to October (if we're lucky) is going to be downhill. The more obvious evidence comes in the form of the crumbling US economy, boosted with easy money, welfare checks, food stamps, disability payments and other government transfer payments that still cannot produce a GDP growing at faster than a two percent clip.

All the evidence is out there, in front of everyone's eyes, but it seemed that only today, the buzz-heads and stock jocks in equity la-la-land finally took the bait and took a big chunk out of the normalcy bias that pervades trading desks and the floors of the exchanges.

There was actual fear in the air, rather than the usual blather that the "Fed has our back," that has been conventional wisdom for the past four-plus years.

In effect, it's the Fed that has caused, in large part, the continuum of crisis that continues unabated, their easy money policies creating distortions of immense proportions, so that almost everything is mis-priced, mis-allocated and misinterpreted, the result being one massive, global mistake of monetary mismanagement that threatens the entire financial and social fabric of the planet.

It didn't take a genius to figure all of this out, just a feeling, that when everything began falling, the tumbling would not stop, the last time this happened (our minds reeling and whirring like the great analytical tools they are) was September of 2008, when Lehman Brothers was about to go under and the world changed - not for the better.

Mark this date, because it may be one for the history books, noted as the beginning of the end, when the tsunami of financial events, forestalled since the extraordinary measures of the Fed and other central banks in 2008-09, finally came rushing onshore, all at the same time, with a force and a fury that's been building since those well-embraced days of Hank Paulson putting a $700 billion gun to the head of the government and threatening to pull the trigger.

We may have weathered the storm of the past four years, but the backlash may be even worse, and it's coming faster than most people can anticipate or prepare for.

It's a funny thing about predicting disasters. You're humored or ignored or laughed at all the way up to the actual event. And then, people ask you what to do, when you've been telling them just that, all along.

Stocks may be up again tomorrow, or for the next week or month, even, but there's trouble coming, you can just feel it.

Dow 14,550.35, 111.66 (0.76%)
NASDAQ 3,218.60, -36.26 (1.11%)
S&P 500 1,553.69, -16.56 (1.05%)
NYSE Composite 8,983.40, -109.50 (1.20%)
NASDAQ Volume 1,813,335,250
NYSE Volume 4,418,003,000
Combined NYSE & NASDAQ Advance - Decline: 1499-4977 (huge)
Combined NYSE & NASDAQ New highs - New lows: 182-92 (tighter)
WTI crude oil: 94.45, -2.74
Gold: 1,553.50, -22.40
Silver: 26.80, -0.451

Monday, October 15, 2012

Did Retail Sales Power a Rare Monday Rally?

Retail sales for September, as reported on Monday prior to the opening bell, were up sharply year-over-year and were up 1.1% after a 1.2% rise in August.

So, did the retail sector fuel the rare Monday rally, which was only the third time stocks had shown gains on a Monday in the past 20 weeks?

Well, yes they did, as the Consumer Cyclical space gained 1.11%, the best sector gain of the day. Following were Health Care and Financials, the latter based largely on an earnings beat by Citicroup (C), which beat solidly on revenue as well.

The timing could not have been better for options players as October monthly options settle this week, on Friday, just in time for stocks to head to new highs and savvy options professionals cash in on their bets.

Trading on this Monday was a radical departure from last week's broad decline, with the advance-decline line repairing itself and new highs beating new lows by a 2-1 ratio.

Oddly enough, the market wins either way in the currently-convoluted presidential debate regime that is market psychology. With retail and stocks doing well, one would envisage an Obama victory on November 6, anathema to the markets, but, good numbers are good numbers, so, stock traders went along for the ride.

Sticking with the current thinking, even if retail sales had been poor, stocks would probably have risen anyway, because the poor numbers would indicate a Romney victory, which the market is said to love.

In either case, stocks win, even on a day when commodities were hit hard across the board, especially in the precious metals segment, as gold and silver were pounded lower right from the opening of trading.

That seems to be the game plan, at least for today, by the central bank stock market cartel controlling markets worldwide. Buy riskier assets and sell off those things that are proven to be a reliable store of value.

It's working, as stocks are within 5-8% of all time highs on the S&P and the Dow. It's a very interesting time for both political junkies and market watchers, but should get even more intense during the week and after options expiry on Friday. There's still unfinished business in Europe, mostly regarding Greece and Spain, and a shock from the land of the socialists could easily upset any balancing act currently taking place in the markets.

Most of the attention is focused on Tuesday night's presidential debate, the current wisdom saying that another poor performance by president Obama would practically hand the election over to Mitt Romney, the Republican challenger, making the event must-see TV for all, despite the thinly-veiled sarcasm in that statement.

The debates are largely political porn, with many voters having already made up their minds. If Obama purposely throws Tuesday's debate, as he did the first one, it would give Romney an edge, so, considering how the media whores need to keep the American public on the edge of their seats right up until - and beyond - election day, count on the President to deliver some serious body blows Tuesday night, followed by a negative market reaction Wednesday.

With the election just three weeks away, expect the rhetoric and noise to rise to a crescendo in coming weeks. Along with it could be a climactic rise in stocks, with the Dow touching off new all-time highs and the S&P hot on its heels, or, a dramatic turndown heading into the big fiasco that is election day in America.

Dow 13,424.23, +95.38 (0.72%)
NASDAQ 3,064.18, +20.07 (0.66%)
S&P 500 1,440.13, +11.54 (0.81%)
NYSE Composite 8,296.97, +69.89 (0.85%)
NASDAQ Volume 1,536,536,250
NYSE Volume 3,257,196,000
Combined NYSE & NASDAQ Advance - Decline: 3596-1897
Combined NYSE & NASDAQ New highs - New lows: 133-65
WTI crude oil: 91.85, -0.01
Gold: 1,737.60, -22.10
Silver: 32.74, -0.926

Monday, June 6, 2011

Stocks Pounded Again as No Catalyst Exists; BofA Gets a Taste of Own Medicine

After last week's carnage, traders lined up on Monday for what looks to be one of the duller trading weeks of the year, though the Greek bailout crisis in Euroland might change the scenario a bit.

There is scant economic news and the quarter doesn't end until June 30, so there are no corporate quarterly earnings reports on which to trade, which leaves markets in a situation nearly resembling "every man for himself."

Inasmuch as traders are a courageous lot, there was some horse-swapping in the session, though most of it was in the form of shedding assets because the US economy looks to be falling back upon itself and could be headed for another recession. QE2 ends abruptly just after options expiration on the 17th, so one could expect an even more severe downturn at that time.

Banks are once again in the cross-hairs. They led today's decline and are possibly among the worst risk assets to be holding at present, especially in the case of the big ones: JP Morgan, BofA, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo.

While many have taken to calling this a "soft patch" - which is just another term for "I have no idea because I only can make money when stocks go up" - more hardened economists see the current condition as analogous to the Fall of '08, as Greece (and maybe Spain, Portugal and Italy) takes the place of Lehman Brothers and another solvency crisis comes to bear.

However, it could be even deeper than that, with one of the major US banks finally throwing in the towel. In that case, it's likely to be Bank of America (BAC), which was highlighted in Fortune magazine on Friday.

In the article linked above, contributor Abigail Field - who has penned a number of solidly-researched pieces on the mortgage crisis - claims that the extent of sloppiness, incompleteness and outright fraud contained in mortgages originated and securitized by Countrywide (taken over by Bank of America in 2008) is likely much more severe and perverse than anyone had imagined and BofA wasn't letting on about it.

Bank of America is easily the one most crippled by the mortgage and foreclosure crisis and the extent of their losses may have been (probably is) grossly understated, both by the bank and by regulators. The sheer volume of bad loans, fraudulent documents and outright chaos in the mortgage servicing department of Bank of America would have taken down a smaller institution years ago, but BofA is the nation's largest bank and they've been aided continuously by the Federal Reserve, at taxpayer expense.

The severity of the crisis continues to dog the mega-bank at every turn and they may have to make the decision of off-board the entire Countrywide unit in order to salvage what remains of their institution. Of course, this is speculation, but the regulations still being written for the Dodd-Frank bill may be complete enough to call for an orderly winding down of the bank should it pose systemic risk, and surely it does.

To a lesser extent, Wells-Fargo (WFC) faces the same situation, as they managed to snatch up Wachovia - and all their no-doc, low-doc loans - during the turmoil of the financial crisis.

On the day, both stocks finished well into the red, with BAC falling to its lowest closing level since May 15, 2009, breaking below the close of 10.92 on November 30, 2010, losing 45 cents, to 10.83. Wells-Fargo (WFC) lost 0.60 to 26.26 and is close to making a double-bottom.

Today was a truly ugly day on Wall Street, as stocks simply lost value steadily, albeit slowly, throughout the session. The lows of the day were reached shortly after 3:00 pm and an abrupt rally fizzled in the final minutes. Nothing but reluctance to sell is keeping this market from an outright crash.

Dow 12,090.11, -61.15 (0.50%)
NASDAQ 2,702.56, -30.22 (1.11%)
S&P 500 1,286.17, -13.99 (1.08%)
NYSE Composite 8,115.87, -106.28 (1.29%)

Despite the modest declines, internals were shattered. Losers dominated winners, 5175-1436. The NASDAQ posted just 31 new highs, overwhelmed by 131 new lows. On the NYSE, there were just 27 new highs, but 65 new lows, putting the combined number at 58 new highs to 196 new lows. This is the third straight day of the lows beating the highs. On Thursday of last week, it was 115 to 76 and Friday saw 130-68, both in favor of new lows.

This is a very telling sign that we are about to enter a serious correction which should last months, at least through September. A ton of money has already fled stocks and more will follow. Volume was moderate, but only because there are fewer and fewer players every day.

NASDAQ Volume 1,826,802,125.00
NYSE Volume 4,034,310,000

Crude oil futures fell $1.21 to $99.01. Gold advanced $2.40, to $1544.80. Silver finished up 51 cents, at $36.80

Finally, in the video below, some justice was served in Florida, where Bank of America got their just deserts.

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.

Friday, March 27, 2009

Reality, Resistance Force Profit-Taking at Week's End

After becoming absurdly overbought, US equity markets finally produced an intelligent about-face on Friday, though there remain a large number of holdouts who believe that the current condition is something other than an abnormally-large bear market rally.

The major indices gave back most of Thursday's ridiculous gains but still finished the week very much on the positive side. There was little in the way of economic reports or company earnings filings, so investors were mostly on their own, playing the momentum trade, and the momentum had clearly run its course to the upside, as the NASDAQ ended in positive territory for the year on Thursday, but came back to earth on Friday and the Dow broke dangerously close to upside resistance at 8000 before backing well away today.

The week was the third straight that stocks had finished with gains, and, in case you're keeping score, was the 4th time this year that stocks ended a week higher, against 8 which closed on a negative note. For some perspective, the Dow is down exactly 1000 points for the year, while the NASDAQ is off only 34 and the S&P down 88, more in line with the Dow.

Obviously, the NASDAQ contains far fewer financial stocks and is overweighted with tech stocks and smaller corporations, so we may be about to witness the stock market equivalent of Revenge of the Nerds as new-age technology companies outperform older, more established (and with heavier debt burdens and legacy costs) companies on the Dow and NYSE. Speaking of the NYSE Composite, it has performed the on line with the Dow, down 660 points for the year.

Dow 7,776.18, -148.38 (1.87%)
NASDAQ 1,545.20, -41.80 (2.63%)
S&P 500 815.94, -16.92 (2.03%)
NYSE Composite 5,096.64, -133.89 (2.56%)

Internals were decidedly negative, with advancing issues being outnumbered by declining ones, 4896-1612, a 3-1 ratio. New lows continued to pour in ahead of new highs, though at a moderate pace, 110-25. That metric, despite the huge recent rally, has yet to roll over. When it does, it is likely to be short-lived, as stocks should return to some more normal range (between 6900 and 7500 on the Dow). After that, it's anybody's guess where they will go, though a retest of the low (Dow 6550) is more than likely in the offing, though the exact timing of that move is as yet unclear. It could be merely weeks away or many months. Consult your own crystal ball if you desire a more accurate reading.

Volume was down slightly from levels seen during the run-up, indicating that there are still stubborn types holding recent gains. Those should be eviscerated over the coming 5 weeks, as the next round of corporate earnings takes center stage.

NYSE Volume 1,443,266,000
NASDAQ Volume 2,102,247,000

Over in the commodity pits, life was equally downbeat as oil slipped another $1.98, to $52.38, a bit of a relief for drivers as gas prices have recently edged back above the $2 mark. Gold fell $16.90, to $925.30. Silver was down 36 cents to $13.26. The precious metals continue to languish in a trading range, with gold hanging between $880 and $990 and silver trading iroughly between $12 and $13.75. Investors seem to be torn between buying the assets as inflation hedges and selling them on upticks in price during a deflationary trend. Both have been right at different times.

Just after the market closed (one can only wonder in amazement at the timing of these things) the FDIC took over Georgia's Omni National Bank, and it's nearly $1 billion in assets - pocket change in today's environment.

The coming week should be highly entertaining and instructional. On Tuesday, the S&P/Case Shiller Home Price Index numbers and Consumer Confidence for March are released prior to the market's open. Wednesday offers a bonanza of economic reports, including the ADP employment report for March, Construction Spending and Pending Home Sales for February, Crude Inventories and March Auto and Truck Sales. If the market can absorb that, Friday comes the government's official figures for March Non-farm Payrolls.

Traders will likely be hard-pressed to hold onto recent gains. Enjoy some great college hoops this weekend and get ready for a wild ride next week.