With the FOMC decision Wednesday to reduced the federal funds overnight lending rate another 25 basis points, to a range of 1.50-1.75%, stocks took a the rest of decision day and Thursday to digest the news, then ramped stocks on Friday, sending the NASDAQ and S&P 500 to record closings and the Dow Jones Industrials and NYSE Composite near all-time highs.
While the third consecutive rate cut was able to reawaken some of Wall Street's animal spirits, it may be the last one for a while. Changing the wording in some parts of their statement, the Fed took on a more hawkish stance concerning rates going forward. Fed policy will remain data dependent, but not necessarily active. That didn't bother stock traders, who saw the opportunity to ignite what may extend into a holiday rally, and ran with it.
Wall Street's enthusiasm came a day after the US House of Representatives voted along strict party lines to make their impeachment inquiry against President Trump just a little more public than it has been up to this point, wherein Democrats, led by Chairman of the Permanent Select Committee on Intelligence, Adam Schiff, held secret, closed door depositions and heard hearsay testimony from various witnesses in connection with a phone call the president made to Ukraine President Volodymyr Zelensky back in July.
The charges the Democrats have alleged against Mr. Trump may be scurrilous at worst and inconsequential at best, but that hasn't prevented the Democrats to continue to spread stories to their friends in the corrupt mainstream media to smear the president in the run-up to the 2020 election. Not a single Republican voted in favor of the resolution which formally enshrined the inquiry and expanded it to other committees.
Washington being thus rendered impotent as it wastes the taxpayer dime on ridiculous accusations and pointless investigations - along the same lines as the 2+ years of the infamous Mueller probe - it does give Wall Street some relief, understanding that the government will be introducing no new laws or regulations that might impede the current, long-standing bull run.
Elsewhere, outside the United States, the world is burning, either through popular strife in countries and places as diverse as Chile, Hong Kong, and Spain (Catalonia), or by economic policy, especially the brunt instrumentality of negative interest rates, in many European countries.
China's economic slowdown became an issue this week as well, demonstrating that the Chinese hard-line stance on trade negotiations with the United States is a charade. The Chinese government knows full well that it needs cooperation with its main trading partner, but insists on slow-walking any formal agreement. President Trump is well aware of China's condition and has maintained his equally-tough positions through whatever negotiations have been made or planned. China is eventually going to lose its grip and be forced to come to terms with the United States or risk popular uprisings of its own people.
Ignoring the background noise of geopolitics, companies continued to roll out third quarter earnings reports which were modest, but nowhere near disastrous. Additionally, US GDP came in at a stronger-than-expected 1.9% in the first estimate, and October job growth was muted, but well beyond expectations, delivering a non-farm payroll report that saw job gains of 128,000, following an upwardly revised 180,000 increase in September, easily beating market expectations of 89,000. Even though the BLS report is a damaged documentary on true economic growth, the trading community saw this as a positive one and responded accordingly.
Bonds rallied. The yield curve, having un-inverted in early August, continued to steepen, with the 10-year note at 1.69% on Thursday before closing out the week at 1.73%. The longer-duration, 30-year bond, which had fallen under two percent in July, and was being sold off until this week, rallied sharply, with yields falling from 2.34% on Monday to 2.17% on Thursday, settling on Friday at 2.21%.
Gold and silver were also bid, gold regaining the $1500 per ounce level and silver shooting beyond $18 per ounce.
The week ahead features more madness from Washington, a slew of earnings reports, including some popular names like Shake Shack, Uber, UnderArmor, Sprint, Hertz, Groupon, Mariott (Monday), Chesapeake Energy and Newmont Mining (Tuesday), Roku, CVS Health, Square, Humana, Qualcom (Wednesday), Teva, Planet Fitness, AMC Entertainment, Cardinal Health, Stamps.com (Thursday), and Duke Energy and US Concrete (Friday). The Walt Disney Company (DIS), a Dow component, reports Thursday.
Barring any unforeseen negative developments like bank runs (China), riots and street killings (Hong Kong), or desultory commentary on negative interest rates (Denmark), all appears to be smooth sailing through Black Friday, which approaches rapidly, just 19 trading days hence.
Happy Holidays? Too soon?
At the Close, Friday, November 1, 2019:
Dow Jones Industrial Average: 27,347.36, +301.13 (+1.11%)
NASDAQ: 8,386.40, +94.04 (+1.13%)
S&P 500: 3,066.91, +29.35 (+0.97%)
NYSE Composite: 13,300.27, +128.46 (+0.98%)
For the Week:
Dow: +389.30 (+1.44%)
NASDAQ: +143.28 (+1.74%)
S&P 500: +29.35 (+0.97%)
NYSE Composite: +154.03 (+1.17%)
The following is dedicated to California Rep. Adam Schiff:
Showing posts with label interest rate policy. Show all posts
Showing posts with label interest rate policy. Show all posts
Sunday, November 3, 2019
Monday, December 17, 2018
Global Stock Rout Deepens; Dow Loses Another 500 Points; NASDAQ Down 16.7% Since August
The pain is spreading, and it doesn't seem to be about to abate any time soon.
According to Dow Jones Market Data, the S&P 500 closed at its lowest level since October of 2017, the NASDAQ finished at its lowest since November of 2017, while the Dow closed at lowest level since March 23. Only a rally in the final 15 minutes of trading kept the Dow from closing at its lowest level of the year.
The Dow had plunged as low as 23,456.8 with just minutes to the closing bell, but short-covering boosted the industrials more than 100 points in the final minutes of trading. Not that it matters very much, but the closing low for the year was 23,533.20. Prior to that, the Dow closed at a low of 23,271.28 on November 15, 2017.
Both of those levels are likely to be subsumed, as the stock rout about to be hit with another dose of reality. Trumping anticipation, the Fed meeting which ends Wednesday afternoon at 2:00 pm ET, is almost certain to include a 25 basis point raise to the federal funds rate. On Friday, the federal government, unable to reach a suitable compromise on President Trump's border wall, will go into a partial shutdown.
Neither event - especially the federal shutdown - is of the earth-shattering variety, but they come at a very inopportune time for the market, which is struggling to find any good news upon which to hang a rally.
Europe is either in flames (France), in a bear market (Germany), or about to enter a recession thanks to the end of the ECB's brand of QE. Beyond that, there's the uncertainty of an orderly departure from the EU by Great Britain. The official date for Britain to separate itself from the EU is March, but there have been rumblings of an extension and more than just a little unrest from the island nation to the continent concerning what effect a member country departing will have on the solidarity of remaining members.
In China and Japan, an economic slowdown is already well underway, so it appears that the sellers have reason enough to move away from stocks, and rapidly. There are just too many negatives floating around geopolitical and financial circles for all of them to be resolved in the near term. Rather, these worries turn into realities which the market doesn't appreciate, such as the actual imposition of tariffs rather than mere rumors and threats of them. The same goes for the Fed's upcoming rate hike and the government shutdown. It's become a market that's twisted the old saw into "sell the rumor, sell the news." Everything is on sale and buyers have been heading to the sidelines beginning in February. Since October, the pace has picked up noticeably, but December threatens to be the worst month of the year for the Dow, at least.
For perspective, February's loss on the Dow was 1120.19 points.
March saw a decline of 926.09.
In October the Dow lost 1341.55 points.
So far this month, the Dow is lower by 1945.58 points, making the October through December (November's gain was 426.12 points) period worse than the February-March spasm.
The NASDAQ is down 16.7% since August 29. WTI Crude was seen at $49.45 per barrel, the lowest price since September, 2017.
Throughout the years of experimental financial chicanery of QE and ZIRP, and NIRP (negative interest rate policy) by the Federal Reserve and fellow central bankers following the Great Financial Crisis (GFC) of 2007-09, the question was always, "how is this all going to end?"
Now, we have the answer, firsthand, and, as many predicted, it's not pretty and likely to get worse.
Dow Jones Industrial Average December Scorecard:
At the Close, Monday, December 17, 2018:
Dow Jones Industrial Average: 23,592.98, -507.53 (-2.11%)
NASDAQ: 6,753.73, -156.93 (-2.27%)
S&P 500: 2,545.94, -54.01 (-2.08%)
NYSE Composite: 11,532.12, -223.27 (-1.90%)
According to Dow Jones Market Data, the S&P 500 closed at its lowest level since October of 2017, the NASDAQ finished at its lowest since November of 2017, while the Dow closed at lowest level since March 23. Only a rally in the final 15 minutes of trading kept the Dow from closing at its lowest level of the year.
The Dow had plunged as low as 23,456.8 with just minutes to the closing bell, but short-covering boosted the industrials more than 100 points in the final minutes of trading. Not that it matters very much, but the closing low for the year was 23,533.20. Prior to that, the Dow closed at a low of 23,271.28 on November 15, 2017.
Both of those levels are likely to be subsumed, as the stock rout about to be hit with another dose of reality. Trumping anticipation, the Fed meeting which ends Wednesday afternoon at 2:00 pm ET, is almost certain to include a 25 basis point raise to the federal funds rate. On Friday, the federal government, unable to reach a suitable compromise on President Trump's border wall, will go into a partial shutdown.
Neither event - especially the federal shutdown - is of the earth-shattering variety, but they come at a very inopportune time for the market, which is struggling to find any good news upon which to hang a rally.
Europe is either in flames (France), in a bear market (Germany), or about to enter a recession thanks to the end of the ECB's brand of QE. Beyond that, there's the uncertainty of an orderly departure from the EU by Great Britain. The official date for Britain to separate itself from the EU is March, but there have been rumblings of an extension and more than just a little unrest from the island nation to the continent concerning what effect a member country departing will have on the solidarity of remaining members.
In China and Japan, an economic slowdown is already well underway, so it appears that the sellers have reason enough to move away from stocks, and rapidly. There are just too many negatives floating around geopolitical and financial circles for all of them to be resolved in the near term. Rather, these worries turn into realities which the market doesn't appreciate, such as the actual imposition of tariffs rather than mere rumors and threats of them. The same goes for the Fed's upcoming rate hike and the government shutdown. It's become a market that's twisted the old saw into "sell the rumor, sell the news." Everything is on sale and buyers have been heading to the sidelines beginning in February. Since October, the pace has picked up noticeably, but December threatens to be the worst month of the year for the Dow, at least.
For perspective, February's loss on the Dow was 1120.19 points.
March saw a decline of 926.09.
In October the Dow lost 1341.55 points.
So far this month, the Dow is lower by 1945.58 points, making the October through December (November's gain was 426.12 points) period worse than the February-March spasm.
The NASDAQ is down 16.7% since August 29. WTI Crude was seen at $49.45 per barrel, the lowest price since September, 2017.
Throughout the years of experimental financial chicanery of QE and ZIRP, and NIRP (negative interest rate policy) by the Federal Reserve and fellow central bankers following the Great Financial Crisis (GFC) of 2007-09, the question was always, "how is this all going to end?"
Now, we have the answer, firsthand, and, as many predicted, it's not pretty and likely to get worse.
Dow Jones Industrial Average December Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 12/3/18 | 25,826.43 | +287.97 | +287.97 |
| 12/4/18 | 25,027.07 | -799.36 | -511.39 |
| 12/6/18 | 24,947.67 | -79.40 | -590.79 |
| 12/7/18 | 24,388.95 | -558.72 | -1149.51 |
| 12/10/18 | 24,423.26 | +34.31 | -1115.20 |
| 12/11/18 | 24,370.24 | -53.02 | -1168.22 |
| 12/12/18 | 24,527.27 | +157.03 | -1011.19 |
| 12/13/18 | 24,597.38 | +70.11 | -941.08 |
| 12/14/18 | 24,100.51 | -496.87 | -1437.95 |
| 12/17/18 | 23,592.98 | -507.53 | -1945.58 |
At the Close, Monday, December 17, 2018:
Dow Jones Industrial Average: 23,592.98, -507.53 (-2.11%)
NASDAQ: 6,753.73, -156.93 (-2.27%)
S&P 500: 2,545.94, -54.01 (-2.08%)
NYSE Composite: 11,532.12, -223.27 (-1.90%)
Wednesday, November 28, 2018
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:
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%)
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%)
Wednesday, September 26, 2018
Fed Raises Rates, Stocks Tank, Regular People Get Squeezed
Sometimes, there's just too much of a good thing.
Like booze, or sex, or food, or federal funds interest rate increases.
Yes, one of those is different from the others, but, if you're a big brain at the Federal Reserve, maybe not. People who live for an love money might have the same kind of reactions ordinary people have to normal stimuli from money-induced pleasure.
Keeping interest rates at near zero for such a long time, from 2008 to 2015, had to be hard on people at the Fed. There was a lot of stress during that time, and the FOMC governors and presidents of the regional banking hubs had to make up for their lack of money pleasure (ZIRP) by printing oodles of dollars out of thin air (QE). It was an artificial high, a necessary evil to some, and everybody knew it would have to come to an end.
Nothing brings a smile to the face of a banker, central or otherwise, than interest rate increases. It means more money in their silk-lined pockets.
Ordinary humans may not be able to comprehend the exhilaration of a 0.25% increase in the federal funds rate, but central bankers do. They revel in it. Imagine, with one simple policy announcement, making an extra $2.5 billion per year. That's real excitement. And that's just the interest on a trillion dollars. The Fed is handling one heck of a lot more than just a didly trillion. By golly, that's just pocket change.
Rest assured, there are a lot of bemused smiles at the Fed this afternoon. Probably some good old back-slapping, toasting with fine wine, and smoking of expensive cigars, such is the wont of the central banking elite. They've made themselves a mighty handy profit today, and you're paying for it, on your credit cards, mortgages, personal loans, car loans and leases and just about every other negotiable debt instrument you can think of. Business is paying the piper as well. In spades.
So, does the market reaction to the Fed's scheme surprise anybody? Nope. Higher interest rates are always bad for consumers, especially those carrying debt, which is just about everybody these days.
The major indices were cruising along with decent gains until the Fed's announcement at 2:00 pm EDT. After a pause and a slight rise, stocks began to slip. From it's intra-day peak at 2:15 pm, the Dow shed 231 points, the NASDAQ lost 78 points. The move was significant. The Dow has posted losses three days in a row. Correlation, in this case, seems to imply causation.
Wall Street investors aren't immune to the interest rate malaise. They know where their bread is buttered and some surely shifted some dough out of stocks and into bonds, or cash, or art, or expensive cars.
The Fed's insistence on raising rates every quarter has gotten to be a pretty definable pattern by now, but some people are beginning to question when it's all going to end and also, how it's going to end.
Will the stock market and all those juicy profits go down in flames? Hard to say, but a 3.10% yield on a ten-year treasury note ($31,000 a year risk free on a $1,000,000 investment) isn't hard to take, and, in the world of rich people with millions of dollars, yen, or euros to throw around, many will take it.
The rich just got a little bit richer. The poor didn't get any poorer, but the people in the middle (debtors) did.
Dow Jones Industrial Average September Scorecard:
At the Close, Wednesday, September 26, 2018:
Dow Jones Industrial Average: 26,385.28, -106.93 (-0.40%)
NASDAQ: 7,990.37, -17.10 (-0.21%)
S&P 500: 2,905.97, -9.59 (-0.33%)
NYSE Composite: 13,102.68, -57.92 (-0.44%)
Like booze, or sex, or food, or federal funds interest rate increases.
Yes, one of those is different from the others, but, if you're a big brain at the Federal Reserve, maybe not. People who live for an love money might have the same kind of reactions ordinary people have to normal stimuli from money-induced pleasure.
Keeping interest rates at near zero for such a long time, from 2008 to 2015, had to be hard on people at the Fed. There was a lot of stress during that time, and the FOMC governors and presidents of the regional banking hubs had to make up for their lack of money pleasure (ZIRP) by printing oodles of dollars out of thin air (QE). It was an artificial high, a necessary evil to some, and everybody knew it would have to come to an end.
Nothing brings a smile to the face of a banker, central or otherwise, than interest rate increases. It means more money in their silk-lined pockets.
Ordinary humans may not be able to comprehend the exhilaration of a 0.25% increase in the federal funds rate, but central bankers do. They revel in it. Imagine, with one simple policy announcement, making an extra $2.5 billion per year. That's real excitement. And that's just the interest on a trillion dollars. The Fed is handling one heck of a lot more than just a didly trillion. By golly, that's just pocket change.
Rest assured, there are a lot of bemused smiles at the Fed this afternoon. Probably some good old back-slapping, toasting with fine wine, and smoking of expensive cigars, such is the wont of the central banking elite. They've made themselves a mighty handy profit today, and you're paying for it, on your credit cards, mortgages, personal loans, car loans and leases and just about every other negotiable debt instrument you can think of. Business is paying the piper as well. In spades.
So, does the market reaction to the Fed's scheme surprise anybody? Nope. Higher interest rates are always bad for consumers, especially those carrying debt, which is just about everybody these days.
The major indices were cruising along with decent gains until the Fed's announcement at 2:00 pm EDT. After a pause and a slight rise, stocks began to slip. From it's intra-day peak at 2:15 pm, the Dow shed 231 points, the NASDAQ lost 78 points. The move was significant. The Dow has posted losses three days in a row. Correlation, in this case, seems to imply causation.
Wall Street investors aren't immune to the interest rate malaise. They know where their bread is buttered and some surely shifted some dough out of stocks and into bonds, or cash, or art, or expensive cars.
The Fed's insistence on raising rates every quarter has gotten to be a pretty definable pattern by now, but some people are beginning to question when it's all going to end and also, how it's going to end.
Will the stock market and all those juicy profits go down in flames? Hard to say, but a 3.10% yield on a ten-year treasury note ($31,000 a year risk free on a $1,000,000 investment) isn't hard to take, and, in the world of rich people with millions of dollars, yen, or euros to throw around, many will take it.
The rich just got a little bit richer. The poor didn't get any poorer, but the people in the middle (debtors) did.
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 |
At the Close, Wednesday, September 26, 2018:
Dow Jones Industrial Average: 26,385.28, -106.93 (-0.40%)
NASDAQ: 7,990.37, -17.10 (-0.21%)
S&P 500: 2,905.97, -9.59 (-0.33%)
NYSE Composite: 13,102.68, -57.92 (-0.44%)
Thursday, July 26, 2018
Which Way Is Up? Markets Careen As Trump Makes Deal With EU, Facebook Falls From Grace
It's too early to call it a trend, but the Dow broke out of the trading range in which it had been ensconced for over four months after President Trump met with European Commission president Claude Junker and announced a breakthrough on trade and tariff negotiations between the European Union and the United States, forestalling what many feared would become a trade war.
The Dow, which had been lumbering below the unchanged line most of the session, broke above it shortly after 3:00 pm EDT, and then rocketed higher, gaining over 150 points in the final half hour of trading.
The other indices responded in similar manner, though after hours, Facebook (FB) took a severe lashing, losing 24% at one point, after its second quarter earnings failed to meet expectations. Facebook's fall sent NASDAQ futures into a 1.5% nosedive, though they're recovering prior to Thursday's opening bell.
What is most important to note about these developments is the movement in the Dow. According to Dow Theory, the index entered bear market conditions on April 9, when the Dow Jones Transportation Index confirmed the Industrial Average's February-March double-dip off January highs. Besides the reliability of Dow Theory in gauging market movement and primary trends, stocks have not readily behaved as they would in an ordinary bear market, with both the NASDAQ and S&P recovering to make all-time highs, the most recent, just Wednesday, as the NASDAQ set a new, high-water mark at the close.
The current episode of market mania is being driven by forces both unforeseen and unseen, most of it emanating from Washington, D.C., where, on one hand, President Trump's audacious approach to governance and world politics has thus far returned positive results, including Wednesday's breakthrough with the EC.
Thus, the number that bears watching continues to be the January 23 all-time closing high on the Dow of 26,616.71. While the index has broken above what was considerable resistance, it still has a wall of worry - and about 1200 points - to climb before the existence of bearish conditions can be eliminated.
On the other side of the coin, Facebook's woes may only be the beginning for the tech sector, the NASDAQ and the market as a whole. Next up on the chopping block appears to be Tesla (TSLA), whose CEO, Elon Musk, has been raising concerns about the company as a whole by his strange and possibly bi-polar behavior. Tesla is under considerable pressure to produce positive results after months of scrutiny over its cars exploding, production questions, quality concerns and the general mental well-being of its founder and CEO.
Tech stocks have largely been the driver behind the rise of the NASDAQ, whereas President Trump has been generally holding down the Dow. Now those two elements appear to be working in reverse, and the result could be a shock to both the upside on the Dow and the downside on the NASDAQ.
It's hard to imagine the two indices diverging for very long, but the future is unknowable. With Trump "winning" on many fronts, he still faces a massive horde of opposition in Washington, not only from Democrats and the so-called "deep state," but from members of his own party as well.
Add the Fed's unwinding of its balance sheet and relentless quarter-by-quarter raising of interest rates and you have an imperfect storm through which stock and bond speculators and investors must navigate.
Rough seas ahead, for certain, but in which direction? With so much on the deck and cross-currents blowing in every direction, trading should become volatile and choppy until November, when the midterm elections will likely determine the ultimate direction of not just the stock market but of the US and global economy as well.
Dow Jones Industrial Average July Scorecard:
At the Close, Wednesday, July 25, 2018:
Dow Jones Industrial Average: 25,414.10, +172.16 (+0.68%)
NASDAQ: 7,932.24, +91.47 (+1.17%)
S&P 500: 2,846.07, +25.67 (+0.91%)
NYSE Composite: 12,933.63, +86.14 (+0.67%)
The Dow, which had been lumbering below the unchanged line most of the session, broke above it shortly after 3:00 pm EDT, and then rocketed higher, gaining over 150 points in the final half hour of trading.
The other indices responded in similar manner, though after hours, Facebook (FB) took a severe lashing, losing 24% at one point, after its second quarter earnings failed to meet expectations. Facebook's fall sent NASDAQ futures into a 1.5% nosedive, though they're recovering prior to Thursday's opening bell.
What is most important to note about these developments is the movement in the Dow. According to Dow Theory, the index entered bear market conditions on April 9, when the Dow Jones Transportation Index confirmed the Industrial Average's February-March double-dip off January highs. Besides the reliability of Dow Theory in gauging market movement and primary trends, stocks have not readily behaved as they would in an ordinary bear market, with both the NASDAQ and S&P recovering to make all-time highs, the most recent, just Wednesday, as the NASDAQ set a new, high-water mark at the close.
The current episode of market mania is being driven by forces both unforeseen and unseen, most of it emanating from Washington, D.C., where, on one hand, President Trump's audacious approach to governance and world politics has thus far returned positive results, including Wednesday's breakthrough with the EC.
Thus, the number that bears watching continues to be the January 23 all-time closing high on the Dow of 26,616.71. While the index has broken above what was considerable resistance, it still has a wall of worry - and about 1200 points - to climb before the existence of bearish conditions can be eliminated.
On the other side of the coin, Facebook's woes may only be the beginning for the tech sector, the NASDAQ and the market as a whole. Next up on the chopping block appears to be Tesla (TSLA), whose CEO, Elon Musk, has been raising concerns about the company as a whole by his strange and possibly bi-polar behavior. Tesla is under considerable pressure to produce positive results after months of scrutiny over its cars exploding, production questions, quality concerns and the general mental well-being of its founder and CEO.
Tech stocks have largely been the driver behind the rise of the NASDAQ, whereas President Trump has been generally holding down the Dow. Now those two elements appear to be working in reverse, and the result could be a shock to both the upside on the Dow and the downside on the NASDAQ.
It's hard to imagine the two indices diverging for very long, but the future is unknowable. With Trump "winning" on many fronts, he still faces a massive horde of opposition in Washington, not only from Democrats and the so-called "deep state," but from members of his own party as well.
Add the Fed's unwinding of its balance sheet and relentless quarter-by-quarter raising of interest rates and you have an imperfect storm through which stock and bond speculators and investors must navigate.
Rough seas ahead, for certain, but in which direction? With so much on the deck and cross-currents blowing in every direction, trading should become volatile and choppy until November, when the midterm elections will likely determine the ultimate direction of not just the stock market but of the US and global economy as well.
Dow Jones Industrial Average July Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 7/2/18 | 24,307.18 | +35.77 | +35.77 |
| 7/3/18 | 24,174.82 | -132.36 | -96.59 |
| 7/5/18 | 24,345.44 | +181.92 | +85.33 |
| 7/6/18 | 24,456.48 | +99.74 | +185.07 |
| 7/9/18 | 24,776.59 | +320.11 | +505.18 |
| 7/10/18 | 24,919.66 | +143.07 | +648.25 |
| 7/11/18 | 24,700.45 | -219.21 | +429.04 |
| 7/12/18 | 24,924.89 | +224.44 | +653.48 |
| 7/13/18 | 25,019.41 | +94.52 | +748.00 |
| 7/16/18 | 25,064.36 | +44.95 | +792.95 |
| 7/17/18 | 25,119.89 | +55.53 | +848.48 |
| 7/18/18 | 25,199.29 | +79.40 | +927.88 |
| 7/19/18 | 25,064.50 | -134.79 | +793.09 |
| 7/20/18 | 25,058.12 | -6.38 | +786.71 |
| 7/23/18 | 25,044.29 | -13.83 | +772.88 |
| 7/24/18 | 25,241.94 | +197.65 | +970.53 |
| 7/25/18 | 25,414.10 | +172.16 | +1142.69 |
At the Close, Wednesday, July 25, 2018:
Dow Jones Industrial Average: 25,414.10, +172.16 (+0.68%)
NASDAQ: 7,932.24, +91.47 (+1.17%)
S&P 500: 2,846.07, +25.67 (+0.91%)
NYSE Composite: 12,933.63, +86.14 (+0.67%)
Wednesday, June 13, 2018
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:
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%)
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:
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%)
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%)
Wednesday, May 2, 2018
Federal Reserve FOMC Meeting EPIC FAIL; Stocks Battered
The Federal Reserve - yes, those people who made what in 1968 was a hamburger and french fries for about $1.50, today $7.95 on average - snuck in another FOMC rate policy meeting, doing nothing, but suggesting that there will be absolutely three and probably four rate hikes this year.
Market reaction: Initial happiness, followed by a shocking reality. "We're screwed!" was the soundbite of the day from those well-tailored gentlemen and women who trade stocks with your money for a living.
Since - like the eTrade advertisements say - your stockbroker's new car isn't going to pay for itself, the buyers and holders of stocks have once again been taken to the proverbial cleaners.
As we can clearly see from the Money Daily handy Dow scoreboard, "sell in May" is already in play.
Dow Jones Industrial Average May Scorecard:
At the Close, Wednesday, May 2, 2018:
Dow Jones Industrial Average: 23,924.98, -174.07 (-0.72%)
NASDAQ: 7,100.90, -29.81 (-0.42%)
S&P 500: 2,635.67, -19.13 (-0.72%)
NYSE Composite: 12,418.06, -74.96 (-0.60%)
Market reaction: Initial happiness, followed by a shocking reality. "We're screwed!" was the soundbite of the day from those well-tailored gentlemen and women who trade stocks with your money for a living.
Since - like the eTrade advertisements say - your stockbroker's new car isn't going to pay for itself, the buyers and holders of stocks have once again been taken to the proverbial cleaners.
As we can clearly see from the Money Daily handy Dow scoreboard, "sell in May" is already in play.
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 |
At the Close, Wednesday, May 2, 2018:
Dow Jones Industrial Average: 23,924.98, -174.07 (-0.72%)
NASDAQ: 7,100.90, -29.81 (-0.42%)
S&P 500: 2,635.67, -19.13 (-0.72%)
NYSE Composite: 12,418.06, -74.96 (-0.60%)
Monday, April 16, 2018
Stocks Close Out Week on Sour Note, But Still Post Weekly Gains
For the superstitious, Friday the 13th was not a disaster, but it wasn't particularly pleasant either, as stocks spent the entire session underwater, unable to follow through on gains from the previous day.
The up-and-down, give-and-take between bulls and bears has been a feature of the equity markets since late January. Thus far in April, the Dow has finished with gains in six session, closing down in four. An overview of the market presents a picture of a market without direction, as geo-political events, fundamental conditions, and economic data collide.
Being the middle of earnings season, the bulls appear to have at least a short-term advantage, especially since the US - along with France and Great Britain - chose to launch targeted attacks on Syria late Friday, giving markets ample time to digest the ramifications, which, at this point, appear limited.
Heading into the third full week of the second quarter, earnings from top companies will provide the catalyst for traders. There's a widely-held assumption that companies are going to put up good - if not great - first quarter reports, aided by tax benefits from the overhaul provided by congress and the president in December.
This would be a good week to take account of positions and perhaps take some profits off the table. Markets tend to be a little less volatile and generally trade higher during earnings seasons.
There isn't a FOMC rate policy meeting during April, and the May 1-2 meeting is probably going to result in no action being taken. The next Fed-driven stock market move won't be until the June 12-13 affair, when the Fed is expected to raise the federal funds rate another 25 basis points. While it doesn't sound like much, it will be the seventh such hike since the Fed got off the zero-bound in December 2015. It will push the rate to 1.75-2.00%, a significant figure sure to have an impact not only on stocks, but on the finances of individuals, families, businesses and governments.
Presently, this is the proverbial calm before the storm.
Dow Jones Industrial Average April Scorecard:
At the Close, Friday, April 13, 2018:
Dow Jones Industrial Average: 24,360.14, -122.91 (-0.50%)
NASDAQ: 7,106.65, -33.60 (-0.47%)
S&P 500: 2,656.30, -7.69 (-0.29%)
NYSE Composite: 12,546.05, -34.17 (-0.27%)
For the Week:
Dow: +427.38 (+1.79%)
NASDAQ: +191.54 (+2.77%)
S&P 500: +51.83 (+1.99%)
NYSE Composite: +196.94 (+1.59%)
The up-and-down, give-and-take between bulls and bears has been a feature of the equity markets since late January. Thus far in April, the Dow has finished with gains in six session, closing down in four. An overview of the market presents a picture of a market without direction, as geo-political events, fundamental conditions, and economic data collide.
Being the middle of earnings season, the bulls appear to have at least a short-term advantage, especially since the US - along with France and Great Britain - chose to launch targeted attacks on Syria late Friday, giving markets ample time to digest the ramifications, which, at this point, appear limited.
Heading into the third full week of the second quarter, earnings from top companies will provide the catalyst for traders. There's a widely-held assumption that companies are going to put up good - if not great - first quarter reports, aided by tax benefits from the overhaul provided by congress and the president in December.
This would be a good week to take account of positions and perhaps take some profits off the table. Markets tend to be a little less volatile and generally trade higher during earnings seasons.
There isn't a FOMC rate policy meeting during April, and the May 1-2 meeting is probably going to result in no action being taken. The next Fed-driven stock market move won't be until the June 12-13 affair, when the Fed is expected to raise the federal funds rate another 25 basis points. While it doesn't sound like much, it will be the seventh such hike since the Fed got off the zero-bound in December 2015. It will push the rate to 1.75-2.00%, a significant figure sure to have an impact not only on stocks, but on the finances of individuals, families, businesses and governments.
Presently, this is the proverbial calm before the storm.
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 |
At the Close, Friday, April 13, 2018:
Dow Jones Industrial Average: 24,360.14, -122.91 (-0.50%)
NASDAQ: 7,106.65, -33.60 (-0.47%)
S&P 500: 2,656.30, -7.69 (-0.29%)
NYSE Composite: 12,546.05, -34.17 (-0.27%)
For the Week:
Dow: +427.38 (+1.79%)
NASDAQ: +191.54 (+2.77%)
S&P 500: +51.83 (+1.99%)
NYSE Composite: +196.94 (+1.59%)
Wednesday, March 21, 2018
Down, Down, Down, Up, Up, Down, Up
As the headline indicates, stocks are in an extreme state of fluctuation. The ups-and-downs in the headline indicate the direction of the Dow Jones Industrial Average for the past seven sessions.
The total point movement for those seven days is 1217.97 with the emphasis on the downside of over 600 points. The average change was 174.00, with only one day (March 16) posting a change of less than 115 points (+72.85). It is plain to see that volatility is quite high. Wednesday's rate policy decision from the FOMC should provide some idea of direction, though it is unlikely to calm markets at all.
The decision - probably a hike in the federal funds rate of 0.25% - is scheduled for Wednesday, 2:00 pm EDT with new Fed chairman Jerome Powell's first press conference at 2:30 pm EDT.
Dow Jones Industrial Average March Scorecard:
At the Close, Tuesday, March 20, 2018:
Dow Jones Industrial Average: 24,727.27, +116.36 (+0.47%)
NASDAQ: 7,364.30, +20.06 (+0.27%)
S&P 500: 2,716.94, +4.02 (+0.15%)
NYSE Composite: 12,663.64, +12.18 (+0.10%)
The total point movement for those seven days is 1217.97 with the emphasis on the downside of over 600 points. The average change was 174.00, with only one day (March 16) posting a change of less than 115 points (+72.85). It is plain to see that volatility is quite high. Wednesday's rate policy decision from the FOMC should provide some idea of direction, though it is unlikely to calm markets at all.
The decision - probably a hike in the federal funds rate of 0.25% - is scheduled for Wednesday, 2:00 pm EDT with new Fed chairman Jerome Powell's first press conference at 2:30 pm EDT.
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 |
At the Close, Tuesday, March 20, 2018:
Dow Jones Industrial Average: 24,727.27, +116.36 (+0.47%)
NASDAQ: 7,364.30, +20.06 (+0.27%)
S&P 500: 2,716.94, +4.02 (+0.15%)
NYSE Composite: 12,663.64, +12.18 (+0.10%)
Wednesday, December 13, 2017
Alabama Turns Blue; Yellen's Final Rate Hike In Focus
Late Tuesday night, the nation learned that Democrat Doug Jones defeated embattled Republican Roy Moore in Alabama's special election for the seat formerly occupied by Jeff Sessions, who vacated when he was promoted to Attorney General by President Trump.
What may very well go unlearned is how much the blatant attacks on Roy Moore by women claiming he sexually assaulted him or otherwise acted in immoral ways swung the election to Jones, who will be the first Democrat elected to the senate from Alabama since sitting senator Richard Shelby won as a Democrat in 1986, but changed parties in 1994.
The election of Jones narrows the Republican majority in the senate to 51-49, a slim edge that puts any future Republican-sponsored legislation in serious jeopardy. That's news that Wall Street should cheer because a lame congress is usually good for business, though it's far too early to say what the overall effect will be.
Looking further out, Democrats are bolstered by the upset victory in usually-red Alabama, believing - with good reason - that they have an opportunity to wrest control of the Senate in the 2018 mid-term elections, the campaigns for which will begin heating up shortly after the holidays.
What's also on the minds of investors is the FOMC policy meeting concluding Wednesday afternoon. The Fed is widely expected to vote to increase the federal funds rate another 25 basis points, to 1.25-1.50%.
As has been the case for the past nine years and the slow parade of 0.25% rate hikes which began in December of 2016, it's unlikely to cause much of a stir on Wall Street.
The Fed has plans for three to four more hikes in 2018, which would put the overnight lending rate at something around two percent. While still historically low, some analysts believe the economy isn't nearly durable enough to maintain a positive bent in the face of higher rates.
The Fed makes its policy statement at 2:00 pm ET Wednesday afternoon.
At the Close, Tuesday, December 12, 2017:
Dow: 24,504.80, +118.77 (+0.49%)
NASDAQ: 6,862.32, -12.76 (-0.19%)
S&P 500: 2,664.11, +4.12 (+0.15%)
NYSE Composite: 12,697.78, +29.57 (+0.23%)
What may very well go unlearned is how much the blatant attacks on Roy Moore by women claiming he sexually assaulted him or otherwise acted in immoral ways swung the election to Jones, who will be the first Democrat elected to the senate from Alabama since sitting senator Richard Shelby won as a Democrat in 1986, but changed parties in 1994.
The election of Jones narrows the Republican majority in the senate to 51-49, a slim edge that puts any future Republican-sponsored legislation in serious jeopardy. That's news that Wall Street should cheer because a lame congress is usually good for business, though it's far too early to say what the overall effect will be.
Looking further out, Democrats are bolstered by the upset victory in usually-red Alabama, believing - with good reason - that they have an opportunity to wrest control of the Senate in the 2018 mid-term elections, the campaigns for which will begin heating up shortly after the holidays.
What's also on the minds of investors is the FOMC policy meeting concluding Wednesday afternoon. The Fed is widely expected to vote to increase the federal funds rate another 25 basis points, to 1.25-1.50%.
As has been the case for the past nine years and the slow parade of 0.25% rate hikes which began in December of 2016, it's unlikely to cause much of a stir on Wall Street.
The Fed has plans for three to four more hikes in 2018, which would put the overnight lending rate at something around two percent. While still historically low, some analysts believe the economy isn't nearly durable enough to maintain a positive bent in the face of higher rates.
The Fed makes its policy statement at 2:00 pm ET Wednesday afternoon.
At the Close, Tuesday, December 12, 2017:
Dow: 24,504.80, +118.77 (+0.49%)
NASDAQ: 6,862.32, -12.76 (-0.19%)
S&P 500: 2,664.11, +4.12 (+0.15%)
NYSE Composite: 12,697.78, +29.57 (+0.23%)
Wednesday, July 26, 2017
Stocks Unimpressed With FOMC Decision; Dollar Dashed
The Fomc wrapped up a relatively uneventful meeting Wednesday, keeping rates unchanged and saying little to nothing about winding down the Fed's bloated balance sheet.
After two hikes already this year, rates will almost surely remain on hold until December and an announcement that the Federal Reserve is ready to shed assets may come at the September meeting, according to knowledgeable experts on the subject. Having been sufficiently prepped and prodded, the Fed can feel some confidence that a beginning of an asset unloading program won't upset the status quo too awfully much.
The one kicker is that the wildly out-of-control federal government faces a potentially debilitating debt ceiling debate and a testy budget process in September, but that will come only after congress has taken a month's vacation, pending Obamacare replace and/or repeal legislation currently under consideration in the Senate.
Nothing the Fed does can accurately predict what the paid lackeys... er, prostitutes, er, politicians will do when the rubber meets the road in terms of the soon-to-be $20 trillion national debt. Chances are good that they'll punt, laying one deep and long, giving themselves room to survive the midterm elections in 2018. One person who does not have to suffer any kind of electoral fate in that year is President Trump, who is almost certain to have boisterous opinions on the matter of the debt ceiling and federal government budget.
There are wild card outcomes which the Fed is unable to predict no matter how deep or thorough their modeling, which raises the possibility for abrupt changes in policy, and the jokers dealt by the government are not the only potential surprises. Geopolitics - specifically, North Korea, Ukraine, Iran, or Syria - may play a role in future policies, as could any number of scenarios, from ECB jump-starting their own tapering, Japan failing to follow through with continued buying of equities, or, perhaps a war between China and India stemming from border disputes in and near the Himalaya mountains. Go figure.
As far as stock movements and reactions to the FOMC nothing-burger issued today, the markets basically were held in suspended animation afterwards with a slight bias to the downside.
The outsize gains on the DJIA were largely the result of Boeing's (BA) monstrous 9.2% spike today (biggest day for BA since 10/28/08), responsible for 132 Dow points. So, essentially, the remainder of the Dow was lower, only lifted higher by the flighty airline manufacturer. Only 13 Dow components were higher, 17 lower, led down by Nike and McDonald's, the latter having made new all-time highs just yesterday, which is alarming, since what the company passes off for food has recently reached new lows. Must be their outstanding customer service or something else casual consumers just don't see or understand. Share of MCD are massively overpriced, with earnings per share of 6.25 and a stock price of roughly 156 translating to a P/E of 25. Shareholders and executives (neither of which actually eat at any of their own restaurants) are "loving' it."
The dollar got whiplashed lower, sending (alarm bells) gold and silver higher. Also on the run is the price of crude oil, as the latest reports showed a massive draw, though gasoline inventories were built. Once more, the people actually using the stuff - drivers - just don't get it, apparently.
At the Close, 7/26/17:
Dow: 21,711.01, +97.58 (0.45%)
NASDAQ: 6,422.75, +10.57 (0.16%)
S&P 500 2,477.83: 0.70 (0.03%)
NYSE Composite: 11,964.92, -0.80 (-0.01%)
After two hikes already this year, rates will almost surely remain on hold until December and an announcement that the Federal Reserve is ready to shed assets may come at the September meeting, according to knowledgeable experts on the subject. Having been sufficiently prepped and prodded, the Fed can feel some confidence that a beginning of an asset unloading program won't upset the status quo too awfully much.
The one kicker is that the wildly out-of-control federal government faces a potentially debilitating debt ceiling debate and a testy budget process in September, but that will come only after congress has taken a month's vacation, pending Obamacare replace and/or repeal legislation currently under consideration in the Senate.
Nothing the Fed does can accurately predict what the paid lackeys... er, prostitutes, er, politicians will do when the rubber meets the road in terms of the soon-to-be $20 trillion national debt. Chances are good that they'll punt, laying one deep and long, giving themselves room to survive the midterm elections in 2018. One person who does not have to suffer any kind of electoral fate in that year is President Trump, who is almost certain to have boisterous opinions on the matter of the debt ceiling and federal government budget.
There are wild card outcomes which the Fed is unable to predict no matter how deep or thorough their modeling, which raises the possibility for abrupt changes in policy, and the jokers dealt by the government are not the only potential surprises. Geopolitics - specifically, North Korea, Ukraine, Iran, or Syria - may play a role in future policies, as could any number of scenarios, from ECB jump-starting their own tapering, Japan failing to follow through with continued buying of equities, or, perhaps a war between China and India stemming from border disputes in and near the Himalaya mountains. Go figure.
As far as stock movements and reactions to the FOMC nothing-burger issued today, the markets basically were held in suspended animation afterwards with a slight bias to the downside.
The outsize gains on the DJIA were largely the result of Boeing's (BA) monstrous 9.2% spike today (biggest day for BA since 10/28/08), responsible for 132 Dow points. So, essentially, the remainder of the Dow was lower, only lifted higher by the flighty airline manufacturer. Only 13 Dow components were higher, 17 lower, led down by Nike and McDonald's, the latter having made new all-time highs just yesterday, which is alarming, since what the company passes off for food has recently reached new lows. Must be their outstanding customer service or something else casual consumers just don't see or understand. Share of MCD are massively overpriced, with earnings per share of 6.25 and a stock price of roughly 156 translating to a P/E of 25. Shareholders and executives (neither of which actually eat at any of their own restaurants) are "loving' it."
The dollar got whiplashed lower, sending (alarm bells) gold and silver higher. Also on the run is the price of crude oil, as the latest reports showed a massive draw, though gasoline inventories were built. Once more, the people actually using the stuff - drivers - just don't get it, apparently.
At the Close, 7/26/17:
Dow: 21,711.01, +97.58 (0.45%)
NASDAQ: 6,422.75, +10.57 (0.16%)
S&P 500 2,477.83: 0.70 (0.03%)
NYSE Composite: 11,964.92, -0.80 (-0.01%)
Monday, June 19, 2017
Stocks End Week Mixed, But Damage Has Been Done
While the Dow, S&P and NYSE Composite all gained slightly on the week, the NASDAQ, which ended lower Friday, registered its second straight week of losses.
The NASDAQ has finished in the red three straight sessions and five of the last six, beginning with last Friday's washout of the FAANG stocks (Facebook, Amazon, Apple, Netflix, Google, aka Alphabet).
While the NASDAQ may have hit a pocket of support for the time being, the intraday high of 6341.70 is now nearly 200 points off in the distance. Not that the venerable algos, computers and few human hands operating the machinery at the NAZ couldn't pull the index up and beyond that level in a matter of days, there still remains to be a reason for such a move.
With the calendar showing the middle of June, there may not be much in the way of stock-inspiring news until second quarter earnings begin being trotted out the second week of July. The Fed's rate hike is out of the way for now, and it's anticipated that the Fed won't make any significant moves until September at the earliest, and more likely December, if at all.
All markets remain bloated, just like government salary and benefit packages, while real Americans struggle to find and keep good jobs, pay bills and possibly save something for the future, be that retirement or college of kids.
The world's financial markets continue to be prodded and plotted by central bankers, which means there will be no abrupt collapse on their watch, or until they deem it advisable to crash the stock market by means of tight money or other policy initiatives.
Meanwhile, the NASDAQ bears watching, if anybody in the world still believes in technical analysis, because further weakness could portend a finish to the third longest bull run in market history, albeit with the lowest growth rate (2.0%). Those two historic marks are at opposition, and it will be interesting to see how long the fiat parade can continue without significant reckoning of reality.
At the Close, 6/16/17:
Dow: 21,384.28, +24.38 (0.11%)
NASDAQ: 6,151.76, -13.74 (-0.22%)
S&P 500: 2,433.15, +0.69 (0.03%)
NYSE Composite: 11,772.02, +31.50 (0.27%)
For the Week:
Dow: +112.31 (0.53%)
NASDAQ: -56.16 (0.90%)
S&P 500: +1.38 (0.06%)
NYSE Composite: +27.29 (0.23%)
The NASDAQ has finished in the red three straight sessions and five of the last six, beginning with last Friday's washout of the FAANG stocks (Facebook, Amazon, Apple, Netflix, Google, aka Alphabet).
While the NASDAQ may have hit a pocket of support for the time being, the intraday high of 6341.70 is now nearly 200 points off in the distance. Not that the venerable algos, computers and few human hands operating the machinery at the NAZ couldn't pull the index up and beyond that level in a matter of days, there still remains to be a reason for such a move.
With the calendar showing the middle of June, there may not be much in the way of stock-inspiring news until second quarter earnings begin being trotted out the second week of July. The Fed's rate hike is out of the way for now, and it's anticipated that the Fed won't make any significant moves until September at the earliest, and more likely December, if at all.
All markets remain bloated, just like government salary and benefit packages, while real Americans struggle to find and keep good jobs, pay bills and possibly save something for the future, be that retirement or college of kids.
The world's financial markets continue to be prodded and plotted by central bankers, which means there will be no abrupt collapse on their watch, or until they deem it advisable to crash the stock market by means of tight money or other policy initiatives.
Meanwhile, the NASDAQ bears watching, if anybody in the world still believes in technical analysis, because further weakness could portend a finish to the third longest bull run in market history, albeit with the lowest growth rate (2.0%). Those two historic marks are at opposition, and it will be interesting to see how long the fiat parade can continue without significant reckoning of reality.
At the Close, 6/16/17:
Dow: 21,384.28, +24.38 (0.11%)
NASDAQ: 6,151.76, -13.74 (-0.22%)
S&P 500: 2,433.15, +0.69 (0.03%)
NYSE Composite: 11,772.02, +31.50 (0.27%)
For the Week:
Dow: +112.31 (0.53%)
NASDAQ: -56.16 (0.90%)
S&P 500: +1.38 (0.06%)
NYSE Composite: +27.29 (0.23%)
Wednesday, June 14, 2017
Fed Raises Rates, Sets Out Asset Disposal Plan
As was widely anticipated, the FOMC of the Federal Reserve voted 8-1 to raise the federal funds overnight lending rate 25 basis points, from 0.75-1.00% to 100-1.25%. Minneapolis Fed President Neel Kashkari was the lone member to vote to leave the rate unchanged. The Fed also raised the prime rate - to which many credit cards, car and mortgage loans are indexed - by 1/4%. The prime - or Primary, in fed-speak - rate now stands at 1.75%.
While the move was telegraphed to the market well in advance, the Fed's decision to release some details of its plan to unwind its enormous balance sheet of over $4.5 trillion, came as something of a shock to investors, characterized by the sullen market reaction.
About the only assets that didn't go down following the Fed's release were Dow and the dollar, the DJIA saved by the usual antics of the altos or the PPT, with the traditional hockey stick save in the last half hour, which also lifted the S&P, the Comp., and NASDAQ from deeper losses.
The dollar index rallied from 96.36 - a seven-month low - earlier in the day, to close at 96.918, a closing loss of just 0.06%. As usual, precious metals were sold down the river in the heavily-rigged futures market. WTI crude oil closed in New York at 44.69, -1.77 (-3.81%). The price is a massive surprise, considering the "summer driving season" has begun. However, the glut of crude on world markets continues to depress prices. Consumers have not yet seen the result at the gas pump, where prices have been relatively stable, despite oil's recent fall from about $52 to the mid-40s.
As usual, the day following the Fed rate decision will offer more clarity on stock direction.
The Fed laid out plans to wind down its multi-trillion-dollar balance sheet, gradually reducing its holdings of Treasuries and agency securities, by decreasing the Fed’s reinvestment of principal payments. Payments will only be reinvested when they exceed preset and self-administered caps, which start out at $6 billion per month for Treasuries and $4 billion per month for agency and mortgage-backed securities.
Since the Fed sopped up literally trillions worth of garbage MBS and dodgy treasuries during the aftermath of the GFC, the effect of their balance sheet unwind will be an attempt to allow market normalization with the Fed out of the way. While this tactic has been the subject of great scrutiny, without a "buyer of last resort" such as the Federal Reserve, the concern is that interest rates will spiral out of control with inadequate buying interest depressing prices and thus, raising yields beyond reasonable levels.
At present, this has not occurred, In fact, the benchmark 10-year note was exceptionally depressed, closing at a yield of 2.138, but, the Fed hasn't actually begun its unwinding, only mentioned how they plan to achieve their goals.
In an addendum to its statement, the Fed stated,
According to the caps the Fed has just announced, it's going to be a long time before their balance sheet regains some semblance of normalcy. At a rate of $10 billion a month, the Fed will only be able to reduce the bloat by $120 billion a year. At that rate, getting their carried balance down to $2.5 billion would take roughly 20 years.
We can hardly wait.
At the Close, 6/14/17:
Dow: 21,374.56, +46.09 (0.22%)
NASDAQ: 6,194.89, -25.48 (-0.41%)
S&P 500: 2,437.92, -2.43 (-0.10%)
NYSE Composite: 11,779.81, -16.98 (-0.14%)
While the move was telegraphed to the market well in advance, the Fed's decision to release some details of its plan to unwind its enormous balance sheet of over $4.5 trillion, came as something of a shock to investors, characterized by the sullen market reaction.
About the only assets that didn't go down following the Fed's release were Dow and the dollar, the DJIA saved by the usual antics of the altos or the PPT, with the traditional hockey stick save in the last half hour, which also lifted the S&P, the Comp., and NASDAQ from deeper losses.
The dollar index rallied from 96.36 - a seven-month low - earlier in the day, to close at 96.918, a closing loss of just 0.06%. As usual, precious metals were sold down the river in the heavily-rigged futures market. WTI crude oil closed in New York at 44.69, -1.77 (-3.81%). The price is a massive surprise, considering the "summer driving season" has begun. However, the glut of crude on world markets continues to depress prices. Consumers have not yet seen the result at the gas pump, where prices have been relatively stable, despite oil's recent fall from about $52 to the mid-40s.
As usual, the day following the Fed rate decision will offer more clarity on stock direction.
The Fed laid out plans to wind down its multi-trillion-dollar balance sheet, gradually reducing its holdings of Treasuries and agency securities, by decreasing the Fed’s reinvestment of principal payments. Payments will only be reinvested when they exceed preset and self-administered caps, which start out at $6 billion per month for Treasuries and $4 billion per month for agency and mortgage-backed securities.
Since the Fed sopped up literally trillions worth of garbage MBS and dodgy treasuries during the aftermath of the GFC, the effect of their balance sheet unwind will be an attempt to allow market normalization with the Fed out of the way. While this tactic has been the subject of great scrutiny, without a "buyer of last resort" such as the Federal Reserve, the concern is that interest rates will spiral out of control with inadequate buying interest depressing prices and thus, raising yields beyond reasonable levels.
At present, this has not occurred, In fact, the benchmark 10-year note was exceptionally depressed, closing at a yield of 2.138, but, the Fed hasn't actually begun its unwinding, only mentioned how they plan to achieve their goals.
In an addendum to its statement, the Fed stated,
“The Committee currently anticipates reducing the quantity of supply of reserve balances, over time, to a level appreciably below that seen in recent years but larger than before the financial crisis; the level will reflect the banking system’s demand for reserve balances.”As the ultimate arbiter of rates and ostensibly in control of all things financial, the Fed is hopeful that the rest of the world will go along with their grand plan.
According to the caps the Fed has just announced, it's going to be a long time before their balance sheet regains some semblance of normalcy. At a rate of $10 billion a month, the Fed will only be able to reduce the bloat by $120 billion a year. At that rate, getting their carried balance down to $2.5 billion would take roughly 20 years.
We can hardly wait.
At the Close, 6/14/17:
Dow: 21,374.56, +46.09 (0.22%)
NASDAQ: 6,194.89, -25.48 (-0.41%)
S&P 500: 2,437.92, -2.43 (-0.10%)
NYSE Composite: 11,779.81, -16.98 (-0.14%)
Monday, May 22, 2017
Despite Friday's Gains, Stocks Finish Week Lower; About To Get A Wedgie?
Major US equity indices finished the week strong, with solid gains across all, but the weekly view gives another picture, despite the NASDAQ diverging radically from the others.
Looking especially at the NYSE Composite, the broadest index available (also the one nobody ever mentions) a rising wedge pattern appears from a May (11,254.87) 2015 top, to a bottom (8937.99) in January 2016, to this week's close at 11,542.69. Though the overall gain from the bottom last January is massive - more than 2100 points), the overall increase from the top in 2015 is fewer than 300 points, a return of less than three percent over a two-year span.
Apparently, this is why no self-serving analyst or financial news commentator ever speaks of the "Comp" in glowing terms because it reveals the truth behind this runaway bull market: that it has been concentrated among a few select stocks, leaving the bulk of issues behind, in much the same manner as wealth is distributed among individuals. Most of the money goes to the top 5%, the rest lag behind.
None of the other indices present such a pattern. They are all higher by double digits over the same period. Thus, the market shows a heavy weight toward highly speculative tech stocks in the NASDAQ, dividend-payers in the DOW, and, naturally, the 500 largest US-based companies (S&P 500).
Breadth being a hidden issue, this central bank campaign of feeding the leaders should continue as we head into what are traditionally the weakest months of trading (i.e., sell in May and go away). Internal squabbling among the FOMC board members may address this issue as the approach to an expected rate hike increase in June quickens.
The Fed has more or less signaled three rate hikes this year, though this second of the proposed three may have to hold off until September, after second quarter GDP and earnings are revealed in the latter half of July and into August. May non-farm employment - which will be announced prior to the FOMC June meeting - will also have significant impact.
After two consecutive down weeks in the S&P, Comp., and Dow, the Fed, and the markets, can ill afford another week of losses, so close attention is warranted. This week may mark a true turning point, if there ever is one to be had.
At the Close, 5/19/17:
Dow: 20,804.84, +141.82 (0.69%)
NASDAQ: 6,083.70, +28.57 (0.47%)
S&P 500: 2,381.73 +16.01 (0.68%)
NYSE Composite: 11,542.69, +108.62 (0.95%)
For the Week:
Dow: -91.77 (-0.44%)
NASDAQ: -37.53 (-0.61%)
S&P 500: -9.17 (-0.38%)
NYSE Composite: -4.57 (-0.04)
Looking especially at the NYSE Composite, the broadest index available (also the one nobody ever mentions) a rising wedge pattern appears from a May (11,254.87) 2015 top, to a bottom (8937.99) in January 2016, to this week's close at 11,542.69. Though the overall gain from the bottom last January is massive - more than 2100 points), the overall increase from the top in 2015 is fewer than 300 points, a return of less than three percent over a two-year span.
Apparently, this is why no self-serving analyst or financial news commentator ever speaks of the "Comp" in glowing terms because it reveals the truth behind this runaway bull market: that it has been concentrated among a few select stocks, leaving the bulk of issues behind, in much the same manner as wealth is distributed among individuals. Most of the money goes to the top 5%, the rest lag behind.
None of the other indices present such a pattern. They are all higher by double digits over the same period. Thus, the market shows a heavy weight toward highly speculative tech stocks in the NASDAQ, dividend-payers in the DOW, and, naturally, the 500 largest US-based companies (S&P 500).
Breadth being a hidden issue, this central bank campaign of feeding the leaders should continue as we head into what are traditionally the weakest months of trading (i.e., sell in May and go away). Internal squabbling among the FOMC board members may address this issue as the approach to an expected rate hike increase in June quickens.
The Fed has more or less signaled three rate hikes this year, though this second of the proposed three may have to hold off until September, after second quarter GDP and earnings are revealed in the latter half of July and into August. May non-farm employment - which will be announced prior to the FOMC June meeting - will also have significant impact.
After two consecutive down weeks in the S&P, Comp., and Dow, the Fed, and the markets, can ill afford another week of losses, so close attention is warranted. This week may mark a true turning point, if there ever is one to be had.
At the Close, 5/19/17:
Dow: 20,804.84, +141.82 (0.69%)
NASDAQ: 6,083.70, +28.57 (0.47%)
S&P 500: 2,381.73 +16.01 (0.68%)
NYSE Composite: 11,542.69, +108.62 (0.95%)
For the Week:
Dow: -91.77 (-0.44%)
NASDAQ: -37.53 (-0.61%)
S&P 500: -9.17 (-0.38%)
NYSE Composite: -4.57 (-0.04)
Tuesday, September 20, 2016
Markets Brace For FOMC Nothing-Burger
Just in case you're keeping score at home, stocks remain in caution mode prior to the FOMC rate policy announcement due out tomorrow at 2:00 pm EDT.
Consensus sentiment is that the governors will do what they've done at every meeting except one since the end of 2008... nothing.
Federal funds rate will likely remain at 0.25-0.50, or effectively zero, and the financial world will once again be treated to the numb mumbling and vague interpretations of data by Chairwoman Janet Yellen at a press conference a half hour after the announcement.
This is all nonsense, all for show, and all for naught. Any attempt at "normalization" (as the Fed likes to put it) will send the interest on US debt to astronomical levels, upsetting the entire global financial universe.
It is precisely why the Fed and other central banks cannot raise rates, or, if they somehow choose to do so, it will be a gradual, drawn out process, because the unwinding of 5, 7, 10, and 30-year notes and bonds will take that many years. Unless the Fed intends to bankrupt all existing nation-states - always a possibility - interest rate increases will be gradual, if at all. The central banks have no way out of the mess they've created, except by creating another, even worse mess.
Tomorrow, like today and the day before, will be nothing but a dog-and-pony show, and a bad one at that.
Nothing even close to important will occur prior to the November elections. The Fed and their buddies are hoping that Hillary Clinton remains alive long enough to win and then, last until January 20, when she will supposedly assume the throne of president of the United States of America.
Those are two possibilities that fewer and fewer people are putting on hard money. There is one good future for the USA, and it does not include a Clinton presidency.
Tuesday's Close:
Dow 30
18,129.96, +9.79 (0.05%)
NASDAQ
5,241.35, +6.33 (0.12%)
S&P 500
2,139.76, +0.64 (0.03%)
^NYA
NYSE COMPOSITE (DJ)
10,573.98, +9.68 (0.09%)
Consensus sentiment is that the governors will do what they've done at every meeting except one since the end of 2008... nothing.
Federal funds rate will likely remain at 0.25-0.50, or effectively zero, and the financial world will once again be treated to the numb mumbling and vague interpretations of data by Chairwoman Janet Yellen at a press conference a half hour after the announcement.
This is all nonsense, all for show, and all for naught. Any attempt at "normalization" (as the Fed likes to put it) will send the interest on US debt to astronomical levels, upsetting the entire global financial universe.
It is precisely why the Fed and other central banks cannot raise rates, or, if they somehow choose to do so, it will be a gradual, drawn out process, because the unwinding of 5, 7, 10, and 30-year notes and bonds will take that many years. Unless the Fed intends to bankrupt all existing nation-states - always a possibility - interest rate increases will be gradual, if at all. The central banks have no way out of the mess they've created, except by creating another, even worse mess.
Tomorrow, like today and the day before, will be nothing but a dog-and-pony show, and a bad one at that.
Nothing even close to important will occur prior to the November elections. The Fed and their buddies are hoping that Hillary Clinton remains alive long enough to win and then, last until January 20, when she will supposedly assume the throne of president of the United States of America.
Those are two possibilities that fewer and fewer people are putting on hard money. There is one good future for the USA, and it does not include a Clinton presidency.
Tuesday's Close:
Dow 30
18,129.96, +9.79 (0.05%)
NASDAQ
5,241.35, +6.33 (0.12%)
S&P 500
2,139.76, +0.64 (0.03%)
^NYA
NYSE COMPOSITE (DJ)
10,573.98, +9.68 (0.09%)
Tuesday, June 14, 2016
Slump Continues For Stocks; Oil Lower As Discontent Grows
While the world awaits an edict from the high halls of the Federal Reserve on Wednesday, when the FOMC concludes their two day meeting and announces no change in the federal funds rate, investors appear increasingly nervous, not over the expected nothingness dictum from the Fed, but from the overall malaise that has captured markets, otherwise known as stagnation.
What capitalists fear more than anything else is an economy going backwards. What we have today is an economy at stall speed, needing only the slightest of nudges to fall into recession. The US is not alone in these fears; most of Europe is teetering on the brink of a receding growth curve, and this time, there is not enough left of policy maneuvers by central bankers in the EU, Japan, China, or anywhere else in the developed or underdeveloped world, should a recession occur, to keep it from becoming a global depression.
Lessons learned from the near-collapse of the global economy in 2008-09 are that stimuli only is a short-term fix, QE is a waste of money, and lower interest rates do not stir a dormant economy. In essence, the world's central bankers are out of ideas and have been for some time. They are, and have been, pushing on a string, kicking a can down a road, keeping their fingers crossed, and hoping for an economic miracle all at the same time.
Nothing has worked. Nothing will work... until the economies of both the developed world and underdeveloped world purge themselves of debt, stop trying to implement policies that clearly do not work, go back to money backed by something other than empty promises, and stop allowing governments to run up enormous deficits serviced by ever-lower interest payments (debasing the currency all the way along).
Those are just for starters. The world finds itself on the cusp of economic, societal and philosophical revolution. Ordinary people are fed up with government, the media, and various other institutions supposedly in place to provide for the public weal. They are tired of lies, cheating at the highest levels, institutional regulatory strangulation, higher and higher taxes, and an endless stream of regulations that have stripped away their liberties and much of what some may have previously called the "good life."
The few people currently in power are only interested in keeping and maintaining their control over the populations and their power and positions. They are being seriously questioned by populations who feel betrayed, unappreciated and desperate for relief from the very governments and institutions which are supposed to improve their lives, not impoverish them.
Therefore, stocks continue to wallow. And though today's declines are not noteworthy in and of themselves, there's a growing chorus of discontent that continues to rise.
The policies and practices of the past 20 or 30 years cannot continue indefinitely.
The time is coming for major change.
Today's Dippity-Do:
S&P 500: 2,075.32, -3.74 (0.18%)
Dow: 17,674.82, -57.66 (0.33%)
NASDAQ: 4,843.55, -4.89 (0.10%)
Crude Oil 48.56 -0.65% Gold 1,287.90 +0.08% EUR/USD 1.1208 -0.71% 10-Yr Bond 1.61 -0.31% Corn 435.25 +1.22% Copper 2.04 -0.46% Silver 17.40 -0.25% Natural Gas 2.89 -0.86% Russell 2000 1,147.09 -0.31% VIX 20.54 -2.05% BATS 1000 20,677.17 0.00% GBP/USD 1.4109 -0.74% USD/JPY 106.1300 -0.03%
What capitalists fear more than anything else is an economy going backwards. What we have today is an economy at stall speed, needing only the slightest of nudges to fall into recession. The US is not alone in these fears; most of Europe is teetering on the brink of a receding growth curve, and this time, there is not enough left of policy maneuvers by central bankers in the EU, Japan, China, or anywhere else in the developed or underdeveloped world, should a recession occur, to keep it from becoming a global depression.
Lessons learned from the near-collapse of the global economy in 2008-09 are that stimuli only is a short-term fix, QE is a waste of money, and lower interest rates do not stir a dormant economy. In essence, the world's central bankers are out of ideas and have been for some time. They are, and have been, pushing on a string, kicking a can down a road, keeping their fingers crossed, and hoping for an economic miracle all at the same time.
Nothing has worked. Nothing will work... until the economies of both the developed world and underdeveloped world purge themselves of debt, stop trying to implement policies that clearly do not work, go back to money backed by something other than empty promises, and stop allowing governments to run up enormous deficits serviced by ever-lower interest payments (debasing the currency all the way along).
Those are just for starters. The world finds itself on the cusp of economic, societal and philosophical revolution. Ordinary people are fed up with government, the media, and various other institutions supposedly in place to provide for the public weal. They are tired of lies, cheating at the highest levels, institutional regulatory strangulation, higher and higher taxes, and an endless stream of regulations that have stripped away their liberties and much of what some may have previously called the "good life."
The few people currently in power are only interested in keeping and maintaining their control over the populations and their power and positions. They are being seriously questioned by populations who feel betrayed, unappreciated and desperate for relief from the very governments and institutions which are supposed to improve their lives, not impoverish them.
Therefore, stocks continue to wallow. And though today's declines are not noteworthy in and of themselves, there's a growing chorus of discontent that continues to rise.
The policies and practices of the past 20 or 30 years cannot continue indefinitely.
The time is coming for major change.
Today's Dippity-Do:
S&P 500: 2,075.32, -3.74 (0.18%)
Dow: 17,674.82, -57.66 (0.33%)
NASDAQ: 4,843.55, -4.89 (0.10%)
Crude Oil 48.56 -0.65% Gold 1,287.90 +0.08% EUR/USD 1.1208 -0.71% 10-Yr Bond 1.61 -0.31% Corn 435.25 +1.22% Copper 2.04 -0.46% Silver 17.40 -0.25% Natural Gas 2.89 -0.86% Russell 2000 1,147.09 -0.31% VIX 20.54 -2.05% BATS 1000 20,677.17 0.00% GBP/USD 1.4109 -0.74% USD/JPY 106.1300 -0.03%
Tuesday, March 15, 2016
Markets Moribund Facing FOMC Meeting
Nothing matters except the Fed and the FOMC rate policy meeting which wraps up tomorrow.
At 2:00 pm EDT, something will happen, though the Fed is expected to leave the federal funds rate unchanged.
La-dee-da.
S&P 500: 2,015.93, -3.71 (0.18%)
Dow: 17,251.53, +22.40 (0.13%)
NASDAQ: 4,728.67, -21.61 (0.45%)
Crude Oil 36.53 -1.75% Gold 1,232.80 -0.99% EUR/USD 1.1119 +0.13% 10-Yr Bond 1.9590 -0.20% Corn 368.25 -0.14% Copper 2.24 -0.13% Silver 15.29 -1.49% Natural Gas 1.85 +1.65% Russell 2000 1,066.67 -1.62% VIX 16.84 -0.47% BATS 1000 20,682.61 0.00% GBP/USD 1.4147 -1.08% USD/JPY 113.1630 -0.56%
At 2:00 pm EDT, something will happen, though the Fed is expected to leave the federal funds rate unchanged.
La-dee-da.
S&P 500: 2,015.93, -3.71 (0.18%)
Dow: 17,251.53, +22.40 (0.13%)
NASDAQ: 4,728.67, -21.61 (0.45%)
Crude Oil 36.53 -1.75% Gold 1,232.80 -0.99% EUR/USD 1.1119 +0.13% 10-Yr Bond 1.9590 -0.20% Corn 368.25 -0.14% Copper 2.24 -0.13% Silver 15.29 -1.49% Natural Gas 1.85 +1.65% Russell 2000 1,066.67 -1.62% VIX 16.84 -0.47% BATS 1000 20,682.61 0.00% GBP/USD 1.4147 -1.08% USD/JPY 113.1630 -0.56%
Tuesday, March 8, 2016
Oil Beaten Down Along With Gold, Silver, Stocks
After yesterday's run-up in crude, the obligatory return to red was the order of the day as WTI crude ended below $37/barrel. Not to be missed were the turn-about in gold and silver, but stocks remain mostly on hold for Mario Draghi and the ECB's rate announcement on Thursday.
This is what happens when the entire world revolves around central bankers: lots of nothing, and all investment vehicles returning essentially zero returns on capital, unless one's timing is extraordinary, you're a professional horse handicapper turned day-trader, or one of the various front-running HFTs.
Speaking of timing, Money Daily editor, Fearless Rick, has called out Dennis Gartman of the Gartman Letter, and his somewhat flimsy assertion that his proprietary fund is up 12.3% year-to-date. Mr. Rick emailed Gartman (see here), and tried to get a subscription to his newsletter, but has heard nothing yet. Money Daily will update with any developments (some interesting information on Mr. Gartman has already been discovered on the internet and a file is being updated... stay tuned)
Today's Mangled Mess:
S&P 500: 1,979.26, -22.50 (1.12%)
Dow: 16,964.10, -109.85 (0.64%)
NASDAQ: 4,648.82, -59.43 (1.26%)
Crude Oil 36.46 -3.80% Gold 1,263.20 -0.06% EUR/USD 1.1006 -0.08% 10-Yr Bond 1.8320 -3.68% Corn 360.75 +0.49% Copper 2.22 -2.89% Silver 15.43 -1.33% Natural Gas 1.72 +1.54% Russell 2000 1,068.18 -2.37% VIX 18.75 +8.07% BATS 1000 20,677.17 0.00% GBP/USD 1.4215 -0.33% USD/JPY 112.6420
This is what happens when the entire world revolves around central bankers: lots of nothing, and all investment vehicles returning essentially zero returns on capital, unless one's timing is extraordinary, you're a professional horse handicapper turned day-trader, or one of the various front-running HFTs.
Speaking of timing, Money Daily editor, Fearless Rick, has called out Dennis Gartman of the Gartman Letter, and his somewhat flimsy assertion that his proprietary fund is up 12.3% year-to-date. Mr. Rick emailed Gartman (see here), and tried to get a subscription to his newsletter, but has heard nothing yet. Money Daily will update with any developments (some interesting information on Mr. Gartman has already been discovered on the internet and a file is being updated... stay tuned)
Today's Mangled Mess:
S&P 500: 1,979.26, -22.50 (1.12%)
Dow: 16,964.10, -109.85 (0.64%)
NASDAQ: 4,648.82, -59.43 (1.26%)
Crude Oil 36.46 -3.80% Gold 1,263.20 -0.06% EUR/USD 1.1006 -0.08% 10-Yr Bond 1.8320 -3.68% Corn 360.75 +0.49% Copper 2.22 -2.89% Silver 15.43 -1.33% Natural Gas 1.72 +1.54% Russell 2000 1,068.18 -2.37% VIX 18.75 +8.07% BATS 1000 20,677.17 0.00% GBP/USD 1.4215 -0.33% USD/JPY 112.6420
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