With no major economic data released, Wednesday was a bit of a nothing-burger on the day. The Dow lost some ground while the other indices finished modestly to the upside.
There was more interest in the 10-year note, as the Treasury auctioned off $23 billion on what was deemed a very weak sale at a yield 2.333%.
Also making some headlines was WTI crude oil, which fell below $52 per barrel, after the American Petroleum Institute (API) said crude inventories rose by 14.2 million barrels, the second largest weekly build in the series.
The dull session comes as Q4 2016 earnings are winding down, and there hasn't been much in the way of good news from the corporate sector. Conversely, not many companies have been lowering forecasts, leaving investors in an area of suspense about which direction the market may go next.
At The Close, Tuesday, February 8, 2017:
Dow: 20,054.34, -35.95 (-0.18%)
NASDAQ: 5,682.45, +8.24 (0.15%)
S&P 500: 2,294.67, +1.59 (0.07%)
NYSE Composite: 11,252.31, +8.93 (0.08%)
Showing posts with label oil. Show all posts
Showing posts with label oil. Show all posts
Wednesday, February 8, 2017
Saturday, January 14, 2017
NASDAQ Posts Seventh Record Of 2017; Dow Flat; Gold Outperforming All Other Assets
As America lurches toward inauguration day (Jan. 20), stocks remain a mixed bag.
The Dow ended the week with a small loss on Friday as the NASDAQ rose to another record close, its seventh this year.
For the week, the NAZ was up nearly one percent. The Dow's loss was minor, at less than one half percent (-0.39%), but the broader S&P and NYSE composite suffered almost no depreciation.
Overall, it was fairly uneventful in markets, which is odd, given the cross-currents blowing through the political and economic spectrum.
Next week, with the inauguration of Donald J. Trump as America's 45th president putting a final glow on the proceedings, promises to be a more volatile period, shortened by one day, as markets are idle for Monday's Martin Luther King holiday.
Ominously, the Dow Jones Industrial Average remains positioned below the expected 20,000 level but has been flat as a pancake for the past four weeks.
WTI crude oil remains mired in the mid-fifties, while gold, the year's best-performing asset thus far, pierced the 1200/oz. mark on Friday but fell off and closed at 1196.90 the ounce.
At The Close 1.13.16:
Dow: 19,885.73, -5.27 (-0.03%)
NASDAQ: 5,574.12, +26.63 (0.48%)
S&P 500: 2,274.64, +4.20 (0.18%)
NYSE Composite: 11,227.17, +23.02 (0.21%)
Week Ending 1.13.16:
Dow: -78.07 (-0.39%)
NASDAQ: +53.06 (0.96%)
S&P 500: -2.34 (-0.10%)
NYSE Composite: -10.45 (-0.09%)
The Dow ended the week with a small loss on Friday as the NASDAQ rose to another record close, its seventh this year.
For the week, the NAZ was up nearly one percent. The Dow's loss was minor, at less than one half percent (-0.39%), but the broader S&P and NYSE composite suffered almost no depreciation.
Overall, it was fairly uneventful in markets, which is odd, given the cross-currents blowing through the political and economic spectrum.
Next week, with the inauguration of Donald J. Trump as America's 45th president putting a final glow on the proceedings, promises to be a more volatile period, shortened by one day, as markets are idle for Monday's Martin Luther King holiday.
Ominously, the Dow Jones Industrial Average remains positioned below the expected 20,000 level but has been flat as a pancake for the past four weeks.
WTI crude oil remains mired in the mid-fifties, while gold, the year's best-performing asset thus far, pierced the 1200/oz. mark on Friday but fell off and closed at 1196.90 the ounce.
At The Close 1.13.16:
Dow: 19,885.73, -5.27 (-0.03%)
NASDAQ: 5,574.12, +26.63 (0.48%)
S&P 500: 2,274.64, +4.20 (0.18%)
NYSE Composite: 11,227.17, +23.02 (0.21%)
Week Ending 1.13.16:
Dow: -78.07 (-0.39%)
NASDAQ: +53.06 (0.96%)
S&P 500: -2.34 (-0.10%)
NYSE Composite: -10.45 (-0.09%)
Wednesday, September 14, 2016
Back To School Not For All; Trump Surges
Well, it's still summer for those of us who go by the calendar rather than a Labor Day or back-to-school regimen.
Actually, most of us hated school, didn't we? And work isn't much better, so... retirement?
Good luck with that.
In any case, stocks are confused, but oil dipped to its lowest level in weeks, which should set firre to the bears' feet. They'll be coming out of summer slumber soon enough to catch another downdraft is our guess, even though the Fed dare not raise the federal funds rate next week.
The likelihood of a Trump presidency grows larger with each passing day, which is enough to cause serious sickness across the investing spectrum, although his victory will prove a dynamic positive in the long run.
It's the short term that scares most people.
Wednesday's Woes:
Dow Jones Industrial Average
18,034.77, -31.98 (-0.18%)
NASDAQ
5,173.77, 18.52 (0.36%)
S&P 500
2,125.77, -1.25 (-0.06%)
NYSE Composite
10,511.54, -23.82 (-0.23%)
Actually, most of us hated school, didn't we? And work isn't much better, so... retirement?
Good luck with that.
In any case, stocks are confused, but oil dipped to its lowest level in weeks, which should set firre to the bears' feet. They'll be coming out of summer slumber soon enough to catch another downdraft is our guess, even though the Fed dare not raise the federal funds rate next week.
The likelihood of a Trump presidency grows larger with each passing day, which is enough to cause serious sickness across the investing spectrum, although his victory will prove a dynamic positive in the long run.
It's the short term that scares most people.
Wednesday's Woes:
Dow Jones Industrial Average
18,034.77, -31.98 (-0.18%)
NASDAQ
5,173.77, 18.52 (0.36%)
S&P 500
2,125.77, -1.25 (-0.06%)
NYSE Composite
10,511.54, -23.82 (-0.23%)
Monday, August 8, 2016
Stocks Flat As Dog Days Drag
Considering the huge push Hillary Clinton got from the pollsters and media over the past week, it's a wonder the stock market wasn't off to the races come Monday morning.
Instead, stocks were marginally higher at the opening bell, but spent most of the session in the red. Since stocks are trading at or near all-time highs on the major averages, perhaps this wait-and-see action was the best approach.
Volatility was very low, with stocks trading in very tight ranges. The outlier was oil, as WTI crude ramped up more than a dollar, to $42.87, though this mini-bounce is not likely to be taken seriously or signal another run-up to $50 per barrel or higher. Oil's global glut is real and serious. Only a highly structured and skeptical futures market is keeping crude from collapsing to below $30 per barrel. For now, drivers are getting the benefit of lower gas prices, a condition which used to be associated with a burgeoning economy.
Oddly enough, because of excess debt in the system, stagnation with low inflation is about the best this economy can do. For the most part, individuals are doing better than they have the past few years, but high taxes and the rising cost of healthcare have put the brakes on personal spending.
Dow Jones Industrial Average
18,529.29, -14.24 (-0.08%)
NASDAQ
5,213.14, -7.98 (-0.15%)
S&P 500
2,180.89, -1.98 (-0.09%)
NYSE Composite
10,788.01, 5.14 (0.05%)
Instead, stocks were marginally higher at the opening bell, but spent most of the session in the red. Since stocks are trading at or near all-time highs on the major averages, perhaps this wait-and-see action was the best approach.
Volatility was very low, with stocks trading in very tight ranges. The outlier was oil, as WTI crude ramped up more than a dollar, to $42.87, though this mini-bounce is not likely to be taken seriously or signal another run-up to $50 per barrel or higher. Oil's global glut is real and serious. Only a highly structured and skeptical futures market is keeping crude from collapsing to below $30 per barrel. For now, drivers are getting the benefit of lower gas prices, a condition which used to be associated with a burgeoning economy.
Oddly enough, because of excess debt in the system, stagnation with low inflation is about the best this economy can do. For the most part, individuals are doing better than they have the past few years, but high taxes and the rising cost of healthcare have put the brakes on personal spending.
Dow Jones Industrial Average
18,529.29, -14.24 (-0.08%)
NASDAQ
5,213.14, -7.98 (-0.15%)
S&P 500
2,180.89, -1.98 (-0.09%)
NYSE Composite
10,788.01, 5.14 (0.05%)
Thursday, August 4, 2016
Stocks Drag Trhough Thursday Session; Oil Bounces
Sluggish would be a compliment to the manner of trading that took place on Thursday, with the major indices scratching out meager gains, with the exception of the Dow 30, which took it slightly on the chin but avoided a knockout blow.
Market participants are unaware of what to do without some form of guidance by or from the Fed or other central bankers. It's almost as though markets are locked up with nowhere to go, which actually might be the case as the slog through August continues.
If there was any bright spot for the markets it was in the oil patch, where WTI crude rallied off a low spot at $40 per barrel a few days ago and now sits closer to $42. It isn't much of a move, but nervous oil specs will take any gains they can get at this juncture. With crude spilling out of every known production facility at near record pace, the glut has only worsened over the summer as demand has not exactly been robust.
The price of crude - if not for material intervention by players of significant size - should be hovering closer to $30 than $40. Crude has fallen into a bear market, more than 20% off the recent artificial high of $50 per barrel, which didn't last for more than a nanosecond.
A serious sell-off in crude over the next few weeks or into October could be the catalyst for more selling of equities and another dip in the stock markets, though the power of the Fed and other central banks to prevent anything even resembling a correction before the November presidential election cannot be underestimated.
Dow Jones Industrial Average
18,352.05, -2.95 (-0.02%)
NASDAQ
5,166.25, +6.51 (0.13%)
S&P 500
2,164.25, +0.46 (0.02%)
NYSE Composite
10,707.13, +11.99 (0.11%)
Market participants are unaware of what to do without some form of guidance by or from the Fed or other central bankers. It's almost as though markets are locked up with nowhere to go, which actually might be the case as the slog through August continues.
If there was any bright spot for the markets it was in the oil patch, where WTI crude rallied off a low spot at $40 per barrel a few days ago and now sits closer to $42. It isn't much of a move, but nervous oil specs will take any gains they can get at this juncture. With crude spilling out of every known production facility at near record pace, the glut has only worsened over the summer as demand has not exactly been robust.
The price of crude - if not for material intervention by players of significant size - should be hovering closer to $30 than $40. Crude has fallen into a bear market, more than 20% off the recent artificial high of $50 per barrel, which didn't last for more than a nanosecond.
A serious sell-off in crude over the next few weeks or into October could be the catalyst for more selling of equities and another dip in the stock markets, though the power of the Fed and other central banks to prevent anything even resembling a correction before the November presidential election cannot be underestimated.
Dow Jones Industrial Average
18,352.05, -2.95 (-0.02%)
NASDAQ
5,166.25, +6.51 (0.13%)
S&P 500
2,164.25, +0.46 (0.02%)
NYSE Composite
10,707.13, +11.99 (0.11%)
Tuesday, July 26, 2016
All Quiet On The FOMC Front; Meanwhile, Rancor At The DNC
With the chance of a rate hike hovering between absolutely not and no chance at the two-day July meeting (today and Wednesday) stocks took something of a breather, finishing in mixed fashion and anticipating no rate movement from the FOMC, which will release its policy decision at 2:00 pm EDT tomorrow.
There was a sudden drop in equities across the board early in the day on Tuesday, sending the major indices into negative territory, a place they spent most of the remainder of the session.
Oil continued its relentless decline off ridiculously high levels reached last month. While today's drop was less than one percent, the price of WTI crude for September 2016 delivery fell to a three-month low as gasoline demand in the US and most other developed nations remains stubbornly low. The last traded price was in the $42.82 per barrel range.
The global glut in crude oil will continue into the foreseeable future, as production from OPEC nations continues at near capacity and US rig counts continue to creep slowly upward.
Precious metals posted small gains, but remain off their recent highs. This appears to be a time of price consolidation prior to the next leg upward, the four-year bear market now clearly in the rear view mirror and fading from view.
Besides the FOMC meeting, focus is clearly on the political front, as the Democratic National Convention enters the second of its four-day schedule. Much of the rancor over the leaked emails has subsided, though delegates and supporters of Bernie Sanders - the runner-up to Hillary Clinton in the primaries - continue to protest and clamor for their candidate.
Tonight's main event is the delegate roll-call, sure to be accompanied by loud cheers, jeers, assorted sign-waving, and yelping from the disaffected Sanders delegations. It is expected that Hillary Clinton will be awarded the delegates she needs to secure the Democratic nomination, though many Sanders supporters have not given up hope for a last-minute change of heart by some super delegates.
It's a long shot for Sanders, but he will continue his fight for social justice as a serious sideshow in the run-up to November's elections.
Tuesday's Tremble:
Dow Jones Industrial Average
18,473.75, -19.31 (-0.10%)
NASDAQ
5,110.05, +12.42 (0.24%)
S&P 500
2,169.18, +0.70 (0.03%)
NYSE Composite
10,772.99, +20.56 (0.19%)
There was a sudden drop in equities across the board early in the day on Tuesday, sending the major indices into negative territory, a place they spent most of the remainder of the session.
Oil continued its relentless decline off ridiculously high levels reached last month. While today's drop was less than one percent, the price of WTI crude for September 2016 delivery fell to a three-month low as gasoline demand in the US and most other developed nations remains stubbornly low. The last traded price was in the $42.82 per barrel range.
The global glut in crude oil will continue into the foreseeable future, as production from OPEC nations continues at near capacity and US rig counts continue to creep slowly upward.
Precious metals posted small gains, but remain off their recent highs. This appears to be a time of price consolidation prior to the next leg upward, the four-year bear market now clearly in the rear view mirror and fading from view.
Besides the FOMC meeting, focus is clearly on the political front, as the Democratic National Convention enters the second of its four-day schedule. Much of the rancor over the leaked emails has subsided, though delegates and supporters of Bernie Sanders - the runner-up to Hillary Clinton in the primaries - continue to protest and clamor for their candidate.
Tonight's main event is the delegate roll-call, sure to be accompanied by loud cheers, jeers, assorted sign-waving, and yelping from the disaffected Sanders delegations. It is expected that Hillary Clinton will be awarded the delegates she needs to secure the Democratic nomination, though many Sanders supporters have not given up hope for a last-minute change of heart by some super delegates.
It's a long shot for Sanders, but he will continue his fight for social justice as a serious sideshow in the run-up to November's elections.
Tuesday's Tremble:
Dow Jones Industrial Average
18,473.75, -19.31 (-0.10%)
NASDAQ
5,110.05, +12.42 (0.24%)
S&P 500
2,169.18, +0.70 (0.03%)
NYSE Composite
10,772.99, +20.56 (0.19%)
Monday, May 9, 2016
China's Commodity Carnage Crushes Crude, PMs
Overnight, China stocks fell as more poor economic data was presented, as hopes for a domestic recovery were sidelined by declining import and export data.
Additionally, commodity prices were negatively affected by government regulations which aim to crack down on speculation.
This translated into a very confused day for equity pros, though commodity traders apparently had the sell button surgically attached to their index fingers, with prices for oil down more than three percent while gold and silver took deep declines.
At the end of the day, stocks leveled off roughly where they began the day, though markets appear vulnerable to a downturn.
Monday's Mingle:
S&P 500: 2,058.69, +1.55 (0.08%)
Dow: 17,705.91, -34.72 (0.20%)
NASDAQ: 4,750.21, +14.05 (0.30%)
Crude Oil 43.24 -3.18% Gold 1,265.80 -0.06% EUR/USD 1.1382 -0.02% 10-Yr Bond 1.76 -1.07% Corn 369.25 -2.19% Copper 2.10 -0.19% Silver 17.07 -0.14% Natural Gas 2.10 -0.24% Russell 2000 1,118.25 +0.32% VIX 14.57 -1.02% BATS 1000 20,677.17 0.00% GBP/USD 1.4410 +0.03% USD/JPY 108.4335 -0.01%
Additionally, commodity prices were negatively affected by government regulations which aim to crack down on speculation.
This translated into a very confused day for equity pros, though commodity traders apparently had the sell button surgically attached to their index fingers, with prices for oil down more than three percent while gold and silver took deep declines.
At the end of the day, stocks leveled off roughly where they began the day, though markets appear vulnerable to a downturn.
Monday's Mingle:
S&P 500: 2,058.69, +1.55 (0.08%)
Dow: 17,705.91, -34.72 (0.20%)
NASDAQ: 4,750.21, +14.05 (0.30%)
Crude Oil 43.24 -3.18% Gold 1,265.80 -0.06% EUR/USD 1.1382 -0.02% 10-Yr Bond 1.76 -1.07% Corn 369.25 -2.19% Copper 2.10 -0.19% Silver 17.07 -0.14% Natural Gas 2.10 -0.24% Russell 2000 1,118.25 +0.32% VIX 14.57 -1.02% BATS 1000 20,677.17 0.00% GBP/USD 1.4410 +0.03% USD/JPY 108.4335 -0.01%
Tuesday, April 12, 2016
Bad News Sends Stocks, Oil, Higher; Silver Outshines All
Stocks moved higher based on nothing other than an "informed diplomatic source" that said Russia and Saudi Arabia had agreed to freeze oil production. Along with stocks, oil futures moved notably higher, topping $41.50 a barrel.
The news was taken with so much enthusiasm that traders apparently forgot that there exists a worldwide glut of crude oil larger than any before it. They also disregarded obvious topping patterns in stocks and upcoming earnings reports, including those of the big banks which happen to be saddled with bad oil loans.
News that the IMF cut its global growth forecast for 2016 for the fourth time in a year, backing it off to 3.2%, was also disregarded, as was the US March budget deficit came in at double what it was last year, a whopping $108 billion.
In an unrelated move, silver continued its non-stop ascent, closing in New York at its highest price since late October of 2015, topping $16/ounce for the first time this year. The price of silver has risen more than 8% in the past week.
S&P 500: 2,061.72, +19.73 (0.97%)
Dow: 17,721.25, +164.84 (0.94%)
NASDAQ: 4,872.09, +38.69 (0.80%)
Crude Oil 41.56 +2.97% Gold 1,257.40 -0.05% EUR/USD 1.1390 -0.12% 10-Yr Bond 1.78 +3.31% Corn 361.25 +1.26% Copper 2.15 +2.85% Silver 16.22 +1.50% Natural Gas 2.02 +5.60% Russell 2000 1,105.71 +1.04% VIX 14.85 -8.67% BATS 1000 20,682.61 0.00% GBP/USD 1.4269 +0.24% USD/JPY 108.5655 +0.57%
The news was taken with so much enthusiasm that traders apparently forgot that there exists a worldwide glut of crude oil larger than any before it. They also disregarded obvious topping patterns in stocks and upcoming earnings reports, including those of the big banks which happen to be saddled with bad oil loans.
News that the IMF cut its global growth forecast for 2016 for the fourth time in a year, backing it off to 3.2%, was also disregarded, as was the US March budget deficit came in at double what it was last year, a whopping $108 billion.
In an unrelated move, silver continued its non-stop ascent, closing in New York at its highest price since late October of 2015, topping $16/ounce for the first time this year. The price of silver has risen more than 8% in the past week.
S&P 500: 2,061.72, +19.73 (0.97%)
Dow: 17,721.25, +164.84 (0.94%)
NASDAQ: 4,872.09, +38.69 (0.80%)
Crude Oil 41.56 +2.97% Gold 1,257.40 -0.05% EUR/USD 1.1390 -0.12% 10-Yr Bond 1.78 +3.31% Corn 361.25 +1.26% Copper 2.15 +2.85% Silver 16.22 +1.50% Natural Gas 2.02 +5.60% Russell 2000 1,105.71 +1.04% VIX 14.85 -8.67% BATS 1000 20,682.61 0.00% GBP/USD 1.4269 +0.24% USD/JPY 108.5655 +0.57%
Monday, April 4, 2016
April's Fools
Having been given the green light by Janet Yellen and her uber-dovish comments concerning the relaxed pace of interest rate increases, stocks closed Friday at their best levels of the year, erasing any nasty remembrances of the January and early February slump.
Monday brought the blues, a touch of reality, and maybe a case of buyer's remorse, as the major averages began the first full trading week of the month in a depressed vein.
Leading the charge to the downside was the usual culprit, crude oil, which slipped below $36/barrel on the current contract. The consistency of the oil slump can be attributed to a variety of causes, though the most obvious is slow or absent global economic growth. Major developed nations find themselves in a horrible bind due to limited opportunity for wage growth and slack demand for everything from farm equipment to fancy glasses.
While cheerleaders in the media are reluctant to mention any news which might be construed as even remotely negative, there is no mistaking the demographics of the developed world. Europe, Japan, and increasingly, the United States bear aging populations with no viable means of escape from the financial vortex of ultra-low interest rates except via the ultimate demise, death.
What the central banks and central planners of advanced economies have wrought with their ham-handed zero interest (and lower) environment is a world in which aging people without advancing incomes or prospects for opportunity have no viable means of protecting their savings. For those younger, saving is also crimped by these lower rates, pushing entire populations into risky, often leveraged investment schemes.
Economists have historical reference to ages marked by financial repression such as the current one, and they nearly always end in disaster, war, and a reordering of the global economic condition. Central banks desire inflation anywhere, while the population cries out for avenues for saving, putting the monetary system and the realities of life on a direct collision course.
The central banks must certainly know that there is nowhere out of this condition, but they are reluctant - indeed, they are violently opposed to the idea - to balance growth, productivity, wages and wealth creation. They have become the worst nightmare of the people, bent only toward risk in financial instruments, and against anything that might promote the general well-being. They have become the enemy of savers, anathema to the aging, and a net detraction from productive economies everywhere.
Perhaps it is all part of their plan, but, if it is, such a plan has been well-hidden because nobody with any amount of wealth or savings can see the wisdom of it. Unless stocks continue to rise in value forever - a distinct impossibility - humanity will be at the mercy of a small, useless band of monetarists who have not, as yet, propositioned any plan for the past seven years other than to cut interest rates and hope.
And we all know that hope is not a strategy.
S&P 500: 2,066.13, -6.65 (0.32%)
Dow: 17,737.00, -55.75 (0.31%)
NASDAQ: 4,891.80, -22.75 (0.46%)
Crude Oil 35.81 -2.66% Gold 1,216.90 -0.54% EUR/USD 1.1392 -0.02% 10-Yr Bond 1.78 -0.73% Corn 354.50 +0.14% Copper 2.14 -0.97% Silver 14.94 -0.74% Natural Gas 2.00 +2.45% Russell 2000 1,109.06 -0.77% VIX 14.17 +8.17% BATS 1000 20,682.61 0.00% GBP/USD 1.4264 +0.30% USD/JPY 111.3450 -0.28%
Monday brought the blues, a touch of reality, and maybe a case of buyer's remorse, as the major averages began the first full trading week of the month in a depressed vein.
Leading the charge to the downside was the usual culprit, crude oil, which slipped below $36/barrel on the current contract. The consistency of the oil slump can be attributed to a variety of causes, though the most obvious is slow or absent global economic growth. Major developed nations find themselves in a horrible bind due to limited opportunity for wage growth and slack demand for everything from farm equipment to fancy glasses.
While cheerleaders in the media are reluctant to mention any news which might be construed as even remotely negative, there is no mistaking the demographics of the developed world. Europe, Japan, and increasingly, the United States bear aging populations with no viable means of escape from the financial vortex of ultra-low interest rates except via the ultimate demise, death.
What the central banks and central planners of advanced economies have wrought with their ham-handed zero interest (and lower) environment is a world in which aging people without advancing incomes or prospects for opportunity have no viable means of protecting their savings. For those younger, saving is also crimped by these lower rates, pushing entire populations into risky, often leveraged investment schemes.
Economists have historical reference to ages marked by financial repression such as the current one, and they nearly always end in disaster, war, and a reordering of the global economic condition. Central banks desire inflation anywhere, while the population cries out for avenues for saving, putting the monetary system and the realities of life on a direct collision course.
The central banks must certainly know that there is nowhere out of this condition, but they are reluctant - indeed, they are violently opposed to the idea - to balance growth, productivity, wages and wealth creation. They have become the worst nightmare of the people, bent only toward risk in financial instruments, and against anything that might promote the general well-being. They have become the enemy of savers, anathema to the aging, and a net detraction from productive economies everywhere.
Perhaps it is all part of their plan, but, if it is, such a plan has been well-hidden because nobody with any amount of wealth or savings can see the wisdom of it. Unless stocks continue to rise in value forever - a distinct impossibility - humanity will be at the mercy of a small, useless band of monetarists who have not, as yet, propositioned any plan for the past seven years other than to cut interest rates and hope.
And we all know that hope is not a strategy.
S&P 500: 2,066.13, -6.65 (0.32%)
Dow: 17,737.00, -55.75 (0.31%)
NASDAQ: 4,891.80, -22.75 (0.46%)
Crude Oil 35.81 -2.66% Gold 1,216.90 -0.54% EUR/USD 1.1392 -0.02% 10-Yr Bond 1.78 -0.73% Corn 354.50 +0.14% Copper 2.14 -0.97% Silver 14.94 -0.74% Natural Gas 2.00 +2.45% Russell 2000 1,109.06 -0.77% VIX 14.17 +8.17% BATS 1000 20,682.61 0.00% GBP/USD 1.4264 +0.30% USD/JPY 111.3450 -0.28%
Wednesday, March 9, 2016
Oil Glut Yet Prices Higher; Gold, Silver Demand Up, Prices Down
There is a serious disturbance in the Farce called the global economy, and it is the role of central bankers who create absurd amounts of fiat currencies, literally out of thin air.
Policies adopted by the financial elite experts who control nearly all currencies worldwide have caused markets to virtually stop functioning. After seven years of base interest rates at near zero - and recently, below zero - endless stimulus programs otherwise known by the catchy name, quantitative easing, and a serious lack of transparency, regulation, and discipline in all markets, global growth is a non-starter for 2016 and the foreseeable future.
Businesses, fed a diet of easy money for nearly a decade (two decades, if one includes the Greenspan "put" years) are loathe to spend on capital improvements, labor or infrastructure. Businesses are, so to speak, "living off the land," by cutting budgets while fattening the salaries and bonuses of crony CEOs and others occupying the executive suites and boards of directors.
It's a horrible condition, with disinflation and outright deflation popping up in pockets like food production, energy, and most hard commodities (see natural gas and copper). Price discovery has become a function less of supply and demand and more driven by derivative bets, options, credit default swaps, and hedging. Over-finacialization of nearly all markets that matter has turned fundamentals on their heads and what once were functional markets into nothing more than trap-laden casinos. The effect has been to alienate a generation of investors (millenials), impoverish another (retirees) and overburden those not yet ready to enter the economy (the youth). In the middle is generation X, condemned to toil away towards an uncertain future.
The argument that fundamental supply and demand is defunct rests largely on the oil market, currently carrying the largest global glut on record, yet pushed to levels indicative of a shortage. Oil was ranging toward $25 per barrel just a month or so ago; today it is approaching $40, mostly a function of short-covering and naked short selling.
Much the same can be said of the markets for precious metals, the price held down by nefarious forces while the demand continues to expand. In many quarters, gold, silver, and gemstones are considered the only investments worth having and holding. They carry no counterparts risk, are relatively easy to transport and can be converted into money or any other asset with relative ease.
As Bill Bonner and his enlightened crew love to postulate, a day of reckoning is coming, though just exactly when that day arrives and how it is manifested are known to exactly nobody.
It's a mess. Better to put money in a mattress or buy canned goods than risk in capital markets, as moribund and compromised as they are. US equity indices peaked in May of 2015. It's nearly a year from the all-time highs without any rally catalysts in sight.
All eyes and ears will be tuned to the ECB tomorrow, when Mario Draghi does what he can only do, signal more easing, more fraud, and more of the relentless can-kicking that has typified the past seven years.
Nobody is holding his or her breath on this coming non-event because there is no longer any air to breathe.
Wednesday's Wackiness:
S&P 500: 1,989.26, +10.00 (0.51%)
Dow: 17,000.36, +36.26 (0.21%)
NASDAQ: 4,674.38, +25.55 (0.55%)
Crude Oil 38.23 +4.74% Gold 1,253.90 -0.71% EUR/USD 1.1001 -0.06% 10-Yr Bond 1.8920 +3.28% Corn 360.25 -0.07% Copper 2.23 +0.54% Silver 15.31 -0.52% Natural Gas 1.76 +2.92% Russell 2000 1,072.77 +0.46% VIX 18.34 -1.77% BATS 1000 20,677.17 0.00% GBP/USD 1.4217 +0.03% USD/JPY 113.3350 +0.60%
Policies adopted by the financial elite experts who control nearly all currencies worldwide have caused markets to virtually stop functioning. After seven years of base interest rates at near zero - and recently, below zero - endless stimulus programs otherwise known by the catchy name, quantitative easing, and a serious lack of transparency, regulation, and discipline in all markets, global growth is a non-starter for 2016 and the foreseeable future.
Businesses, fed a diet of easy money for nearly a decade (two decades, if one includes the Greenspan "put" years) are loathe to spend on capital improvements, labor or infrastructure. Businesses are, so to speak, "living off the land," by cutting budgets while fattening the salaries and bonuses of crony CEOs and others occupying the executive suites and boards of directors.
It's a horrible condition, with disinflation and outright deflation popping up in pockets like food production, energy, and most hard commodities (see natural gas and copper). Price discovery has become a function less of supply and demand and more driven by derivative bets, options, credit default swaps, and hedging. Over-finacialization of nearly all markets that matter has turned fundamentals on their heads and what once were functional markets into nothing more than trap-laden casinos. The effect has been to alienate a generation of investors (millenials), impoverish another (retirees) and overburden those not yet ready to enter the economy (the youth). In the middle is generation X, condemned to toil away towards an uncertain future.
The argument that fundamental supply and demand is defunct rests largely on the oil market, currently carrying the largest global glut on record, yet pushed to levels indicative of a shortage. Oil was ranging toward $25 per barrel just a month or so ago; today it is approaching $40, mostly a function of short-covering and naked short selling.
Much the same can be said of the markets for precious metals, the price held down by nefarious forces while the demand continues to expand. In many quarters, gold, silver, and gemstones are considered the only investments worth having and holding. They carry no counterparts risk, are relatively easy to transport and can be converted into money or any other asset with relative ease.
As Bill Bonner and his enlightened crew love to postulate, a day of reckoning is coming, though just exactly when that day arrives and how it is manifested are known to exactly nobody.
It's a mess. Better to put money in a mattress or buy canned goods than risk in capital markets, as moribund and compromised as they are. US equity indices peaked in May of 2015. It's nearly a year from the all-time highs without any rally catalysts in sight.
All eyes and ears will be tuned to the ECB tomorrow, when Mario Draghi does what he can only do, signal more easing, more fraud, and more of the relentless can-kicking that has typified the past seven years.
Nobody is holding his or her breath on this coming non-event because there is no longer any air to breathe.
Wednesday's Wackiness:
S&P 500: 1,989.26, +10.00 (0.51%)
Dow: 17,000.36, +36.26 (0.21%)
NASDAQ: 4,674.38, +25.55 (0.55%)
Crude Oil 38.23 +4.74% Gold 1,253.90 -0.71% EUR/USD 1.1001 -0.06% 10-Yr Bond 1.8920 +3.28% Corn 360.25 -0.07% Copper 2.23 +0.54% Silver 15.31 -0.52% Natural Gas 1.76 +2.92% Russell 2000 1,072.77 +0.46% VIX 18.34 -1.77% BATS 1000 20,677.17 0.00% GBP/USD 1.4217 +0.03% USD/JPY 113.3350 +0.60%
Thursday, February 25, 2016
Tickle Me Elmo Version Of Durable Goods Sends Stocks Soaring
Reactions to this morning's January Durable Goods report ran from the mildly surprised to grossly exuberant, with the most apropos metaphor being the one in which the stock market is Christmas, the traders are children (not far from the truth) and the report was a Tickle Me Elmo doll.
The doll was immediately unwrapped, hugged and unconditionally loved by all the kids, who seemed to wish that Christmas would never end, sending the major indices solidly higher and yields on bonds noticeably lower.
It was as though the year was hard, winter came early and any present would have sufficed to ease some of the woes, though this particular gift was simply perfection, wiping away the past six weeks of anguish and anger, tears, fears and jeers. Even oil gained 2 1/2%, finishing just over $33/bbl.
For the record, the rise in durable goods was 4.9%, the best move in 10 months.
According to a one-time reading of the stock market (today), there are no longer any issues regarding ultra-low interest rates, the slowdown in China (the SSE slipped by 6.41% overnight), chaos in Europe, or the ongoing wars in Syria and Ukraine.
We know this is untrue, but today's action would have one believe that a bull market was in full gear, GDP was booming at 5% and peace had broken out around the globe. Such are the vicissitudes in a market driven solely by headlines and not by fundamentals, because, in reality, the problems have not been resolved - not the ones from last week, last month, last year, or even from 2008. The issues remain, as do the fast-buck artists populating the trading stations and computer terminals of the markets.
Tomorrow should prove more prescient, with the second estimate of 2015 4th quarter GDP hitting the wires at 8:30 am, a good hour prior to ringing the opening bell.
But today was an undoubted victory for the bulls. Let them celebrate tonight and face the music as time presses forward. The Gold Bugs and Silver Eagles continue to be constrained, shackled, handcuffed, quarantined.
Best quote of the day: "Nobody will see it coming." They usually don't.
Tickle These, Elmo:
S&P 500: 1,951.70, +21.90 (1.13%)
Dow: 16,697.29, +212.30 (1.29%)
NASDAQ: 4,582.21, +39.60 (0.87%)
Crude Oil 33.06 +2.83% Gold 1,235.30 -0.31% EUR/USD 1.1028 +0.09% 10-Yr Bond 1.6970 -2.58% Corn 360.25 -1.17% Copper 2.08 -0.86% Silver 15.15 -0.93% Natural Gas 1.79 -2.56% Russell 2000 1,031.58 +0.93% VIX 19.11 -7.77% BATS 1000 20,677.17 0.00% GBP/USD 1.3964 +0.22% USD/JPY 112.8855
The doll was immediately unwrapped, hugged and unconditionally loved by all the kids, who seemed to wish that Christmas would never end, sending the major indices solidly higher and yields on bonds noticeably lower.
It was as though the year was hard, winter came early and any present would have sufficed to ease some of the woes, though this particular gift was simply perfection, wiping away the past six weeks of anguish and anger, tears, fears and jeers. Even oil gained 2 1/2%, finishing just over $33/bbl.
For the record, the rise in durable goods was 4.9%, the best move in 10 months.
According to a one-time reading of the stock market (today), there are no longer any issues regarding ultra-low interest rates, the slowdown in China (the SSE slipped by 6.41% overnight), chaos in Europe, or the ongoing wars in Syria and Ukraine.
We know this is untrue, but today's action would have one believe that a bull market was in full gear, GDP was booming at 5% and peace had broken out around the globe. Such are the vicissitudes in a market driven solely by headlines and not by fundamentals, because, in reality, the problems have not been resolved - not the ones from last week, last month, last year, or even from 2008. The issues remain, as do the fast-buck artists populating the trading stations and computer terminals of the markets.
Tomorrow should prove more prescient, with the second estimate of 2015 4th quarter GDP hitting the wires at 8:30 am, a good hour prior to ringing the opening bell.
But today was an undoubted victory for the bulls. Let them celebrate tonight and face the music as time presses forward. The Gold Bugs and Silver Eagles continue to be constrained, shackled, handcuffed, quarantined.
Best quote of the day: "Nobody will see it coming." They usually don't.
Tickle These, Elmo:
S&P 500: 1,951.70, +21.90 (1.13%)
Dow: 16,697.29, +212.30 (1.29%)
NASDAQ: 4,582.21, +39.60 (0.87%)
Crude Oil 33.06 +2.83% Gold 1,235.30 -0.31% EUR/USD 1.1028 +0.09% 10-Yr Bond 1.6970 -2.58% Corn 360.25 -1.17% Copper 2.08 -0.86% Silver 15.15 -0.93% Natural Gas 1.79 -2.56% Russell 2000 1,031.58 +0.93% VIX 19.11 -7.77% BATS 1000 20,677.17 0.00% GBP/USD 1.3964 +0.22% USD/JPY 112.8855
Tuesday, February 9, 2016
Stocks Finish Flat, But Internals Signal Something Is Seriously Wrong
US Stocks closed today marginally on the downside, though appearances can be deceiving, as there was outright catastrophe in Japan which spilled over into worried European markets.
With Chinese markets (including the SSE and Hang Seng) the Nikkei took a magnificent beating on Tuesday, losing 918 points, a 5.40% loss on the day, sending the main index of Japan further into bear market territory. Perhaps even more significant, the JCB 10-year note yield fell to a negative number, under ZERO, for the first time in history. This marks Japan and Switzerland as the only countries in the world with negative yields out to ten years, though other countries are rapidly approaching that benchmark, in particular, Germany.
European bourses all finished their session with losses of one percent or more, and, at the open in the US, the situation appeared dire, with Dow futures down more than 150 points. Stocks quickly gained traction, turned positive near midday, flirted with the unchanged line throughout the session until finally giving it up late in the day.
But, the story is not the minor loss the major indices took, but the skew of all manner of metrics toward the negative. Bond yields continued to collapse, with the ten-year down to 1.71%. The spread between the ten and two-year note compressed down to 1.04, something of a danger zone, as the two-year actually rose two bits, to yield 0.67%.
Bank stocks were unhappy spots, with Bank of America (BAC) closing at 12.20, a new 52-week and multi-year low.
Advancers were also far behind declining stocks by a margin of more than 2-to-1. Also of note, the number of new lows (NASDAQ and NYSE combined) dwarfed new highs, 812-70, with only six of those new highs on the Naz. The central planners at the central banks can pin their hats on the day as they successfully halted the manic rallies in silver and gold, for a day, anyway.
Additionally, oil was sent back well below the $30 mark, finishing in New York at $28.38 a barrel.
The VIX is also signaling more turbulence, hanging steadily in the mid-20s range.
The rout in stocks, however, like the gains for the metals, is far from over. Consensus view on Wall Street is still concerned, but not yet panicked. Stocks are still about 5-7% away from official bear market territory, though a few bad days could send the indices reeling in the wrong direction.
In a story by Bernard Condon (AP) about how much money companies have lost doing stock buybacks, we find that the stock buybacks which goosed the market and individual stocks higher over the past six to seven years has been nothing short of a colossal flop and threatens to become an even heavier weight stopped to the stock market.
What stock buybacks did accomplish was to allow executives to boost their companies' earnings without devoting capital to expansion, while at the same time justifying their extraordinary salaries and cashing out their outrageous stock options and/or bonuses.
Investors should be outraged, and righteously so, because these companies should have been either expanding their capital base or market share or distributing dividends to their shareholders. What these stock buyback kings have done is nothing short of a fiduciary failure, which in other industries would be cause for criminal indictments.
Of course, since this all occurred within the cozy regulatory environment that is Wall Street, nothing even close to that will happen. The executives who personally profited from corporate paper profits will walk away with their cash after hollowing out scores of once-healthy companies. It may turn out to be good overall, if a few of the giant multi-nationals like Wal-Mart, Yum Brands and ExxonMobil get cut down to more reasonable sizes and markets open up for more nimble - and honest - competitors.
Tuesday's Cracker-jack pot:
S&P 500: 1,852.21, -1.23 (0.07%)
Dow: 16,014.38, -12.67 (0.08%)
NASDAQ: 4,268.76, -14.99 (0.35%)
Crude Oil 28.38 -4.41% Gold 1,189.20 -0.73% EUR/USD 1.1294 +0.86% 10-Yr Bond 1.7290 -0.35% Corn 360.50 -0.48% Copper 2.04 -2.61% Silver 15.23 -1.30% Natural Gas 2.10 -2.01% Russell 2000 964.17 -0.53% VIX 26.71 +2.73% BATS 1000 20,030.11 -0.07% GBP/USD 1.4468 +0.29% USD/JPY 115.0020 -0.51%
With Chinese markets (including the SSE and Hang Seng) the Nikkei took a magnificent beating on Tuesday, losing 918 points, a 5.40% loss on the day, sending the main index of Japan further into bear market territory. Perhaps even more significant, the JCB 10-year note yield fell to a negative number, under ZERO, for the first time in history. This marks Japan and Switzerland as the only countries in the world with negative yields out to ten years, though other countries are rapidly approaching that benchmark, in particular, Germany.
European bourses all finished their session with losses of one percent or more, and, at the open in the US, the situation appeared dire, with Dow futures down more than 150 points. Stocks quickly gained traction, turned positive near midday, flirted with the unchanged line throughout the session until finally giving it up late in the day.
But, the story is not the minor loss the major indices took, but the skew of all manner of metrics toward the negative. Bond yields continued to collapse, with the ten-year down to 1.71%. The spread between the ten and two-year note compressed down to 1.04, something of a danger zone, as the two-year actually rose two bits, to yield 0.67%.
Bank stocks were unhappy spots, with Bank of America (BAC) closing at 12.20, a new 52-week and multi-year low.
Advancers were also far behind declining stocks by a margin of more than 2-to-1. Also of note, the number of new lows (NASDAQ and NYSE combined) dwarfed new highs, 812-70, with only six of those new highs on the Naz. The central planners at the central banks can pin their hats on the day as they successfully halted the manic rallies in silver and gold, for a day, anyway.
Additionally, oil was sent back well below the $30 mark, finishing in New York at $28.38 a barrel.
The VIX is also signaling more turbulence, hanging steadily in the mid-20s range.
The rout in stocks, however, like the gains for the metals, is far from over. Consensus view on Wall Street is still concerned, but not yet panicked. Stocks are still about 5-7% away from official bear market territory, though a few bad days could send the indices reeling in the wrong direction.
In a story by Bernard Condon (AP) about how much money companies have lost doing stock buybacks, we find that the stock buybacks which goosed the market and individual stocks higher over the past six to seven years has been nothing short of a colossal flop and threatens to become an even heavier weight stopped to the stock market.
What stock buybacks did accomplish was to allow executives to boost their companies' earnings without devoting capital to expansion, while at the same time justifying their extraordinary salaries and cashing out their outrageous stock options and/or bonuses.
Investors should be outraged, and righteously so, because these companies should have been either expanding their capital base or market share or distributing dividends to their shareholders. What these stock buyback kings have done is nothing short of a fiduciary failure, which in other industries would be cause for criminal indictments.
Of course, since this all occurred within the cozy regulatory environment that is Wall Street, nothing even close to that will happen. The executives who personally profited from corporate paper profits will walk away with their cash after hollowing out scores of once-healthy companies. It may turn out to be good overall, if a few of the giant multi-nationals like Wal-Mart, Yum Brands and ExxonMobil get cut down to more reasonable sizes and markets open up for more nimble - and honest - competitors.
Tuesday's Cracker-jack pot:
S&P 500: 1,852.21, -1.23 (0.07%)
Dow: 16,014.38, -12.67 (0.08%)
NASDAQ: 4,268.76, -14.99 (0.35%)
Crude Oil 28.38 -4.41% Gold 1,189.20 -0.73% EUR/USD 1.1294 +0.86% 10-Yr Bond 1.7290 -0.35% Corn 360.50 -0.48% Copper 2.04 -2.61% Silver 15.23 -1.30% Natural Gas 2.10 -2.01% Russell 2000 964.17 -0.53% VIX 26.71 +2.73% BATS 1000 20,030.11 -0.07% GBP/USD 1.4468 +0.29% USD/JPY 115.0020 -0.51%
Tuesday, January 12, 2016
Stocks (and Oil) Can't Catch a Break
It was another ugly day on Wall Street, not because stocks finished higher, but because of how they got there.
Right out of the gate, the major averages were soaring, but all of the early gains were wiped away shortly after 11:00 am. Stocks zig-zagged through the midday, going positive, then negative, and, finally, just after 2:00 pm, decided that upwards would be the most-favored path, so the bid was in.
However, prior to that late-afternoon spike, there were more than a fair share of winners and losers, most of them being of the losing variety. Of the top ten most actives, nine of them were in the red, even with the indices moving decidedly positive. Only Apple (AAPL) was a winner, for reasons of which nobody could rightfully discern.
Of those nine losers, eight of them were energy or materials-related. The oddball in the group was Bank of America (BAC), which continues to shed market cap and is now in the early running for dog stock of the year (but, it's early, though since it's a bank, our money is on them).
Energy and material stocks were actively trending lower because of the all-too-obvious drop in the price of crude oil and just about anything else that falls into the commodity sphere. Oil continued to decline, price-wise, today reaching below $30/barrel for WTI crude as inventories rose and demand fell, giving the slick stuff a double whammy of bad news.
On the NYSE, losers and winners were nearly even, and there the disparity between the new highs (9) and new lows (564) was cause for alarm. On the NASDAQ, a similar story was unfolding, though breadth was slightly better. New highs numbered only 12, with 352 hitting new lows. That's where the real story is taking place. There are far too few stocks leading the market (large caps) and far too many small and mid-caps weighing it down.
These imbalances have much to do with the ongoing debate over wealth inequality. The policies of the Fed not only have benefitted the richest individuals in the society, they've also been particularly advantageous to the larger, better-established listed companies. The big firms have better access to big money for stock buybacks, primarily, while the smaller firms languish in the all-too-real mundane world where profits matter and cost-cutting continues.
Smaller firms have a harder time making their numbers in a slumping economy and are first hit when business begins to slide, or, at least that's how the current crop of traders has been conditioned. Slumping oil prices has morphed into an all-around slap-down of commodities in general, which, in normal times would be good for business, but today the low prices for everything from aluminum to copper to zinc has spread over to consumer goods, most of which are manufactured overseas in sweatshops at minimal cost.
The other side of the equation, that being consumer demand, has been hollowed out by years of fleecing by giant corporations and the Fed's insistence that nobody earn a dime in interest. While Wall Street could afford to speculate and spend because the spigot was wide open, Main Street tightened its belt until consumers are able to only afford the bare necessities after paying more in taxes, fees, credit card interest, student loans and, especially, health care. If there's one culprit upon which most of the blame can be laid for the rottenness of the general economy, it has to be the misappropriately-named Affordable Care Act, which acted as a wealth transfer mechanism from the pockets of ordinary citizens into the health care morass of hospitals, providers, big pharma and insurance companies. It has drained the economy of whatever excess had been created by reduced gas and fuel prices.
Today's closing quotes:
S&P 500: 1,938.68, +15.01 (0.78%)
Dow: 16,516.22, +117.65 (0.72%)
NASDAQ: 4,685.92, +47.93 (1.03%)
Crude Oil 30.57 -2.67% Gold 1,086.00 -0.93% EUR/USD 1.0849 +0.01% 10-Yr Bond 2.1020 -2.59% Corn 358.00 +0.35% Copper 1.96 -0.63% Silver 13.77 -0.69% Natural Gas 2.26 -5.68% Russell 2000 1,044.70 +0.27% VIX 22.47 -7.53% BATS 1000 20,630.49 +0.55% GBP/USD 1.4440 +0.04% USD/JPY 117.7805 +0.04%
Right out of the gate, the major averages were soaring, but all of the early gains were wiped away shortly after 11:00 am. Stocks zig-zagged through the midday, going positive, then negative, and, finally, just after 2:00 pm, decided that upwards would be the most-favored path, so the bid was in.
However, prior to that late-afternoon spike, there were more than a fair share of winners and losers, most of them being of the losing variety. Of the top ten most actives, nine of them were in the red, even with the indices moving decidedly positive. Only Apple (AAPL) was a winner, for reasons of which nobody could rightfully discern.
Of those nine losers, eight of them were energy or materials-related. The oddball in the group was Bank of America (BAC), which continues to shed market cap and is now in the early running for dog stock of the year (but, it's early, though since it's a bank, our money is on them).
Energy and material stocks were actively trending lower because of the all-too-obvious drop in the price of crude oil and just about anything else that falls into the commodity sphere. Oil continued to decline, price-wise, today reaching below $30/barrel for WTI crude as inventories rose and demand fell, giving the slick stuff a double whammy of bad news.
On the NYSE, losers and winners were nearly even, and there the disparity between the new highs (9) and new lows (564) was cause for alarm. On the NASDAQ, a similar story was unfolding, though breadth was slightly better. New highs numbered only 12, with 352 hitting new lows. That's where the real story is taking place. There are far too few stocks leading the market (large caps) and far too many small and mid-caps weighing it down.
These imbalances have much to do with the ongoing debate over wealth inequality. The policies of the Fed not only have benefitted the richest individuals in the society, they've also been particularly advantageous to the larger, better-established listed companies. The big firms have better access to big money for stock buybacks, primarily, while the smaller firms languish in the all-too-real mundane world where profits matter and cost-cutting continues.
Smaller firms have a harder time making their numbers in a slumping economy and are first hit when business begins to slide, or, at least that's how the current crop of traders has been conditioned. Slumping oil prices has morphed into an all-around slap-down of commodities in general, which, in normal times would be good for business, but today the low prices for everything from aluminum to copper to zinc has spread over to consumer goods, most of which are manufactured overseas in sweatshops at minimal cost.
The other side of the equation, that being consumer demand, has been hollowed out by years of fleecing by giant corporations and the Fed's insistence that nobody earn a dime in interest. While Wall Street could afford to speculate and spend because the spigot was wide open, Main Street tightened its belt until consumers are able to only afford the bare necessities after paying more in taxes, fees, credit card interest, student loans and, especially, health care. If there's one culprit upon which most of the blame can be laid for the rottenness of the general economy, it has to be the misappropriately-named Affordable Care Act, which acted as a wealth transfer mechanism from the pockets of ordinary citizens into the health care morass of hospitals, providers, big pharma and insurance companies. It has drained the economy of whatever excess had been created by reduced gas and fuel prices.
Today's closing quotes:
S&P 500: 1,938.68, +15.01 (0.78%)
Dow: 16,516.22, +117.65 (0.72%)
NASDAQ: 4,685.92, +47.93 (1.03%)
Crude Oil 30.57 -2.67% Gold 1,086.00 -0.93% EUR/USD 1.0849 +0.01% 10-Yr Bond 2.1020 -2.59% Corn 358.00 +0.35% Copper 1.96 -0.63% Silver 13.77 -0.69% Natural Gas 2.26 -5.68% Russell 2000 1,044.70 +0.27% VIX 22.47 -7.53% BATS 1000 20,630.49 +0.55% GBP/USD 1.4440 +0.04% USD/JPY 117.7805 +0.04%
Tuesday, December 29, 2015
End-of-Year Santa Rally: Is It Real or the Ultimate Head-Fake?
Stocks took off like proverbial holiday bottle rockets on Tuesday, as 2015 winds down and investors (or HFT algos) scramble for the last bits of profit for the year.
All three of the major US indices were up handsomely with just two more trading days left in the year. Equity and bond markets will be open for business as usual on Thursday, the 31st, and closed for New Year's Day on Friday, January 1.
The boost today came right at the open, with all the indices shooting up roughly one percent promptly at 9:30 am ET. The remainder of the session was somewhat on the dull side with low volume, but the speculators didn't seem to mind booking one-day gains.
What little economic data there was turned out to be positive, the Case-Shiller 20-city Index showing a 5.5% gain for October and the Conference Board's measure of consumer confidence came in at 96.5, well above consensus estimates of 92.9. It seems that consumers were sharing in the holiday spirit. MasterCard yesterday reported robust holiday spending, at a pace 7.9% better than last year. the gains were attributed in part to lower gasoline prices making more income disposable for holiday spending sprees.
With data darting in and out from positive to negative over the past few weeks, the question arises whether the end-of-year rally on Wall Street is the real thing or whether it's a Grinch-y fake-out which will all be taken away come the new year.
That's a tough call, though most analysts will gladly opine that the bull market is here to stay, since the Fed's rate increase has gone off without a hitch, consumer spending (which accounts for as much as 70% of the economy, so it is said) is awesome and roaring, and funds are all in on equities.
The other side of the coin, from Main Street, is seeing heavier use of credit for everyday purchases, a job market that on the surface says full employment but at the core is made up of statistics, lies and low-paying jobs, and a middle class that continues to be eviscerated by taxes and inflation.
The glue to either side of the story is oil, the one commodity upon which the global economy spins, which is as cheap as it has been since the crisis of 08-09, and doesn't seem to be going anywhere, despite the outsize gains today (WTI closed up, at 37.35/barrel). Low oil and gas prices are boons to consumers and to business, driving input costs lower and profits higher. The only people not happy with the price of oil are the producers, especially the frackers, who have had to lay off thousands as the price of crude has declined.
What the low price of oil does beyond the gas pumps is provide margins for business production, and there's little downside to that. So, other than stocks approaching nosebleed levels, the US economy is in a strange spot. GDP may actually begin to ramp up to levels the Fed can feel more comfortable about raising rates though stocks will be hard-pressed to continue much higher. The rally is going on seven years, already the second-longest in market history since WWII and earnings have slowed for many companies, though the price of their stock remains high.
That's an unsustainable condition, one which will be worked out by the markets over time, and the general rule at these levels would be to fade any rallies, even ones which come in holiday wrappings with candy canes and sugar plums.
It's what's inside that counts, and market internals like breath and volume are pointing in the wrong direction.
Stocks are likely to rally for the remainder of the week and the year, but all-time highs are looming, and on the Dow and S&P haven't been overcome since May. It's tough to see how these indices can go much higher without significant improvement in the bottom lines of many companies.
Besides, it's never smart to buy high, and these markets have been at extremes for more than six months. There's been plenty of time to switch out of equities, but seriously, where else can money go?
All three of the major US indices were up handsomely with just two more trading days left in the year. Equity and bond markets will be open for business as usual on Thursday, the 31st, and closed for New Year's Day on Friday, January 1.
The boost today came right at the open, with all the indices shooting up roughly one percent promptly at 9:30 am ET. The remainder of the session was somewhat on the dull side with low volume, but the speculators didn't seem to mind booking one-day gains.
What little economic data there was turned out to be positive, the Case-Shiller 20-city Index showing a 5.5% gain for October and the Conference Board's measure of consumer confidence came in at 96.5, well above consensus estimates of 92.9. It seems that consumers were sharing in the holiday spirit. MasterCard yesterday reported robust holiday spending, at a pace 7.9% better than last year. the gains were attributed in part to lower gasoline prices making more income disposable for holiday spending sprees.
With data darting in and out from positive to negative over the past few weeks, the question arises whether the end-of-year rally on Wall Street is the real thing or whether it's a Grinch-y fake-out which will all be taken away come the new year.
That's a tough call, though most analysts will gladly opine that the bull market is here to stay, since the Fed's rate increase has gone off without a hitch, consumer spending (which accounts for as much as 70% of the economy, so it is said) is awesome and roaring, and funds are all in on equities.
The other side of the coin, from Main Street, is seeing heavier use of credit for everyday purchases, a job market that on the surface says full employment but at the core is made up of statistics, lies and low-paying jobs, and a middle class that continues to be eviscerated by taxes and inflation.
The glue to either side of the story is oil, the one commodity upon which the global economy spins, which is as cheap as it has been since the crisis of 08-09, and doesn't seem to be going anywhere, despite the outsize gains today (WTI closed up, at 37.35/barrel). Low oil and gas prices are boons to consumers and to business, driving input costs lower and profits higher. The only people not happy with the price of oil are the producers, especially the frackers, who have had to lay off thousands as the price of crude has declined.
What the low price of oil does beyond the gas pumps is provide margins for business production, and there's little downside to that. So, other than stocks approaching nosebleed levels, the US economy is in a strange spot. GDP may actually begin to ramp up to levels the Fed can feel more comfortable about raising rates though stocks will be hard-pressed to continue much higher. The rally is going on seven years, already the second-longest in market history since WWII and earnings have slowed for many companies, though the price of their stock remains high.
That's an unsustainable condition, one which will be worked out by the markets over time, and the general rule at these levels would be to fade any rallies, even ones which come in holiday wrappings with candy canes and sugar plums.
It's what's inside that counts, and market internals like breath and volume are pointing in the wrong direction.
Stocks are likely to rally for the remainder of the week and the year, but all-time highs are looming, and on the Dow and S&P haven't been overcome since May. It's tough to see how these indices can go much higher without significant improvement in the bottom lines of many companies.
Besides, it's never smart to buy high, and these markets have been at extremes for more than six months. There's been plenty of time to switch out of equities, but seriously, where else can money go?
Monday, December 28, 2015
Santa Takes a Little Off the Top
Stocks fell today, first hard, then made a daylong comeback to close near the unchanged mark.
It was rather a random day in the world of high finance. Ten-year and 30-year treasuries each closed off a pip, 2.21 and 2.93, respectively, while the 2-year note budged upward from 0.97 to 0.98, tightening and flattening the spread. It wasn't a monumental move, but noticeable to anyone paying attention. The market didn't really appreciate the boost in the fed funds rate and the displeasure is being voiced by various, subtle means, like the desperation in high yields, and the shut-off of the banking spigot that funded stock buybacks for most of the last five years.
It's probably better, right now, to keep a close eye on the bond market. It may turn out to be the place for volatility and profit in 2016, especially if the Federal Reserve follows through on their plans for three or four more rate hikes by this time next year. That is an unlikely event, though "normalization" is what the Fed continues to say they are aiming for, though a truly normal economy won't likely materialize for three or four more years, if they're lucky.
To have a 10-year treasury yielding 4-5% would be quite an accomplishment by 2019 or 2020, considering all the damage already done by over a decade of fed fund rates at one percent or lower.
Equity markets were decidedly dull, as there are few trades to be made of any importance this late in the game, though the markets are still well below all-time highs reached in May, especially the broad gauge of the S&P, which cannot seem to get out of its own way.
Today was mostly gibberish, as will likely be the case the remainder of the week, and the year. It's hard to draw any conclusions from the last week's trading in a calendar year. The first week of January will be much more insightful.
WTI crude was slapped back down from last week's euphoric and ridiculous closing level, finishing the day at 36.72/barrel. Anyone calling a bottom around here just hasn't considered the slack in the economy and the production glut facing producers. It's a huge problem, but nobody wants to cut production, even at these lower prices, constituting a possible new normal.
S&P 500, 2,056.50, -4.49 (0.22%)
Dow, 17,528.27, -23.90 (0.14%)
NASDAQ, 5,040.99, -7.51 (0.15%)
It was rather a random day in the world of high finance. Ten-year and 30-year treasuries each closed off a pip, 2.21 and 2.93, respectively, while the 2-year note budged upward from 0.97 to 0.98, tightening and flattening the spread. It wasn't a monumental move, but noticeable to anyone paying attention. The market didn't really appreciate the boost in the fed funds rate and the displeasure is being voiced by various, subtle means, like the desperation in high yields, and the shut-off of the banking spigot that funded stock buybacks for most of the last five years.
It's probably better, right now, to keep a close eye on the bond market. It may turn out to be the place for volatility and profit in 2016, especially if the Federal Reserve follows through on their plans for three or four more rate hikes by this time next year. That is an unlikely event, though "normalization" is what the Fed continues to say they are aiming for, though a truly normal economy won't likely materialize for three or four more years, if they're lucky.
To have a 10-year treasury yielding 4-5% would be quite an accomplishment by 2019 or 2020, considering all the damage already done by over a decade of fed fund rates at one percent or lower.
Equity markets were decidedly dull, as there are few trades to be made of any importance this late in the game, though the markets are still well below all-time highs reached in May, especially the broad gauge of the S&P, which cannot seem to get out of its own way.
Today was mostly gibberish, as will likely be the case the remainder of the week, and the year. It's hard to draw any conclusions from the last week's trading in a calendar year. The first week of January will be much more insightful.
WTI crude was slapped back down from last week's euphoric and ridiculous closing level, finishing the day at 36.72/barrel. Anyone calling a bottom around here just hasn't considered the slack in the economy and the production glut facing producers. It's a huge problem, but nobody wants to cut production, even at these lower prices, constituting a possible new normal.
S&P 500, 2,056.50, -4.49 (0.22%)
Dow, 17,528.27, -23.90 (0.14%)
NASDAQ, 5,040.99, -7.51 (0.15%)
Monday, December 14, 2015
Is a Global Recession Just Ahead, or, A Global Depression?
Gas prices at the pump haven't been this low since 2009, though the prices back then maintained for a very brief time, as oil plummeted during the financial crisis (remember that?), but quickly rebounded as the Fed and other central banks added extreme amounts of liquidity to markets globally and before long, crude oil was back in the $90-100/barrel range.
Last year, the price of a barrel of crude - both Brent and WTI - began a precipitous decline, cutting in half the traded price. As 2014 turned to 2015 and many culprits were blamed (Saudi Arabia, US frackers, Russia(?), the price continued to hover in the $45-65 range. By late summer, all bets were off as the price of a barrel of crude fell into the low-$40 range, and then this month declined into the 30s.
While gas at $2/gallon and lower is a boon for drivers, especially in the US, where commuters and businesses were burdened with gas above $3.00 and sometimes over $4/gallon for years, it's not such a great deal for oil producers, especially the aforementioned frackers, whose marginal profitable price per barrel was estimated at somewhere between $45 and $75 per barrel.
Plenty of rigs have gone idle, but debt has to be serviced, and most of these drillers are on the hook for millions, borrowed from banks when the getting was good, now having to pay back the costs of exploration, drilling and extraction while operating at a loss.
The oil patch is just one element of the global liquidity crunch which may be about to enter a new, more dangerous phase, when, in two days time, the FOMC of the Federal Reserve is supposed to raise the federal funds rate for the first time in more than seven years.
The Fed plans to set the rate at 0.25% for money banks can borrow from the Fed, and, while that may not sound like a big deal to most, it certainly is to banks and corporations, which have been borrowing and spending at record paces since mid-2009.
With the FOMC rate policy decision now less than 48 hours away, there's a growing nervousness on Wall Street over this unprecedented move by the Fed. It's unprecedented because there's a vast amount of evidence that the bubble the Fed has blown is about to be not only pricked, but popped and blown wide open. Simply put, the party is about to end, and the drunks on the dance floor will be looking for a ride home, but nobody will be available for a safe trip, because not just the investment and corporate community, but the Fed itself, is staggering and woozy.
It may be a big, bad boogey man, like the 2000 scare, or the Mayan calendar, or those pesky asteroids which dare to come within 100,000 miles of dear planet earth. Or, it could be the real thing.
Nothing lasts forever, and, from the looks of the bond, commodity, and emerging markets, the long "recovery" and stock market rally seems to have run out of steam. Global trade is down, global GDP keeps being revised lower, US manufacturing is fading, China is becoming a basket case. It all points to reduced growth, or, in proper recession terms, negative growth.
If you're in the market, there's still a day and a half to get out, and probably more, if you can handle small losses. If you're not in the market, but still have to drive, eat, and breath, good news. In recessions and, especially, depressions, everything (except debt) is cheaper.
Hedge, buy, or sell accordingly.
--FR
Last year, the price of a barrel of crude - both Brent and WTI - began a precipitous decline, cutting in half the traded price. As 2014 turned to 2015 and many culprits were blamed (Saudi Arabia, US frackers, Russia(?), the price continued to hover in the $45-65 range. By late summer, all bets were off as the price of a barrel of crude fell into the low-$40 range, and then this month declined into the 30s.
While gas at $2/gallon and lower is a boon for drivers, especially in the US, where commuters and businesses were burdened with gas above $3.00 and sometimes over $4/gallon for years, it's not such a great deal for oil producers, especially the aforementioned frackers, whose marginal profitable price per barrel was estimated at somewhere between $45 and $75 per barrel.
Plenty of rigs have gone idle, but debt has to be serviced, and most of these drillers are on the hook for millions, borrowed from banks when the getting was good, now having to pay back the costs of exploration, drilling and extraction while operating at a loss.
The oil patch is just one element of the global liquidity crunch which may be about to enter a new, more dangerous phase, when, in two days time, the FOMC of the Federal Reserve is supposed to raise the federal funds rate for the first time in more than seven years.
The Fed plans to set the rate at 0.25% for money banks can borrow from the Fed, and, while that may not sound like a big deal to most, it certainly is to banks and corporations, which have been borrowing and spending at record paces since mid-2009.
With the FOMC rate policy decision now less than 48 hours away, there's a growing nervousness on Wall Street over this unprecedented move by the Fed. It's unprecedented because there's a vast amount of evidence that the bubble the Fed has blown is about to be not only pricked, but popped and blown wide open. Simply put, the party is about to end, and the drunks on the dance floor will be looking for a ride home, but nobody will be available for a safe trip, because not just the investment and corporate community, but the Fed itself, is staggering and woozy.
It may be a big, bad boogey man, like the 2000 scare, or the Mayan calendar, or those pesky asteroids which dare to come within 100,000 miles of dear planet earth. Or, it could be the real thing.
Nothing lasts forever, and, from the looks of the bond, commodity, and emerging markets, the long "recovery" and stock market rally seems to have run out of steam. Global trade is down, global GDP keeps being revised lower, US manufacturing is fading, China is becoming a basket case. It all points to reduced growth, or, in proper recession terms, negative growth.
If you're in the market, there's still a day and a half to get out, and probably more, if you can handle small losses. If you're not in the market, but still have to drive, eat, and breath, good news. In recessions and, especially, depressions, everything (except debt) is cheaper.
Hedge, buy, or sell accordingly.
--FR
Thursday, March 19, 2015
Stocks Give Back Some Gains
We took a personal day today, but did notice that the crooks gave back some of the money they stole yesterday, a la the old pump and dump routine.
Most of us had to work, but who could blame anyone for taking some time off to check out NCAA tournament early games.
Oil fell back to earth simply because there was no fundamental reason for oil to gain in price yesterday, as interest rates have about as much to do with the price of oil as saddle soap has to do with masochism (don't get any ideas).
Bottom line is that rich guys who play with other people's money (your pension fund) skimmed and scammed their way to a new car or maybe a year's tuition for their "special" princess.
Whatever. Week ends tomorrow, full report.
Dow 17,959.03, -117.16 (-0.65%)
S&P 500 2,089.27, -10.23 (-0.49%)
NASDAQ 4,992.38, +9.55 (0.19%)
Most of us had to work, but who could blame anyone for taking some time off to check out NCAA tournament early games.
Oil fell back to earth simply because there was no fundamental reason for oil to gain in price yesterday, as interest rates have about as much to do with the price of oil as saddle soap has to do with masochism (don't get any ideas).
Bottom line is that rich guys who play with other people's money (your pension fund) skimmed and scammed their way to a new car or maybe a year's tuition for their "special" princess.
Whatever. Week ends tomorrow, full report.
Dow 17,959.03, -117.16 (-0.65%)
S&P 500 2,089.27, -10.23 (-0.49%)
NASDAQ 4,992.38, +9.55 (0.19%)
Wednesday, November 6, 2013
Wall Street Weirdness as Dow Makes New Record, NASDAQ Falls
Maybe it's the weather, but investor taste for speculation may be turning, just a day before the hoopla over the Twitter IPO is set to take place. The 142-character internet darling will open tomorrow at a very overpriced $27-30 per share. It could be that some big players in the tech investing (gambling) space just freed up money to get into the hottest IPO since... um, Facebook, though the memory of that magnificent failure is still fresh.
Still, winners just barely edged losers on the day, while the place to be in Dow stocks was in Chevron (CVX), IBM (IBM) and Microsoft (MSFT), an odd grouping there.
The MBA Mortgage Index slumped sadly prior to the open, with weekly applications off seven percent, even as 30-year rates fell to 4.32%.
Crude inventories showed only a modest uptick, which helped oil stage a rally off of five-month lows.
With bond yields settling lower, gold and silver up moderately, it was very tough to get a read on the overall market. Corn made fresh 52-week lows, which is bearish for beef, but bullish for carnivores in general, with beef prices stable and possibly set to decline. Overall, however, falling corn prices is about as good a deflation indicator as one can find, especially priced in silver.
Steady as she goes, though, especially on those safety plays in the Dow, which should consider to out-perform in a flight to dividend comfort.
Tweet that.
Dow 15,746.88, +128.66 (0.82%)
Nasdaq 3,931.95, -7.92 (0.20%)
S&P 500 1,770.49, +7.52 (0.43%)
10-Yr Bond 2.64%, -0.02
NYSE Volume 3,298,818,000
Nasdaq Volume 1,989,898,000
Combined NYSE & NASDAQ Advance - Decline: 2851-2753
Combined NYSE & NASDAQ New highs - New lows: 317-79
WTI crude oil: 94.80, +1.43
Gold: 1,317.80, +9.70
Silver: 21.77, +0.132
Corn: 421.25, -3.75
Still, winners just barely edged losers on the day, while the place to be in Dow stocks was in Chevron (CVX), IBM (IBM) and Microsoft (MSFT), an odd grouping there.
The MBA Mortgage Index slumped sadly prior to the open, with weekly applications off seven percent, even as 30-year rates fell to 4.32%.
Crude inventories showed only a modest uptick, which helped oil stage a rally off of five-month lows.
With bond yields settling lower, gold and silver up moderately, it was very tough to get a read on the overall market. Corn made fresh 52-week lows, which is bearish for beef, but bullish for carnivores in general, with beef prices stable and possibly set to decline. Overall, however, falling corn prices is about as good a deflation indicator as one can find, especially priced in silver.
Steady as she goes, though, especially on those safety plays in the Dow, which should consider to out-perform in a flight to dividend comfort.
Tweet that.
Dow 15,746.88, +128.66 (0.82%)
Nasdaq 3,931.95, -7.92 (0.20%)
S&P 500 1,770.49, +7.52 (0.43%)
10-Yr Bond 2.64%, -0.02
NYSE Volume 3,298,818,000
Nasdaq Volume 1,989,898,000
Combined NYSE & NASDAQ Advance - Decline: 2851-2753
Combined NYSE & NASDAQ New highs - New lows: 317-79
WTI crude oil: 94.80, +1.43
Gold: 1,317.80, +9.70
Silver: 21.77, +0.132
Corn: 421.25, -3.75
Tuesday, November 5, 2013
Stocks Split in Sloppy Session; Bond Yields Rising, Oil Sliding
Stocks slid at the opening bell, with the Dow down by as many as 117 points in the first half hour of trading, but quickly reversed direction at 10:00 am EST and continued a slow but steady gain the rest of the day.
Apparently, what turned stocks around was the October ISM Services reading, which came in at a solid 55.4, a full pint better than last month's data and a huge beat to the expected 54.0.
While questions concerning the veracity of these kinds of reports after the unusually-strong Chicago PMI data a week ago continue to swirl around, the beat on services - which is now the main production engine of the US, since we've hollowed out our manufacturing core and mostly export inflation - was enough for the Wall Street crowd to lift stocks off their lows.
That they were able to keep buying interest maintained for the remainder of the session was likely due to the usual POMO injection by the Fed, allowing for rampant speculation and unusually-high leverage.
While stocks were seeing the light of day - though the NASDAQ never quite made it into positive territory, bonds were getting slammed, up six bips in yield by the end of the day, as the gains following the end of the government shutdown are gradually being eroded. The closing level of 2.66% on the 10-year note was the highest in two-and-a-half weeks.
The big story happens to be in oil, which continues its retreat from $110/barrel highs just two months ago. Another $5.00 drop in the price of WTI will put oil into a bear market, a condition nobody has considered. While low oil prices relate positively to gas at the pump and is a boost for the economy, releasing more purchasing power, the underlying causes may be more nefarious and significant.
There is, at last, a supply-demand condition that is positive for the US, as more and more oil is being produced in North America, at the same time that demand is dwindling, or rather, has been dwindling for the past three to four years. Americans have tightened their collective belts and are much more careful about their driving habits these days, as lowered incomes have left less for transportation expenses. High unemployment also pays a part, as fewer people are driving to work five or six days a week.
So, while a period of lower gas prices is cause for celebration, the party may not be of the epic variety, with fewer participants and an overhang of disappointing economic circumstances.
Key numbers to watch tomorrow will be the MBA Mortgage Index (7:00 am), September Leading Indicators (10:00 am) and crude inventories (10:30 am).
Dow 15,618.22, -20.90 (0.13%)
Nasdaq 3,939.86, +3.27 (0.08%)
S&P 500 1,762.97, -4.96 (0.28%)
10-Yr Bond 2.66%, +0.06
NYSE Volume 3,485,473,500
Nasdaq Volume 1,899,388,750
Combined NYSE & NASDAQ Advance - Decline: 2064-3571
Combined NYSE & NASDAQ New highs - New lows: 248-74
WTI crude oil: 93.37, -1.25
Gold: 1,308.10, -6.60
Silver: 21.64, 0.064
Corn: 425.00, -1.25
Apparently, what turned stocks around was the October ISM Services reading, which came in at a solid 55.4, a full pint better than last month's data and a huge beat to the expected 54.0.
While questions concerning the veracity of these kinds of reports after the unusually-strong Chicago PMI data a week ago continue to swirl around, the beat on services - which is now the main production engine of the US, since we've hollowed out our manufacturing core and mostly export inflation - was enough for the Wall Street crowd to lift stocks off their lows.
That they were able to keep buying interest maintained for the remainder of the session was likely due to the usual POMO injection by the Fed, allowing for rampant speculation and unusually-high leverage.
While stocks were seeing the light of day - though the NASDAQ never quite made it into positive territory, bonds were getting slammed, up six bips in yield by the end of the day, as the gains following the end of the government shutdown are gradually being eroded. The closing level of 2.66% on the 10-year note was the highest in two-and-a-half weeks.
The big story happens to be in oil, which continues its retreat from $110/barrel highs just two months ago. Another $5.00 drop in the price of WTI will put oil into a bear market, a condition nobody has considered. While low oil prices relate positively to gas at the pump and is a boost for the economy, releasing more purchasing power, the underlying causes may be more nefarious and significant.
There is, at last, a supply-demand condition that is positive for the US, as more and more oil is being produced in North America, at the same time that demand is dwindling, or rather, has been dwindling for the past three to four years. Americans have tightened their collective belts and are much more careful about their driving habits these days, as lowered incomes have left less for transportation expenses. High unemployment also pays a part, as fewer people are driving to work five or six days a week.
So, while a period of lower gas prices is cause for celebration, the party may not be of the epic variety, with fewer participants and an overhang of disappointing economic circumstances.
Key numbers to watch tomorrow will be the MBA Mortgage Index (7:00 am), September Leading Indicators (10:00 am) and crude inventories (10:30 am).
Dow 15,618.22, -20.90 (0.13%)
Nasdaq 3,939.86, +3.27 (0.08%)
S&P 500 1,762.97, -4.96 (0.28%)
10-Yr Bond 2.66%, +0.06
NYSE Volume 3,485,473,500
Nasdaq Volume 1,899,388,750
Combined NYSE & NASDAQ Advance - Decline: 2064-3571
Combined NYSE & NASDAQ New highs - New lows: 248-74
WTI crude oil: 93.37, -1.25
Gold: 1,308.10, -6.60
Silver: 21.64, 0.064
Corn: 425.00, -1.25
Wednesday, September 18, 2013
Surprise! Fed Ponzi Scheme Not Working, Will Continue
No change in asset (ha, ha, ha, ha) purchases.
The Fed is content to continue buying worthless paper with make-believe money they create out of thin air.
Sending this money mainly to the primary dealers via zero interest rate policy and repo actions, the dealers become free to speculate in whatever assets they believe worth pursuing, driving prices, in the main, higher.
The next magic trick is more difficult. These primary dealers are supposed to lend out their unallocated capital into the market, creating debt, which is, after all, the only goal of fractional reserve bankers.
Essentially, by changing nothing - even though the Fed hinted strongly that asset purchases would be "tapered" and the markets expected as much - the Fed is telling the world that their stimulus programs have not resulted in the expected results. Inflation remains below their desired threshold, unemployment remains stubbornly high and economic growth continues to be muted, the GDP, even with hedonic adjustments and recent additions, failing to achieve three percent annualized in any quarter since the collapse of 2008-09.
So, everything stays the same. The Fed keeps buying $45 billion of worthless government debt and $40 billion of even more destructive and toxic mortgage debt (toxic because price, or par, is at an excessive, unrealistic level) every month, in hopes that the combined markets which fuel the economy will continue to stumble forward.
Contemporary and classic theories of economics both say this kind of activity can lead to no good. Eventually all assets become overpriced in terms of a depreciating currency to the point at which the currency is no longer accepted in trade. Until the malinestments are purged from the system, normalcy in markets cannot occur, and guess who is holding most of the bad investments.
Central banks, particularly the Bank of England, the European Central Bank (ECB), Bank of Japan (BOJ) and, surpassing them all by levels of magnitude, the US Federal Reserve will end up holding most of the world's assets. Central banks are cornered without escape. They must keep devaluing their currencies in order to service burgeoning debt set against faulty assets. In terms of bubbles, the central banks of the developed nations are the world's greatest bubble and when that pops, there will be true freedom in economies, currencies, prices and price discovery. Not until.
More than anyone else, David Stockman has captured the essence of the current economic climate by use of the word "deformation." The global economy is deformed, distorted, obtuse and opaque. All price discovery mechanisms have been distorted out of recognition by the continuing debasement of currencies.
Even though nothing changed, markets behaved as if something had. Stocks roared to new highs on the Dow and S&P 500, but, here's the kicker: by percentage, hard assets were the most appreciated on the day. Commodities, particularly crude oil, gold and silver all outpaced stocks by multiples. Gold surged 4.5%, silver up 7.5%, crude gained a paltry 2.5%, making the sloppy one percent returns in stocks look like a piker's paradise.
The ramifications of today's Fed (in)action are monumental and trend-setting. So much so, that they cannot be easily disseminated and pursued in a single blog post, though they will have enduring effects, which Money Daily will continue to report upon in the days, weeks and months ahead.
Happy Hunting! Free Houses for Everybody!
Dow 15,676.94, +147.21 (0.95%)
Nasdaq 3,783.64, +37.94 (1.01%)
S&P 500 1,725.52, +20.76 (1.22%)
10-Yr Bond 2.71%, -0.14
NYSE Volume 4,410,661,500
Nasdaq Volume 1,769,496,125
Combined NYSE & NASDAQ Advance - Decline: 5052-1648
Combined NYSE & NASDAQ New highs - New lows: 565-51
WTI crude oil: 108.07, +2.65
Gold: 1,366.40, +58.80
Silver: 23.18, +1.616
The Fed is content to continue buying worthless paper with make-believe money they create out of thin air.
Sending this money mainly to the primary dealers via zero interest rate policy and repo actions, the dealers become free to speculate in whatever assets they believe worth pursuing, driving prices, in the main, higher.
The next magic trick is more difficult. These primary dealers are supposed to lend out their unallocated capital into the market, creating debt, which is, after all, the only goal of fractional reserve bankers.
Essentially, by changing nothing - even though the Fed hinted strongly that asset purchases would be "tapered" and the markets expected as much - the Fed is telling the world that their stimulus programs have not resulted in the expected results. Inflation remains below their desired threshold, unemployment remains stubbornly high and economic growth continues to be muted, the GDP, even with hedonic adjustments and recent additions, failing to achieve three percent annualized in any quarter since the collapse of 2008-09.
So, everything stays the same. The Fed keeps buying $45 billion of worthless government debt and $40 billion of even more destructive and toxic mortgage debt (toxic because price, or par, is at an excessive, unrealistic level) every month, in hopes that the combined markets which fuel the economy will continue to stumble forward.
Contemporary and classic theories of economics both say this kind of activity can lead to no good. Eventually all assets become overpriced in terms of a depreciating currency to the point at which the currency is no longer accepted in trade. Until the malinestments are purged from the system, normalcy in markets cannot occur, and guess who is holding most of the bad investments.
Central banks, particularly the Bank of England, the European Central Bank (ECB), Bank of Japan (BOJ) and, surpassing them all by levels of magnitude, the US Federal Reserve will end up holding most of the world's assets. Central banks are cornered without escape. They must keep devaluing their currencies in order to service burgeoning debt set against faulty assets. In terms of bubbles, the central banks of the developed nations are the world's greatest bubble and when that pops, there will be true freedom in economies, currencies, prices and price discovery. Not until.
More than anyone else, David Stockman has captured the essence of the current economic climate by use of the word "deformation." The global economy is deformed, distorted, obtuse and opaque. All price discovery mechanisms have been distorted out of recognition by the continuing debasement of currencies.
Even though nothing changed, markets behaved as if something had. Stocks roared to new highs on the Dow and S&P 500, but, here's the kicker: by percentage, hard assets were the most appreciated on the day. Commodities, particularly crude oil, gold and silver all outpaced stocks by multiples. Gold surged 4.5%, silver up 7.5%, crude gained a paltry 2.5%, making the sloppy one percent returns in stocks look like a piker's paradise.
The ramifications of today's Fed (in)action are monumental and trend-setting. So much so, that they cannot be easily disseminated and pursued in a single blog post, though they will have enduring effects, which Money Daily will continue to report upon in the days, weeks and months ahead.
Happy Hunting! Free Houses for Everybody!
Dow 15,676.94, +147.21 (0.95%)
Nasdaq 3,783.64, +37.94 (1.01%)
S&P 500 1,725.52, +20.76 (1.22%)
10-Yr Bond 2.71%, -0.14
NYSE Volume 4,410,661,500
Nasdaq Volume 1,769,496,125
Combined NYSE & NASDAQ Advance - Decline: 5052-1648
Combined NYSE & NASDAQ New highs - New lows: 565-51
WTI crude oil: 108.07, +2.65
Gold: 1,366.40, +58.80
Silver: 23.18, +1.616
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