Trade Uncertainty Tempers Markets on First Full Day of Holiday Trading

The first week of the final month of 2019 was a deviation from the general theme of 2019. Stocks were sold with reckless abandon, as were bonds, with the 10-year note bounding back to yield 1.83% - though higher during the day - a level not visited since mid-November.

The bond market felt more like churning than the start of actual long-term selling, but stocks had a different sense about them. Bad news on the US-China trade situation has the financial world in a near-panic as the deadline approaches for added tariffs to be applied on Chinese exports to the US. Additionally, President Trump reimposed tariffs on steel from Argentina and Brazil, citing the two South American countries' recent currency devaluations as reason for slapping on the tariffs "immediately."

While the steel tariffs boosted shares of US steel producers, it only exacerbated the unease surrounding the wider Chinese issue and sent stocks into a day-long tailspin. Selling was the order of the day globally, as bourses from Japan, China, Europe and the Americas all suffered declines with the sourness continuing into Tuesday as trade resumed Tuesday in international markets.

While the focus may currently be on trade and tariffs, there appears to be more to the sudden swing from buying to selling than just the movement of goods around the planet. Recall that Friday (ubiquitously know as Black Friday in the US) also witnessed declines, not the usual euphoria associated with the start of the holiday shopping season. Other concerns are various recent populist uprising in places as diverse as Hong Kong, Iran, Lebanon, India and elsewhere. Besides, it is December, so one can safely assume that any concerted selling is going to be enhanced by year-end profit-taking.

While the mainstream (now nearly completely fake) media will focus on the stock markets' generous advances during the year, they will also conveniently gloss over the dual declines from October and December of 2018, which, taken in such context, renders gains from September 2018 as practically nil.

The Dow Jones Industrial Average, for instance, is up only 1000 points since mid-September of 2018, accounting for a gain of less than a half percent. The NASDAQ has tacked on about 450 points since August of last year, while the S&P 500, at current levels, has added just 183 points over the past 15 months, the point being that stocks, though they've recently made new all-time highs, are really not much further ahead than they were more than a year ago, but the media will remind us only of what's happened in the current calendar year, which might be a tad misleading.

In any case, internationally, stocks are being whacked again Tuesday morning and US futures are looking pretty dismal, with Dow futures down nearly 300 points less than an hour prior to the opening bell.

Corporate profits have been underwhelming, to say the least, for the past few quarters, so some fundamental shift may be underway. If a flight into the safely of bonds develops, that will be a sign that the stock market is going to finish off the year on a negative note, though there's always the possibility of a Sant Calus rally the week between Christmas and New Year to save everybody's bacon.

At the Close, Monday, December 2, 2019:
Dow Jones Industrial Average: 27,783.04, -268.37 (-0.96%)
NASDAQ: 8,567.99, -97.48 (-1.12%)
S&P 500: 3,113.87, -27.11 (-0.86%)
NYSE Composite: 13,448.26, -96.95 (-0.72%)

Dow Losses Tied To Nothing Other Than Profit-Taking

There's almost no chance - as Yahoo! News blared in a headline late Monday afternoon - that Brett Kavenaugh's Supreme Court nomination had anything to do with the 181-point drop on the Dow.

The continuing false narrative foisted by the financial media is about as fake as fake news can get. Every day, there has to be a reason for stocks rising or falling, there just has to be. Otherwise, how would the 24-hour squawking about stocks, finance, and your money justify its existence.

Sure enough, there are days that movements in stocks is correlated to some economic event, data drop, or newsworthy story, but most of the time trading actions are the result of some analysis, some emotion, and largely, some advance planning. Big firms don't just jump in and out of positions on the news of the day, their positions, and the allocation of their capital, is guided by profit and loss, gauging risk and reward, greed and fear.

There are times in which herd mentality takes over and swings sectors or even entire markets one way or the other, but, by and large, such huge swings are already programmed by the big trading firms, which almost never leave their positions vulnerable to unforeseen events. They are protected by covered calls or puts or any of a variety of risk-reducing strategies. Nobody with any experience trading stocks is rushing to their terminals to buy or sell on whatever nonsense is being cooked up by the crooks running the federal government in Washington, DC, because what happens on Capitol Hill usually has little to nothing to do with real capital being flung far and wide from Wall Street.

Firm in the knowledge that big positions were not being liquidated by major traders, what did cause the dip on the Dow Monday?

Chalk it up to profit-taking on short-term positions. Of the 30 Dow stocks, only seven were winners on the day, leaving 23 in the loss column. Two of the winner - ExxonMobil and Chevron - were tied almost directly to oil prices, which were up not just on the day, but for the past few weeks, as WTI crude hit a four-year high above $72/barrel on Monday. Three were chip or computer-related, as Apple, Microsoft and Intel were up, and the other two, Disney and United Health, were based on some perceived valuation play.

The rest of the stocks were lower, and it's probably a good idea to discount it as nothing more than random noise. The Dow just reached all-time highs this past Thursday and was even higher on Friday, so traders had plenty of time over the weekend to figure their positions, their profits, and how to take them. Since the move was less than one percent there's reason to believe that many traders - who, via groupthink, share many of the same strategies, knowledge, and objectives - saw an opportunity to book profits and move on to the next big thing, whatever that might be.

And, when they discover the next profitable trade, it's a safe bet that you won't be privy to it, but that many of the bigger traders on the street will know. It will have nothing to do with the news, politics, the soybean crop report, or the color of Lady Gaga's hair. You can bet on that.

Dow Jones Industrial Average September Scorecard:

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

At the Close, Monday, September 24, 2018:
Dow Jones Industrial Average: 26,562.05, -181.45 (-0.68%)
NASDAQ: 7,993.25, +6.29 (+0.08%)
S&P 500: 2,919.37, -10.30 (-0.35%)
NYSE Composite: 13,162.05, -74.39 (-0.56%)

Despite Deep State and Media Trump Hatred, US Economy Continues Expansion

Stocks made steady advances through the week and were especially profitable on Friday, as the NASDAQ and S&P 500 reached all-time closing highs.

The week also marked an historic moment on Wednesday, when the current S&P 500 became the longest bull market in US history, though the celebration was largely muted and overshadowed by fake news concerning President Trump.

While Washington and the mainstream media remains focused on unseating a duly-elected president, Wall Street is making hay while the sun shines, living large in the light under Trump's easy fiscal and tough trade policies which have put more money in the pockets of American workers, upset the global status quo, and spurred a delightful rally since he won the presidency in November, 2016.

Many deep state politicians and the loathsome mainstream media seem to be on another planet when it comes to politics and the economy. While middle America is flourishing after years of mismanagement under presidents Bush and Obama, they look the other way when it comes to Trump, refusing to acknowledge his various successes, instead plowing ahead with false narratives that run the gamut from colluding with Russia during the 2016 campaign to steamy affairs with a porn star and a Playboy playmate.

Politicians on the left and even many so-called RHINO Republicans seem content to spend most of their time fomenting fear and hatred. At the same time, Wall Street remains unimpressed and without concern over the political hijinks and wasted efforts to impeach or impair the Trump presidency.

It's a sad state of affairs when the dominant media can only produce stories that are shakily superficial and barely believable. If anything unsettles markets, it would likely come from the swamp creatures in DC and the media, though as of yet, investors and the general US population aren't buying it.

Approaching the final week of unofficial summer, markets are robust but heavily overvalued. Profits since the last recession and the 2008-09 financial crisis have been all too easy. Market veterans know just how quickly good times can turn bad, although since the downturn in February and March there's been little thought or discussion about booking profits, moving to cash positions, or consolidating gains in any concerted fashion.

Bonds have been stable, precious metals have gone into a long, deep reversion, and inflation is not overwhelming. Outside of high valuations and the constant attacks on President Trump, the US economy appears as healthy as it has been in the past 20 years.

Dow Jones Industrial Average August Scorecard:

Date	Close	Gain/Loss	Cum. G/L
8/1/18	25,333.82	-81.37	-81.37
8/2/18	25,326.16	-7.66	-89.03
8/3/18	25,462.58	+136.42	+55.05
8/6/18	25,502.18	+39.60	+94.65
8/7/18	25,628.91	+126.73	+221.38
8/8/18	25,583.75	-45.16	+176.22
8/9/18	25,509.23	-74.52	+101.70
8/10/18	25,313.14	-196.09	-94.39
8/13/18	25,187.70	-125.44	-219.83
8/14/18	25,299.92	+112.22	-107.61
8/15/18	25,162.41	-137.51	-245.12
8/16/18	25,558.73	+396.32	+151.20
8/17/18	25,669.32	+110.59	+261.79
8/20/18	25,758.69	+89.37	+351.16
8/21/18	25,822.29	+63.60	+414.76
8/22/18	25,733.60	-88.69	+326.07
8/23/18	25,656.98	-76.62	+249.45
8/24/18	25,790.35	+133.37	+382.82

At the Close, Friday, August 24, 2018:
Dow Jones Industrial Average: 25,790.35, +133.37 (+0.52%)
NASDAQ: 7,945.98, +67.52 (+0.86%)
S&P 500: 2,874.69, +17.71 (+0.62%)
NYSE Composite: 12,999.44, +65.98 (+0.51%)

For the Week:
DOW: +121.03 (+0.47%)
NASDAQ: +125.65 (+1.66%)
S&P 500: +24.56 (+0.86%)
NYSE Composite: +91.18 (+0.71%)

Stock Market Losses Will Not Be Tolerated

In a world which is prodded, directed, managed, and ultimately controlled by central banks and government authoritarians, the narrative is often more important than the reality of life under the thumb.

A case in point comes today - a day after the NASDAQ, S&P 500, Dow Industrial Average each set new all-time highs - in which actual economic data diverged from the preferred narrative of "everything is peachy-keen."

Two important data sets were released prior to the opening of US equity markets, July PPI and July retail sales. Both were disappointing.

PPI came in at -0.4% and retail sales posted a sluggish 0.0% (zero) growth, with the core - ex-autos - down 0.3%. These figures not only suggest deflation, but are actually indicative of a deflationary environment, the sole condition which can awaken central bankers from sound sleep in cold sweats and is, at the same time, a relief for cash-strapped, income-stagnant workers and consumers.

According to the book of central bank policy, should one actually exist, the wants and needs of the average working Jane or Joe is to be disregarded in such an instance, preference given to fat-cat Wall Street types who do no work, produce nothing of value, but rake in billions of dollars in fees, profits, and commissions for their trading activities in the stock market casino.

So it came to be that since stocks had just made all-time highs, a major setback could not and would not be tolerated. The major indices slumped most of the session, but were boosted higher going into the close, with losses trimmed on the Dow and S&P, the NASDAQ actually closing positive, as deemed appropriate by the masters of the the universe.

The rigging of markets is never going to work out long term. Massive mis-allocation of capital has been taking place since the last financial crisis, setting the global economy up for a colossal, catastrophic, cataclysmic collapse. Maybe it won't be as bad as our alliterative case suggests, if only because ordinary people have had time to adjust and prepare, but, for anyone owning stocks at current altitudes, losses are nearly a certainty. That is, unless the entire world remains in a state of suspended animation, normalcy bias, and cognitive dissonance, and the wild-eyed central bankers of the world are allowed to continue their insane policies of negative interest rates, naked purchasing of equities (already a de facto policy of the BOJ and ECB, still a clandestine operation by the US Fed), stimulus, and maybe, if we're really lucky, helicopter money.

The week ended well for the titans of Wall Street. Have a (few, lots of, keg of) beers, enjoy the weekend, and sleep on it.

Friday's Figures:
Dow Jones Industrial Average
18,576.47, -37.05 (-0.20%)

NASDAQ
5,232.89, +4.50 (0.09%)

S&P 500
2,184.05, -1.74 (-0.08%)

NYSE Composite
10,820.79, -15.26 (-0.14%)

The weekly figures weren't all that impressive, though the NASDAQ recorded its seventh consecutive weekly gain.

For the Week:
Dow: +32.94 (+0.18%)
NASDAQ: +11.77 (+0.23%)
S&P 500: +1.18 (+0.05%)
NYSE Comp.: +37.92 (+0.35%)

Wall Street Sulks as Fed Is Not Dovish Enough

In the aftermath last month's federal funds rate hike - the first in eight years, and, a paltry 0.25% at that - the Fed held their first FOMC rate policy meeting of the year and the reaction from Wall Street was nothing short of derisive.

While the Fed governors did their level best to hem, haw, and dance around their policy "mistake" - which has taken US stocks roughly seven percent lower and cratered confidence - market participants apparently wanted more, as in a complete roll back of the hike and a return to ZIRP, the policy that had prevailed since the fall of 2008.

Stocks were trading close to the flatline until the 2:00 pm announcement by the Fed. After a small amount of see-sawing, sentiment turned radically negative, with all indices taking a punch to the gut that extended into the close.

The Fed cannot escape its fate. It will be overseeing the utter calamity of a global currency crisis, brought about by their excessive credit policies from the Greenspan and Bernanke eras. Janet Yellen, the current Fed Chair, will be scapegoated, and rightfully, as she is completely tone deaf to the needs of the US and global economies, which are screaming deflation at every turn.

The best Ms. Yellen can hope for in her sure-to-be-short tenure as Chairwoman of the Federal Reserve is for Japan or Europe to somehow come to the rescue with additional QE in coming weeks and months, which will buy her additional time to exit in an orderly manner.

The handwriting is on the wall and the handwringing can be seen on the faces populating the video screens from CNBC and Bloomberg TV. Nobody wants stocks, and soon enough, nobody will want dollars, at least not for long. But first, the powerful grip of deflation will have to work its way through the system, crushing the investor class while shoring up those at the bottom of the societal and economic ladders.

That process has been underway for at least a year, as shown by the price of crude oil. It will eventually infest all consumer goods, crushing corporate profits in manufacturing and retail. The systemic underutilization will commence until governments fall, first in emerging markets, then developed ones.

There is no escaping a monetary event such as what is coming. Gold continued to ramp up. Silver is lagging, but will eventually follow and then surpass the gains made by gold.

Today's closing quotes:
S&P 500: 1,882.95, -20.68 (1.09%)
Dow: 15,944.46, -222.77 (1.38%)
NASDAQ: 4,468.17, -99.51 (2.18%)

Crude Oil 32.19 +2.35% Gold 1,124.90 +0.42% EUR/USD 1.09 +0.32% 10-Yr Bond 2.0010 +0.35% Corn 369.75 +0.14% Copper 2.06 +1.08% Silver 14.50 -0.44% Natural Gas 2.15 -0.51% Russell 2000 1,002.75 -1.50% VIX 23.11 +2.71% BATS 1000 20,083.96 -0.92% GBP/USD 1.4245 -0.72% USD/JPY 118.63 +0.18%