Does it really matter why?
The Dow was down 116 points in early trading (9:45 am ET) after the monthly report on personal income and spending showed a modest (.02%) increase in spending but a 3.6% decline in income, the worst such loss in 20 years.
Futures markets had been pointing to a lower open to the first day of March, and the data exacerbated the condition.
However, stocks began to grind higher, eventually staying positive after turning into the green at noon. The remainder of the session was fairly undramatic, with traders speculating on just when the new all-time highs would be breached.
It's inevitable, no matter how bad the news is.
Meanwhile, the top clowns in Washington - Obama, Boehner, McConnell, Reid and Pelosi (the Fumbling Five) agreed to disagree about the sequester and allowed the cuts to happen, the president taking to the podium to announce the foolishness just before the lunch hour.
The it was off to the golf course for a quick round and afterward, martinis with the "in" crowd.
Ugh. Really, it's that bad.
On the bright side, the number of new 52-week lows has been slowly but steadily rising. Nothing close to parity yet, but it is a trend worth watching. One could make a case that the Dow and S&P might make new all-time highs just in time for a market reversal. After all, the current bull market is entering its 49th week with only one correction of more than 10% (August 2001), and as bulls go, this one's getting a bit long on the hoof.
Additionally, oil finished at its lowest price of the year, hovering just above $90 per barrel. Now, if that trend continues and translates into lower fuel prices, this sequestration idea might just turn out to be OK after all.
At the end of the week, a colleague pointed out this well-researched article which points up the real US debt. And you thought it was just $16.6 trillion.
Dow 14,089.66, +35.17 (0.25%)
NASDAQ 3,169.74, +9.55 (0.30%)
S&P 500 1,518.20, +3.52 (0.23%)
NYSE Composite 8,874.19, +5.48 (0.06%)
NASDAQ Volume 1,869,785,125
NYSE Volume 4,125,383,750
Combined NYSE & NASDAQ Advance - Decline: 3447-2852
Combined NYSE & NASDAQ New highs - New lows: 250-78
WTI crude oil: 90.68, -1.37
Gold: 1,572.30, -5.80
Silver: 28.49, +0.058
Showing posts with label sequester. Show all posts
Showing posts with label sequester. Show all posts
Friday, March 1, 2013
Wednesday, February 27, 2013
Forget the Sequester; Bernanke Has All the Cards (and all the money)
Nothing like a couple of days in the woods - away from the Sturm und Drang of the neo-rational markets and shrieking media pundits - to offer a bit of perspective on not only the economic realities of the day, but the human condition in general.
What appeared to be the inevitable swoon the naysayers have been long-hoping-for on Monday, with markets taking their most violent downturn of the year, was quickly overruled on Tuesday and absolutely trumped and superseded with the third-best gain (on the Dow, at least) of the year on Wednesday.
Not that there wasn't a good share of associated nonsense and rationale for each of the directional market moves, but, in the end, it was a wash and a win for the erudite chairman of the Federal Reserve, Mr. Ben Bernanke, who availed himself of the opportunity to alternately receive and give both praise and chiseled criticism to both chambers of Congress in his annual Henry Hawkins testimony and the adjoining question and answer periods. We rest assured that the Chairman is content that not only are his policies of ZIRP and QEternity the correct ones for the US and global economies (because as goes the US, so goes the world at this juncture), but also that he has convinced most members of congress that they are working. Besides, there's nothing the congress nor the president nor any other person or assemblages can do about said policies, right, wrong or otherwise.
He is, for all intents and purposes, master of the financial universe. So be it.
Noting the chairman's unadulterated power to influence and control the economics of the world, skeptics still advertise their discontent, brining up the untidy details of the unwinding of his easy money regime, but this argument is a chimera, a cloak for ineptitude, a misunderstanding, a falsity, an impotent attempt to fleece power from the unbridled king of money, because the chairman and his cronies at the Fed are not at all concerned with unwinding anything. Their policies will remain in effect until the next chairman and governors are appointed/elected, and then such unwinding - if there ever is one at all - will be their problem.
For the rest of us, who do not enjoy the luxuries of appointments or elections, but rather suffer the daily slings, swings and arrows of outrageous fortune (or misfortune), a plan is a necessity, though those offered by the shysters and criminals populating the financial services industry might not always be in our own self-interest, if only because they contain the notion of conceit that markets are always optimized and correct, risk is always contained and humans always make rational decisions.
History will prove all three of those basic financial tenets absolute falsehoods. That is why we have booms and busts, successes and failures, joy and tears. Existence is not guaranteed and a fruitful existence is only attainable at some others' expense, such is the basis of capitalism.
So, a note, as the congress and the president sit upon their fattened hands awaiting the monster of their own creation - sequestration - which commences on March 1st, but in reality is more a boogie-man-in-the-closet apparition than an actual threat to the economy, especially on a local, individual, human level. It's something on the order of a two percent cut in the discretionary budget - domestic programs (not welfare, Social Security Medicare or Medicaid) and defense spending - thrown against the background of a baseline budgeting process which automatically increases the spending on these programs by three to ten percent in the upcoming continuing resolution process (which has displaced the budget process for five years now) due to commence by mid-March. In effect, the sequester is a non-sequitur - it is utterly meaningless.
Still, a plan one must have for the Ben Bernanke era, so make one, and make sure it includes not buying a new car unless you are willing and able to pay for it in cash or can get 0% interest for the life of the loan (hey, the banks get that rate, why not you?) which should be no longer than five years. Your plan should also include the paying down or clipping up (or maybe both) of all your credit cards except one for dire emergencies, unless you have $10,000 or more in cash safely hidden away in your back yard or sock drawer (though a safe would seem a more prudent place).
Those are the starting points, but check to see if you are playing more than 1/3 of your net income (after taxes) on housing. If you are, move. Downsize. There are plenty of deals available at excellent prices, even though the housing market in many places has yet to bottom.
And here's something that bugs the heck out of some people: It doesn't matter if you make $20,000, $200,000 or $2,000,000 a year. Spending four to five dollars on a cup of coffee is stupid. Stop it. Put Starbucks out of business. And stop all the other dumb, extravagant, ludicrous things like lottery tickets, day spas, dining out and "entertainment." Well, you don't have to stop them altogether, just be sensible about your spending. A very wise man (my father, RIP) once said, "it's not how much you make, but how much you spend." That kind of depression-era advice can go a long way these days (since we're in another depression but don't really know it. Shhh... the banks are faking it).
Remember at all times that financial news - even news on specific stocks - is marco-news, and, thus, will have little effect on your own personal condition.
Save. Don't invest. Save 5-10% of your gross income and put it into cash or physical gold or silver or tangible assets which will hold their value no matter what (a tough find).
Grow yourself some herbs, fruits or vegetables. Seriously. There's nothing like the taste of something you've nurtured from seed or seedling or sapling to a ripened delicacy. And, it's relatively easy. Nature does most of the work. Wall Street has nothing that compares to the return you get from a handful of seeds, sunshine and rain. Beyond that, you will be the envy of your neighbors, who aren't nearly as smart or thrifty or nature-loving as you. There's something to be said for that.
All hail the great Bernanke! Amen.
Dow 14,075.37, +175.24 (1.26%)
NASDAQ 3,162.26, +32.61 (1.04%)
S&P 500 1,515.99, +19.05 (1.27%)
NYSE Composite 8,875.33, +109.15 (1.25%)
NASDAQ Volume 1,726,024,500
NYSE Volume 3,911,747,250
Combined NYSE & NASDAQ Advance - Decline: 4528-1799
Combined NYSE & NASDAQ New highs - New lows: 252-38
WTI crude oil: 92.76, +0.13
Gold: 1,595.70, -19.80
Silver: 28.94, -0.317
What appeared to be the inevitable swoon the naysayers have been long-hoping-for on Monday, with markets taking their most violent downturn of the year, was quickly overruled on Tuesday and absolutely trumped and superseded with the third-best gain (on the Dow, at least) of the year on Wednesday.
Not that there wasn't a good share of associated nonsense and rationale for each of the directional market moves, but, in the end, it was a wash and a win for the erudite chairman of the Federal Reserve, Mr. Ben Bernanke, who availed himself of the opportunity to alternately receive and give both praise and chiseled criticism to both chambers of Congress in his annual Henry Hawkins testimony and the adjoining question and answer periods. We rest assured that the Chairman is content that not only are his policies of ZIRP and QEternity the correct ones for the US and global economies (because as goes the US, so goes the world at this juncture), but also that he has convinced most members of congress that they are working. Besides, there's nothing the congress nor the president nor any other person or assemblages can do about said policies, right, wrong or otherwise.
He is, for all intents and purposes, master of the financial universe. So be it.
Noting the chairman's unadulterated power to influence and control the economics of the world, skeptics still advertise their discontent, brining up the untidy details of the unwinding of his easy money regime, but this argument is a chimera, a cloak for ineptitude, a misunderstanding, a falsity, an impotent attempt to fleece power from the unbridled king of money, because the chairman and his cronies at the Fed are not at all concerned with unwinding anything. Their policies will remain in effect until the next chairman and governors are appointed/elected, and then such unwinding - if there ever is one at all - will be their problem.
For the rest of us, who do not enjoy the luxuries of appointments or elections, but rather suffer the daily slings, swings and arrows of outrageous fortune (or misfortune), a plan is a necessity, though those offered by the shysters and criminals populating the financial services industry might not always be in our own self-interest, if only because they contain the notion of conceit that markets are always optimized and correct, risk is always contained and humans always make rational decisions.
History will prove all three of those basic financial tenets absolute falsehoods. That is why we have booms and busts, successes and failures, joy and tears. Existence is not guaranteed and a fruitful existence is only attainable at some others' expense, such is the basis of capitalism.
So, a note, as the congress and the president sit upon their fattened hands awaiting the monster of their own creation - sequestration - which commences on March 1st, but in reality is more a boogie-man-in-the-closet apparition than an actual threat to the economy, especially on a local, individual, human level. It's something on the order of a two percent cut in the discretionary budget - domestic programs (not welfare, Social Security Medicare or Medicaid) and defense spending - thrown against the background of a baseline budgeting process which automatically increases the spending on these programs by three to ten percent in the upcoming continuing resolution process (which has displaced the budget process for five years now) due to commence by mid-March. In effect, the sequester is a non-sequitur - it is utterly meaningless.
Still, a plan one must have for the Ben Bernanke era, so make one, and make sure it includes not buying a new car unless you are willing and able to pay for it in cash or can get 0% interest for the life of the loan (hey, the banks get that rate, why not you?) which should be no longer than five years. Your plan should also include the paying down or clipping up (or maybe both) of all your credit cards except one for dire emergencies, unless you have $10,000 or more in cash safely hidden away in your back yard or sock drawer (though a safe would seem a more prudent place).
Those are the starting points, but check to see if you are playing more than 1/3 of your net income (after taxes) on housing. If you are, move. Downsize. There are plenty of deals available at excellent prices, even though the housing market in many places has yet to bottom.
And here's something that bugs the heck out of some people: It doesn't matter if you make $20,000, $200,000 or $2,000,000 a year. Spending four to five dollars on a cup of coffee is stupid. Stop it. Put Starbucks out of business. And stop all the other dumb, extravagant, ludicrous things like lottery tickets, day spas, dining out and "entertainment." Well, you don't have to stop them altogether, just be sensible about your spending. A very wise man (my father, RIP) once said, "it's not how much you make, but how much you spend." That kind of depression-era advice can go a long way these days (since we're in another depression but don't really know it. Shhh... the banks are faking it).
Remember at all times that financial news - even news on specific stocks - is marco-news, and, thus, will have little effect on your own personal condition.
Save. Don't invest. Save 5-10% of your gross income and put it into cash or physical gold or silver or tangible assets which will hold their value no matter what (a tough find).
Grow yourself some herbs, fruits or vegetables. Seriously. There's nothing like the taste of something you've nurtured from seed or seedling or sapling to a ripened delicacy. And, it's relatively easy. Nature does most of the work. Wall Street has nothing that compares to the return you get from a handful of seeds, sunshine and rain. Beyond that, you will be the envy of your neighbors, who aren't nearly as smart or thrifty or nature-loving as you. There's something to be said for that.
All hail the great Bernanke! Amen.
Dow 14,075.37, +175.24 (1.26%)
NASDAQ 3,162.26, +32.61 (1.04%)
S&P 500 1,515.99, +19.05 (1.27%)
NYSE Composite 8,875.33, +109.15 (1.25%)
NASDAQ Volume 1,726,024,500
NYSE Volume 3,911,747,250
Combined NYSE & NASDAQ Advance - Decline: 4528-1799
Combined NYSE & NASDAQ New highs - New lows: 252-38
WTI crude oil: 92.76, +0.13
Gold: 1,595.70, -19.80
Silver: 28.94, -0.317
Wednesday, February 20, 2013
Fed Minutes Send Shock Waves, Stocks Plummet
Was today the day that the skeptics and shorts have been waiting for the four months? The day the market turned and rolled over, ending ridiculous speculation that the rally had more legs and major indices - S&P, Dow - would reach all-time highs?
Maybe. And to think that it would be the Fed, the very same Federal Reserve that continues relentlessly pumping money at a rate of $85 billion a month into the market, that would cause the turn is simply delicious in its irony.
Stocks were cruising along aimlessly most of the session, down slightly, until last month's Fed minutes were released at 2:00 pm ET. The initial reaction was muted, as most algos were turned off for the event, not being able to peer into the minutes from the FOMC meeting of January 29-30.
The minutes revealed extensive discussion over the current expansionary Fed policy of QE, focused around the purchase of Treasury and mortgage-backed bonds that has been in effect since September of 2012 and whether or not the Fed should continue the policy along the lines of its current stature - until unemployment targets of 6.5% are met - or modify the existing arrangement as market actions warrant.
The committee discussed its options at the January meeting, but voted in favor of keeping the current polify intact, though today's minutes show that fissures in Fed policy are beginning to appear, with not all members completely in line with Chairman Ben Bernanke's policy of unusually easy money.
Once enough wall Street experts were able to read and comprehend what the Fed was transmitting, the selling ensued and at times became quite raucous, especially in the more speculative issues on, mainly on the NASDAQ, which suffered its worst loss of the year.
The Dow lost over 100 points on the day and the S&P pulled back substantially as well. Whether or not the declines will last for more than one session is still up in the air, but what is certain is that officials at the Fed are now openly questioning policy decisions - some insisting that QE is necessary and that the economy is too fragile to change policy, others suggesting that the extraordinary measures are leading to a bubble in equity markets, a view that is beginning to gain traction.
There's little doubt anywhere that if the Fed were to substantially reduce its asset-buying-binge, the economy - and especially the equity markets - would not respond favorably and the economy could be thrust into another round of recession, a reality that is much closer than anyone wishes to believe, after last quarter's -0.1 GDP print.
At this juncture, it would appear that the Fed has tied its own hands, and that any change in policy would be damaging to markets, if not the greater economy. Mere mention of discussion about change caused a selloff, so actual change would no doubt engender more severe reactions.
Dovetailing into the government's do-nothing policy regarding the upcoming sequestration issue, Fed policy should not materially change for the next three to six months, unless the president and congress find a way toward compromise on spending cuts without raising taxes, an outcome seen as remote by most.
How the market responds tomorrow and Friday will set the stage for the final week of February, which is loaded with important economic data releases, not the least of which is the second estimate on fourth quarter GDP on the 28th. Since next Friday is the first of March, the usual non-farm payroll data will be delayed until the 8th, giving the BLS more time to analyze and massage the data.
This may or may not be a significant turn in the markets, but for certain, it's an important development heading into at least three weeks of important data and serious fiscal issues that the government has thus far been reluctant to address.
Collateral damage was done in the precious metals as gold and silver took sizable hits after the Fed minutes release.
Dow 13,927.54, -108.13 (0.77%)
NASDAQ 3,164.41, -49.18 (1.53%)
S&P 500 1,511.95, -18.99 (1.24%)
NYSE Composite 8,883.63, -120.75 (1.34%)
NASDAQ Volume 1,998,613,000
NYSE Volume 4,576,938,000
Combined NYSE & NASDAQ Advance - Decline: 1519-5016
Combined NYSE & NASDAQ New highs - New lows: 470-59
WTI crude oil: 94.46, -2.20
Gold: 1,562.40, -41.80
Silver: 28.51, -0.912
Maybe. And to think that it would be the Fed, the very same Federal Reserve that continues relentlessly pumping money at a rate of $85 billion a month into the market, that would cause the turn is simply delicious in its irony.
Stocks were cruising along aimlessly most of the session, down slightly, until last month's Fed minutes were released at 2:00 pm ET. The initial reaction was muted, as most algos were turned off for the event, not being able to peer into the minutes from the FOMC meeting of January 29-30.
The minutes revealed extensive discussion over the current expansionary Fed policy of QE, focused around the purchase of Treasury and mortgage-backed bonds that has been in effect since September of 2012 and whether or not the Fed should continue the policy along the lines of its current stature - until unemployment targets of 6.5% are met - or modify the existing arrangement as market actions warrant.
The committee discussed its options at the January meeting, but voted in favor of keeping the current polify intact, though today's minutes show that fissures in Fed policy are beginning to appear, with not all members completely in line with Chairman Ben Bernanke's policy of unusually easy money.
Once enough wall Street experts were able to read and comprehend what the Fed was transmitting, the selling ensued and at times became quite raucous, especially in the more speculative issues on, mainly on the NASDAQ, which suffered its worst loss of the year.
The Dow lost over 100 points on the day and the S&P pulled back substantially as well. Whether or not the declines will last for more than one session is still up in the air, but what is certain is that officials at the Fed are now openly questioning policy decisions - some insisting that QE is necessary and that the economy is too fragile to change policy, others suggesting that the extraordinary measures are leading to a bubble in equity markets, a view that is beginning to gain traction.
There's little doubt anywhere that if the Fed were to substantially reduce its asset-buying-binge, the economy - and especially the equity markets - would not respond favorably and the economy could be thrust into another round of recession, a reality that is much closer than anyone wishes to believe, after last quarter's -0.1 GDP print.
At this juncture, it would appear that the Fed has tied its own hands, and that any change in policy would be damaging to markets, if not the greater economy. Mere mention of discussion about change caused a selloff, so actual change would no doubt engender more severe reactions.
Dovetailing into the government's do-nothing policy regarding the upcoming sequestration issue, Fed policy should not materially change for the next three to six months, unless the president and congress find a way toward compromise on spending cuts without raising taxes, an outcome seen as remote by most.
How the market responds tomorrow and Friday will set the stage for the final week of February, which is loaded with important economic data releases, not the least of which is the second estimate on fourth quarter GDP on the 28th. Since next Friday is the first of March, the usual non-farm payroll data will be delayed until the 8th, giving the BLS more time to analyze and massage the data.
This may or may not be a significant turn in the markets, but for certain, it's an important development heading into at least three weeks of important data and serious fiscal issues that the government has thus far been reluctant to address.
Collateral damage was done in the precious metals as gold and silver took sizable hits after the Fed minutes release.
Dow 13,927.54, -108.13 (0.77%)
NASDAQ 3,164.41, -49.18 (1.53%)
S&P 500 1,511.95, -18.99 (1.24%)
NYSE Composite 8,883.63, -120.75 (1.34%)
NASDAQ Volume 1,998,613,000
NYSE Volume 4,576,938,000
Combined NYSE & NASDAQ Advance - Decline: 1519-5016
Combined NYSE & NASDAQ New highs - New lows: 470-59
WTI crude oil: 94.46, -2.20
Gold: 1,562.40, -41.80
Silver: 28.51, -0.912
Wednesday, February 6, 2013
Meandering Midweek Market
Mostly, investors were mulling over issues that developed over Monday and Tuesday, as nothing new really sufaced on Wednesday. Europe is still in an uncertain state, as is the US, but there was nothing really developing to move markets and the indices dropped popped, dropped and popped back to positive at the end of the session.
Focus will soon turn to the budget and sequester debates in the congress, though that exercise has already been well telegraphed by the players involved. More can-kicking will likely be the order of the day on both fronts, but it is likely to cause a temporary drag on markets.
Tomorrow's initial unemployment claims may cause some excitement, after ripping back up to 368,000 last week, but the biggest factor overall is still the relentless MBS buying and treasury monetizing by the Fed, at a pace of $85 billion per month, underpinning the market.
Until some change in policy occurs, the bets are all on black, the market continuing to climb, obviously a position tough to stand against.
Dow 13,986.52, +7.22(0.05%)
NASDAQ 3,168.48, -3.10 (0.10%)
S&P 500 1,512.12, +0.83(0.05%)
NYSE Composite 8,934.26, +14.12 (0.16%)
NASDAQ Volume 1,961,700,250
NYSE Volume 3,775,844,750
Combined NYSE & NASDAQ Advance - Decline: 3577-2796
Combined NYSE & NASDAQ New highs - New lows: 324-19
WTI crude oil: 96.62, -0.02
Gold: 1,678.80, +5.30
Silver: 31.88, +0.002
Focus will soon turn to the budget and sequester debates in the congress, though that exercise has already been well telegraphed by the players involved. More can-kicking will likely be the order of the day on both fronts, but it is likely to cause a temporary drag on markets.
Tomorrow's initial unemployment claims may cause some excitement, after ripping back up to 368,000 last week, but the biggest factor overall is still the relentless MBS buying and treasury monetizing by the Fed, at a pace of $85 billion per month, underpinning the market.
Until some change in policy occurs, the bets are all on black, the market continuing to climb, obviously a position tough to stand against.
Dow 13,986.52, +7.22(0.05%)
NASDAQ 3,168.48, -3.10 (0.10%)
S&P 500 1,512.12, +0.83(0.05%)
NYSE Composite 8,934.26, +14.12 (0.16%)
NASDAQ Volume 1,961,700,250
NYSE Volume 3,775,844,750
Combined NYSE & NASDAQ Advance - Decline: 3577-2796
Combined NYSE & NASDAQ New highs - New lows: 324-19
WTI crude oil: 96.62, -0.02
Gold: 1,678.80, +5.30
Silver: 31.88, +0.002
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