We have seen this show before.
Jittery markets, just off fresh all-time highs, make dramatic swings to the downside.
For the past nine years running, such activity has typically been followed by aggressive "dip-buying" and soon thereafter, new all-time highs on all the major indices.
Is this time different?
It's tempting to say that it is, especially for analysts who have been consistently wrong about market corrections during the grand recovery, but, it's probably nothing, unless...
... one considers the US treasury bond complex and its fast-collapsing curve, which currently has the spread between between a 2-year bill (1.80%) and the 10-year-note (2.34%) at a mere 54 basis points. The 2/30 spread is a minuscule 92 basis points (1.80%-2.72%), but perhaps most troubling is the tiny, 21 basis points between the 5-year and 10-year note.
The five-year note is yielding 2.13%.
Why does this matter? There are a number of good reasons, primarily, because in banking, one typically buys short-duration and lends long duration, making money on the spread. But, if there is no spread, there's scant money to be made and only a relative few defaults on long loans (such as occurred during the sub-prime crisis) can cause calamity for the lenders.
Also, the danger of inversion is weighty, occurring when a shorter-duration bond yields higher than a longer-duration. Such inversion might occur between the fives and tens, where the spread is - as mentioned above - only 21 basis points (0.21%).
Inversion matters because it signals that investors have no appetite for anything of long duration (loss of confidence) and are attempting to get all the yield on the short end, as quickly as possible. Every time bond yields have inverted in the past 90 years of market history, a significant inversion has been followed by a recession.
So, while Wall Street is enjoying salad days in stocks, the bond market is worrying, as Main Street finds difficulty in borrowing for the future.
The tide in stocks may also be turning, as evidenced yesterday as the Dow took over the lead in the relentless decline experienced in the NASDAQ. At this point, all stocks are at risk, probably due to the threat of yet another government shutdown, looming close at December 8. The November non-farm payroll report Friday could be the catalyst to send stocks even lower and bond spreads tighter. Extreme caution is advised the remainder of the week, noting that holiday season stock routs are extremely rare events. They usually happen in January.
In conclusion, this time is not different. It's the same as it always has been. Periods of stock euphoria are usually followed by recession. Boom-bust. Nothing lasts forever. To think so is pure tom-foolery.
At the Close, Tuesday, December 5, 2017:
Dow: 24,180.64, -109.41 (-0.45%)
NASDAQ: 6,762.21, -13.15 (-0.19%)
S&P 500: 2,629.57, -9.87 (-0.37%)
NYSE Composite: 12,567.16, -67.73 (-0.54%)
Showing posts with label treasury bonds. Show all posts
Showing posts with label treasury bonds. Show all posts
Wednesday, December 6, 2017
Thursday, September 21, 2017
Witch Doctors at the Fed Brewing Something Wicked?
Eventually, everything matters.
Whether it's a hurricane ravaging Houston, Miami, or Puerto Rico, Toys 'R Us going chapter 11, or JP Morgan Chase CEO Jamie Dimon bashing cryptocurrencies in general and Bitcoin in the specific, all actions have consequences. It's the butterfly flapping its wings in Africa resulting in the subtropical windstorm, pure physics, action, reaction, cause and effect.
Thus it is consequential that the Fed's announcement in June indicating that it would begin to sell off it's hefty bag of assets - confirmed just yesterday - beginning in October (a scant ten days from now) should have some noticeable effect.
Market reaction to the announcement three months ago was muted. It was more serious yesterday and took on a gloomy tone today as all of the major indices retreated from all-time highs, the hardest hit being the speculative NASDAQ index, though one could posit that the knee-jerk nature of the selling today was nothing more than casual.
Suppose it is more than that.
Wouldn't the biggest players in the investing universe be monitoring market movements closely, making incremental moves, buying insurance? Of course. None of them want to tip their hand, but, they are concerned that the Federal Reserve has lost control of the monetary side of the equation. After all, ZIRP (zero interest rate policy) didn't work, nor did quantitative easing (QE). With all of their bullets spent, the Fed has nonchalantly called the financial crisis over and done and signaled to the market that they are going to raise interest rates, sell off the assets they've been hoarding for some six, seven, or eight years and the economy of the United States - and the world - will suddenly and magically be wonderful again.
As Dana Carvey playing the "Church Lady" might say, "how convenient!"
The Fed is at a loss and has been for eight or nine years running (some may say longer), because they cannot control distant event, geological occurrences, sunrises, or the whims of people with money. They are what Ayn Rand and Rollo May might have called witch doctors whose power is derived from people's belief in their so-called powers.
When the Fed begins selling their cache of securities (mostly treasury bonds and mortgage-backed securities) expect some degree of howling from various quarters, notably those who have been calling the central bank's attempts to control global markets a scam, sham, or film-flam from the start.
Especially when it comes to the mortgage-backed securities (MBS) there will be great gnashing of teeth, especially deep inside the bowels of the Eccles Building, where it cannot be heard, as Fed governors (a number of them already jumping ship) bemoan their dissatisfaction over the task at hand.
They are about to become scorned, and with good reason. They've mismanaged other people's money (practically everybody's) to their own profit. Bernie Madoff would look like a saint compared to the crimes the people at the Fed have committed. Those crimes continue, and they will be manifest in the "great unwind."
As the case may be, all of these high priests and witch doctors of finance will claim they didn't see the carnage coming, but come it will. There's a place for people who use deceit and obfuscation to achieve their ends, and it's certainly not in heaven.
Keep a close eye on three things: the price of silver, the price of corn and wheat, and the performance of the major stock indices. If suspicions play out, all three (or two of three, with the only gainer being silver) will decline for months before there's true confirmation that, in the long scheme of things, the Fed officials, from Greenspan to Bernanke to Yellen, knew exactly what they were doing but did it anyway.
Today's position: Fetal.
At the Close, Thursday, September 21, 2017:
Dow: 22,359.23, -53.36 (-0.24%)
NASDAQ: 6,422.69, -33.35 (-0.52%)
S&P 500: 2,500.60, -7.64 (-0.30%)
NYSE Composite: 12,133.62, -13.88 (-0.11%)
Whether it's a hurricane ravaging Houston, Miami, or Puerto Rico, Toys 'R Us going chapter 11, or JP Morgan Chase CEO Jamie Dimon bashing cryptocurrencies in general and Bitcoin in the specific, all actions have consequences. It's the butterfly flapping its wings in Africa resulting in the subtropical windstorm, pure physics, action, reaction, cause and effect.
Thus it is consequential that the Fed's announcement in June indicating that it would begin to sell off it's hefty bag of assets - confirmed just yesterday - beginning in October (a scant ten days from now) should have some noticeable effect.
Market reaction to the announcement three months ago was muted. It was more serious yesterday and took on a gloomy tone today as all of the major indices retreated from all-time highs, the hardest hit being the speculative NASDAQ index, though one could posit that the knee-jerk nature of the selling today was nothing more than casual.
Suppose it is more than that.
Wouldn't the biggest players in the investing universe be monitoring market movements closely, making incremental moves, buying insurance? Of course. None of them want to tip their hand, but, they are concerned that the Federal Reserve has lost control of the monetary side of the equation. After all, ZIRP (zero interest rate policy) didn't work, nor did quantitative easing (QE). With all of their bullets spent, the Fed has nonchalantly called the financial crisis over and done and signaled to the market that they are going to raise interest rates, sell off the assets they've been hoarding for some six, seven, or eight years and the economy of the United States - and the world - will suddenly and magically be wonderful again.
As Dana Carvey playing the "Church Lady" might say, "how convenient!"
The Fed is at a loss and has been for eight or nine years running (some may say longer), because they cannot control distant event, geological occurrences, sunrises, or the whims of people with money. They are what Ayn Rand and Rollo May might have called witch doctors whose power is derived from people's belief in their so-called powers.
When the Fed begins selling their cache of securities (mostly treasury bonds and mortgage-backed securities) expect some degree of howling from various quarters, notably those who have been calling the central bank's attempts to control global markets a scam, sham, or film-flam from the start.
Especially when it comes to the mortgage-backed securities (MBS) there will be great gnashing of teeth, especially deep inside the bowels of the Eccles Building, where it cannot be heard, as Fed governors (a number of them already jumping ship) bemoan their dissatisfaction over the task at hand.
They are about to become scorned, and with good reason. They've mismanaged other people's money (practically everybody's) to their own profit. Bernie Madoff would look like a saint compared to the crimes the people at the Fed have committed. Those crimes continue, and they will be manifest in the "great unwind."
As the case may be, all of these high priests and witch doctors of finance will claim they didn't see the carnage coming, but come it will. There's a place for people who use deceit and obfuscation to achieve their ends, and it's certainly not in heaven.
Keep a close eye on three things: the price of silver, the price of corn and wheat, and the performance of the major stock indices. If suspicions play out, all three (or two of three, with the only gainer being silver) will decline for months before there's true confirmation that, in the long scheme of things, the Fed officials, from Greenspan to Bernanke to Yellen, knew exactly what they were doing but did it anyway.
Today's position: Fetal.
At the Close, Thursday, September 21, 2017:
Dow: 22,359.23, -53.36 (-0.24%)
NASDAQ: 6,422.69, -33.35 (-0.52%)
S&P 500: 2,500.60, -7.64 (-0.30%)
NYSE Composite: 12,133.62, -13.88 (-0.11%)
Tuesday, September 19, 2017
Dow Jones Industrials, S&P 500 Mark New All-Time Highs; Fed To Unwind Massive Fake Balance Sheet
All is well!
At the Close, Monday, September 18, 2017:
Dow: 22,331.35, +63.01 (+0.28%)
NASDAQ: 6,454.64, +6.17 (+0.10%)
S&P 500 :2,503.87, +3.64 (+0.15%)
NYSE Composite: 12,111.45, +31.31 (+0.26%)
Following a truly boffo week past, the mid-point of September brings more record-breaking on the stock exchanges.
Just ahead is a roadblock to progress, as the FOMC begins a meeting on Tuesday, concluding Wednesday with what should be a statement covering plans to begin unwinding its $4.5 trillion portfolio of Treasuries and mortgage backed securities.
Remember, many of those mortgage-backed securities which the Fed holds (lots of them 20 or 30 years in length) are largely worthless, and, since the Fed purchased them at par (ha, ha), they'll be selling at a loss.
Of course, it's all just worthless paper in any case, so, if the Federal Reserve paid $100 million for mortgage toilet paper X, and they sell it for $30 million, the result is a 70% loss, or a cool $70 million. Multiply that into the billions which the Fed held and that balance sheet will erode pretty quickly.
The effort is going to be largely deflationary, as opposed to what many analysts believe will be an inflationary tsunami driving interest rates sky high.
There's also the question of just who will be buying the mortgage toilet paper. Will it be the very same banks which issued it in the first place back in 2006-2009? That is a somewhat likely outcome, or, as karma dictates, what goes around, comes around.
Couldn't happen to a better bunch of banker crooks.
Have a happy.
At the Close, Monday, September 18, 2017:
Dow: 22,331.35, +63.01 (+0.28%)
NASDAQ: 6,454.64, +6.17 (+0.10%)
S&P 500 :2,503.87, +3.64 (+0.15%)
NYSE Composite: 12,111.45, +31.31 (+0.26%)
Following a truly boffo week past, the mid-point of September brings more record-breaking on the stock exchanges.
Just ahead is a roadblock to progress, as the FOMC begins a meeting on Tuesday, concluding Wednesday with what should be a statement covering plans to begin unwinding its $4.5 trillion portfolio of Treasuries and mortgage backed securities.
Remember, many of those mortgage-backed securities which the Fed holds (lots of them 20 or 30 years in length) are largely worthless, and, since the Fed purchased them at par (ha, ha), they'll be selling at a loss.
Of course, it's all just worthless paper in any case, so, if the Federal Reserve paid $100 million for mortgage toilet paper X, and they sell it for $30 million, the result is a 70% loss, or a cool $70 million. Multiply that into the billions which the Fed held and that balance sheet will erode pretty quickly.
The effort is going to be largely deflationary, as opposed to what many analysts believe will be an inflationary tsunami driving interest rates sky high.
There's also the question of just who will be buying the mortgage toilet paper. Will it be the very same banks which issued it in the first place back in 2006-2009? That is a somewhat likely outcome, or, as karma dictates, what goes around, comes around.
Couldn't happen to a better bunch of banker crooks.
Have a happy.
Wednesday, July 5, 2017
NASDAQ Continues Short-Term Slide; Bond Yields Soar
Happy Independence Day!
While plenty of Americans were celebrating the founding of their nation, drinking cold ones and grilling hot ones, the elitist scum that wants to control everybody's lives couldn't take the hint - and a four-day weekend - returning to the trading desks Monday for another round of Sell That Tech Stock.
The major indices were all rising, with the notable exception of the NASDAQ, upon which the most speculative stocks are traded, closing down just shy of 1/2 percent on the day.
Closing below its 50-day moving average for the third straight session, the NASDAQ is exhibiting a unitary weakness, unshared by its cohorts. The last time the NASDAQ made such a breach was at the very end of December, 2016. Six months have passed since the end-of-year scare, so it is notable, but the index is only down 3.66% since the 6341.70 top on June 9.
The selling seems to not be abating any time soon. The NASDAQ has closed lower 11 of the last 17 sessions, inclusive of the June 9 FAANG debacle.
Obviously, a multi-day decline of less than four percent is alarming to almost nobody, though closer analysis does give one reason to pause and possibly for many to liquidate out of high-multiple, overpriced equities into the safety of dividend-paying plays such as those readily found on the Dow or within the higher echelons of the S&P.
Divergence of the NASDAQ from its close peers bears notice, as has been mentioned here at Money Daily on a number of occasions over the past few weeks. Since it is easily the most bloated of the indices, it is most vulnerable to sprees of selling, or, as may be the case, cyclical rotation.
With that in mind, it may be amusing to some that the Dow posted an all-time intra-day high on Monday, but closed below the record closing high, though that mark may be surpassed on Wednesday, with traders flush with renewed animal spirits.
Otherwise, the eight-year-old bull market seems to be running on fumes, badly in need of something other than fresh fiat from central banks, which has been the primary fuel for the record rise over the long span.
Also worthy of notice is the continued sell-off in the 10-year note, sending yields as high as 2.35. The condition has prevailed since just after the latest interest rate hike on June 14, putting the federal funds rate at a multi-year high of 1.00-1.25%. It's also a marvel that the FOMC of the Fed has changed the game somewhat, targeting the rate in a range rather than offering a solid number. It gives the fakery some wiggle room, though bond brokers seem to be reacting as the Fed would wish, even though rising rates in a declining economy - of which the signs of are lurking everywhere - is a classic misalignment.
Hang on, diversify, or get off. Those are the current choices, though for specs, the last of those choices seems to currently be the most favored plan.
At the Close, 7/3/17:
Dow: 21,479.27, +129.64 (0.61%)
NASDAQ: 6,110.06, -30.36 (-0.49%)
S&P 500: 2,429.01, +5.60 (0.23%)
NYSE Composite: 11,835.72, +74.02 (0.63%)
While plenty of Americans were celebrating the founding of their nation, drinking cold ones and grilling hot ones, the elitist scum that wants to control everybody's lives couldn't take the hint - and a four-day weekend - returning to the trading desks Monday for another round of Sell That Tech Stock.
The major indices were all rising, with the notable exception of the NASDAQ, upon which the most speculative stocks are traded, closing down just shy of 1/2 percent on the day.
Closing below its 50-day moving average for the third straight session, the NASDAQ is exhibiting a unitary weakness, unshared by its cohorts. The last time the NASDAQ made such a breach was at the very end of December, 2016. Six months have passed since the end-of-year scare, so it is notable, but the index is only down 3.66% since the 6341.70 top on June 9.
The selling seems to not be abating any time soon. The NASDAQ has closed lower 11 of the last 17 sessions, inclusive of the June 9 FAANG debacle.
Obviously, a multi-day decline of less than four percent is alarming to almost nobody, though closer analysis does give one reason to pause and possibly for many to liquidate out of high-multiple, overpriced equities into the safety of dividend-paying plays such as those readily found on the Dow or within the higher echelons of the S&P.
Divergence of the NASDAQ from its close peers bears notice, as has been mentioned here at Money Daily on a number of occasions over the past few weeks. Since it is easily the most bloated of the indices, it is most vulnerable to sprees of selling, or, as may be the case, cyclical rotation.
With that in mind, it may be amusing to some that the Dow posted an all-time intra-day high on Monday, but closed below the record closing high, though that mark may be surpassed on Wednesday, with traders flush with renewed animal spirits.
Otherwise, the eight-year-old bull market seems to be running on fumes, badly in need of something other than fresh fiat from central banks, which has been the primary fuel for the record rise over the long span.
Also worthy of notice is the continued sell-off in the 10-year note, sending yields as high as 2.35. The condition has prevailed since just after the latest interest rate hike on June 14, putting the federal funds rate at a multi-year high of 1.00-1.25%. It's also a marvel that the FOMC of the Fed has changed the game somewhat, targeting the rate in a range rather than offering a solid number. It gives the fakery some wiggle room, though bond brokers seem to be reacting as the Fed would wish, even though rising rates in a declining economy - of which the signs of are lurking everywhere - is a classic misalignment.
Hang on, diversify, or get off. Those are the current choices, though for specs, the last of those choices seems to currently be the most favored plan.
At the Close, 7/3/17:
Dow: 21,479.27, +129.64 (0.61%)
NASDAQ: 6,110.06, -30.36 (-0.49%)
S&P 500: 2,429.01, +5.60 (0.23%)
NYSE Composite: 11,835.72, +74.02 (0.63%)
Thursday, December 15, 2016
Fed Post-Mortem: Stocks Pop, Stop; China Bonds Crash; Silver Hits Target
After posting a duo of sentiments Wednesday, outlining the Money Daily "trade of the year," events escalated quickly following the Fed's federal funds interest rate hike of 0.25%.
Overnight, China treasury bonds crashed and trading in key futures were halted in an unprecedented move. Panicked investors sent yields soaring, the 10-year bond hitting a 16-month high of 3.4%. Elsewhere around the globe, the bond rout continued as yields spiked, reflecting the potential the Fed laid on the table for rising rates through 2020.
US stocks gained on the day, though the closing prices were less than half of what was achieved at midday.
As predicted, the silver price was clubbed like a baby seal, dropping to a high-15 handle early in the day and never recovering. Whether the move in silver (and gold) can be stemmed short term, it's likely that pricing will remain moribund unless further events occur to derail the massive spike in the US dollar.
The inverse relationship between the dollar and all commodities is especially pronounced in volatile silver. The Money Daily call to "buy at any price under $16/ounce has already been achieved, but indications are that it could continue as low as $14.75 the ounce.
Hang tight through tomorrow and the weekend, as Friday is a quad-witching day for options and futures expiry.
At the Close:
Dow: 19,852.24, +59.71 (0.30%)
NASDAQ: 5,456.85, +20.18 (0.37%)
S&P 500: 2,262.03, +8.75 (0.39%)
NYSE Composite: 11,131.85, +33.18 (0.30%)
Overnight, China treasury bonds crashed and trading in key futures were halted in an unprecedented move. Panicked investors sent yields soaring, the 10-year bond hitting a 16-month high of 3.4%. Elsewhere around the globe, the bond rout continued as yields spiked, reflecting the potential the Fed laid on the table for rising rates through 2020.
US stocks gained on the day, though the closing prices were less than half of what was achieved at midday.
As predicted, the silver price was clubbed like a baby seal, dropping to a high-15 handle early in the day and never recovering. Whether the move in silver (and gold) can be stemmed short term, it's likely that pricing will remain moribund unless further events occur to derail the massive spike in the US dollar.
The inverse relationship between the dollar and all commodities is especially pronounced in volatile silver. The Money Daily call to "buy at any price under $16/ounce has already been achieved, but indications are that it could continue as low as $14.75 the ounce.
Hang tight through tomorrow and the weekend, as Friday is a quad-witching day for options and futures expiry.
At the Close:
Dow: 19,852.24, +59.71 (0.30%)
NASDAQ: 5,456.85, +20.18 (0.37%)
S&P 500: 2,262.03, +8.75 (0.39%)
NYSE Composite: 11,131.85, +33.18 (0.30%)
Wednesday, March 23, 2016
Topped Out? Stocks, Oil Fall On Stronger Dollar
Concerned over fears that the Fed might actually raise rates at the April FOMC meeting, investors took some long-overdue profits after five straight weeks of gains on the S&P and Dow Jones Industrials.
Nearly everything else was in the red on the day as the dollar strengthened against major currencies, most notably the British Pound, sent reeling over fears that UK residents might vote - in an upcoming June referendum - for Britain to leave the EU, a new poll showed.
Such cracks in the facade of the status quo are troubling for elite investors clinging to their one and two-percent dividends in stocks and bonds while the rest of the world crumbles under the weight of central bank intransigence.
Adding to the worries are the recent attacks by ISIS in the heart of the EU, Brussels, where Tuesday's terrorist bombings occurred at the airport and in a subway station just blocks from the EU parliament building.
Gold, silver, bond yields and oil also fell sharply on the day as a reassessment of priorities seems to be underway. The rout of Hillary Clinton by Idaho and Utah by insurgent candidate, Bernie Sanders, also weighed. Ted Cruz and Donald Trump split the vote on Tuesday, as Cruz captured all delegates in Utah and Trump took home the prize in Arizona's winner-take-all primary.
Oil stockpiles expanded for a fifth straight week, as the US glut expanded by 9.4 million barrels last week to 532.5 million barrels, an amount triple what analysts had expected.
While one day's slipshod results may not be nearly enough data to imply anything other than market noise, the alternative argument figures that, having made back all the losses for the year, it's time to book early profits and head for safer havens. Bonds, where yields fall as their price improves, seems to be wagging the tail of the stock market at present. The benchmark 10-year note has rallied for the better part of a month, though it still remains below two percent since dipping under that line on February 1st.
With the rest of the developed world embracing negative interest rates at the short end of the curve (though Japan's now-inverted curve has the ten-year JGB lower than the overnight rate), the Us continues to try to buck the trend by implying rate hikes ahead.
Nothing could be further from the truth. The Fed has already seen what a mere 25 basis point hike in the federal funds rate produced - a sharp decline in stock prices - and they're not about to embark upon that trip now that those losses have been retaken.
As many analysts have pointed out, the Fed is trapped, with an economy not strong enough to warrant rate increases and a base rate too low to offer any resistance to recessionary or deflationary forces. Their only resource available in the case that the economy creaks and cracks is negative rates, a subject they have already publicly broached.
Today's Setback:
S&P 500: 2,036.71, -13.09 (0.64%)
Dow: 17,502.59, -79.98 (0.45%)
NASDAQ: 4,768.86, -52.80 (1.10%)
Crude Oil 39.80 -3.98% Gold 1,220.80 -2.23% EUR/USD 1.1182 -0.32% 10-Yr Bond 1.88 -3.10% Corn 367.25 -0.74% Copper 2.24 -2.23% Silver 15.27 -3.90% Natural Gas 1.78 -4.29% Russell 2000 1,075.70 -1.97% VIX 14.94 +5.43% BATS 1000 20,682.61 0.00% GBP/USD 1.4116 -0.71% USD/JPY 112.4155 +0.07%
Nearly everything else was in the red on the day as the dollar strengthened against major currencies, most notably the British Pound, sent reeling over fears that UK residents might vote - in an upcoming June referendum - for Britain to leave the EU, a new poll showed.
Such cracks in the facade of the status quo are troubling for elite investors clinging to their one and two-percent dividends in stocks and bonds while the rest of the world crumbles under the weight of central bank intransigence.
Adding to the worries are the recent attacks by ISIS in the heart of the EU, Brussels, where Tuesday's terrorist bombings occurred at the airport and in a subway station just blocks from the EU parliament building.
Gold, silver, bond yields and oil also fell sharply on the day as a reassessment of priorities seems to be underway. The rout of Hillary Clinton by Idaho and Utah by insurgent candidate, Bernie Sanders, also weighed. Ted Cruz and Donald Trump split the vote on Tuesday, as Cruz captured all delegates in Utah and Trump took home the prize in Arizona's winner-take-all primary.
Oil stockpiles expanded for a fifth straight week, as the US glut expanded by 9.4 million barrels last week to 532.5 million barrels, an amount triple what analysts had expected.
While one day's slipshod results may not be nearly enough data to imply anything other than market noise, the alternative argument figures that, having made back all the losses for the year, it's time to book early profits and head for safer havens. Bonds, where yields fall as their price improves, seems to be wagging the tail of the stock market at present. The benchmark 10-year note has rallied for the better part of a month, though it still remains below two percent since dipping under that line on February 1st.
With the rest of the developed world embracing negative interest rates at the short end of the curve (though Japan's now-inverted curve has the ten-year JGB lower than the overnight rate), the Us continues to try to buck the trend by implying rate hikes ahead.
Nothing could be further from the truth. The Fed has already seen what a mere 25 basis point hike in the federal funds rate produced - a sharp decline in stock prices - and they're not about to embark upon that trip now that those losses have been retaken.
As many analysts have pointed out, the Fed is trapped, with an economy not strong enough to warrant rate increases and a base rate too low to offer any resistance to recessionary or deflationary forces. Their only resource available in the case that the economy creaks and cracks is negative rates, a subject they have already publicly broached.
Today's Setback:
S&P 500: 2,036.71, -13.09 (0.64%)
Dow: 17,502.59, -79.98 (0.45%)
NASDAQ: 4,768.86, -52.80 (1.10%)
Crude Oil 39.80 -3.98% Gold 1,220.80 -2.23% EUR/USD 1.1182 -0.32% 10-Yr Bond 1.88 -3.10% Corn 367.25 -0.74% Copper 2.24 -2.23% Silver 15.27 -3.90% Natural Gas 1.78 -4.29% Russell 2000 1,075.70 -1.97% VIX 14.94 +5.43% BATS 1000 20,682.61 0.00% GBP/USD 1.4116 -0.71% USD/JPY 112.4155 +0.07%
Thursday, December 31, 2015
Money Daily TacklesThe Best Of Wall Street With 2016 Predictions; The Big Fail: S&P, Dow Finish Lower for 2015
Stocks took it on the chin on the last trading day of 2015, and the S&P and Dow Industrials ended the year with losses. Only the NASDAQ showed a gain for the year.
Closing prices for December 31, 2015:
That's a wrap for the year. Read on, because 2016 is going to be even more interesting.
Picks for 2016
Courtesy of Barron's, here are some of Wall Street's top strategists picks to click in 2016:
Note the groupthink among these masters of the universe posers.
Aside from Steven Auth's outrageous call for 2500 (it might be a typo) the target for the S&P 500 ranges from 2100 to 2250. The expected 2016 GDP is all in a range from 1.9% to 2.8%. These are not the brave and the bold, that's for sure.
So, since Wall Street analysts have decided to continue with the false narrative that all is well, Money Daily offers the following set-up for what figures to be a downright fascinating year.
Since it's a presidential election year and the past two which marked the end of an eight-year presidency (Bush replaced Clinton in 2000, Obama replaced Bush in 2008) both were near-disasters for equity traders, 2016 promises to be an explosive twelve months.
Now that you've seen theirs - which, by the way, don't vary much - here is what Money Daily believes will work in the coming year.
First, the equity markets will absolutely tank.
Stocks Take a Beating
While it would be foolhardy to predict where whole indices will be trading at the end of the year 2016, it may be more instructive to offer a timeline. Since the S&P and Dow haven't made new highs since May of 2015 and both ended the year lower than they closed out 2014, the table has been set for an absolute bear-fest in the opening quarter of the year.
As bears emerge from a short hibernation due to climate change (one of the warmest winters on record in the Northeastern US), they will be hungry to take down entire sectors of the market. Hardest hit will be consumer goods, financials, health care, technology and services. No sector will be spared, but the safest havens will be in basic materials and utilities. The best place of all to be will be largely in cash or bonds. The 10-year note is likely to rally strongly as people flee to safety, and, despite the best efforts of Janet Yellen and the Federal Reserve to boost interest rates, the market will set the tone.
The major indices will be looking up at highs which will seem ridiculous by June. Taken on a monthly basis, January will see outright selling, putting the major indices into correction (-10%). February and March may be mild, but could be wild, depending on the direction of most of the well-followed indicators, like industrial production, capacity utilization, the various Fed surveys, factory orders, ISM manufacturing and services, and, of course, non-farm payrolls.
By April or May, the bloom will truly be off the rose, as first quarter GDP comes in below expectations or even shows up negative, the most likely culprit, warmer weather, as opposed to cold weather, which was blamed for the last two Q1 debacles.
Timing the return to a bear market can be tricky, so let it suffice to say that by June at the very latest, stocks will be down more than 20% overall, and the scare will be on.
At the bottom, which will be any time prior to election day, here's where Money Daily expects the major indices to be residing:
S&P 500: 1450
Dow: 12,400
NASDAQ: 3200
Bonds Will Be Wonderful
The 10-year note will trade higher from February through September, with the yield going below the two percent mark and staying there for an extended period, perhaps through the end of the year. Since stocks will offer only losses, lowered guidance and dividend cuts, the flight to bonds will be massive. The short end will be anathema; the 10-year and 30-year will be the bright spots.
GDP May Appear Recessionary
If 2016 results in any growth at all, it will be anemic, in the 1-1.5% range at best. With either the first and second or the second and third quarters putting up negative numbers, the odds for a true recession are high, and the Fed, without any interest rate cuts to counter the slack in the economy, will prove powerless.
The long look will be on currency collapse. After the massive gains in 2015 for the US dollar, that trade will likely reverse. Either that, or a global depression will be the order of the day.
Precious Metals Still Shine
While shunned with near-unaniminity on Wall Street, gold, silver, and platinum will hold their own and probably explode to the upside in the face of outright recession or depression. Gold and platinum could easily see 30-40% gains, while silver, the most-suppressed metal (and most important) could double by year-end, but all the metals will pull back in the early stages of the bear market in stocks.
Once a base is set for the precious metals, it will be off to the races in what will be the resumption of the decades-long bull market that began in 2000. The declines from 2012-2015 will be seen only as a cyclical bear correction amidst a secular bull.
Commodities Useful in Any Environment
So beaten down has been the commodity index, investors may be able to pick and choose from their choice of useful basic materials. Coal, iron, copper, zinc, lumber, oil and other fuels can be a boon in the best or worst of times.
Low prices in crude oil, natural gas and coal should remain in place for the entire year, and beyond. The usefulness of any commodity is, naturally, the selling point, but, in an oversupply environment, end users, rather than producers, will be the main beneficiaries.
An outright deflationary environment should prevail, a boon to cottage industries and small business, which is a welcome change from the repressed conditions of the previous decade. Anyone with the ability to store or make productive use of any manner of commodity should benefit greatly.
Real Estate As Investment Could Be Solid
There are three good reasons to own real estate. Living in a residential home, farming or mining, and renting on a commercial basis.
Since residential real estate is and has been in the stratosphere in many parts of the USA, it's likely to take a serious hit in 2016, with price declines of 10-30% in selected areas, more in others. Speculators and flippers will be fed to the sharks and there will be a slew of defaults in the REIT space.
Farmland, especially anything under 30 acres, which can be handled by a family or small enterprise, could be the best investment of the year. Productive land is usually safe, and besides, you can eat what you grow, which is always a concern.
Commercial real estate will go begging. It's massively overpriced and over-leveraged, due for a massive decline.
Conclusions
The US and global economies have been on a collision course between a massive debt bubble and a large pin. It all comes to a head in 2016, some of it pre-planned, much of it unrehearsed, unwanted and unnecessary.
Stocks will be hated, Wall Street bankers will once again be the object of derision (as they so rightly deserve to be), and politicians will be exposed as mere vassals to the deep state and the banking cartel.
The US will be lucky to avoid a major war, as the Military-Industrial-Congressional-Conplex (MICC) seeks a way out of debt crash and currency debauchery. There isn't one. Only systemic collapse can heal what's wrong in the economies of the world. Watch Japan closely, then Europe. They are the proverbial canaries in the coal mines. China will set its own course, but will continue to emerge as a world power.
The outlook isn't very rosy, admittedly, but, the great oligarchs of the day have made it so. Unmanageable levels of government, business and household debt are screaming for a reset, a break, a jubilee, and it very well could happen.
On the other side of a currency collapse is a bright future, but, if any of the outcomes predicted here actually occur, it will only be the beginning, and there will be more pain for the remainder of the decade. Until Americans and people around the world throw off the shackles of governments, replete with their laws, rules, regulations and onerous taxes, there will be no prosperity.
Donald Trump will win the presidency in November, a sign that the American people have had enough of the status quo.
Happy New Year!
Closing prices for December 31, 2015:
Picks for 2016
Courtesy of Barron's, here are some of Wall Street's top strategists picks to click in 2016:
Aside from Steven Auth's outrageous call for 2500 (it might be a typo) the target for the S&P 500 ranges from 2100 to 2250. The expected 2016 GDP is all in a range from 1.9% to 2.8%. These are not the brave and the bold, that's for sure.
So, since Wall Street analysts have decided to continue with the false narrative that all is well, Money Daily offers the following set-up for what figures to be a downright fascinating year.
Since it's a presidential election year and the past two which marked the end of an eight-year presidency (Bush replaced Clinton in 2000, Obama replaced Bush in 2008) both were near-disasters for equity traders, 2016 promises to be an explosive twelve months.
Now that you've seen theirs - which, by the way, don't vary much - here is what Money Daily believes will work in the coming year.
First, the equity markets will absolutely tank.
Stocks Take a Beating
While it would be foolhardy to predict where whole indices will be trading at the end of the year 2016, it may be more instructive to offer a timeline. Since the S&P and Dow haven't made new highs since May of 2015 and both ended the year lower than they closed out 2014, the table has been set for an absolute bear-fest in the opening quarter of the year.
As bears emerge from a short hibernation due to climate change (one of the warmest winters on record in the Northeastern US), they will be hungry to take down entire sectors of the market. Hardest hit will be consumer goods, financials, health care, technology and services. No sector will be spared, but the safest havens will be in basic materials and utilities. The best place of all to be will be largely in cash or bonds. The 10-year note is likely to rally strongly as people flee to safety, and, despite the best efforts of Janet Yellen and the Federal Reserve to boost interest rates, the market will set the tone.
The major indices will be looking up at highs which will seem ridiculous by June. Taken on a monthly basis, January will see outright selling, putting the major indices into correction (-10%). February and March may be mild, but could be wild, depending on the direction of most of the well-followed indicators, like industrial production, capacity utilization, the various Fed surveys, factory orders, ISM manufacturing and services, and, of course, non-farm payrolls.
By April or May, the bloom will truly be off the rose, as first quarter GDP comes in below expectations or even shows up negative, the most likely culprit, warmer weather, as opposed to cold weather, which was blamed for the last two Q1 debacles.
Timing the return to a bear market can be tricky, so let it suffice to say that by June at the very latest, stocks will be down more than 20% overall, and the scare will be on.
At the bottom, which will be any time prior to election day, here's where Money Daily expects the major indices to be residing:
S&P 500: 1450
Dow: 12,400
NASDAQ: 3200
Bonds Will Be Wonderful
The 10-year note will trade higher from February through September, with the yield going below the two percent mark and staying there for an extended period, perhaps through the end of the year. Since stocks will offer only losses, lowered guidance and dividend cuts, the flight to bonds will be massive. The short end will be anathema; the 10-year and 30-year will be the bright spots.
GDP May Appear Recessionary
If 2016 results in any growth at all, it will be anemic, in the 1-1.5% range at best. With either the first and second or the second and third quarters putting up negative numbers, the odds for a true recession are high, and the Fed, without any interest rate cuts to counter the slack in the economy, will prove powerless.
The long look will be on currency collapse. After the massive gains in 2015 for the US dollar, that trade will likely reverse. Either that, or a global depression will be the order of the day.
Precious Metals Still Shine
While shunned with near-unaniminity on Wall Street, gold, silver, and platinum will hold their own and probably explode to the upside in the face of outright recession or depression. Gold and platinum could easily see 30-40% gains, while silver, the most-suppressed metal (and most important) could double by year-end, but all the metals will pull back in the early stages of the bear market in stocks.
Once a base is set for the precious metals, it will be off to the races in what will be the resumption of the decades-long bull market that began in 2000. The declines from 2012-2015 will be seen only as a cyclical bear correction amidst a secular bull.
Commodities Useful in Any Environment
So beaten down has been the commodity index, investors may be able to pick and choose from their choice of useful basic materials. Coal, iron, copper, zinc, lumber, oil and other fuels can be a boon in the best or worst of times.
Low prices in crude oil, natural gas and coal should remain in place for the entire year, and beyond. The usefulness of any commodity is, naturally, the selling point, but, in an oversupply environment, end users, rather than producers, will be the main beneficiaries.
An outright deflationary environment should prevail, a boon to cottage industries and small business, which is a welcome change from the repressed conditions of the previous decade. Anyone with the ability to store or make productive use of any manner of commodity should benefit greatly.
Real Estate As Investment Could Be Solid
There are three good reasons to own real estate. Living in a residential home, farming or mining, and renting on a commercial basis.
Since residential real estate is and has been in the stratosphere in many parts of the USA, it's likely to take a serious hit in 2016, with price declines of 10-30% in selected areas, more in others. Speculators and flippers will be fed to the sharks and there will be a slew of defaults in the REIT space.
Farmland, especially anything under 30 acres, which can be handled by a family or small enterprise, could be the best investment of the year. Productive land is usually safe, and besides, you can eat what you grow, which is always a concern.
Commercial real estate will go begging. It's massively overpriced and over-leveraged, due for a massive decline.
Conclusions
The US and global economies have been on a collision course between a massive debt bubble and a large pin. It all comes to a head in 2016, some of it pre-planned, much of it unrehearsed, unwanted and unnecessary.
Stocks will be hated, Wall Street bankers will once again be the object of derision (as they so rightly deserve to be), and politicians will be exposed as mere vassals to the deep state and the banking cartel.
The US will be lucky to avoid a major war, as the Military-Industrial-Congressional-Conplex (MICC) seeks a way out of debt crash and currency debauchery. There isn't one. Only systemic collapse can heal what's wrong in the economies of the world. Watch Japan closely, then Europe. They are the proverbial canaries in the coal mines. China will set its own course, but will continue to emerge as a world power.
The outlook isn't very rosy, admittedly, but, the great oligarchs of the day have made it so. Unmanageable levels of government, business and household debt are screaming for a reset, a break, a jubilee, and it very well could happen.
On the other side of a currency collapse is a bright future, but, if any of the outcomes predicted here actually occur, it will only be the beginning, and there will be more pain for the remainder of the decade. Until Americans and people around the world throw off the shackles of governments, replete with their laws, rules, regulations and onerous taxes, there will be no prosperity.
Donald Trump will win the presidency in November, a sign that the American people have had enough of the status quo.
Happy New Year!
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%)
Wednesday, July 16, 2014
US Interest Rate Yields on Ten-Year Treasuries Will Go Lower
Money Daily stopped being a daily post blog in March, 2014. While the name remains the same, the posts are now on an intermittent basis, as conditions warrant, though it is advised to read the archives (from 2006-2014) regularly, even daily, for insights and historical perspective.
I wrote this post today in response to an article that said interest rates can't get any lower...(FR)
I wrote this post today in response to an article that said interest rates can't get any lower...(FR)
The 10-year treasury still has a long way down to go. Hell, we're still at 2.55% or thereabouts, while the Bund is hovering around 1.7%, and the Jap 10-year is fagedaboutit! like 0.6%. So, the US gov and the Fed and Wall St. still have more time to shake, rattle and roll that paper. QE has been winding down and the stock market keeps going up, so, the Fed must be happy with that, and, remember, now they can always unwrap a new round of QE, since the last few have worked out so well.
Just in case nobody's noticing, there are still a lot of (take your pick) well-off middle class retirees, pretty well-off working class stiffs (albeit fewer than before, and most of them are in the Public sector), welfare queens, idiots spending $XXXX to send their spoiled kids to school, mammoth tax receipts (wanna get sick, try a school district budget of $67 million to educate 3600 kids from K-12), car loans and leases, people buying houses at ridiculously-inflated prices.
OK, you get my drift. There's still lots of money floating around and the bankers, .gov and the Fed still have more to skim. Why would they willingly end this massive ponzi upon which they sit at the top? This is going to go on and on and on. It's been six years since the crash of '08, and nobody expected us to be where we are now, back then, so, I think nobody expects this to go on much longer, but normalcy bias and cognitive dissonance will outlast rational economic policies (already have).
Consider: Five years ago today, my father died. Left me his house and other assets. I stopped paying the mortgage immediately. Bank started foreclosure in March 2010, since then, crickets. I am still here. Bank knows the house is worth maybe 2/3rds or less of what they appraised it for in 2007. If they prevail in foreclosure, they lose. If they make a deal with me, they lose. If they keep the non-performing loan on their books at par: WIN, WIN, WIN, because they never have to realize the loss.
Some people ask me if it is stressful to live in a house I do not own (depends on how you look at it). I've rationalized that the bank (BofA) does not have any good solution. I also don't want to move, or pay, so, essentially, we're (the bank and me) both faking it, which makes certain sense, since the money is fake, the mortgage was based on fraud and all wealth is just more massive fakery.
Who's rich? I know a guy with $5-7 million in the bank and he doesn't know what the hell to do with it. He's still working at retirement age, for god's sake. I have almost nothing, and love my life, my little garden, fish ponds, a life of leisure and literature, could care less about money because it's all fake, and I've always been able to make as much as I need since I was 16 (now 60).
So, who's rich? The "wealthy" boob without a clue, or me, as I sit by the fish pond, reading Thoreau or Dante or Milton, in the sunshine as my garden grows by nature. The garden will sustain me. All the money in the world cannot buy that kind of security nor peace of mind.
You judge for yourself. Sure, I'd take that guy's $6 million, buy a big-assed piece of land and you'd never see me again. But this fool can't figure that far. I stopped working full time in 1999, because I always felt the rat race was just that: working just to pay bills. A fool's game. So, I don't have much in terms of money, but I have lots of physical assets which are either useful or valuable, tangible and intangible, no stress and much happiness.
Everybody talks about retirement, but what is the point? I know some idiots who retired and then got a job. WTF? My idea of retirement is what I do now. Work a little (I average about two hours a day), chill, drink, laugh. It's pretty easy.
OK, I'm rambling, but I keep thinking about that cryptic message by the IMF chief, Christine LaGarde, about the number seven and 7/20/2014. Having studied numerology (did you know it was invented by Pythagoras? Yep, that guy!) I see it this way: If she was sending a message, well, too many people caught on, and, yeah, something may have been planned for that date, but plans change, and, things seem to be going pretty good for the status quo right now, so why mess with it? Something may happen this Sunday, but it probably won't be as dramatic as anyone expects. I'm thinking it's all hot air. Personally, I'm going to a party. Here's the video clip in question:
I believe the author of this youtube clip is overstating the case, taking too much for granted to make his point. There's no G7 or G20 meeting scheduled for that weekend, except for G20 meeting of trade ministers in Sydney, Australia on the 19th. So, if anything earth-shaking is to occur, it would likely come out of that meeting, so it's worth keeping an eye on. Just in case, I'll be pulling some cash out of my bank on Friday, especially if there are other clues, though, so far, none.
Try to change your lifestyle. Be more self-reliant. Try not driving for a day, a few days. Don't watch TV. Cook for yourself. It's refreshing.
Wednesday, December 18, 2013
Fed Tapers Bond Purchases, Loosens Policy Guidance; Markets Love It
In a masterstroke of monetary legerdemain, outgoing Federal Reserve chairman Ben Bernanke delivered a final, resonant chord to his easy money policy of the past five years, announcing a reduction in the level of MBS and treasury bond purchases while simultaneously changing the guidance for rate policy going forward.
What the Fed has decided to do was to strike a delicate balance between the two policy initiatives currently employed. Bond purchases will henceforth be reduced from $85 billion to $75 Billion per month, shaving $5 billion from MBS and $5 billion from treasury purchases.
In its policy statement, however, the Fed took a different direction, emphasizing that the federal funds rate would remain at zero to 0.25% beyond the time at which unemployment falls below 6.5%. In other words, the Fed, as is their usual mode of operation, changed the game or moved the goal posts in terms of policy in order to accommodate a lower amount of bond purchases, in effect, maintaining equilibrium.
What the Fed is saying, somewhat tongue in cheek, is that their bond purchasing program (QE) has not quite brought about the desired results. The economy is not improving as rapidly as they anticipated, if at all, but, in order to not upset capital and equity markets with their bond purchase "tapering," they decided to loosen the language surrounding any future decision to raise interest rates.
It was quite the nifty move by the hands at the Fed, and both bond and stock markets behaved well along the lines anticipated by the manipulators of the world's money supply.
Stocks rose gratuitously, with the Dow and S&P closing at all-time highs; bonds remained distinctly calm. It was the perfect end to a reign of easy money that Bernanke has overseen, and gave the next man up, Janet Yellen, direction in which to pursue the Fed's policy directives.
The long and short of all the hype and hoopla over this final Fed meeting of the year and the last press conference by Mr. Bernanke is that the status quo was maintained and will be maintained for the foreseeable future. During his presser, the Chairman spoke of low inflation through 2016, with unemployment coming down gradually over a similar time period.
While the inflation expectations are well below what the Fed desires (2-2 1/2%), the 6.5% unemployment threshold has essentially been removed from all future Fed calculus.
When the world completes a couple more trips around the sun, at this time two years from now, it's expected that the Fed will no longer be purchasing bonds to the excessive degree it is today, and that unemployment will be much closer to "normalcy" at or near five percent.
In the real world, should everything proceed as the Fed anticipates, the economy, with interest rates still moored at zero, with 5% unemployment, the economy would be growing at a ripping rate so rapid that inflation would once again become a real problem.
Would it be so. The chances of everything working in straight lines toward a normalized economy is nothing more than a Fed fantasy. There will be disruptions and distortions and quite possibly another recession. Additionally, believing that pressures and changes from other parts of the planet would not be disruptive, is the purest height of folly.
The Fed hasn't really changed much at all. Reducing bond purchases by $10 billion per month is nothing more than a rounding error in the larger scheme of things. The punchbowl of free fiat has been left at the Wall Street party. Nothing has changed other than possibly, perception, and the person sitting in the Fed chair will be different.
The monetary can just got kicked down the road quite a stretch further. The new normal gets extended until something breaks.
DOW 16,167.97, +292.71 (+1.84%)
NASDAQ 4,070.06, +46.38 (+1.15%)
S&P 1,810.65, +29.65 (+1.66%)
10-Yr Note 98.78, -0.29 (-0.29%) Yield: 2.89%
NASDAQ Volume 1.83 Bil
NYSE Volume 3.74 Bil
Combined NYSE & NASDAQ Advance - Decline: 4252-1467
Combined NYSE & NASDAQ New highs - New lows: 311-112
WTI crude oil: 97.80, +0.58
Gold: 1,235.00, +4.90
Silver: 20.06, +0.219
Corn: 425.00, -1.75
What the Fed has decided to do was to strike a delicate balance between the two policy initiatives currently employed. Bond purchases will henceforth be reduced from $85 billion to $75 Billion per month, shaving $5 billion from MBS and $5 billion from treasury purchases.
In its policy statement, however, the Fed took a different direction, emphasizing that the federal funds rate would remain at zero to 0.25% beyond the time at which unemployment falls below 6.5%. In other words, the Fed, as is their usual mode of operation, changed the game or moved the goal posts in terms of policy in order to accommodate a lower amount of bond purchases, in effect, maintaining equilibrium.
What the Fed is saying, somewhat tongue in cheek, is that their bond purchasing program (QE) has not quite brought about the desired results. The economy is not improving as rapidly as they anticipated, if at all, but, in order to not upset capital and equity markets with their bond purchase "tapering," they decided to loosen the language surrounding any future decision to raise interest rates.
It was quite the nifty move by the hands at the Fed, and both bond and stock markets behaved well along the lines anticipated by the manipulators of the world's money supply.
Stocks rose gratuitously, with the Dow and S&P closing at all-time highs; bonds remained distinctly calm. It was the perfect end to a reign of easy money that Bernanke has overseen, and gave the next man up, Janet Yellen, direction in which to pursue the Fed's policy directives.
The long and short of all the hype and hoopla over this final Fed meeting of the year and the last press conference by Mr. Bernanke is that the status quo was maintained and will be maintained for the foreseeable future. During his presser, the Chairman spoke of low inflation through 2016, with unemployment coming down gradually over a similar time period.
While the inflation expectations are well below what the Fed desires (2-2 1/2%), the 6.5% unemployment threshold has essentially been removed from all future Fed calculus.
When the world completes a couple more trips around the sun, at this time two years from now, it's expected that the Fed will no longer be purchasing bonds to the excessive degree it is today, and that unemployment will be much closer to "normalcy" at or near five percent.
In the real world, should everything proceed as the Fed anticipates, the economy, with interest rates still moored at zero, with 5% unemployment, the economy would be growing at a ripping rate so rapid that inflation would once again become a real problem.
Would it be so. The chances of everything working in straight lines toward a normalized economy is nothing more than a Fed fantasy. There will be disruptions and distortions and quite possibly another recession. Additionally, believing that pressures and changes from other parts of the planet would not be disruptive, is the purest height of folly.
The Fed hasn't really changed much at all. Reducing bond purchases by $10 billion per month is nothing more than a rounding error in the larger scheme of things. The punchbowl of free fiat has been left at the Wall Street party. Nothing has changed other than possibly, perception, and the person sitting in the Fed chair will be different.
The monetary can just got kicked down the road quite a stretch further. The new normal gets extended until something breaks.
DOW 16,167.97, +292.71 (+1.84%)
NASDAQ 4,070.06, +46.38 (+1.15%)
S&P 1,810.65, +29.65 (+1.66%)
10-Yr Note 98.78, -0.29 (-0.29%) Yield: 2.89%
NASDAQ Volume 1.83 Bil
NYSE Volume 3.74 Bil
Combined NYSE & NASDAQ Advance - Decline: 4252-1467
Combined NYSE & NASDAQ New highs - New lows: 311-112
WTI crude oil: 97.80, +0.58
Gold: 1,235.00, +4.90
Silver: 20.06, +0.219
Corn: 425.00, -1.75
Tuesday, December 17, 2013
Markets Flat in Advance of Fed Announcement
With little movement in the major indices - or individual stocks, for that matter - it is evident to anyone watching or participating in equity and bond markets that the financial world anxiously awaits the policy statement from the FOMC tomorrow at 2:00 pm ET, in which the Fed may or may not announce the tapering of its bond purchasing program.
Currently stuck at monthly figures of $45 billion in treasury purchases and another $40 billion in MBS (mortgage-backed securities), signs that the Fed may have enough reliable data to begin scaling the program back are still ambiguous. There have been hints, predictions and all manner of speculation on what the Fed will announce via their final policy meeting of the year, but one thing remains certain: the Fed must begin to curtail this program soon, not only because it has been ineffective, but that it could also do (and may have already) damage to the fragile economy.
On Wall Street, there's widespread belief that a cut-back in bond purchases by the Federal Reserve would cause a dip in the equity indices, being that there would be less of the free champagne money flowing to the TBTF banks, but a growing suspicion that the extent of these bond purchases, with money going to the connected and already-well-heeled, may be causing a rift of considerable proportions between the monied interests of the financiers and the rest of the planet.
Income disparity, already at an extraordinarily-high rate preceding the crisis of 2008-09, has been exacerbated by the easy money put into the hands of the rich, a trend which may be leading to suspicion, distrust and eventually, class enmity.
So, with less than 24 hours before what may be a significant announcement, traders have chosen to sit upon their collective hands, leaving volume at some of the lowest levels of the year.
Wednesday's FOMC announcement should provide some pre-holiday fireworks. If not, markets could just as easily rally from relief as sell off from disappointment. Whatever the Fed has planned for tomorrow should affect everything from stock prices to mortgage rates.
DOW 15,875.26, -9.31 (-0.06%)
NASDAQ 4,023.68, -5.84 (-0.14%)
S&P 1,781.00, -5.54 (-0.31%)
10-Yr Note 99.05, +0.77 (+0.79%) Yield: 2.86%
NASDAQ Volume 1.59 Bil
NYSE Volume 2.82 Bil
Combined NYSE & NASDAQ Advance - Decline: 2593-2889
Combined NYSE & NASDAQ New highs - New lows: 154-117
WTI crude oil: 97.22, -0.26
Gold: 1,230.10, -14.30
Silver: 19.84, -0.261
Corn: 426.75, +3.50
Currently stuck at monthly figures of $45 billion in treasury purchases and another $40 billion in MBS (mortgage-backed securities), signs that the Fed may have enough reliable data to begin scaling the program back are still ambiguous. There have been hints, predictions and all manner of speculation on what the Fed will announce via their final policy meeting of the year, but one thing remains certain: the Fed must begin to curtail this program soon, not only because it has been ineffective, but that it could also do (and may have already) damage to the fragile economy.
On Wall Street, there's widespread belief that a cut-back in bond purchases by the Federal Reserve would cause a dip in the equity indices, being that there would be less of the free champagne money flowing to the TBTF banks, but a growing suspicion that the extent of these bond purchases, with money going to the connected and already-well-heeled, may be causing a rift of considerable proportions between the monied interests of the financiers and the rest of the planet.
Income disparity, already at an extraordinarily-high rate preceding the crisis of 2008-09, has been exacerbated by the easy money put into the hands of the rich, a trend which may be leading to suspicion, distrust and eventually, class enmity.
So, with less than 24 hours before what may be a significant announcement, traders have chosen to sit upon their collective hands, leaving volume at some of the lowest levels of the year.
Wednesday's FOMC announcement should provide some pre-holiday fireworks. If not, markets could just as easily rally from relief as sell off from disappointment. Whatever the Fed has planned for tomorrow should affect everything from stock prices to mortgage rates.
DOW 15,875.26, -9.31 (-0.06%)
NASDAQ 4,023.68, -5.84 (-0.14%)
S&P 1,781.00, -5.54 (-0.31%)
10-Yr Note 99.05, +0.77 (+0.79%) Yield: 2.86%
NASDAQ Volume 1.59 Bil
NYSE Volume 2.82 Bil
Combined NYSE & NASDAQ Advance - Decline: 2593-2889
Combined NYSE & NASDAQ New highs - New lows: 154-117
WTI crude oil: 97.22, -0.26
Gold: 1,230.10, -14.30
Silver: 19.84, -0.261
Corn: 426.75, +3.50
Wednesday, November 20, 2013
Stocks Fall After October Fed Minutes Released; Deflation Commences
Just in case anyone forgot that the only thing that matters in this market is Federal Reserve policy, the message was forcefully driven home precisely at 2:00 pm ET, when the minutes from the last FOMC meeting were released.
Within those arcane discussions of all things monetary were warnings from more than a few members that tapering bond purchases by the Fed might begin sooner rather than later. Accepted thinking had been that the Fed would not taper until March, though after today, analysts are suggesting that December - just two weeks away - might mark the beginning of the end of the Fed's bond-buying spree.
While the cutback in bond purchases monthly may only be a decrease of $10 to $15 billion of the current $85 billion, Wall Street money-grubbers were spooked as usual at the suggestion that money would be anything other than nearly free to borrow.
Today's action in stocks shows just how fragile the 4 1/2-year-plus market rally is and how quickly paper profits may vanish if the Fed doesn't keep the money-printing machine going pedal to the metal.
It's a ridiculous market made up of ridiculous valuations and propositions, that, without Herculean-like support from the central bank, could fall apart in days or weeks.
The Fed will no doubt taper, the only remaining questions are when and by how much. Whatever the decision shall be, markets will not like it one bit, and the general economy may suffer even more than it already has as Wall Street will no doubt throw a massive hissy fit.
When it's all done with, when the Fed stops buying bonds altogether (when will that be, 2065?), either stocks or the US dollar (and maybe both) will be worth a lot less than they are today.
Lunatic policies by the Fed will be followed in time by equally hilarious conclusions to those misguided policies. The results will be a catastrophe financial markets have never seen before.
What is either amusing or distressing is the reaction in precious metal markets, which fell in concert with stocks and bonds. If the markets are correct, Fed tapering will be a deflationary event with magnificent outcomes ahead.
In the long term, the Fed cannot taper back on bond purchases because they have succeeded in crowding out the few remaining participants over the past four years. Deflations and defaults will be the most likely results, though emerging markets will feel the pain much sooner and to a much greater degree than established economies, though no nation will be spared the death spiral of deflation.
Dow 15,900.82, -66.21 (0.41%)
Nasdaq 3,921.27, -10.28 (0.26%)
S&P 500 1,781.37, -6.50 (0.36%)
10-Yr Bond 2.79%, +0.08
NYSE Volume 3,094,246,250
Nasdaq Volume 1,686,541,875
Combined NYSE & NASDAQ Advance - Decline: 2180-3428
Combined NYSE & NASDAQ New highs - New lows: 162-98
WTI crude oil: 93.33, -0.01
Gold: 1,258.00, -15.50
Silver: 20.06, 0.276
Corn: 425.25, -1.00
Within those arcane discussions of all things monetary were warnings from more than a few members that tapering bond purchases by the Fed might begin sooner rather than later. Accepted thinking had been that the Fed would not taper until March, though after today, analysts are suggesting that December - just two weeks away - might mark the beginning of the end of the Fed's bond-buying spree.
While the cutback in bond purchases monthly may only be a decrease of $10 to $15 billion of the current $85 billion, Wall Street money-grubbers were spooked as usual at the suggestion that money would be anything other than nearly free to borrow.
Today's action in stocks shows just how fragile the 4 1/2-year-plus market rally is and how quickly paper profits may vanish if the Fed doesn't keep the money-printing machine going pedal to the metal.
It's a ridiculous market made up of ridiculous valuations and propositions, that, without Herculean-like support from the central bank, could fall apart in days or weeks.
The Fed will no doubt taper, the only remaining questions are when and by how much. Whatever the decision shall be, markets will not like it one bit, and the general economy may suffer even more than it already has as Wall Street will no doubt throw a massive hissy fit.
When it's all done with, when the Fed stops buying bonds altogether (when will that be, 2065?), either stocks or the US dollar (and maybe both) will be worth a lot less than they are today.
Lunatic policies by the Fed will be followed in time by equally hilarious conclusions to those misguided policies. The results will be a catastrophe financial markets have never seen before.
What is either amusing or distressing is the reaction in precious metal markets, which fell in concert with stocks and bonds. If the markets are correct, Fed tapering will be a deflationary event with magnificent outcomes ahead.
In the long term, the Fed cannot taper back on bond purchases because they have succeeded in crowding out the few remaining participants over the past four years. Deflations and defaults will be the most likely results, though emerging markets will feel the pain much sooner and to a much greater degree than established economies, though no nation will be spared the death spiral of deflation.
Dow 15,900.82, -66.21 (0.41%)
Nasdaq 3,921.27, -10.28 (0.26%)
S&P 500 1,781.37, -6.50 (0.36%)
10-Yr Bond 2.79%, +0.08
NYSE Volume 3,094,246,250
Nasdaq Volume 1,686,541,875
Combined NYSE & NASDAQ Advance - Decline: 2180-3428
Combined NYSE & NASDAQ New highs - New lows: 162-98
WTI crude oil: 93.33, -0.01
Gold: 1,258.00, -15.50
Silver: 20.06, 0.276
Corn: 425.25, -1.00
Monday, May 20, 2013
Stocks Close (mostly) Lower, But Metals Reverse Early Declines
Stocks were up, then down, then up, then down, never deviating far from the UNCH line, finally ending down, with the exception of the COMP, which was up marginally.
These moves were so minuscule and the volume so light that most of the traders could have taken the day off and nobody would have noticed.
What was noticeable were the moves in gold and silver, both of which were hammered lower in light Asian trading, before reversing course to finish with fairly impressive gains. In particular, gold, which had traded lower for seven consecutive sessions, ended nearly 1.5% higher and tacked on another $12 after the NYMEX close. Silver was also ramping higher in electronic trading, up another 40 cents from the open outcry finish.
If there ever was a key reversal day for the precious metals, today was it. The criminal central banking elites have been banging the metals lower for the better part of the past month, but Andrew McGuire, whistle-blower and expert metals trader, called this one over the weekend, saying the bullion banks were about to punish the shorts with a buying spree to replenish supplies depleted during the recent downward manipulation.
So far, that looks like a prescient call.
Stocks were unaffected by the moves in gold and silver, more attuned to the differing tones comeing from various Fed officials, most of whom are hinting that QEternity could be winding down (tapering) in short order. All the talk is nothing more than "jawboning" a tactic by which the Fed talks one way but actually has no intention of doing anything except continue current policy.
Such talk is needed to cool overheated markets, such as in US stocks, and, while its efforts have been mostly for naught - the indices keep rising - a problem the Fed does have to consider is that it is running out of things to buy, particularly MBS. At $40 billion a month, the Fed is effectively sucking up about 60% of all issuance, choking the market, which, after all, it the intent of the policy.
However, with rates so consistently low (and rising a bit of late), refinancing activity is expected to slow, which would push the Fed's buying up to 90% or more of issuance, and that would not only choke the market, but strangle it and kill it.
The same condition exists in Treasuries, but not to such a degree, though the government is on track to issue less in short-term notes than the Fed has scheduled to buy. This is a situation the Fed obviously did not consider when it embarked upon its gigantic bond-buying program, but, if taken out until the end of 2013, the folly of the Fed will be shown for all to see, i.e., the emperor having no clothes.
Should such a condition prevail, interest rates would rocket higher, stocks would tank and the federal deficit would then be reduced to spending much more - in percentage terms - to service its debts, prompting further borrowing, forcing the Fed to buy up even more debt.
An endless, non-virtuous circle, just as un-planned.
Dow 15,335.28, -19.12 (0.12%)
NASDAQ 3,496.43, -2.53 (0.07%)
S&P 500 1,666.29, -1.18 (0.07%)
NYSE Composite 9,587.51, +11.09 (0.12%)
NASDAQ Volume 1,687,899,125
NYSE Volume 3,556,500,250
Combined NYSE & NASDAQ Advance - Decline: 3699-2778
Combined NYSE & NASDAQ New highs - New lows: 768-36
WTI crude oil: 96.71, +0.69
Gold: 1,384.10, +19.40
Silver: 22.58, +0.23
These moves were so minuscule and the volume so light that most of the traders could have taken the day off and nobody would have noticed.
What was noticeable were the moves in gold and silver, both of which were hammered lower in light Asian trading, before reversing course to finish with fairly impressive gains. In particular, gold, which had traded lower for seven consecutive sessions, ended nearly 1.5% higher and tacked on another $12 after the NYMEX close. Silver was also ramping higher in electronic trading, up another 40 cents from the open outcry finish.
If there ever was a key reversal day for the precious metals, today was it. The criminal central banking elites have been banging the metals lower for the better part of the past month, but Andrew McGuire, whistle-blower and expert metals trader, called this one over the weekend, saying the bullion banks were about to punish the shorts with a buying spree to replenish supplies depleted during the recent downward manipulation.
So far, that looks like a prescient call.
Stocks were unaffected by the moves in gold and silver, more attuned to the differing tones comeing from various Fed officials, most of whom are hinting that QEternity could be winding down (tapering) in short order. All the talk is nothing more than "jawboning" a tactic by which the Fed talks one way but actually has no intention of doing anything except continue current policy.
Such talk is needed to cool overheated markets, such as in US stocks, and, while its efforts have been mostly for naught - the indices keep rising - a problem the Fed does have to consider is that it is running out of things to buy, particularly MBS. At $40 billion a month, the Fed is effectively sucking up about 60% of all issuance, choking the market, which, after all, it the intent of the policy.
However, with rates so consistently low (and rising a bit of late), refinancing activity is expected to slow, which would push the Fed's buying up to 90% or more of issuance, and that would not only choke the market, but strangle it and kill it.
The same condition exists in Treasuries, but not to such a degree, though the government is on track to issue less in short-term notes than the Fed has scheduled to buy. This is a situation the Fed obviously did not consider when it embarked upon its gigantic bond-buying program, but, if taken out until the end of 2013, the folly of the Fed will be shown for all to see, i.e., the emperor having no clothes.
Should such a condition prevail, interest rates would rocket higher, stocks would tank and the federal deficit would then be reduced to spending much more - in percentage terms - to service its debts, prompting further borrowing, forcing the Fed to buy up even more debt.
An endless, non-virtuous circle, just as un-planned.
Dow 15,335.28, -19.12 (0.12%)
NASDAQ 3,496.43, -2.53 (0.07%)
S&P 500 1,666.29, -1.18 (0.07%)
NYSE Composite 9,587.51, +11.09 (0.12%)
NASDAQ Volume 1,687,899,125
NYSE Volume 3,556,500,250
Combined NYSE & NASDAQ Advance - Decline: 3699-2778
Combined NYSE & NASDAQ New highs - New lows: 768-36
WTI crude oil: 96.71, +0.69
Gold: 1,384.10, +19.40
Silver: 22.58, +0.23
Tuesday, April 10, 2012
Markets Offering Few Directional Clues Amidst Continuing Crises
Spain today, tomorrow jobs, next day China. Wholesale inventories are growing.
That's how the markets seem to be lurching from one crisis to the next, though overall performance in equity markets has - until the past five days - been outstanding.
Today's deep declines in Europe and the US notwithstanding, global economies have withstood more than three years of relentless pressure and are still standing.
This kind of vacillation leaves most analysts red-eyed and weary at the ends of most weeks and casual market observers in a state of dumbfounded blurriness.
Recapping the losses in US equity markets today need not lead one to conclude that the economy is falling over a cliff; indeed, stocks have been on a 30% tear since October, and the recent five-day decline has only clipped off a small percentage. And, it's just the start of earnings season for the first quarter, one which is predicted to be less-than-outstanding, withe the estimate for earnings growth to be less than one percent.
The Dow is on its worst five-day losing streak since August of 2011; meanwhile the S&P and NASDAQ have suffered their biggest drops since late November. The S&P broke through support at 1370 and continued down from there, slicing through its 50-day moving average, while the NASDAQ busted below 3000, a beachhead just recently breached.
Fear? Greed? Take your pick. Stocks finished close to their lows of the day, setting up just about anything for Wednesday, though the overhand from Spain's 10-year bond hovering around 6% is troubling to all.
On the bright side, Alcoa (AA) opened earnings season with a surprise, posting a nine-cent per share first quarter profit on expectations of a four-cent loss. On the other hand, last year's first quarter profit was 27 cents per share.
The 10-year US treasury closed below 2% (1.98%) for the first time in a month and WTI crude oil ended the day at roughly the same level it was at on December 30 of last year.
Most corporate economists are calling for 2-3% growth for 2012, though their track record is of misses so wide that one would be a fool to invite them onto the bar darts team.
A couple of clues to keep on the radar over the next few days, because they will be telling: the advance-decline line has been anemic for the past two weeks and the past two days have been decidedly bearish; the VIX has spiked 30% in the past eight sessions; Dow transports never confirmed the recent rally and have been taking a beating recently; new highs - new lows has rolled over in three of the past four sessions; and, crude oil has tanked.
All of these indicators are important, but it's still too early to call a trend, especially as we head into the heart of earnings season over the next two weeks. It will pay to keep a very close eye on developments. The recent downturn could easily be nothing more than profit-taking or the forerunner of a severe downturn.
So, take your pick. Up, down, left, right, forward, backwards. If you have a job, keep it. If you have some money, save it. If you need to eat, buy some food (it's still relatively cheap), if you don't have to drive, don't, and, if you think life is still pretty good, enjoy it, because, in this environment, one never knows how long the good times will last.
Keep an eye on sunrise and sunset times and any variance from published expectations.
Dow 12,715.93, -213.66 (1.65%)
NASDAQ 2,991.22, -55.86 (1.83%)
S&P 500 1,358.59, -23.61 (1.71%)
NYSE Composite 7,842.00, -150.32 (1.88%)
NASDAQ Volume 1,916,928,125
NYSE Volume 4,651,426,500
Combined NYSE & NASDAQ Advance - Decline: 924-4713
Combined NYSE & NASDAQ New highs - New lows: 45-157
WTI crude oil: 101.02, -1.44
Gold: 1,660.70, +16.80
Silver: 31.68, +0.16
That's how the markets seem to be lurching from one crisis to the next, though overall performance in equity markets has - until the past five days - been outstanding.
Today's deep declines in Europe and the US notwithstanding, global economies have withstood more than three years of relentless pressure and are still standing.
This kind of vacillation leaves most analysts red-eyed and weary at the ends of most weeks and casual market observers in a state of dumbfounded blurriness.
Recapping the losses in US equity markets today need not lead one to conclude that the economy is falling over a cliff; indeed, stocks have been on a 30% tear since October, and the recent five-day decline has only clipped off a small percentage. And, it's just the start of earnings season for the first quarter, one which is predicted to be less-than-outstanding, withe the estimate for earnings growth to be less than one percent.
The Dow is on its worst five-day losing streak since August of 2011; meanwhile the S&P and NASDAQ have suffered their biggest drops since late November. The S&P broke through support at 1370 and continued down from there, slicing through its 50-day moving average, while the NASDAQ busted below 3000, a beachhead just recently breached.
Fear? Greed? Take your pick. Stocks finished close to their lows of the day, setting up just about anything for Wednesday, though the overhand from Spain's 10-year bond hovering around 6% is troubling to all.
On the bright side, Alcoa (AA) opened earnings season with a surprise, posting a nine-cent per share first quarter profit on expectations of a four-cent loss. On the other hand, last year's first quarter profit was 27 cents per share.
The 10-year US treasury closed below 2% (1.98%) for the first time in a month and WTI crude oil ended the day at roughly the same level it was at on December 30 of last year.
Most corporate economists are calling for 2-3% growth for 2012, though their track record is of misses so wide that one would be a fool to invite them onto the bar darts team.
A couple of clues to keep on the radar over the next few days, because they will be telling: the advance-decline line has been anemic for the past two weeks and the past two days have been decidedly bearish; the VIX has spiked 30% in the past eight sessions; Dow transports never confirmed the recent rally and have been taking a beating recently; new highs - new lows has rolled over in three of the past four sessions; and, crude oil has tanked.
All of these indicators are important, but it's still too early to call a trend, especially as we head into the heart of earnings season over the next two weeks. It will pay to keep a very close eye on developments. The recent downturn could easily be nothing more than profit-taking or the forerunner of a severe downturn.
So, take your pick. Up, down, left, right, forward, backwards. If you have a job, keep it. If you have some money, save it. If you need to eat, buy some food (it's still relatively cheap), if you don't have to drive, don't, and, if you think life is still pretty good, enjoy it, because, in this environment, one never knows how long the good times will last.
Keep an eye on sunrise and sunset times and any variance from published expectations.
Dow 12,715.93, -213.66 (1.65%)
NASDAQ 2,991.22, -55.86 (1.83%)
S&P 500 1,358.59, -23.61 (1.71%)
NYSE Composite 7,842.00, -150.32 (1.88%)
NASDAQ Volume 1,916,928,125
NYSE Volume 4,651,426,500
Combined NYSE & NASDAQ Advance - Decline: 924-4713
Combined NYSE & NASDAQ New highs - New lows: 45-157
WTI crude oil: 101.02, -1.44
Gold: 1,660.70, +16.80
Silver: 31.68, +0.16
Friday, February 17, 2012
Freaky Friday: $6 Trillion In Fake Bonds, Euro-Greek Bond Swap; March 23rd Looking Grim
For a Friday, the news flow certainly was heavy.
The morning began with a report out of Italy, that $6 trillion worth of allegedly "fake" US Treasury bonds were seized by Italian police and the US Secret Service along with eight men involved in the counterfeiting and money laundering scam. Authorities said that the individuals arrested were planning to purchase plutonium from Nigeria, a story that has a familiar ring, last used as part of the pretense for going to war with Iraq after 9/11.
This story has all the markings of either a false flag event or wild conspiracy. Details are sketchy, though the assembled mainstream news media has already accepted the idea that the bonds are fakes. Don't expect to hear or see much more about this after today, except from bloggers and investigators outside the mainstream.
The European Central Bank (ECB) swapped its Greek bonds for new ones to ensure it isn’t forced to take losses in a debt restructuring. This story also greeted the morning in New York, without much fanfare, except for the press mimicking the officials at the ECB that Greece is moving closer to a resolution of its debt issues before the fateful date of March 20 arrives.
ZeroHedge has a pretty good take on the implications and possible illegalities of the move, which will apparently trigger the collective action clauses (CAC) and also Credit Default Swaps, as it would be a default event. Ooopsie. Could be a cascade coming.
Related, but unconfirmed, is a report that some banks already have documents detailing a March 23 default by Greece in which Greek banks will be closed, accounts frozen and Euro-denominated currency will become worthless in the land of Plato and Aristotle.
March 23 happens to be a Friday, which makes sense, since the report says the major credit agencies will declare Greece in default, and late Friday afternoons, after US markets have closed, seems to be the preferred time for any nasty news from the credit raters.
Late in the day, our normally-inept congress managed to PURPOSELY UNDERFUND THE SOCIAL SECURITY TRUST FUND by passing a bill to extend the roughly-30% cut to employees for the rest of the year and keep unemployment benefits flowing to the millions of Americans who just can't seem to find a good job.
Amid all of this, the stock market looked like a side show, with stocks limping along to yet another positive close - except for the NASDAQ, mostly because Apple finished down 0.09 - on horrifyingly-low volume.
It's tough to make this stuff up, but somebody must be, because financial markets are acting as if they're from another dimension or distant galaxy. The only reasonable correlation that can be assumed these days is that if the Euro is up, so will be US stocks. Oh, and any mention of Iran or the Strait of Hormuz is good for at least another 40-cent move higher in the price of crude, which has retail gasoline now priced at US record levels for February.
Hey, it's a three-day weekend. We can worry about Greece on Tuesday. But, don't drive too much. Could just wreck your budget.
Dow 12,950.10, +46.02 (0.36%)
NASDAQ 2,951.78, -8.07 (0.27%)
S&P 500 1,361.23, +3.19 (0.23%)
NYSE Composite 8,114.51, +22.32 (0.28%)
NASDAQ Volume 1,972,077,750
NYSE Volume 3,675,412,000
Combined NYSE & NASDAQ Advance - Decline: 3082-2535
Combined NYSE & NASDAQ New highs - New lows: 303-12 (0 new lows on NYSE. WOW!)
WTI crude oil: 103.24, +0.93
Gold: 1,725.90, -2.50
Silver: 33.22, -0.15
The morning began with a report out of Italy, that $6 trillion worth of allegedly "fake" US Treasury bonds were seized by Italian police and the US Secret Service along with eight men involved in the counterfeiting and money laundering scam. Authorities said that the individuals arrested were planning to purchase plutonium from Nigeria, a story that has a familiar ring, last used as part of the pretense for going to war with Iraq after 9/11.
This story has all the markings of either a false flag event or wild conspiracy. Details are sketchy, though the assembled mainstream news media has already accepted the idea that the bonds are fakes. Don't expect to hear or see much more about this after today, except from bloggers and investigators outside the mainstream.
The European Central Bank (ECB) swapped its Greek bonds for new ones to ensure it isn’t forced to take losses in a debt restructuring. This story also greeted the morning in New York, without much fanfare, except for the press mimicking the officials at the ECB that Greece is moving closer to a resolution of its debt issues before the fateful date of March 20 arrives.
ZeroHedge has a pretty good take on the implications and possible illegalities of the move, which will apparently trigger the collective action clauses (CAC) and also Credit Default Swaps, as it would be a default event. Ooopsie. Could be a cascade coming.
Related, but unconfirmed, is a report that some banks already have documents detailing a March 23 default by Greece in which Greek banks will be closed, accounts frozen and Euro-denominated currency will become worthless in the land of Plato and Aristotle.
March 23 happens to be a Friday, which makes sense, since the report says the major credit agencies will declare Greece in default, and late Friday afternoons, after US markets have closed, seems to be the preferred time for any nasty news from the credit raters.
Late in the day, our normally-inept congress managed to PURPOSELY UNDERFUND THE SOCIAL SECURITY TRUST FUND by passing a bill to extend the roughly-30% cut to employees for the rest of the year and keep unemployment benefits flowing to the millions of Americans who just can't seem to find a good job.
Amid all of this, the stock market looked like a side show, with stocks limping along to yet another positive close - except for the NASDAQ, mostly because Apple finished down 0.09 - on horrifyingly-low volume.
It's tough to make this stuff up, but somebody must be, because financial markets are acting as if they're from another dimension or distant galaxy. The only reasonable correlation that can be assumed these days is that if the Euro is up, so will be US stocks. Oh, and any mention of Iran or the Strait of Hormuz is good for at least another 40-cent move higher in the price of crude, which has retail gasoline now priced at US record levels for February.
Hey, it's a three-day weekend. We can worry about Greece on Tuesday. But, don't drive too much. Could just wreck your budget.
Dow 12,950.10, +46.02 (0.36%)
NASDAQ 2,951.78, -8.07 (0.27%)
S&P 500 1,361.23, +3.19 (0.23%)
NYSE Composite 8,114.51, +22.32 (0.28%)
NASDAQ Volume 1,972,077,750
NYSE Volume 3,675,412,000
Combined NYSE & NASDAQ Advance - Decline: 3082-2535
Combined NYSE & NASDAQ New highs - New lows: 303-12 (0 new lows on NYSE. WOW!)
WTI crude oil: 103.24, +0.93
Gold: 1,725.90, -2.50
Silver: 33.22, -0.15
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