When stocks power ahead, especially after a severe downturn (such as last week's), there is normally a good amount of short squeezing going on, as individuals who borrow stock in an attempt to unload it at a lower price, thus raking in the difference (short sellers), are forced to cover (buy at a higher price than they anticipated).
The amount of money that short sellers can lose in conditions like this are unlimited, so there's a strong urge to limit losses. It's all very sophisticated, this short selling and short-squeezing, generally the province of high frequency traders at dealer hubs. Neither practice is recommended for the average 401K investor.
When short-squeezes occur, they are usually one-day events, after which the markets return to some semblance of normalcy, though "normal" is a highly suggestive description under current market conditions. Individual stocks and whole indices are being whipsawed daily by the cross-currents of currency devaluation, trade war rumors, economic data, and yes, even the occasional quarterly corporate report.
Thus, traders and analysts are well-advised to do some smoothing out of all the noise in the markets, focusing on moving averages and daily ranges, rather than final prices. In that regard, the major US indices are between their 50 and 200-day moving averages, which implies plenty of volatility, setting up both buying and selling opportunities over the near term for those with high risk tolerance (hint: probably not you).
Day-traders, otherwise known as major broker-dealers, will have a field day in such an environment, though history is rife with examples of traders being spectacularly wrong and losing billions in the process. That's likely to happen in the current environment, if only because people never, ever, ever learn from the mistakes of others.
Expect more volatility, with a tiny edge to upside trading, though different sectors and different stocks will move in different directions.
Choose wisely.
At the Close, Monday, August 19, 2019:
Dow Jones Industrial Average: 26,135.79, +249.78 (+0.96%)
NASDAQ: 8,002.81, +106.82 (+1.35%)
S&P 500: 2,923.65, +34.97 (+1.21%)
NYSEComposite: 12,687.91, +107.50 (+0.85%)
Tuesday, August 20, 2019
Monday, August 19, 2019
WEEKEND WRAP: Stocks Lower Third Straight Week; Treasury Curve Inverts
Stocks took another turn for the worse, the third straight week in which the major averages shed points. That would constitute a trend, especially considering what happened on the Treasury yield curve, where the two-year note inverted against the 10-year-note, yielding - for a short time - one basis point more than its longer-term counterpart.
Additionally, bonds with negative yields globally moved beyond the $16 trillion mark, with Germany, among other EU countries, having its entire bond complex falling below zero yield.
Those two events in bond-land are going to prove to be crippling to global growth and the effects are already becoming apparent.
Negative interest rates destroy the time value of money. Debt is discarded. Without debt, there is no money, except for that which has no interest or counterparty. That would be gold, silver, hard assets. Gold and silver have been rallying while national central-bank fiat currencies fluctuate against each other in the desperate race to the bottom.
The idea that the country which can devalue its currency fastest and lowest will be the winner in the trade arena is offset by the fact that weak currencies - while great for exporters - are not necessarily good for that nation's consumers, because imports would necessarily become more dear.
The desire to send interest rates into negative territory - a concept launched by the Japanese and quickly taken up by Europe after the GFC - is a marker for the death of currencies, i.e., fiat money.
Negative rates are inherently deflationary, which is exactly what central banks wish to avoid, because it voids their franchise. Fiat money - which is in use globally - will die, not by hyperinflation, but by hyper-deflation.
That has been the working thesis at Money Daily since 2008, and it appears to finally be setting off into a new phase.
Facts must be faced. After the crash in 2008, banks became insolvent and were bailed out by trillions of dollars, yen and euros from central banks, which, by their very nature of money creation out of thin air, are also insolvent. Most governments are either deeply in debt or insolvent, with massive debts to their central banks offset by national resources (see Greece). Most people's finances are in a state of insolvent, with debt far outweighing assets. That leaves corporations, large and small, as the only solvent entities in the world, though many of those corporations are also insolvent, with more debt than equity, and much of their equity accounted for by stock buybacks. When the market takes a meaningful dive, many of these corporations will be prime bankruptcy targets, though the government would almost surely step in - as it did with the banks and General Motors during the crisis - with freshly-minted money to stave off creditors.
All roads lead back to the fiat money system and fractional reserve banking.
We have broken countries undertaking broken trade in broken markets. Mal-investments and wealth inequality are proliferating. Big government, running enormous deficits, carries on the fraud of counterfeiting by central banks. The currencies commonly used in exchange are worth nothing more than the ink and paper upon which are printed the pretty pictures and numbers. They are all debt instruments and negative interest rates extinguish debt. The world is headed for a radical reconfiguration of the monetary system.
At the Close, Friday, August 16, 2019:
Dow Jones Industrial Average: 25,886.01, +306.61 (+1.20%)
NASDAQ: 7,895.99, +129.37 (+1.67%)
S&P 500: 2,888.68, +41.08 (+1.44%)
NYSE Composite: 12,580.41, +170.91 (+1.38%)
For the Week:
Dow: -401.43 (-1.53%)
NASDAQ: -63.15 (-0.79%)
S&P 500: -29.97 (-1.03%)
NYSE Composite: -168.01 (-1.32%)
Dow Transports: -239.89 (-2.35%)
Additionally, bonds with negative yields globally moved beyond the $16 trillion mark, with Germany, among other EU countries, having its entire bond complex falling below zero yield.
Those two events in bond-land are going to prove to be crippling to global growth and the effects are already becoming apparent.
Negative interest rates destroy the time value of money. Debt is discarded. Without debt, there is no money, except for that which has no interest or counterparty. That would be gold, silver, hard assets. Gold and silver have been rallying while national central-bank fiat currencies fluctuate against each other in the desperate race to the bottom.
The idea that the country which can devalue its currency fastest and lowest will be the winner in the trade arena is offset by the fact that weak currencies - while great for exporters - are not necessarily good for that nation's consumers, because imports would necessarily become more dear.
The desire to send interest rates into negative territory - a concept launched by the Japanese and quickly taken up by Europe after the GFC - is a marker for the death of currencies, i.e., fiat money.
Negative rates are inherently deflationary, which is exactly what central banks wish to avoid, because it voids their franchise. Fiat money - which is in use globally - will die, not by hyperinflation, but by hyper-deflation.
That has been the working thesis at Money Daily since 2008, and it appears to finally be setting off into a new phase.
Facts must be faced. After the crash in 2008, banks became insolvent and were bailed out by trillions of dollars, yen and euros from central banks, which, by their very nature of money creation out of thin air, are also insolvent. Most governments are either deeply in debt or insolvent, with massive debts to their central banks offset by national resources (see Greece). Most people's finances are in a state of insolvent, with debt far outweighing assets. That leaves corporations, large and small, as the only solvent entities in the world, though many of those corporations are also insolvent, with more debt than equity, and much of their equity accounted for by stock buybacks. When the market takes a meaningful dive, many of these corporations will be prime bankruptcy targets, though the government would almost surely step in - as it did with the banks and General Motors during the crisis - with freshly-minted money to stave off creditors.
All roads lead back to the fiat money system and fractional reserve banking.
We have broken countries undertaking broken trade in broken markets. Mal-investments and wealth inequality are proliferating. Big government, running enormous deficits, carries on the fraud of counterfeiting by central banks. The currencies commonly used in exchange are worth nothing more than the ink and paper upon which are printed the pretty pictures and numbers. They are all debt instruments and negative interest rates extinguish debt. The world is headed for a radical reconfiguration of the monetary system.
At the Close, Friday, August 16, 2019:
Dow Jones Industrial Average: 25,886.01, +306.61 (+1.20%)
NASDAQ: 7,895.99, +129.37 (+1.67%)
S&P 500: 2,888.68, +41.08 (+1.44%)
NYSE Composite: 12,580.41, +170.91 (+1.38%)
For the Week:
Dow: -401.43 (-1.53%)
NASDAQ: -63.15 (-0.79%)
S&P 500: -29.97 (-1.03%)
NYSE Composite: -168.01 (-1.32%)
Dow Transports: -239.89 (-2.35%)
Friday, August 16, 2019
Ignore the Noise as Markets Grind Bond Yields Toward Zero
Thursday's trading saw more of the usual up-and-down twerking that usually accompanies large moves in either direction. After Wednesday's rout - the fourth-largest point decline on the Dow Industrials - some bounce was expected, and it did occur early, though markets slipped into the red midday before being rescued by apparently-optimistic investors (central banks, PPT) into the close.
Interesting is the idea that Wednesday's selloff was not met with more panic in the media and by the general public. Stocks have been volatile since October of last year, so the possibility that people are zoned out from the near-constant drubbing and recovery is real.
People should actually care that their college retirement funds are at so much risk in stocks, but that doesn't seem to be the case among the 401K crowd. Getting used to uncertainty is a kind of Stockholm syndrome that is inimitable to the Wall Street casino. The general public may get agitated more over mass shootings, tweets by the president, or a bad call in an NFL game, but when it comes to the money betting on their futures, they are sheepish.
Maybe that's a good thing when talking about market noise, but an 800-point drop on the Dow is something that shouldn't be ignored or overlooked. There are damn good reasons stocks get hammered, and even passive investors should express at least a modicum of concern.
Be that as it may, Thursday was more of the noisy variety, though most other markets - bonds, commodities, futures, FX - were being bounced around pretty vigorously, especially treasury bonds, where the 10-year-note continues to fall, reaching for all-time lows.
The 10-year is hovering in the 1.47 - 1.65 range. The all-time low yield on the benchmark 10-year was 1.375, on July 5, 2016. Anybody wearing a thinking cap clearly sees where this recent decline is headed. With now $16 trillion in bonds yielding negative returns globally, US treasuries stick out like sore thumbs. In the race to the bottom, the 10-year will fall below the record low yield. It's simply a matter of time. Eventually, US bonds will likely carry negative yields as the global financial system, rescued by central banks in 2008-09, completely falls apart over the next three to five years.
Money is dying. Fiat money will die quite painfully.
At the Close, Thursday, August 15, 2019:
Dow Jones Industrial Average: 25,579.39, +99.97 (+0.39%)
NASDAQ: 7,766.62, -7.32 (-0.09%)
S&P 500: 2,847.60, +7.00 (+0.25%)
NYSE Composite: 12,409.54, +41.49 (+0.34%)
Interesting is the idea that Wednesday's selloff was not met with more panic in the media and by the general public. Stocks have been volatile since October of last year, so the possibility that people are zoned out from the near-constant drubbing and recovery is real.
People should actually care that their college retirement funds are at so much risk in stocks, but that doesn't seem to be the case among the 401K crowd. Getting used to uncertainty is a kind of Stockholm syndrome that is inimitable to the Wall Street casino. The general public may get agitated more over mass shootings, tweets by the president, or a bad call in an NFL game, but when it comes to the money betting on their futures, they are sheepish.
Maybe that's a good thing when talking about market noise, but an 800-point drop on the Dow is something that shouldn't be ignored or overlooked. There are damn good reasons stocks get hammered, and even passive investors should express at least a modicum of concern.
Be that as it may, Thursday was more of the noisy variety, though most other markets - bonds, commodities, futures, FX - were being bounced around pretty vigorously, especially treasury bonds, where the 10-year-note continues to fall, reaching for all-time lows.
The 10-year is hovering in the 1.47 - 1.65 range. The all-time low yield on the benchmark 10-year was 1.375, on July 5, 2016. Anybody wearing a thinking cap clearly sees where this recent decline is headed. With now $16 trillion in bonds yielding negative returns globally, US treasuries stick out like sore thumbs. In the race to the bottom, the 10-year will fall below the record low yield. It's simply a matter of time. Eventually, US bonds will likely carry negative yields as the global financial system, rescued by central banks in 2008-09, completely falls apart over the next three to five years.
Money is dying. Fiat money will die quite painfully.
At the Close, Thursday, August 15, 2019:
Dow Jones Industrial Average: 25,579.39, +99.97 (+0.39%)
NASDAQ: 7,766.62, -7.32 (-0.09%)
S&P 500: 2,847.60, +7.00 (+0.25%)
NYSE Composite: 12,409.54, +41.49 (+0.34%)
Thursday, August 15, 2019
Stocks Crumble As Treasury Yield Curve Inverts; 30-year Tumbles Below 2%
It is certainly getting interesting in terms of global economics.
National currencies are in a race to the bottom, and Japan and the EU are winning.
With more than $14 trillion worth of bonds holding negative yields (you get back less than you invested), the world is looking like a place headed for disaster. European and Japanese bonds have the most negative yielding bonds. Their economies are not just heading for a recession, they're diving into depression territory.
There is no growth and that's not to blame on Trump's tariffs. In fact, the tariffs have little to nothing to do with the state of global trade. All economies are slowing. There's entirely too much uncertainty, piled atop too much malinvestment, coupled with an aging demographic, for which to promote any kind of meaningful growth.
By this time next year, expect to see at least six of the major developed nations in recession. The most likely candidates would be Japan, Germany, France, Italy, Spain, and Greece. Notably absent from the list are the US, Australia, Great Britain, and Canada. Since China claims to be still growing, they will admit only to slowing down, to about 3% growth, which might as well be a recession. India, which is not a developed nation (nor is China), is already a basket case.
These recessions will not end easily, and the US, Britain, and Canada will likely recede as well, but not quite as soon as the other nations, mostly European, because Brexit is going to change the dynamic to some degree. The EU is going to lose Britain as a trading partner come October 31. That is a near certainty and long overdue.
The US, Australia, and Canada will sign agreements with Britain to continue trade on a reasonable, fair basis. Europe will be shut out of any such agreement, due to their unwillingness to allow Britain an orderly exit for some three years running. The genii in the EU parliament have made their beds and will have to sleep in them. The populations of the EU countries should rightly riot since EU governance, in conjunction with their national leaders have sold them down the proverbial river via lax immigration standards and horrible economic policies.
In the end - though it may take some time - the EU will dissolve, disintegrate. It may take war, or it may take anger from the Greeks, Spanish, Irish or Italians to tip the EU contract overboard, but it will happen.
For the present, however, the world is focused on stocks and bonds, and stocks are not faring well. Wednesday's disaster was the worst trading day of 2019, rivaling some of the hours of last December.
With a global recession looming, investors may be rushing the exits at various stages over the coming months. Adding to the malaise is the upcoming US elections, whereby strident Democrats seek to unseat Mr. Trump. None have shown the qualities to lead or offer any reasonable path to a stable future. Trump should rightly win in a landslide.
With that, the 30-year bond became the latest victim of upside-down economics and the flight to safety, dipping below 2.00% in yield for the first time EVER. The entire treasury curve is now not only yielding less than two percent, it is inverted, and all of it is yielding lower returns than the effective overnight federal funds rate (2.11%).
We are witnessing the death of fiat money in real time. In the meantime, look for a short-lived relief rally which could extend through the rest of August. Real selling should commence after Labor Day.
At the Close, Wednesday, August 14, 2019:
Dow Jones Industrial Average: 25,479.42, -800.49 (-3.05%)
NASDAQ: 7,773.94, -242.42 (-3.02%)
S&P 500: 2,840.60, -85.72 (-2.93%)
NYSE Composite: 12,368.05, -356.32 (-2.80%)
National currencies are in a race to the bottom, and Japan and the EU are winning.
With more than $14 trillion worth of bonds holding negative yields (you get back less than you invested), the world is looking like a place headed for disaster. European and Japanese bonds have the most negative yielding bonds. Their economies are not just heading for a recession, they're diving into depression territory.
There is no growth and that's not to blame on Trump's tariffs. In fact, the tariffs have little to nothing to do with the state of global trade. All economies are slowing. There's entirely too much uncertainty, piled atop too much malinvestment, coupled with an aging demographic, for which to promote any kind of meaningful growth.
By this time next year, expect to see at least six of the major developed nations in recession. The most likely candidates would be Japan, Germany, France, Italy, Spain, and Greece. Notably absent from the list are the US, Australia, Great Britain, and Canada. Since China claims to be still growing, they will admit only to slowing down, to about 3% growth, which might as well be a recession. India, which is not a developed nation (nor is China), is already a basket case.
These recessions will not end easily, and the US, Britain, and Canada will likely recede as well, but not quite as soon as the other nations, mostly European, because Brexit is going to change the dynamic to some degree. The EU is going to lose Britain as a trading partner come October 31. That is a near certainty and long overdue.
The US, Australia, and Canada will sign agreements with Britain to continue trade on a reasonable, fair basis. Europe will be shut out of any such agreement, due to their unwillingness to allow Britain an orderly exit for some three years running. The genii in the EU parliament have made their beds and will have to sleep in them. The populations of the EU countries should rightly riot since EU governance, in conjunction with their national leaders have sold them down the proverbial river via lax immigration standards and horrible economic policies.
In the end - though it may take some time - the EU will dissolve, disintegrate. It may take war, or it may take anger from the Greeks, Spanish, Irish or Italians to tip the EU contract overboard, but it will happen.
For the present, however, the world is focused on stocks and bonds, and stocks are not faring well. Wednesday's disaster was the worst trading day of 2019, rivaling some of the hours of last December.
With a global recession looming, investors may be rushing the exits at various stages over the coming months. Adding to the malaise is the upcoming US elections, whereby strident Democrats seek to unseat Mr. Trump. None have shown the qualities to lead or offer any reasonable path to a stable future. Trump should rightly win in a landslide.
With that, the 30-year bond became the latest victim of upside-down economics and the flight to safety, dipping below 2.00% in yield for the first time EVER. The entire treasury curve is now not only yielding less than two percent, it is inverted, and all of it is yielding lower returns than the effective overnight federal funds rate (2.11%).
We are witnessing the death of fiat money in real time. In the meantime, look for a short-lived relief rally which could extend through the rest of August. Real selling should commence after Labor Day.
At the Close, Wednesday, August 14, 2019:
Dow Jones Industrial Average: 25,479.42, -800.49 (-3.05%)
NASDAQ: 7,773.94, -242.42 (-3.02%)
S&P 500: 2,840.60, -85.72 (-2.93%)
NYSE Composite: 12,368.05, -356.32 (-2.80%)
Wednesday, August 14, 2019
Stocks Rally On Trump Tariff Turnback; PMs Slammed, Bonds Not Buying It As Curve Inverts
Tuesday's miraculous stock market rally was fueled by the silliest of news.
The US Trade Representative (USTR), led by Robert E. Lighthizer, announced the delay of some of the proposed tariffs to be imposed upon China come September 1, rolling back the date on some consumer-sensitive items to December 15.
The government also mentioned that trade reps from both countries would speak by phone in the near future.
Thus, stocks were off to the races, having been given a big, fat one to knock out of the park.
Obviously, such news only makes for one-day wonders on Wall Street and an opportunity to smack down real money - gold and silver - in the process. Precious metals had extended their rallies and were soaring overnight. Traders in the futures complex felt best to sell, all at once, apparently.
Meanwhile, short-dated treasuries were being whipsawed, with the yield on the 2-year note rising from 1.58% to 1.66%, while the 10-year note gained a smaller amount, the yield rising from 1.65% to 1.68%.
Overnight, as Tuesday turned to Wednesday in the US, the two-year yield briefly surpassed that of the 10-year by one basis point. This marks the first time the 2s-10s have inverted since 2005. Because such an inversion almost always indicates imminent recession, this spurred headlines across the financial media, with Yahoo Finance screaming in all caps, YIELD CURVE INVERTS.
One shouldn't get too excited about this startling, yet widely-anticipated event. Each of the last seven recessions (dating back to 1969) were preceded by the 10-year falling below the 2-year, but in the most recent instance - December 27, 2005 - the recession didn't actually get underway until the third quarter of 2007, as precursor of the Great Financial Crisis (GFC). The last time there was an inverted 2s-10s yield curve was May 2007.
Naturally, haters of President Donald J. Trump are enthusiastically cheering for a recession prior to the 2020 elections, and they may get their wish. Stocks have been running on fumes for about 18 months, a bear market indicated by Dow Theory as far back as April 9, 2018.
The onset of recession, after the first instance of the 2s-10s inversion, normally occurs eight to 24 months hence.
With the hopes of Democrats taking back the White House riding on anything from Russian election interference to trade wars with China to recession, the leftists are pushing on various strings, hoping for something - anything - to trip up the celebrity president.
They have a 15-month lead time on recession, so their chances are about 50/50. If the recession occurs after the election, which Donald J. Trump will almost surely win, they may conclude that having a recession in ones' second term is an impeachable offense.
This story is developing, so watch something else.
[sarcasm noted]
The US Trade Representative (USTR), led by Robert E. Lighthizer, announced the delay of some of the proposed tariffs to be imposed upon China come September 1, rolling back the date on some consumer-sensitive items to December 15.
The government also mentioned that trade reps from both countries would speak by phone in the near future.
Thus, stocks were off to the races, having been given a big, fat one to knock out of the park.
Obviously, such news only makes for one-day wonders on Wall Street and an opportunity to smack down real money - gold and silver - in the process. Precious metals had extended their rallies and were soaring overnight. Traders in the futures complex felt best to sell, all at once, apparently.
Meanwhile, short-dated treasuries were being whipsawed, with the yield on the 2-year note rising from 1.58% to 1.66%, while the 10-year note gained a smaller amount, the yield rising from 1.65% to 1.68%.
Overnight, as Tuesday turned to Wednesday in the US, the two-year yield briefly surpassed that of the 10-year by one basis point. This marks the first time the 2s-10s have inverted since 2005. Because such an inversion almost always indicates imminent recession, this spurred headlines across the financial media, with Yahoo Finance screaming in all caps, YIELD CURVE INVERTS.
One shouldn't get too excited about this startling, yet widely-anticipated event. Each of the last seven recessions (dating back to 1969) were preceded by the 10-year falling below the 2-year, but in the most recent instance - December 27, 2005 - the recession didn't actually get underway until the third quarter of 2007, as precursor of the Great Financial Crisis (GFC). The last time there was an inverted 2s-10s yield curve was May 2007.
Naturally, haters of President Donald J. Trump are enthusiastically cheering for a recession prior to the 2020 elections, and they may get their wish. Stocks have been running on fumes for about 18 months, a bear market indicated by Dow Theory as far back as April 9, 2018.
The onset of recession, after the first instance of the 2s-10s inversion, normally occurs eight to 24 months hence.
With the hopes of Democrats taking back the White House riding on anything from Russian election interference to trade wars with China to recession, the leftists are pushing on various strings, hoping for something - anything - to trip up the celebrity president.
They have a 15-month lead time on recession, so their chances are about 50/50. If the recession occurs after the election, which Donald J. Trump will almost surely win, they may conclude that having a recession in ones' second term is an impeachable offense.
This story is developing, so watch something else.
[sarcasm noted]
Monday, August 12, 2019
Far From Ordinary Times For National Economies
Empires rise and fall. Nations traverse through periods of feast and famine, disputes with other nations, sometimes wars, and economic booms and busts. History is rife with stories detailing the life and times of nations and their leaders.
The vast majority of nations today face conditions that are far from normal.
There are at least three major migrations taking place, Africans to Europe, Chinese to Africa, and South Americans to North America. These are disruptive events, not only for the individuals involved but for the entire populations of the nations affected. Changes are gradual, mostly, but the mundane can be cracked by atrocities, absurdities and maladjustments committed by migrants in the clash of cultures.
Such conditions are prevalent in Europe and the United States, with migration reaching epidemic proportions. Indeed, President Trump himself calls the illegal immigration at the southern US border an "invasion." He is not wrong. The United States was built on the back of immigrants - legal ones - whose individual efforts and respect for their fellows built the greatest nation on Earth.
Illegal immigration is challenging the normative behavior of well-established citizens. According to certain left-leaning politicians and a corrupted media, illegal immigrants should receive free health care, free schooling, and largely, freedom from gainful employment. Ordinary, established US citizens do not receive such largesse, nor should they. Nor should the illegal entrants, who have violated our borders, broken our laws and flaunted the lifestyles and even the national flags of whence they came.
Such activity is largely disruptive to the fine working condition of a nation and the United States has been building to this state of affairs for more than 40 years. Estimates of people living in the US illegally range from 11 million to as many as 60 million people. The higher end of that range is probably closest to the truth, which is why immigrants - mostly the illegal ones - disrespect US laws, commit crimes, and take advantage of an overly generous social framework and increasingly undisciplined judicial process.
The condition in many European countries is far worse, where theft, rape, and other human crimes are committed with impunity. Often, if an immigrant is accused of crime, there exists no punishment. The system feeds upon itself and eventually fails to protect the national culture.
That is not all. Every nation on earth is controlled economically by an unelected elite, otherwise know as a central bank. In Europe, where the financial condition is dire, all nations on the continent are controlled by one central bank, the ECB. Nations have usurped their right to issue currency, having been overwhelmed by the collectivist desires of the European Union. The ECB issues fiat currency, in the form of a counterfeit euro, bolstered most recently by negative interest rates because the system is a fraud and it imploded over 10 years ago, during the Great Financial Crisis. The global central banks added untold amounts of liquidity, but it will never be enough because the crisis is one not of liquidity, but of solvency. All central banks create currency out of thin air, charge interest for its use, and, via the magic of fractional reserve lending, multiply the amount of currency in circulation by ghastly amounts.
The system is broken and will remain broken until it is completely rejected by the various populaces which employ it. That moment in time is unknowable, but it is inevitable.
There is more.
Great Britain, wise enough to keep their currency - the pound - national in nature, is attempting to exit the EU, but has been met with resistance three years since a national referendum preferred exiting, or, in common parlance, Brexit.
This is a further disruption to the status quo, and the elites will have none of it.
President Donald J. Trump, of the United States, foments more radical departures, not the least of which being his penchant for fair trade via tariffs. For three decades, the globalists have promulgated their "free trade" jingoism, which is commonly broken, cheated upon, corrupted, deceitful, unequal, and decrepit. Global trade should well collapse, and if President Trump's tariffs are the agent of change, all the better.
Thus, these days are far from normal. Superficially, people go about their business as if nothing is brewing beneath the casual calm. There will be a shock, probably multiple shocks, similar to, and many of them larger than the events of 2007-2009.
How long the politicians, bankers, and the media can keep a lid on the calamity that is bubbling up below, is anyone's guess, but their time is running short. Currencies will collapse, nations will fall, there will be wars.
It would pay to keep a sharp eye on one's assets, hard and soft. Anything that is not well-protected can be stolen away in a flash. Consider the number of security breaches at financial institutions as warnings. The money is unsafe. Hard assets are safer, but must be protected, defended.
All of this is frighteningly real and happening at breakneck speed. The usual media sources will not tell you the truth. You must find it on your own.
Ten years is a long time for the central banks and their friends to keep the spinning plates of a corrupt, defunct global financial construct from experiencing inertia and crashing to the floor, shattering into millions of tiny, unrecoverable pieces.
The spinning will end. Everything will change.
At the Close, Monday, August 12, 2019:
Dow Jones Industrial Average: 25,897.71, -389.73 (-1.48%)
NASDAQ: 7,863.41, -95.73 (-1.20%)
S&P 500: 2,883.09, -35.56 (-1.22%)
NYSE Composite: 12,586.24, -162.18 (-1.27%)
The vast majority of nations today face conditions that are far from normal.
There are at least three major migrations taking place, Africans to Europe, Chinese to Africa, and South Americans to North America. These are disruptive events, not only for the individuals involved but for the entire populations of the nations affected. Changes are gradual, mostly, but the mundane can be cracked by atrocities, absurdities and maladjustments committed by migrants in the clash of cultures.
Such conditions are prevalent in Europe and the United States, with migration reaching epidemic proportions. Indeed, President Trump himself calls the illegal immigration at the southern US border an "invasion." He is not wrong. The United States was built on the back of immigrants - legal ones - whose individual efforts and respect for their fellows built the greatest nation on Earth.
Illegal immigration is challenging the normative behavior of well-established citizens. According to certain left-leaning politicians and a corrupted media, illegal immigrants should receive free health care, free schooling, and largely, freedom from gainful employment. Ordinary, established US citizens do not receive such largesse, nor should they. Nor should the illegal entrants, who have violated our borders, broken our laws and flaunted the lifestyles and even the national flags of whence they came.
Such activity is largely disruptive to the fine working condition of a nation and the United States has been building to this state of affairs for more than 40 years. Estimates of people living in the US illegally range from 11 million to as many as 60 million people. The higher end of that range is probably closest to the truth, which is why immigrants - mostly the illegal ones - disrespect US laws, commit crimes, and take advantage of an overly generous social framework and increasingly undisciplined judicial process.
The condition in many European countries is far worse, where theft, rape, and other human crimes are committed with impunity. Often, if an immigrant is accused of crime, there exists no punishment. The system feeds upon itself and eventually fails to protect the national culture.
That is not all. Every nation on earth is controlled economically by an unelected elite, otherwise know as a central bank. In Europe, where the financial condition is dire, all nations on the continent are controlled by one central bank, the ECB. Nations have usurped their right to issue currency, having been overwhelmed by the collectivist desires of the European Union. The ECB issues fiat currency, in the form of a counterfeit euro, bolstered most recently by negative interest rates because the system is a fraud and it imploded over 10 years ago, during the Great Financial Crisis. The global central banks added untold amounts of liquidity, but it will never be enough because the crisis is one not of liquidity, but of solvency. All central banks create currency out of thin air, charge interest for its use, and, via the magic of fractional reserve lending, multiply the amount of currency in circulation by ghastly amounts.
The system is broken and will remain broken until it is completely rejected by the various populaces which employ it. That moment in time is unknowable, but it is inevitable.
There is more.
Great Britain, wise enough to keep their currency - the pound - national in nature, is attempting to exit the EU, but has been met with resistance three years since a national referendum preferred exiting, or, in common parlance, Brexit.
This is a further disruption to the status quo, and the elites will have none of it.
President Donald J. Trump, of the United States, foments more radical departures, not the least of which being his penchant for fair trade via tariffs. For three decades, the globalists have promulgated their "free trade" jingoism, which is commonly broken, cheated upon, corrupted, deceitful, unequal, and decrepit. Global trade should well collapse, and if President Trump's tariffs are the agent of change, all the better.
Thus, these days are far from normal. Superficially, people go about their business as if nothing is brewing beneath the casual calm. There will be a shock, probably multiple shocks, similar to, and many of them larger than the events of 2007-2009.
How long the politicians, bankers, and the media can keep a lid on the calamity that is bubbling up below, is anyone's guess, but their time is running short. Currencies will collapse, nations will fall, there will be wars.
It would pay to keep a sharp eye on one's assets, hard and soft. Anything that is not well-protected can be stolen away in a flash. Consider the number of security breaches at financial institutions as warnings. The money is unsafe. Hard assets are safer, but must be protected, defended.
All of this is frighteningly real and happening at breakneck speed. The usual media sources will not tell you the truth. You must find it on your own.
Ten years is a long time for the central banks and their friends to keep the spinning plates of a corrupt, defunct global financial construct from experiencing inertia and crashing to the floor, shattering into millions of tiny, unrecoverable pieces.
The spinning will end. Everything will change.
At the Close, Monday, August 12, 2019:
Dow Jones Industrial Average: 25,897.71, -389.73 (-1.48%)
NASDAQ: 7,863.41, -95.73 (-1.20%)
S&P 500: 2,883.09, -35.56 (-1.22%)
NYSE Composite: 12,586.24, -162.18 (-1.27%)
WEEKEND WRAP: Another Shaky Week for Stocks; Bond, Gold, Silver Rallies Extend
As the global ponzi turns, the week now left behind shares a trails of tears and cheers, sadness for equity holders, joyous celebrations in the bond pits as US rates re-approach the zero-bound (despite the Fed's reluctance).
While stocks bounced like a rubber ball on a string, the losses were limited by some mysterious dip-buying mid-week as news flow changed not just by the day, but seemingly by the hour.
At the same time, the bond market in the US was mimicking Japan and Europe, grinding yields lower, with the 10-year note closing out the week at 1.74%, which is lower than the 1,2,3,6-month and one-year yields, making the case for an already inverted yield curve. The 2-year continues to be resilient, though one has to wonder how much longer it can hold the narrow margin below the 10-year, which is currently a scant 11 basis points (1.63%).
Precious metals have also benefitted from global uncertainty, with gold hovering around $1500 and silver teasing the $17.00 mark. Both are significantly higher from lows spotted in late May. The ascent of the metals has been swift and without any major pullback. If the metals are in an overbought condition, they certainly aren't showing any signs of it. As usual, however, the persistence of central banks to keep "real money" on its heels is probably keeping PMs from going vertical. That story seems to have no end, except that a hyperbolic rise in gold and silver would signal the death of not just the US dollar, but probably all fiat currencies in use by every nation, developed or not. After fiat finds its proper value (ZERO), barter will follow. It's a natural progression. The central question, as has been for centuries, is, "what do you give for a live chicken?"
Though it may appear that the global economy is about to implode, it's useful to be reminded that the Great Financial Crisis (GFC) is well beyond its 10th anniversary, thanks to massive infusions of counterfeit fiat ladled out to the unwashed by the BOJ, FRS, BOE, SNB, PBOC, ECB. Spelling out the acronyms somehow yields negative interest rates and the death of money. Nobody knows when this will occur, but it will, and the effects will devastate many. Think billions of people, not just millions.
In the interim, as the world is roiled by international, geopolitical events, the wall of worry is being built upon the current crises (not in any particular order):
That's more than enough to keep traders up at night and on their collective toes during the days ahead.
Incidentally, all of this anguish has shielded the markets somewhat from a less-than-rousing second quarter earnings season, even as the corporates float through the third quarter. The Dow Transports re-entered correction territory two weeks past week and extended it last week with the worst showing of all the US indices, by far.
Recession is almost a certainly, though it needn't be particularly horrible for the US, since employment is still strong, despite weakening earnings in the large cap corporate sector. Since the US is a very big country, different areas will be affected in different ways. Areas of the country that have been growing (most of the South, Midwest and Pacific Northwest) will continue to do so, albeit at a slower pace. Those areas in decline (Northeast cities, California, rural enclaves) will see conditions worsen. Those areas in decline will continue to do so through good times and bad and some may be exacerbated by outflows of high income individuals due to SALT taxes. It's a big country, a panacea for speculators with long time horizons.
At the Close, Friday, August 9:
Dow Jones Industrial Average: 26,287.44, -90.76 (-0.34%)
NASDAQ: 7,959.14, -80.02 (-1.00%)
S&P 500: 2,918.65, -19.44 (-0.66%)
NYSE Composite: 12,748.42, -80.38 (-0.63%)
For the Week:
Dow Industrials: -197.57 (-0.75%)
Dow Jones Transports: -167.22 (-1.61%)
NASDAQ: -44.93 (-0.56%)
S&P 500: -13.40 (-0.46%)
NYSE Composite: -91.08 (-0.71%)
While stocks bounced like a rubber ball on a string, the losses were limited by some mysterious dip-buying mid-week as news flow changed not just by the day, but seemingly by the hour.
At the same time, the bond market in the US was mimicking Japan and Europe, grinding yields lower, with the 10-year note closing out the week at 1.74%, which is lower than the 1,2,3,6-month and one-year yields, making the case for an already inverted yield curve. The 2-year continues to be resilient, though one has to wonder how much longer it can hold the narrow margin below the 10-year, which is currently a scant 11 basis points (1.63%).
Precious metals have also benefitted from global uncertainty, with gold hovering around $1500 and silver teasing the $17.00 mark. Both are significantly higher from lows spotted in late May. The ascent of the metals has been swift and without any major pullback. If the metals are in an overbought condition, they certainly aren't showing any signs of it. As usual, however, the persistence of central banks to keep "real money" on its heels is probably keeping PMs from going vertical. That story seems to have no end, except that a hyperbolic rise in gold and silver would signal the death of not just the US dollar, but probably all fiat currencies in use by every nation, developed or not. After fiat finds its proper value (ZERO), barter will follow. It's a natural progression. The central question, as has been for centuries, is, "what do you give for a live chicken?"
Though it may appear that the global economy is about to implode, it's useful to be reminded that the Great Financial Crisis (GFC) is well beyond its 10th anniversary, thanks to massive infusions of counterfeit fiat ladled out to the unwashed by the BOJ, FRS, BOE, SNB, PBOC, ECB. Spelling out the acronyms somehow yields negative interest rates and the death of money. Nobody knows when this will occur, but it will, and the effects will devastate many. Think billions of people, not just millions.
In the interim, as the world is roiled by international, geopolitical events, the wall of worry is being built upon the current crises (not in any particular order):
- The Epstein "suicide"
- Honk Hong protests
- Brexit
- Trade War and tariffs
- Middle East tensions
- Mass Shootings, Gun Control Legislation, Red Flaw Laws (won't happen)
- 2020 presidential election hijinks
- Ongoing migrations (Africa to Europe, South America to North America, China to Africa)
That's more than enough to keep traders up at night and on their collective toes during the days ahead.
Incidentally, all of this anguish has shielded the markets somewhat from a less-than-rousing second quarter earnings season, even as the corporates float through the third quarter. The Dow Transports re-entered correction territory two weeks past week and extended it last week with the worst showing of all the US indices, by far.
Recession is almost a certainly, though it needn't be particularly horrible for the US, since employment is still strong, despite weakening earnings in the large cap corporate sector. Since the US is a very big country, different areas will be affected in different ways. Areas of the country that have been growing (most of the South, Midwest and Pacific Northwest) will continue to do so, albeit at a slower pace. Those areas in decline (Northeast cities, California, rural enclaves) will see conditions worsen. Those areas in decline will continue to do so through good times and bad and some may be exacerbated by outflows of high income individuals due to SALT taxes. It's a big country, a panacea for speculators with long time horizons.
At the Close, Friday, August 9:
Dow Jones Industrial Average: 26,287.44, -90.76 (-0.34%)
NASDAQ: 7,959.14, -80.02 (-1.00%)
S&P 500: 2,918.65, -19.44 (-0.66%)
NYSE Composite: 12,748.42, -80.38 (-0.63%)
For the Week:
Dow Industrials: -197.57 (-0.75%)
Dow Jones Transports: -167.22 (-1.61%)
NASDAQ: -44.93 (-0.56%)
S&P 500: -13.40 (-0.46%)
NYSE Composite: -91.08 (-0.71%)
Friday, August 9, 2019
Stocks Jittery On Trade, Economies, Recession
Still on the road...
Watching the various global indices, it's obvious that the markets are quite jittery. A single headline can move stocks up or down, depending on the news. It's very knee-jerk right now and not a good time to be taking positions, unless you're short some China-US trade and well-hedged.
The US and China are to going to work out their differences right away, so it's a good bet that President Trump's promised 10% tariffs on a wider range of imports will come to bear on September 1, which is just three weeks away.
In the meantime, European economies are looking very weak, with some countries on the verge of recession. Britain already announced a second quarter slowdown and more should be forthcoming from various parts of the continent. If Germany falls into recession, there will be a bloodbath in stocks and bonds yields could collapse even further into the negative.
All this suggests a global rout in the not-so-distant future.
It's been a hellish two weeks and Friday, August 9, is shaping up to be deadly for the long side.
At the Close, Thursday, August 8, 2019:
Dow Jones Industrial Average: 26,378.19, +371.09 (+1.43%)
NASDAQ: 8,039.16, +176.33 (+2.24%)
S&P 500: 2,938.09, +54.11 (+1.88%)
NYSE Composite: 12,828.82, +195.82 (+1.55%)
Tuesday, August 6, 2019
Panic Sets in as US-China Trade Spat Intensifies
On the road, so this will be a drive-by posting...
On Monday, stocks suffered their worst session of 2019 after China, without warning, devalued their currency, the yuan, in response to US demands for increased tariffs on imports.
President Trump announced that he would tack on a 10% tariff on a variety of Chinese goods - many of them consumer staples - on September first. The response from China was not entirely unexpected, though it took Wall Street and stock traders around the globe, mostly by surprise.
Intraday, the Dow was lower by more than 900 points, but rallied slightly into the close. It was still one of the worst days in recent memory for all US indices.
As Tuesday's trading approaches, US futures have turned positive as China pegged its currency at a higher level overnight, to everyone's relief.
While Monday's panic may appear to be a one-off, the trade war continues to roil markets on a regular basis. Until the two major trading partners agree to play nice and work out some kind of long-term deal, these kinds of shock events will continue to plague investors.
At the close, Monday, August 5, 2019:
Dow Jones Industrial Average: 25,717.74, -767.27 (-2.90%)
NASDAQ: 7,726.04, -278.03 (-3.47%)
S&P 500: 2,844.74, -87.31 (-2.98%)
NYSE Composite: 12,497.31, -342.20 (-2.67%)
Monday, August 5, 2019
WEEKEND WRAP: Worst Week Of Year For Stocks
Stocks were pretty well hammered this week, as shown in the figures below.
What did them in was not that the FOMC eased for the first time since 2008, but that it was only 25 basis points. Everybody, including President Trump, was looking for a 50 basis point cut, and they didn't get it, so market participants, already concerned at the ongoing tariff war with China, sold the news (after buying the rumor).
The drop was hardly anything to get excited over as all markets were down less than four percent. The coming week may outdo this last one however, as China has upped the ante Monday by devaluing the yuan (further proof that the Chinese are currency manipulators, along with everything else we don't like about them) and halting US agricultural imports.
These developments are very bad for a jittery market and this one has a case of the DTs. Watch for either a cascading, waterfall type event or some intervention by our friends at the NY Fed, those hale and hearty fellows that saved the Dow with a 200-point boost in the final half hour of trading on Friday. They're likely to be quite busy buying stocks again this week.
Keep a close eye on the divergence between big caps and small-to-mid caps. The smaller stocks are in danger of entering correction or even bear markets for some. They're not supported by the funds nor the fed, so they may be the first dominoes to fall in a crisis, which is entirely possible at this juncture.
Since the federal government has already put in place a moratorium on the debt ceiling, don't expect a September swoon, as we've seen so often when the government can't agree on a budget. With the agreement signed last week, the Trump administration and the congress has committed to spending well beyond whatever is allocated or budgeted. A trillion dollar deficit has now become the norm, though tariff income may begin to whittle away at that (there is some silver lining to the tariffs).
Generally, markets are looking quite unstable and another 3-4% decline could be in the cards. There are few catalysts for upside development. Gold and silver are not going anywhere, despite the howls coming from the Goldbugs and Silver Surfers. The rally has topped out. There may be a little movement to the upside, but it won't be allowed to develop into anything outstanding. When gold goes past $1500 and silver sells for more than $18 an ounce, that may be the time to change one's outlook.
WTI crude is going to end up in the $40s per barrel price by October, if not sooner. There's a massive glut and the economy is by no means overheating. Besides, nobody in the oil business wants to correctly identify the impact of solar, wind, increased efficiency in auto engines, or conservation by US drivers (who are getting older by the day and thus drive less and less).
The world is not going to come to an end this week, but we may be treated to a preview of what it will look like. 2023 is the outlier.
BTW: The 10-year treasury note is likely to sink below 1.50% THIS YEAR. Good for bond sellers and debtors. There is no inflation than cannot be sidestepped with alternatives or smart shopping.
At the Close, Friday, August 2, 2019:
Dow Jones Industrial Average: 26,485.01, -98.41 (-0.37%)
NASDAQ: 8,004.07, -107.05 (-1.32%)
S&P 500: 2,932.05, -21.51 (-0.73%)
NYSE COMPOSITE: 12,839.51, -81.31 (-0.63%)
For the Week:
Dow: -707.44 (-2.60%)
Dow Transports: -402.24 (-3.73%)
NASDAQ: -326.14 (-3.92%)
S&P 500: -93.81 (-3.10%)
NYSE COMPOSITE: -396.00 (-2.99%)
What did them in was not that the FOMC eased for the first time since 2008, but that it was only 25 basis points. Everybody, including President Trump, was looking for a 50 basis point cut, and they didn't get it, so market participants, already concerned at the ongoing tariff war with China, sold the news (after buying the rumor).
The drop was hardly anything to get excited over as all markets were down less than four percent. The coming week may outdo this last one however, as China has upped the ante Monday by devaluing the yuan (further proof that the Chinese are currency manipulators, along with everything else we don't like about them) and halting US agricultural imports.
These developments are very bad for a jittery market and this one has a case of the DTs. Watch for either a cascading, waterfall type event or some intervention by our friends at the NY Fed, those hale and hearty fellows that saved the Dow with a 200-point boost in the final half hour of trading on Friday. They're likely to be quite busy buying stocks again this week.
Keep a close eye on the divergence between big caps and small-to-mid caps. The smaller stocks are in danger of entering correction or even bear markets for some. They're not supported by the funds nor the fed, so they may be the first dominoes to fall in a crisis, which is entirely possible at this juncture.
Since the federal government has already put in place a moratorium on the debt ceiling, don't expect a September swoon, as we've seen so often when the government can't agree on a budget. With the agreement signed last week, the Trump administration and the congress has committed to spending well beyond whatever is allocated or budgeted. A trillion dollar deficit has now become the norm, though tariff income may begin to whittle away at that (there is some silver lining to the tariffs).
Generally, markets are looking quite unstable and another 3-4% decline could be in the cards. There are few catalysts for upside development. Gold and silver are not going anywhere, despite the howls coming from the Goldbugs and Silver Surfers. The rally has topped out. There may be a little movement to the upside, but it won't be allowed to develop into anything outstanding. When gold goes past $1500 and silver sells for more than $18 an ounce, that may be the time to change one's outlook.
WTI crude is going to end up in the $40s per barrel price by October, if not sooner. There's a massive glut and the economy is by no means overheating. Besides, nobody in the oil business wants to correctly identify the impact of solar, wind, increased efficiency in auto engines, or conservation by US drivers (who are getting older by the day and thus drive less and less).
The world is not going to come to an end this week, but we may be treated to a preview of what it will look like. 2023 is the outlier.
BTW: The 10-year treasury note is likely to sink below 1.50% THIS YEAR. Good for bond sellers and debtors. There is no inflation than cannot be sidestepped with alternatives or smart shopping.
At the Close, Friday, August 2, 2019:
Dow Jones Industrial Average: 26,485.01, -98.41 (-0.37%)
NASDAQ: 8,004.07, -107.05 (-1.32%)
S&P 500: 2,932.05, -21.51 (-0.73%)
NYSE COMPOSITE: 12,839.51, -81.31 (-0.63%)
For the Week:
Dow: -707.44 (-2.60%)
Dow Transports: -402.24 (-3.73%)
NASDAQ: -326.14 (-3.92%)
S&P 500: -93.81 (-3.10%)
NYSE COMPOSITE: -396.00 (-2.99%)
Friday, August 2, 2019
Stocks Slammed As Trump Targets Tariffs At China; Gold Bid; Payrolls, Unemployment Steady
Stocks swooned for the second straight session after President Trump announced that he would be adding a 10% tariff on $300 billion of Chinese imports beginning September 1.
The president noted that China had backed down on previous commitments to purchase farm produce from US farmers and to stem the flow of fentanyl into the United States.
Markets reacted with the usual disfavor, erasing earlier gains and slumping deep into negative territory. Apparently, nothing can help the market disengage from negativity. Wednesday's 1/4-point easing of the federal funds rate caused a mini-crash and Thursday's small tariff hike sent dealers to the sell buttons.
On the same news, gold caught a tailwind, rising from a low of $1400 to nearly $1448 in just over seven hours. Silver also gained, but not nearly in the manner of gold. Silver was around $16.30 an ounce as US trading closed and has been trending lower early Friday morning.
WTI crude oil took a nosedive on Thursday, recording its worst one-day performance in four years, with futures dipping below $54 per barrel in late Thursday trading.
As US markets prepare for the final session of the week, Asian and European indices headed lower, with most of the major bourses down more than two percent. After European PMIs all showed contraction - and with the outlook for a "no deal" Brexit a real possibility by the end of October - traders on the continent are voting with their feet, leaving behind a wake of battered stock prices. Europe is most definitely headed for a recession soon, though a US recession is still not an apparent reality.
While the rest of the world struggles to maintain their economies, under the leadership of Donald Trump, the US appears to have a real advantage, the dollar strengthening while the bond market rallies. The US 10-year treasury blasted through the two percent line on Thursday, currently holding with a yield around 1.89%.
In breaking news, July non-farm payrolls came mostly in line with expectations at 164,000 new jobs added during the month. The unemployment rate held steady at 3.7% and year-over-year wages increased at a 3.2% rate.
Us stock futures are trending off their lows as the opening bell approaches.
At the close, Thursday, August 1, 2019:
Dow Jones Industrial Average: 26,583.42, -280.85 (-1.05%)
NASDAQ: 8,111.12, -64.30 (-0.79%)
S&P 500: 2,953.56, -26.82 (-0.90%)
NYSE COMPOSITE: 12,920.82, -145.78 (-1.12%)
Wednesday, July 31, 2019
Did You Fall For the Fakery? Fed Eases, Stocks Slide, Dollar Gains; Silver Overbought
Today, July 31, 2019, the FOMC of the Federal Reserve System cut the federal funds rate by 25 basis points, as expected.
What was unexpected was the response from the market, which stumbled badly on the news. It was a classic case of "buy the rumor, sell the news," herd mentality. The Fed did not have to cut rates, obviously, just as they were wrong to raise them every quarter by 25 basis points since December, 2015.
The Fed is still out in uncharted territory, unable to raise rates because the economy is just chugging along at less than three percent growth, which is fine, in reality. The trouble is that investors want more. They are chasing yield, but what they're really doing is pushing on a string, exacerbating an already overbought market at or near record highs.
Here's the truth of the matter:
The system broke in 2008 and it was not fixed, just patched up with lots of liquidity thanks to Uncle Sugars at the Fed, BoJ, PBOC, ECB, SNB.
Fiat is an arbitrary order. In other words, this is "money." It's not. Yen, euros, dollars are currency. The intrinsic value of all fiat is zero.
This fakery will continue until there's nothing left except mega-corporations, governments, central banks, and slaves (almost everybody).
Noting that we're phasing through a zombie economy, much like that of Japan, with an aging demographic, systemic debt problems, and myopic, corrupt governments worldwide, there is little the Fed or any central bank can do but to continue the fakery until the public is completely bereft of all assets. Then they will declare the global economy dead, start a new order, promise prosperity for everyone, and deliver a global depression.
There's no way around it. All developed nations are bankrupt. The central banks create money (actually, currency) out of thin air, sell it as debt to governments, at interest, collect their skim and enrich themselves. The central banks work for themselves, not the governments they shadily represent, nor the citizens who make use of the currency.
They have no way out. Government debts (the US is already $22 trillion behind) will never be repaid, so the central banks can only perpetuate the fraud until they can't.
As far as precious metals are concerned, they will continued to be whipped like a rented mule. The recent run-up was only a diversion, a ruse, designed to get more people to buy the stuff. Now, gold and silver will be sold off and the bankers will eventually accumulate at lower prices.
That is why I haven't changed my position or bought into the silver rally from $14.50 to $16.50 per ounce. The bulk of the move came about when the dollar was weakening. Now it is strengthening again, meaning you will buy less gold with the same amount of dollars. The math is simple.
All told, stocks are overbought. the metals are currently overbought, but not for long. Bonds have much more rally in them than may be evident superficially. The bond rally has been ongoing for 35 years and it's not going to stop here. The eventual end-point is negative rates, or NIRP (Negative Interest Rate Policy), as is the current regime in the rest of the world. More than $13 trillion in bonds are priced at negative yields, which tells much about the future prospects for developed nations (and semi-developed China and India).
I continue to be targeting silver for $12.35 by 2021 or sooner. If it goes above $20, that would be a shock and a sign that the global financial system is melting away faster than anyone thought, but it's not likely to happen.
The global economy is a train wreck in super-slow motion. It is unlikely to implode before 2021, so there is still time to prepare for TEOTWAWKI.
That is all for now. Good luck.
At The Close, Wednesday, July 31, 2019:
Dow Jones Industrial Average: 26,864.27, -333.75 (-1.23%)
NASDAQ: 8,175.42, -98.19 (-1.19%)
S&P 500: 2,980.38, -32.80 (-1.09%)
NYSE COMPOSITE: 13,066.60, -120.61 (-0.91%)
Tuesday, May 14, 2019
Blood on the Tracks: Transportation Average in Correction
It's been a rough month for transportation stocks and Monday's tumble sent the Dow Jones Transportation Average back into correction territory, a condition unnoticed by financial pundits who are supposed to be on top of such events.
Maybe it's because the transports - and the rest of the stock universe - has had a happy 2019 thus far, but the previous high referenced by the ^DJT dates back to September 14.
The S&P and NASDAQ set new all-time highs earlier this month, but the Industrials, like the Trannys, harken back to 2018. October 3 to be precise.
While the other indices took sizable hits on Monday, they are each down around five to six percent, but the transports have been taking it on the chin of late, their pronounced decline due, no doubt, to ongoing trade tensions with China. Since trade and transportation are so heavily intertwined, it doesn't take a mastermind to figure why the transports have been treated so harshly.
With the trade scenario likely to continue devolving, expect no relief in the transport sector. The next key points for the average is around 9900 (the October lows) and 8637 (late December). Should the transports continue their descent from here, expect the other indices to follow suit, which means the peals of panic will be loud and sustained.
This entire exercise in trade trolling will eventually work itself out and the Chinese are likely to end up on the losing side. As President Trump never fails to highlight, they've been winning for decades, and it's time to turn the tables, at least a little bit. It's not like the Chinese empire will return to the 18th century, though, because they've got trade tentacles everywhere. The US is seeking better terms, and they're almost certain to get them because China will be pragmatic. They will not risk losing power control over trade with just one country, even though that country is their biggest customer.
China will politely bow, the president will rightly claim a victory, stocks will be lower, but they will spring back, like they always do. President Trump's trade policies are disruptive, but, they will benefit US business interests in the long term. They're nothing to be panicked about and certainly aren't going to threaten the US economy in any grand fashion.
In the meantime, however, the transports and industrials are probably going to take a significant hit. Figure another 15-20% on the trannys and 10-15% downside for the indys.
Dow Jones Industrial Average: 25,324.99, -617.38 (-2.38%)
NASDAQ: 7,647.02, -269.92 (-3.41%)
S&P 500: 2,811.87, -69.53 (-2.41%)
NYSE Composite: 12,526.71, -261.43 -2.04%
Dow Jones Transportation Average: 10,305.85, -296.34 (-2.80%)
Maybe it's because the transports - and the rest of the stock universe - has had a happy 2019 thus far, but the previous high referenced by the ^DJT dates back to September 14.
The S&P and NASDAQ set new all-time highs earlier this month, but the Industrials, like the Trannys, harken back to 2018. October 3 to be precise.
While the other indices took sizable hits on Monday, they are each down around five to six percent, but the transports have been taking it on the chin of late, their pronounced decline due, no doubt, to ongoing trade tensions with China. Since trade and transportation are so heavily intertwined, it doesn't take a mastermind to figure why the transports have been treated so harshly.
With the trade scenario likely to continue devolving, expect no relief in the transport sector. The next key points for the average is around 9900 (the October lows) and 8637 (late December). Should the transports continue their descent from here, expect the other indices to follow suit, which means the peals of panic will be loud and sustained.
This entire exercise in trade trolling will eventually work itself out and the Chinese are likely to end up on the losing side. As President Trump never fails to highlight, they've been winning for decades, and it's time to turn the tables, at least a little bit. It's not like the Chinese empire will return to the 18th century, though, because they've got trade tentacles everywhere. The US is seeking better terms, and they're almost certain to get them because China will be pragmatic. They will not risk losing power control over trade with just one country, even though that country is their biggest customer.
China will politely bow, the president will rightly claim a victory, stocks will be lower, but they will spring back, like they always do. President Trump's trade policies are disruptive, but, they will benefit US business interests in the long term. They're nothing to be panicked about and certainly aren't going to threaten the US economy in any grand fashion.
In the meantime, however, the transports and industrials are probably going to take a significant hit. Figure another 15-20% on the trannys and 10-15% downside for the indys.
Dow Jones Industrial Average: 25,324.99, -617.38 (-2.38%)
NASDAQ: 7,647.02, -269.92 (-3.41%)
S&P 500: 2,811.87, -69.53 (-2.41%)
NYSE Composite: 12,526.71, -261.43 -2.04%
Dow Jones Transportation Average: 10,305.85, -296.34 (-2.80%)
Thursday, April 25, 2019
Dow Theory: Primary Bear Market with Reactionary Bull in Effect
Dow Theory has been around for more than 100 years and even in today's lightning-fast markets, Fed interventions, multiple tasing platforms and indices, it still serves investors well in determining primary and secondary trends over medium and longer-term horizons.
Even as the NASDAQ and S&P 500 made new highs on Tuesday, April 23 - and scampered back from them on Wednesday, the 24th - the Dow Jones Industrial Average remains technically in a bear market which began in October of 2018 and was confirmed by the Dow Jones Transports later in the month when the Trannys slipped below 10,000, bounced back from there but were clobbered all of December (as were the Industrials), putting in a low right around Christmas.
Since then, stocks have been on a tear, but the Transports and Industrials have stubbornly resisted making new all-time highs dating back to September of 2018 for the Trannys and the first week of October for the Industrials.
As the momentum of the new year and the "Trump economy," with an able assist from the Federal Reserve - which stopped its insistence on hiking the federal funds rate 25 basis points every quarter and also suspended its balance sheet roll-off - both indices are within hailing distance of all-time highs once again. They are tantalizingly close to extending what many consider to be the longest bull market in US history, despite Dow Theory standing in the way, saying, "no, the primary trend has changed."
The issue for investors and chart-watchers is whether the Bear that emerged late last year will persist in the face of solid economic data and healthy performances by individual stocks or fall victim to excessive speculation and high valuations. The Shiller CAPE ratio remains elevated, above levels seen in 1929 and 2008, though below the spasmodic bubble highs of 2000.
Neither proposition - new all-time highs or another retreat - offers particular pleasure. New highs would confirm that the bubble economics put in place following the 08-09 financial crisis are still in play, and there's ample evidence to support that view. A systemic breakdown - first a correction (10%), followed by a massive sell-off similar to what was witnessed in December of last year - would please nobody other than the most ardent short-sellers (and maybe the Democrat party, Trump haters and the mainstream media).
Of course, the Industrial and Transportation indices are exceedingly narrow, though they are far from being outdated. The 30 stocks on the Industrial Average and the 20 on the Transportation Index still manage to provide a compelling snapshot of the US big business economy. Understanding their primary and secondary trends goes a long way towards gauging the overall health of the US economy.
This is a time to pay them extra attention, as the next major move should provide timely insight to the years ahead. Friday's first estimate of first quarter GDP may spur a move in one direction or another as estimates have ranged as low as +0.9 to +2.8.
Anything over +2.2 is likely to be viewed positively in the current risk-happy environment. a reading under +1.6 would fan the flames of the bear campfire. The estimate is due out on Friday, April 26, at 8:30 am ET.
Even as the NASDAQ and S&P 500 made new highs on Tuesday, April 23 - and scampered back from them on Wednesday, the 24th - the Dow Jones Industrial Average remains technically in a bear market which began in October of 2018 and was confirmed by the Dow Jones Transports later in the month when the Trannys slipped below 10,000, bounced back from there but were clobbered all of December (as were the Industrials), putting in a low right around Christmas.
Since then, stocks have been on a tear, but the Transports and Industrials have stubbornly resisted making new all-time highs dating back to September of 2018 for the Trannys and the first week of October for the Industrials.
As the momentum of the new year and the "Trump economy," with an able assist from the Federal Reserve - which stopped its insistence on hiking the federal funds rate 25 basis points every quarter and also suspended its balance sheet roll-off - both indices are within hailing distance of all-time highs once again. They are tantalizingly close to extending what many consider to be the longest bull market in US history, despite Dow Theory standing in the way, saying, "no, the primary trend has changed."
The issue for investors and chart-watchers is whether the Bear that emerged late last year will persist in the face of solid economic data and healthy performances by individual stocks or fall victim to excessive speculation and high valuations. The Shiller CAPE ratio remains elevated, above levels seen in 1929 and 2008, though below the spasmodic bubble highs of 2000.
Neither proposition - new all-time highs or another retreat - offers particular pleasure. New highs would confirm that the bubble economics put in place following the 08-09 financial crisis are still in play, and there's ample evidence to support that view. A systemic breakdown - first a correction (10%), followed by a massive sell-off similar to what was witnessed in December of last year - would please nobody other than the most ardent short-sellers (and maybe the Democrat party, Trump haters and the mainstream media).
Of course, the Industrial and Transportation indices are exceedingly narrow, though they are far from being outdated. The 30 stocks on the Industrial Average and the 20 on the Transportation Index still manage to provide a compelling snapshot of the US big business economy. Understanding their primary and secondary trends goes a long way towards gauging the overall health of the US economy.
This is a time to pay them extra attention, as the next major move should provide timely insight to the years ahead. Friday's first estimate of first quarter GDP may spur a move in one direction or another as estimates have ranged as low as +0.9 to +2.8.
Anything over +2.2 is likely to be viewed positively in the current risk-happy environment. a reading under +1.6 would fan the flames of the bear campfire. The estimate is due out on Friday, April 26, at 8:30 am ET.
Thursday, April 11, 2019
Silver Is Testing $14/ounce Again; How Low Can It Go?
![Silver Technical chart [Kitco Inc.]](https://www.kitco.com/lfgif/ag0730lf_ma.gif) |
| Blue line=30 day MA; Green Line=200-day MA |
It's something of a relief to be able to write as I speak, discarding the strictures, stultification and distance of the third person.
That means I can mean what I say, say what I mean, directly, closing the space between me, and you, the reader (2nd person).
Enough semantics and style, for now. Let's get right to the subject matter.
Silver has long been a favorite investment of mine, though over the past number of years - since the heady days of 2010-11, when the price rose close to $50/ounce - it has been rather disappointing. My holdings did, however, manage to provide some relief against rising interest rates on credit cards in 2017 and 2018, as I was able to liquidate to cash and pay off the loan sharks otherwise known as banks and credit issuers.
Since my basis was right around $17/ounce and buyers paid a hefty (15-30%) premium on my offerings, I was actually able to cash out at a profit and still maintain something of a stash for future purposes.
As an aside, that's what investments are about. Generally, people don't hold assets for the sake of holding them, except, of course for precious metals, gems, art, and some real estate. Eventually, they want to convert to cash to spend on something else. In my case, cutting up a couple of credit cards which were obliging me with ungodly - and rising - interest rates was the purpose of some of my silver. The rest, I continue to hold as a store of value, even though that's still a questionable proposition.
As anyone who plays in the gold and silver markets already knows all too well, the metals have been squashed in recent years by central banks because the metals pose competition to fiat currencies. That's all right if one manages to ignore the Sprotts and Caseys of the world who insist with regularity that gold and silver are on the verge of a breakout. Nothing could be further from the truth.
Gold and silver have been in a slow, long, excruciating bear market since mid-2011. They have been and continue to be relentlessly beaten down in the speculative futures markets and they will continue to be for the foreseeable future.
![Silver Technical chart [Kitco Inc.]](https://www.kitco.com/lfgif/ag3650lf_ma.gif) |
| Blue line=30 day MA; Green Line=200-day MA |
The most recent bottom came in 2015, when silver struck out at $13.71 on December 14. In 2018, it approached that figure, but never quite made it, bottoming at $13.97 on the 14th of November. This year, the low was $15.025, on April 2.
With no bounce in the charts other than the usual 1-3% noise, silver is headed back in the
14s soon, likely within the next week. Stocks and first quarter earnings will be all the rage for the next three weeks, so there's no interest in shiny metals, presenting a tempting opportunity.
It might be prudent to avoid that temptation, because the commodity will have every opportunity to set a three-year low. Like any asset, the time to buy is when everybody else has given up. Silver may never again get to $48/ounce, but it's also likely that it will never again sell for $6 or $7, which was the norm in the 1990s, prior to the great awakening.
I do believe $12 or even $11 per ounce or lower is possible, and, if you're doing your investing right - buying small amounts on a set schedule - you may be able to dollar-cost average your way to a very low basis for your holdings. Of course, anybody who got in at $16 or $17 last year may still be buying right now, and nobody can blame them for lowering their basis.
What it will take to get silver to some more reasonable valuation - say $20-22 - is anybody's guess and a fool's game. Silver is a hedge and it's certainly better than paying 18% interest on credit cards or blowing your money on dinners out, vacations or other life-changing "experiences."
Having a vault full of 1, 10, and 100-ounce bars is likely to be a more life-changing, exceptional, and satisfying experience.
Per Aspera Ad Astra,
Fearless Rick
Coincidentally, this article on silver - by a (ahem) respected investment writer - popped up right as I was publishing mine. Of course, his conclusive approach is completely incorrect.
Wednesday, January 23, 2019
Burnout
Over the course of the Martin Luther King Jr. holiday weekend, I burned out.
I no longer had any interest in penning my "Weekend Wrap," as it has come to be known. The stock market was no longer of any interest to me. I didn't write my usual column, and, I didn't write my daily market commentary on Tuesday either.
It's not as if this was a sudden, knee-jerk reaction to anything. This has been brewing inside me for a long time. Obviously, I don't even care anymore to write in the third person, as has been the usual mode of this blog. It's just not important, just as money and markets aren't important, to me, at least.
Maybe money is important to you. Maybe the ups and downs of Wall Street matter to you, to your feelings of well being, to your existence. Money and markets are not existential prerogatives to me. Never have been. And now, they really don't matter at all.
I took an interest in stocks, bonds, money, and business when I was very young. At the age of six, I was intrigued by the small type in the newspaper displaying the gains and losses of big companies. To me, at such a tender age, the world of business and finance was a fantastic place populated by titans of industry, upstanding men of character and wisdom who employed their thinking and inventiveness to build fabulous engines of wealth. Such a fascination with money and business served me well along my path through adolescence and into adulthood. I conceived any number of business ideas, launched most, failed at many, until finally, by age 30, I found success in the newspaper business.
Perhaps the rude awakening to how business actually operated was where my burnout began and it just took a long time for me to realize it. I don't like the way business is conducted anymore. When I was in business - in the 80s, before the internet - an office, a phone, and a car were just about all one needed to get oneself on the path to riches. Almost all of the deals and ad sales I did were in person. A few were done by phone, but a follow-up personal visit was always required. I did business with people, in person. Try that today and you'll be laughed out of most places. It's an email, a text, a slick website and an electronic funds transfer. Done.
Wall Street, for all it's glamor and glory, is different now as well. A quarter point or half point gain - which used to be a big deal - is now 0.25 or 0.50, and it's nothing. Hedge funds, fake news, the Federal Reserve, and a host of unseen forces - algorithms, HFTs, ETFs, the PPT - have destroyed whatever was left of free markets and the "old Wall Street after the ravages of 9/11/2001. There's no Louis Rukeyser's "Wall Street Week" on Friday nights. Today it's CNBC, wall-to-wall, all the time, blaring the trumpets for the honorable necessity of owning stocks all day long, all night long.
It's boring, and most of the time, it's meaningless, or downright wrong. Stocks all move in tandem today. There's no science; only emotion, and mine is spent.
My personal short literary demise - which this is - may have more to do with anxiety over the fate of our nation than my dislike for the current rigors of finance. Everything is in chaos and there doesn't seem to be any end to it. Nor is there any sense to it, anymore. Tucker Carlson's tirade from a few weeks back encapsulates much of what I'm feeling, but, for me, there's more.
There has to be more than stocks. When I figure out what that is, I'll be back.
I no longer had any interest in penning my "Weekend Wrap," as it has come to be known. The stock market was no longer of any interest to me. I didn't write my usual column, and, I didn't write my daily market commentary on Tuesday either.
It's not as if this was a sudden, knee-jerk reaction to anything. This has been brewing inside me for a long time. Obviously, I don't even care anymore to write in the third person, as has been the usual mode of this blog. It's just not important, just as money and markets aren't important, to me, at least.
Maybe money is important to you. Maybe the ups and downs of Wall Street matter to you, to your feelings of well being, to your existence. Money and markets are not existential prerogatives to me. Never have been. And now, they really don't matter at all.
I took an interest in stocks, bonds, money, and business when I was very young. At the age of six, I was intrigued by the small type in the newspaper displaying the gains and losses of big companies. To me, at such a tender age, the world of business and finance was a fantastic place populated by titans of industry, upstanding men of character and wisdom who employed their thinking and inventiveness to build fabulous engines of wealth. Such a fascination with money and business served me well along my path through adolescence and into adulthood. I conceived any number of business ideas, launched most, failed at many, until finally, by age 30, I found success in the newspaper business.
Perhaps the rude awakening to how business actually operated was where my burnout began and it just took a long time for me to realize it. I don't like the way business is conducted anymore. When I was in business - in the 80s, before the internet - an office, a phone, and a car were just about all one needed to get oneself on the path to riches. Almost all of the deals and ad sales I did were in person. A few were done by phone, but a follow-up personal visit was always required. I did business with people, in person. Try that today and you'll be laughed out of most places. It's an email, a text, a slick website and an electronic funds transfer. Done.
Wall Street, for all it's glamor and glory, is different now as well. A quarter point or half point gain - which used to be a big deal - is now 0.25 or 0.50, and it's nothing. Hedge funds, fake news, the Federal Reserve, and a host of unseen forces - algorithms, HFTs, ETFs, the PPT - have destroyed whatever was left of free markets and the "old Wall Street after the ravages of 9/11/2001. There's no Louis Rukeyser's "Wall Street Week" on Friday nights. Today it's CNBC, wall-to-wall, all the time, blaring the trumpets for the honorable necessity of owning stocks all day long, all night long.
It's boring, and most of the time, it's meaningless, or downright wrong. Stocks all move in tandem today. There's no science; only emotion, and mine is spent.
My personal short literary demise - which this is - may have more to do with anxiety over the fate of our nation than my dislike for the current rigors of finance. Everything is in chaos and there doesn't seem to be any end to it. Nor is there any sense to it, anymore. Tucker Carlson's tirade from a few weeks back encapsulates much of what I'm feeling, but, for me, there's more.
There has to be more than stocks. When I figure out what that is, I'll be back.
Thursday, January 17, 2019
Fake News Bumps Stocks Higher (No Kidding!)
A Wall Street Journal story that Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback - later dismissed as false - sent stocks soaring on outrageous volume at 2:37 pm ET.
Any questions?
At the Close, Thursday, January 17, 2019:
Dow Jones Industrial Average: 24,370.10, +162.94 (+0.67%)
NASDAQ: 7,084.46, +49.77 (+0.71%)
S&P 500: 2,635.96, +19.86 (+0.76%)
NYSE Composite: 11,994.54, +86.93 (+0.73%)
Dow Jones Industrial Average January Scorecard:
Any questions?
At the Close, Thursday, January 17, 2019:
Dow Jones Industrial Average: 24,370.10, +162.94 (+0.67%)
NASDAQ: 7,084.46, +49.77 (+0.71%)
S&P 500: 2,635.96, +19.86 (+0.76%)
NYSE Composite: 11,994.54, +86.93 (+0.73%)
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
| 1/8/19 | 23,787.45 | +256.10 | +459.99 |
| 1/9/19 | 23,879.12 | +91.67 | +551.66 |
| 1/10/19 | 24,001.92 | +122.80 | +674.46 |
| 1/11/19 | 23,995.95 | -5.97 | +669.49 |
| 1/14/19 | 23,909.84 | -86.11 | +583.38 |
| 1/15/19 | 24,065.59 | +155.75 | +739.13 |
| 1/16/19 | 24,207.16 | +141.57 | +880.70 |
| 1/17/19 | 24,370.10 | +162.94 | +1043.64 |
Wednesday, January 16, 2019
Bank Stocks Boost Market; Vanguard's John Bogle Dead At 89
On the backs of earnings from Bank of American (BAC) and Goldman Sachs (GS), stocks took another step forward as January 2019 is beginning to look a lot like January 2018.
The Dow has already added 880 points in the new year, the NASDAQ, 400, the S&P 500, 110. Of the 11 trading sessions so far in 2019, the major indices have finished in positive territory in eight of them.
On the day, point gains were minimized in late selling, suggesting that the bank earnings were not out of the ordinary nor any indication that the economy was picking up speed, only that money needs to be parked somewhere, there's plenty of it sloshing around and BAC and GS had been beaten down recently.
In some sad news, John C. Bogle, the founder of the Vanguard Group and the inventor of the index fund, has died at age 89. Bogle was one of the great financial minds of our time and a very decent human being. His wisdom and wit will be missed.
Dow Jones Industrial Average January Scorecard:
At the Close, Wednesday, January 16, 2019:
Dow Jones Industrial Average: 24,207.16, +141.57 (+0.59%)
NASDAQ: 7,034.69, +10.86 (+0.15%)
S&P 500: 2,616.10, +5.80 (+0.22%)
NYSE Composite: 11,907.61, +38.93 (+0.33%)
Joke of the Day: NY junior Senator Kirsten Gillibrand announces Presidential bid. This woman barely qualifies as a Senator, elected to the seat vacated by Hillary Clinton, she was only viable as a shoe-in in one of the most liberal states in the country. Her list of accomplishments includes the shaming of Al Franken.
Gillibrand, in addition to praising voters last year that she would not run for president and would serve out her full term in the senate if re-elected (probably true, that), has often changed her views. When she was a member the House of Representatives in 2008, she received an "A" rating from the NRA for her positions on gun control. In 2018, the NRA gave her an "F."
The Dow has already added 880 points in the new year, the NASDAQ, 400, the S&P 500, 110. Of the 11 trading sessions so far in 2019, the major indices have finished in positive territory in eight of them.
On the day, point gains were minimized in late selling, suggesting that the bank earnings were not out of the ordinary nor any indication that the economy was picking up speed, only that money needs to be parked somewhere, there's plenty of it sloshing around and BAC and GS had been beaten down recently.
In some sad news, John C. Bogle, the founder of the Vanguard Group and the inventor of the index fund, has died at age 89. Bogle was one of the great financial minds of our time and a very decent human being. His wisdom and wit will be missed.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
| 1/8/19 | 23,787.45 | +256.10 | +459.99 |
| 1/9/19 | 23,879.12 | +91.67 | +551.66 |
| 1/10/19 | 24,001.92 | +122.80 | +674.46 |
| 1/11/19 | 23,995.95 | -5.97 | +669.49 |
| 1/14/19 | 23,909.84 | -86.11 | +583.38 |
| 1/15/19 | 24,065.59 | +155.75 | +739.13 |
| 1/16/19 | 24,207.16 | +141.57 | +880.70 |
At the Close, Wednesday, January 16, 2019:
Dow Jones Industrial Average: 24,207.16, +141.57 (+0.59%)
NASDAQ: 7,034.69, +10.86 (+0.15%)
S&P 500: 2,616.10, +5.80 (+0.22%)
NYSE Composite: 11,907.61, +38.93 (+0.33%)
Joke of the Day: NY junior Senator Kirsten Gillibrand announces Presidential bid. This woman barely qualifies as a Senator, elected to the seat vacated by Hillary Clinton, she was only viable as a shoe-in in one of the most liberal states in the country. Her list of accomplishments includes the shaming of Al Franken.
Gillibrand, in addition to praising voters last year that she would not run for president and would serve out her full term in the senate if re-elected (probably true, that), has often changed her views. When she was a member the House of Representatives in 2008, she received an "A" rating from the NRA for her positions on gun control. In 2018, the NRA gave her an "F."
Tuesday, January 15, 2019
Stocks Rise Despite Spate Of Bad News, Brexit No-Go Vote
Some are wondering whether the market is being run by computers or human operatives, or, worse yet, humans running computers front-running the market.
What may be happening is that humans are programming computer algorithms to react to fake news and the PPT is backstopping each and every tick lower by buying futures, resulting in the altos readjusting to buy more.
There was a good deal of bad news flow in the morning... and then just after 7:00 pm London time (2:00 pm ET), there was the Brexit vote.
Here's what passed across the wires prior to the opening bell and shortly thereafter:
With all this in the cooker, stocks opened higher and took off from there. The Dow exploded to a gain of 190 points just before noon. The NASDAQ was up nearly 120 points.
After noon, the markets went into a wait-and-see mood as the Brexit vote approached. In what has to be the most convoluted, time-wasting exercise in government over-reach (possibly challenged by the partial shutdown in the US), Britain has been wrangling over just how to depart from the European Union after a referendum passed nearly two-and-a-half years ago (June 23, 2016).
With different constituents vying for complete Brexit, partial Brexit with a backstop, no Brexit, and other variants, the argument over how to implement what was voted upon by the constituency has been nothing short of a disaster and an indictment against the effectiveness of government everywhere.
Somebody should point out - we will - that with all the Brexit juggling, partial US shutdown jousting, and continuing French protesting, governments in developed nations are proving to be at least cracked, if not nearly completely broken. Besides the fact that none of them can manage to spend less than what they receive through their extreme, excessive, heavy-handed taxation - which is over the top - it seems all they're capable of doing at the highest levels is fight for positioning and power, all to the detriment of the people they're supposed to be representing. Collectively, they pass no new legislation that is of benefit to the people. Other than President Trump's efforts, government is a massive, obvious failure of human capacity.
If ever there was a time for a global revolution (not a new concept), it would be now, though nobody has any contingency plans for how to deal with the dystopian aftermath that would surely follow.
Experience teaches us that disposing of scoundrels, deposing tyrants, or overthrowing governments only makes matters seem better for a short period of time. At least in the original American revolution, the patriots were separated from their tyrannical rulers by a vast ocean which technology hadn't quite conquered.
Today's intertwined system is different, close at hand, and the scoundrels much better disguised. There isn't going to be any overthrow of anything except morals and values, people's faith and judgment, which seem to be going in the direction of all flesh. Anger, the most palpable manifestation of displeasure, is boiling over in all facets of urban life. People are becoming more and more ill-mannered, short-tempered, self-absorbed, and intolerant toward the views and objectives of others. All of this adds up to uncivil activities, flouting of the law, violence and strife. Essentially, when ordinary people lose faith in a government that they had become accustomed to relying upon, all that's left is chaos, and that seems to be the direction in which we're inexorably, sadly, headed.
... and then came the Brexit vote in Britain's Parliament. Prime Minister Teresa May's government proposal was rounded defeated by a 432-202 vote in the House of Commons. On the news, the Dow tanked... briefly, the other indices slumped shortly, and then shot back to from whence they came.
It's all fake, people. There are no more free markets. Face it. All the geese been thoroughly cooked.
What may be happening is that humans are programming computer algorithms to react to fake news and the PPT is backstopping each and every tick lower by buying futures, resulting in the altos readjusting to buy more.
There was a good deal of bad news flow in the morning... and then just after 7:00 pm London time (2:00 pm ET), there was the Brexit vote.
Here's what passed across the wires prior to the opening bell and shortly thereafter:
- Both Wells Fargo (WFC) and JP Morgan Chase (JPM) missed on both earnings per share and revenue.
- Netflix (NFLX) announced the largest price increase in its 12-year history.
- China's economy grew by 6.4%, the slowest rate in over a decade.
- PPI cane in at -0.2%, a deflationary reading.
- Delta Airlines (DAL) beat, but warned that the partial government shutdown would negatively impact earnings in the current quarter.
- The Empire State Manufacturing Survey fell to a reading of 3.9 in January from an upwardly revised reading of 11.5 in December.
- Goodyear Tire (GT) lowered its fourth quarter outlook and full year (2018) guidance.
With all this in the cooker, stocks opened higher and took off from there. The Dow exploded to a gain of 190 points just before noon. The NASDAQ was up nearly 120 points.
After noon, the markets went into a wait-and-see mood as the Brexit vote approached. In what has to be the most convoluted, time-wasting exercise in government over-reach (possibly challenged by the partial shutdown in the US), Britain has been wrangling over just how to depart from the European Union after a referendum passed nearly two-and-a-half years ago (June 23, 2016).
With different constituents vying for complete Brexit, partial Brexit with a backstop, no Brexit, and other variants, the argument over how to implement what was voted upon by the constituency has been nothing short of a disaster and an indictment against the effectiveness of government everywhere.
Somebody should point out - we will - that with all the Brexit juggling, partial US shutdown jousting, and continuing French protesting, governments in developed nations are proving to be at least cracked, if not nearly completely broken. Besides the fact that none of them can manage to spend less than what they receive through their extreme, excessive, heavy-handed taxation - which is over the top - it seems all they're capable of doing at the highest levels is fight for positioning and power, all to the detriment of the people they're supposed to be representing. Collectively, they pass no new legislation that is of benefit to the people. Other than President Trump's efforts, government is a massive, obvious failure of human capacity.
If ever there was a time for a global revolution (not a new concept), it would be now, though nobody has any contingency plans for how to deal with the dystopian aftermath that would surely follow.
Experience teaches us that disposing of scoundrels, deposing tyrants, or overthrowing governments only makes matters seem better for a short period of time. At least in the original American revolution, the patriots were separated from their tyrannical rulers by a vast ocean which technology hadn't quite conquered.
Today's intertwined system is different, close at hand, and the scoundrels much better disguised. There isn't going to be any overthrow of anything except morals and values, people's faith and judgment, which seem to be going in the direction of all flesh. Anger, the most palpable manifestation of displeasure, is boiling over in all facets of urban life. People are becoming more and more ill-mannered, short-tempered, self-absorbed, and intolerant toward the views and objectives of others. All of this adds up to uncivil activities, flouting of the law, violence and strife. Essentially, when ordinary people lose faith in a government that they had become accustomed to relying upon, all that's left is chaos, and that seems to be the direction in which we're inexorably, sadly, headed.
... and then came the Brexit vote in Britain's Parliament. Prime Minister Teresa May's government proposal was rounded defeated by a 432-202 vote in the House of Commons. On the news, the Dow tanked... briefly, the other indices slumped shortly, and then shot back to from whence they came.
It's all fake, people. There are no more free markets. Face it. All the geese been thoroughly cooked.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
| 1/8/19 | 23,787.45 | +256.10 | +459.99 |
| 1/9/19 | 23,879.12 | +91.67 | +551.66 |
| 1/10/19 | 24,001.92 | +122.80 | +674.46 |
| 1/11/19 | 23,995.95 | -5.97 | +669.49 |
| 1/14/19 | 23,909.84 | -86.11 | +583.38 |
| 1/15/19 | 24,065.59 | +155.75 | +739.13 |
At the Close, Tuesday, January 15, 2019:
Dow Jones Industrial Average: 24,065.59, +155.75 (+0.65%)
NASDAQ: 7,023.83, +117.92 (+1.71%)
S&P 500: 2,610.30, +27.69 (+1.07%)
NYSE Composite: 11,868.68, +69.57 (+0.59%)
Monday, January 14, 2019
Dull Monday
Stocks took a negative turn on Monday, with no rationale for the move other than general sentiment. Citigroup (C) missed on revenue when they announced fourth quarter earnings prior to the opening bell.
More bank stocks will be reporting as the week progresses, so this small downdraft may be just the start of something larger. The major indices seem to be nearly out of steam from the recent rally. Expectations for earnings season have been muted, and some earnings and revenue misses are to be expected, and, if that's the case, nothing kills rallies better than earnings misses.
Stay tuned.
Dow Jones Industrial Average January Scorecard:
At the Close, Monday, January 14, 2019:
Dow Jones Industrial Average: 23,909.84, -86.11 (-0.36%)
NASDAQ: 6,905.92, -65.56 (-0.94%)
S&P 500: 2,582.61, -13.65 (-0.53%)
NYSE Composite: 11,799.11, -48.90 (-0.41%)
More bank stocks will be reporting as the week progresses, so this small downdraft may be just the start of something larger. The major indices seem to be nearly out of steam from the recent rally. Expectations for earnings season have been muted, and some earnings and revenue misses are to be expected, and, if that's the case, nothing kills rallies better than earnings misses.
Stay tuned.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
| 1/8/19 | 23,787.45 | +256.10 | +459.99 |
| 1/9/19 | 23,879.12 | +91.67 | +551.66 |
| 1/10/19 | 24,001.92 | +122.80 | +674.46 |
| 1/11/19 | 23,995.95 | -5.97 | +669.49 |
| 1/14/19 | 23,909.84 | -86.11 | +583.38 |
At the Close, Monday, January 14, 2019:
Dow Jones Industrial Average: 23,909.84, -86.11 (-0.36%)
NASDAQ: 6,905.92, -65.56 (-0.94%)
S&P 500: 2,582.61, -13.65 (-0.53%)
NYSE Composite: 11,799.11, -48.90 (-0.41%)
Sunday, January 13, 2019
Weekend Wrap: The Fed Never Had Control, And What They Now Have Is As Fake As Fake News
What a week it was for equity holders and speculators!
Friday's very minor declines snapped five-day winning streaks for the major indices, with the exception of the NYSE Composite, which continued gaining for a sixth straight session.
Solid for the past three weeks, the current rally has managed to relieve the stress from steep losses incurred in December though the majors still have plenty of distance to travel. For instance, the Dow Jones Industrial Average lost 4034.23 from December 4 through Christmas Eve (Dec. 24), and has since gained 2203.75, nearly half of that amount regained the day after Christmas (Dec. 26), setting a one-day record by picking up 1086.25 points.
The other indices have exhibited similar patterns, with sudden acceleration in the final trading days of December and continuing smaller, albeit significant, positive closes on nine of the twelve sessions from December 26 through January 11.
Catalysts for the post-holiday rally continue to be diverse, the most significant strong data point coming from the BLS, which showed the economy adding 312,000 jobs for December in the most recent non-farm payroll report, released last Friday. So far beyond expectations was that number that it appeared to have kept sentiment positive for a full week after its release.
The week's most important data release was Friday's CPI number, which - thanks largely to the price of gasoline - declined 0.1% in December, and slowed to 1.9% in year-over-year measure. Core was +0.2% (mom) and +2.2% (yoy).
Slowing inflation, or perhaps, outright deflation, is anathema to the Federal Reserve, despite their all-too-frequent suggestions that they exist to keep inflation under check. The entire monetary scheme of the Fed and the global economy would disintegrate without inflation, thus the Fed will be diligent in regards to interest rates going forward. After hiking the federal funds rate at a pace of 25 basis points per quarter for the past two years, the Fed has received warnings aplenty, first from the cascading declines in the stock market, and second, from a squashing of inflation.
That CPI data, for all intents and purposes, killed any idea of a March rate hike, just as the market drop caused Treasury Secretary Mnuchin to frantically call in the Plunge Protection Team just before Christmas. The results from that plea for help have been grossly evident the past three weeks.
While the Fed believes it can control the economy, the truth is that it absolutely cannot. Bond prices and yields point that out in spades. The benchmark 10-year note yield dropped as low as 2.54% (1/3) in the face of all the recent rate hikes. As of Friday, the 2s-10s spread fell to 16 basis points. Already inverted are the 1-year and 2-year notes as related to the 5s. The 1-year closed on Friday with a yield of 2.58%; the 2-year at 2.55%; the 5-year at 2.52%, the 7-year at 2.60, and the 10-year at 2.60%.
The 2s-10s spread is the most cited and closely watched, but the 1s-7s are just two basis points from inversion, the cause, undeniably, the Fed's incessant pimping of the overnight rate.
If bond traders are acting in such a manner that they prefer short-dated maturities over the longer run, the signal is danger just ahead. Talk of an impending recession has tapered off in recent days, but the bond market's insistent buying patterns suggest that the Fed did indeed go too far, too fast with the rate hikes, spurring disinvestment and eventually, a recession.
What the Fed cannot control are human decisions. Noting the sentiment in bonds, the latest stock market gains have been contrived from the start and are certain to reverse course. As has been stated here countless times, bull markets do not last forever and Dow Theory has already signaled primary trend change twice in 2018 (in March-April and October).
The major indices have not escaped correction territory and all are trading below both their 50-and-200-day moving averages. Further those averages are upside-down, with the 200-day below the 50-day. The death crosses having already occurred, stocks will resume their reversion to the mean in the very near future.
Dow Jones Industrial Average January Scorecard:
At the Close, Friday, January 11, 2019:
Dow Jones Industrial Average: 23,995.95, -5.97 (-0.02%)
NASDAQ: 6,971.48, -14.59 (-0.21%)
S&P 500: 2,596.26, -0.38 (-0.01%)
NYSE Composite: 11,848.01, +8.70 (+0.07%)
For the Week:
Dow: +562.79 (+2.40%)
NASDAQ: +232.62 (+3.45%)
S&P 500: +64.32 (+2.54%)
NYSE Composite: +314.67 (+2.73%)
Friday's very minor declines snapped five-day winning streaks for the major indices, with the exception of the NYSE Composite, which continued gaining for a sixth straight session.
Solid for the past three weeks, the current rally has managed to relieve the stress from steep losses incurred in December though the majors still have plenty of distance to travel. For instance, the Dow Jones Industrial Average lost 4034.23 from December 4 through Christmas Eve (Dec. 24), and has since gained 2203.75, nearly half of that amount regained the day after Christmas (Dec. 26), setting a one-day record by picking up 1086.25 points.
The other indices have exhibited similar patterns, with sudden acceleration in the final trading days of December and continuing smaller, albeit significant, positive closes on nine of the twelve sessions from December 26 through January 11.
Catalysts for the post-holiday rally continue to be diverse, the most significant strong data point coming from the BLS, which showed the economy adding 312,000 jobs for December in the most recent non-farm payroll report, released last Friday. So far beyond expectations was that number that it appeared to have kept sentiment positive for a full week after its release.
The week's most important data release was Friday's CPI number, which - thanks largely to the price of gasoline - declined 0.1% in December, and slowed to 1.9% in year-over-year measure. Core was +0.2% (mom) and +2.2% (yoy).
Slowing inflation, or perhaps, outright deflation, is anathema to the Federal Reserve, despite their all-too-frequent suggestions that they exist to keep inflation under check. The entire monetary scheme of the Fed and the global economy would disintegrate without inflation, thus the Fed will be diligent in regards to interest rates going forward. After hiking the federal funds rate at a pace of 25 basis points per quarter for the past two years, the Fed has received warnings aplenty, first from the cascading declines in the stock market, and second, from a squashing of inflation.
That CPI data, for all intents and purposes, killed any idea of a March rate hike, just as the market drop caused Treasury Secretary Mnuchin to frantically call in the Plunge Protection Team just before Christmas. The results from that plea for help have been grossly evident the past three weeks.
While the Fed believes it can control the economy, the truth is that it absolutely cannot. Bond prices and yields point that out in spades. The benchmark 10-year note yield dropped as low as 2.54% (1/3) in the face of all the recent rate hikes. As of Friday, the 2s-10s spread fell to 16 basis points. Already inverted are the 1-year and 2-year notes as related to the 5s. The 1-year closed on Friday with a yield of 2.58%; the 2-year at 2.55%; the 5-year at 2.52%, the 7-year at 2.60, and the 10-year at 2.60%.
The 2s-10s spread is the most cited and closely watched, but the 1s-7s are just two basis points from inversion, the cause, undeniably, the Fed's incessant pimping of the overnight rate.
If bond traders are acting in such a manner that they prefer short-dated maturities over the longer run, the signal is danger just ahead. Talk of an impending recession has tapered off in recent days, but the bond market's insistent buying patterns suggest that the Fed did indeed go too far, too fast with the rate hikes, spurring disinvestment and eventually, a recession.
What the Fed cannot control are human decisions. Noting the sentiment in bonds, the latest stock market gains have been contrived from the start and are certain to reverse course. As has been stated here countless times, bull markets do not last forever and Dow Theory has already signaled primary trend change twice in 2018 (in March-April and October).
The major indices have not escaped correction territory and all are trading below both their 50-and-200-day moving averages. Further those averages are upside-down, with the 200-day below the 50-day. The death crosses having already occurred, stocks will resume their reversion to the mean in the very near future.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
| 1/8/19 | 23,787.45 | +256.10 | +459.99 |
| 1/9/19 | 23,879.12 | +91.67 | +551.66 |
| 1/10/19 | 24,001.92 | +122.80 | +674.46 |
| 1/11/19 | 23,995.95 | -5.97 | +669.49 |
At the Close, Friday, January 11, 2019:
Dow Jones Industrial Average: 23,995.95, -5.97 (-0.02%)
NASDAQ: 6,971.48, -14.59 (-0.21%)
S&P 500: 2,596.26, -0.38 (-0.01%)
NYSE Composite: 11,848.01, +8.70 (+0.07%)
For the Week:
Dow: +562.79 (+2.40%)
NASDAQ: +232.62 (+3.45%)
S&P 500: +64.32 (+2.54%)
NYSE Composite: +314.67 (+2.73%)
Thursday, January 10, 2019
Retail Woes Subdued By Dip Buyers; Stocks Continue New Year Rally
Stocks have been on quite a tear since Christmas, a move that is strangely similar to hmmmm... last January.
How did that turn out?
Since the big downdraft of December, which culminated in a major splashdown on Christmas Eve, the Dow, NASDAQ and S&P 500 have staged a rally that is remarkable if only for its vacuousness. The only reasonable rationale for the recovery rally is that stocks were down so much, they looked like bargains. Oddly enough, many of these same stocks - names like Amazon (AMZN), Apple (AAPL) and Facebook (FB) - were being unloaded like cabbage off a produce truck just weeks ago.
These companies aren't doing any better than they were in November or December, nor is the economy. Even worse, the government shutdown, which began just before the markets bottomed, has continued, its effects so far minimized. The shutdown only affects about a quarter of "non-essential" federal operations, so it has not been a major headache for many. In a month or two, however, even if the shutdown ends soon, there will be some material and psychological damage to the economy, that's without a doubt. Plans were changed, the federal employees who were either furloughed or working without pay had problems making ends meet, and the general populace grimaced, frowned, and variously expressed disgust at the government's dysfunction.
So, the choice is whether to engage in the buying or await a better entry point, or, since stocks are up broadly in the nearly three weeks since Christmas, go short.
For now, the waiting game may be the most prudent, unless one has an economic itch that is in need of a scratch, especially since today's action saw a heavy downdraft at the open due to failures in the retail space, particularly Macy's (M) and Kohl's (KSS), both of which reported disappointing same store sales over the holidays.
Macy's was sacrificed to the tune of a 17% decline on the day, while Kohl's, down nearly 10% early, finished with a loss that was half that, thanks to the dip buyers de jour.
If this continues, all stocks will eventually be bought, at some price, regardless of fundamentals. Certainly, Macy's is now going to be seen as ripe for the plucking by somebody.
Dow Jones Industrial Average January Scorecard:
At the Close, Thursday, January 10, 2019:
Dow Jones Industrial Average: 24,001.92, +122.80 (+0.51%)
NASDAQ: 6,986.07, +28.99 (+0.42%)
S&P 500: 2,596.64, +11.68 (+0.45%)
NYSE Composite: 11,839.31, +60.89 (+0.52%)
How did that turn out?
Since the big downdraft of December, which culminated in a major splashdown on Christmas Eve, the Dow, NASDAQ and S&P 500 have staged a rally that is remarkable if only for its vacuousness. The only reasonable rationale for the recovery rally is that stocks were down so much, they looked like bargains. Oddly enough, many of these same stocks - names like Amazon (AMZN), Apple (AAPL) and Facebook (FB) - were being unloaded like cabbage off a produce truck just weeks ago.
These companies aren't doing any better than they were in November or December, nor is the economy. Even worse, the government shutdown, which began just before the markets bottomed, has continued, its effects so far minimized. The shutdown only affects about a quarter of "non-essential" federal operations, so it has not been a major headache for many. In a month or two, however, even if the shutdown ends soon, there will be some material and psychological damage to the economy, that's without a doubt. Plans were changed, the federal employees who were either furloughed or working without pay had problems making ends meet, and the general populace grimaced, frowned, and variously expressed disgust at the government's dysfunction.
So, the choice is whether to engage in the buying or await a better entry point, or, since stocks are up broadly in the nearly three weeks since Christmas, go short.
For now, the waiting game may be the most prudent, unless one has an economic itch that is in need of a scratch, especially since today's action saw a heavy downdraft at the open due to failures in the retail space, particularly Macy's (M) and Kohl's (KSS), both of which reported disappointing same store sales over the holidays.
Macy's was sacrificed to the tune of a 17% decline on the day, while Kohl's, down nearly 10% early, finished with a loss that was half that, thanks to the dip buyers de jour.
If this continues, all stocks will eventually be bought, at some price, regardless of fundamentals. Certainly, Macy's is now going to be seen as ripe for the plucking by somebody.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
| 1/8/19 | 23,787.45 | +256.10 | +459.99 |
| 1/9/19 | 23,879.12 | +91.67 | +551.66 |
| 1/10/19 | 24,001.92 | +122.80 | +674.46 |
At the Close, Thursday, January 10, 2019:
Dow Jones Industrial Average: 24,001.92, +122.80 (+0.51%)
NASDAQ: 6,986.07, +28.99 (+0.42%)
S&P 500: 2,596.64, +11.68 (+0.45%)
NYSE Composite: 11,839.31, +60.89 (+0.52%)
Wednesday, January 9, 2019
Stocks Keep Rising, But Major Speed Bumps Are Dead Ahead
Bored yet?
Since bottoming out the day before Christmas (December 24), the major US indices have gained in eight of the last ten sessions, including today's smallish gains.
While going eight for ten to the upside certainly sounds impressive, there is a small problem. The NASDAQ. S&P 500, Dow Industrials, and NYSE Composite are all trading below their 50-and-200-day moving averages. What's more troubling is that those averages are inverted, with the 50 below the 200, as all of the charts show the so-called "death cross" occurring variously between late November and mid-December.
This is troubling to chartists because the rallies have produced some ill-placed optimism in the minds of some investors, mostly affecting those passive types with 401k, retirement, IRA and other "hands off" accounts.
So, while everybody is cheering the fantastic performance of stocks in the new year, there are major speed bumps dead ahead. Turning around inverted moving averages is the kind of heavy lifting for which the PPT was created and how the Fed came up with various forms of money creation, such as QE, QE2, Operation Twist, and other variants of magical fiat money.
Earnings season is about to kick into high gear next week, and expectations are not all that rosy, though, if one tracks home builders, like Lennar (LEN), which missed expectations but still managed a gain today of nearly eight percent. Of course, the stock is just off its 52-week low, so there's an outside chance that everybody, all at once decided it was too cheap to pass up.
So, the question is whether the PPT or the Fed or the Bank of Japan or the ECB, or all of them are of like mind and will buy with open arms every stock that looks like a sure loser over the next four to five weeks.
There's an old adage in the investing world, that posits, "don't fight the Fed." This time it appears to be for real and the Fed, from the speeches and off-the-cuff quotes by some of the regional presidents, is in a fighting mood.
Dow Jones Industrial Average January Scorecard:
At the Close, Wednesday, January 9, 2018:
Dow Jones Industrial Average: 23,879.12, +91.67 (+0.39%)
NASDAQ: 6,957.08, +60.08 (+0.87%)
S&P 500: 2,584.96, +10.55 (+0.41%)
NYSE Composite: 11,778.42, +62.19 (+0.53%)
Since bottoming out the day before Christmas (December 24), the major US indices have gained in eight of the last ten sessions, including today's smallish gains.
While going eight for ten to the upside certainly sounds impressive, there is a small problem. The NASDAQ. S&P 500, Dow Industrials, and NYSE Composite are all trading below their 50-and-200-day moving averages. What's more troubling is that those averages are inverted, with the 50 below the 200, as all of the charts show the so-called "death cross" occurring variously between late November and mid-December.
This is troubling to chartists because the rallies have produced some ill-placed optimism in the minds of some investors, mostly affecting those passive types with 401k, retirement, IRA and other "hands off" accounts.
So, while everybody is cheering the fantastic performance of stocks in the new year, there are major speed bumps dead ahead. Turning around inverted moving averages is the kind of heavy lifting for which the PPT was created and how the Fed came up with various forms of money creation, such as QE, QE2, Operation Twist, and other variants of magical fiat money.
Earnings season is about to kick into high gear next week, and expectations are not all that rosy, though, if one tracks home builders, like Lennar (LEN), which missed expectations but still managed a gain today of nearly eight percent. Of course, the stock is just off its 52-week low, so there's an outside chance that everybody, all at once decided it was too cheap to pass up.
So, the question is whether the PPT or the Fed or the Bank of Japan or the ECB, or all of them are of like mind and will buy with open arms every stock that looks like a sure loser over the next four to five weeks.
There's an old adage in the investing world, that posits, "don't fight the Fed." This time it appears to be for real and the Fed, from the speeches and off-the-cuff quotes by some of the regional presidents, is in a fighting mood.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
| 1/8/19 | 23,787.45 | +256.10 | +459.99 |
| 1/9/19 | 23,879.12 | +91.67 | +551.66 |
At the Close, Wednesday, January 9, 2018:
Dow Jones Industrial Average: 23,879.12, +91.67 (+0.39%)
NASDAQ: 6,957.08, +60.08 (+0.87%)
S&P 500: 2,584.96, +10.55 (+0.41%)
NYSE Composite: 11,778.42, +62.19 (+0.53%)
Tuesday, January 8, 2019
PPT And/Or The Fed Working Overtime To Keep Stocks Elevated
Not exactly proof, but here's a mainstream article calling out the central banks for market intervention, otherwise known as manipulation, or, preventing a crash.
Call it anything you want, including PPT, but there are surely unseen forces at work. Consider, if you will, that since central banks have the power to goose markets upwards, they also possess the power to depress them. Sobering thought, isn't it?
Valuation will become a concern this year as soon as earnings reports commence. First quarter reports may not be all that impactful, but second quarter corporate earnings and revenue reports may validate the theory that a combination of easy fed policies, low interest rates, buybacks, and a willingness to believe that the Fed would backstop any sizable decline were responsible for the last ten years of gains.
If some of the more astute forecasters are correct, an earnings and profit recession is due sometime in 2019, and the likelihood of such an occurrence will accelerate throughout the year. If corporations are going to slow down in 2019, stocks should follow, but, in the parallel universe that has become Wall Street and end of the business cycle as we once knew it, anything could happen.
The rally since Christmas appears to be based on just about nothing. Noting that, how long it will last has only one correct solution. Out will last until holders of stocks find a comfortable exit price because the major indices are still in correction.
Dow Jones Industrial Average January Scorecard:
At the Close, Tuesday, January 8, 2019:
Dow Jones Industrial Average: 23,787.45, +256.10 (+1.09%)
NASDAQ: 6,897.00, +73.53 (+1.08%)
S&P 500: 2,574.41, +24.72 (+0.97%)
NYSE Composite: 11,716.23, +110.27 (+0.95%)
Call it anything you want, including PPT, but there are surely unseen forces at work. Consider, if you will, that since central banks have the power to goose markets upwards, they also possess the power to depress them. Sobering thought, isn't it?
Valuation will become a concern this year as soon as earnings reports commence. First quarter reports may not be all that impactful, but second quarter corporate earnings and revenue reports may validate the theory that a combination of easy fed policies, low interest rates, buybacks, and a willingness to believe that the Fed would backstop any sizable decline were responsible for the last ten years of gains.
If some of the more astute forecasters are correct, an earnings and profit recession is due sometime in 2019, and the likelihood of such an occurrence will accelerate throughout the year. If corporations are going to slow down in 2019, stocks should follow, but, in the parallel universe that has become Wall Street and end of the business cycle as we once knew it, anything could happen.
The rally since Christmas appears to be based on just about nothing. Noting that, how long it will last has only one correct solution. Out will last until holders of stocks find a comfortable exit price because the major indices are still in correction.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
| 1/8/19 | 23,787.45 | +256.10 | +459.99 |
At the Close, Tuesday, January 8, 2019:
Dow Jones Industrial Average: 23,787.45, +256.10 (+1.09%)
NASDAQ: 6,897.00, +73.53 (+1.08%)
S&P 500: 2,574.41, +24.72 (+0.97%)
NYSE Composite: 11,716.23, +110.27 (+0.95%)
Monday, January 7, 2019
Volatility Tamped Down By PPT A Probable Cause For Monday's Dullness
Chip stocks (NVDA, ADM) led the big gain on the NASDAQ, but the session overall was lackluster, with a dip at the open and a weak close.
Investors are still unconvinced the volatility of the past few months has abated. Today felt more like a temporary reprieve rather than a new paradigm. There's also the very good possibility that the Plunge Protection Team (PPT) is still active, especially considering the quick turnaround this morning. It was classic insider action, like hitting sellers over the head with a sledgehammer.
The PPT has absolutely no subtlety about it which makes their intrusions somewhat obvious, as has always been the case, even back in the days when people thought they were a myth or some kind of financial urban legend. As it turned out, the PPT was always a real thing, and a threat to fair, unmolested, open markets. Now that they've been out in the open for at least a decade, not much is left to the imagination. US markets - and, likely, almost every other market in the world - have been highly manipulated by central banks and governments working in cahoots and that's unlikely to end soon.
With friends like these in markets and the preponderance of investments in stocks, investing today is riskier than it has ever been. Who wants to play in a casino knowing that the dealer has the ability to cheat at any time? As unsuitable as it is for large money players to intervene at times of crisis, it's even worse when they do so at the drop of a hat, or, as the case may be, a few thousand points on the Dow.
It's not pleasant to witness wild swings in entire indices on a regular basis, which is why so many individual investors are so jaded. They know their money is at extreme risk all the time. There has to be a better way, and there used to be, prior to the financialization era we currently are enduring, before everything from mom's mortgage to pizza stocks are part and parcel of every fund's basic needs.
The trouble with markets today are the real probability that in the case of an extended bear market, the entire global financial system would simply implode. It keeps more than just a few heads at the IMF, BIS, and the Fed from sleeping well at night.
Dow Jones Industrial Average January Scorecard:
At the Close, Monday, January 7, 2019:
Dow Jones Industrial Average: 23,531.35, +98.19 (+0.42%)
NASDAQ: 6,823.47, +84.61 (+1.26%)
S&P 500: 2,549.69, +17.75 (+0.70%)
NYSE Composite: 11,605.96, +72.62 (+0.63)
Investors are still unconvinced the volatility of the past few months has abated. Today felt more like a temporary reprieve rather than a new paradigm. There's also the very good possibility that the Plunge Protection Team (PPT) is still active, especially considering the quick turnaround this morning. It was classic insider action, like hitting sellers over the head with a sledgehammer.
The PPT has absolutely no subtlety about it which makes their intrusions somewhat obvious, as has always been the case, even back in the days when people thought they were a myth or some kind of financial urban legend. As it turned out, the PPT was always a real thing, and a threat to fair, unmolested, open markets. Now that they've been out in the open for at least a decade, not much is left to the imagination. US markets - and, likely, almost every other market in the world - have been highly manipulated by central banks and governments working in cahoots and that's unlikely to end soon.
With friends like these in markets and the preponderance of investments in stocks, investing today is riskier than it has ever been. Who wants to play in a casino knowing that the dealer has the ability to cheat at any time? As unsuitable as it is for large money players to intervene at times of crisis, it's even worse when they do so at the drop of a hat, or, as the case may be, a few thousand points on the Dow.
It's not pleasant to witness wild swings in entire indices on a regular basis, which is why so many individual investors are so jaded. They know their money is at extreme risk all the time. There has to be a better way, and there used to be, prior to the financialization era we currently are enduring, before everything from mom's mortgage to pizza stocks are part and parcel of every fund's basic needs.
The trouble with markets today are the real probability that in the case of an extended bear market, the entire global financial system would simply implode. It keeps more than just a few heads at the IMF, BIS, and the Fed from sleeping well at night.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
At the Close, Monday, January 7, 2019:
Dow Jones Industrial Average: 23,531.35, +98.19 (+0.42%)
NASDAQ: 6,823.47, +84.61 (+1.26%)
S&P 500: 2,549.69, +17.75 (+0.70%)
NYSE Composite: 11,605.96, +72.62 (+0.63)
Saturday, January 5, 2019
Weekend Wrap: Friday's Big Gains Offset Thursday's Huge Loss, Dow Up Just 105 In 2019
Wall Street's week straddled 2018 and 2019, as Monday's session was the last of the prior year, and Wednesday, Thursday, and Friday starting off the new year.
Thus, the following final closing prices for the major indices, which will be instructive as we plow through the weeks, months, and quarters ahead:
Dow Industrials 12/31/18: 23,327.46
Dow Transports 12/31/18: 9,170.40
NASDAQ 12/31/18: 6,635.28
S&P 500 12/31/18: 2,506.85
NYSE Composite 12/31/18: 11,374.39
Two big trading days happened back-to-back, in opposite directions. Thursday's (1/3) downdraft was largely attributable to Apple's announcement that revenue for its fiscal first quarter (4th quarter) results would come in well below analyst estimates. December PMI from the ISM was also a contributing factor, insinuating a slowdown in the general economy, much of it tied to US-China trade tensions.
A blowout December jobs report was responsible Friday's about-face. Words from Fed Chairman Jerome Powell added fuel to the ascending fire. Powell stated quite plainly that the Fed was going to be flexible about raising rates and drawing down its balance sheet, which is pulling $50 billion a month out of the bond market.
After all was said and done, the week was just so-so, though the bias was obviously trending positive. There's some inkling of manipulation and coordination of and by the PPT, especially since the Fed was so compliant with its dovish commentary. Nobody really wants a bear market, and the data from Friday's release of the December non-farm payroll report (312K actual vs. 122K projected) suggests that the economy is humming right along and President Trump's promise to create more US jobs is being kept.
The Fed's jawboning was well-timed, coming a day after a confidence-shaking 660-point drop on the Dow, but the remarks by Chairman Powell won't be the last time the Fed has moved the goal posts in search of expediency.
Dow Jones Industrial Average January Scorecard:
At the Close, Friday, January 4, 2019:
Dow Jones Industrial Average: 23,433.16, +746.94 (+3.29%)
NASDAQ: 6,738.86, +275.35 (+4.26%)
S&P 500: 2,531.94, +84.05 (+3.43%)
NYSE Composite: 11,533.34, +342.90 (+3.06%)
For the Week:
Dow: +370.76 (+1.61%)
NASDAQ: +154.34 (+2.34%)
S&P 500: +46.20 (+1.86%)
NYSE Composite: +242.39 (+2.15%)
Thus, the following final closing prices for the major indices, which will be instructive as we plow through the weeks, months, and quarters ahead:
Dow Industrials 12/31/18: 23,327.46
Dow Transports 12/31/18: 9,170.40
NASDAQ 12/31/18: 6,635.28
S&P 500 12/31/18: 2,506.85
NYSE Composite 12/31/18: 11,374.39
Two big trading days happened back-to-back, in opposite directions. Thursday's (1/3) downdraft was largely attributable to Apple's announcement that revenue for its fiscal first quarter (4th quarter) results would come in well below analyst estimates. December PMI from the ISM was also a contributing factor, insinuating a slowdown in the general economy, much of it tied to US-China trade tensions.
A blowout December jobs report was responsible Friday's about-face. Words from Fed Chairman Jerome Powell added fuel to the ascending fire. Powell stated quite plainly that the Fed was going to be flexible about raising rates and drawing down its balance sheet, which is pulling $50 billion a month out of the bond market.
After all was said and done, the week was just so-so, though the bias was obviously trending positive. There's some inkling of manipulation and coordination of and by the PPT, especially since the Fed was so compliant with its dovish commentary. Nobody really wants a bear market, and the data from Friday's release of the December non-farm payroll report (312K actual vs. 122K projected) suggests that the economy is humming right along and President Trump's promise to create more US jobs is being kept.
The Fed's jawboning was well-timed, coming a day after a confidence-shaking 660-point drop on the Dow, but the remarks by Chairman Powell won't be the last time the Fed has moved the goal posts in search of expediency.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
At the Close, Friday, January 4, 2019:
Dow Jones Industrial Average: 23,433.16, +746.94 (+3.29%)
NASDAQ: 6,738.86, +275.35 (+4.26%)
S&P 500: 2,531.94, +84.05 (+3.43%)
NYSE Composite: 11,533.34, +342.90 (+3.06%)
For the Week:
Dow: +370.76 (+1.61%)
NASDAQ: +154.34 (+2.34%)
S&P 500: +46.20 (+1.86%)
NYSE Composite: +242.39 (+2.15%)
Thursday, January 3, 2019
Stocks Slammed, Bonds Rally As Global Slowdown Fears Rise
Apple computer, maker of the iconic iPhone, was the cause of much of today's equity angst, as the tech giant warned that fourth quarter sales were likely to come in under revenue estimates.
Apple CEO Tim Cook issued a letter late Wednesday to investors advising that a slowdown in China sales would cause fourth quarter revenue to decline 4.8% year over year to $84 billion, well below analyst estimates. It's not that Apple is losing money - far from that - it's just not making as much as expected. Shares of Apple (AAPL) were down nearly 10% on the news, the largest one-day loss in six years.
Combined with a report from the Institute for Supply Management (ISM) that had December's PMI fall by the most since the financial crisis of 2008, stocks were on the defensive all day long. The report concluded that December PMI fell from 59.3 to 54.1, a descent of 5.4%. While anything over 50 is considered expansion, the falloff is considered to be a harbinger of worse data to come, as many participants in the survey blamed trade tensions with China as a leading cause for the slowdown.
Thus, the 1000+ point gain from December 26 was cut down by two-thirds on Thursday, just a week later, sending the Dow and other major indices closer to bear market territory once again.
January has gotten off to a horrible start, as though December's rout hadn't ended, which, of course, would be correct. Losses on stocks are only just beginning. By March of this year, expect stocks to be another 10-15% lower than where they stand today, and, even then, with signs of a global slowdown flashing red, a bottom won't likely be put in until the market has flushed out all of the weak hands and sent fund managers scurrying in even greater numbers to cash and bonds.
Presently, the treasuries are telling an interesting story about the economy. While the Federal Reserve insisted on raising rates four times in 2019, the bond market has expressed extreme displeasure, sending the yield on the 10-year note to 2.56%, down ten basis points just today, marking the lowest yield since January of last year. Additionally, short-maturity bills spiked (thanks to Fed hikes at the low end) with the one-year yielding 2.50%, as compared to 2.39% for the 2-year and 2.37% for the five-year note. Inversion in accelerating at the short end of the curve.
While this is traditionally not the pairs that signal recession, that distinction belonging to the 2s-10s spread, it is highly unusual. Bond traders are saying they don't want to issue longer-term, for fear that the economy will weaken as time progresses. The 30-year also was slammed lower, yielding 2.92%, down five basis points from yesterday.
2019 is looking to be an even worse year for equity investors, and a rout in the stock market could cause panic to spread to many diverse levels of economic activity. A recession within the next three to twelve months is looking more a certainty with each passing day.
Dow Jones Industrial Average January Scorecard:
At the Close, Thursday, January 3, 2019:
Dow Jones Industrial Average: 22,686.22, -660.02 (-2.83%)
NASDAQ: 6,463.50, -202.43 (-3.04%)
S&P 500: 2,447.89, -62.14 (-2.48%)
NYSE Composite: 11,190.44, -193.09 (-1.70%)
Apple CEO Tim Cook issued a letter late Wednesday to investors advising that a slowdown in China sales would cause fourth quarter revenue to decline 4.8% year over year to $84 billion, well below analyst estimates. It's not that Apple is losing money - far from that - it's just not making as much as expected. Shares of Apple (AAPL) were down nearly 10% on the news, the largest one-day loss in six years.
Combined with a report from the Institute for Supply Management (ISM) that had December's PMI fall by the most since the financial crisis of 2008, stocks were on the defensive all day long. The report concluded that December PMI fell from 59.3 to 54.1, a descent of 5.4%. While anything over 50 is considered expansion, the falloff is considered to be a harbinger of worse data to come, as many participants in the survey blamed trade tensions with China as a leading cause for the slowdown.
Thus, the 1000+ point gain from December 26 was cut down by two-thirds on Thursday, just a week later, sending the Dow and other major indices closer to bear market territory once again.
January has gotten off to a horrible start, as though December's rout hadn't ended, which, of course, would be correct. Losses on stocks are only just beginning. By March of this year, expect stocks to be another 10-15% lower than where they stand today, and, even then, with signs of a global slowdown flashing red, a bottom won't likely be put in until the market has flushed out all of the weak hands and sent fund managers scurrying in even greater numbers to cash and bonds.
Presently, the treasuries are telling an interesting story about the economy. While the Federal Reserve insisted on raising rates four times in 2019, the bond market has expressed extreme displeasure, sending the yield on the 10-year note to 2.56%, down ten basis points just today, marking the lowest yield since January of last year. Additionally, short-maturity bills spiked (thanks to Fed hikes at the low end) with the one-year yielding 2.50%, as compared to 2.39% for the 2-year and 2.37% for the five-year note. Inversion in accelerating at the short end of the curve.
While this is traditionally not the pairs that signal recession, that distinction belonging to the 2s-10s spread, it is highly unusual. Bond traders are saying they don't want to issue longer-term, for fear that the economy will weaken as time progresses. The 30-year also was slammed lower, yielding 2.92%, down five basis points from yesterday.
2019 is looking to be an even worse year for equity investors, and a rout in the stock market could cause panic to spread to many diverse levels of economic activity. A recession within the next three to twelve months is looking more a certainty with each passing day.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
At the Close, Thursday, January 3, 2019:
Dow Jones Industrial Average: 22,686.22, -660.02 (-2.83%)
NASDAQ: 6,463.50, -202.43 (-3.04%)
S&P 500: 2,447.89, -62.14 (-2.48%)
NYSE Composite: 11,190.44, -193.09 (-1.70%)
Wednesday, January 2, 2019
Stocks Stumble In New Year; Fantastic Four #4 12-Cent Comic Book, Now $4489
Stocks tumbled, then stumbled to an unimpressive finish on the first trading day of 2019, leaving doubt in the minds of many after the rout that was December, 2018.
What's more impressive than chasing stocks are the devotees of Marvel comics, especially the 12-cent variety from the early 60s. If you're in your 60s or older, you may remember this one from your youth. If you gave it away or trashed it, as many of us did, you might be sick to see what it's worth today.In a recent ebay auction, the #4 issue of Fantastic Four sold for $4,489.00, in very fine condition.
Wow! Who knew that 12 cents could turn into four grand?
Just consider, if one had saved 100 comic books from the early 60s - the ones our parents and teachers said were just a waste of time and money - and kept them in good condition, you might have a nest egg of nearly half a million dollars sitting in a box about two feet high. Ounce for ounce and pound for pound, these early comics are worth in weight more than gold.
Amazing... Spider-Man tomorrow.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
At the Close, Wednesday, January 2, 2019:
Dow Jones Industrial Average: 23,346.24, +18.78 (+0.08%)
NASDAQ: 6,665.94, +30.66 (+0.46%)
S&P 500: 2,510.03, +3.18 (+0.13%)
NYSE Composite: 11,383.53, +9.14 (+0.08%)
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