Stocks spent most of Thursday trading in a narrow range on moderate volume as investors nervously awaited Friday's Non-Farms Payroll data for September.
The report is expected to reveal growth in the labor pool of 100,000 jobs, though arguments are being made on both sides of the equation. Judging from recent commentary, the idea that the US economy is stumbling toward recession has gained traction, especially since new claims for unemployment insurance ticked higher Thursday.
Dow 13,974.31 +6.26; NASDAQ 2,733.57 +4.14; S&P 500 1,542.84 +3.25; NYSE Composite 10,142.93 +41.90
However, Wall Street diehards are hoping for a reversal of the trend which resulted in a net loss of jobs for August and a rebound, though there's no talk of where these new jobs may have been created. The housing and construction industries, mortgage and banking-related employment have all felt the sting from the sub-prime mortgage meltdown.
Nevertheless, investors were generally on the positive side Thursday. Advancing issues were ahead of decliners by a 3-2 margin. New highs retained their edge on new lows, 217-130. That margin continues to narrow, albeit by small increments, daily.
In an ominous portent, commodities advanced across the board. Oil futures gained $1.40, nearly erasing a week's worth of declines, to $81.44 at the close. Gold added $8.10 to $743.80, while silver popped 3 cents to $13.50.
The Non-Farms Payroll data is due out at 8:30 am ET, an hour prior to the opening of the equity markets. Stay tuned.
Thursday, October 4, 2007
Wednesday, October 3, 2007
More Money Down the Drain
Investors who pumped the Dow to new record highs on Monday are scratching their heads after two consecutive days of losses. What could have happened, buying so close to the high, with the overhang of the still-unwinding credit crisis, a slumping housing market, oil near all-time highs and the US dollar in the tank?
Talk of a looming recession still trickles from the lips of brokers who dare speak truth to power; the massive losses by major banks in the coming quarterly reports are mentioned in hushed whispers, in private meetings, but sometimes the fears are manifested in the trades, like today.
Dow 13,968.05 -79.26; NASDAQ 2,729.43 -17.68; S&P 500 1,539.59 -7.08; NYSE Composite 10,101.03 -74.81
All of the major indices took a hit on Wednesday, and the losses were double or more than Tuesday's. Declining stocks laid over advancers by a 5-2 margin while new lows gained ground on new highs for the second consecutive day, with the highs holding a 232-127.
Economic numbers have been benign for the most part. Investors may be looking for positive news from the September Non-Farms Payroll report, due Friday prior to the market open. Estimates call for 100,000 new jobs created, though last month's estimate was equally rosy when the report for August showed a net loss of 4000 jobs.
Oil slipped 11 cents to close at $79.94; gold and silver were marginally changed. Gold lost 60 cents. Silver was up 2 pennies.
What the payroll report holds in store for the markets is yet indeterminate. Stocks have been rising on bad economic news, in a convoluted logic that a weak economy will spur the Fed to lower interest rates even more. The thinking is that looser money will be invested and cause stocks to gain. The trouble with that is eventually, as economic conditions worsen, consumers will close their wallets and stop spending. That's the downside of the equation. Lower interest rates can only free up so much capital. Sooner or later, consumers, who make up 70% of GDP, must get some relief.
Lowering interest rates is inherently inflationary and weakens the dollar against foreign currencies. While that may be good for exports, again, consumers are stuck with higher bills for just about everything, being that the US has become an import-driven economy.
If there are less than 100,000 new jobs created, investors may get just what they're asking for, but the fruit of their desires may come with a bitter aftertaste.
Talk of a looming recession still trickles from the lips of brokers who dare speak truth to power; the massive losses by major banks in the coming quarterly reports are mentioned in hushed whispers, in private meetings, but sometimes the fears are manifested in the trades, like today.
Dow 13,968.05 -79.26; NASDAQ 2,729.43 -17.68; S&P 500 1,539.59 -7.08; NYSE Composite 10,101.03 -74.81
All of the major indices took a hit on Wednesday, and the losses were double or more than Tuesday's. Declining stocks laid over advancers by a 5-2 margin while new lows gained ground on new highs for the second consecutive day, with the highs holding a 232-127.
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That gap has closed considerably and is signaling continued weakness.Edmonton, Vancouver, Bad Credit, Divorced, Bankruptcy OK. Apply online.
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Economic numbers have been benign for the most part. Investors may be looking for positive news from the September Non-Farms Payroll report, due Friday prior to the market open. Estimates call for 100,000 new jobs created, though last month's estimate was equally rosy when the report for August showed a net loss of 4000 jobs.
Oil slipped 11 cents to close at $79.94; gold and silver were marginally changed. Gold lost 60 cents. Silver was up 2 pennies.
What the payroll report holds in store for the markets is yet indeterminate. Stocks have been rising on bad economic news, in a convoluted logic that a weak economy will spur the Fed to lower interest rates even more. The thinking is that looser money will be invested and cause stocks to gain. The trouble with that is eventually, as economic conditions worsen, consumers will close their wallets and stop spending. That's the downside of the equation. Lower interest rates can only free up so much capital. Sooner or later, consumers, who make up 70% of GDP, must get some relief.
Lowering interest rates is inherently inflationary and weakens the dollar against foreign currencies. While that may be good for exports, again, consumers are stuck with higher bills for just about everything, being that the US has become an import-driven economy.
If there are less than 100,000 new jobs created, investors may get just what they're asking for, but the fruit of their desires may come with a bitter aftertaste.
Tuesday, October 2, 2007
No Follow-Through off Big Rally
Stock indices spent the better parts of Tuesday wallowing in the red, and with the exception of the NASDAQ, all closed lower.
Dow 14,047.31 -40.24; NASDAQ 2,747.11 +6.12; S&P 500 1,546.63 -0.41; NYSE Composite 10,175.66 -8.84
Essentially, since the declines were so marginal, little can be gleaned from Tuesday's session, except that investors are not exactly solid in their positions. Some wizened veterans of Wall Street say the 4th quarter kick-off rally was funded mostly through fresh 401k money, put to use by various fund managers who have nothing better to do than add to already overbought positions in an attempt to goose prices higher.
If anything, this market is short-term, with a very limited view of market history. If the credit market unraveling of August is prelude and already forgotten, the "irrational exuberance" of 1999-2000 is prehistoric. One can almost sense the desperation in the headlines, suggesting that traders will swap a weak economy for more fed funds rate cuts. That kind of thinking is a sure symptom of short-sighted trading, as is buying near or at tops.
By now, you've probably discerned that I am not particularly encouraged by any Wall Street euphoria since it is being built on the backs of a weakened economy and tumbling US dollar.
Internals were once again bullish, however, with advancers beating decliners by a 3-2 margin. New highs beat new lows, 366-120. Both margins were significantly slimmer than yesterday, though that is expected.
Oil continued it's week-long decline, falling well below the absurd $80 threshold before rallying back to close down just 19 cents at $80.05. Gold and silver profits were trimmed, if not slashed and burned, with gold losing $17.80 to $736.30 and silver declining 41 cents to $13.45.
The moves in the metals are of particular interest. The last time they fell in tandem by such a large amount was last month, at the height of the mad cash scramble prompted by the ongoing credit squeeze.
There's a safe bet that some of the selling in the metals was credit-related, as that nasty little problem may have been swept under the rug for now, but is beginning to smell.
What will be interesting is how the major banks handle the massive writedowns for the mortgage mess in their third quarter reports. The largest banks, including Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wachovia (WB), Washington Mutual (WM) and Wells Fargo (WFC) all report between October 15 and 19. That's just two weeks away and investors should expect some serious fallout. Citigroup already warned that profits would be cut by more than 60%. None of the others have yet to show such bravery, though some word is sure to slip out sooner rather than later.
When one or two of these drop a bomb on the market, expect some serious reconsideration in trading strategy for the remainder of the quarter. Most mainstream stocks won't be adversely affected, though some strain will surely be showing as we wend our way toward the holidays.
October can be a vicious month for stocks. Ask anybody who was around in 1929.
Dow 14,047.31 -40.24; NASDAQ 2,747.11 +6.12; S&P 500 1,546.63 -0.41; NYSE Composite 10,175.66 -8.84
Essentially, since the declines were so marginal, little can be gleaned from Tuesday's session, except that investors are not exactly solid in their positions. Some wizened veterans of Wall Street say the 4th quarter kick-off rally was funded mostly through fresh 401k money, put to use by various fund managers who have nothing better to do than add to already overbought positions in an attempt to goose prices higher.
If anything, this market is short-term, with a very limited view of market history. If the credit market unraveling of August is prelude and already forgotten, the "irrational exuberance" of 1999-2000 is prehistoric. One can almost sense the desperation in the headlines, suggesting that traders will swap a weak economy for more fed funds rate cuts. That kind of thinking is a sure symptom of short-sighted trading, as is buying near or at tops.
By now, you've probably discerned that I am not particularly encouraged by any Wall Street euphoria since it is being built on the backs of a weakened economy and tumbling US dollar.
Internals were once again bullish, however, with advancers beating decliners by a 3-2 margin. New highs beat new lows, 366-120. Both margins were significantly slimmer than yesterday, though that is expected.
Oil continued it's week-long decline, falling well below the absurd $80 threshold before rallying back to close down just 19 cents at $80.05. Gold and silver profits were trimmed, if not slashed and burned, with gold losing $17.80 to $736.30 and silver declining 41 cents to $13.45.
The moves in the metals are of particular interest. The last time they fell in tandem by such a large amount was last month, at the height of the mad cash scramble prompted by the ongoing credit squeeze.
There's a safe bet that some of the selling in the metals was credit-related, as that nasty little problem may have been swept under the rug for now, but is beginning to smell.
What will be interesting is how the major banks handle the massive writedowns for the mortgage mess in their third quarter reports. The largest banks, including Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wachovia (WB), Washington Mutual (WM) and Wells Fargo (WFC) all report between October 15 and 19. That's just two weeks away and investors should expect some serious fallout. Citigroup already warned that profits would be cut by more than 60%. None of the others have yet to show such bravery, though some word is sure to slip out sooner rather than later.
When one or two of these drop a bomb on the market, expect some serious reconsideration in trading strategy for the remainder of the quarter. Most mainstream stocks won't be adversely affected, though some strain will surely be showing as we wend our way toward the holidays.
October can be a vicious month for stocks. Ask anybody who was around in 1929.
Monday, October 1, 2007
4th quarter begins with a bang
As though there is no peak too high for the US equity markets, stocks soared to record highs on Monday as the 4th quarter opened with the loud sounds of buy orders.
Dow 14,087.55 +191.92; NASDAQ 2,740.99 +39.49; S&P 500 1,547.04 +20.29; NYSE Composite 10,184.50 +145.22
Whether or not this frenzied pace is sustainable is anyone's guess, but buying stocks when they are at or near their all-time highs has proven - time and again - to be a fool's game. The Dow Jones Industrials soared to a record close on strong volume with the other major indices reaching or close to multi-year highs. The NASDAQ is at a 6 1/2 year high; the S&P 500 within 6 points of its all-time high.
Market internals displayed the obvious. Gainers outnumbered losers by nearly 3-1 while new highs arched over new lows, 451-159, the largest that divergence in two months.
Naturally, the dollar fell again against the British Pound and the Euro, but commodities were tame. Oil futures lost another $1.42, but remain stubbornly high, closing at $80.24. Gold gained while silver lost marginally.
For a perspective on why Fed rate cuts are not always good for economies, see this exceptional article on the Mises.com site.
Tuesday will be all the more interesting to see if volume and price remain strong.
Dow 14,087.55 +191.92; NASDAQ 2,740.99 +39.49; S&P 500 1,547.04 +20.29; NYSE Composite 10,184.50 +145.22
Whether or not this frenzied pace is sustainable is anyone's guess, but buying stocks when they are at or near their all-time highs has proven - time and again - to be a fool's game. The Dow Jones Industrials soared to a record close on strong volume with the other major indices reaching or close to multi-year highs. The NASDAQ is at a 6 1/2 year high; the S&P 500 within 6 points of its all-time high.
Market internals displayed the obvious. Gainers outnumbered losers by nearly 3-1 while new highs arched over new lows, 451-159, the largest that divergence in two months.
Naturally, the dollar fell again against the British Pound and the Euro, but commodities were tame. Oil futures lost another $1.42, but remain stubbornly high, closing at $80.24. Gold gained while silver lost marginally.
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Not everyone is convinced that this rally is sustainable as most of it has to do with the recent Federal Reserve rate cuts and the promise of more to come. Worldwide, equity markets have had over $1 trillion pumped into them since the recent sub-prime induced liquidity crisis and inflation and recession may be rearing their twin ugly heads sooner than anyone might hope.The Path of Substantial Wealth and Riches: Your Parents' Influence on Your Finances
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For a perspective on why Fed rate cuts are not always good for economies, see this exceptional article on the Mises.com site.
Tuesday will be all the more interesting to see if volume and price remain strong.
Friday, September 28, 2007
End of Quarter Apathy
Friday was the final day of trading for the third quarter. Usually there's quite a bit of trading activity when a quarter ends because mutual funds and institutions generally unload or pick up stocks for their various portfolios, but this day ended with a whimper instead of a blast.
Trading volume was light, and, as the recent market activity continues to suggest, the market has no direction because investors on either side of the buy/sell equation have been spooked and rendered somewhat inert by the credit calamity and the Fed's gigantic rate cut.
Nobody wants to believe or admit that there's still a problem in credit markets, even after central banks injected over $1 Trillion in liquidity over the past six weeks. The Fed cut the discount rate a full percentage point and the federal funds rate by 1/2%. The resultant rally on Wall Street was the expected result, as was the run-up in gold, silver and oil, and the run-down of the US dollar, which continues to reach new lows against the Euro and other currencies daily.
Dow 13,895.63 -17.31; NASDAQ 2,701.50 -8.09; S&P 500 1,526.75 -4.63; NYSE Composite 10,039.28 -17.67
Logic would suggest that a lower value for he dollar would drive stock prices higher (since the money backing those stocks is worth less every day) and logic would, of course, be correct. However, the long term aspect is frightening. Stocks will price themselves to infinity as the US dollar buys less and less of everything. Sure, you'll own 10,000 shares of stock XYZ at an all time high, but you won't be able feed your family with the proceeds because bread is now $400 per loaf.
The Fed rate cut may have been good for multi-national firms and their stock prices, but it is inherently inflationary. More news on that front came in the form of today's core PCE deflator, a favorite inflation indicator for the Fed, being up only 0.1%.
Analysts say the Fed will be able to justify more rate cuts in coming months with inflation so low, but the idea that inflation has or is being contained is a figment of some very dull economic minds. Adding in fuel and food expenditures, inflation has been running at a steady rate of over 4% for at least the last three years.
But, using the Fed's numbers, we'll all be told that inflation is not a problem as the Fed cuts rates again and again, debasing our currency even further. If you thought Alan Greenspan was a master economist, you'll love Ben Bernanke. Greenspan only damaged the economy with his boom and bust strategy. Bernanke intends to break it permanently.
Declining stocks once again held sway over advancing issues, by a 4-3 margin. New highs ruled the day, beating new lows, 310-172, a fairly slim advantage.
Oil dropped $1.22 to a mere $81.66, but gold and silver had banner days, with gold up a whopping $10.10 to close at an even $750.00 per ounce and silver adding 28 cents to $13.92.
The money's in the metals, the dollar's in the toilet, but the DJI is just $105 points away from the all-time high. For a holistic, humanistic view of economics, I suggest taking a drive to buy a gallon of milk. That's where it's really at. Thanks, Mr. Bernanke. Sleep well, you bastard.
Trading volume was light, and, as the recent market activity continues to suggest, the market has no direction because investors on either side of the buy/sell equation have been spooked and rendered somewhat inert by the credit calamity and the Fed's gigantic rate cut.
Nobody wants to believe or admit that there's still a problem in credit markets, even after central banks injected over $1 Trillion in liquidity over the past six weeks. The Fed cut the discount rate a full percentage point and the federal funds rate by 1/2%. The resultant rally on Wall Street was the expected result, as was the run-up in gold, silver and oil, and the run-down of the US dollar, which continues to reach new lows against the Euro and other currencies daily.
Dow 13,895.63 -17.31; NASDAQ 2,701.50 -8.09; S&P 500 1,526.75 -4.63; NYSE Composite 10,039.28 -17.67
Logic would suggest that a lower value for he dollar would drive stock prices higher (since the money backing those stocks is worth less every day) and logic would, of course, be correct. However, the long term aspect is frightening. Stocks will price themselves to infinity as the US dollar buys less and less of everything. Sure, you'll own 10,000 shares of stock XYZ at an all time high, but you won't be able feed your family with the proceeds because bread is now $400 per loaf.
The Fed rate cut may have been good for multi-national firms and their stock prices, but it is inherently inflationary. More news on that front came in the form of today's core PCE deflator, a favorite inflation indicator for the Fed, being up only 0.1%.
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However, year over year core-PCE is 1.8%, close to the high end of the Fed's "target range" of 1-2%. This serves only as more evidence of the fraud in statistics and the Fed's overall rationale. Core-PCE (personal consumption expenditures) covers everything except food and energy, the two items that have more impact on everyday life than anything else and the two areas which have been rising the most over the past two years.Forex Foreign Currency Exchange Trading Beginner's Resource Center.
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Analysts say the Fed will be able to justify more rate cuts in coming months with inflation so low, but the idea that inflation has or is being contained is a figment of some very dull economic minds. Adding in fuel and food expenditures, inflation has been running at a steady rate of over 4% for at least the last three years.
But, using the Fed's numbers, we'll all be told that inflation is not a problem as the Fed cuts rates again and again, debasing our currency even further. If you thought Alan Greenspan was a master economist, you'll love Ben Bernanke. Greenspan only damaged the economy with his boom and bust strategy. Bernanke intends to break it permanently.
Declining stocks once again held sway over advancing issues, by a 4-3 margin. New highs ruled the day, beating new lows, 310-172, a fairly slim advantage.
Oil dropped $1.22 to a mere $81.66, but gold and silver had banner days, with gold up a whopping $10.10 to close at an even $750.00 per ounce and silver adding 28 cents to $13.92.
The money's in the metals, the dollar's in the toilet, but the DJI is just $105 points away from the all-time high. For a holistic, humanistic view of economics, I suggest taking a drive to buy a gallon of milk. That's where it's really at. Thanks, Mr. Bernanke. Sleep well, you bastard.
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