Boom Times: Stocks Up Every Friday in 2013

Want to know what the easiest trade of 2013 has been?

Simple. Buy any index fund, future or call on Thursday just prior to the market close and sell it for a profit some time on Friday.

Stocks have been up on each and every Friday of 2013, ten in a row, including today's push higher thanks to a BLS non-farm payroll report that showed creation of 236,000 jobs in February and the unemployment rate falling from 7.9 to 7.7%.

Never mind that most of the jobs were part time or that the jump in the unemployment rate was due to a furher deterioration in the labor participation rate, Wall Street took the headline number and ran with it.

As has been said ad nauseum on this and other like-minded blogs, there has probably never been a safer environment in which to invest in stocks. Due to the low level of returns on bonds, equities are the only game in town and one would have to have been one of the worst stock pickers or timers of the last century not to have made money in this unprecedented, elongated bull run.

Besides being in the midst of one of the best market advances of all time, today marks the four-year anniversary of the bottom. On March 9, 2009, stocks bottomed, began to rise and have never looked back.

Whether one agrees with the tactics or not, one has to hand it to the federal reserve and Chairman Bernanke. Through their efforts of quantitative easing, sero interest rate policy and coordination with central banks around the globe, the Fed - with an assist from the Treasury Department - averted what could have been one of the most devastating financial collapses of all time.

Bravo! Mr. Bernanke.

Dow 14,396.92, +67.43 (0.47%)
NASDAQ 3,244.37, +12.28 (0.38%)
S&P 500 1,551.15, +6.89 (0.45%)
NYSE Composite 9,059.53, +46.09 (0.51%)
NASDAQ Volume 1,574,870,375
NYSE Volume 3,734,663,750
Combined NYSE & NASDAQ Advance - Decline: 4298-2148
Combined NYSE & NASDAQ New highs - New lows: 601-21 (WOW!)
WTI crude oil: 91.95, +0.39
Gold: 1,576.90, +1.80
Silver: 28.95, +0.14

Another Day, Another Dow Record

Until further notice, just figure on stocks gaining about one percent per week on the major indices. There seems to be no impediment to rising equity asset prices and there is a great deal of support for prices at these levels.

Don't count on tomorrow's non-farm payroll data to make any difference at all; the experts are predicting a gain of about 160,000 jobs in February, pretty much in line with Wednesday's ADP report.

The Russell 2000 set an all-time high today, and the S&P 500 is just about 20 points from cracking the champagne on a new record top. That event could be any time within the next two to four weeks and it is one which investors are eyeing with some skepticism as it is a much broader average than the Dow Industrials.

Party on, but not like it's 1999, because 2000 was not a pretty year.

Best guess has Dow 15,000 in sight by the end of the year, possibly much sooner, unless there is some wild geo-political event or sudden reversal of fortune coming out of the blue, but betting on black swans has not been fruitful the past four years.

There's probably never been a safer environment for short-term traders. Stocks are on an unmistakable flight path to new highs.

Dow 14,329.49, +33.25 (0.23%)
NASDAQ 3,232.09, +9.72 (0.30%)
S&P 500 1,544.26, +2.80 (0.18%)
NYSE Composite 9,013.36, +16.39 (0.18%)
NASDAQ Volume 1,647,033,000
NYSE Volume 3,871,534,750
Combined NYSE & NASDAQ Advance - Decline: 3862-2586
Combined NYSE & NASDAQ New highs - New lows: 420-18
WTI crude oil: 91.56, +1.13
Gold: 1,575.10, +0.20
Silver: 28.81, +0.005

Dow Reaches New High... Again; Hugo Chavez Death a Boon for Oil Companies

Another day, another new high for the Dow Jones Industrials.

Ho, hum, bumble-dee-dum.

It's going to be this way for a while. Don't expect a major correction any time soon, no matter what happens in the real world, because we haven't had one since the fall of 2011, when the government was about to go over the artificial debt ceiling.

Did somebody say artificial? How crass. But, it should be noted that most of what occurs on computer screens and TVs these days is nothing but bunk, a self-sustaining Wall Street fantasy designed to keep the economy from deflating.

And, you know, a little deflation - in things like gas prices, food prices and maybe, god forbid, event ticket prices - might not be such a bad thing.

But that is what the fed fears most... runaway deflation, where prices actually match up with the costs of living. For those of you under the age of 50, there was a time in this country - not so long ago - that a man could support a family with his own wages and still have money left over to save.

Those days are long gone, unless you're making over $85K a year, are an expert budgeter and have an understanding wife. (Please, hold your laughter.)

That would apply to maybe 10% of the population. The rest are waiting in line at Wal-Mart at midnight waiting for the food stamp deposit to clear the bank so as to proceed to checkout. The disparities between rich and poor in America have not compressed, but, look on the bright side, they're worse in Europe and France is forcing most of their million-and-billionaires to move because of confiscatory tax rates.

So, Hugo Chavez, president of Venezuela, is dead, so ExxonMobil, Royal Dutch Shell, BP and Chevron now have a free pass to plunder the resources of another South American nation. It's all good. Plundering in the Middle east or Africa is such a tiring trip, so far from the homeland.

This morning's ADP employment report showed a gain of 198,000 jobs in February, spurred mostly by - hold on now - small businesses. And you though the days of any job over 30 hours were over thanks to Obamacare. Well, wait until next year. We're in a recovery, dontcha know.

Today's market action was about as muted as a golf clap for a double bogey. The S&P struggled to close positive; the NASDAQ couldn't muster into the green.

When the music stops, make sure your chair has four legs.

Dow 14,296.24, +42.47 (0.30%)
NASDAQ 3,222.37, -1.76 (0.05%)
S&P 500 1,541.46, +1.67 (0.11%)
NYSE Composite 8,996.97, +18.88 (0.21%)
NASDAQ Volume 1,716,934,500
NYSE Volume 3,951,567,000
Combined NYSE & NASDAQ Advance - Decline: 3548-2878
Combined NYSE & NASDAQ New highs - New lows: 520-54
WTI crude oil: 90.43, -0.39
Gold: 1,574.90, 0.00
Silver: 28.80, +0.199

INEVITABLE: Dow Sets New All-Time Closing High

Without a doubt, this headline news story is about the least anticipated - because it was such a sure thing - of this or any recent year.

With unemployment at 7.9%, 47 million Americans on food stamps and after millions of foreclosures, bank bailouts, company bailouts (GM, Chrysler, AIG, others), a downgrade of the US from AAA to AA+, Wall Street has its new record high.

Big whoop.

That's the good news.

Keeping a level head and household, as prices rise and wages stagnate, that's the tough part. Not everyone in America has participated in this miraculous four year rally off the March, 2009 lows. The main beneficiaries have been the big Wall Street brokerages, which, thanks to the magnanimity of the Federal Reserve - whose balance sheet has more than triple in that time period - were able to at least partially repair their broken balance sheets and claim victory over the evil financial crash.

At this level the Dow Jones Industrials are up a stunning 117% off the lows, as good a period for stocks as ever has been, though one might argue that it was bought on the backs of homeowners, many of whom are still trapped in their domiciles, with prices well below what they owe or what they paid back in the heady days of the early to mid-2000s.

It would be a different story were the US economy growing at a pace of better than two percent - where it's been stuck for these past four to five years, but, realistically, there aren't many Americans who can camly state that they've doubled their net investment value over the past four years. Most of the gains were made on Wall Street or close to it, by the traders, players and hedge funds who expressed their blind faith that the system would not - could not - fail, and dove headlong into stocks.

Bully for them, and may they enjoy their profits. There's absolutely nothing wrong with making money. But, the evidence that the majority of Americans are not participating is clear. Average daily volumes are less than half what they were in 2007, the last time the Dow posted a record close.

There's also the fear that keeps people out of markets. It's no coincidence that after making new highs, stocks have lately had the nasty habit of recoiling and falling back, as was the case in both 2000 and 2007.

So, this may be short-lived if recent history is a guide, or, are we on the path to a new and glorious epoc of American exceptionalism?

One would be hard-pressed to find anyone of that undiluted opinion... except maybe on CNBC or Bloomberg TV, where "guests" are paid handsomely to talk their book.

Buy, buy, buy at the new all-time high?

You're kidding, right?

And, not to rain on anybody's parade, here are the changes to the makeup of the Dow Industrials since 2007.

On February 19, 2008, Chevron (CV) and Bank of America (BAC) replaced Altria Group (MO) and Honeywell (HON).

On September 22, 2008, Kraft Foods (KRFT) replaced American International Group (AIG).

On June 8, 2009, General Motors (GM) and Citigroup (C) were replaced by The Travelers Companies (TRV) and Cisco Systems (CSCO).

On September 24, 2012, UnitedHealth Group (UNH) replaced Kraft Foods (KRFT).

It seems, especially in that September 22, 2008 swap, that some bad was replaced with good. GM was restructured and salvaged by the US government. Citigroup went through a 1:10 reverse split in 2010. Where would the Dow be today, without these changes? Travelers alone is up over 100% since joining the Dow.

And, lest we forget that little thing called inflation, which, experts tell us, has been running at about 2.5% for the past five years, today's record for the Dow is a nominal one, not a real one, and, just to throw some more fuel on the fire, measured in gold instead of dollars, it's not even close. In fact, measured against gold, the Dow has barely budged off the bottom.

It's all a matter of which metrics you want to use.

No matter what, though, let's see how high it goes from here. With the Fed backing it at the rate of $85 billion a month, it should rip right through 15,000 before even breaking a sweat.

Dow 14,253.77, +125.95 (0.89%)
NASDAQ 3,224.13, +42.10 (1.32%)
S&P 500 1,539.79, +14.59 (0.96%)
NYSE Composite 8,978.12, +77.07 (0.87%)
NASDAQ Volume 1,849,814,250
NYSE Volume 3,686,912,250
Combined NYSE & NASDAQ Advance - Decline: 4532-1728
Combined NYSE & NASDAQ New highs - New lows: 688-50
WTI crude oil: 90.82, +0.70
Gold: 1,574.90, +2.50
Silver: 28.60, +0.108

Central Bank Bubbles Cause Dow to Hit 2nd-Best All-Time Closing High

There's been an ongoing debate over whether there is a bond bubble and whether - and when - it will finally burst.

With the Fed carrying the water for the US Treasury to the tune of 40-45% of all new debt issuance there's abmple evidence that Chairman Bernanke and his henchmen and women have had the bubble-blowing pipes surgically implanted into their collective mouths. They've managed to keep all interest rates at historically-low, bargain basement prices for the past four years, though the net results of their efforts have been widely different depending upon one's perspective.

For the nation's largest banks, Fed largesse has meant easy money with which to rebuild their badly-damaged balance sheets after the real estate debacle which ended in the 2008 crash. This easy money has also inspired rampant speculation by those very same banks and has trickled down to hedge funds, the marginal buyer in this runaway stock market.

Whether the bond bubble will eventually burst is a matter of conjecture and even more speculation, though one can be relatively assured that if such a bubble exists and does burst, rates will escalate higher in a disorderly fashion which will make any previous stock market crash look like a summer picnic. In sum, higher interest rates would wreck the global economy. Everyone from the marginal student lender to the great sovereign nations of the world would be unable to service debt at higher - and rising - interest rates. Cue the oompah band from the days of the Weimar Republic.

Where there exists a bona fide, can't miss, no-doubt-about-it bubble is in stocks. Friday will mark the four-year anniversary of the bottom of the 2008-09 slide into the abyss. In those four short years, the major indices have embarked upon one of the longest uninterrupted stock rallies in global history. The Fed's insistence to throw $85 billion per month at the market through the purchase of Treasury and mortgage-backed securities is like traders drinking from an endless champagne fountain, drunk in the knowledge that any slight pullback will be shortly erased by the ungodly amounts of capital flowing into the markets.

Because the Fed has crushed interest rates (and with them, savers), stocks are the only financial instruments by which one can expect a return in excess of inflation, which is, after all, the key to maintaining and developing a wealth portfolio.

One method by which one can identify a bubble is by watching the dips and subsequent rebounds. In the stock market, this phenomenon is readily apparent. Just looking at today's intraday loss of 61 points and the middday reversal and eventual positive close is evidence enough that - turning an old adage on its side - what goes down will go up.

Last week's 200-plus-point drop on Monday was snuffed out and overwhelmed in the next two days of trading. The pattern is unmistakable and repeatable throughout the four years of excessive Federal Reserve easing and zero interest rate policy. To say that such extraordinary measures are unsustainable would be the understatement of the millennium. Never before in recorded history have interest rates been held so artificially low for such an extended period of time.

The problem with the Fed's policies are that they are reckless and untried in practice. Based entirely upon a groupthink methodology of Keynsian economic theory, the Fed has taken a free-market demand economy and turned it into a manipulated, command-driven socialism experiment, and the results are not and will not be understood until there is an attempt to undo whatever good or damage has been done and return to a semblance of "normalcy," a term becoming more quaint and misunderstood each passing day.

Other than stocks and bonds, the Fed has created - with ample assistance from the inept federal government apparatus - a bubble in student loans, which last year exceeded the total amount of credit crad debt outstanding, approaching a trillion dollars.

One can argue that an education is a worthwhile investment, though, comparing to credit cards, at least most people would have something tangible to show for their monthly statement of debt-slavery. For the graduates and soon-to-be grads, they have a peice of paper attesting they have some rudimentary knowledge in some broad field of endeavor. In an economy long on promise and short on actual paying jobs, those sheepskins are, and maybe become even more, worthless.

The US Federal Reserve is not alone in blowing bubbles, though one can rest assured they were cheering the Chinese all the way toward creating what now must be considered the most massive real estate bubble in the history of the world, dwarfing the sub-prime fiasco by a matter of degrees.

As mentioned by many over the year and documented by CBS' 60 Minutes on the Sunday, March 3rd broadcast, the Chinese have created at least a dozen "ghost cities" complete with high-rises, shopping malls, streets and thoroughfares, infrastructure and amenities, just no people. The simple fact is that the Chinese people were sold a bill of goods by their own versions of snake oil salesmen, buying up properties in developments on the outskirts of most major cities, even though the apartments, housing and commercial rental units are far beyond the reach of the average Chinese working-class individual or family. The 12-minute clip is embedded below.

Whether the timing of the 60 Minutes report was coincidental or just dumb luck (being of the conspiracy mind, we think it's the former), the Chinese central government has imposed new rules designed to slow down the real estate frenzy or the piercing of the bubble, which will, without a doubt, eventually burst. The question is simply a matter of how long and how well Chinese officials can lie and obfuscate the reality that they have created a bubble that has - during the buildup - resonated worldwide, and will do the same as it deflates.

The new measures, which involve higher down payments and higher interest rates on second home buyers and a 20% capital gains tax on the sale of any housing unit that is not a primary dwelling. The Shanghai Composite lost 3.7% on the day, with a number of property development firms down the maximum allowable one-day drop of 10%.

With those results in tow, US stocks began the day lower, but, thanks to our own financial fantasy-land bubble machine, ended higher.

Once again, it seems the three most basic tenets of investment practice have been ignored: buy low, sell high, and do your own due diligence. People never seem to learn.

Oh, well. It's only money.



Dow 14,127.82, +38.16 (0.27%)
NASDAQ 3,182.03, +12.29 (0.39%)
S&P 500 1,525.20, +7.00 (0.46%)
NYSE Composite 8,901.07, +26.88 (0.30%)
NASDAQ Volume 1,716,599,625
NYSE Volume 3,701,113,250
Combined NYSE & NASDAQ Advance - Decline: 3483-2956
Combined NYSE & NASDAQ New highs - New lows: 411-81
WTI crude oil: 90.12, -0.56
Gold: 1,572.40, +0.10
Silver: 28.50, +0.006