Is anyone other than the Fed governors and CNBC hosts convinced that ZIRP and QE aren't exactly working?
For the second day out of the past three, stocks suffered severe, across-the-board losses, extending the pullback that began on Friday.
The worst performing index has been the NASDAQ, which has dropped nearly 100 points since the close on Thursday (1300.18).
Dow stocks, predominated by high-yielding, dividend-producing income companies - the creme de la creme - have fared better, though the index is still down 247 points and there are still two days remaining in the trading week.
While the recent moves may be described as a precursor of the time-honored tradition of "sell in May and stay away," the directionality is troubling, because the US is supposed to be in a recovery.
Not helping matters much are the oddities coming out of Boston in the aftermath of Monday's bomb strikes, and Washington, where packages containing ricin have been showing up with increasing frequency.
Larger issues loom in Europe, where data continues to deteriorate, even in Germany, thought to be the bastion of strength.
Corporate earnings have been less-than-encouraging as well. Today's numbers from Bank of America (BAC) were notably weak, spurring the drop at the opening bell.
Still, the losses have not reached even three percent, so it may well be too early to make a call that direction has changed, though, as has been pointed out repeatedly here and elsewhere, bull markets do not last forever, and this one is heading into its 50th month.
Key data this week has included a wicked drop in the Empire State manufacturing index, from 9.2 to 3.1, a negative reading (-0.2) on CPI for March and a drop-off in building permits, suggesting that the housing sector may not be quite as healthy as the pundits have been preaching.
Volume on the day was particularly heavy, a signal not lost on both bulls and bears; decliners outpaced advancing issues four-to-one; new lows, for the first time this year, superseded new highs, and by a rather large amount, another key metric.
After the bell, both American Express (AXP) and eBay (EBAY) missed gross revenue targets and just barely beat (each by a penny) the per share earnings forecasts.
Commodities continue to be beaten down as deflationary forces appear to be winning at the present time. Depending upon which side you butter your bread, that may be good or bad news.
There is good news in oil, which hit a multi-month low. If prices for crude continue to depress and remain so, it won't be long before driving Americans finally get a break at the gas pump.
Gold and silver continue to be on sale, though shortages in physical metal are widespread and premiums over spot prices are ranging anywhere from 16 to 35 percent. If that condition persists, forget the gold and silver ETFs, they will eventually break down as the backers are unable to deliver physical metal on contracts.
LATE BREAKING: Senate votes down gun control "compromise" measure. Long live the 2nd amendment!
and...
Europe's leading parliamentarian, Nigel Farage:
Dow 14,618.59, -138.19 (0.94%)
NASDAQ 3,204.67, -59.96 (1.84%)
S&P 500 1,552.01, -22.56 (1.43%)
NYSE Composite 8,955.47, -130.96 (1.44%)
NASDAQ Volume 1,889,783,125
NYSE Volume 4,579,846,000
Combined NYSE & NASDAQ Advance - Decline: 1382-5083
Combined NYSE & NASDAQ New highs - New lows: 87-178 (this could be huge!)
WTI crude oil: 86.68, -2.04
Gold: 1,373.10, -14.30
Silver: 23.24, -0.383
Wednesday, April 17, 2013
Tuesday, April 16, 2013
Global Financial Condition Cannot Be Sustained
Hyperbole aside, Monday's market events need to be taken in context with current conditions before examining the relief rally on Tuesday.
Stocks were close to record highs, advancing steadily from the November lows and putting the first three months of 2013 in frothy territory. A reversal - and not just a one-day, buy-the-dip kind of drop - was long overdue and is likely to continue because all economic data over the past three weeks have disappointed.
Eventually, stocks will coincide with reality, as they did on Monday, spurred on by China's announcement that their economy continues to slow. That news sent all Asian equity markets into a tailspin and put a negative tone on the European markets and eventually to the US as well. The slide was a global one, reflecting conditions that have even the usually-rosy IMF predicting slow global growth of around two percent, which is probably an overstatement.
Investors need to be aware of macro conditions that are causing disruptions and dislocations. China's continued courting of bi-lateral trade and currency deals with other nations - blunting US dollar hegemony - is an outlier, the impact of which should not and cannot be underestimated. The days of petro-dollar dominance are coming to an end and likely are occurring faster than those in "control" wish to consider. The ramifications of the US losing reserve currency status are deep and will put America in a non-competitive condition, not something that anyone is currently considering.
Japan's experiment with inflation may not be as seamless or painless as its architects will admit. The volatility since the beginning of the BOJ's massive buying spree is disrupting the carry trade of easy money. A slip-up or miscalculation - highly likely - could cause the target of two percent inflation to be overshot by a wide margin, spurring hyper-inflation and portending a worldwide financial calamity.
Thus, Monday's broad, massive, global selloff appears to be only the first volley from the forces of deflation, which, even with worldwide money-printing gone wild, is a relentless adversary.
As for the gold smack-down, the fingerprints of central bankers - especially our own Federal Reserve - are all over it. The rationale for the take-down of the precious metal can best be explained by two articles: one by Paul Craig Roberts, here, the other by Bill Downey at GoldTrends.net, here.
Broadly speaking, a dislocation between paper prices and physical metal on hand was causing a major problem which needed a creative, though underhanded and heavy-handed solution.
The timing of the bomb blasts in Boston could not have been more prescient for markets, as the tragedy put all other news on back burners, to the point that none of the three nightly network news shows even made mention of the stock market travails or the plunge in gold and all other commodities. Regular scheduling on CNBC was pre-empted by network coverage from the scene of the crime. For the ill-informed, all they'll know is that stocks staged yet anothr miraculous rally on Tuesday, and that all is well in the world at a time when the wheels of industry and finance are practically falling off, wheeling out in all sorts of odd directions.
Sooner or later, governments and their financiers simply can't fake it any more. Today's network whining over the "tax gap" of $500 billion annually being under-reported or not reported at all is only a symptom of the malady of over-taxation. People just have to "cheat" just to get by, and, with the numbers of food stamp recipients rising to all-time highs, the government is a willful participant in pushing people over the edge and into the "underground" economy, which has flourished since 2000 and especially since 2008.
Governments are bloated with debt and false promises, their central bankers morally, intellectually and financially bankrupt. The system will implode or explode. Different countries will have different results, though most will suffer deepening and discouraging depression and deflation. Central banks have printed over $25 trillion in fresh money since 2008, shoring up the balance sheets of zombie banks in the US, Europe and elsewhere, but the money has not flowed beyond the banks' vaults.
Financial repression will continue until massive dislocations can no longer be ignored. Financial reporting by major firms is mostly fraudulent, as many firms have bought back massive blocks of stock, making their earnings per share comparisons easy, but, eventually, weaker than the headline numbers being touted.
Wall Street may be waking up to the fact that revenue growth simply is not happening and that current levels will be difficult to maintain.
These are just a few of the issues facing global financial tinkerers. At some point, they will not have answers when problems confront them. Their time is running out.
Keep a close eye on the new highs - new lows. When that rolls over and there are more new lows than new highs for more than three days, it could be the first signal that the bull market is over and the bears are about to claw the market to pieces. That indicator has bee widely in favor of new highs for a long time, but recently has tightened, with the gap closing significantly on Monday and Tuesday.
Dow 14,756.78, +157.58 (1.08%)
NASDAQ 3,264.63, +48.14 (1.50%)
S&P 500 1,574.57, +22.21 (1.43%)
NYSE Composite 9,082.58, +128.63 (1.44%)
NASDAQ Volume 1,447,797,375
NYSE Volume 3,740,603,750
Combined NYSE & NASDAQ Advance - Decline: 5111-1368
Combined NYSE & NASDAQ New highs - New lows: 137-87
WTI crude oil: 88.72, +0.01
Gold: 1,366.40, +5.30
Silver: 23.34, -0.016
Stocks were close to record highs, advancing steadily from the November lows and putting the first three months of 2013 in frothy territory. A reversal - and not just a one-day, buy-the-dip kind of drop - was long overdue and is likely to continue because all economic data over the past three weeks have disappointed.
Eventually, stocks will coincide with reality, as they did on Monday, spurred on by China's announcement that their economy continues to slow. That news sent all Asian equity markets into a tailspin and put a negative tone on the European markets and eventually to the US as well. The slide was a global one, reflecting conditions that have even the usually-rosy IMF predicting slow global growth of around two percent, which is probably an overstatement.
Investors need to be aware of macro conditions that are causing disruptions and dislocations. China's continued courting of bi-lateral trade and currency deals with other nations - blunting US dollar hegemony - is an outlier, the impact of which should not and cannot be underestimated. The days of petro-dollar dominance are coming to an end and likely are occurring faster than those in "control" wish to consider. The ramifications of the US losing reserve currency status are deep and will put America in a non-competitive condition, not something that anyone is currently considering.
Japan's experiment with inflation may not be as seamless or painless as its architects will admit. The volatility since the beginning of the BOJ's massive buying spree is disrupting the carry trade of easy money. A slip-up or miscalculation - highly likely - could cause the target of two percent inflation to be overshot by a wide margin, spurring hyper-inflation and portending a worldwide financial calamity.
Thus, Monday's broad, massive, global selloff appears to be only the first volley from the forces of deflation, which, even with worldwide money-printing gone wild, is a relentless adversary.
As for the gold smack-down, the fingerprints of central bankers - especially our own Federal Reserve - are all over it. The rationale for the take-down of the precious metal can best be explained by two articles: one by Paul Craig Roberts, here, the other by Bill Downey at GoldTrends.net, here.
Broadly speaking, a dislocation between paper prices and physical metal on hand was causing a major problem which needed a creative, though underhanded and heavy-handed solution.
The timing of the bomb blasts in Boston could not have been more prescient for markets, as the tragedy put all other news on back burners, to the point that none of the three nightly network news shows even made mention of the stock market travails or the plunge in gold and all other commodities. Regular scheduling on CNBC was pre-empted by network coverage from the scene of the crime. For the ill-informed, all they'll know is that stocks staged yet anothr miraculous rally on Tuesday, and that all is well in the world at a time when the wheels of industry and finance are practically falling off, wheeling out in all sorts of odd directions.
Sooner or later, governments and their financiers simply can't fake it any more. Today's network whining over the "tax gap" of $500 billion annually being under-reported or not reported at all is only a symptom of the malady of over-taxation. People just have to "cheat" just to get by, and, with the numbers of food stamp recipients rising to all-time highs, the government is a willful participant in pushing people over the edge and into the "underground" economy, which has flourished since 2000 and especially since 2008.
Governments are bloated with debt and false promises, their central bankers morally, intellectually and financially bankrupt. The system will implode or explode. Different countries will have different results, though most will suffer deepening and discouraging depression and deflation. Central banks have printed over $25 trillion in fresh money since 2008, shoring up the balance sheets of zombie banks in the US, Europe and elsewhere, but the money has not flowed beyond the banks' vaults.
Financial repression will continue until massive dislocations can no longer be ignored. Financial reporting by major firms is mostly fraudulent, as many firms have bought back massive blocks of stock, making their earnings per share comparisons easy, but, eventually, weaker than the headline numbers being touted.
Wall Street may be waking up to the fact that revenue growth simply is not happening and that current levels will be difficult to maintain.
These are just a few of the issues facing global financial tinkerers. At some point, they will not have answers when problems confront them. Their time is running out.
Keep a close eye on the new highs - new lows. When that rolls over and there are more new lows than new highs for more than three days, it could be the first signal that the bull market is over and the bears are about to claw the market to pieces. That indicator has bee widely in favor of new highs for a long time, but recently has tightened, with the gap closing significantly on Monday and Tuesday.
Dow 14,756.78, +157.58 (1.08%)
NASDAQ 3,264.63, +48.14 (1.50%)
S&P 500 1,574.57, +22.21 (1.43%)
NYSE Composite 9,082.58, +128.63 (1.44%)
NASDAQ Volume 1,447,797,375
NYSE Volume 3,740,603,750
Combined NYSE & NASDAQ Advance - Decline: 5111-1368
Combined NYSE & NASDAQ New highs - New lows: 137-87
WTI crude oil: 88.72, +0.01
Gold: 1,366.40, +5.30
Silver: 23.34, -0.016
Monday, April 15, 2013
Stocks Globally Down, US Stocks Worst Session of Year; Bomb Blasts In Boston; Tax Day, Y'all
Well, I was going to take the day off in celebration of doing my income taxes for the 40th time, but, sure enough, events seem to be overtaking my expected holiday.
First, EVERYTHING WENT DOWN TODAY. From Asian markets, european markets, US and South American markets, gold, oil, silver, corn, wheat... everything.
The fact that the world is entering the second stage of the depression will be obscured by the explosions near the finish line of the Boston marathon which occurred about 3:15 pm EDT.
The nightly news will be all over the explosions and may give 30 seconds to the facts that gold fell by the most amount EVER in one day (probably the same with silver), and US markets had their worst sessions of 2013.
Already, CNBC has pre-empted their normal coverage will wall-to-wall coverage of the Boston blasts.
And, so it goes, we get 9/11 and September, 2008, all rolled into one.
You are welcome to draw your own conclusions. I'm taking the rest of the day off. When more normalcy returns (tomorrow), I'll post a complete column on what all this might mean.
Dow 14,599.20, -265.86 (1.79%)
Nasdaq 3,216.49, -78.46 (2.38%)
S&P 500 1,552.36, -36.49 (2.30%)
10-Yr Bond 1.70% -0.02
NYSE Volume 5,244,061,000
Nasdaq Volume 1,776,598,375
Combined NYSE & NASDAQ Advance - Decline: 868-5689
Combined NYSE & NASDAQ New highs - New lows: 142-137
WTI crude oil: 88.31, -2.98
Gold: 1,357.50, -143.90
Silver: 22.92, -3.41
First, EVERYTHING WENT DOWN TODAY. From Asian markets, european markets, US and South American markets, gold, oil, silver, corn, wheat... everything.
The fact that the world is entering the second stage of the depression will be obscured by the explosions near the finish line of the Boston marathon which occurred about 3:15 pm EDT.
The nightly news will be all over the explosions and may give 30 seconds to the facts that gold fell by the most amount EVER in one day (probably the same with silver), and US markets had their worst sessions of 2013.
Already, CNBC has pre-empted their normal coverage will wall-to-wall coverage of the Boston blasts.
And, so it goes, we get 9/11 and September, 2008, all rolled into one.
You are welcome to draw your own conclusions. I'm taking the rest of the day off. When more normalcy returns (tomorrow), I'll post a complete column on what all this might mean.
Dow 14,599.20, -265.86 (1.79%)
Nasdaq 3,216.49, -78.46 (2.38%)
S&P 500 1,552.36, -36.49 (2.30%)
10-Yr Bond 1.70% -0.02
NYSE Volume 5,244,061,000
Nasdaq Volume 1,776,598,375
Combined NYSE & NASDAQ Advance - Decline: 868-5689
Combined NYSE & NASDAQ New highs - New lows: 142-137
WTI crude oil: 88.31, -2.98
Gold: 1,357.50, -143.90
Silver: 22.92, -3.41
Friday, April 12, 2013
Gold, Silver Smashed; JP Morgan, Wells Fargo Beat, Sell Off
More questions than answers in the jumbled mess of trading today.
Stocks opened down rather sharply and stayed in the red the balance of the session, but, as usual, the bulls came back in the late stages to push the Dow from a 74-point loss to almost unchanged.
Both JP Morgan Chase (JPM) and Wells-Fargo (WFC) posted positive first quarter results prior to the opening bell, but were sold off in the regular session.
Aside from the usual hijinks in stocks, the real story was in commodities, where gold and silver were battered, sending them to two-year lows.
The questions surrounding the gold trade are thus:
Did Goldman Sachs - which lowered their forecasts just days ago on gold - have anything to do with it or have advance knowledge? (Probably.)
Was the forced selling of gold from the Cyprus central bank the cause or an effect?
Understandable that gold was rocked down, but silver fell even more, by percentage. Why?
The best news of the day came from the oil pits, where crude traded just above $90 for a time today and closed down more than 2%. A cursory glance at oil prices over the past year show the downtrend fully in place. Consequently, gas at the pump is down 36 cents from a year ago, on average, and should drop even more in coming weeks with today's drop.
The commodities, along with the string of recent misses in US economic data (today, retail sales were a stinker), may be telling the market something which it does not wish to hear, setting up a correction that is long overdue. Leading that concept is the huge imbalance in the advance-decline line, given the smallish losses.
Of course, that's just the kind of thinking that leads to losses in this liquidity-fed environment, but, then again, how long can this bull run without a break and without breaking down? The current bull market is just over 48 months, and the general length of bull markets is somewhere between 44 and 62 weeks. Time may be running short, or , is this time different?
The word from the Fed is simple. Stay long. Stay strong.
Ah, conventional wisdom is so... simple.
Dow 14,865.06, -0.08 (0.00%)
NASDAQ 3,294.95, -5.21 (0.16%)
S&P 500 1,588.85, -4.52 (0.28%)
NYSE Composite 9,188.11, -45.91 (0.50%)
NASDAQ Volume 1,459,983,750
NYSE Volume 3,534,229,250
Combined NYSE & NASDAQ Advance - Decline: 2478-3940
Combined NYSE & NASDAQ New highs - New lows: 260-53
WTI crude oil: 91.29, -2.22
Gold: 1,501.40, -63.50
Silver: 26.33, -1.366
Stocks opened down rather sharply and stayed in the red the balance of the session, but, as usual, the bulls came back in the late stages to push the Dow from a 74-point loss to almost unchanged.
Both JP Morgan Chase (JPM) and Wells-Fargo (WFC) posted positive first quarter results prior to the opening bell, but were sold off in the regular session.
Aside from the usual hijinks in stocks, the real story was in commodities, where gold and silver were battered, sending them to two-year lows.
The questions surrounding the gold trade are thus:
Did Goldman Sachs - which lowered their forecasts just days ago on gold - have anything to do with it or have advance knowledge? (Probably.)
Was the forced selling of gold from the Cyprus central bank the cause or an effect?
Understandable that gold was rocked down, but silver fell even more, by percentage. Why?
The best news of the day came from the oil pits, where crude traded just above $90 for a time today and closed down more than 2%. A cursory glance at oil prices over the past year show the downtrend fully in place. Consequently, gas at the pump is down 36 cents from a year ago, on average, and should drop even more in coming weeks with today's drop.
The commodities, along with the string of recent misses in US economic data (today, retail sales were a stinker), may be telling the market something which it does not wish to hear, setting up a correction that is long overdue. Leading that concept is the huge imbalance in the advance-decline line, given the smallish losses.
Of course, that's just the kind of thinking that leads to losses in this liquidity-fed environment, but, then again, how long can this bull run without a break and without breaking down? The current bull market is just over 48 months, and the general length of bull markets is somewhere between 44 and 62 weeks. Time may be running short, or , is this time different?
The word from the Fed is simple. Stay long. Stay strong.
Ah, conventional wisdom is so... simple.
Dow 14,865.06, -0.08 (0.00%)
NASDAQ 3,294.95, -5.21 (0.16%)
S&P 500 1,588.85, -4.52 (0.28%)
NYSE Composite 9,188.11, -45.91 (0.50%)
NASDAQ Volume 1,459,983,750
NYSE Volume 3,534,229,250
Combined NYSE & NASDAQ Advance - Decline: 2478-3940
Combined NYSE & NASDAQ New highs - New lows: 260-53
WTI crude oil: 91.29, -2.22
Gold: 1,501.40, -63.50
Silver: 26.33, -1.366
Thursday, April 11, 2013
New Highs All Around... Again
Can it really be this easy?
Apparently, investing has become more sport than discipline, as the major indices drove again to new highs - the NASDAQ bounding over 3300, with the Dow, the Comp. and S&P 500 setting new all-time record closes.
In addition to the Fed's constant $85 billion/month put, there are other factors at work. Money is pouring out of Japan and Europe since the Cyprus incident and the BOJ's experimental monetary policy that makes Bernanke's monetizing of US debt appear paltry.
The Japanese central bank, while openly buying all the government issued treasuries it can, is also tinkering in the open markets, buying ETFs and REITs, especially.
If Bernanke gets a whiff of this kind of action, US markets could be buffeted with even more stimulus by the Fed, openly buying stocks to levitate the equity markets higher.
When it will end is anybody's guess, but, despite some Fed officials openly saying - in yesterday's leaked February Fed minutes - that they'd like to taper the bond purchases this year and possibly end them by year's end, Friday's non-farm payroll and today's news that first quarter PC shipments fell by 13.9% globally, the worst decline since records began being kept in 1994.
While Wall Street is flying high, the real economy may not be quite so robust. Many argue that the US is still in a recession, and that the one which began in 2007 never really ended. High levels of unemployment has become endemic, a structural rather than a cyclical issue.
Nonetheless, the markets continue to roar higher, and the chances for a significant pull-back seem about as good as a chicken hatching a coyote. There hasn't been a major decline since August of 2011, and that one was caused by our congress and president nearly letting the government breach the debt ceiling.
The mountains of debt being piled up in Washington are of little concern to Wall Street, though, nor, it appears, to the millions of American who have jobs, or are collecting on one of a myriad of entitlement programs.
It wasn't supposed to work this way, but, for now, it's what we've got as an economy and there's practically nobody arguing against its continued success.
Of those groups getting murdered by the rise of stocks are retirees, who cannot make any money safely, i.e., in fixed income investments, gold and silver bugs and anyone who's not "in."
The question remaining is when these groups capitulate and join the party, will the rug be pulled from under them?
Dow 14,865.14, +62.90 (0.42%)
NASDAQ 3,300.16, +2.91 (0.09%)
S&P 500 1,593.37, +5.64 (0.36%)
NYSE Composite 9,234.62, +45.53 (0.50%)
NASDAQ Volume 1,793,031,500
NYSE Volume 3,476,424,250
Combined NYSE & NASDAQ Advance - Decline: 3663-2761
Combined NYSE & NASDAQ New highs - New lows: 563-25
WTI crude oil: 93.51, -1.13
Gold: 1,564.90, +6.10
Silver: 27.70, +0.044
Apparently, investing has become more sport than discipline, as the major indices drove again to new highs - the NASDAQ bounding over 3300, with the Dow, the Comp. and S&P 500 setting new all-time record closes.
In addition to the Fed's constant $85 billion/month put, there are other factors at work. Money is pouring out of Japan and Europe since the Cyprus incident and the BOJ's experimental monetary policy that makes Bernanke's monetizing of US debt appear paltry.
The Japanese central bank, while openly buying all the government issued treasuries it can, is also tinkering in the open markets, buying ETFs and REITs, especially.
If Bernanke gets a whiff of this kind of action, US markets could be buffeted with even more stimulus by the Fed, openly buying stocks to levitate the equity markets higher.
When it will end is anybody's guess, but, despite some Fed officials openly saying - in yesterday's leaked February Fed minutes - that they'd like to taper the bond purchases this year and possibly end them by year's end, Friday's non-farm payroll and today's news that first quarter PC shipments fell by 13.9% globally, the worst decline since records began being kept in 1994.
While Wall Street is flying high, the real economy may not be quite so robust. Many argue that the US is still in a recession, and that the one which began in 2007 never really ended. High levels of unemployment has become endemic, a structural rather than a cyclical issue.
Nonetheless, the markets continue to roar higher, and the chances for a significant pull-back seem about as good as a chicken hatching a coyote. There hasn't been a major decline since August of 2011, and that one was caused by our congress and president nearly letting the government breach the debt ceiling.
The mountains of debt being piled up in Washington are of little concern to Wall Street, though, nor, it appears, to the millions of American who have jobs, or are collecting on one of a myriad of entitlement programs.
It wasn't supposed to work this way, but, for now, it's what we've got as an economy and there's practically nobody arguing against its continued success.
Of those groups getting murdered by the rise of stocks are retirees, who cannot make any money safely, i.e., in fixed income investments, gold and silver bugs and anyone who's not "in."
The question remaining is when these groups capitulate and join the party, will the rug be pulled from under them?
Dow 14,865.14, +62.90 (0.42%)
NASDAQ 3,300.16, +2.91 (0.09%)
S&P 500 1,593.37, +5.64 (0.36%)
NYSE Composite 9,234.62, +45.53 (0.50%)
NASDAQ Volume 1,793,031,500
NYSE Volume 3,476,424,250
Combined NYSE & NASDAQ Advance - Decline: 3663-2761
Combined NYSE & NASDAQ New highs - New lows: 563-25
WTI crude oil: 93.51, -1.13
Gold: 1,564.90, +6.10
Silver: 27.70, +0.044
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