Issues persist in global financial markets and investors are beginning to shift assets back into fixed income, since yields are rising and should continue to do so, though chances that the Fed will begin tapering in September appear to be diminishing as economic data and corporate reports are not suggestive of a strengthening economy.
The Dow, which, along with the other major indices, was positive all session long, finally succumbed to selling pressure in the final minutes of trading, ending the day with a minor loss, though still the fifth straight session in the red.
What's not being talked about much is where the Dow Industrials currently are settled, well below the 50-day moving average (roughly 15,275) and in danger of sparking another rout in stocks. Additionally, Dow stocks are largely among the best dividend-payers, just the kind of risk asset that investors are shunning, with interest rates on the rise and fixed income carrying much less perceived risk than even blue chip stocks.
The Dow components aren't exactly going to be sold off in wholesale fashion - there's too many diversified investors in them - but they have obviously been under pressure since the start of August, despite Fed incantations and deliberations over QE tapering beginning sometime in the near future.
For gambling types, the biggest question is whether the Fed will actually begin tapering its bond-buying in September, or, at some later date. Some suggest that the economy is so weak, and the Fed terrified of causing a market panic, that tapering will not and cannot occur in the current environment. The secondary issue of by how much the Fed will taper is also in play. Being that the Fed is now so trapped and dovish, the tapering might be an inconsequential number, like $10 billion, reducing their total bond purchases to $75 billion a month, still an enormous liquidity lift.
In such a case, wherein the Fed reduces QE by a mere $10 billion a month, in either September or October, and then continues to cut down on bond purchases at a rate of around $10 billion a month every two to three months, would probably be enough to rattle markets a bit without causing a correction or crash. Of course, the US and global economies are currently in such a weakened state that markets may crash and burn on their own, despite what the Fed and other central banks conspire in their rigging.
The outlook remains the same, with the bias toward the downside. September, with the Federal government politicians back from their extended, annual August recess, is shaping up to be momentous, what with budget negotiations and an expected fight over raising the debt ceiling again, with the outlier that the Republican Tea Partiers may be so inclined as to stall negotiations on both issues to a point at which the government is shut down. On top of the already-expanding sequester, these kind of childish hissy fits from our political elite might be enough to topple the markets into bear territory.
It's an eventuality, as the bull market is approaching the 54-month mark, which it will reach on September 9. The week of September 8-15 figures to be dramatic, with the anniversary of 9/11 and expected hijinks in the corridors of power.
One thing is for sure: the housing market is already under stress and, unless interest rates suddenly reverse course (unlikely), the so-called recovery in housing is over, dead and done. Real estate prices nationwide should experience a fairly sharp pullback over the next three to 12 months, because there are not enough qualified purchasers out there, interest rates are driving up the cost of buying and carrying a mortgage, and, the number of homes still held off the market by the banks continues to be an enormous, unseen force driving down real estate. Bargains are out there, but one has to look hard and long for the right ones at the right entry price. This is not a market for bold speculation, but rather for considered, strategic purchasing of the right property, be it for housing, farming or simply to escape the madness which is headed toward everyone within 10 miles of a major population center.
Major shifts in the economies of billions of people are underway and will play out over the next five to seven years, transforming the economic landscape beyond what most people can imagine.
Dow 15,002.99, -7.75 (0.05%)
NASDAQ 3,613.59, +24.50 (0.68%)
S&P 500 1,652.35, +6.29 (0.38%)
NYSE Composite 9,421.56, +35.67 (0.38%)
NASDAQ Volume 1,285,024,000
NYSE Volume 3,266,316,500
Combined NYSE & NASDAQ Advance - Decline: 4827-1777
Combined NYSE & NASDAQ New highs - New lows: 75-316
WTI crude oil: 104.96, -2.14
Gold: 1,372.60, +6.90
Silver: 23.07, -0.095
Tuesday, August 20, 2013
Stocks Slammed Again; 10-Year at 2.90%; Egypt Coming Apart
Make it four down days in a row and nine of the last 11 for the Dow Industrials, since making an all-time closing high of 15,658.36 on August 2nd, slipping today to the closest point to 15,000 since July 5th.
If one needs a catalyst or cause, it's Egypt. A former ally, the most populous Muslim nation in the Middle East, now up in flames and our government backing the wrong side. Tragic, complex and horrifying, the tableau playing out is enough to shatter the confidence of most of the globe.
Beyond the obvious implications of large nations devolving into anarchy and chaos, there are so many other issues - financial and political - roiling the markets, it is impossible to take all of them accurately into account. Suffice to say, it's a mess out there and politicians are about to make it messier, with a new round of budget battles and debt ceiling debate set to get underway in the nation's capitol.
On the global horizon, India is having a currency crisis, the Rupee falling to historic lows against the dollar as the Indian government attempts to limit and/or tax individual holdings of gold. It certainly will not work. India has the highest gold-ownership per capita on the planet.
Naturally, our very own Federal Reserve will not be outdone by foreign rivals. The Fed continues to tinker and experiment with the currency, becoming all-too-powerful a force in all markets, from commodities to stocks to treasuries.
Speaking of treasuries, the benchmark 10-year note touched 2.90% today, a 130-basis-point rise since May. Literally, nothing will destroy the economy better than uncontrollably-rising interest rates, and we have them across the curve.
It has long been said on this blog and elsewhere that these experimental attempts to revive a dead, decaying, US and global economy will not end well. The stark reality is that the global economy imploded in 2008. All the QE, ZIRP and presumptive actions by the Fed and other central banks is nothing but window dressing, the model in the storefront being a naked - and likely capitalist - pig.
If the carnage since 2008 has not been enough for this country to bear, imagine the pain as it's about to get worse, a lot worse.
Dow 15,010.74, -70.73 (0.47%)
NASDAQ 3,589.09, -13.69 (0.38%)
S&P 500 1,646.06, -9.77 (0.59%)
NYSE Composite 9,385.89, -79.70 (0.84%)
NASDAQ Volume 1,402,886,250
NYSE Volume 3,236,012,750
Combined NYSE & NASDAQ Advance - Decline: 1566-5077
Combined NYSE & NASDAQ New highs - New lows: 64-532 (how quickly it has turned!)
WTI crude oil: 107.10, -0.36
Gold: 1,365.70, -5.30
Silver: 23.17, -0.156
If one needs a catalyst or cause, it's Egypt. A former ally, the most populous Muslim nation in the Middle East, now up in flames and our government backing the wrong side. Tragic, complex and horrifying, the tableau playing out is enough to shatter the confidence of most of the globe.
Beyond the obvious implications of large nations devolving into anarchy and chaos, there are so many other issues - financial and political - roiling the markets, it is impossible to take all of them accurately into account. Suffice to say, it's a mess out there and politicians are about to make it messier, with a new round of budget battles and debt ceiling debate set to get underway in the nation's capitol.
On the global horizon, India is having a currency crisis, the Rupee falling to historic lows against the dollar as the Indian government attempts to limit and/or tax individual holdings of gold. It certainly will not work. India has the highest gold-ownership per capita on the planet.
Naturally, our very own Federal Reserve will not be outdone by foreign rivals. The Fed continues to tinker and experiment with the currency, becoming all-too-powerful a force in all markets, from commodities to stocks to treasuries.
Speaking of treasuries, the benchmark 10-year note touched 2.90% today, a 130-basis-point rise since May. Literally, nothing will destroy the economy better than uncontrollably-rising interest rates, and we have them across the curve.
It has long been said on this blog and elsewhere that these experimental attempts to revive a dead, decaying, US and global economy will not end well. The stark reality is that the global economy imploded in 2008. All the QE, ZIRP and presumptive actions by the Fed and other central banks is nothing but window dressing, the model in the storefront being a naked - and likely capitalist - pig.
If the carnage since 2008 has not been enough for this country to bear, imagine the pain as it's about to get worse, a lot worse.
Dow 15,010.74, -70.73 (0.47%)
NASDAQ 3,589.09, -13.69 (0.38%)
S&P 500 1,646.06, -9.77 (0.59%)
NYSE Composite 9,385.89, -79.70 (0.84%)
NASDAQ Volume 1,402,886,250
NYSE Volume 3,236,012,750
Combined NYSE & NASDAQ Advance - Decline: 1566-5077
Combined NYSE & NASDAQ New highs - New lows: 64-532 (how quickly it has turned!)
WTI crude oil: 107.10, -0.36
Gold: 1,365.70, -5.30
Silver: 23.17, -0.156
Friday, August 16, 2013
End-Game Begins as Stocks Are Sold, Bond Yields Rise, Precious Metals Take Off
What happened over the latter part of this week should be the stuff of history books for future economic historians, given there will even be an economic history after the worst crisis in history begins its second leg down.
Forget about Friday. That was mostly churn, finger-pointing, squaring of positions in options and a great deal of nail-biting by the financial elite and central bankers. The real action was on Wednesday and Thursday, and, more specifically, the close of the trading day Wednesday and the pre-market Thursday, when St. Louis fed president, James Bullard, made comments, first to a Rotary club in Paducah, Kentucky, at 3:15 pm EDT Wednesday, and then reiterated and expanded upon those comments Thursday prior to the opening bell.
Both attempts to jawbone the market back into a state of control were, as they say in current parlance, epics fails, because market fundamentals - those things like economic data and earnings reports - finally came to the forefront and overtook what little control the Federal Reserve had over markets - both stocks and bonds.
Wednesday was shaping up to be a painful session when Bullard attempted to soothe the pain by saying that the Fed needed more data in the second half of the year before committing to a slowdown in their bond-purchase program (aka QE) in September or sometime near that time frame. The market's knee-jerk reaction was a swift erasure of 30 losing Dow points, but almost as quickly, sellers swamped back in, with the Dow closing near the lows of the day.
After the close, Cisco (CSCO) released second quarter earnings, with a penny miss on EPS and a small shortfall in revenue. Making matters worse was the conference call afterwards, in which the company issued some negative guidance, as has been the mantra this earnings season, sending the stock down roughly 10% in after hours trading.
On Thursday morning, Wal-Mart (WMT) released their second quarter earnings report, eeril similar to Cisco's complete with negative guidance for the remainder of the year. Around 7:30 am EDT, when pre-market trading opened, Dow futures, already down substantially, took a nosedive.
Queue James Bullard, reiterating Wednesday's comments and adding some new verbiage, in a desperate attempt to satiate the trading community. Once again, Bullard's comments failed to incite any kind of rally in futures. The day was setting up to be a bad one for the bulls.
At 8:30 am, the final nail in the coffin was hammered home by the weekly unemployment claims report, which came in at 320,000, a six-year low and a complete misread by anyone thinking a better jobs picture would be a salve for jittery traders. It was the exact opposite, the thinking being that if the jobs picture was indeed improving, the Fed would be more than willing to begin curbing QE in September. Futures were pounded even lower and the market opened in a sea of red ink, the Dow quickly down 150, then 200 points, the other major indices following along in a coordinated dive. Interest rates spiked higher, prompting even the most steadfast into a selling frenzy.
The upshot is that unemployment claims, despite being at multi-year lows, is a complete canard. The jobs created over the past past year, and primarily the last six months, have been mostly low-paying, service-type, part-time varieties, due to the coming slaughter of the jobs market via Obamacare, which mandates employer-provided insurance for companies with more than 50 full-time employees. While there are no real new jobs being created, nobody's leaving to look elsewhere for work and the slack caused by full-time jobs being split into part-time increments means more jobs overall, just not good ones and, especially, not full-time ones.
Thus, unemployment claims henceforth must be viewed with a skewed eye, despite the glad-handing by the media, financial pundits and politicians. Evidence that the overall economy is not even close to the so-called "recovery" we've all been anxiously awaiting since 2009, was amply provided by Cisco and Wal-Mart, two huge employers and both Dow components.
With the close on Thursday, the market was pointed for the worst week of the year heading into Friday, and, despite a lame attempt at tape-painting late in the session, it was delivered, with all of the indices closing marginally lower.
Treasuries hit their highest yields in two years, anathema to stocks and the housing market, further clouding the picture for the Fed and their plans for a graceful exit by Mr. Bernanke later this year. The Fed has lost control of all markets; they likely cannot slow their bond purchases in September, lest they risk a complete meltdown in stocks and melt-up in yields.
Gold and silver - especially the latter - had their best week in two-and-a-half years, with both hitting three-month highs and breaking out of the recent, depressed range.
Looking out a month to three months, the Fed is completely boxed in. On one hand, they can say that the economy is improving enough - even though the data doesn't remotely support such a claim - and begin tapering in September, even October. Or, they could face reality, admit their policies have been utter failures and continue the current pace of QE. Neither scenario is particularly bullish for stocks, the reality case the worst, as the decline off the August 2nd closing high has begun to accelerate with a strong downward trajectory, sending the Dow straight through its 50-day moving average, and the S&P closing out the week resting right upon its 50-day.
Nothing good will come from the politicians' return from their month-long hiatus, when they will once again entertain the markets with their rituals of piercing the debt ceiling and coming up with a budget or suitable continuing resolution. No matter what the Fed decides in September can be perceived as good, though from a trading standpoint, keeping QE at its current $85 billion per month will appear as a victory of sorts for the Wall Street crowd, when in reality it is admission that all has failed and the Fed can do nothing, other than continue debasing the currency until is ceases to exist.
The mathematical certainty that the experiment with fiat currency, back with nothing but promises and lies, will fail, is entering the second leg, or the third, after the crash in '08-09 and the nearly five years of false, liquidity-driven recovery. Any astute observer will immediately comprehend that lost faith in the currency foreshadows another crisis, this one likely more severe than that of 2008.
While many of the status quo will cringe at the prospect of the greenback's death throes and a complete collapse of the global economy, those fed up to their eyeballs with the current regime of lies, uncertainty, complete fraud by the major banks and totalitarian fear-mongering will welcome the change with open arms.
One can only hope that it won't drag on and out for years, as in europe and the Middle East, but the best advice at this point is to stay in precious metals, away from large population centers and hope for the best while preparing for the worst.
Other than those dire words, it looks to be a fine summer weekend in most of the US. Get out and enjoy some sun and taste the bounty of our land. Food, the fuel we humans - at the most basic level - need to survive, is still readily produced and relatively inexpensive. And that, my friends, is one shining silver lining.
Dow 15,081.47, -30.72 (0.20%)
NASDAQ 3,602.78, -3.34 (0.09%)
S&P 500 1,655.83, -5.49 (0.33%)
NYSE Composite 9,465.19, -24.10 (0.25%)
NASDAQ Volume 1,458,862,12
NYSE Volume 3,532,477,250
Combined NYSE & NASDAQ Advance - Decline: 2554-3882
Combined NYSE & NASDAQ New highs - New lows: 77-369
WTI crude oil: 107.46, +0.13
Gold: 1,371.00, +10.10
Silver: 23.32, +0.387
Forget about Friday. That was mostly churn, finger-pointing, squaring of positions in options and a great deal of nail-biting by the financial elite and central bankers. The real action was on Wednesday and Thursday, and, more specifically, the close of the trading day Wednesday and the pre-market Thursday, when St. Louis fed president, James Bullard, made comments, first to a Rotary club in Paducah, Kentucky, at 3:15 pm EDT Wednesday, and then reiterated and expanded upon those comments Thursday prior to the opening bell.
Both attempts to jawbone the market back into a state of control were, as they say in current parlance, epics fails, because market fundamentals - those things like economic data and earnings reports - finally came to the forefront and overtook what little control the Federal Reserve had over markets - both stocks and bonds.
Wednesday was shaping up to be a painful session when Bullard attempted to soothe the pain by saying that the Fed needed more data in the second half of the year before committing to a slowdown in their bond-purchase program (aka QE) in September or sometime near that time frame. The market's knee-jerk reaction was a swift erasure of 30 losing Dow points, but almost as quickly, sellers swamped back in, with the Dow closing near the lows of the day.
After the close, Cisco (CSCO) released second quarter earnings, with a penny miss on EPS and a small shortfall in revenue. Making matters worse was the conference call afterwards, in which the company issued some negative guidance, as has been the mantra this earnings season, sending the stock down roughly 10% in after hours trading.
On Thursday morning, Wal-Mart (WMT) released their second quarter earnings report, eeril similar to Cisco's complete with negative guidance for the remainder of the year. Around 7:30 am EDT, when pre-market trading opened, Dow futures, already down substantially, took a nosedive.
Queue James Bullard, reiterating Wednesday's comments and adding some new verbiage, in a desperate attempt to satiate the trading community. Once again, Bullard's comments failed to incite any kind of rally in futures. The day was setting up to be a bad one for the bulls.
At 8:30 am, the final nail in the coffin was hammered home by the weekly unemployment claims report, which came in at 320,000, a six-year low and a complete misread by anyone thinking a better jobs picture would be a salve for jittery traders. It was the exact opposite, the thinking being that if the jobs picture was indeed improving, the Fed would be more than willing to begin curbing QE in September. Futures were pounded even lower and the market opened in a sea of red ink, the Dow quickly down 150, then 200 points, the other major indices following along in a coordinated dive. Interest rates spiked higher, prompting even the most steadfast into a selling frenzy.
The upshot is that unemployment claims, despite being at multi-year lows, is a complete canard. The jobs created over the past past year, and primarily the last six months, have been mostly low-paying, service-type, part-time varieties, due to the coming slaughter of the jobs market via Obamacare, which mandates employer-provided insurance for companies with more than 50 full-time employees. While there are no real new jobs being created, nobody's leaving to look elsewhere for work and the slack caused by full-time jobs being split into part-time increments means more jobs overall, just not good ones and, especially, not full-time ones.
Thus, unemployment claims henceforth must be viewed with a skewed eye, despite the glad-handing by the media, financial pundits and politicians. Evidence that the overall economy is not even close to the so-called "recovery" we've all been anxiously awaiting since 2009, was amply provided by Cisco and Wal-Mart, two huge employers and both Dow components.
With the close on Thursday, the market was pointed for the worst week of the year heading into Friday, and, despite a lame attempt at tape-painting late in the session, it was delivered, with all of the indices closing marginally lower.
Treasuries hit their highest yields in two years, anathema to stocks and the housing market, further clouding the picture for the Fed and their plans for a graceful exit by Mr. Bernanke later this year. The Fed has lost control of all markets; they likely cannot slow their bond purchases in September, lest they risk a complete meltdown in stocks and melt-up in yields.
Gold and silver - especially the latter - had their best week in two-and-a-half years, with both hitting three-month highs and breaking out of the recent, depressed range.
Looking out a month to three months, the Fed is completely boxed in. On one hand, they can say that the economy is improving enough - even though the data doesn't remotely support such a claim - and begin tapering in September, even October. Or, they could face reality, admit their policies have been utter failures and continue the current pace of QE. Neither scenario is particularly bullish for stocks, the reality case the worst, as the decline off the August 2nd closing high has begun to accelerate with a strong downward trajectory, sending the Dow straight through its 50-day moving average, and the S&P closing out the week resting right upon its 50-day.
Nothing good will come from the politicians' return from their month-long hiatus, when they will once again entertain the markets with their rituals of piercing the debt ceiling and coming up with a budget or suitable continuing resolution. No matter what the Fed decides in September can be perceived as good, though from a trading standpoint, keeping QE at its current $85 billion per month will appear as a victory of sorts for the Wall Street crowd, when in reality it is admission that all has failed and the Fed can do nothing, other than continue debasing the currency until is ceases to exist.
The mathematical certainty that the experiment with fiat currency, back with nothing but promises and lies, will fail, is entering the second leg, or the third, after the crash in '08-09 and the nearly five years of false, liquidity-driven recovery. Any astute observer will immediately comprehend that lost faith in the currency foreshadows another crisis, this one likely more severe than that of 2008.
While many of the status quo will cringe at the prospect of the greenback's death throes and a complete collapse of the global economy, those fed up to their eyeballs with the current regime of lies, uncertainty, complete fraud by the major banks and totalitarian fear-mongering will welcome the change with open arms.
One can only hope that it won't drag on and out for years, as in europe and the Middle East, but the best advice at this point is to stay in precious metals, away from large population centers and hope for the best while preparing for the worst.
Other than those dire words, it looks to be a fine summer weekend in most of the US. Get out and enjoy some sun and taste the bounty of our land. Food, the fuel we humans - at the most basic level - need to survive, is still readily produced and relatively inexpensive. And that, my friends, is one shining silver lining.
Dow 15,081.47, -30.72 (0.20%)
NASDAQ 3,602.78, -3.34 (0.09%)
S&P 500 1,655.83, -5.49 (0.33%)
NYSE Composite 9,465.19, -24.10 (0.25%)
NASDAQ Volume 1,458,862,12
NYSE Volume 3,532,477,250
Combined NYSE & NASDAQ Advance - Decline: 2554-3882
Combined NYSE & NASDAQ New highs - New lows: 77-369
WTI crude oil: 107.46, +0.13
Gold: 1,371.00, +10.10
Silver: 23.32, +0.387
Thursday, August 15, 2013
Stocks Rocked, Gold. Silver, 10-Year Rip higher; Now, we're Getting Somewhere
And that somewhere is closer to reality.
No time now, full recap on Friday as the carnage commences.
Dow 15,112.19, -225.47 (1.47%)
NASDAQ 3,606.12, -63.16 (1.72%)
S&P 500 1,661.32, -24.07 (1.43%)
NYSE Composite 9,489.29, -104.21 (1.09%)
NASDAQ Volume 1,699,330,750
NYSE Volume 3,885,446,000
Combined NYSE & NASDAQ Advance - Decline: 1235-5423
Combined NYSE & NASDAQ New highs - New lows: 57-453 (WOWOWOWOW!!!)
WTI crude oil: 107.33, +0.48 (really?)
Gold: 1,360.90, +27.50 (Good!)
Silver: 22.94, +1.148 (Really Good!)
No time now, full recap on Friday as the carnage commences.
Dow 15,112.19, -225.47 (1.47%)
NASDAQ 3,606.12, -63.16 (1.72%)
S&P 500 1,661.32, -24.07 (1.43%)
NYSE Composite 9,489.29, -104.21 (1.09%)
NASDAQ Volume 1,699,330,750
NYSE Volume 3,885,446,000
Combined NYSE & NASDAQ Advance - Decline: 1235-5423
Combined NYSE & NASDAQ New highs - New lows: 57-453 (WOWOWOWOW!!!)
WTI crude oil: 107.33, +0.48 (really?)
Gold: 1,360.90, +27.50 (Good!)
Silver: 22.94, +1.148 (Really Good!)
Wednesday, August 14, 2013
Fed's Bullard Fails to Halt Market Decline; Fed Credibility Nil; Correction, Potential Crash in Motion
At last!
After weeks of churning, uneventful trading, Wall Street delivered a most interesting session on Wednesday.
Instead of the usual down in the morning, up in the afternoon routine that's been de rigueur of late, this was a dip that virtually nobody was buying.
Stocks began the session quietly, but soon fell to their lows of the day, shortly before the close of European markets. Money that had heretofore been jumping from European equities into US stocks did not manage to materialize, as they have over the past few weeks.
Instead, stocks languished in negative territory, with the Dow down between 60 and 90 points most of the midday. Another bump lower between 1:00 and 2:00 pm EDT left the Dow at its lows of the day, the S&P and NASDAQ following it down, though on a lower percentage basis.
At 3:15 pm, St. Louis Fed president James Bullard, one of the more effeminate and dovish Fed members, laid out his pre-arranged meme to calm markets in an unofficial speech to a Rotary club in Paducah, Kentucky, saying that he Fed needed more data in the second half before embarking on any kind of bond purchase tapering and that the Fed should hold press conferences after every FOMC meeting, in order to facilitate a more open, quick response to markets.
Initially, stocks moved upward on his comments, but quickly fell back, signaling that traders and markets have become weary of the differentiating tone of the Fed, one day favoring tapering, the next day softening their stance. The market response to Bullard's comments was clearly a sign that fundamental market analysis was overtaking the Fed's manipulation by word of mouth and that the Fed was clearly stuck in a box from which there was no salvageable escape.
Truth is, the economy is not improving to any noticeable degree, and even a partial winding down or "tapering" of QE would cause a selloff in stocks and likely another round of interest rate hikes devoid of any influence from the Federal Reserve. Nearly disarmed and out of ammunition, the Fed is now stuck between a rock and a hard place. They can declare the economy improving and crash the market (because it isn't) or hold tight to their insane strategy of pumping $85 billion a month in bond purchases for a longer time period, a strategy that has caused distortions and dislocations of magnificent proportions.
Traders, usually quick-thinking and thick-skinned, have found no solace in Fed utterings of late, and are taking action on their own, mostly on the side of selling, to the utter dismay of the proponents of central planning and controlled economic reality.
Stocks suffered fairly severely, though still are floating on a sea of liquidity supplied by the ever-present Fed, a condition which - whether it changes or not - seems to have run its course. Valuations are such that further gains need a serious catalyst in the form or fundamentally strong data, which has yet to materialize. Thus, booking profits off the outsize gains from the first half seems to be the prudent strategy prior to the next FOMC meeting in September, and there's little the Fed can do to stem the waves of selling pressure now appearing in all sectors.
A slew of fiscal and geopolitical risks also conspire against the Federal Reserve and the stock market, making the condition ripe for a serious, sustained correction. The cyclical bull, inspired off the first round of QE and ZIRP in March 2009, is now 54 months old, and getting a bit weary.
Only fools would rush in to this market, but as is well known, Wall Street and investment types are replete with foolish folks, so a quick pop prior to a reversal would not be a surprise, though the odds for a solid correction of 5-10% are rising quickly.
Though losses were not large, the Hinderburg Omen strategy remains the most powerful. The advance-decline line was humbled on today's session, the losing streak has all indices down for the month and new lows overwhelmed new highs (as shown below) for the first time in two months. Gold and silver made substantial gains both during NYMEX and electronic trading, with silver the shining out-performer of the day.
All of this sets up for a bearish tone tomorrow and into next week, with key data releases on Thursday, including the closely-watched weekly unemployment claims.
Cisco (CSCO) reported after the bell, beating earnings per share by a penny with revenues roughly in line with estimates. Before the opening bell tomorrow, McDonald's reports with expectations of 1.25 pr share and revenue of 118.25 for the second quarter. Same store comps will be closely monitored as those fell in the previous quarter from a year ago.
Dow 15,337.66, -113.35 (0.73%)
NASDAQ 3,669.27, -15.17 (0.41%)
S&P 500 1,685.39, -8.77 (0.52%)
NYSE Composite 9,593.34, -37.23 (0.39%)
NASDAQ Volume 1,546,362,000
NYSE Volume 3,126,848,500
Combined NYSE & NASDAQ Advance - Decline: 2451-4038
Combined NYSE & NASDAQ New highs - New lows: 217-272
WTI crude oil: 106.85, +0.02
Gold: 1,333.40, +12.90
Silver: 21.79, +0.444
After weeks of churning, uneventful trading, Wall Street delivered a most interesting session on Wednesday.
Instead of the usual down in the morning, up in the afternoon routine that's been de rigueur of late, this was a dip that virtually nobody was buying.
Stocks began the session quietly, but soon fell to their lows of the day, shortly before the close of European markets. Money that had heretofore been jumping from European equities into US stocks did not manage to materialize, as they have over the past few weeks.
Instead, stocks languished in negative territory, with the Dow down between 60 and 90 points most of the midday. Another bump lower between 1:00 and 2:00 pm EDT left the Dow at its lows of the day, the S&P and NASDAQ following it down, though on a lower percentage basis.
At 3:15 pm, St. Louis Fed president James Bullard, one of the more effeminate and dovish Fed members, laid out his pre-arranged meme to calm markets in an unofficial speech to a Rotary club in Paducah, Kentucky, saying that he Fed needed more data in the second half before embarking on any kind of bond purchase tapering and that the Fed should hold press conferences after every FOMC meeting, in order to facilitate a more open, quick response to markets.
Initially, stocks moved upward on his comments, but quickly fell back, signaling that traders and markets have become weary of the differentiating tone of the Fed, one day favoring tapering, the next day softening their stance. The market response to Bullard's comments was clearly a sign that fundamental market analysis was overtaking the Fed's manipulation by word of mouth and that the Fed was clearly stuck in a box from which there was no salvageable escape.
Truth is, the economy is not improving to any noticeable degree, and even a partial winding down or "tapering" of QE would cause a selloff in stocks and likely another round of interest rate hikes devoid of any influence from the Federal Reserve. Nearly disarmed and out of ammunition, the Fed is now stuck between a rock and a hard place. They can declare the economy improving and crash the market (because it isn't) or hold tight to their insane strategy of pumping $85 billion a month in bond purchases for a longer time period, a strategy that has caused distortions and dislocations of magnificent proportions.
Traders, usually quick-thinking and thick-skinned, have found no solace in Fed utterings of late, and are taking action on their own, mostly on the side of selling, to the utter dismay of the proponents of central planning and controlled economic reality.
Stocks suffered fairly severely, though still are floating on a sea of liquidity supplied by the ever-present Fed, a condition which - whether it changes or not - seems to have run its course. Valuations are such that further gains need a serious catalyst in the form or fundamentally strong data, which has yet to materialize. Thus, booking profits off the outsize gains from the first half seems to be the prudent strategy prior to the next FOMC meeting in September, and there's little the Fed can do to stem the waves of selling pressure now appearing in all sectors.
A slew of fiscal and geopolitical risks also conspire against the Federal Reserve and the stock market, making the condition ripe for a serious, sustained correction. The cyclical bull, inspired off the first round of QE and ZIRP in March 2009, is now 54 months old, and getting a bit weary.
Only fools would rush in to this market, but as is well known, Wall Street and investment types are replete with foolish folks, so a quick pop prior to a reversal would not be a surprise, though the odds for a solid correction of 5-10% are rising quickly.
Though losses were not large, the Hinderburg Omen strategy remains the most powerful. The advance-decline line was humbled on today's session, the losing streak has all indices down for the month and new lows overwhelmed new highs (as shown below) for the first time in two months. Gold and silver made substantial gains both during NYMEX and electronic trading, with silver the shining out-performer of the day.
All of this sets up for a bearish tone tomorrow and into next week, with key data releases on Thursday, including the closely-watched weekly unemployment claims.
Cisco (CSCO) reported after the bell, beating earnings per share by a penny with revenues roughly in line with estimates. Before the opening bell tomorrow, McDonald's reports with expectations of 1.25 pr share and revenue of 118.25 for the second quarter. Same store comps will be closely monitored as those fell in the previous quarter from a year ago.
Dow 15,337.66, -113.35 (0.73%)
NASDAQ 3,669.27, -15.17 (0.41%)
S&P 500 1,685.39, -8.77 (0.52%)
NYSE Composite 9,593.34, -37.23 (0.39%)
NASDAQ Volume 1,546,362,000
NYSE Volume 3,126,848,500
Combined NYSE & NASDAQ Advance - Decline: 2451-4038
Combined NYSE & NASDAQ New highs - New lows: 217-272
WTI crude oil: 106.85, +0.02
Gold: 1,333.40, +12.90
Silver: 21.79, +0.444
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