Today's Markets:
Dow 17,976.31, +263.65 (1.49%)
S&P 500 2,086.24, +25.22 (1.22%)
NASDAQ 4,947.44, +56.22 (1.15%)
The results of trading today in New York (and just about everywhere else in the world) show that if a trend gets started for no good reason, people will follow along blindly.
There's no good reason for stocks to go up like they did today, especially in the face of weak economic data in the US and in many countries around the world. However, this is the normal conclusion to the debasing of currencies. If money is free to obtain, then it is not regarded as anything of value.
Worse, when markets and morals are manipulated (see gold and silver, primarily) or goosed by computer algorithms which actually do the bulk of the trading, this is what happens.
Should one take the time to research the companies that are being traded these days to higher and higher valuations, one may find an odd, but, nevertheless, disturbing trend among them: that earnings per share are being led higher by stock buybacks, which reduce the number of shares outstanding, so that the same, or even lower, earnings result in the same or higher, EPS. Or, one might discover that many of these same companies' earnings are actually falling, yet, in a complete break with logic and core investing principles, investors are willing to pay more per share for them.
This kind of trading, based on nothing but vapidness and the delusion of crowds, was once thought to be able to continue only for a short while, because, as investors discovered the reality of assets without any basis in reality, they would bail out, sell, and cause a wicked market correction or crash. That hasn't happened in six years of this kind of activity.
While the future is unknown, it can be assumed that whatever is guiding stocks to new high after new high will some day end. The trick is getting the timing right. For most, that would be impossible. For some it will be dumb luck, but, for the many, they will be stuck with stocks without any value.
On Friday, the BLS will release the non-farm payroll report for March, and everyone will happily accept the fiction that 250, 000 - 300,000 net new jobs were created during the month, or, failing that, some excuse, like "weather" will be invented, but stocks will soar to new highs again.
Some things, you can bank on them.
Monday, March 30, 2015
Friday, March 27, 2015
Stocks Finish Friday with Gains, but Down More Than Two Percent for the Week
Stocks finished up for the day, but down for the week, with the Dow Industrials retracing all of its gains from the prior week, losing 414.99 points, a 2.29% decline.
The S&P 500 lost 47.08 points, 2.23%, roughly the same as the Dow. Both indices are trading below their 50-day simple moving average.
The NASDAQ had the best gains of the past two days, but still finished the week down 135.20 points, and 2.69%. It is still hovering just above the 50-DMA.
Other than the third revision to 4th quarter GDP, there was little in the way of economic news on the session, which made for a dull time, except for the final thirty minutes, in which most of the gains were made. The revision was not revised at all, finalizing the fourth quarter GDP at 2.2% and the year at a squeamish 2.42%, not much to write home about or encourage rate hike hawks on the Fed.
There was a notable lack of volume in the final session of the week. With two trading days left in March, the focus will be on the Monday and Tuesday sessions, to see if the quarter can end positively. While the NASDAQ is clearly in the green for the year, the Dow and S&P are about even. Small losses on either or both days could tip them into the red.
If you held gold or silver for the week, you're way ahead of the stock-picking crowd.
Dow 17,712.66, +34.43 (0.19%)
S&P 500 2,061.02, +4.87 (0.24%)
NASDAQ 4,891.22, +27.86 (0.57%)
The S&P 500 lost 47.08 points, 2.23%, roughly the same as the Dow. Both indices are trading below their 50-day simple moving average.
The NASDAQ had the best gains of the past two days, but still finished the week down 135.20 points, and 2.69%. It is still hovering just above the 50-DMA.
Other than the third revision to 4th quarter GDP, there was little in the way of economic news on the session, which made for a dull time, except for the final thirty minutes, in which most of the gains were made. The revision was not revised at all, finalizing the fourth quarter GDP at 2.2% and the year at a squeamish 2.42%, not much to write home about or encourage rate hike hawks on the Fed.
There was a notable lack of volume in the final session of the week. With two trading days left in March, the focus will be on the Monday and Tuesday sessions, to see if the quarter can end positively. While the NASDAQ is clearly in the green for the year, the Dow and S&P are about even. Small losses on either or both days could tip them into the red.
If you held gold or silver for the week, you're way ahead of the stock-picking crowd.
Dow 17,712.66, +34.43 (0.19%)
S&P 500 2,061.02, +4.87 (0.24%)
NASDAQ 4,891.22, +27.86 (0.57%)
Thursday, March 26, 2015
Individual Investors Should Not Be Confused About Volatility and Market Noise
Famously, John Pierpont (J.P.) Morgan, financier, banker, philanthropist and art collector who dominated corporate finance and industrial consolidation, when asked what the market would do, wistfully answered, "It will fluctuate," and that is the kind of sage advice by which individual investors should be guided.
Markets, whether they be stocks, bonds, commodities or baseball cards are continually in a condition of fluctuation, buffeted about by popular opinion, spin doctors, general sentiment, analyst opinions and the prevailing economic conditions of the time, and this time, like any other, is subject to the same market forces.
Volatility in markets generally is of benefit only to a small, elite group of active traders who are rabid in their pursuit of true value propositions and correct assumptions of price discovery. While the current regime of Fed-induced interest rate and bubble-manic equity markets might be confusing to some, they need not be to the astute, patient and prudent individual investor.
Today's events were dominated by turmoil in the Arabian peninsula - specifically, the fall of order in Yemen and subsequent armed invasion by the Saudis and Egyptians - which first sent stocks down, then up, then down again, etc., and the price of oil up, and only up. However, these knee-jerk reactions are meaningless in the larger scheme of things. A two-dollar rise in the price of WTI crude oil isn't going to affect the purchasing habits of millions of motorists, just as a one or two percent move in major averages like the Dow Jones Industrials or S&P 500 will influence investment decisions.
Military action today will likely be replaced by peace tomorrow, or, at some later date, and prices and markets will return to some semblance of normalcy. Enthusiastic journalists and commentators on CNBC and/or Bloomberg TV might have panic in their voice and fear in their eyes, but they are largely for entertainment purposes only and should never be considered when actual money and investment decisions are at hand.
In a world far away and long ago, that being prior to televised financial nonsense and noise, stocks were relatively calm and decent places in which to park excess cash. Today's monumental stupidity caused by too many people paying attention to talking heads on television and exacerbated by headline-scanning algorithms employed by HFT firms makes for markets that are irrational in the short term and less-than-reliable on a short-term basis, but, when viewed from a six-month or longer perspective, all the bumps and grinds of fast money (and yes, that is a swipe at CNBC's show by the same name) get smoothed out and wrung dry of volatility.
Unless and until there is a major market-moving event like the liquidity and solvency melt-down in 2008 and 2009, or the housing boom and bust that preceded it and extended beyond it, markets will behave in somewhat of a normal fashion. Looking at stocks over the past six years, starting with the bottom in March 2009, they've done nothing but perform brilliantly, and anyone who had simply bought and held the major indices correctly would have handsome profits today.
Oil and other commodities have behaved rather radically over the same time period, but what can be said about some may be applied to all. They are more volatile and subject to price swings. And, when one considers currency - because, honestly, parking all your cash in a single currency could be a bad idea - diversity is the key, though anyone considering a safe play might want to take a serious look at gold, and an even deeper peerage into the value of silver.
Both of the popular precious metals are really nothing more than alternative currencies, and, though they may not be quite as liquid as a stock of $100 bills, they also bear no counter-party risk and have been relatively stable over the near term, residing mostly near bottoms. That both gold and silver are bouncing around low levels is worthy of further consideration, because, beyond being currency, they can also be collateral and they may even offer some gain in terms of rising price. At the worst, either metal may suffer a small decline from current levels of maybe 10-15%, but in no way will they ever be worthless.
They are useful hedges and alternative currencies and not nearly enough investors and individuals have taken advantage of their purposefulness, though the fact that they are tightly held may be a part of their charm.
Overall, days like today and weeks and months in which one has to be subject to the whims and fantasies of speculators, newscasters, pundits, analysts and fools, aren't worth wasting one's time upon. It's far easier to make a few strident choices and be done with it. Life is indeed too short to worry about money, or even about the value of it. The world today seems preoccupied with it, though it should be remembered that it is only a means to an end, and not the end itself.
Dow 17,678.23, -40.31 (-0.23%)
S&P 500 2,056.15, -4.90 (-0.24%)
NASDAQ 4,863.36, -13.16 (-0.27%)
P.S.: If you did absolutely nothing today, i.e., made no trades, you out-performed 70% of the day-or-day-to-day-traders. Give yourself a pat on the back.
Markets, whether they be stocks, bonds, commodities or baseball cards are continually in a condition of fluctuation, buffeted about by popular opinion, spin doctors, general sentiment, analyst opinions and the prevailing economic conditions of the time, and this time, like any other, is subject to the same market forces.
Volatility in markets generally is of benefit only to a small, elite group of active traders who are rabid in their pursuit of true value propositions and correct assumptions of price discovery. While the current regime of Fed-induced interest rate and bubble-manic equity markets might be confusing to some, they need not be to the astute, patient and prudent individual investor.
Today's events were dominated by turmoil in the Arabian peninsula - specifically, the fall of order in Yemen and subsequent armed invasion by the Saudis and Egyptians - which first sent stocks down, then up, then down again, etc., and the price of oil up, and only up. However, these knee-jerk reactions are meaningless in the larger scheme of things. A two-dollar rise in the price of WTI crude oil isn't going to affect the purchasing habits of millions of motorists, just as a one or two percent move in major averages like the Dow Jones Industrials or S&P 500 will influence investment decisions.
Military action today will likely be replaced by peace tomorrow, or, at some later date, and prices and markets will return to some semblance of normalcy. Enthusiastic journalists and commentators on CNBC and/or Bloomberg TV might have panic in their voice and fear in their eyes, but they are largely for entertainment purposes only and should never be considered when actual money and investment decisions are at hand.
In a world far away and long ago, that being prior to televised financial nonsense and noise, stocks were relatively calm and decent places in which to park excess cash. Today's monumental stupidity caused by too many people paying attention to talking heads on television and exacerbated by headline-scanning algorithms employed by HFT firms makes for markets that are irrational in the short term and less-than-reliable on a short-term basis, but, when viewed from a six-month or longer perspective, all the bumps and grinds of fast money (and yes, that is a swipe at CNBC's show by the same name) get smoothed out and wrung dry of volatility.
Unless and until there is a major market-moving event like the liquidity and solvency melt-down in 2008 and 2009, or the housing boom and bust that preceded it and extended beyond it, markets will behave in somewhat of a normal fashion. Looking at stocks over the past six years, starting with the bottom in March 2009, they've done nothing but perform brilliantly, and anyone who had simply bought and held the major indices correctly would have handsome profits today.
Oil and other commodities have behaved rather radically over the same time period, but what can be said about some may be applied to all. They are more volatile and subject to price swings. And, when one considers currency - because, honestly, parking all your cash in a single currency could be a bad idea - diversity is the key, though anyone considering a safe play might want to take a serious look at gold, and an even deeper peerage into the value of silver.
Both of the popular precious metals are really nothing more than alternative currencies, and, though they may not be quite as liquid as a stock of $100 bills, they also bear no counter-party risk and have been relatively stable over the near term, residing mostly near bottoms. That both gold and silver are bouncing around low levels is worthy of further consideration, because, beyond being currency, they can also be collateral and they may even offer some gain in terms of rising price. At the worst, either metal may suffer a small decline from current levels of maybe 10-15%, but in no way will they ever be worthless.
They are useful hedges and alternative currencies and not nearly enough investors and individuals have taken advantage of their purposefulness, though the fact that they are tightly held may be a part of their charm.
Overall, days like today and weeks and months in which one has to be subject to the whims and fantasies of speculators, newscasters, pundits, analysts and fools, aren't worth wasting one's time upon. It's far easier to make a few strident choices and be done with it. Life is indeed too short to worry about money, or even about the value of it. The world today seems preoccupied with it, though it should be remembered that it is only a means to an end, and not the end itself.
Dow 17,678.23, -40.31 (-0.23%)
S&P 500 2,056.15, -4.90 (-0.24%)
NASDAQ 4,863.36, -13.16 (-0.27%)
P.S.: If you did absolutely nothing today, i.e., made no trades, you out-performed 70% of the day-or-day-to-day-traders. Give yourself a pat on the back.
Wednesday, March 25, 2015
Warren Buffet Really Gets Under Your Skin; Big Market Decline Probably Means Nothing
 |
| Warrenn Buffett bears a striking resemblance to the Wizard of Oz. |
At the center of this mega-merger is none other than America's cuddliest billionaire, Warren Buffett and his squid-like Berkshire-Hathaway corporation. With this, Buffett now touches nearly all aspects of the average American's daily life, and, most essentially his or her food consumption.
Buffett, it was pointed out by a wily poster on a popular financial website, needs only to buy a significant interest in Monsanto or ADM and Newcomer Funeral Homes and he would have his had firmly in a "cradle to grave" solution for every man and woman in the United States, growing GMO-laced food products which deny nutrition and selling them nationally, slowly killing humans, and then taking a share of their post-breathing lives with embalming, burying or cremation.
Thus, Mr. Buffett has finally gotten under the skin of the average American consumer, and not in a good way. The combination of Heinz (John Kerry's wife, Theresa Heinz is a major owner) and Kraft would have been subject to severe scrutiny by regulators under an effective anti-trust regime, but the antiquated notion of competition has been slowly squeezed from the national conscience long ago.
In our new dystopian world, we will have but a few providers of every necessary service. Reference the merger of Charter Communications and Time Warner Cable, Staples and Office Depot, et. al. Fewer choices, fewer decisions to make. What a wonderful world.
As far as the massive market declines on the day are concerned, they are probably about the same as the last dozen or twenty or so that have occurred since March of 2009, when the current bull market began when the FASB abandoned all reason and did away with mark-to-market accounting. Since then it's been all fraud, all the time, with no end in sight.
Today's big dips in stocks are nothing more than a continuum of the controlled demolition of the global economy, led by the United States stock markets. Sell-offs are nothing more than profit-taking efforts by the controlling interests and their whiz-bang computers, to be followed, in short order, by concentrated buying and new all-time highs.
Nothing new under the sun. And nothing to see here. Move along, now.
Meanwhile, the Atlanta Fed predicts the first quarter 2015 GDP growth at 0.2%, WTI crude oil futures were up 3% on the day in the face of a string of the largest crude stockpile supply growth ever, but likely the cause/result of a falling dollar. Durable goods for February were down for the second straight month.
Some of this actually makes sense, but only on a selected basis.
Dow 17,718.54, -292.60 (-1.62%)
S&P 500 2,061.05, -30.45 (-1.46%)
NASDAQ 4,876.52, -118.21 (-2.37%)
Tuesday, March 24, 2015
What China is Making, the World Isn't Taking
With not much in the way of company news or economic data to spur stocks in any particular direction, stocks - if you believe there is still a viable market out there - may have taken their queues today from China, where manufacturing slipped to its lowest level in nearly a year.
HSBC's purchasing manager's initial survey for March fell to 49.2, signaling contraction, from January's reading of 50.7, the worst reading in 11 months. The survey is designed so that numbers above 50 indicate expansion, under 50, contraction.
This should not have been a surprise to anyone on Wall Street, because they know how China's dumplings are boiled. They're reliant on exports of manufactured goods, primarily to the United States and Europe.
Therefore, if those two consumer groups are not buying, China isn't selling. And that's exactly what has been going on for months now, if not years. Economic numbers in all areas of the world are slightly skewed by regional and political preference, but when China, widely regarded as the world's engine of growth in the 21st century, actually shows manufacturing in decline, it's likely much worse than reported.
There isn't much about boosting manufacturing that the central banks of the world haven't already tried and found to not work, so it's likely, at this point, up to individuals to get out and spend.
Not. Gonna. Happen.
Europe is bankrupt. The USA has gone, in sixty short years, from being a creditor nation, to debtor nation, to where we are today, on the cusp of becoming a deadbeat nation.
In popular parlance, a deadbeat is somebody who borrows and doesn't pay back its debts. Well, the good, old USA can do attitude hasn't been getting it done for a long, long time. Which is why we have a federal debt of over $16 Trillion. The government doesn't pay off its debts; it rolls them over into new debt, something that, if you or I or your neighbor tried to do, we'd be laughed all the way to the nearest courthouse.
The US government has seemingly been intent upon destroying the country, the currency, and the popular notion of being the "land of the free." The failure of politicians to even attempt to fix the various parts of our fiscal condition that are broken is at the bottom of not only the Fed's Zero Interest Rate Policy (ZIRP) but also is tearing away at the fabric of the nation, and people are beginning, at last, to notice, and worse, they're doing something about it.
They're not buying. They're not buying Chinese products. They're not buying politicians' promises. They're not buying Wall Street's scams. They're not buying government statistics because people in America don't consider themselves statistics. They consider themselves people.
People matter. Governments come and go. It may be getting close to the time that some of the bigger ones get up and leave.
But, they'll probably need a little push... over the cliff.
Dow 18,011.14, -104.90 (-0.58%)
S&P 500 2,091.50, -12.92 (-0.61%)
NASDAQ 4,994.73, -16.25 (-0.32%)
HSBC's purchasing manager's initial survey for March fell to 49.2, signaling contraction, from January's reading of 50.7, the worst reading in 11 months. The survey is designed so that numbers above 50 indicate expansion, under 50, contraction.
This should not have been a surprise to anyone on Wall Street, because they know how China's dumplings are boiled. They're reliant on exports of manufactured goods, primarily to the United States and Europe.
Therefore, if those two consumer groups are not buying, China isn't selling. And that's exactly what has been going on for months now, if not years. Economic numbers in all areas of the world are slightly skewed by regional and political preference, but when China, widely regarded as the world's engine of growth in the 21st century, actually shows manufacturing in decline, it's likely much worse than reported.
There isn't much about boosting manufacturing that the central banks of the world haven't already tried and found to not work, so it's likely, at this point, up to individuals to get out and spend.
Not. Gonna. Happen.
Europe is bankrupt. The USA has gone, in sixty short years, from being a creditor nation, to debtor nation, to where we are today, on the cusp of becoming a deadbeat nation.
In popular parlance, a deadbeat is somebody who borrows and doesn't pay back its debts. Well, the good, old USA can do attitude hasn't been getting it done for a long, long time. Which is why we have a federal debt of over $16 Trillion. The government doesn't pay off its debts; it rolls them over into new debt, something that, if you or I or your neighbor tried to do, we'd be laughed all the way to the nearest courthouse.
The US government has seemingly been intent upon destroying the country, the currency, and the popular notion of being the "land of the free." The failure of politicians to even attempt to fix the various parts of our fiscal condition that are broken is at the bottom of not only the Fed's Zero Interest Rate Policy (ZIRP) but also is tearing away at the fabric of the nation, and people are beginning, at last, to notice, and worse, they're doing something about it.
They're not buying. They're not buying Chinese products. They're not buying politicians' promises. They're not buying Wall Street's scams. They're not buying government statistics because people in America don't consider themselves statistics. They consider themselves people.
People matter. Governments come and go. It may be getting close to the time that some of the bigger ones get up and leave.
But, they'll probably need a little push... over the cliff.
Dow 18,011.14, -104.90 (-0.58%)
S&P 500 2,091.50, -12.92 (-0.61%)
NASDAQ 4,994.73, -16.25 (-0.32%)
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