In the aftermath last month's federal funds rate hike - the first in eight years, and, a paltry 0.25% at that - the Fed held their first FOMC rate policy meeting of the year and the reaction from Wall Street was nothing short of derisive.
While the Fed governors did their level best to hem, haw, and dance around their policy "mistake" - which has taken US stocks roughly seven percent lower and cratered confidence - market participants apparently wanted more, as in a complete roll back of the hike and a return to ZIRP, the policy that had prevailed since the fall of 2008.
Stocks were trading close to the flatline until the 2:00 pm announcement by the Fed. After a small amount of see-sawing, sentiment turned radically negative, with all indices taking a punch to the gut that extended into the close.
The Fed cannot escape its fate. It will be overseeing the utter calamity of a global currency crisis, brought about by their excessive credit policies from the Greenspan and Bernanke eras. Janet Yellen, the current Fed Chair, will be scapegoated, and rightfully, as she is completely tone deaf to the needs of the US and global economies, which are screaming deflation at every turn.
The best Ms. Yellen can hope for in her sure-to-be-short tenure as Chairwoman of the Federal Reserve is for Japan or Europe to somehow come to the rescue with additional QE in coming weeks and months, which will buy her additional time to exit in an orderly manner.
The handwriting is on the wall and the handwringing can be seen on the faces populating the video screens from CNBC and Bloomberg TV. Nobody wants stocks, and soon enough, nobody will want dollars, at least not for long. But first, the powerful grip of deflation will have to work its way through the system, crushing the investor class while shoring up those at the bottom of the societal and economic ladders.
That process has been underway for at least a year, as shown by the price of crude oil. It will eventually infest all consumer goods, crushing corporate profits in manufacturing and retail. The systemic underutilization will commence until governments fall, first in emerging markets, then developed ones.
There is no escaping a monetary event such as what is coming. Gold continued to ramp up. Silver is lagging, but will eventually follow and then surpass the gains made by gold.
Today's closing quotes:
S&P 500: 1,882.95, -20.68 (1.09%)
Dow: 15,944.46, -222.77 (1.38%)
NASDAQ: 4,468.17, -99.51 (2.18%)
Crude Oil 32.19 +2.35% Gold 1,124.90 +0.42% EUR/USD 1.09 +0.32% 10-Yr Bond 2.0010 +0.35% Corn 369.75 +0.14% Copper 2.06 +1.08% Silver 14.50 -0.44% Natural Gas 2.15 -0.51% Russell 2000 1,002.75 -1.50% VIX 23.11 +2.71% BATS 1000 20,083.96 -0.92% GBP/USD 1.4245 -0.72% USD/JPY 118.63 +0.18%
Wednesday, January 27, 2016
Tuesday, January 26, 2016
Global Volatility and the Rise of Precious Metals
Another day, another oddity courtesy of the purveyors of false hope, as China stocks crashed overnight, sparking a small rally in Europe and a monumental one in the United States.
Gold and silver investors, however, were not fooled, with the price of both precious metals rising in tandem - an equally odd event, given the blatant manipulation of the metals markets - to multi-month highs.
Silver gained a cool two percent, finishing the New York session at 14.495, its top tick since November 10. Gold, at 1119.70, saw its best level since November 3rd. Both price levels are notable as the twin titans have been kept solidly in a tight range for the past two months. While it's too early to call, the signal is for a breakout from these moribund levels, but, as any investor in the shiny stuff can surely attest, we've seen this play before.
Still, with world markets in turmoil, the rise of gold and silver back to a place of prominence as true currency would be in line with global concerns over instability, dull trade and the overarching risk of deflation.
In China, the SSE closed down 6.42%, the lowest close since early last year and a sure sign that all is not well in the Red Dragon's stomach. The Nikkei and Hang Seng were also lower by more than two percent.
Europe's markets were modestly higher, with gains on the majors of one percent or less.
The US equity market was another story altogether, romping right out of the gate on what can only be assumed to be false hope, in that the FOMC kicked off its first meeting of the year, and the thinking is that after the recent turmoil, the Fed may at least roll back its rate hike language. There is no chance of a rate move in either direction come tomorrow when the policy is released. Nobody is sweating bullets over this non-event. Stay tuned for further boredom and stupidity at 2:00 pm ET on Wednesday.
Bonus: for those unfamiliar with gold's traditional place as a global currency and why buying gold now might not be such a bad idea, see this article by Hugo Salinas Price, The Coming Revaluation of Gold.
Today's Closing Prices:
S&P 500: 1,903.63, +26.55 (1.41%)
Dow: 16,167.23, +282.01 (1.78%)
NASDAQ: 4,567.67, +49.18 (1.09%)
Crude Oil 31.42 +3.56% Gold 1,117.80 +1.13% EUR/USD 1.0866 +0.15% 10-Yr Bond 1.9940 -1.38% Corn 369.25 -0.14% Copper 2.04 +2.23% Silver 14.52 +1.87% Natural Gas 2.12 -1.62% Russell 2000 1,017.97 +2.07% VIX 22.50 -6.83% BATS 1000 20,270.92 +1.65% GBP/USD 1.4351 +0.75% USD/JPY 118.4055 +0.04%
Gold and silver investors, however, were not fooled, with the price of both precious metals rising in tandem - an equally odd event, given the blatant manipulation of the metals markets - to multi-month highs.
Silver gained a cool two percent, finishing the New York session at 14.495, its top tick since November 10. Gold, at 1119.70, saw its best level since November 3rd. Both price levels are notable as the twin titans have been kept solidly in a tight range for the past two months. While it's too early to call, the signal is for a breakout from these moribund levels, but, as any investor in the shiny stuff can surely attest, we've seen this play before.
Still, with world markets in turmoil, the rise of gold and silver back to a place of prominence as true currency would be in line with global concerns over instability, dull trade and the overarching risk of deflation.
In China, the SSE closed down 6.42%, the lowest close since early last year and a sure sign that all is not well in the Red Dragon's stomach. The Nikkei and Hang Seng were also lower by more than two percent.
Europe's markets were modestly higher, with gains on the majors of one percent or less.
The US equity market was another story altogether, romping right out of the gate on what can only be assumed to be false hope, in that the FOMC kicked off its first meeting of the year, and the thinking is that after the recent turmoil, the Fed may at least roll back its rate hike language. There is no chance of a rate move in either direction come tomorrow when the policy is released. Nobody is sweating bullets over this non-event. Stay tuned for further boredom and stupidity at 2:00 pm ET on Wednesday.
Bonus: for those unfamiliar with gold's traditional place as a global currency and why buying gold now might not be such a bad idea, see this article by Hugo Salinas Price, The Coming Revaluation of Gold.
Today's Closing Prices:
S&P 500: 1,903.63, +26.55 (1.41%)
Dow: 16,167.23, +282.01 (1.78%)
NASDAQ: 4,567.67, +49.18 (1.09%)
Crude Oil 31.42 +3.56% Gold 1,117.80 +1.13% EUR/USD 1.0866 +0.15% 10-Yr Bond 1.9940 -1.38% Corn 369.25 -0.14% Copper 2.04 +2.23% Silver 14.52 +1.87% Natural Gas 2.12 -1.62% Russell 2000 1,017.97 +2.07% VIX 22.50 -6.83% BATS 1000 20,270.92 +1.65% GBP/USD 1.4351 +0.75% USD/JPY 118.4055 +0.04%
Monday, January 25, 2016
Gold, Silver Rise as Banks, Energy Stocks in Market Crosshairs
Being that the US equity markets are almost 100% likely to end the month with losses, the opening of the final week of January trading may have been significant if only for the direction of a select number of trading vehicles.
Obviously, energy stocks were once again in focus after last week's faux rally on actual inventory builds, though the pundits of oil slickery are blaming today's demise on the record weekend blizzard that decimated the Northeast.
As lame as it may sound, having the I-95 corridor out of commission for the better part of three to four days is certain to result in growth of the oil and distillate glut that has been plaguing the markets for the past 18 months. The logic is simple: if people aren't driving, nobody's buying gas, and that is exactly what the market doesn't want to hear, especially those of the camp who still believe in the peak oil myth and would like nothing better than to cripple the middle class with another round of crushing gas prices at the pump.
Sadly for them, no such thing is about to occur, and, after being goosed nearly 20% last week, WTI crude took a turn to the downside again, off almost 6% on the day, closing just a nod above $30 per barrel. With the canard of higher oil prices (last week was a serious short squeeze) out of the way, oil majors Exxon Mobil (XOM) and Chevron (CVX) - both Dow components - both declined by more than three percent.
Also taken down a few notches were banks, especially Bank of America (BAC), which closed below 13 at 12.96, a one-day four percent drop, now down a solid 30% from its recent 52-week high (18.48). Investors and specs are concerned not only with BAC's exposure to the oil patch and fracking concerns, which have been going belly-up since last Autumn, but with the overall health of the banking sector. Reminded that the nation's largest banks had to be bailed out during the sub-prime crisis just eight years ago, stock players don't need much to arouse their worst suspicions, that the balance sheets of the big money center banks are still not exactly transparent.
Citigroup (C) also was on the chopping block, losing 3.35%, extending its decline since May to a third of its value, from 60.95 to today's close at 39.55.
Meanwhile, gold and silver put on tidy gains, with gold edging up nearly $10, from $1098/oz. at Friday's close to a finish in US markets at $1107.90 today. Silver gained, from an even $14 to $14.23 on the day.
Overall, stocks were exposed again, with US indices staying in the red all day long, the selling accelerating during the afternoon and into the close. It was an inauspicious start to the week in a month that has been nothing short of embarrassing for Wall Street's perms-bulls.
Today's Closing Prices:
S&P 500: 1,877.08, -29.82 (1.56%)
Dow: 15,885.22, -208.29 (1.29%)
NASDAQ: 4,518.49, -72.69 (1.58%)
Crude Oil 30.33 -5.78% Gold 1,105.60 +0.85% EUR/USD 1.0849 +0.47% 10-Yr Bond 2.0220 -1.27% Corn 369.25 -0.27% Copper 1.99 -0.47% Silver 14.23 +1.23% Natural Gas 2.16 +0.84% Russell 2000 997.37 -2.28% VIX 24.15 +8.10% BATS 1000 19,941.58 -1.78% GBP/USD 1.4246 -0.19% USD/JPY 118.3035 -0.36%
Obviously, energy stocks were once again in focus after last week's faux rally on actual inventory builds, though the pundits of oil slickery are blaming today's demise on the record weekend blizzard that decimated the Northeast.
As lame as it may sound, having the I-95 corridor out of commission for the better part of three to four days is certain to result in growth of the oil and distillate glut that has been plaguing the markets for the past 18 months. The logic is simple: if people aren't driving, nobody's buying gas, and that is exactly what the market doesn't want to hear, especially those of the camp who still believe in the peak oil myth and would like nothing better than to cripple the middle class with another round of crushing gas prices at the pump.
Sadly for them, no such thing is about to occur, and, after being goosed nearly 20% last week, WTI crude took a turn to the downside again, off almost 6% on the day, closing just a nod above $30 per barrel. With the canard of higher oil prices (last week was a serious short squeeze) out of the way, oil majors Exxon Mobil (XOM) and Chevron (CVX) - both Dow components - both declined by more than three percent.
Also taken down a few notches were banks, especially Bank of America (BAC), which closed below 13 at 12.96, a one-day four percent drop, now down a solid 30% from its recent 52-week high (18.48). Investors and specs are concerned not only with BAC's exposure to the oil patch and fracking concerns, which have been going belly-up since last Autumn, but with the overall health of the banking sector. Reminded that the nation's largest banks had to be bailed out during the sub-prime crisis just eight years ago, stock players don't need much to arouse their worst suspicions, that the balance sheets of the big money center banks are still not exactly transparent.
Citigroup (C) also was on the chopping block, losing 3.35%, extending its decline since May to a third of its value, from 60.95 to today's close at 39.55.
Meanwhile, gold and silver put on tidy gains, with gold edging up nearly $10, from $1098/oz. at Friday's close to a finish in US markets at $1107.90 today. Silver gained, from an even $14 to $14.23 on the day.
Overall, stocks were exposed again, with US indices staying in the red all day long, the selling accelerating during the afternoon and into the close. It was an inauspicious start to the week in a month that has been nothing short of embarrassing for Wall Street's perms-bulls.
Today's Closing Prices:
S&P 500: 1,877.08, -29.82 (1.56%)
Dow: 15,885.22, -208.29 (1.29%)
NASDAQ: 4,518.49, -72.69 (1.58%)
Crude Oil 30.33 -5.78% Gold 1,105.60 +0.85% EUR/USD 1.0849 +0.47% 10-Yr Bond 2.0220 -1.27% Corn 369.25 -0.27% Copper 1.99 -0.47% Silver 14.23 +1.23% Natural Gas 2.16 +0.84% Russell 2000 997.37 -2.28% VIX 24.15 +8.10% BATS 1000 19,941.58 -1.78% GBP/USD 1.4246 -0.19% USD/JPY 118.3035 -0.36%
Friday, January 22, 2016
Stock Rally Extends to Weekend, Rips Faces Off Bears
It was the worst of times. Then, midweek, it became the best of times.
With US stocks falling off the proverbial value cliff on Wednesday, just before noon everything suddenly changed, and the rest of the week was witness to a face-ripping surge which took the Dow Jones Industrials from a low of 15,450.56 on Wednesday to the close Friday at 16,093.51, a gain of 643 points, or, roughly four percent.
The gains from Wednesday afternoon, Thursday, and Friday were so large and so widespread that they left the seeming collapse of Tuesday and early Wednesday as fleeting memories.
Also on the agenda was the untimely end of the price collapse in crude oil, which bottomed out at 26 dollars and change on Wednesday, but closed Friday right around $32 per barrel.
Of course, all of this would not have been possible without some catalyst, like exceptional across-the-board earnings results, outstanding economic data or great geopolitical news. Truth is, none of that happened. Earnings reports have been moderate and inconsistent, economic data has been nothing if not poor, and the geopolitical condition has not changed one whit since Wednesday.
The rally was all concocted and executed by sellers of size, using hyperventilating computer algos which control more than 90% of the trading in the Wall Street casino. It is neither a fair market nor a free market, nor much of a market at all. There hasn't been true price discovery for a long time, at least since March of 2009, when the FASB suspended mark-to-market accounting and the Federal Reserve - in cahoots with the various central banks of Europe, China and Japan - went on an asset-buying binge and slashed the federal funds interest rate to zero.
The market of today is nothing like the one that worked in the heyday of Wall Street. This one is a rotting corpse, overseen by undertakers from the Fed and their lackeys in the large banks and brokerages, which control it, lock, stock and barrel. It is not a place to invest. It is a place to gamble, and gamblers almost always lose.
So it is that the Federal Reserve's reign over the world's finances will continue, with or without some occasional fireworks from the stock market.
The shortened week (markets were closed Monday for MLK Day) ended positive, the first in the three weeks thus far in 2016. However, unless this current rally remains intact and explosive to the upside next week, January will end in the red. By how much is anybody's guess, though the final two days of this week can rightfully be chalked up to options expiration, as doubles many a tenacious trader made money in a derivative fashion.
For the Week:
S&P: +26.57 (+1.41%)
Dow: +105.43 (+0.66%)
NASDAQ: +102.76 (+2.29%)
The Day's Closing Quotes:
S&P 500: 1,906.90, +37.91 (2.03%)
Dow: 16,093.51, +210.83 (1.33%)
NASDAQ: 4,591.18, +119.12 (2.66%)
Crude Oil 31.99 +8.33% Gold 1,097.50 -0.06% EUR/USD 1.08 -0.60% 10-Yr Bond 2.0480 +1.44% Corn 369.75 +0.75% Copper 2.00 +0.28% Silver 14.06 -0.24% Natural Gas 2.14 +0.05% Russell 2000 1,020.77 +2.35% VIX 22.34 -16.30% BATS 1000 20,303.38 +1.95% GBP/USD 1.4264 +0.34% USD/JPY 118.7715 +0.79%
With US stocks falling off the proverbial value cliff on Wednesday, just before noon everything suddenly changed, and the rest of the week was witness to a face-ripping surge which took the Dow Jones Industrials from a low of 15,450.56 on Wednesday to the close Friday at 16,093.51, a gain of 643 points, or, roughly four percent.
The gains from Wednesday afternoon, Thursday, and Friday were so large and so widespread that they left the seeming collapse of Tuesday and early Wednesday as fleeting memories.
Also on the agenda was the untimely end of the price collapse in crude oil, which bottomed out at 26 dollars and change on Wednesday, but closed Friday right around $32 per barrel.
Of course, all of this would not have been possible without some catalyst, like exceptional across-the-board earnings results, outstanding economic data or great geopolitical news. Truth is, none of that happened. Earnings reports have been moderate and inconsistent, economic data has been nothing if not poor, and the geopolitical condition has not changed one whit since Wednesday.
The rally was all concocted and executed by sellers of size, using hyperventilating computer algos which control more than 90% of the trading in the Wall Street casino. It is neither a fair market nor a free market, nor much of a market at all. There hasn't been true price discovery for a long time, at least since March of 2009, when the FASB suspended mark-to-market accounting and the Federal Reserve - in cahoots with the various central banks of Europe, China and Japan - went on an asset-buying binge and slashed the federal funds interest rate to zero.
The market of today is nothing like the one that worked in the heyday of Wall Street. This one is a rotting corpse, overseen by undertakers from the Fed and their lackeys in the large banks and brokerages, which control it, lock, stock and barrel. It is not a place to invest. It is a place to gamble, and gamblers almost always lose.
So it is that the Federal Reserve's reign over the world's finances will continue, with or without some occasional fireworks from the stock market.
The shortened week (markets were closed Monday for MLK Day) ended positive, the first in the three weeks thus far in 2016. However, unless this current rally remains intact and explosive to the upside next week, January will end in the red. By how much is anybody's guess, though the final two days of this week can rightfully be chalked up to options expiration, as doubles many a tenacious trader made money in a derivative fashion.
For the Week:
S&P: +26.57 (+1.41%)
Dow: +105.43 (+0.66%)
NASDAQ: +102.76 (+2.29%)
The Day's Closing Quotes:
S&P 500: 1,906.90, +37.91 (2.03%)
Dow: 16,093.51, +210.83 (1.33%)
NASDAQ: 4,591.18, +119.12 (2.66%)
Crude Oil 31.99 +8.33% Gold 1,097.50 -0.06% EUR/USD 1.08 -0.60% 10-Yr Bond 2.0480 +1.44% Corn 369.75 +0.75% Copper 2.00 +0.28% Silver 14.06 -0.24% Natural Gas 2.14 +0.05% Russell 2000 1,020.77 +2.35% VIX 22.34 -16.30% BATS 1000 20,303.38 +1.95% GBP/USD 1.4264 +0.34% USD/JPY 118.7715 +0.79%
Thursday, January 21, 2016
Stocks Bounce After Draghi Jawboning But Finish Poorly
For the most part, stocks were better behaved on Thursday than they have been almost any day in this new year, but that's hardly any consolation for investors and holders of 401k products, who have seen roughly 10% of their portfolios wiped out over the better part of the past three weeks.
European Central Bank Chairman, Mario Draghi, made brief headlines prior to the US market open, hinting to anybody within earshot that the ECB would review its policy in March. Market watchers, or, more specifically, alogrithms which control the direction of trading these days, took that to be a positive sign, so stocks flow higher and remained in positive territory for the entire session.
European stocks also finished green, though Asian markets had spooked the altos earlier, with the Shangai Stock Exchange down more than three percent, to 2880, its lowest level in over a year. The Nikkei shed another 2.5% and the Hang Seng was down nearly two percent.
While Draghi's comments to the press may have soothed some nerves for now, markets remain under pressure and without upside catalysts. The world is entering what appears to be a prolonged decline, prompted by years of overfunding of easy money by central banks globally.
With options expiring on Friday, both bulls and bears have been well-served this week. The closing session for the week may be on the tame side, if only due to stocks being overextended short-term to the downside and general exhaustion, though longer term, earnings of companies reporting thus far don't seem to hold much promise for a quick, lasting rebound.
If there was any disappointment on the day, it was into the close, which was unremarkably weak, the NASDAQ finishing within a hair's breath of going down the tubes.
Today's closing figures:
S&P 500: 1,868.99, +9.66 (0.52%)
Dow: 15,882.68, +115.94 (0.74%)
NASDAQ: 4,472.06, +0.37 (0.01%)
Crude Oil 29.70 +4.76% Gold 1,100.80 -0.49% EUR/USD 1.0876 -0.14% 10-Yr Bond 2.0190 +1.76% Corn 367.50 -0.34% Copper 1.99 +1.58% Silver 14.10 -0.39% Natural Gas 2.15 +1.61% Russell 2000 997.34 -0.20% VIX 26.69 -3.26% BATS 1000 19,915.85 +0.62% GBP/USD 1.4221 +0.23% USD/JPY 117.7250 +0.67%
European Central Bank Chairman, Mario Draghi, made brief headlines prior to the US market open, hinting to anybody within earshot that the ECB would review its policy in March. Market watchers, or, more specifically, alogrithms which control the direction of trading these days, took that to be a positive sign, so stocks flow higher and remained in positive territory for the entire session.
European stocks also finished green, though Asian markets had spooked the altos earlier, with the Shangai Stock Exchange down more than three percent, to 2880, its lowest level in over a year. The Nikkei shed another 2.5% and the Hang Seng was down nearly two percent.
While Draghi's comments to the press may have soothed some nerves for now, markets remain under pressure and without upside catalysts. The world is entering what appears to be a prolonged decline, prompted by years of overfunding of easy money by central banks globally.
With options expiring on Friday, both bulls and bears have been well-served this week. The closing session for the week may be on the tame side, if only due to stocks being overextended short-term to the downside and general exhaustion, though longer term, earnings of companies reporting thus far don't seem to hold much promise for a quick, lasting rebound.
If there was any disappointment on the day, it was into the close, which was unremarkably weak, the NASDAQ finishing within a hair's breath of going down the tubes.
Today's closing figures:
S&P 500: 1,868.99, +9.66 (0.52%)
Dow: 15,882.68, +115.94 (0.74%)
NASDAQ: 4,472.06, +0.37 (0.01%)
Crude Oil 29.70 +4.76% Gold 1,100.80 -0.49% EUR/USD 1.0876 -0.14% 10-Yr Bond 2.0190 +1.76% Corn 367.50 -0.34% Copper 1.99 +1.58% Silver 14.10 -0.39% Natural Gas 2.15 +1.61% Russell 2000 997.34 -0.20% VIX 26.69 -3.26% BATS 1000 19,915.85 +0.62% GBP/USD 1.4221 +0.23% USD/JPY 117.7250 +0.67%
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