Market Moves on Fiction

Money Daily's new policy will be (most of the time) to just post the closing figures when stocks close to the upside and offer more analysis and "insight" when the markets close in the red, sometimes, when we feel like it, or not.

After all the carnage that's happened this year, apparently, the bulls are back for another slaughter. Bulls, being the central banks of the world, are desperately buying equities in an attempt to shore up the last vestiges of the industrial revolution, information age and dot-com 3.0.

The current three-day rally offers the same kind of background as all of the previous uplifting moves in stocks; nothing of lasting value.

Today's fiction:
DJIA: 16,453.83, +257.42
S&P 500: 1,926.82, +31.24
NASDAQ: 4,534.07, +98.11

Crude Oil 31.00 +6.75% Gold 1,210.20 +0.17% EUR/USD 1.1135 +0.09% 10-Yr Bond 1.8190 +2.31% Corn 367.00 -0.07% Copper 2.07 +1.05% Silver 15.36 +0.20% Natural Gas 1.93 +1.21% Russell 2000 1,011.13 +1.54% VIX 22.31 -7.47% BATS 1000 20,743.15 +1.55% GBP/USD 1.4294 +0.04% USD/JPY 113.9950 -0.17%

Crooked Markets Will Remain At or Above Key Levels Until the End

Pretty much within a few percent either way, the key levels for economic fraud remain at DJIA, 16,000; S&P 500, 1,800; NASDAQ, 4,500.

Global equity markets are being bought by central banks. Eight years ago, Money Daily told you to move your money out of retirement accounts, 401k and IRAs into cash, precious metals and useful machinery. It's still not too late.

DJIA: 16,196.41, +222.57
S&P 500: 1,895.58, +30.80
NASDAQ: 4,435.95, +98.44

Crude Oil 28.91 -1.80% Gold 1,204.30 -2.83% EUR/USD 1.1144 -0.16% 10-Yr Bond 1.7780 +1.72% Corn 361.50 +0.77% Copper 2.05 +1.03% Silver 15.27 -3.29% Natural Gas 1.90 -3.10% Russell 2000 995.80 +2.45% VIX 24.11 -5.08% BATS 1000 20,426.37 +1.68% GBP/USD 1.4304 -0.91% USD/JPY 114.0750 -0.35%

Stocks Always Rebound After Sound Drubbings... Except When They Don't

Regular readers of Money Daily may notice that our editorial point of view - on days like today - sees no reason for stocks to go higher for just about any reason.

There's a method to the madness: it's because the economy stinks and most of the stocks that comprise the major averages are either overpriced or making use of devious accounting tactics to hide the truth.

Today was textbook manipulation to the upside, and, as it turns out, insufficient to cover the losses from earlier in the week. That's the problem with glowing headlines about stocks going up: the writers of such headlines and articles fail to point out that these stocks are coming off being beaten down.

For instance, today's gain on Bank of America (BAC) was 7%, but, it closed at 11.95. It was 18 six months ago, and 14 just a few weeks ago. Some for WTI crude oil, which was up a whopping 11.33% today. Outstanding. However, the closing price was $29.18, more than a 70% decline from 18 months ago.

Anybody even remotely suggesting that the economy and/or equity markets are sound should be shackled, drug off to the nearest body of water and thrown in. Stupidity (from central banks and paid economists) is what got the markets and the economy into the current mess.

Enough is enough, today's results notwithstanding.

For the week:
S&P 500: -15.27 (-0.81%)
Dow: -231.13 (-1.43%)
NASDAQ: -25.63 (-0.59%)

Today's fancy, farcical feast:
S&P 500: 1,864.78, +35.70 (1.95%)
Dow: 15,973.84, +313.66 (2.00%)
NASDAQ: 4,337.51, +70.67 (1.66%)

Crude Oil 29.18 +11.33% Gold 1,239.30 -0.68% EUR/USD 1.1250 -0.57% 10-Yr Bond 1.7480 +6.33% Corn 358.75 -0.42% Copper 2.03 +1.37% Silver 15.76 -0.25% Natural Gas 1.97 -1.45% Russell 2000 971.99 +1.92% VIX 25.40 -9.74% BATS 1000 20,089.57 +1.80% GBP/USD 1.4499 +0.10% USD/JPY 113.2750 +0.60%

How To Tell The Economy Is Really Horrible

A number of interesting developments highlighted today's off-the-street action concerning US stock markets and the general global economy. They were all internet-related, but have nothing to do with the share prices of the companies affected, but first, let's take a recap of the actual carnage in the markets today.

Asia was awash in red ink, as Japan circles the monetary drain (must be Adam Smith's "invisible hand" pulling the plug) sending the Nikkei down to new depths, as noted below, along with Hong Kong's Hang Seng Index, which suffered an even more severe loss in points and percentage:

Nikkei 225: 15,713.39, -372.05, -2.31%
Hang Seng Index 18,545.80, -742.37, -3.85%

With China's markets closed for the week as the country celebrates Chinese New Year, over in Hong Kong, it was back to work after a three-day hiatus. The HSI fell out at the open and never recovered. As many in the US apparently do not know, all of Asia's major markets - including Australia, recently - are in bear market territory. The Hang Seng topped out at 28,588 in late April, 2015. Today's loss puts it down 35% from its highs.

While the Asian markets were spitting up blood, Europe opened with a bang to the downside, as Sweden announced its central bank was cutting interest rates further into the negative. Sweden’s Riksbank cut its benchmark interest rate from -0.35% to -0.5%. So, theoretically, anyone wishing to keep 100,000 Krona in a Swedish bank has the awesome privilege of paying the bank 500 of those Krona for the year.

That, in addition to the ongoing banking collapse (Duetshe Bank, in particular), sent Euro stock bourses reeling. Germany's DAX was off 2.93%. In England, the FTSE was down 2.36%. France's CAC 40 fell by 4.05%, and the Euro Stoxx 50 was battered some 108 points, a 3.90% downside.

US traders left no stone unturned, sending the markets close to the August lows and the NASDAQ within 50 points of the magic bear market line (-20%), until a spurious story about Saudi oil cuts saved the day around 2:30 pm. The Dow was down more than 400 points at the lows, and there was some talk about the S&P bouncing off a key level at 1812. Truth be told, key levels and support lines aren't going to matter much in coming days, weeks and months, because there is growing evidence that recession has arrived in the US, just as it has washed up on the shores of Asia and Europe.

Now, back to those off-Wall Street developments that offer many clues on how to know the economy isn't doing very well.

First, there was the outage at ZeroHedge.com just as the market was opening. Anybody who wants the straight, uncensored, bearish view of markets instinctively heads for "the Hedge" as it is known, the site famous for it's inveterate grinding on the wheels of finance. An apparent DDOS attack took the site offline for about 30 minutes and was the second such attack in as many weeks.

While the culprit is unknown, tin-foil cap types point to the NSA or another government agency which wishes to keep at least a leash on the unruly junkyard dog.

Second, MSN Money disabled comments on all its stories. While news of this was not reported widely, its unknown exactly when the company decided it didn't want to hear from its readers. MSN Money follows the lead of Bloomberg, which disabled commenting across its web properties last year. Censorship. It's what's for dinner, and you can't complain about it.

Third, Janet Yellen completed her annual testimony to congress today with a visit to the Senate Banking Committee, chaired by Richard Shelby (R-AL), and failed to goose the markets. When the Fed Chair has less influence on markets than a teen beauty queen at a gay pride rally, take that as a sign markets are more than a little jittery.

Gold and silver continued to rally, with gold up more than $50 at one point in the day. Silver was fast approaching $16/oz. It was under $15 as of Monday's fix. The two precious metals are the best-performing assets (along with select bonds) of 2016.

And finally, Yahoo Editor-in-Chief, Andy Serwer, had to pen this little gem of statist nonsense, explaining that nobody knows why stocks are going down. Server proves that he has quit an imagination, or none.

All in all, it appears the media, government, and the financial world are not about ready to let the muppets get a feeling that something bad is heading their way, despite Yellen fielding questions about the Fed being "out of bullets" and negative interest rates.

The status quo is getting very, very nervous and it's beginning to show. With the US heading into a three-day weekend (Monday is President's Day. In case your boss didn't tell you, you don't have to come in.) and China's markets re-opening on Monday, tomorrow's trading might be more than just a little interesting. The week has gone badly so far, and it is doubtful many will want to head into the break long.



Hate Crime for Thursday:
S&P 500: 1,829.08, -22.78 (1.23%)
Dow: 15,660.18, -254.56 (1.60%)
NASDAQ: 4,266.84, -16.76 (0.39%)

Crude Oil 27.30 -0.55% Gold 1,247.00 +4.39% EUR/USD 1.1316 +0.32% 10-Yr Bond 1.64 -3.58% Corn 360.00 -0.07% Copper 2.01 -0.72% Silver 15.80 +3.36% Natural Gas 1.99 -2.79% Russell 2000 953.72 -1.01% VIX 28.14 +7.04% BATS 1000 19,734.69 -1.33% GBP/USD 1.4484 -0.35% USD/JPY 112.5900 -0.01%

Yellen's Congressional Testimony Fails to Inspire Confidence

As Janet Yellen testified to the House of Representatives (on Thursday, she speaks and takes questions from the Senate), stocks hung on her every, stuttering, stammering word, but eventually fell in late trading as the Fed Chair seemed a bit too concerned about recent data, stock declines and global tensions to allow congress or investors any happy talk on the now-stalled "recovery."

S&P: 1851.86, -0.35 (-0.02%)
Dow: 15914.74, -99.64 (-0.62%)
NASDAQ: 4283.59, +14.83 (+).35%)

As per this article, JP Morgan economists are now "not all that worried" about negative interest rates in the US, my response:

Of course, negative interest rates are the embodiment of absolute insanity, madness of the markets. Whats worse, perhaps, is that some commentators are touting that this will bring on hyperinflation, though none of them explain the mechanism.

Here at Money Daily, the widely-held belief is that if rates go any lower, we will have an outright deflationary depression, or, an extension of the deflationary depression which has been underway since 2008. We've been hearing about hyperinflation for years now, and, while there admittedly is some inflation, there's more deflation, especially when it comes to cash.

If the banks go NIRP and put on more capital controls (ban on cash not going to actually occur in some places), cash will surely be king, as it was in the Great Depression. Gold and silver should be worth even more, but that's not until the COMEX gets stung (still waiting on that one).

Anybody who's read "When Money Dies" by Adam Fergusson should recall that during Germany's Weimar, the farmers were barely affected until near the end when hordes of people came out from the cities and actually slaughtered animals and raided crop stores.

There's a free PDF, though this is not recommended for everyone - it's somewhat dense:

When Money Dies: The Nightmare of the Weimar …

In the meantime, farmers figure on getting started with seedlings in about three weeks here in (now, finally) snowy upstate NY. Then, investors with any sense should go long vegetable stands. If the banks want to charge money to hold cash, figure people will be more than willing to exchange it for FOOD.

The central bankers have lost their minds. Ask a farmer about storage costs for cash and you'll probably hear, after a long, sidewards stare, that he'd be happy to help you out, since he has plenty of storage for livestock, tools, equipment, produce, and his family (commonly known as a home or household).

People in a city or large town/village should be concerned. Out in the country, not an issue. Besides, this madness will only last - at best - a year. Donald Trump will be president and life will get better. We are (pun intended) banking on it.

This, from a poster called "The Continental," is apropos:

Positive interest rates cause capital to form. Negative interest rates destroy capital.

The banks are desperate to prevent the bond bubble from collapse and are extrapolating to negative interest rates. In short, it's game over for the dollar and its fiat currency brethren.

Central bank reserves were growing exponentially after 1948 up to mid 2014 whilst going vertical they suddenly stopped and plateaued. In the last year, ~$1 trillion of reserves have "disappeared" the collective balance sheets of the world. This means that cash/credit dollars are being created while counterbalancing bonds are being destroyed. This is monetization at its worst. The reserve base of the currency is slowly vanishing.

In the short run, cash dollars will become scarce and valuable. In the long run there is nothing, not even bonds, backing cash dollars and they will collapse (hyperinflate) when trillions of dollars return home looking for assets to convert to.

Buying physical gold (and silver) at any price is not only a no brainer vis-à-vis protecting capital; it is financial suicide not to buy gold.