Retail Sales, Inventory, PPI Fall; Stocks Full Steam Ahead

Events of the day no longer matter, as we are clearly in the final stages of a global financial catastrophe, one which few will see coming, though signs of malaise and deconstruction are everywhere.

On the day, March retail sales were reported to be off by 0.3%, that being a negative, as opposed to a positive, which was expected. Despite the obvious collapse of the consumer pocketbook, stocks disregarded the data - as per usual - and marched higher, with the Dow Jones Industrial Average arching towards the magic 18,000 mark, a number that has not been seen on Wall Street or anywhere since mid-July of last year.

PPI, an inaccurate guide to wholesale inflation, fell 0.1%, on expectations of a rise of 0.3%, another blow to the Fed's inflation targeting of two percent, and yet another arrow in the quiver of the punchy speculators who view all bad economic news as good.

Business inventories for February also fell, by 0.1%, a result of over-ramping holiday buying without the resultant sales. Businesses find themselves largely overstocked, and have no need to build inventories, especially at a time in which the global economy is either not growing at all or actually contracting.

Meanwhile, anecdotal reports of falling food prices are rafting throughout the US economy. One consumer reported a dozen eggs at $1.50, when they were $3.00 or more just six months ago, due largely to a 2015 bird flu which decimated the nation's chicken population.

Therein lies the conundrum: with gas prices low, food prices falling, consumers are still finding difficulty opening their wallets and spending. Primary culprits include excessive taxation, health care (Obamacare), college tuition, and high housing costs, be they either renting or owning, and, since making ends meet via interest on savings has become a relic of a bygone era, people are also paying down debt.

It doesn't matter to Wall Street. Main Street could shrivel up and die - which, in many smaller cities it already has - and stocks would still enjoy the speculative splendor of negligible interest rates.

Splurge, baby, splurge.

DJIA: 17,908.28, +187.03
S&P 500: 2,082.42, +20.70
NASDAQ: 4,947.42, +75.33

Crude Oil 41.55 -1.47% Gold 1,244.10 -1.33% EUR/USD 1.1277 -0.95% 10-Yr Bond 1.76 -1.07% Corn 373.75 +3.03% Copper 2.17 +1.14% Silver 16.24 +0.08% Natural Gas 2.04 +1.80% Russell 2000 1,129.93 +2.19% VIX 13.84 -6.80% BATS 1000 20,682.61 0.00% GBP/USD 1.4206 -0.43% USD/JPY 109.3075 +0.67%

Bad News Sends Stocks, Oil, Higher; Silver Outshines All

Stocks moved higher based on nothing other than an "informed diplomatic source" that said Russia and Saudi Arabia had agreed to freeze oil production. Along with stocks, oil futures moved notably higher, topping $41.50 a barrel.

The news was taken with so much enthusiasm that traders apparently forgot that there exists a worldwide glut of crude oil larger than any before it. They also disregarded obvious topping patterns in stocks and upcoming earnings reports, including those of the big banks which happen to be saddled with bad oil loans.

News that the IMF cut its global growth forecast for 2016 for the fourth time in a year, backing it off to 3.2%, was also disregarded, as was the US March budget deficit came in at double what it was last year, a whopping $108 billion.

In an unrelated move, silver continued its non-stop ascent, closing in New York at its highest price since late October of 2015, topping $16/ounce for the first time this year. The price of silver has risen more than 8% in the past week.

S&P 500: 2,061.72, +19.73 (0.97%)
Dow: 17,721.25, +164.84 (0.94%)
NASDAQ: 4,872.09, +38.69 (0.80%)

Crude Oil 41.56 +2.97% Gold 1,257.40 -0.05% EUR/USD 1.1390 -0.12% 10-Yr Bond 1.78 +3.31% Corn 361.25 +1.26% Copper 2.15 +2.85% Silver 16.22 +1.50% Natural Gas 2.02 +5.60% Russell 2000 1,105.71 +1.04% VIX 14.85 -8.67% BATS 1000 20,682.61 0.00% GBP/USD 1.4269 +0.24% USD/JPY 108.5655 +0.57%

Amid Economic Unease, Former Fed Chair Bernanke Proposes MFFP (aka Helicopter Money)

We must be nearing the end of the current monetary system, since there is no growth, no prospects, and the entirety of the future has been mortgaged to the tune of $19 Trillion in US debt, and much, much more in unfunded liabilities via entitlement programs such as Social Security and Medicare/Medicaid.

Adding to the belief that the end is nigh, former Fed chairman, Ben Bernanke, now working for the Brookings Institute, penned a blog post today entitled, What tools does the Fed have left? Part 3: Helicopter money, wherein he openly advances the idea of direct money drops to the public. That would, ideally, include you, me, your poor uncle Tony, aunt Gracie, your neighbors, the weird guy in the run-down house on the corner, and everybody else who could use a few extra c-notes in the mail, ostensibly, tomorrow, and maybe, a few times a year, or month, or maybe even weekly...

You see where this is going, right? Bernanke is not convinced that US economic growth is kaput, yet he throws this out there for public consumption because, well, maybe he's grown weary of downloading porn, or he has to do something to make him seem relevant to the people paying his salary, or, perhaps he actually believes this is a realistic solution should the US economy completely stall out, or, heaven forbid, enter recession (like the one we've been in for the past eight years).

Not to make too much fun of the poor, old coot, but Bernanke was the Fed chairman during the last financial crisis, and his policies didn't do much to relieve anybody but the one percenters from economic repression, so it's unlikely that anything he suggests in his new role as wizened sage overseeing the global economy from some ivory tower will accomplish anything more than perverting the economy more than it already has been.

The most favored paragraph from Bernanke's flight of fancy is this one:

In more prosaic and realistic terms, a “helicopter drop” of money is an expansionary fiscal policy—an increase in public spending or a tax cut—financed by a permanent increase in the money stock. [4] To get away from the fanciful imagery, for the rest of this post I will call such a policy a Money-Financed Fiscal Program, or MFFP.

Yes, he coined a new acronym, MFFP, which I, Fearless Rick, a junior economist at best, reconfigured to mean Mother-(a vulgar word for copulating)-Foolish-Policy, and I think my naming makes more sense than anything any former Fed chairman could conjure. After all, I have been a writer for newspapers and blogs for many years, while Fed-heads only talk about money, interest rates, and other arcane foibles of economics. They're not very creative; I have to be (or I'll die, but that's another issue for another time).

So, choose whichever wording your little heart desires, I think Bernanke's just another old fart with a Ph.D., which these days are a dine a dozen. Being a doctor of anything these days isn't what it used to be. Doctors don't make that much, especially since the US has adopted a socialized system of medicine, which you all know and swear at when you receive your monthly health care statement, as Obamacare.

Being a doctor is over-rated. So is the Fed. What a bunch of morons. Seriously.

My point is simple. Handing out money, no matter to whom you bequest, or whatever you call it, or whatever cutesy acronym you paint on it, or whichever "mechanism" you use to do it, is just bad policy, and just plain stupid.

Moreover, Bernanke exposes himself as a completely dull ignoramus for even suggesting "money drops," not once, not twice, but now at least three times in his esteemed career as a monetary theorist. As Mark Twain once said,

It's better to keep your mouth shut and appear stupid than open it and remove all doubt.

I guess Bernanke never read that line, or worse, failed to understand it.

Geez. Just put your hand out. Somebody will magically fill it with cash. Yeah, and the queen of England is a babe.

CAUTIONARY NOTE. WARNING.

PAY ATTENTION TO TODAY'S MARKET RESULTS. MARKETS POPPED AND DROPPED, FINISHING IN THE RED, PRIOR TO THE KICKOFF OF EARNINGS SEASON. ALCOA ANNOUNCED AFTER THE CLOSE - 0.07/share; $4.95B Rev. - AND ALL THE MONEY CENTER BANKS - JP MORGAN CHASE (Wed), BANK OF AMERICA (Thurs), WELLS-FARGO (Thurs), CITIGROUP (Fri) - REPORT THIS WEEK.

BE ALERT FOR FALLING STOCK PRICES.

Today's market noise:
S&P 500: 2,041.99, -5.61 (0.27%)
Dow: 17,556.41, -20.55 (0.12%)
NASDAQ: 4,833.40, -17.29 (0.36%)

Crude Oil 40.38 +1.66% Gold 1,259.40 +1.25% EUR/USD 1.1408 +0.05% 10-Yr Bond 1.72 +0.23% Corn 356.75 -1.52% Copper 2.08 -0.19% Silver 15.93 +3.55% Natural Gas 1.93 -3.07% Russell 2000 1,094.34 -0.27% VIX 16.26 +5.86% BATS 1000 20,682.61 0.00% GBP/USD 1.4233 +0.77% USD/JPY 107.9395 -0.11%

Stocks Stage Brave Friday Rally, Fall For Week As Yellen Denies Bubble

Janet Yellen, April 7, 2016:

"So I would say the US economy has made tremendous progress in recovering from the damage from the financial crisis. Uh, slowly but surely the labor market is healing. Um, for well over a year we’ve averaged about 225,000 jobs a month. The unemployment rate now stands at 5%. So, we’re coming close to our assigned congressional goal of maximum employment. Um, inflation which, um, my colleagues here Paul [Volker] and Alan [Greenspan]
um, spent much of their time as chair um, bringing inflation down from unacceptably high levels. For a number of years now inflation has been running under our 2% goal and we’re focused on moving it up to 2%. Um, but we think that it’s partly transitory influences, namely declining oil prices, and uh, the strong dollar that are responsible for pulling inflation below the 2% level we think is most desirable. So, I think we’re making progress there as well, and this is an economy on a solid course, um, not a bubble economy. Um, we tried carefully to look at evidence of potential financial instability that might be brewing and some of the hallmarks of that, clearly overvalued asset prices, high leverage, rising leverage, and rapid credit growth. We certainly don’t see those imbalances. And so although interest rates are low, and that is something that could encourage reach for yield behavior, I wouldn’t describe this as a bubble economy."

Janet Yellen; Stupid or insincere?

So, apparently, April Fool's Day has been extended to April Fool's Week. The Chairwoman's comment was made in response to a question of whether the US economy was in a bubble.

It has become increasingly obvious to more than just high-rollers on Wall Street, that the occupants of various ivory towers in the Eccles Building are either clueless or lying, and, whichever camp one adheres to, the idea that their economic policies have been detrimental to the common good is without doubt.

Friday's action was nothing more than a dead cat bounce, with all three major indices ripping at the open, but running stagnant as the session wore on, finally ending with small gains.

For the week the degradation was uniform, the Dow lost 215.79 (-1.21%), the S&P shed 25.18 points (-1.21%), while the exuberant NASDAQ dropped 63.85 (-1.30%) points.

Oil gained six percent on the day, followed by more stable precious metals, particularly silver, which has rebounded nicely from a recent smack down.

Friday's Pop and Flop:
S&P 500: 2,047.60, +5.69 (0.28%)
Dow: 17,576.96, +35.00 (0.20%)
NASDAQ: 4,850.69, +2.32 (0.05%)

Crude Oil 39.51 +6.04% Gold 1,241.70 +0.34% EUR/USD 1.1395 +0.18% 10-Yr Bond 1.72 +1.71% Corn 362.00 +0.14% Copper 2.09 +0.48% Silver 15.37 +1.40% Natural Gas 1.99 -1.49% Russell 2000 1,097.31 +0.41% VIX 15.36 -4.95% BATS 1000 20,682.61 0.00% GBP/USD 1.4128 +0.51% USD/JPY 108.1670 -0.08%

Stocks Slammed Back Into The Red As Resistance Has Been Met

The stock market is getting too predictable, and when that happens, it's generally a sign that change is at hand.

Not individual stocks, mind you, but at the macro level - entire indices, countries, or specific sectors - movement is largely telegraphed, as if some floor brokers have bullhorns shouting out the trades of the day, the week, the quarter.

On an impersonal level, US indices are ready for another bruising earnings season, having already touched recent highs, now dipping into negative territory for the year. It's all about the flow at this juncture, and the flow is out of stocks and into cash, or bonds, or any place safe.

All of this begs out for the buy-and-hold mentality that persisted during the true heyday of the American stock markets, from the mid-80s through Greenspan's irrational exuberance regime of the late 90s, but that epoch is long past and investors must be more nimble and adroit, being that there are so many more pitfalls and potholes in modern markets.

Above all, the Fed's role is out-sized and outdated. They've simply overstayed their welcome in equity markets, politicizing them to such an extent that honest trading on fundamentals has become passe - a relic from a long-lost civilization.

And so we embark into earnings season with the worst-looking week in nearly two months. Stocks were pounded without mercy on Thursday, setting up either a massive bounce on Friday or a continuation of the dolorous trading that has prevailed for the better part of this week.

As stated here yesterday, resistance has been met, and the only way out is to the downside. How far? That kind of conceit will kill you and leave your heirs penniless.

Many commodities - take your pick, but steer clear of oil - are close to short-term lows and may be the way ahead, though it would be advisable to tread very lightly for at least the next few months.


S&P 500: 2,041.91, -24.75 (1.20%)
Dow: 17,541.96, -174.09 (0.98%)
NASDAQ: 4,848.37, -72.35 (1.47%)

Crude Oil 37.54 -0.56% Gold 1,242.00 +1.49% EUR/USD 1.1377 -0.14% 10-Yr Bond 1.69 -3.65% Corn 361.25 +0.91% Copper 2.08 -3.01% Silver 15.23 +1.17% Natural Gas 2.02 +5.65% Russell 2000 1,092.79 -1.45% VIX 16.16 +14.69% BATS 1000 20,682.61 0.00% GBP/USD 1.4057 -0.45% USD/JPY 108.1250 -1.49%