The stage is set for the presidential election and the Fed will try its best to not influence it (that is, unless Hillary Clinton is losing).
At its most recent meeting - which ended this past Wednesday with the usual "no change" announcement - the FOMC decided that there wasn't enough positive economic data to support raising rates, despite record low unemployment according to official sources.
Thise in the know understand that the Fed cannot and will not (the next meeting is scheduled for November 1-2) raise interest rates prior to the election (November 8) because any increase, such as the lonesome one of 0.25% back in December of last year, would cause a market panic and sharp selloff of stocks.
The condition is asinine, akin to preparing a race horse for racing and then continually scratching the nag before the event.
Members of the Fed continue to jawbone about raising rates, which keeps their fragile authority intact. The truth is that they lost control back in 2008, and have done nothing to retain or repair the confidence of the populace, though, due to normalcy bias, everybody keeps using fiat money and going along for the zero interest rate ride for the time being.
These policies cannot last forever, thus it may become fashionable and even predictable to vote for Donald Trump in the upcoming election. Trump is a change agent, one feared in the halls of congress, statehouses and even in the conference rooms of the Fed's Eccles building.
Stocks are overpriced because there is no alternative for many large investors, and that's a danger.
So, get ready for a rocky road ahead. The first presidential debate is Monday, and that event could change the dynamics for November and the immediate future.
Stay tuned and stay liquid.
Friday's Closing Prices:
Dow Jones Industrial Average
18,261.45, -131.01 (-0.71%)
NASDAQ
5,305.75, -33.78 (-0.63%)
S&P 500
2,164.69, -12.49 (-0.57%)
NYSE Composite
10,717.99, -75.67 (-0.70%)
The week:
Dow: +137.65 (0.76%)
NASDAQ: +61.18 (1.17%)
S&P 500: +25.53 (1.19%)
NYSE Composite: +185.72 (1.76)
Saturday, September 24, 2016
Wednesday, September 21, 2016
Fed Holds Rates Steady; Nothing To See Here
As expected, the Fed holds the federal funds overnight rate at 0.25-0.50%.
Since this was a foregone conclusion, there's little need to mention the market reaction, which, as always, was BUY! BUY! BUY!
It's a little bit sick, this interest rate game. Money Daily will have more on this in coming days.
Since this was a foregone conclusion, there's little need to mention the market reaction, which, as always, was BUY! BUY! BUY!
It's a little bit sick, this interest rate game. Money Daily will have more on this in coming days.
Tuesday, September 20, 2016
Markets Brace For FOMC Nothing-Burger
Just in case you're keeping score at home, stocks remain in caution mode prior to the FOMC rate policy announcement due out tomorrow at 2:00 pm EDT.
Consensus sentiment is that the governors will do what they've done at every meeting except one since the end of 2008... nothing.
Federal funds rate will likely remain at 0.25-0.50, or effectively zero, and the financial world will once again be treated to the numb mumbling and vague interpretations of data by Chairwoman Janet Yellen at a press conference a half hour after the announcement.
This is all nonsense, all for show, and all for naught. Any attempt at "normalization" (as the Fed likes to put it) will send the interest on US debt to astronomical levels, upsetting the entire global financial universe.
It is precisely why the Fed and other central banks cannot raise rates, or, if they somehow choose to do so, it will be a gradual, drawn out process, because the unwinding of 5, 7, 10, and 30-year notes and bonds will take that many years. Unless the Fed intends to bankrupt all existing nation-states - always a possibility - interest rate increases will be gradual, if at all. The central banks have no way out of the mess they've created, except by creating another, even worse mess.
Tomorrow, like today and the day before, will be nothing but a dog-and-pony show, and a bad one at that.
Nothing even close to important will occur prior to the November elections. The Fed and their buddies are hoping that Hillary Clinton remains alive long enough to win and then, last until January 20, when she will supposedly assume the throne of president of the United States of America.
Those are two possibilities that fewer and fewer people are putting on hard money. There is one good future for the USA, and it does not include a Clinton presidency.
Tuesday's Close:
Dow 30
18,129.96, +9.79 (0.05%)
NASDAQ
5,241.35, +6.33 (0.12%)
S&P 500
2,139.76, +0.64 (0.03%)
^NYA
NYSE COMPOSITE (DJ)
10,573.98, +9.68 (0.09%)
Consensus sentiment is that the governors will do what they've done at every meeting except one since the end of 2008... nothing.
Federal funds rate will likely remain at 0.25-0.50, or effectively zero, and the financial world will once again be treated to the numb mumbling and vague interpretations of data by Chairwoman Janet Yellen at a press conference a half hour after the announcement.
This is all nonsense, all for show, and all for naught. Any attempt at "normalization" (as the Fed likes to put it) will send the interest on US debt to astronomical levels, upsetting the entire global financial universe.
It is precisely why the Fed and other central banks cannot raise rates, or, if they somehow choose to do so, it will be a gradual, drawn out process, because the unwinding of 5, 7, 10, and 30-year notes and bonds will take that many years. Unless the Fed intends to bankrupt all existing nation-states - always a possibility - interest rate increases will be gradual, if at all. The central banks have no way out of the mess they've created, except by creating another, even worse mess.
Tomorrow, like today and the day before, will be nothing but a dog-and-pony show, and a bad one at that.
Nothing even close to important will occur prior to the November elections. The Fed and their buddies are hoping that Hillary Clinton remains alive long enough to win and then, last until January 20, when she will supposedly assume the throne of president of the United States of America.
Those are two possibilities that fewer and fewer people are putting on hard money. There is one good future for the USA, and it does not include a Clinton presidency.
Tuesday's Close:
Dow 30
18,129.96, +9.79 (0.05%)
NASDAQ
5,241.35, +6.33 (0.12%)
S&P 500
2,139.76, +0.64 (0.03%)
^NYA
NYSE COMPOSITE (DJ)
10,573.98, +9.68 (0.09%)
Friday, September 16, 2016
Confusion Reigns In Advance Of FOMC Interest Rate Meeting
Depending upon your individual point of view, Friday's trading was either remarkable or expected.
Following Thursday's ramp-up on news that retail sales were still slumping - leading many to believe the Fed would not dare raise rates next week - stocks opened the day in the red and remained there.
This being a triple-or-quad witching options expiration day, the downdraft could signify many things, but mostly that traders had done their best to capitalize on Thursday, before the rush to close out positions.
That's the most reliable explanation for Friday's fumble, though hardly one adequate enough.
The week ending on a downbeat means little, except that there was some selling in the face of uncertainty over the weekend and leading up to the FOMC meeting Tuesday and Wednesday.
Despite the considerable volatility in play, Dow and S&P stocks ended the week roughly where they began, the NASDAQ was ahead by more than two percent, with the NYSE Composite three-quarters of a percent lower, leaving everyone equally confused.
Betting types will be putting their money on the Fed leaving rates unchanged at the upcoming meeting, not wanting to damage the chances for Hillary Clinton any further than the candidate has done so herself.
Friday's Close:
Dow Jones Industrial Average
18,123.80, -88.68 (-0.49%)
NASDAQ
5,244.57, -5.12 (-0.10%)
S&P 500
2,139.16, -8.10 (-0.38%)
NYSE Composite
10,529.83, -73.11 (-0.69%)
For the Week:
Dow: +38.35 (0.25%)
NASDAQ: +118.66 (2.31%)
S&P 500: +11.35 (0.53%)
NYSE Composite: -80.00 (-0.76%)
Following Thursday's ramp-up on news that retail sales were still slumping - leading many to believe the Fed would not dare raise rates next week - stocks opened the day in the red and remained there.
This being a triple-or-quad witching options expiration day, the downdraft could signify many things, but mostly that traders had done their best to capitalize on Thursday, before the rush to close out positions.
That's the most reliable explanation for Friday's fumble, though hardly one adequate enough.
The week ending on a downbeat means little, except that there was some selling in the face of uncertainty over the weekend and leading up to the FOMC meeting Tuesday and Wednesday.
Despite the considerable volatility in play, Dow and S&P stocks ended the week roughly where they began, the NASDAQ was ahead by more than two percent, with the NYSE Composite three-quarters of a percent lower, leaving everyone equally confused.
Betting types will be putting their money on the Fed leaving rates unchanged at the upcoming meeting, not wanting to damage the chances for Hillary Clinton any further than the candidate has done so herself.
Friday's Close:
Dow Jones Industrial Average
18,123.80, -88.68 (-0.49%)
NASDAQ
5,244.57, -5.12 (-0.10%)
S&P 500
2,139.16, -8.10 (-0.38%)
NYSE Composite
10,529.83, -73.11 (-0.69%)
For the Week:
Dow: +38.35 (0.25%)
NASDAQ: +118.66 (2.31%)
S&P 500: +11.35 (0.53%)
NYSE Composite: -80.00 (-0.76%)
Wednesday, September 14, 2016
Back To School Not For All; Trump Surges
Well, it's still summer for those of us who go by the calendar rather than a Labor Day or back-to-school regimen.
Actually, most of us hated school, didn't we? And work isn't much better, so... retirement?
Good luck with that.
In any case, stocks are confused, but oil dipped to its lowest level in weeks, which should set firre to the bears' feet. They'll be coming out of summer slumber soon enough to catch another downdraft is our guess, even though the Fed dare not raise the federal funds rate next week.
The likelihood of a Trump presidency grows larger with each passing day, which is enough to cause serious sickness across the investing spectrum, although his victory will prove a dynamic positive in the long run.
It's the short term that scares most people.
Wednesday's Woes:
Dow Jones Industrial Average
18,034.77, -31.98 (-0.18%)
NASDAQ
5,173.77, 18.52 (0.36%)
S&P 500
2,125.77, -1.25 (-0.06%)
NYSE Composite
10,511.54, -23.82 (-0.23%)
Actually, most of us hated school, didn't we? And work isn't much better, so... retirement?
Good luck with that.
In any case, stocks are confused, but oil dipped to its lowest level in weeks, which should set firre to the bears' feet. They'll be coming out of summer slumber soon enough to catch another downdraft is our guess, even though the Fed dare not raise the federal funds rate next week.
The likelihood of a Trump presidency grows larger with each passing day, which is enough to cause serious sickness across the investing spectrum, although his victory will prove a dynamic positive in the long run.
It's the short term that scares most people.
Wednesday's Woes:
Dow Jones Industrial Average
18,034.77, -31.98 (-0.18%)
NASDAQ
5,173.77, 18.52 (0.36%)
S&P 500
2,125.77, -1.25 (-0.06%)
NYSE Composite
10,511.54, -23.82 (-0.23%)
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