The Rush To Safety Has Begun In Earnest; 10-Year Yields Drop to 2.41%

With one of the most amazing sporting spectacles - Super Bowl 51 (LI, for those of the Roman numeral persuasion) - behind, most people got back to work today, including the rabid money-grubbers of Wall Street, but all was not rosy and peachy after the New England Patriots won in overtime, 34-28, over the Atlanta Falcons.

As President Donald Trump continues to attempt to "make America great again," much of the focus on the first trading day of the week was not on stocks, but rather, bonds, most noticeably on the 10-year treasury note, which plummeted eight basis points on the day to produce the lowest yield in two weeks, to 2.41%.

That figure may not seem so attractive to the yield-seekers of the world, but to countless hedge and managed bond fund professionals, it was a pretty awesome start to the week. Prices - which preform in the opposite direction of yield - for the 10-year were rocketing higher and any continuation of the move over the next few days and through the week might make for a trend-setting reversion following weeks of speculation after the Fed hiked federal funds rates at the end of last year.

Stocks were down modestly, but that was antecedent to the speculative ride in bonds, which was focused on the long end, thereby flattening the curve. What is more than just passing interest in treasury bonds figures to keep a lid on stock prices for the near term, at least until the next Fed meeting, in mid-March, at which time the FOMC will likely keep interest rates at the same levels. It's simply going to be too early for the Fed to believe that the economy is on sound footing toward expansion, something they've been sniffing around for over the past eight years. To their dismay, and possible demise, the Fed hasn't found much in the data to suggest that the US economy is going to be great, again, or with any other adverbial disclaimer.

So, today can be summed up as bond traders getting calls to buy safety and executing on the wishes of their clients. Any assumption that the Trump rally or any other concoction of the news and financial media is going to send stocks even higher than the stratospheric levels they've already achieved in one of the longest multiple expansions in history may be similar to a dog whistle.

Dogs may hear it and lower-thinking humans might get a strange beeping sound, but long-term financial experts aren't going to notice. They've already made up their minds about where stocks are headed and, from today's indications, they're not going to a pleasant place.

Gird your loins and whatever else you might think appropriate for a trip of declining prices and some creative destruction in stocks. Hopefully, it won't be your money that's being lost.

At the Close, Monday, January 6, 2017:
Dow: 20,052.42, -19.04 (-0.09%)
NASDAQ: 5,663.55, -3.21 (-0.06%)
S&P 500: 2,292.56, -4.86 (-0.21%)
NYSE Composite: 11,264.11, -46.63 (-0.41%)

What Wall Street Wants, Wall Street Gets; Trump Slashes Dodd-Frank

There's no better way to put it than to say that the Wall Street banks - Goldman Sachs, Bank of America, JP Morgan Chase, Morgan Stanley, Wells Fargo, and Citi - have Donald Trump's "get out of jail free" card in their back pockets.

Today's action by the President, an executive order slashing most of the regulations put on banks by the Dodd-Frank act under past-president Obama and the useless congress, paves the way for even looser regulations and more wild risk-taking by Wall Street.

And the celebration got underway right after the stupid BLS jobs report and the opening bell, boosting all major averages to within spitting distance of all-time highs.

Should anyone wonder if Mr. Trump knows anything about economics, one has only to look at his Treasury nominee, Steven Mnuchin, who led a group of investors in the take-out of IndyMac, later changing the name to OneWest while it became a serial abuser of mortgage financing and foreclosure laws.

While the former Goldman Sachs partner is not yet assured of passing muster in Senate confirmation, the appearance of yet another Goldman alumnus at the top finance job in the administration should be all one needs to know. Trump has long-standing associations with Wall Street, Goldman Sachs and financiers in general, so it isn't really a surprise.

Business will do business, whether or not it's moral, fiduciary, or based upon sound best practices. Wall Street retained control when Trump was elected, and would have even with Hillary as the president, so there's a bit of a silver lining in that at least the office of the president isn't occupied by a serial liar and psychopath. President Trump is better than the alternative, probably by more than anyone imagined.

After all the whipsaw activity of the past week, the major indices ended relatively unchanged. So, jobs data, the Fed, Trump, the EU, Japan, and the UK central bankers didn't actually add up to much at all.

Caveat Emptor

Carry on and Mind the Gap.


At the Close, Friday, February 3, 2017:
Dow: 20,071.46, +186.55 (0.94%)
NASDAQ: 5,666.77, +30.57 (0.54%)
S&P 500: 2,297.42, +16.57 (0.73%)
NYSE Composite: 11,311.74, +96.36 (0.86%)

For the Week:
Dow: -22.32 (-0.11%)
NASDAQ: +5.98 (0.11%)
S&P 500: +2.72 (0.12%)
NYSE Composite: +27.52 (+0.24%)

Stocks Finish Flat Thursday, Friday Futures Boosted By Boffo BLS Jobs Report

Stocks finished the day Thursday relatively flat, but the big jobs number Friday should manage to erase any doubts about where the market is headed (spoiler alert: back over 20,000).

According to the ever-accurate-and-oft-revised BLS, he US economy added 227,000 jobs in January while the unemployment rate rose slightly to 4.8%. Economists were looking for payrolls to grow by 175,000 with the unemployment rate expected to hold steady at 4.7%.

So, more jobs, but the unemployment rate goes higher. Only in America, land of missed opportunities and bogus statistical data from the government.

Wages missed the mark, as average hourly earnings rose just 0.1%. The usual suspect "experts" were seeking a gain of 0.3%. Sorry, slaves. Back to work. However, the day is early, and though futures are rocketing higher, there's now the possibility that President Trump will unleash a tweet or two designed to fan the flames of confusion.

Just one question: Are we having fun yet?

At The Close, Thursday, February 2, 2017:
Dow: 19,884.91, -6.03 (-0.03%)
NASDAQ: 5,636.20, -6.45 (-0.11%)
S&P 500: 2,280.85, +1.30 (0.06%)
NYSE Composite: 11,215.38, +8.14 (0.07%)

Fed On Hold, Markets Steady In Dull Session After Shaky Start To Week

With the Federal Reserve deciding that there would be no raise to the federal funds rate, as expected, US indices finished the day modestly higher, though the S&P 500 struggled to gain and the NYSE Composite finished in the red.

That was about all there was to the day, as investors took a break from the rabid pace set largely by President Trump's first ten days in office.

The next FOMC rate policy meeting isn't until March 14-15, though analysts and economists are still relatively certain that the Fed will continue to leave rates unchanged.

At The Close, Wednesday, February 1, 2016:
Dow: 19,890.94, +26.85 (0.14%)
NASDAQ: 5,642.65, +27.86 (0.50%)
S&P 500: 2,279.55, +0.68 (0.03%)
NYSE Composite: 11,207.24, -15.71 (-0.14%)

Stocks Drop, Rally In Split Session; Dow Down Three Straight; Apple Beats; Gold, Silver Rally

Beginning just after 2:00 pm ET, a furious rally brought US stock indices back from the depths of despair, finishing up Tuesday with a split decision, the S&P and Dow down, the NASDAQ and NYSE Comp. positive.

In close focus was the Dow Industrial Average, which was lower by as much as 186 points, but gathered back nearly half of that in the final two hours of the session. Leading the way lower were financial stocks, Goldman Sachs (GS) and JP Morgan Chase (JPM), the same companies that boosted the averages during the "Trump Rally" following November's election.

Now, it appears the euphoria over the presidency of Donald J. Trump is waning and enthusiasm for making America great again is falling prey to the harsh realities of economics, politics, and a divided country. Also weighing on stocks ae Trump's own bold initiatives, Twitter tweets and statements which appear to indicate that the 45th president is about to engage in an all-out, no-holds-barred currency and trade war with America's largest trading partners, in particular, China, Mexico and the European Union.

It just so happens that what President Trump is doing is exactly what he promised all during his campaign for the high office. Trump is truly an agent for change, but his changes - and the execution of them - are almost certainly not going to be smooth or predictable.

Today's targets of Trump ire included pharmaceutical companies, Germany and congress. Among other things, Trump told pharma execs to lower prices and move their operations back to the US.

Early in the day, President Trump's top trade advisor, Peter Navarro, said Germany was benefiting from a "grossly undervalued" euro, that gave Germany an unfair edge over US and fellow EU trading partners.

As for congress, Trump continues to hoot over the Democrats' stalling tactics on his cabinet nominees. In a procedural move, Democrat senators walked out on committee votes for nominations for Health and Human Services nominee, Tom Price, and Treasury pick, Steve Mnuchin. Democrats also delayed a vote (reportedly only until tomorrow) on Attorney General choice, Jeff Sessions, a position which has been the focus of vigorous debate.

All of this is providing cover for sellers and considerable confusion in global markets, sending the Dow into the red for a third straight day. Since the top tick of 20,125.58 on January 26 (last Thursday), the Dow has dipped 340 points intraday, or about 1.6%.

While it's still not enough to call a trend, it is worrying to some, especially since anybody with even marginal knowledge of stock valuations has to understand just how overvalued equities are, especially under the current changing environment.

Amid the carnage in stocks, gold and silver rallied sharply as the dollar slipped. Bond yields fell, with the 10-year note holding at 2.45%.

It's been often said that Wall Street hates uncertainty, and there's more than enough of that fueling the current dips and dives.

Just in after the close are Apple's (AAPL) earnings for its fiscal 2017 first quarter. Apple had $78.4 billion in gross revenue on expectations of $77.4 billion, and reported earnings of $3.36 per share on expectations of $3.21. IPhone sales were well beyond expectations. Shares of Apple were up more than three percent in after-hours trading, which should provide at least a temporary boost to stock prices tomorrow.

At the Close, Tuesday, 1.31.17:
Dow: 19,864.09, -107.04 (-0.54%)
NASDAQ: 5,614.79, +1.07 (0.02%)
S&P 500: 2,278.87, -2.03 (-0.09%)
NYSE Composite: 11,222.97, +17.73 (0.16%)