As the Federal Reserve raised the federal funds rate to 0.75-1.00% on Wednesday, investors and traders barely took notice of the highly-anticipated move, sending stocks higher on the day and taking a basically taking the day off Thursday. Stocks were flat-lined at the close.
All in seems to be the order of the day, so long as the Fed isn't too interested in raising rates again too soon.
More on this and other important topics in the Money Daily weekend recap, Friday afternoon and Saturday.
For now, we're just happy to have survived the great blizzard of 2017. Lots of snow, lots of wind, not much fun, but, happily, it's over.
At the close, 3.16.17:
Dow: 20,934.55 -15.55 (-0.07%)
NASDAQ: 5,900.76, 0.71 (0.01%)
S&P 500: 2,381.38, -3.88 (-0.16%)
NYSE Composite: 11,600.24, 9.93 (0.09%)
Thursday, March 16, 2017
Sunday, March 12, 2017
Despite Near-Surety Of Fed Rate Hike, Stocks Gain To Close Out Week
Editor's Note: This weekend edition may be the last Money Daily posting until Thursday of this week as incredibly bad weather has persisted in our neck of the woods, a recent windstorm knocking out power to over a quarter million of our neighbors immediately to the West. Bone-chilling temperatures and a major snowstorm are predicted for the early part of this coming week. Money Daily will return to a regular daily posting once weather conditions permit.
Investors took Friday's non-farm payroll (NFP) report of 235,000 net new jobs added to the US economy in February as genuine good news, despite the nearly foregone conclusion that the robust figure would make the case for a federal funds rate increase by the FOMC of the Federal Reserve a fait acommpli. The gains snapped a recent string of losing sessions on the major indices.
In reality, the idea of a rate increase of 25 basis points shouldn't be worrying to anybody, especially with the federal funds overnight rate remaining at or below zero for 14 of the past 17 years and the last eight straight.
A 0.25% increase would move the rate to 0.75-1.00, a number that the Fed has been apprehensive of since the Great Financial Crisis of 2008. Since then, they and their fellow travelers in central banking have added trillions in liquidity to the fractured system, saving it from complete collapse.
In the process, however, they have managed to dilute the currencies of most nations, notably those of Japan and the European Union. While rate increases by the US may be a panacea, they could impact other nationas and the global economy in a variety of ways. As the last crisis was liquidity-driven, expect any future crises to be based upon sovereign solvency or faith in national currencies, all of which are backed by nothing more than the faith and (ahem) credit of the issuing country.
The globe is one giant Ponzi scheme, in which everybody buys each others currencies, hoping beyond hope that nobody defaults in a messy manner. Thus far, central banking institutions have managed to avoid large-scale default, but there's no guarantee that such benign conditions will avail themselves indefinitely.
On the other hand, with the ability to conjure dollars, euros and yen out of thin air at their whim, the central bankers are holding all the cards, even though they're bluffing into their sleeves. The system may fail at some point, but it's more likely that gradualism will prevail, making the case that the most important aspect of one's finances may not be generation of income or growth, but preservation of what one already owns.
At The Close, Friday, March 9, 2017:
Dow: 20,902.98, +44.79 (0.21%)
NASDAQ: 5,861.73, +22.92 (0.39%)
S&P 500: 2,372.60, +7.73 (0.33%)
NYSE Composite: 11,500.76, +43.12 (0.38%)
For the Week:
Dow: -102.73 (-0.49%)
NASDAQ: -9.03 (-0.15%)
S&P 500: -10.52 (-0.44%)
NYSE Composite: -97.61 (-0.84%)
Investors took Friday's non-farm payroll (NFP) report of 235,000 net new jobs added to the US economy in February as genuine good news, despite the nearly foregone conclusion that the robust figure would make the case for a federal funds rate increase by the FOMC of the Federal Reserve a fait acommpli. The gains snapped a recent string of losing sessions on the major indices.
In reality, the idea of a rate increase of 25 basis points shouldn't be worrying to anybody, especially with the federal funds overnight rate remaining at or below zero for 14 of the past 17 years and the last eight straight.
A 0.25% increase would move the rate to 0.75-1.00, a number that the Fed has been apprehensive of since the Great Financial Crisis of 2008. Since then, they and their fellow travelers in central banking have added trillions in liquidity to the fractured system, saving it from complete collapse.
In the process, however, they have managed to dilute the currencies of most nations, notably those of Japan and the European Union. While rate increases by the US may be a panacea, they could impact other nationas and the global economy in a variety of ways. As the last crisis was liquidity-driven, expect any future crises to be based upon sovereign solvency or faith in national currencies, all of which are backed by nothing more than the faith and (ahem) credit of the issuing country.
The globe is one giant Ponzi scheme, in which everybody buys each others currencies, hoping beyond hope that nobody defaults in a messy manner. Thus far, central banking institutions have managed to avoid large-scale default, but there's no guarantee that such benign conditions will avail themselves indefinitely.
On the other hand, with the ability to conjure dollars, euros and yen out of thin air at their whim, the central bankers are holding all the cards, even though they're bluffing into their sleeves. The system may fail at some point, but it's more likely that gradualism will prevail, making the case that the most important aspect of one's finances may not be generation of income or growth, but preservation of what one already owns.
At The Close, Friday, March 9, 2017:
Dow: 20,902.98, +44.79 (0.21%)
NASDAQ: 5,861.73, +22.92 (0.39%)
S&P 500: 2,372.60, +7.73 (0.33%)
NYSE Composite: 11,500.76, +43.12 (0.38%)
For the Week:
Dow: -102.73 (-0.49%)
NASDAQ: -9.03 (-0.15%)
S&P 500: -10.52 (-0.44%)
NYSE Composite: -97.61 (-0.84%)
Friday, March 10, 2017
Is Good News, Good News? February NFP 255,000; Fed Sure To Hike Rates Next Week
As was expected, the February non-farm payroll number was massive, with the US labor force expanding by 235,000 jobs according to data from the Bureau of Labor Statistics.
Additionally, the unemployment rate fell to 4.7%, the excellent report supplying plenty of cover for the Federal Reserve to increase the federal funds rate when the FOMC meets next Tuesday and Wednesday.
While the jobs report has Americans ecstatic over the prospects for jobs as the first year of the Trump administration ensues, raising interest rates is not such a universally-loved subject as low rates have largely fueled the eight-year rally which continues on Wall Street.
If the Fed decides to hike rates when they meet next week, it will be the second such advance in three months. In December, the Fed increased the federal funds rate to a range of 0.50-.0.75%. The stock market shrugged it off, advancing sharply since, though the past week has seen the major averages pull back from all-time highs.
An increase to 0.75-1.00% next week would hardly be earth-shattering or even noticeable to most. Some mortgage and credit card debt is tied to the rate, though more are gauged to the prime rate, which hasn't seen much movement throughout the economic expansion.
So, perhaps the good news from the jobs report will translate into genuine good news for the economy. It will, if it slows down the pace of stock buybacks which have fueled the rally, and doesn't crimp the Main Street economy, which is beginning to show positive signs.
At The Close, 4.9.17:
Dow: 20,858.19 +2.46 (0.01%)
NASDAQ: 5,838.81, +1.25 (0.02%)
S&P 500: 2,364.87, +1.89 (0.08%)
NYSE Composite: 11,457.64, +9.43 (0.08%)
Additionally, the unemployment rate fell to 4.7%, the excellent report supplying plenty of cover for the Federal Reserve to increase the federal funds rate when the FOMC meets next Tuesday and Wednesday.
While the jobs report has Americans ecstatic over the prospects for jobs as the first year of the Trump administration ensues, raising interest rates is not such a universally-loved subject as low rates have largely fueled the eight-year rally which continues on Wall Street.
If the Fed decides to hike rates when they meet next week, it will be the second such advance in three months. In December, the Fed increased the federal funds rate to a range of 0.50-.0.75%. The stock market shrugged it off, advancing sharply since, though the past week has seen the major averages pull back from all-time highs.
An increase to 0.75-1.00% next week would hardly be earth-shattering or even noticeable to most. Some mortgage and credit card debt is tied to the rate, though more are gauged to the prime rate, which hasn't seen much movement throughout the economic expansion.
So, perhaps the good news from the jobs report will translate into genuine good news for the economy. It will, if it slows down the pace of stock buybacks which have fueled the rally, and doesn't crimp the Main Street economy, which is beginning to show positive signs.
At The Close, 4.9.17:
Dow: 20,858.19 +2.46 (0.01%)
NASDAQ: 5,838.81, +1.25 (0.02%)
S&P 500: 2,364.87, +1.89 (0.08%)
NYSE Composite: 11,457.64, +9.43 (0.08%)
Thursday, March 9, 2017
Stocks Down Third Straight Session As NFP Looms
One would assume that a good jobs number on Friday would be good for stocks, but, as the economy goes, the Fed goes against it, with tightening via a raise in the federal funds rate almost a surety if the NFP number for February comes in strong, as suggested by Wednesday's ADP figure of 298,000 new jobs added in the month.
That's the backwardness of the stock market, fueled almost entirely by cheap credit and share repurchases (buybacks) over the past eight years. In fact, today marks the 8th anniversary of the market bottom in 2009, and its been nothing but accommodation by the Fed and happy talk from the press ever since.
Thus, stocks fell for the third straight session and fourth in five days, with the exception of the NASDAQ, where speculators have still not succumbed to the axe of profit-taking.
In a sign that the narrative may be unraveling, WTI crude oil fell sharply on Wednesday, closing under $50 a barrel for the first time since December after another survey showed massive gluts in crude and distillates. This should transfer into good news for drivers as the spring and summer driving months come into focus with lower prices at the pump.
Oil has experienced a glut of magnificent proportions over the past two years with demand down and supply at or near record levels. The price of +$50 has been fueled largely by speculation, as is everything else in the financial sector. With interest rates set to increase, perhaps the malinvestments and speculative frenzy can abate and true price discovery ensue.
At The Close, 3.8.17:
Dow: 20,855.73, -69.03 (-0.33%)
NASDAQ: 5,837.55, +3.62 (0.06%)
S&P 500: 2,362.98, -5.41 (-0.23%)
NYSE Composite: 11,448.21, -58.11 (-0.51%)
That's the backwardness of the stock market, fueled almost entirely by cheap credit and share repurchases (buybacks) over the past eight years. In fact, today marks the 8th anniversary of the market bottom in 2009, and its been nothing but accommodation by the Fed and happy talk from the press ever since.
Thus, stocks fell for the third straight session and fourth in five days, with the exception of the NASDAQ, where speculators have still not succumbed to the axe of profit-taking.
In a sign that the narrative may be unraveling, WTI crude oil fell sharply on Wednesday, closing under $50 a barrel for the first time since December after another survey showed massive gluts in crude and distillates. This should transfer into good news for drivers as the spring and summer driving months come into focus with lower prices at the pump.
Oil has experienced a glut of magnificent proportions over the past two years with demand down and supply at or near record levels. The price of +$50 has been fueled largely by speculation, as is everything else in the financial sector. With interest rates set to increase, perhaps the malinvestments and speculative frenzy can abate and true price discovery ensue.
At The Close, 3.8.17:
Dow: 20,855.73, -69.03 (-0.33%)
NASDAQ: 5,837.55, +3.62 (0.06%)
S&P 500: 2,362.98, -5.41 (-0.23%)
NYSE Composite: 11,448.21, -58.11 (-0.51%)
Wednesday, March 8, 2017
Stocks Lower Again In Sluggish Trade
For the second straight session and the third in the past four, the major indices closed in the red as US equities seem to have reached the top of the proverbial "wall of worry."
More than any one thing, the investment community is concerned about the Fed raising rates next week, though the unusually highly charged political environment could be taking its toll on an overstretched market.
Stocks are not supposed to be prone to politics, but that is the unitary condition that is emerging, in which all aspects of economics, politics and religion become intertwined.
AT THE CLOSE, 3/7/17:
Dow: 20,924.76, -29.58 (-0.14%)
NASDAQ: 5,833.93, -15.25 (-0.26%)
S&P 500: 2,368.38, -6.93 (-0.29%)
NYSE Composite: 11,506.32, -41.47 (-0.36%)
More than any one thing, the investment community is concerned about the Fed raising rates next week, though the unusually highly charged political environment could be taking its toll on an overstretched market.
Stocks are not supposed to be prone to politics, but that is the unitary condition that is emerging, in which all aspects of economics, politics and religion become intertwined.
AT THE CLOSE, 3/7/17:
Dow: 20,924.76, -29.58 (-0.14%)
NASDAQ: 5,833.93, -15.25 (-0.26%)
S&P 500: 2,368.38, -6.93 (-0.29%)
NYSE Composite: 11,506.32, -41.47 (-0.36%)
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