This market cant seem to make up its mind.
At least that's the impression from the past few days of trading - or even the past eight weeks - which has seen the major averages whipsawed by varying reports of Trump administration plans, key industry data, jobless claims, and the all-important stance by the Federal Reserve on raising the federal funds rate.
On that last point, the recent March non-farm payroll data should have put the kibosh on any rate hikes until at least July, and that's the thinking of most of the Wall Street analysts, who actually get it right some of the time.
With just Friday remaining, unless stocks are donw close to one percent on the day, the week will finish positive, though it would be only the fourth positive week in the last eight, another sign of indecision.
At the Close, Thursday, April 20, 2017:
Dow: 20,578.71, +174.22 (0.85%)
NASDAQ: 5,916.78, +53.74 (0.92%)
S&P 500: 2,355.84, +17.67 (0.76%)
NYSE Composite: 11,427.73, +85.31 (0.75%)
Thursday, April 20, 2017
Stocks Split, But Down On The Main; Valuation Could Be At The Root
Something is upsetting the markets, but it's difficult to find an appropriate culprit for the current nausea.
Maybe it's an overhang from tax filing day, even though that is now two days in arrears, still, the amount of taxes Americans pa to federal, state, and local governments has probably never been higher. If taxes rates are not the largest they've ever been, they're certainly close to being so.
It takes 113 working days for the average American worker to earn enough money just to pay off the taxman. That day arrives - for most people - around mid-May, so perhaps the realization that one hasn't yet worked enough just to stay even with the bloated governments that regulate every conceivable activity might be a cause for upset.
Falling stock prices cannot be attributable to the current employment situation because we've been told over and over again that there are plenty of jobs in America. What we're not told is that many of those jobs are part time,
or low-paying, or otherwise dissatisfying. So, maybe it could be that.
One doesn't see to many corporate CEOs suffering, so there is virtually no possibility that these titans of industry are panic selling their shares.
What could it be?
Maybe the idea that stocks are currently trading at some of the highest valuations in history is giving some with more savvy investing skills than the average fund manager cause for concern. These people have seen tops and bottoms before, so they might just be looking for an exit and these high prices seems like a good place to take one's leave, or, as the case may be, profits.
If that's all there is to the sideways trading since mid-March, then it's probably not much to worry about, unless one is looking for a place to invest. In that regard, buying would be quite out of the question, thus solving our quandary: there are more sellers than buyers.
It could be that simple.
At the Close, Wednesday, April 19, 2017:
Dow: 20,404.49, -118.79 (-0.58%)
NASDAQ: 5,863.03, +13.56 (0.23%)
S&P 500: 2,338.17, -4.02 (-0.17%)
NYSE Composite: 11,342.42, -36.16 (-0.32%)
Maybe it's an overhang from tax filing day, even though that is now two days in arrears, still, the amount of taxes Americans pa to federal, state, and local governments has probably never been higher. If taxes rates are not the largest they've ever been, they're certainly close to being so.
It takes 113 working days for the average American worker to earn enough money just to pay off the taxman. That day arrives - for most people - around mid-May, so perhaps the realization that one hasn't yet worked enough just to stay even with the bloated governments that regulate every conceivable activity might be a cause for upset.
Falling stock prices cannot be attributable to the current employment situation because we've been told over and over again that there are plenty of jobs in America. What we're not told is that many of those jobs are part time,
or low-paying, or otherwise dissatisfying. So, maybe it could be that.
One doesn't see to many corporate CEOs suffering, so there is virtually no possibility that these titans of industry are panic selling their shares.
What could it be?
Maybe the idea that stocks are currently trading at some of the highest valuations in history is giving some with more savvy investing skills than the average fund manager cause for concern. These people have seen tops and bottoms before, so they might just be looking for an exit and these high prices seems like a good place to take one's leave, or, as the case may be, profits.
If that's all there is to the sideways trading since mid-March, then it's probably not much to worry about, unless one is looking for a place to invest. In that regard, buying would be quite out of the question, thus solving our quandary: there are more sellers than buyers.
It could be that simple.
At the Close, Wednesday, April 19, 2017:
Dow: 20,404.49, -118.79 (-0.58%)
NASDAQ: 5,863.03, +13.56 (0.23%)
S&P 500: 2,338.17, -4.02 (-0.17%)
NYSE Composite: 11,342.42, -36.16 (-0.32%)
Wednesday, April 19, 2017
Stocks In Spring Funk, Well Off All-Time Highs
Monday's big rally failed to inspire much confidence as the major averages fell sharply on Tuesday, giving back most of the gains from the prior session.
If it seems that stocks have hit a wall or are in stall mode for the present, it's because they are. The last all-time high close on the Dow Jones Industrial Average was March 6, when the bellwether ended the day at 20,954.34.
The other averages have been in similar holding patterns, though the markets overall - despite their closeness to record levels - do not appear very fragile. It's just that there isn't very much velocity or volatility, and even with first quarter earnings thus far somewhat positive, they haven't supplied a catalyst to move stocks out of a Spring funk.
Without a clear case for an upside move, speculators may be looking more to politics for a positive tone, but the rancor in Washington has been at near-deafening levels since the inauguration of Donald Trump in January and the Democrats seem to be dug in to obstruct any and all of the President's agendas.
China and Russia moving troops to the borders of North Korea, along with US warships steaming towards its coast, probably has dampened investor appetite as well.
But that's all for the time being. Economic data is pointing to more of the same, a slow, dolorous economy that isn't making anybody happy, least of which are the governors of the Fed, who wish to see more robust job creation and some pricing power by corporations, but, exclusively in the latter case, are seeing the opposite. Consumers are no longer the suckers they once were, and are beginning to demand value for their dollars. Retailers and restaurants - the front lines for consumer inflation - have been feeling the pinch, with many regional and national chains already engaged in a pitched price war.
That kind of activity can only go one way, and it's not the way of inflation. Bond sellers are a happy bunch for this, with prices for their offerings high and yields down.
Trump may want to make America great again, but it may have to start with better deals for consumers.
At the Close, Tuesday, April 18, 2017:
Dow: 20,523.28, -113.64, (-0.55%)
NASDAQ: 5,849.47, -7.32 (-0.12%)
S&P 500: 2,342.19, -6.82 (-0.29%)
NYSE Composite: 11,378.58, -48.50 (-0.42%)
If it seems that stocks have hit a wall or are in stall mode for the present, it's because they are. The last all-time high close on the Dow Jones Industrial Average was March 6, when the bellwether ended the day at 20,954.34.
The other averages have been in similar holding patterns, though the markets overall - despite their closeness to record levels - do not appear very fragile. It's just that there isn't very much velocity or volatility, and even with first quarter earnings thus far somewhat positive, they haven't supplied a catalyst to move stocks out of a Spring funk.
Without a clear case for an upside move, speculators may be looking more to politics for a positive tone, but the rancor in Washington has been at near-deafening levels since the inauguration of Donald Trump in January and the Democrats seem to be dug in to obstruct any and all of the President's agendas.
China and Russia moving troops to the borders of North Korea, along with US warships steaming towards its coast, probably has dampened investor appetite as well.
But that's all for the time being. Economic data is pointing to more of the same, a slow, dolorous economy that isn't making anybody happy, least of which are the governors of the Fed, who wish to see more robust job creation and some pricing power by corporations, but, exclusively in the latter case, are seeing the opposite. Consumers are no longer the suckers they once were, and are beginning to demand value for their dollars. Retailers and restaurants - the front lines for consumer inflation - have been feeling the pinch, with many regional and national chains already engaged in a pitched price war.
That kind of activity can only go one way, and it's not the way of inflation. Bond sellers are a happy bunch for this, with prices for their offerings high and yields down.
Trump may want to make America great again, but it may have to start with better deals for consumers.
At the Close, Tuesday, April 18, 2017:
Dow: 20,523.28, -113.64, (-0.55%)
NASDAQ: 5,849.47, -7.32 (-0.12%)
S&P 500: 2,342.19, -6.82 (-0.29%)
NYSE Composite: 11,378.58, -48.50 (-0.42%)
Tuesday, April 18, 2017
Stocks Bounce Higher After Long Weekend; Bond Yields Smashed
Apparently, there was so much pent up demand for overpriced stocks that all the major averages posted nearly one percent gains.
Surely, this has something to do with the failed North Korean missile launch on Sunday, though there might be some Russian involvement in stocks going higher.
Then again, it just might be that speculators are taking one final dive into equities before this year's official federal income tax deadline (April 18), getting all they can out of super low interest rates.
Speaking of interest rates, the officials over at the Federal Reserve must be highly perplexed, with the 10-year note resting comfortably at around 2.20% yield. Somebody's happy, but surely not the millions of retirees who pine for the days when banks paid five percent interest on savings.
Those days are long gone, but the party continues. Hyperinflation for the win?
At The Close, Monday, April 17, 2017:
Dow: 20,636.92, +183.67 (0.90%)
NASDAQ: 5,856.79, +51.64 (0.89%)
S&P 500: 2,349.01, +20.06 (0.86%)
NYSE Composite: 11,427.08 +102.55 (0.91%)
Surely, this has something to do with the failed North Korean missile launch on Sunday, though there might be some Russian involvement in stocks going higher.
Then again, it just might be that speculators are taking one final dive into equities before this year's official federal income tax deadline (April 18), getting all they can out of super low interest rates.
Speaking of interest rates, the officials over at the Federal Reserve must be highly perplexed, with the 10-year note resting comfortably at around 2.20% yield. Somebody's happy, but surely not the millions of retirees who pine for the days when banks paid five percent interest on savings.
Those days are long gone, but the party continues. Hyperinflation for the win?
At The Close, Monday, April 17, 2017:
Dow: 20,636.92, +183.67 (0.90%)
NASDAQ: 5,856.79, +51.64 (0.89%)
S&P 500: 2,349.01, +20.06 (0.86%)
NYSE Composite: 11,427.08 +102.55 (0.91%)
Friday, April 14, 2017
If The Fed Is Upset On The CPI Drop And Stubbornly-Low Interest Rates, It Must Be A Good Friday
It's Good Friday and some of us have just finished doing our taxes (such as this writer), so, some of us are wondering what's so good about this particular Friday.
Aside from the generally-obvious religious conventions (Shouldn't it be called Bad Friday because it's the day Jesus Christ was crucified, and that doesn't seem so good?), there probably are some good things afoot.
First, the financial markets are closed, always a bonus. Second, the Labor Department announced today that the Consumer Price Index (CPI) dropped 0.3 percent, the first decline since February 2016. They said that lower cell phone service and gasoline costs outpaced higher rents and a slight increase in food costs (0.3%).
If those food costs are to be believed, since the amount of food most people eat (and buy) can be self-regulated, higher food costs aren't really an issue at all, especially since practically nobody in America is starving at the present time.
This CPI number brings up some interesting possibilities. If the United States is actually experiencing deflation (or, as the TV pundits like to call it, because deflation is bad, you know, "disinflation") then prices are going down, everything is going to cost less. That's the bane of a strong dollar. Imports are cheaper, and, in an economy that relies on lots of imports, that drives domestically-produced goods and services down as well.
It's a win-win-win for everybody, except, possibly, the Federal Reserve, banks and bond investors who are getting anxious and perhaps a bit desperate for higher interest rates.
Well, crocodile tears are the order of the day for them. Higher interest rates are not going to happen unless the economy is strong, meaning many excess jobs are being created, pushing wages higher, and producers are experiencing strong pricing power. Both of those items - jobs and pricing - seem to be going in reverse over the short term. Bond prices have been soaring because yields have been stubbornly opposed to any kind of rise, the now nearly constant urging and jawboning from the genii at the Federal Reserve, Janet Yellen, Stanley Fisher, et. al. notwithstanding.
The 10-year note is hovering around 2.25% yield. That doesn't bode well for inflation. No, not at all.
Stocks were lower for the week, but they're still within a few percentage points of all-time highs. Rich people and people with 401k or pension plans are probably not very concerned with their stock holdings.
In conclusion, this may actually be a pretty good Good Friday after all. Cheaper gas and phone service is a plus and eating a little less is probably not a bad idea in a nation of fatties. Plus, if the people over at the Fed are perplexed or constipated or otherwise annoyed or agitated, that's a huge bonus.
Happy Easter. Don't eat too much ham, lamb, or hard-boiled eggs.
At The Close, Thursday, April 13, 2017:
Dow: 20,453.25, -138.61 (-0.67%)
NASDAQ: 5,805.15, -31.01 (-0.53%)
S&P 500: 2,328.95, -15.98 (-0.68%)
NYSE Composite: 11,324.53, -98.64 (-0.86%)
For the Week:
Dow: -202.85 (-0.98%)
NASDAQ: -72.66 (-1.24%)
S&P 500: -26.59 (-1.13)
NYSE Composite: -121.05 (-1.06%)
Aside from the generally-obvious religious conventions (Shouldn't it be called Bad Friday because it's the day Jesus Christ was crucified, and that doesn't seem so good?), there probably are some good things afoot.
First, the financial markets are closed, always a bonus. Second, the Labor Department announced today that the Consumer Price Index (CPI) dropped 0.3 percent, the first decline since February 2016. They said that lower cell phone service and gasoline costs outpaced higher rents and a slight increase in food costs (0.3%).
If those food costs are to be believed, since the amount of food most people eat (and buy) can be self-regulated, higher food costs aren't really an issue at all, especially since practically nobody in America is starving at the present time.
This CPI number brings up some interesting possibilities. If the United States is actually experiencing deflation (or, as the TV pundits like to call it, because deflation is bad, you know, "disinflation") then prices are going down, everything is going to cost less. That's the bane of a strong dollar. Imports are cheaper, and, in an economy that relies on lots of imports, that drives domestically-produced goods and services down as well.
It's a win-win-win for everybody, except, possibly, the Federal Reserve, banks and bond investors who are getting anxious and perhaps a bit desperate for higher interest rates.
Well, crocodile tears are the order of the day for them. Higher interest rates are not going to happen unless the economy is strong, meaning many excess jobs are being created, pushing wages higher, and producers are experiencing strong pricing power. Both of those items - jobs and pricing - seem to be going in reverse over the short term. Bond prices have been soaring because yields have been stubbornly opposed to any kind of rise, the now nearly constant urging and jawboning from the genii at the Federal Reserve, Janet Yellen, Stanley Fisher, et. al. notwithstanding.
The 10-year note is hovering around 2.25% yield. That doesn't bode well for inflation. No, not at all.
Stocks were lower for the week, but they're still within a few percentage points of all-time highs. Rich people and people with 401k or pension plans are probably not very concerned with their stock holdings.
In conclusion, this may actually be a pretty good Good Friday after all. Cheaper gas and phone service is a plus and eating a little less is probably not a bad idea in a nation of fatties. Plus, if the people over at the Fed are perplexed or constipated or otherwise annoyed or agitated, that's a huge bonus.
Happy Easter. Don't eat too much ham, lamb, or hard-boiled eggs.
At The Close, Thursday, April 13, 2017:
Dow: 20,453.25, -138.61 (-0.67%)
NASDAQ: 5,805.15, -31.01 (-0.53%)
S&P 500: 2,328.95, -15.98 (-0.68%)
NYSE Composite: 11,324.53, -98.64 (-0.86%)
For the Week:
Dow: -202.85 (-0.98%)
NASDAQ: -72.66 (-1.24%)
S&P 500: -26.59 (-1.13)
NYSE Composite: -121.05 (-1.06%)
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