Wall Street Tumbles Most This Year; Treasuries, Gold Rally

Sure enough, being the contrary indicator for which Money Daily has become legendary, as soon as this blog issued the "all clear," circa the past two days - citing that the Fed has Wall Street's back - then the bottom falls completely out of the market.

While today's massive declines could be nothing more than a case of jitters over the Washington establishment's fixation on making President Trump's life a living hell, or, a simple matter of profit taking, there's some indication that both may be partially true.

As usual, with everything related to stocks and finance since roughly the year 2000, there's insufficient information upon which to make a decisive call. One day's worth of declines by no means indicates anything fundamentally wrong, and it's likely that this current bout of market indigestion will blow over with the next data release.

Moreover, given that the mainstream media is chock full of creeps, fabricators and liars, it wouldn't be beyond the pale for financial media to be right in the middle of the "fake news" mix. To the point, the headline on Yahoo Finance at today's market close screams, "Stocks tumble as Trump worries Wall Street," as if it's the President himself causing consternation among international financiers, when in fact, it is the news media itself promulgating questionable narratives surrounding the President and his administration.

Thus, there may be something more compelling afoot. Perhaps some of the more recent data releases haven't been particularly rosy, or maybe somebody deep inside the global financial establishment knows something of which the general public isn't keenly aware. That insiders would know more than the public is undeniably true; whether or not there's something big about to occur - and this was just cover for a deeper dive - is a matter of great conjecture.

On the surface, that doesn't seem to be the case. Tuesday's releases showed that capacity utilization and industrial production both beat expectations, but housing starts and building permits missed the mark. Wednesday's release of crude inventories (a drawdown) and mortgage applications (off by 4.1%) shouldn't have catalyzed the market into this kind of paroxysm.

What we do know is that the dollar index (97.456) fell again today (fifth straight decline) and has been below 100 for a full month. That's sent gold soaring (up nearly two percent today), with silver tagging along, though without as much gusto (+0.73%, 16.87/oz.). A falling dollar should be good for US companies, though that correlation hasn't always held true, because US imports in other countries' currencies would cost less.

We also know that today's losses were the worst of the year for the major indices and Treasuries were rallying, with the 10-year yield falling to 2.22% and the two-year moving down to 1.24%.

Thus, the crystal ball remains cloudy. Thursday's market action may be more telling. It's never too late to take a profit, nor is it ever too early to cut losses. Maybe Wall Street has come to its senses.

At the Close, 5/17/17:
Dow: 20,606.93, -372.82 (-1.78%)
NASDAQ: 6,011.24, -158.63 (-2.57%)
S&P 500: 2,357.03, -43.64 (-1.82%)
NYSE Composite: 11,423.54, -182.95 (-1.58%)

Political Theater Weakening The Dollar; Silver, Gold Up

After setting new record all-time highs (again, and again, and again) yesterday, core investors in the S&P 500 took a back seat to the NASDAQ nutcases who pushed the index to another record close.

While this is beginning to be reminiscent of the 1999-2000 tech bubble and bust, we're still in the bubble stage, so hang on to whatever you're not trading. If you must, get some protection in cheap NASDAQ put options to protect your position.

In case you're not invested in stocks or are more interested in baseball, the NBA playoffs or the current political circus in Washington, a close eye on the dollar index might be a suggested tonic, which goes well with either gin or vodka.

Wiht the dollar index down, gold and silver registered nice gains on the day, but, as soon as the crooked dealers at the COMEX get wind of it, that will change. Gold and silver bugs keep hoping that the current fiat system implodes, which would likely enrich them, though that's an old conclusion not necessarily in order these days.

Taking close to a one percent hit on the day (could it possibly be because even Republicans are now openly in opposition to President Trump, along with the requisite fake outrage from Democrats?) the political climate in Washington is beginning to sour experienced traders and geo-political watchers, mostly because it doesn't take a break. The opposition to the current sitting president is outrageous and loud, and the fear is that something is going to break, if not the President's tweeting pattern, then maybe blood vessels on house minority leader Nancy Pelosi's forehead.

Then again, majority leader Paul Ryan's sound bites on the "Trump gave Russia top secret info" fake news has to make one wonder just what the deep state has on him. He looks like a square guy, but he acts like a Democrat, unless, of course, Trump pushes through a healthcare reform bill or something along those lines. Then he's all glad-handing and giddy. The guy has no political future, and, unless the press and the Democrats begin conducting themselves in more decorous manners, neither does the country.

At the Close, 5/16/17:
Dow: 20,979.75, -2.19 (-0.01%)
NASDAQ: 6,169.87, +20.20 (0.33%)
S&P 500: 2,400.67, -1.65 (-0.07%)
NYSE Composite: 11,606.49, -7.75 (-0.07%)

With the Fed Pledged to Complete Wall Street Backing, There's No Top In Sight

At the Close, 5/15/17:
Dow: 20,981.94, +85.33 (0.41%)
NASDAQ: 6,149.67, +28.44 (0.46%)
S&P 500: 2,402.32, +11.42 (0.48%)
NYSE Composite: 11,614.23, +67.18 (0.58%)

Welcome to the asylum.

Just for reference, a random look at stocks from a one-year perspective.

On May 16, 2016, here's where the major averages closed.
Dow: 17,500.94
NASDAQ: 4,769.56
S&P 500: 2,052.32
NYSE Composite: 10,250.49

OK, so those look like nice gains, right? How much, percentage-wise, through today's close:
Dow: 16.59%
NASDAQ: 22.45%
S&P 500: 14.58%
NYSE Composite: 11.75%

The obvious question is, how long, with the current bull market more than 8 years long (second longest in market history) can this continue?

Skeptics posit that the entire global financial structure is a massive Ponzi scheme based entirely on fiat money backed by nothing, while realists may refer the old "go with the flow" ideology.

With the Fed continuing to be accommodative via historically low interest rates and the continued buying of financial assets by central banks, there may be no better time to be in the market.

Whoever it was who coined the term, "don't fight the Fed," should be sainted immediately by Pope Francis. This bull market could last another two years or end in two weeks. For now, nearly the entire investment community (approaching 100%) is bullish on stocks, which typically signals a turn of fortune. However, this time truly is different. Never has there been the levels of accommodation and asset purchasing by central banks, who eventually, if current patterns play out, will own the entire market, at inflated prices.

Then what?

Global hyperinflation? It could happen, but that will take time.

Stay the course. This is the age of easy money.

Stocks Little Changed For Week With Tech Titans Continuing Leadership

Taken as a whole, the week on Wall Street was about as exciting as a Gheorghe Zamfir concert, without the music.

Stocks gyrated through very narrow ranges, extending a pattern that have prevailed - with only minor aberrations - since late March. In that span of time the major averages are roughly even on a daily and weekly basis, the major exception being the NASDAQ, which continues to climb without regard to fundamentals, driven largely on an odd combination of momentum, hope, faith, greed and a noticeable absence of fear, pricing out major tech companies, especially Alphabet (GOOG), parent of Google; Amazon (AMZN); Apple (AAPL); and Facebook (FB).

Those four companies have outperformed the broader market and carried the whole of Wall Street with it. In an investing environment largely devoid of critical analysis, these "no-brainers" of tech 2.0 or 3.0, or whatever moniker one wishes to place upon the rapid multiple expansion in this space, a few stocks make for giddy headlines.

The facts be damned; all of the investment money from funds and pension plans are routinely flowing into this small piece of the pie, crowding out smaller firms which operate without the largess of the Wall Street elite connected by the hip to the Federal Reserve.

It's a troubling scenario which bears watching closely as the bull market continues to run at its own pace. With the Fed and central bank cronies underwriting the entire market, there's a fakery here that is reminiscent of the tightly-held mainstream media.

Happy hunting!


At the Close, 5/12/17:
Dow: 20,896.61, -22.81 (-0.11%)
NASDAQ: 6,121.23, +5.27 (0.09%)
S&P 500: 2,390.90, -3.54 (-0.15%)
NYSE Composite: 11,547.05, -16.55 (-0.14%)

For the week:
Dow: -110.33 (-0.53%)
NASDAQ: +20.47 (0.34%)
S&P 500: -3.54 (-0.15%)
NYSE Composite: -68.54 (-0.59%)

Retailers Post Losses, Send Stocks Reeling Before Late-Day Recovery

Stocks finished lower, but well off the lows set earlier in the day, as Macy's and other retailers continue to under-perform the broader market.

The retailer reported earnings well below expectations. Kohl's, Penny's, Sears, Nordstrom and Dillards were also big losers on the day. Macy's same-stare sales plummeted 5.2% in April.

The demise of brick-and-mortar retailing is a continuing trend that shows no sign of abating as Americans turn to online retailing as their preferred buying methodology. Store closing in malls and shopping centers around the country have only accelerated as company CEOs seek ways to cut costs and salvage what remains of a buggy-whip-type industry.

Alongside retail, cable companies and network broadcasters could be next, as consumers, enraged over continued increases in television subscription services, cut the cord and elect to go completely wireless.

These trends should continue until most of North America sees malls and cable and phone lines as mere remnants of a wired, consumer-driven past.

At the close, 5/11/17:
Dow: 20,919.42, -23.69 (-0.11%)
NASDAQ: 6,115.96, -13.18 (-0.22%)
S&P 500: 2,394.44, -5.19 (-0.22%)
NYSE Composite: 11,563.60, -35.38 (-0.31%)