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Saturday, June 10, 2017
Thursday, June 8, 2017
Something Is Not Working And It's Called Price Discovery
On Thursday, stocks closed the day essentially flat, with the exception of the NASDAQ, which seems to go up continually, no matter what the news, data or geopolitical conditions.
Oil slipped a little after being pumped and dumped. Precious metals were slammed without mercy, another annoying feature of the central banking control clique.
There seems to be a missing mechanism somewhere in this busted system, such as the one that transfers money from corporations to worthy shareholders or that can actually present a rational value for gold and silver.
It's called price discovery and there hasn't been an honest mechanism for such since 2009, probably earlier.
Like everything else, including the senate testimony of one former FBI Director James Comey, the stock market is built upon a mountain of flimsy propositions, most of which make little to no economic sense, unless, of course, one believes that borrowing insane amounts of money and printing even more will bring prosperity.
Hogwash.
At the Close, 6/8/17:
Dow: 21,182.53, +8.84 (0.04%)
NASDAQ: 6,321.76, +24.38 (0.39%)
S&P 500 2,433.79, +0.65 (0.03%)
NYSE Composite: 11,676.79, +9.06 (0.08%)
Oil slipped a little after being pumped and dumped. Precious metals were slammed without mercy, another annoying feature of the central banking control clique.
There seems to be a missing mechanism somewhere in this busted system, such as the one that transfers money from corporations to worthy shareholders or that can actually present a rational value for gold and silver.
It's called price discovery and there hasn't been an honest mechanism for such since 2009, probably earlier.
Like everything else, including the senate testimony of one former FBI Director James Comey, the stock market is built upon a mountain of flimsy propositions, most of which make little to no economic sense, unless, of course, one believes that borrowing insane amounts of money and printing even more will bring prosperity.
Hogwash.
At the Close, 6/8/17:
Dow: 21,182.53, +8.84 (0.04%)
NASDAQ: 6,321.76, +24.38 (0.39%)
S&P 500 2,433.79, +0.65 (0.03%)
NYSE Composite: 11,676.79, +9.06 (0.08%)
Crude Oil Sinks on Continuing Glut, Slack Demand, Alternatives
While stocks have zigzagged and gone nowhere the first three days of the week, oil has been more consistent in direction, with WTI crude dropping by two dollars a barrel on Wednesday under $46, a nine-month low.
There's been a glut of oil on world markets for some time now, but it's been especially painful to producers since the market riggers lost control in 2015, sending the price from imaginary levels - forced upon the planet by the myth of "peak oil" - around $100 per barrel to where it stands today.
Oil's recent swoon brings up a good question. With all the oil sloshing around and a myriad of factors leading to lessened use of the "fossil fuel," what exactly is fair value for crude?
There are many arguments with which to weigh the answer, whatever that may be, but one element that is undeniable about the current condition, is that producing nations aren't exactly in love with what they're being paid for a barrel of the slippery stuff. That's because many of the producers - OPEC and Middle East nations, primarily - had budgeted for steady sales around the high-water mark of $100/barrel.
Since that price turned out to be completely unsustainable, these countries have had to adjust their spending and programs, leading to some degree of discontent among their citizens. Americans, who benefitted from fracking and shale drilling, have been the biggest beneficiaries, seeing the price of a gallon of gas fall from an average near four dollars to today's prices in the low two dollar range.
One of the largest factors contributing to the glut is purely demographic. Many established economies - Japan, US, Europe - are aging, and older people simply don't drive as much. Add to that the improvements in fuel economy, plus alternatives such as cars which run on natural gas or electricity and he trend becomes more pronounced.
As the price of crude continues under pressure, alternative fuels, such as increased use of coal, solar, and wind in the United States, will only exacerbate the condition.
Back in the good old days of the 70s and 80s, oil used to be under $20 per barrel. Then along came the "peak oil" sham, which sent the price through the roof and consumers to the poorhouse. The true price may or may not be found in the current regime of futures prices, a system that has and probably continues to be gamed, but the real price, taking into account the massive amounts of oil on and off the market, the stagnation of the global economy, and emerging alternatives, is likely to be found at levels well below what it is pinned at today.
Try thinking of oil at about $32-36 per barrel and gasoline at $1.60 and you're probably on the right track.
At the Close, 6/7/17:
Dow: 21,173.69, +37.46 (0.18%)
NASDAQ 6,297.38, +22.32 (0.36%)
S&P 500 2,433.14, +3.81 (0.16%)
NYSE Composite: 11,667.73, -3.73 (-0.03%)
There's been a glut of oil on world markets for some time now, but it's been especially painful to producers since the market riggers lost control in 2015, sending the price from imaginary levels - forced upon the planet by the myth of "peak oil" - around $100 per barrel to where it stands today.
Oil's recent swoon brings up a good question. With all the oil sloshing around and a myriad of factors leading to lessened use of the "fossil fuel," what exactly is fair value for crude?
There are many arguments with which to weigh the answer, whatever that may be, but one element that is undeniable about the current condition, is that producing nations aren't exactly in love with what they're being paid for a barrel of the slippery stuff. That's because many of the producers - OPEC and Middle East nations, primarily - had budgeted for steady sales around the high-water mark of $100/barrel.
Since that price turned out to be completely unsustainable, these countries have had to adjust their spending and programs, leading to some degree of discontent among their citizens. Americans, who benefitted from fracking and shale drilling, have been the biggest beneficiaries, seeing the price of a gallon of gas fall from an average near four dollars to today's prices in the low two dollar range.
One of the largest factors contributing to the glut is purely demographic. Many established economies - Japan, US, Europe - are aging, and older people simply don't drive as much. Add to that the improvements in fuel economy, plus alternatives such as cars which run on natural gas or electricity and he trend becomes more pronounced.
As the price of crude continues under pressure, alternative fuels, such as increased use of coal, solar, and wind in the United States, will only exacerbate the condition.
Back in the good old days of the 70s and 80s, oil used to be under $20 per barrel. Then along came the "peak oil" sham, which sent the price through the roof and consumers to the poorhouse. The true price may or may not be found in the current regime of futures prices, a system that has and probably continues to be gamed, but the real price, taking into account the massive amounts of oil on and off the market, the stagnation of the global economy, and emerging alternatives, is likely to be found at levels well below what it is pinned at today.
Try thinking of oil at about $32-36 per barrel and gasoline at $1.60 and you're probably on the right track.
At the Close, 6/7/17:
Dow: 21,173.69, +37.46 (0.18%)
NASDAQ 6,297.38, +22.32 (0.36%)
S&P 500 2,433.14, +3.81 (0.16%)
NYSE Composite: 11,667.73, -3.73 (-0.03%)
Wednesday, June 7, 2017
A Disturbance in the Farce? Stocks End Lower Second Straight Session
Stocks turn red for the second straight session, this being the first full week of June, suggesting that there may be a revised adage for the new Wall Street, "Sell in June and avoid the swoon?"
Obviously, two days of smallish losses does not constitute a trend. Three days might. A close on the Dow below 20,600 would. Not only would that be a nearly three percent decline (OMG!), but it would be below the previous low close, a line of demarcation that could signal the oncoming of a bear market.
Those who deny the possibility of a bear market are either under the age of eight and have never seen what one looks like, or has forgotten prior bear markets, which generally occur when stocks are overstretched, overvalued and/or overbought.
To imagine that after eight years of somewhat spectacular gains that investors might disinvest and actually pull some of their support from the lofty prices of stocks on the Dow, NASDAQ, S&P, et. al., is not so far-fetched. It's happened before. It will, in all likelihood, happen again.
Trying to time such an event is the task of fools. With the FOMC ready to raise interest rates again, despite the incongruous activity in the bond markets (10-year-note yield at seven month lows, 2.15%), continued declines may become not a nuisance, but a feature this summer, one of the big hits that Hollywood will miss completely.
At The Close, 6/6/17:
Dow: 21,136.23, -47.81 (-0.23%)
NASDAQ 6,275.06, -20.63 (-0.33%)
S&P 500 2,429.33, -6.77 (-0.28%)
NYSE Composite: 11,671.46, -22.22 (-0.19%)
Obviously, two days of smallish losses does not constitute a trend. Three days might. A close on the Dow below 20,600 would. Not only would that be a nearly three percent decline (OMG!), but it would be below the previous low close, a line of demarcation that could signal the oncoming of a bear market.
Those who deny the possibility of a bear market are either under the age of eight and have never seen what one looks like, or has forgotten prior bear markets, which generally occur when stocks are overstretched, overvalued and/or overbought.
To imagine that after eight years of somewhat spectacular gains that investors might disinvest and actually pull some of their support from the lofty prices of stocks on the Dow, NASDAQ, S&P, et. al., is not so far-fetched. It's happened before. It will, in all likelihood, happen again.
Trying to time such an event is the task of fools. With the FOMC ready to raise interest rates again, despite the incongruous activity in the bond markets (10-year-note yield at seven month lows, 2.15%), continued declines may become not a nuisance, but a feature this summer, one of the big hits that Hollywood will miss completely.
At The Close, 6/6/17:
Dow: 21,136.23, -47.81 (-0.23%)
NASDAQ 6,275.06, -20.63 (-0.33%)
S&P 500 2,429.33, -6.77 (-0.28%)
NYSE Composite: 11,671.46, -22.22 (-0.19%)
Monday, June 5, 2017
Unconvincing Open To the Week; Inflation/Deflation Debate Grows; Oil Continues Slide
In the ongoing inflation/deflation scrimmage, it's a draw, but, depending on where you've placed your bets, the victories may be huge.
For the investing crowd, stocks are golden and likely will continue to be so. Rough spots ahead include the June FOMC meeting (next Tuesday and Wednesday) and the coming fight in the congress over President Trump's proposed tax plan, which would constitute not only a major victory for the president, but also a big one for the American people, so it's far from a sure thing.
Congress, in case nobody has noticed, remains, for the most part, useless. Unless one is interested in hearings which lead to nothing or vacation time for rich Senators and soon-to-be-rich members of the House, neither the Republicans nor Democrats seem willing to actually legislate upon anything that will benefit anybody outside the District of Columbia. Truly, congress has become a closed loop between special interests represented by K Street lobbyists and insider deals that benefit one's own district (and that's becoming something of a rarity).
Noting that the government - outside of President Trump's ongoing efforts for change - remains powerless to do anything positive, Wall Street is probably giddy over the prospects, being that the major corporations which own, buy, and sell debt and equity are well insulated against any untoward legislation or outside shocks within their own cozy club.
Thus, it makes little sense to do anything except invest in the only asset class returning gains and/or dividends. Precious metals have floundered for the past four years, and oil has been in the dumps over the past two.
The slide from the low $50 range for WTI crude continued on Monday, dipping as down to 46.86 before recovering late in New York into the low $47 range.
So, in a nutshell, food and many other consumer staples remain without pricing power, restaurants are varyingly in a race to the bottom or towards diversifying menus with many of the large chains offering enticing deals. Retail overall is a basket case, now that online shopping has gone mainstream and will soon overtake brick and mortar from a gross revenue standpoint.
It's stocks for appreciation, though the wizards of Wall Street are somewhat blind to the disinflation, deflation and decimation of Main Street.
At the Close, 6/5/17:
Dow: 21,184.04, -22.25 (-0.10%)
NASDAQ: 6,295.68, -10.11 (-0.16%)
S&P 500: 2,436.10, -2.97 (-0.12%)
NYSE Composite: 11,693.65, -25.04 (-0.21%)
For the investing crowd, stocks are golden and likely will continue to be so. Rough spots ahead include the June FOMC meeting (next Tuesday and Wednesday) and the coming fight in the congress over President Trump's proposed tax plan, which would constitute not only a major victory for the president, but also a big one for the American people, so it's far from a sure thing.
Congress, in case nobody has noticed, remains, for the most part, useless. Unless one is interested in hearings which lead to nothing or vacation time for rich Senators and soon-to-be-rich members of the House, neither the Republicans nor Democrats seem willing to actually legislate upon anything that will benefit anybody outside the District of Columbia. Truly, congress has become a closed loop between special interests represented by K Street lobbyists and insider deals that benefit one's own district (and that's becoming something of a rarity).
Noting that the government - outside of President Trump's ongoing efforts for change - remains powerless to do anything positive, Wall Street is probably giddy over the prospects, being that the major corporations which own, buy, and sell debt and equity are well insulated against any untoward legislation or outside shocks within their own cozy club.
Thus, it makes little sense to do anything except invest in the only asset class returning gains and/or dividends. Precious metals have floundered for the past four years, and oil has been in the dumps over the past two.
The slide from the low $50 range for WTI crude continued on Monday, dipping as down to 46.86 before recovering late in New York into the low $47 range.
So, in a nutshell, food and many other consumer staples remain without pricing power, restaurants are varyingly in a race to the bottom or towards diversifying menus with many of the large chains offering enticing deals. Retail overall is a basket case, now that online shopping has gone mainstream and will soon overtake brick and mortar from a gross revenue standpoint.
It's stocks for appreciation, though the wizards of Wall Street are somewhat blind to the disinflation, deflation and decimation of Main Street.
At the Close, 6/5/17:
Dow: 21,184.04, -22.25 (-0.10%)
NASDAQ: 6,295.68, -10.11 (-0.16%)
S&P 500: 2,436.10, -2.97 (-0.12%)
NYSE Composite: 11,693.65, -25.04 (-0.21%)
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