Trouble In Wonderland; Amazon Drops On Disappointing 2Q Earnings

Nothing other than the usual dippity-doodle for these schizophrenic markets run almost entirely by computer algorithms as July draws to a close.

Apparently, all the new highs were just too much to handle, except in the case of the Dow, which is nearing orbital velocity, but all the other majors pulled back around midday.

The reasons for the collapse (the NASDAQ lost 130 points in roughly an hour and-a-half) were unclear, though the growing chorus of Wall Street analysts using words like bubble, overvalued, and crash may have something to do with it.

Also on the radar is tomorrow's first estimate (guess) of second quarter '17 GDP. The first quarter was nothing to scream about, at 1.6%, but there are plenty of prognosticators calling for upwards of 2.6% for the second quarter. Others remain skeptical, but the news will be released soon enough, prior to the opening bell on Friday.

After the close, Amazon released second quarter results, which were highly anticipated, but turned out to be a dud for investors.

Amazon (AMZN) reported Q2 net income of $197 million, or $0.40 per diluted share, down 77% from $857 million, or $1.78 in Q2 2016. This was on revenue of $37.955 billion, up 25% from the $30.4 billion a year ago, and above both the company's own expectations of $35.25-$37.75BN and consensus estimates of $37.18 billion. The company also reported operating margin of 1.7%, down from 2.8% last quarter and well below expectations.

Amazon was down two percent in after hours trading.

So why is everybody so skittish, or is it just the algos?

At the Close, 7/27/17:
Dow: 21,796.55, +85.54 (0.39%)
NASDAQ: 6,382.19, -40.56 (-0.63%)
S&P 500: 2,475.42, -2.41 (-0.10%)
NYSE Composite: 11,963.23, -1.68 (-0.01%)

Stocks Unimpressed With FOMC Decision; Dollar Dashed

The Fomc wrapped up a relatively uneventful meeting Wednesday, keeping rates unchanged and saying little to nothing about winding down the Fed's bloated balance sheet.

After two hikes already this year, rates will almost surely remain on hold until December and an announcement that the Federal Reserve is ready to shed assets may come at the September meeting, according to knowledgeable experts on the subject. Having been sufficiently prepped and prodded, the Fed can feel some confidence that a beginning of an asset unloading program won't upset the status quo too awfully much.

The one kicker is that the wildly out-of-control federal government faces a potentially debilitating debt ceiling debate and a testy budget process in September, but that will come only after congress has taken a month's vacation, pending Obamacare replace and/or repeal legislation currently under consideration in the Senate.

Nothing the Fed does can accurately predict what the paid lackeys... er, prostitutes, er, politicians will do when the rubber meets the road in terms of the soon-to-be $20 trillion national debt. Chances are good that they'll punt, laying one deep and long, giving themselves room to survive the midterm elections in 2018. One person who does not have to suffer any kind of electoral fate in that year is President Trump, who is almost certain to have boisterous opinions on the matter of the debt ceiling and federal government budget.

There are wild card outcomes which the Fed is unable to predict no matter how deep or thorough their modeling, which raises the possibility for abrupt changes in policy, and the jokers dealt by the government are not the only potential surprises. Geopolitics - specifically, North Korea, Ukraine, Iran, or Syria - may play a role in future policies, as could any number of scenarios, from ECB jump-starting their own tapering, Japan failing to follow through with continued buying of equities, or, perhaps a war between China and India stemming from border disputes in and near the Himalaya mountains. Go figure.

As far as stock movements and reactions to the FOMC nothing-burger issued today, the markets basically were held in suspended animation afterwards with a slight bias to the downside.

The outsize gains on the DJIA were largely the result of Boeing's (BA) monstrous 9.2% spike today (biggest day for BA since 10/28/08), responsible for 132 Dow points. So, essentially, the remainder of the Dow was lower, only lifted higher by the flighty airline manufacturer. Only 13 Dow components were higher, 17 lower, led down by Nike and McDonald's, the latter having made new all-time highs just yesterday, which is alarming, since what the company passes off for food has recently reached new lows. Must be their outstanding customer service or something else casual consumers just don't see or understand. Share of MCD are massively overpriced, with earnings per share of 6.25 and a stock price of roughly 156 translating to a P/E of 25. Shareholders and executives (neither of which actually eat at any of their own restaurants) are "loving' it."

The dollar got whiplashed lower, sending (alarm bells) gold and silver higher. Also on the run is the price of crude oil, as the latest reports showed a massive draw, though gasoline inventories were built. Once more, the people actually using the stuff - drivers - just don't get it, apparently.

At the Close, 7/26/17:
Dow: 21,711.01, +97.58 (0.45%)
NASDAQ: 6,422.75, +10.57 (0.16%)
S&P 500 2,477.83: 0.70 (0.03%)
NYSE Composite: 11,964.92, -0.80 (-0.01%)

Stocks Rock No Matter The News As Long As Central Banks Spend

Proof that you can't fight people who print their own money...

Courtesy of Bloomberg and various central banks, the correlation between central banks sucking up trillions in assets and gains in global stocks is remarkable.

So, anybody thinking they're a stock-picking genius over the past eight years really needs therapy for an over bloated ego, just as the bloat in central bank balance sheets gently guides shares of all companies higher.

The frightening parts of this scenario - shown without doubt in the chart - are what happens when these central banks begin unloading assets, and what will be the timing and nature of this asset disposal sale? Will they all sell at once, or will be it be of the Chinese water torture variety, with a slow, drip, drip, drip as equities reach for fair value, far below where they reside today.

What are the consequences of this massive liquidity injection, since it's clearly already established policy and responsible for massive gains over the past eight years.

The most obvious solution for people with plenty of paper wealth would be to convert it to real assets, in the form of real estate, machinery, gemstones, precious metals, art, collectibles, and, realistically, staples, like food and water.

If the wheels come off the global Ponzi, people will starve. Look no further than Venezuela for proof that economic implosion causes severe social repercussions.

Of course, the vast majority of people living on planet Earth will be unprepared, duped into trading worthless paper and empty promises for more worthless paper and even emptier promises. Peer into underfunded pension plans - like Detroit's public plans, for instance, or many corporate plans that went belly up - for proof of what exactly that looks like.

At the end of this grand experiment called "global fiat money" for lack of a better term, what will become of the global economy, the ECB, the World Bank, the IMF, the Federal Reserve, the most massive control frauds ever foisted upon an unsuspecting public? They, and their governors, directors, and executives will try to "save us" from the financial blight, when it is they themselves causing it.

And people will continue to be duped into lives of slavish devotion to false gods.

At The Close, 7/25/17:
Dow: 21,613.43, +100.26 (0.47%)
NASDAQ: 6,412.17, +1.37 (0.02%)
S&P 500: 2,477.13, +7.22 (0.29%)
NYSE Composite: 11,965.72, +61.01 (0.51%)

For US Markets, It's Splits-ville Again

Another day, another session punctuated by divergent indices.

The NASDAQ goes up; the Dow goes down, or vice versa. The S&P 500 and NYSE Composite seem to go their own ways, more often than not, separate. All of this reeks of manipulation, selectivity, goal-seeking, and just about anything other than rational investing.

Upon examination, the stock market is nothing more than pieces of paper representing shares in company X or Y or Z, being traded for other pieces of paper known as yen, dollars, euros or pesos. It's the ultimate paper chase, based entirely on faith and foolery of grand design by the world's central bankers. It's a confidence game being played at the highest levels of finance, a dangerous precedent for the entire planet.

Unless the public detaches from the fraud, it will continue. The unique phenomenon at work in today's financial arenas is commonly known to psychiatrists as normalcy bias. It is the belief that everything seems to be working all right, so the urge to change is minimized, which is precisely the condition present in the debt-infested governments, businesses, and households everywhere.

The ultimate fear is that confidence is lost in the fiat system. After eight long years of propping up governments, businesses, and households with freshly-printed-or-minted cash, confidence is still durable, thanks to normalcy bias.

But, there are canaries in the coal mine, so to speak. These are burgeoning, non-repayable government debt, underfunded pensions (especially public union pensions), slack demand, disinflation, demographics, and the undeniable eventuality of recession, either in the US, Europe, or globally.

Fighting these trends with some degree of success has been the role of the central banks, but they are running out of viable options to keep global finance operating while also quelling local discontent, which is growing rapidly.

Money Daily does not pretend to know who is buying stocks and/or causing the variations in the major indices, but it is apparent that some entity other than brokerages are buying and it is well known that the Bank of Japan (BOJ), Swiss National Bank (SNB), and European Central Bank (ECB) have been and will continue to be outright buyers of equities.

When these entities become sellers, there will be no bottom to the markets.

Caveat Emptor.

At the Close, 7/24/17:
Dow: 21,513.17, -66.90 (-0.31%)
NASDAQ: 6,410.81, +23.05 (0.36%)
S&P 500: 2,469.91, -2.63 (-0.11%)
NYSE Composite: 11,904.71, -19.89 (-0.17%)

Small Pullback Friday; Stocks Mixed For Week

It was a week to forget.

Nothing much occurred during the week besides the usual NASDAQ pumping, zig-zagging indices and Thursday and Friday's minor profit-taking sessions.

Equities remain elevated, though a little movement in precious metals has the markets a bit on notice that the fiat Ponzi is still in quite a fragile state.

Not that it matters, but gold and silver remain real money, while the Janet Yellens and Mario Draghis of the world continue to print and talk endlessly, their blathering covering up a multitude of malinvestment sins around the world.

All the major indices finished in the red on Friday, a somewhat unusual set-up going into next week, which will be highlighted by a do-nothing-but-talk-a-good-game FOMC meeting which concludes Wednesday.

After that? Off to the races (Saratoga opened this weekend), or back to sleep until Labor Day? With congress failing to come to grips with reality, their August vacation in the balance, the betting is that nothing good gets done in Washington and that will be just fine with Wall Street.

Onward and upward!

At the Close, 7/21/17:
Dow: 21,580.07, -31.71 (-0.15%)
NASDAQ: 6,387.75, -2.25 (-0.04%)
S&P 500: 2,472.54, -0.91 (-0.04%)
NYSE Composite: 11,924.60, -19.90 (-0.17%)

For the week:
Dow: -57.67 (-0.27%)
NASDAQ: +75.29 (1.19%)
S&P 500: +13.27 (0.54%)
NYSE Composite: +27.29 (0.23%)