Stocks ripped higher on Thursday on pure hope and fumes, in anticipation of Friday's BLS release of December non-farm payroll data.
As mentioned in yesterday's post, the market has set itself up for a "sell the news" event, having already bought the rumor in the form of an incredible 250,000 December private jobs gain from ADP.
Being a case of which numbers should be trusted, investors will probably accept the BLS, being that it is the "official" number, despite the wild swings, methodology and revisions for which the data set is so famous.
On Friday morning, the BLS announced a gain of a mere 148,000 net new jobs in December, on expectations of 190,000, the lowest print since July 2017. [full release here]
The unemployment rate remained moored at 4.1%, a rather humorous figure, given that the BLS counts part-time jobs and working more than one day a week as a "job."
As of this writing, roughly 15 minutes prior to the market open, stock futures are higher, but well off the levels seen earlier this morning.
The expectation for stocks to sell off throughout the session, given that valuations have been stretched to unsustainable levels, will likely not materialize since prognosis is as much the stuff of smoke and mirrors as the algo-driven market itself.
At the Close, Thursday, January 4, 2018:
Dow: 25,075.13, +152.45 (+0.61%)
NASDAQ: 7,077.91, +12.38 (+0.18%)
S&P 500: 2,723.99, +10.93 (+0.40%)
NYSE Composite: 13,028.46, +71.18 (+0.55%)
Friday, January 5, 2018
Thursday, January 4, 2018
Caution Thrown To (Bitter Cold) Wind, As Investors Ignore Tech and Weather Threats
Across the board gains were the order de jour on the second day of trading in the new year.
As on Tuesday, the NASDAQ outpaced the other major averages, continuing its meteoric rise beyond the 7,000 mark with tech stocks leading the way despite an admission from Intel (INTC) that their chips have a serious flaw, affecting nearly all chips made by the company over the past ten years.
The world's largest chipmaker was not immediately taken to the woodshed and whipped, though shares of the company were down more than three percent and are off another one-and-a-half percent in pre-market trading on Thursday.
Rival chipmaker, Advanced Micro Devices (AMD), was the main beneficiary of the Intel news, its stock advancing more than five percent on the day, though it appeared that AMD chips are also vulnerable, though not to the same extent nor by the same exploits as Intel chips.
While the immediate impact may be slim, the long-term repercussions of this revelation may be significant. The world's major chip manufacturers may be facing a black swan event once hackers devise attacks that could legitimately effect computers and servers worldwide, for years.
Traders were not on the defensive, however, as the lure of early gains overwhelmed any concerns for troubles ahead, such as the massive snowstorm and bitter cold that is expected to affect most of the Northeast in days ahead. The storm - being called a Bomb Cyclone - is primarily focused off the Eastern coast of mainland North America, though New York, New Jersey, and Massachusetts were making preparations for a major winter weather event which has already bettered Southern cities such as Charleston, SC, and Savannah, GA.
The apparent complacency of equity speculators is somewhat confounding, given the potential for severe disruptions from weather and technology in coming days.
On the other end of the asset spectrum, precious metals responded to a slight rise in the dollar index, blunting a strong run for gold and silver over the past three weeks, though the selling seemed to be transitory, with the metals recovering early on Thursday morning as the dollar fell to fresh lows (91.933).
On Thursday morning, prior to the opening bell on Wall Street, ADP private payroll data for December showed a massive 250,000 job gain for the final month of 2017. While the AMD numbers are preliminary and subject to revision, they are sending a strong signal in advance of Friday's BLS non-farm payroll dataset for December.
With caution being thrown largely to the (bitterly cold) wind, Friday and/or Monday could be a day of "selling the news," or, as has been the case for the past nine years, the stock market rally will not be impeded by facts nor insinuations of negativity.
At the Close, Wednesday, January 3, 2018:
Dow: 24,922.68, +98.67 (+0.40%)
NASDAQ: 7,065.53, +58.63 (+0.84%)
S&P 500: 2,713.06, +17.25 (+0.64%)
NYSE Composite: 12,957.28, +54.55 (+0.42%)
As on Tuesday, the NASDAQ outpaced the other major averages, continuing its meteoric rise beyond the 7,000 mark with tech stocks leading the way despite an admission from Intel (INTC) that their chips have a serious flaw, affecting nearly all chips made by the company over the past ten years.
The world's largest chipmaker was not immediately taken to the woodshed and whipped, though shares of the company were down more than three percent and are off another one-and-a-half percent in pre-market trading on Thursday.
Rival chipmaker, Advanced Micro Devices (AMD), was the main beneficiary of the Intel news, its stock advancing more than five percent on the day, though it appeared that AMD chips are also vulnerable, though not to the same extent nor by the same exploits as Intel chips.
While the immediate impact may be slim, the long-term repercussions of this revelation may be significant. The world's major chip manufacturers may be facing a black swan event once hackers devise attacks that could legitimately effect computers and servers worldwide, for years.
Traders were not on the defensive, however, as the lure of early gains overwhelmed any concerns for troubles ahead, such as the massive snowstorm and bitter cold that is expected to affect most of the Northeast in days ahead. The storm - being called a Bomb Cyclone - is primarily focused off the Eastern coast of mainland North America, though New York, New Jersey, and Massachusetts were making preparations for a major winter weather event which has already bettered Southern cities such as Charleston, SC, and Savannah, GA.
The apparent complacency of equity speculators is somewhat confounding, given the potential for severe disruptions from weather and technology in coming days.
On the other end of the asset spectrum, precious metals responded to a slight rise in the dollar index, blunting a strong run for gold and silver over the past three weeks, though the selling seemed to be transitory, with the metals recovering early on Thursday morning as the dollar fell to fresh lows (91.933).
On Thursday morning, prior to the opening bell on Wall Street, ADP private payroll data for December showed a massive 250,000 job gain for the final month of 2017. While the AMD numbers are preliminary and subject to revision, they are sending a strong signal in advance of Friday's BLS non-farm payroll dataset for December.
With caution being thrown largely to the (bitterly cold) wind, Friday and/or Monday could be a day of "selling the news," or, as has been the case for the past nine years, the stock market rally will not be impeded by facts nor insinuations of negativity.
At the Close, Wednesday, January 3, 2018:
Dow: 24,922.68, +98.67 (+0.40%)
NASDAQ: 7,065.53, +58.63 (+0.84%)
S&P 500: 2,713.06, +17.25 (+0.64%)
NYSE Composite: 12,957.28, +54.55 (+0.42%)
Wednesday, January 3, 2018
Stocks Advance to Start 2018; Gold, Silver Rallies Continue
Stocks ramped higher at the opening of the first trading session of 2018, continuing a trend that carried equity investments to major gains in 2017.
At the same time, gold and silver continued their impressive three-week-old rally. Silver has been the out-performer of the pair, rising from a low of 15.67 per ounce on December 13 to 17.15 as of the close of trading in New York on Tuesday. Gold crested above the sticky $1300 level, finishing the day at 1317.10. It also bottomed out on December 13, dropping below 1240.90 on that date.
While there's certainly nothing unusual about stock gains, the rally in precious metals is raising some eyebrows and prompting talk of future Fed rate hikes and incipient inflation, which has been a false flag for eight years running.
On Wednesday, investors may get some indication of the Fed's intentions. Minutes from the December meeting - at which the Fed raised the federal funds rate for the third time in 2017 - are to be released during the session. Of particular interest is the discussion over rate increases and any dissenting opinion.
The Fed has made it clear that they intend to continue raising rates this year, with four increases of 25 basis points the proposed path. At the same time, the Fed will continue to unwind its bloated balance sheet, shedding billions of dollars worth of treasury bonds and mortgage-backed securities (MBS) and increasing the rate of disposal as the year commences. By October, the Fed is supposed to be dumping as many as $60 billion worth of notes, bills and bonds.
The combination of a general tax cut for consumers, a large tax cut for corporations, rising rates, bond dumping, and an improving economy suggests a formula for inflation, which is generally understood to be good for gold and silver, though the rise in precious metal prices may have more to do with currency debasement than a knee-jerk response to the economic climate.
At the Close, Tuesday, January 2, 2018:
Dow: 24,824.01, +104.79 (+0.42%)
NASDAQ: 7,006.90, +103.51 (+1.50%)
S&P 500 2,695.81, +22.20 (+0.83%)
NYSE Composite: 12,902.72, +93.88 (+0.7329%)
At the same time, gold and silver continued their impressive three-week-old rally. Silver has been the out-performer of the pair, rising from a low of 15.67 per ounce on December 13 to 17.15 as of the close of trading in New York on Tuesday. Gold crested above the sticky $1300 level, finishing the day at 1317.10. It also bottomed out on December 13, dropping below 1240.90 on that date.
While there's certainly nothing unusual about stock gains, the rally in precious metals is raising some eyebrows and prompting talk of future Fed rate hikes and incipient inflation, which has been a false flag for eight years running.
On Wednesday, investors may get some indication of the Fed's intentions. Minutes from the December meeting - at which the Fed raised the federal funds rate for the third time in 2017 - are to be released during the session. Of particular interest is the discussion over rate increases and any dissenting opinion.
The Fed has made it clear that they intend to continue raising rates this year, with four increases of 25 basis points the proposed path. At the same time, the Fed will continue to unwind its bloated balance sheet, shedding billions of dollars worth of treasury bonds and mortgage-backed securities (MBS) and increasing the rate of disposal as the year commences. By October, the Fed is supposed to be dumping as many as $60 billion worth of notes, bills and bonds.
The combination of a general tax cut for consumers, a large tax cut for corporations, rising rates, bond dumping, and an improving economy suggests a formula for inflation, which is generally understood to be good for gold and silver, though the rise in precious metal prices may have more to do with currency debasement than a knee-jerk response to the economic climate.
At the Close, Tuesday, January 2, 2018:
Dow: 24,824.01, +104.79 (+0.42%)
NASDAQ: 7,006.90, +103.51 (+1.50%)
S&P 500 2,695.81, +22.20 (+0.83%)
NYSE Composite: 12,902.72, +93.88 (+0.7329%)
Friday, December 29, 2017
Stocks Sink to End Year as Santa Claus Rally is Kidnapped by Grinch; Gold, Silver Push Higher
As trading drew to a close for 2017, a banner year for stocks was blemished buy a final bout of selling which rendered three of the four major averages lower for the week.
Only the NYSE Composite managed to eek out a gain for the shortened, four-day week, but even that was marginal, up less than a tenth of a percent. The NASDAQ was the most serious casualty, losing nearly one percent for the week. The Dow suffered its worst one-day loss since November 15.
Much of the selling came in the final hour of the session, suggesting that it was largely programmatic, a rebalancing of select funds for end-of-quarter or end-of-year purposes.
For the S&P and the Dow, the day's decline was the fifth in the past eight, though the S&P still managed to close out the week - and the year - just 21 points away from its all-time high.
Whether or not this late-month selloff continues into January 2018 is questionable, given that markets are still buoyant and money, by and large, is still on the cheap side. Thus, it would not be out of the question to see stocks gallop out of the gate on January 2nd.
Perhaps more compelling than watching stocks do an imitation of drying paint the past two weeks was the activity in precious metals, as gold and silver each took off as the year drew to a close. After being beaten down the first part of December, both metals rallied sharply down the stretch.
Silver hit a triple-bottom, six-month low of 15.67 per ounce on December 13, only to rebound to end the year at a respectable 17.01 on Friday. Gold, which was beaten down to 1240.90 (also December 13), hitting a five-month bottom, advanced smartly through the final two weeks, ending the year at 1302.50. Silver's eight percent rally and the five percent move in gold were the best two-week showings for the metals since July.
Some of the rally in metals was undoubtably due to the demise of the dollar, which closed out the year at 92.30, close to its September 8 low-point of the year, 91.35. It traded as low as 91.10 on the day but strengthened into the close.
If there's any meaning to be drawn from the past two weeks of trading, it could be that a sudden whiff of caution may have taken markets by surprise after the Republicans in congress and President Trump managed to push through a tax reform bill right after the Fed raised rates for the third time this year. After all, with Fed on a path of rising interest rates and the federal deficit poised to explode higher in the latter half of 2018, there may finally be a good, factual reason to bail out of stocks.
Despite the best efforts of a deeply-divided congress, fiscal policy is anything but disciplined. Meanwhile, the Federal Reserve is committed to massive bond dumping onto a market which can scarce absorb it.
2018 may indeed be one best described as a collision course of correcting bad monetary policy with tightening and loose fiscal policy. One cannot have the best of all things.
At the Close, Friday, December 29, 2017:
Dow: 24,719.22, -118.29 (-0.48%)
NASDAQ: 6,903.39, -46.77 (-0.67%)
S&P 500: 2,673.61, -13.93 (-0.52%)
NYSE Composite: 12,831.78, -21.31 (-0.17%)
For the Week:
Dow: -34.84 (-0.14%)
NASDAQ: -56.57 (-0.81%)
S&P 500: -9.73 (-0.36%)
NYSE Composite: +11.38 (+0.09%)
Only the NYSE Composite managed to eek out a gain for the shortened, four-day week, but even that was marginal, up less than a tenth of a percent. The NASDAQ was the most serious casualty, losing nearly one percent for the week. The Dow suffered its worst one-day loss since November 15.
Much of the selling came in the final hour of the session, suggesting that it was largely programmatic, a rebalancing of select funds for end-of-quarter or end-of-year purposes.For the S&P and the Dow, the day's decline was the fifth in the past eight, though the S&P still managed to close out the week - and the year - just 21 points away from its all-time high.
Whether or not this late-month selloff continues into January 2018 is questionable, given that markets are still buoyant and money, by and large, is still on the cheap side. Thus, it would not be out of the question to see stocks gallop out of the gate on January 2nd.
Perhaps more compelling than watching stocks do an imitation of drying paint the past two weeks was the activity in precious metals, as gold and silver each took off as the year drew to a close. After being beaten down the first part of December, both metals rallied sharply down the stretch.
Silver hit a triple-bottom, six-month low of 15.67 per ounce on December 13, only to rebound to end the year at a respectable 17.01 on Friday. Gold, which was beaten down to 1240.90 (also December 13), hitting a five-month bottom, advanced smartly through the final two weeks, ending the year at 1302.50. Silver's eight percent rally and the five percent move in gold were the best two-week showings for the metals since July.
Some of the rally in metals was undoubtably due to the demise of the dollar, which closed out the year at 92.30, close to its September 8 low-point of the year, 91.35. It traded as low as 91.10 on the day but strengthened into the close.
If there's any meaning to be drawn from the past two weeks of trading, it could be that a sudden whiff of caution may have taken markets by surprise after the Republicans in congress and President Trump managed to push through a tax reform bill right after the Fed raised rates for the third time this year. After all, with Fed on a path of rising interest rates and the federal deficit poised to explode higher in the latter half of 2018, there may finally be a good, factual reason to bail out of stocks.
Despite the best efforts of a deeply-divided congress, fiscal policy is anything but disciplined. Meanwhile, the Federal Reserve is committed to massive bond dumping onto a market which can scarce absorb it.
2018 may indeed be one best described as a collision course of correcting bad monetary policy with tightening and loose fiscal policy. One cannot have the best of all things.
At the Close, Friday, December 29, 2017:
Dow: 24,719.22, -118.29 (-0.48%)
NASDAQ: 6,903.39, -46.77 (-0.67%)
S&P 500: 2,673.61, -13.93 (-0.52%)
NYSE Composite: 12,831.78, -21.31 (-0.17%)
For the Week:
Dow: -34.84 (-0.14%)
NASDAQ: -56.57 (-0.81%)
S&P 500: -9.73 (-0.36%)
NYSE Composite: +11.38 (+0.09%)
Thursday, December 28, 2017
Dull Market...
As much of the Western Northern Hemisphere falls into a deep freeze (if you think it's cold in the US, try Canada... brrr), stocks seem to be following the trend, frozen into a stuttering somnambulism over the past six trading days.
To get an idea of just how sluggish the market has become, consider the overall range on the Dow since Monday, December 18 - six trading days - has been a mere 155 points. It's been even more severe on the S&P, where, over the same span, the average change has been roughly 3 1/2 points.
The lack of volatility has been a constant throughout the year, though it has been expressed even moreso in the past week, owing to the time of year and exhaustion of traders, many of whom are likely far away from their desks, taking time off to what out the final market days of the year.
Happy Holidays.
At the Close, Wednesday, December 27, 2017:
Dow: 24,774.30, +28.09 (+0.11%)
NASDAQ: 6,939.34, +3.09 (+0.04%)
S&P 500: 2,682.62, +2.12 (+0.08%)
NYSE Composite: 12,821.98, +13.08 (+0.10%)
To get an idea of just how sluggish the market has become, consider the overall range on the Dow since Monday, December 18 - six trading days - has been a mere 155 points. It's been even more severe on the S&P, where, over the same span, the average change has been roughly 3 1/2 points.
The lack of volatility has been a constant throughout the year, though it has been expressed even moreso in the past week, owing to the time of year and exhaustion of traders, many of whom are likely far away from their desks, taking time off to what out the final market days of the year.
Happy Holidays.
At the Close, Wednesday, December 27, 2017:
Dow: 24,774.30, +28.09 (+0.11%)
NASDAQ: 6,939.34, +3.09 (+0.04%)
S&P 500: 2,682.62, +2.12 (+0.08%)
NYSE Composite: 12,821.98, +13.08 (+0.10%)
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