PPT To The Rescue, But For What Purpose?

Prepare for lower lows and lower highs.

It's long been maintained that central banks and/or governments should intervene in capital markets to keep people from panicking. That can also be read as "whenever stocks go down too much, too fast, we're here to protect our friends' investments."

For context, the Dow Jones Industrial Average was down more than 700 points today. It rallied to close with a minor loss. One problem. All other major stock indices around the world closed down between two and three-and-a-half percent. America is great, but not so great that it can avoid a global slowdown. Nefarious forces behind the scenes - much like the man behind the curtain in the Wizard of Oz - averted a major selloff. Globalism is ending, and with it, many multi-national stocks are going to be badly damaged.

That's what today's miracle late-day rally was all about, because if stocks lose value, the system falls apart. It's really that simple. For context, figure this: corporate buybacks have been at record levels the past three years. Corporations have been buying their own stock at a frenetic pace, at the highest prices. If stocks fall, these companies will be sitting on mountains of their own stock which they bought at ridiculously-high prices. When they are forced to sell to raise capital, they will be losing money on investments in their own companies.

It's not just stupid, it's corrupt to the core, and that, friends, is why stocks can't go down.

But they will.

For a little more context, consider that according to Dow Theory, the primary trend has changed again from bull to bear. More on this in a later post.

Caveat Emptor.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79

At the Close, Thursday, December 6, 2018:
Dow Jones Industrial Average: 24,947.67, -79.40 (-0.32%)
NASDAQ: 7,188.26, +29.83 (+0.42%)
S&P 500: 2,695.95, -4.11 (-0.15%)
NYSE Composite: 12,144.41, -77.57 (-0.63%)

MidDay Digest: Global Rout Underway; Asia, Europe Down Big, US Stocks Plunge

This is a Money Daily update on the churning volatility in stocks, which has taken on prodigious proportions as of Tuesday and extended - after an unusual break due to President Trump ordering all federal offices (and with it the stock market) closed in mourning for the late George H.W. Bush, 41st president - into Thursday's trading.

Asian stocks were wracked as the sun rose from the Pacific. Japan's NIKKEI was down nearly two percent, and Hong Kong's Hang Seng fell 2.47%. European markets opened lower and the selling accelerated throughout the day. Of particular note was Germany's Dax, which stood at 10,810.98 by the close, down 389.26 points (-3.48%). The DAX is now down 19% from its October 30, 2017 high. Another 100-point decline will put it officially into a bear market.

Other European bourses were hit hard, with losses of three to three-and-a-half percent on all major exchanges.

When stocks opened in New York, the rout had reached critical velocity. The ow opened down more than 400 points and continued selling off. At one point, the Dow was down more than 700 points, but has recovered somewhat as of this writing. With the NASDAQ already in correction territory, the Dow and S&P are close, both down roughly nine percent from recent highs.

There will be another post here after the market closes. Look for a full recap about 7:00 pm ET.

Heads Up! Stocks Selling Off Worldwide; US Open Looking Ugly; Germany's DAX Nearing Bear Market

After an unscheduled day off for the Kumbayah TV presentation of George HW Bush's funeral Wednesday, the rest of the world's equity bourses took the day to vacillate, but Thursday looks to be a bloodbath of magnificent proportions.

Asian stocks were down broadly in Japan, Hong Won, China, and elsewhere, and European stocks opened lower and continued to descend. The DAX, Germany's main stock exchange, is approaching bear market status, down 19% from an all-time high of 13,478.86, reached on October 30, 2017. The DAX is currently trading around 10,940.

At this writing, Dow futures are off more than 450 points, S&P futures have fallen nearly 50, and NASDAQ futures are 115 points lower.

Money Daily will be monitoring events throughout the US session, as this current downdraft appears to be one without a bottom.

Stocks Rocked As Europe Burns, Political Skepticism Soars; Globalism Grips As Populism Rises

With all the good news that's been spreading of late, the magnitude of this most recent setback was, for some, a little overdone. Others, who see the planet for what it is, see populism on the rise and globalism fading into history.

Prepare for some over-the-top hyperbole in 3...2...1...

Besides wealth inequality reaching heights heretofore unseen, taxation of the general populace in developed nations has reached catastrophic proportions. As seen in the European protests, the civility of the average man and woman, having been grossly abused, has been stretched beyond the limits of many whose toils seem to barely keep pace with the endless panoply of regulations, fees, fines, taxes and penalties. This is how epochs end.

In France, Germany, Sweden, Belgium, Italy and elsewhere, the citizenry has had enough of misrepresentation by so-called officials, elected, selected, or otherwise, and they are seeking economic and social freedom. The forces of globalism have been resolute in obfuscating reality and distorting the obvious all the while raking in the spoils of their pernicious policies and decietful politics.

In the United States, the working class has seen through the flash narrative surrounding the demonization of the popularly-elected President Trump. Americans no longer want illegal migration across their borders, handouts to the poor or the rich, nor policies that do them no good. The entire planet is on the verge of an emotional and psychological breaking point. It has been many years in the making, but, every day that goes by is rife with lies, innuendo, untruths, double-talk. Within the next year or two, everything is going to go sideways. The politics have simply outpaced the usefulness of the ruling class. It's apparent to just about anybody who give a damn and the wisest of the monied class on Wall Street are running for the proverbial hills.

Who knows what causes stocks to zig-zag on a day-to-day basis, for the Dow to pick up 600 points one day and drop nearly 800 the next?

In any case, the point drop on the Dow was the fourth-largest in market history. The other three larger also occurred this year. For the NASDAQ, it was the sixth largest. All of the 11 largest point declines on the NASDAQ occurred in either 2000 or 2018.

The Dow transports (DJT, -4.39%) tumbled 476.37 points, or 4.4%, with all 20 components closing lower. The previous biggest-ever point decline was 445.16 points on Oct. 10. At its intraday worst, the index was down as much as 565.23 points, or 5.2%.

Analysis of the recent volatility is sure to take on obscene forms from a parade of wizened economists, generalists, and hobbyists. None of them will have it exactly right. One day, all the world's full of unicorns and honey. The next, it's going to hell in a hand basket.

Whatever your particular niche or trading style, the current offers a uniquely volatile and confounding proposition for traders, speculators, or even the casual investor.

For the coming months, expect more of the same.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39

At the Close, Tuesday, December 4, 2018:
Dow Jones Industrial Average: 25,027.07, -799.36 (-3.10%)
NASDAQ: 7,158.43, -283.09 (-3.80%)
S&P 500: 2,700.06, -90.31 (-3.24%)
NYSE Composite: 12,221.98, -355.56 (-2.83%)

Stocks Spurt On Tariff Truce; 3-5 Yield Curve Inverts

There was good news on the trade front, but bad news concerning a possible recession.

At the conclusion of the G20 meeting in Buenos Aires, President Trump and his Chinese counterpart, Xi Jinping, announced a 90-day moratorium on tariffs set to take effect on January 1, 2019. Some of the tariffs already in place were set to increase while new tariffs on a variety of goods were to take effect on the new year, but the leaders of the world's two largest economies decided on a cooling-off period and further talks before proceeding.

That good news sent futures soaring in pre-market trading, the euphoria spilling over into the regular session. Barely noticed - and un-noted by the financial press - was a minor inversion in interest rates, with the yield on the 5-year note (2.83%) falling below that of the 3-year treasury note (2.84%).

Though it's not the inversion that most economists are looking for in terms of portending a recession, the minor inversion is a warning shot. The 2-year and 10-year notes are the fear standard, with an inverted curve of those rates consistently preceding every recession since 1955. Currently the 2-year note stands at a yield of 2.83%, while the 10-year holds at 2.98%, notably below 3.00%, after Fed Chairman Jerome Powell softened his stance on rate hikes last week.

Thus, there's a split narrative that threatens to put a lid on gains in the near term. Trade wars have been postponed, for now, but 90 days isn't long enough to establish new guidelines between China and the USA. With the Fed set to raise and check, interest rates are going to give them some maneuverability, though not much, with the federal funds rate settling in somewhere between 2.25 and 2.50%.

Bond vigilantes brought the 10-year note down below the Maginot Line of 3.0% on the first trading day of December. That's more than enough speculation as to where interest rates are headed. In a word, nowhere. The ancillary note is on growth - both domestic and global - which has had a bit of a bump thanks to US strength, but pockets of malaise are popping up everywhere. There seems to be no smooth path heading into 2019, so, after a boost from the Fed and another from the international trading community, this early December rally may not have enough gusto to carry it past the FOMC meeting and through the holidays.

Much emphasis will be put on consumer spending, though with an early Thanksgiving, holiday spending might just peter out a week before Christmas.

It's not all doom and gloom. It's more like murky, with a light at the end of some tunnel.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97

At the Close, Monday, December 3, 2018:
Dow Jones Industrial Average: 25,826.43, +287.97 (+1.13%)
NASDAQ: 7,441.51, +110.98 (+1.51%)
S&P 500: 2,790.37, +30.20 (+1.09%)
NYSE Composite: 12,577.54, +120.00 (+0.96%)