Weekend Wrap: Friday's Big Gains Offset Thursday's Huge Loss, Dow Up Just 105 In 2019

Wall Street's week straddled 2018 and 2019, as Monday's session was the last of the prior year, and Wednesday, Thursday, and Friday starting off the new year.

Thus, the following final closing prices for the major indices, which will be instructive as we plow through the weeks, months, and quarters ahead:

Dow Industrials 12/31/18: 23,327.46
Dow Transports 12/31/18: 9,170.40
NASDAQ 12/31/18: 6,635.28
S&P 500 12/31/18: 2,506.85
NYSE Composite 12/31/18: 11,374.39

Two big trading days happened back-to-back, in opposite directions. Thursday's (1/3) downdraft was largely attributable to Apple's announcement that revenue for its fiscal first quarter (4th quarter) results would come in well below analyst estimates. December PMI from the ISM was also a contributing factor, insinuating a slowdown in the general economy, much of it tied to US-China trade tensions.

A blowout December jobs report was responsible Friday's about-face. Words from Fed Chairman Jerome Powell added fuel to the ascending fire. Powell stated quite plainly that the Fed was going to be flexible about raising rates and drawing down its balance sheet, which is pulling $50 billion a month out of the bond market.

After all was said and done, the week was just so-so, though the bias was obviously trending positive. There's some inkling of manipulation and coordination of and by the PPT, especially since the Fed was so compliant with its dovish commentary. Nobody really wants a bear market, and the data from Friday's release of the December non-farm payroll report (312K actual vs. 122K projected) suggests that the economy is humming right along and President Trump's promise to create more US jobs is being kept.

The Fed's jawboning was well-timed, coming a day after a confidence-shaking 660-point drop on the Dow, but the remarks by Chairman Powell won't be the last time the Fed has moved the goal posts in search of expediency.

Dow Jones Industrial Average January Scorecard:

Date	Close	Gain/Loss	Cum. G/L
1/2/19	23,346.24	+18.78	+18.78
1/3/19	22,686.22	-660.02	-641.24
1/4/19	23,433.16	+746.94	+105.70

At the Close, Friday, January 4, 2019:
Dow Jones Industrial Average: 23,433.16, +746.94 (+3.29%)
NASDAQ: 6,738.86, +275.35 (+4.26%)
S&P 500: 2,531.94, +84.05 (+3.43%)
NYSE Composite: 11,533.34, +342.90 (+3.06%)

For the Week:
Dow: +370.76 (+1.61%)
NASDAQ: +154.34 (+2.34%)
S&P 500: +46.20 (+1.86%)
NYSE Composite: +242.39 (+2.15%)

Stocks Slammed, Bonds Rally As Global Slowdown Fears Rise

Apple computer, maker of the iconic iPhone, was the cause of much of today's equity angst, as the tech giant warned that fourth quarter sales were likely to come in under revenue estimates.

Apple CEO Tim Cook issued a letter late Wednesday to investors advising that a slowdown in China sales would cause fourth quarter revenue to decline 4.8% year over year to $84 billion, well below analyst estimates. It's not that Apple is losing money - far from that - it's just not making as much as expected. Shares of Apple (AAPL) were down nearly 10% on the news, the largest one-day loss in six years.

Combined with a report from the Institute for Supply Management (ISM) that had December's PMI fall by the most since the financial crisis of 2008, stocks were on the defensive all day long. The report concluded that December PMI fell from 59.3 to 54.1, a descent of 5.4%. While anything over 50 is considered expansion, the falloff is considered to be a harbinger of worse data to come, as many participants in the survey blamed trade tensions with China as a leading cause for the slowdown.

Thus, the 1000+ point gain from December 26 was cut down by two-thirds on Thursday, just a week later, sending the Dow and other major indices closer to bear market territory once again.

January has gotten off to a horrible start, as though December's rout hadn't ended, which, of course, would be correct. Losses on stocks are only just beginning. By March of this year, expect stocks to be another 10-15% lower than where they stand today, and, even then, with signs of a global slowdown flashing red, a bottom won't likely be put in until the market has flushed out all of the weak hands and sent fund managers scurrying in even greater numbers to cash and bonds.

Presently, the treasuries are telling an interesting story about the economy. While the Federal Reserve insisted on raising rates four times in 2019, the bond market has expressed extreme displeasure, sending the yield on the 10-year note to 2.56%, down ten basis points just today, marking the lowest yield since January of last year. Additionally, short-maturity bills spiked (thanks to Fed hikes at the low end) with the one-year yielding 2.50%, as compared to 2.39% for the 2-year and 2.37% for the five-year note. Inversion in accelerating at the short end of the curve.

While this is traditionally not the pairs that signal recession, that distinction belonging to the 2s-10s spread, it is highly unusual. Bond traders are saying they don't want to issue longer-term, for fear that the economy will weaken as time progresses. The 30-year also was slammed lower, yielding 2.92%, down five basis points from yesterday.

2019 is looking to be an even worse year for equity investors, and a rout in the stock market could cause panic to spread to many diverse levels of economic activity. A recession within the next three to twelve months is looking more a certainty with each passing day.

Dow Jones Industrial Average January Scorecard:

Date	Close	Gain/Loss	Cum. G/L
1/2/19	23,346.24	+18.78	+18.78
1/3/19	22,686.22	-660.02	-641.24

At the Close, Thursday, January 3, 2019:
Dow Jones Industrial Average: 22,686.22, -660.02 (-2.83%)
NASDAQ: 6,463.50, -202.43 (-3.04%)
S&P 500: 2,447.89, -62.14 (-2.48%)
NYSE Composite: 11,190.44, -193.09 (-1.70%)

Stocks Stumble In New Year; Fantastic Four #4 12-Cent Comic Book, Now $4489

Stocks tumbled, then stumbled to an unimpressive finish on the first trading day of 2019, leaving doubt in the minds of many after the rout that was December, 2018.

What's more impressive than chasing stocks are the devotees of Marvel comics, especially the 12-cent variety from the early 60s. If you're in your 60s or older, you may remember this one from your youth. If you gave it away or trashed it, as many of us did, you might be sick to see what it's worth today.

In a recent ebay auction, the #4 issue of Fantastic Four sold for $4,489.00, in very fine condition.

Wow! Who knew that 12 cents could turn into four grand?

Just consider, if one had saved 100 comic books from the early 60s - the ones our parents and teachers said were just a waste of time and money - and kept them in good condition, you might have a nest egg of nearly half a million dollars sitting in a box about two feet high. Ounce for ounce and pound for pound, these early comics are worth in weight more than gold.

Amazing... Spider-Man tomorrow.

Dow Jones Industrial Average January Scorecard:

Date	Close	Gain/Loss	Cum. G/L
1/2/19	23,346.24	+18.78	+18.78

At the Close, Wednesday, January 2, 2019:
Dow Jones Industrial Average: 23,346.24, +18.78 (+0.08%)
NASDAQ: 6,665.94, +30.66 (+0.46%)
S&P 500: 2,510.03, +3.18 (+0.13%)
NYSE Composite: 11,383.53, +9.14 (+0.08%)

The Year That Was: Investors Bid 2018 GOOD RIDDANCE; Worst Year Since 2008

Should all acquaintance be forgot and never brought to mind,
Should all acquaintance be forgot and the days of auld lang syne.
For auld lang syne, my dear, for auld lang syne,
We'll take a cup of kindness yet for the sake of auld lang syne.
Let's have a drink or maybe two or maybe three or four
Or five or six or seven or eight or maybe even more.

A cup of kindness, indeed. It's what some investors would have liked in December, or October, or maybe February or March.

Those were the worst months for stocks.

Dow loss, February, 2018: -1120.19
March, 2018: -926.09
October, 2018: -1341.55
December, 2018: -2211.10

As the year wore on, conditions proceeded to deteriorate for holders of US large cap equities. On the S&P and the NASDAQ, some stocks suffered losses of 30, 40, 50% or more.

Facebook (FB) was the poster child for tech stocks breaking bad. On July 25, the famous brainchild of Mark Zuckerberg topped out at 217.50. As of December 24, it bottomed out at a closing price of 124.06, a 43% loss. It wasn't a very merry Christmas for Facebook. Still, Zuckerberg is still one of the richest persons in the world, just not quite as rich as he used to be.

Netflix (NFLX) was another one being hammered in the second half of the year. Closing at 418.97 on July 9, the streaming video service lost 44% by December 24, closing that session at 233.88.

Stocks weren't the only asset class that was sucker-punched during the year. One standout of the commodities class was crude oil, where the price of a barrel of West Texas Intermediate (WTI) shot up from $60 to $76 in October - coincidentally, on the same day the Dow peaked - before retreating to under $45 nearing the end of December, striking a low of $42.53 on Christmas Day.

In similar manner, precious metals were abused during the year. Gold spent the early part of the year fluctuating in the $1300-1350 per ounce range, never closing above $1352. By June, signs of weakness were appearing, with the metal of kings dipping into the $1200 range, eventually bottoming out at $1178 by August. With stocks on the decline in the fourth quarter, gold was the beneficiary, ending the year at $1278 per ounce.

Silver was damaged more severely. Peaking at $17.52 per ounce on January 25, silver slumped all the way to 13.97 in November. December was the best month of the year for gentleman's coin, as it closed at a five-month high on December 31, with a price of $15.46. Both gold and silver ended the year on high notes, suggesting that they are due for a long-overdue rally.

Bonds were perhaps the most entertaining of the financial assets, with investors watching for an inversion in the treasury yield curve between the two and 10-year notes. While that did not materialize, a smaller inversion between 2 and three-year and the five-year yield presented itself in December, but only persisted for three weeks. The five-year was actually yielding less than both the 2s and 3s on December 4, but corrected back to normalcy - with yields rising over duration - on December 21. Still, it was a wake-up call to investors fearing a recession in 2019 and may have contributed to some of the panic selling during the final month of 2018.

Yield on the barometric 10-year note ended the year at an 11-month low, checking in at 2.69% on New Year's Eve. The 30-year was also pushed lower. By year's end, it was yielding a mere 3.02%, all of this occurring in the face of four quarterly federal funds rate hikes over the course of the annum. Surely, the bond vigilantes are out in force, and as the year of 2018 comes to a close, fear is winning out over greed in rather obvious manner.

What 2019 will bring is anyone's guess, considering the continuing dysfunction coming out of the nation's capitol. Republicans and Democrats are at war, leaving the American people to fend as best they can as casualties or collaterally-damaged bystanders. Rhetoric from both sides of the aisle has been inflamed to a combustible state, and, with the partial government shutdown already in its second week, when the Democrats seize control of the House of Representatives on January 3, chaos will reign.

Despite honest effort from President Trump, nothing good will come out of Washington this year, unless one considers complete rejection of government by the people to be constructive, because that is precisely where the swamp dwellers inside the beltway - with ample assistance from a media that operates as a free press in name only - are taking the country.

2019 may be a year worse than the one preceding it, perhaps much worse, as the political leaders of the greatest nation on the planet can do no better than bicker, posture, and fail in their duties.

Until and unless Washington changes its ways, the financial picture will be clouded by the politicians, whose only aim seems to be one of destroying anything good in the country. While the Democrats can largely be blamed for inciting division, Republicans in the Senate share nearly equal responsibility for not standing up for the public.

Sadly, Washington has made it clear that it wants to be all-important, all the time. The cost will be borne by the people in ways that exceed mere finance.

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
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58
12/18/18	23,675.64	+82.66	-1862.92
12/19/18	23,323.66	-351.98	-2214.90
12/20/18	22,859.60	-464.06	-2678.96
12/21/18	22,445.37	-414.23	-3093.19
12/24/18	21,792.20	-653.17	-3746.36
12/26/18	22,878.45	+1086.25	-2660.11
12/27/18	22,878.45	+260.37	-2399.74
12/28/18	23,062.40	-76.42	-2476.16
12/31/18	23,327.46	+265.06	-2211.10

At the Close, Monday, December 31, 2019:
Dow Jones Industrial Average: 23,327.46, +265.06 (+1.15%)
NASDAQ: 6,635.28, +50.76 (+0.77%)
S&P 500: 2,506.85, +21.11 (+0.85%)
NYSE Composite: 11,374.39, +83.44 (+0.74%)

WEEKEND WRAP: With Continued Volatility In Stocks, Is It Time To Consider Alternative Investment Asset Classes?

To say the least, this was one wild week.

Monday opened with word that Treasury Secretary Steven Mnuchin had phoned six major banks and the Plunge Protection Team to assure that the banks had adequate liquidity to survive a significant downturn. There were two problem with Mnuchin making these calls and then making them public. First, nobody was thinking about bank liquidity. Second, alerting the PPT suggests that there are significant economic issues facing the market.

Mnuchin initiated a panic, good for -653 points on the Dow, on a day in which markets closed at 1:00 pm. That was Christmas Eve.

The day after Christmas, Wednesday, the Dow set a record for points gained in one session. It was a spectacular day for anybody in the bullish camp. All the other indices were up more than four percent, another first.

On Thursday, stocks were slumping badly again, but then, the rally from nowhere produced a positive finish, boosting the Dow more than 600 points from 2:15 pm into the close, for a net gain on the day of 260 points.

On Friday, the opposite occurred. The Dow Industrials were up 240 points at three o'clock, but closed down 76.

Volatility. It's what's for Christmas, it appears.

When it was all over the week turned out to be a winner, the first in four weeks of December. Since the start of October, there have been nine weekly losses on the Dow, with just five weekly gains. The net result of this wicked roller-coaster of a market is a Dow Jones Industrial Average that's down nearly 2500 points in December and 3766 points from October 3.

While the week's heavy lifting (most likely done by our friends at the PPT) kept the Dow out of bear market territory, it - and the other major indices - are still deep in the correction zone, and all indices are down for the year. Since there's only one trading day left in 2018, this year is a good bet to end up a loser, despite the best efforts of the pumpers, panderers, shills, and jokers in the financial field to separate you from your money with promises of outstanding gains.

Every stock pumper in the world mouths the word "diversification" as a key element leading to positive investment results. The problem with their kind of diversification is that it normally references one, maybe two asset classes: stocks, and then, maybe, bonds.

Such short-sighted thinking obscures all the other asset classes, broadly, real estate, commodities, currencies, art, collectibles, precious metals and gemstones, vehicles, business equipment, private equity, cash, cash equivalents, and human capital.

There are plenty of opportunities in small business development, where ownership can be hands-on or hands-free, with the potential to grow a local business within a community. President Donald Trump (and many other private businessmen) is one good example of how much money can be made in real estate investment and privately-owned businesses.

People who held on to their Spiderman, X-Men, and Fantastic Four comic books are smiling broadly. So too, those who kept baseball and football cards for more than 50 years. The value of a Mickey Mantle rookie card today is astronomical compared to its original cost (less than a penny).

With the recent volatility in stocks, people may be considering diversifying out of stocks and into other asset classes. In the coming year and beyond, presentation of alternative money-making and investment opportunities will be a focus of Money Daily.

Here's to looking forward at a year of diversifying out of strictly stocks in a portfolio.

In advance: Happy New Year!

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
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58
12/18/18	23,675.64	+82.66	-1862.92
12/19/18	23,323.66	-351.98	-2214.90
12/20/18	22,859.60	-464.06	-2678.96
12/21/18	22,445.37	-414.23	-3093.19
12/24/18	21,792.20	-653.17	-3746.36
12/26/18	22,878.45	+1086.25	-2660.11
12/27/18	23,138.82	+260.37	-2399.74
12/28/18	23,062.40	-76.42	-2476.16

At the Close, Friday, December 28, 2018:
Dow Jones Industrial Average: 23,062.40, -76.42 (-0.33%)
NASDAQ: 6,584.52, +5.03 (+0.08%)
S&P 500: 2,485.74, -3.09 (-0.12%)
NYSE Composite: 11,290.95, +5.64 (+0.05%)

For the Week:
Dow: +617.03 (+2.75%)
NASDAQ: +251.53 (+3.97%)
S&P 500: +69.12 (+2.86%)
NYSE Composite: +254.11 (+2.30%)