Apologies for the brevity, on the road once again.
Suffice to say that equity investors shrugged off all concerns on the day and bid stocks higher against a backdrop of daily and weekly losses. The NASDAQ was hardest hit, as traders shunned the high tech sector.
Crude oil has been an interesting story. Since the mid-September attack on the Saudi production facility, oil prices had surged, but now have retreated to prior levels, with WTI crude hovering in the $52/barrel.
Apparently, a two-week shutdown of five percent of global production does not warrant a 15% increase in price, as the perpetrators of the obvious false flag attack had hoped.
Well, at least we can all rest assured that massive fraud and manipulation of markets isn't the sole province of central banks and politicians.
Enjoy the day. Smile through the angst. Go Cardinals!
At the Close, Wednesday, October 9, 2019:
Dow Jones Industrial Average: 26,346.01, +181.97 (+0.70%)
NASDAQ: 7,903.74, +79.96 (+1.02%)
S&P 500: 2,919.40, +26.34 (+0.91%)
NYSE Composite: 12,691.16, +100.25 (+0.80%)
Thursday, October 10, 2019
Wednesday, October 9, 2019
Fun With the Fed and Negative Interest Rates Spooking (and breaking) Markets
Stocks took a beating on Tuesday as trade and impeachment worries were reinforced and the Fed quietly reintroduced QE on the heels of the recent repo panic.
Most of this Fed stuff is beyond almost everybody's pay grade, but the simple finding is that the Fed and other central banks, having expanded their balance sheets to outrageous levels after the GFC in '08-'09, can't find a suitable mechanism to reintroduce all that money back into the system without blowing something up. Ergo, the REPO-related funding issues and now, POMO, because the Fed has backed themselves into a corner painted green with excessive amounts of securities (Treasuries and MBS) and they have to continue being the buyer of last resort, though even moreso now.
So, is cash tight? Kind of, depending on who you talk to, but the Fed's going to ease us all onto easy street again and will lower the federal funds rate again at the end of this month, by at least 25 basis points. At the rate they're going, the Fed is going to find itself at the zero-bound and staring negative interest rates squarely in the face right around the November elections next year.
The fed funds rate is currently 1.75-2.00%. After October's expected 25 basis point (maybe 50?) cut, it will only take six more similar cuts to put the rate at 0.00-0.25%, right back where it was from 2009-2015. However, given the odds for a slowdown in Europe and Japan and elsewhere, interest rates on a global basis are expected to continue their decline.
In order for the US to remain competitive, it may, at some point be forced to tease out negative rates, a slippery slope for certain. A little at first, like -0.10, and soon the market sends it snowballing, like in Europe and Japan where the entire yield curves are under zero.
Happy days! Some day a bank might come to Mr. or Miss Creditworthy and offer to pay them to buy a house or a car or maybe an electric blender if they open an account. But by then, bank charges will exceed the value of anything anybody can whip up in a blender, smoothie or otherwise.
We all want to live in interesting times, but thanks to the banking institutions and fiat currencies floated out of thin air, it's already bizarro-world and getting stranger each passing day.
At the Close, Tuesday, October 8, 2019
Dow Jones Industrial Average: 26,164.04, -313.96 (-1.19%)
NASDAQ: 7,823.78, -132.51 (-1.67%)
S&P 500: 2,893.06, -45.73 (-1.56%)
NYSE Composite: 12,590.91, -186.79 (-1.46%)
Most of this Fed stuff is beyond almost everybody's pay grade, but the simple finding is that the Fed and other central banks, having expanded their balance sheets to outrageous levels after the GFC in '08-'09, can't find a suitable mechanism to reintroduce all that money back into the system without blowing something up. Ergo, the REPO-related funding issues and now, POMO, because the Fed has backed themselves into a corner painted green with excessive amounts of securities (Treasuries and MBS) and they have to continue being the buyer of last resort, though even moreso now.
So, is cash tight? Kind of, depending on who you talk to, but the Fed's going to ease us all onto easy street again and will lower the federal funds rate again at the end of this month, by at least 25 basis points. At the rate they're going, the Fed is going to find itself at the zero-bound and staring negative interest rates squarely in the face right around the November elections next year.
The fed funds rate is currently 1.75-2.00%. After October's expected 25 basis point (maybe 50?) cut, it will only take six more similar cuts to put the rate at 0.00-0.25%, right back where it was from 2009-2015. However, given the odds for a slowdown in Europe and Japan and elsewhere, interest rates on a global basis are expected to continue their decline.
In order for the US to remain competitive, it may, at some point be forced to tease out negative rates, a slippery slope for certain. A little at first, like -0.10, and soon the market sends it snowballing, like in Europe and Japan where the entire yield curves are under zero.
Happy days! Some day a bank might come to Mr. or Miss Creditworthy and offer to pay them to buy a house or a car or maybe an electric blender if they open an account. But by then, bank charges will exceed the value of anything anybody can whip up in a blender, smoothie or otherwise.
We all want to live in interesting times, but thanks to the banking institutions and fiat currencies floated out of thin air, it's already bizarro-world and getting stranger each passing day.
At the Close, Tuesday, October 8, 2019
Dow Jones Industrial Average: 26,164.04, -313.96 (-1.19%)
NASDAQ: 7,823.78, -132.51 (-1.67%)
S&P 500: 2,893.06, -45.73 (-1.56%)
NYSE Composite: 12,590.91, -186.79 (-1.46%)
Tuesday, October 8, 2019
Washington's Impeachment Addiction, Trade Fiasco, Brexit, Global Condition Damaging Wall Street
The headline says it all. Things are coming apart at a rapid rate. Anybody who is even the least bit jittery is moving out of stocks as fast as possible. Rerun of last year's fourth quarter massacre is commencing apace. This iteration may be comparable to the New England Patriots playing a football game against a high school girl's rugby team.
More than caution is needed. A little panic would do the world's markets some good and maybe get the back-slapping bureaucrats and politicians to actually do some thing constructive (fat chance).
China will not negotiate fairly and especially so until the impeachment chorus is silenced for good. Even if President Trump is elected to a second term, Democrats will not stop their harassment, but likely accelerate efforts to remove him from office by any means. One saving grace could come from Republicans recapturing the House of Representatives, but that's a real Hail Mary.
In England, the anti-democratic forces are pushing ahead toward four years since the original referendum to leave the European Union was approved by the general population (June 23, 2016). Since, there has been a non-stop war waged against the wishes of the people. With no apparently-workable deal in sight, it may be the case that Britain won't leave the EU at all until the people rise up against their government. All is needed is a spark, in Britain, in the US, in China, everywhere, for the global condition to turn to global contagion and conflagration.
The global condition - which has generally been worsening since September 11, 2001 - is deteriorating at a quickened pace. There will be pain, but, in the end, if one is consistent, conservative, and constructive, a better future lies just ahead.
At the Close, Monday, October 7, 2019:
Dow Jones Industrial Average: 26,478.02, -95.70 (-0.36%)
NASDAQ: 7,956.29, -26.18 (-0.33%)
S&P 500: 2,938.79, -13.22 (-0.45%)
NYSE Composite: 12,777.74, -53.81 (-0.42%)
More than caution is needed. A little panic would do the world's markets some good and maybe get the back-slapping bureaucrats and politicians to actually do some thing constructive (fat chance).
China will not negotiate fairly and especially so until the impeachment chorus is silenced for good. Even if President Trump is elected to a second term, Democrats will not stop their harassment, but likely accelerate efforts to remove him from office by any means. One saving grace could come from Republicans recapturing the House of Representatives, but that's a real Hail Mary.
In England, the anti-democratic forces are pushing ahead toward four years since the original referendum to leave the European Union was approved by the general population (June 23, 2016). Since, there has been a non-stop war waged against the wishes of the people. With no apparently-workable deal in sight, it may be the case that Britain won't leave the EU at all until the people rise up against their government. All is needed is a spark, in Britain, in the US, in China, everywhere, for the global condition to turn to global contagion and conflagration.
The global condition - which has generally been worsening since September 11, 2001 - is deteriorating at a quickened pace. There will be pain, but, in the end, if one is consistent, conservative, and constructive, a better future lies just ahead.
At the Close, Monday, October 7, 2019:
Dow Jones Industrial Average: 26,478.02, -95.70 (-0.36%)
NASDAQ: 7,956.29, -26.18 (-0.33%)
S&P 500: 2,938.79, -13.22 (-0.45%)
NYSE Composite: 12,777.74, -53.81 (-0.42%)
Sunday, October 6, 2019
WEEKEND WRAP: Stocks Bounce Badly, Bonds Rally In Charged Political, Economic Environment
Stocks ripped higher on Friday after September non-farm payrolls missed estimates, stoking expectations of another 25 basis point rate cut by the FOMC in their upcoming, October 29-30, meeting.
All US indices posted gains over one percent, offsetting about half of the losses made during Tuesday and Wednesday sessions. Despite the huge Friday gains, three of the four major indices finished in the red for a third straight weekly decline as fears of an upcoming recession, continued parlor games in Washington fueling fears of an impeachment of President Trump, and ongoing fits and starts in trade negotiations with China outweighed monetary politics and policy direction.
The NASDAQ was the lone survivor, with a gain of just over 1/2 percent.
Jittery as it has been, US equity markets continue to show signs of weakness but not of breaking down in a capitulating move. With third quarter earnings about a week away, there's optimism that corporate America still has not lost its profitable manner, meanwhile, the flight to US treasuries and corporate bonds continued apace throughout the week, with the yield on the 10-year note dropping 17 basis points - from 1.69 to 1.52% - for the week, and losing 38 basis points since the recent bond selloff sent to 10-year yield to a high of 1.90 on September 13.
Friday's closing bond price for the benchmark 10-year is nearing the lows made in late August and early September of 1.47%.
There seems to be little standing in the way of the 10-year note heading below its historic low yield made on July 5, 2016, of 1.37%, as comparable notes in developed nations - Germany, Japan, Switzerland - are all offering negative yields.
How long the treasury complex can withstand the onslaught of buying worldwide is a minor concern since the Fed has already signaled to markets that they were willing and able to offer negative yields, like the rest of the world's developed nations.
The specter of negative yielding bonds looms closer in the US, but is probably at least two years away, if it develops at all. A recession, such as has been predicted for 2020 (and also was predicted for 2019), could push the 10-year below one percent, but it's a long way down to zero for the world's most popular bond and the world's largest economy.
Unless Democrats succeed in unseating President Trump through impeachment or other means, the onus of recession remains, though it could very well be short-lived, since the US has plenty of untapped capital and productivity.
For the present time, it would be prudent to keep a close eye on the impeachment fiasco underway in congress. There's a strong likelihood that push-back by the Trump administration could send the entire bag of nonsense and dubious Democrat claims into the courts, pushing the narrative through the Democrat primaries in Spring 2020 all the way to November's presidential and congressional elections.
That actually could be the plan for Democrats, since they have made some very spurious allegations about the president, but, the mainstream media loves a circus and promotes the impeachment mantra in an unalterable, monotonous, fallacious chorus.
The American public has grown tired of the repeated attempts to besmirch the duly elected chief executive and the result could be an historic landslide victory for Republicans in the fall of 2020. The alternative, should the Democrats and their obedient lackeys in the media succeed is more than likely to cause a rift in the populace - generally between urban liberals and rural conservatives - that could foment tremendous civil unrest and lawlessness. That is the disruption Wall Street - and most of the civilized world - fears most.
Bumpy will be the ride for the economy, politics, and society over then next 12 to 16 months unless the Democrats are exposed and soundly defeated.
At the Close, Friday, October 4, 2019:
Dow Jones Industrial Average: 26,573.72, +372.68 (+1.42%)
NASDAQ: 7,982.47, +110.21 (+1.40%)
S&P 500 2,952.01, +41.38 (+1.42%)
NYSE Composite: 12,831.54, +145.78 (+1.15%)
For the Week:
Dow: -246.53 (-0.92%)
NASDAQ: +42.85 (+0.54%)
S&P 500: -9.78 (-0.33%)
NYSE Composite: -140.43 (-1.08%)
All US indices posted gains over one percent, offsetting about half of the losses made during Tuesday and Wednesday sessions. Despite the huge Friday gains, three of the four major indices finished in the red for a third straight weekly decline as fears of an upcoming recession, continued parlor games in Washington fueling fears of an impeachment of President Trump, and ongoing fits and starts in trade negotiations with China outweighed monetary politics and policy direction.
The NASDAQ was the lone survivor, with a gain of just over 1/2 percent.
Jittery as it has been, US equity markets continue to show signs of weakness but not of breaking down in a capitulating move. With third quarter earnings about a week away, there's optimism that corporate America still has not lost its profitable manner, meanwhile, the flight to US treasuries and corporate bonds continued apace throughout the week, with the yield on the 10-year note dropping 17 basis points - from 1.69 to 1.52% - for the week, and losing 38 basis points since the recent bond selloff sent to 10-year yield to a high of 1.90 on September 13.
Friday's closing bond price for the benchmark 10-year is nearing the lows made in late August and early September of 1.47%.
There seems to be little standing in the way of the 10-year note heading below its historic low yield made on July 5, 2016, of 1.37%, as comparable notes in developed nations - Germany, Japan, Switzerland - are all offering negative yields.
How long the treasury complex can withstand the onslaught of buying worldwide is a minor concern since the Fed has already signaled to markets that they were willing and able to offer negative yields, like the rest of the world's developed nations.
The specter of negative yielding bonds looms closer in the US, but is probably at least two years away, if it develops at all. A recession, such as has been predicted for 2020 (and also was predicted for 2019), could push the 10-year below one percent, but it's a long way down to zero for the world's most popular bond and the world's largest economy.
Unless Democrats succeed in unseating President Trump through impeachment or other means, the onus of recession remains, though it could very well be short-lived, since the US has plenty of untapped capital and productivity.
For the present time, it would be prudent to keep a close eye on the impeachment fiasco underway in congress. There's a strong likelihood that push-back by the Trump administration could send the entire bag of nonsense and dubious Democrat claims into the courts, pushing the narrative through the Democrat primaries in Spring 2020 all the way to November's presidential and congressional elections.
That actually could be the plan for Democrats, since they have made some very spurious allegations about the president, but, the mainstream media loves a circus and promotes the impeachment mantra in an unalterable, monotonous, fallacious chorus.
The American public has grown tired of the repeated attempts to besmirch the duly elected chief executive and the result could be an historic landslide victory for Republicans in the fall of 2020. The alternative, should the Democrats and their obedient lackeys in the media succeed is more than likely to cause a rift in the populace - generally between urban liberals and rural conservatives - that could foment tremendous civil unrest and lawlessness. That is the disruption Wall Street - and most of the civilized world - fears most.
Bumpy will be the ride for the economy, politics, and society over then next 12 to 16 months unless the Democrats are exposed and soundly defeated.
At the Close, Friday, October 4, 2019:
Dow Jones Industrial Average: 26,573.72, +372.68 (+1.42%)
NASDAQ: 7,982.47, +110.21 (+1.40%)
S&P 500 2,952.01, +41.38 (+1.42%)
NYSE Composite: 12,831.54, +145.78 (+1.15%)
For the Week:
Dow: -246.53 (-0.92%)
NASDAQ: +42.85 (+0.54%)
S&P 500: -9.78 (-0.33%)
NYSE Composite: -140.43 (-1.08%)
Friday, October 4, 2019
September Non-farm Payrolls Fall Short; Stocks Brace for Selloff or Liftoff
Thursday's trading was another typical banker-assisted positive close on US indices. Stocks continued their descent from Tuesday and Wednesday's losses at the open, but quickly rebounded into positive territory. This pattern has been a feature for the Dow, S&P and NASDAQ since the late 1980s, when the PPT or President's Working Group was created, buoying stocks when losses appeared to be overwhelming.
Free markets? Probably not now and not in the near future. The Fed can put its fingers on the scales at any time, frustrating short sellers but acting as an artificial booster rocket for stocks. While the blatant manipulation is nearly-universally disliked, holders of 401k or retirement funds find the benefit of a backstop beneficial to the health of their portfolios.
That's why fundamentals really haven't mattered for some time, and especially since the GFC of 2008. The Fed or their proxies step in and stop the losses in their tracks. It's not exactly fair or transparent, but it is effective.
Prior to Friday's opening bell, September's non-farm payroll data was released by the BLS, showing an increase of 136,000 jobs for the month, below expectations of 145,000. August payrolls were adjusted upward to 168,000. Due to July's low numbers, the three-month average for payroll additions between July, August and September fell to 119,000, representing the lowest since 2012.
The jobs report sends a clear signal that the economy is slowing, but not yet going in reverse. The weak September report paves the way for the Fed to cut another 25 basis points from the federal funds overnight lending rate. Mixed signals are being sent as this produces a "bad news is good news" condition, as weaker economic numbers push the Fed to continue lowering rates.
TGIF.
At the Close, Thursday, October 3, 2019:
Dow Jones Industrial Average: 26,201.04, +122.42 (+0.47%)
NASDAQ: 7,872.27, +87.02 (+1.12%)
S&P 500: 2,910.63, +23.02 (+0.80%)
NYSE Composite: 12,685.77, +77.34 (+0.61%)
Free markets? Probably not now and not in the near future. The Fed can put its fingers on the scales at any time, frustrating short sellers but acting as an artificial booster rocket for stocks. While the blatant manipulation is nearly-universally disliked, holders of 401k or retirement funds find the benefit of a backstop beneficial to the health of their portfolios.
That's why fundamentals really haven't mattered for some time, and especially since the GFC of 2008. The Fed or their proxies step in and stop the losses in their tracks. It's not exactly fair or transparent, but it is effective.
Prior to Friday's opening bell, September's non-farm payroll data was released by the BLS, showing an increase of 136,000 jobs for the month, below expectations of 145,000. August payrolls were adjusted upward to 168,000. Due to July's low numbers, the three-month average for payroll additions between July, August and September fell to 119,000, representing the lowest since 2012.
The jobs report sends a clear signal that the economy is slowing, but not yet going in reverse. The weak September report paves the way for the Fed to cut another 25 basis points from the federal funds overnight lending rate. Mixed signals are being sent as this produces a "bad news is good news" condition, as weaker economic numbers push the Fed to continue lowering rates.
TGIF.
At the Close, Thursday, October 3, 2019:
Dow Jones Industrial Average: 26,201.04, +122.42 (+0.47%)
NASDAQ: 7,872.27, +87.02 (+1.12%)
S&P 500: 2,910.63, +23.02 (+0.80%)
NYSE Composite: 12,685.77, +77.34 (+0.61%)
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