In the most recent Weekend Wrap, the flatlining of stocks over the last 21 months was discovered and discussed, but Monday's trading amplified the condition, with stocks stuck in a narrow range throughout the session.
The Dow Industrials traded in a range of 125 points for the full day, but, after the first half hour, the range was no more than 100 points in either direction. The same range-bound condition was true for all the major indices. Trailing into the close, the three majors (Dow, NAZ, S&P) were all down by less than 0.15 percent.
This was likely due to the observance of Columbus Day, which saw the bond market closed, though the lingeing effects of so much central bank tinkering must be playing on the minds of more than a few seasoned traders.
While markets are unlikely to completely seize up, there is the potential for individual stocks to go bid-less for extended periods. Market volume and breadth has been on the skinny side of thin, to say the least. Volatility has been wrung out, except for the occasional algo bounce directly tied to the up and down, on and off trade disputes between the United States and China. This false narrative moves markets, but not in any consistent pattern except for that of a knee-jerk.
The week ahead will feature third quarter results from the banking sector, sure to add some dynamism to an otherwise flaccid affair.
At the Close, Monday, October 14, 2019:
Dow Jones Industrial Average: 26,787.36, -29.23 (-0.11%)
NASDAQ: 8,048.65, -8.39 (-0.10%)
S&P 500: 2,966.15, -4.12 (-0.14%)
NYSE Composite: 12,896.22, -30.70 (-0.24%)
Tuesday, October 15, 2019
Monday, October 14, 2019
WEEKEND WRAP: Stocks gain on Friday Bulge; 21 Months of Sideways Trading
Stocks gained nicely for the week, thanks entirely to Friday's massive, across-the-board gains. Otherwise, the week would have been flat to slightly lower.
Anybody who went into the weekend with giddiness over his or her market smarties shouldn't get too cocky because for the past 21 months, stocks have gone sideways.
Since February, 2018, the Dow Jones Industrial Average is up a whopping 200 points. That's a return of less than one percent over the course of nearly two years. Investors are free to believe that 2019 is a strong year for stocks, but that's only because of the massive fourth quarter selloff in 2018. All stocks have done this annum is rebound, with the end result being sideways for the whole.
Over the same time span, the NASDAQ is higher by about 500 points, a gain of less than seven percent; the S&P tacked on 100 points for a rise of roughly three percent, and the NYSE Composite has actually lost about 700 points, or minus five percent.
If that's not sideways, France isn't in Europe.
A repeat of last year's fourth quarter, when stocks slid in October and then again in December, would put most portfolios under water for the past two years and that's not something your financial advisor is going to be happy having to tell you.
Well, since this is Columbus Day, we can all bask in the knowledge that while the brave explorer of 1492 did not exactly prove the earth was round, he was headed in the right direction. Little could Columbus imagine that 500+ years hence, all of the round-earth progress would result in flat-lined equities.
Not up. Not down. Sideways.
At the Close, Friday, October 11, 2019:
Dow Jones Industrial Average: 26,816.59, +319.89 (+1.21%)
NASDAQ: 8,057.04, +106.26 (+1.34%)
S&P 500: 2,970.27, +32.14 (+1.09%)
NYSE Composite: 12,926.92, +160.92 (+1.26%)
For the Week:
Dow: +319.92 (+1.21%)
NASDAQ: +74.56 (+0.93%)
S&P 500: +18.26 (+0.62%)
NYSE Composite: +95.37 (+0.74%)
Anybody who went into the weekend with giddiness over his or her market smarties shouldn't get too cocky because for the past 21 months, stocks have gone sideways.
Since February, 2018, the Dow Jones Industrial Average is up a whopping 200 points. That's a return of less than one percent over the course of nearly two years. Investors are free to believe that 2019 is a strong year for stocks, but that's only because of the massive fourth quarter selloff in 2018. All stocks have done this annum is rebound, with the end result being sideways for the whole.
Over the same time span, the NASDAQ is higher by about 500 points, a gain of less than seven percent; the S&P tacked on 100 points for a rise of roughly three percent, and the NYSE Composite has actually lost about 700 points, or minus five percent.
If that's not sideways, France isn't in Europe.
A repeat of last year's fourth quarter, when stocks slid in October and then again in December, would put most portfolios under water for the past two years and that's not something your financial advisor is going to be happy having to tell you.
Well, since this is Columbus Day, we can all bask in the knowledge that while the brave explorer of 1492 did not exactly prove the earth was round, he was headed in the right direction. Little could Columbus imagine that 500+ years hence, all of the round-earth progress would result in flat-lined equities.
Not up. Not down. Sideways.
At the Close, Friday, October 11, 2019:
Dow Jones Industrial Average: 26,816.59, +319.89 (+1.21%)
NASDAQ: 8,057.04, +106.26 (+1.34%)
S&P 500: 2,970.27, +32.14 (+1.09%)
NYSE Composite: 12,926.92, +160.92 (+1.26%)
For the Week:
Dow: +319.92 (+1.21%)
NASDAQ: +74.56 (+0.93%)
S&P 500: +18.26 (+0.62%)
NYSE Composite: +95.37 (+0.74%)
Thursday, October 10, 2019
Stocks Rise
Still on the road... drive-by post, not even tweeting it.
Not a bad week for stocks, thus far.
At the Close, Thursday, October 10, 2019:
Dow Jones Industrial Average: 26,496.67, +150.67 (+0.57%)
NASDAQ: 7,950.78, +47.04 (+0.60%)
S&P 500: 2,938.13, +18.73 (+0.64%)
NYSE Composite: 12,766.00, +74.80 (+0.59%)
Not a bad week for stocks, thus far.
At the Close, Thursday, October 10, 2019:
Dow Jones Industrial Average: 26,496.67, +150.67 (+0.57%)
NASDAQ: 7,950.78, +47.04 (+0.60%)
S&P 500: 2,938.13, +18.73 (+0.64%)
NYSE Composite: 12,766.00, +74.80 (+0.59%)
Stocks Bounce Higher, Shrugging Off Global Funding and Recession Issues
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%)
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%)
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%)
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