Players, speculators and people with more money than they know what to do with stepped up on Monday to buy the dip created when all four major indices closed in the red last week.
Such action is like stepping on a pile of dog poo, wiping it off and stepping into it again. The insanity of investors apparently has no bounds because of ever-increasing liquidity created by the Federal Reserve, the seeming limitlessness of stock buybacks by hundreds of corporations and the hunt for yield by fund managers.
This activity, while cheered on by the financial press, the mainstream press and every other value-clueless pundit of the wonders of free market capitalism, cannot continue without some reckoning, not perhaps a final one, but at least a corrective phase. What happened in October and December of last year has apparently been forgotten, as investors piled into stocks with abandon in this holiday-shortened trading week.
Markets will be closed on Thanksgiving Thursday and close early (1:00 pm ET) on Black Friday, the day celebrated as an orgy of spending and holiday shopping, replete with door-busting deals and the associated mayhem and violence that stems from hundreds of people trying to get into stores earliest to grab oversized TVs, plastic junk from the Republic of China, and other goods marked as low as 50-80% off.
Winning days on Wall Street have - over the course of the last 10 years or so - become something of a yawn-fest, as stocks breached record highs on numerous occasions every year since the Great Financial Crisis (GFC) of 2008. Higher stock prices are to be expected. They are the norm, but nobody wants to actually look at what they're buying, only the gains they're making. It's almost as if the companies in which people are investing will return massive profits for 100 years or longer, or that the 30 stocks comprising the Dow Industrials will never change (they do, and frequently).
Beginning with AIG being dropped from the Dow in September of 2008, 10 companies have been either ousted, merged and/or replaced in the world's leading index. That's a third of the companies. No wonder it's at record highs. The bad companies - the latest being General Electric (GE) - are replaced with companies with better growth potential and the capacity for higher share prices. It would be like lowering the height of the basket a few inches every year for LeBron James. Upon reaching 40 years of age, the NBA superstar could dunk without jumping or even reaching up very high.
For today, the NBA basket is still 10 feet off the floor, but the mastery of financial deception belongs in those goal-post movers on the executive board of Dow Jones.
At the Close, Monday, November 25, 2019:
Dow Jones Industrial Average: 28,066.47, +190.85 (+0.68%)
NASDAQ: 8,632.49, +112.60 (+1.32%)
S&P 500: 3,133.64, +23.35 (+0.75%)
NYSE Composite: 13,532.89, +91.94 (+0.68%)
Tuesday, November 26, 2019
Monday, November 25, 2019
WEEKEND WRAP: Stocks End Long Weekly Win Streaks; Negative Interest Rates Will Destroy Advanced Economies
Oh, Snap! Weekly winning steaks were ended with the first down week in the last eight on the NASDAQ. The S&P 500 and NYSE Composite saw their winning streaks ended at six weeks, while the Dow saw the underside of the unchanged line after four straight positives.
That US stock indices were all lower by less than one-half of one percent points up the resiliency and absurdity of the markets. Eminently malleable, stocks have been guided higher seemingly by Adam Smith's invisible hand, the one that keeps pension plans from imploding, sovereign governments from defaulting, and fiat currencies from the ruinous effects of unacceptability.
Putting into focus the NASDAQ, its seven-week upside move was the second-longest of the year. It began 2019 with an eight-week short-crushing rally on the heels of the final two weeks of 2018, which saw the index rise from the December ashes of a 6,190 low. While that 10-week advance boosted the index by some 1400 points, the most recent weekly gains accounted for only 800 additional points, although it recorded a new high in the week prior to the most recent and has backed down only slightly.
Anyone wise enough to have put all their money into the NASDAQ at the start of this year would be up a whopping 25% with just over a month remaining to add onto those lush profits. For ordinary folks locked into a buy and hold fund strategy, the gains since the highs of August-September 2018 to the present add up to only five percent. That's a more realistic figure for the real world and one which fits like a glove with the slowing pace of GDP and the generally dull data drops over these past 14 months.
While the stock markets may have the appearance of being big, bold, large and in charge, the truth is a somewhat more sobering landscape. Recovering so quickly from 20% losses has kept the investing public soothed and subdued, the politics of passive investing intact, and the wheels of industry churning, albeit at a lower crunch rate.
While stocks took this brief pre-holiday pause, interest rates were moving in the same direction, only with quickened pace. Negative interest rates rode across the plain of developed nations (Europe, Japan), suggesting that US treasuries were underpriced. Indeed, the long end of the curve was where most of the drama occurred, with the 30-year bond trimmed 21 basis points - from 2.41% to 2.22% - since November 8 (10 trading days). The 10-year note shed 17 basis points, slumping from 1.84% to 1.77% over the same period.
That's a trend sure to continue, as it represents a massive carry trade for investors outside the US. With yields in their native nations prefaced with minus signs, your bold-thinking French, German, Swiss, or Japanese investor is afforded a nearly risk-free two percent or more on money that otherwise would be eroded over time if held in sovereign securities. It's a neat trick that only the biggest and richest can perform. The rest of the population is unwittingly blinded by the stagnation and destruction ongoing behind the scenes.
Only a savvy few see negative interest rates for what they really are: a devious central bank device designed to wind down the fiat currency regime. In thirty to fifty years, the euro, yen, pound and even the dollar will be remnants of the industrial and information ages, replaced by something, we hope. while that may sound like a distant projection into the future, anybody in their 20s, 30s, or 40s might be best to be scared to death, because currency death-watches and funerals are morbid events played out over long periods of time.
Those of advanced age may better survive the utterly deflationary effects of negative interest rates and the impending currency decapitation in lower prices on everyday goods, but saving for retirement might best be measured in canned goods and precious metals instead of scraps of paper with important people on them or digitized numerical amounts on smart phone screens.
For many, the future is going to be destroyed before it arrives.
That's right. The world as it is now known will be a vastly different place in 2050 and it's unlikely to be prettier unless one has made the proper preparations into hard assets that will maintain value over harder times. Keeping up with the Joneses will be replaced by outrunning the Zombies. Fuel, food, water, shelter, and arable land - which, by the way, can be had on the cheap in some areas - are life-sustaining. Debt will be repudiated and rejected by a class of people similar to those of the depression era, whose lives were ruined by the influence of a currency they did not control, one which held neither value nor promise for a generation after 1929.
In case one is unconvinced of the effects of negative interest rates, just consider the math. Most pension plans in developed nations are already underfunded and have targets of six or seven percent annual gains written into their accountancy. If the best one can expect is two percent or less, a long-term shortfall is not only inevitable, it is assured.
All of this occurs over a long period of time, not all at once, but the effects on economies will nevertheless be devastating. Pension plans will not fail nor will sovereign debt default outright, but like rows of dominoes falling in super-slow motion, major currencies and first-world economies will gradually, inexorably decline and self-destruct.
Ah, but you say, these are negative thoughts marring the cheery landscape of the holidays.
Nay, if you get coal in your stockings this Christmas, consider yourself lucky. At least you will stay warm over the coming long winter.
At the Close, Friday, November 22, 2019:
Dow Jones Industrial Average: 27,875.62, +109.32 (+0.39%)
NASDAQ: 8,519.88, +13.67 (+0.16%)
S&P 500: 3,110.29, +6.75 (+0.22%0
NYSE Composite: 13,440.95, +34.55 (+0.26%)
For the week:
Dow: -129.27 (-0.46%)
NASDAQ: -20.94 (-0.25%)
S&P 500: -10.17 (-0.335)
NYSE Composite: -52.01 (-0.39%)
That US stock indices were all lower by less than one-half of one percent points up the resiliency and absurdity of the markets. Eminently malleable, stocks have been guided higher seemingly by Adam Smith's invisible hand, the one that keeps pension plans from imploding, sovereign governments from defaulting, and fiat currencies from the ruinous effects of unacceptability.
Putting into focus the NASDAQ, its seven-week upside move was the second-longest of the year. It began 2019 with an eight-week short-crushing rally on the heels of the final two weeks of 2018, which saw the index rise from the December ashes of a 6,190 low. While that 10-week advance boosted the index by some 1400 points, the most recent weekly gains accounted for only 800 additional points, although it recorded a new high in the week prior to the most recent and has backed down only slightly.
Anyone wise enough to have put all their money into the NASDAQ at the start of this year would be up a whopping 25% with just over a month remaining to add onto those lush profits. For ordinary folks locked into a buy and hold fund strategy, the gains since the highs of August-September 2018 to the present add up to only five percent. That's a more realistic figure for the real world and one which fits like a glove with the slowing pace of GDP and the generally dull data drops over these past 14 months.
While the stock markets may have the appearance of being big, bold, large and in charge, the truth is a somewhat more sobering landscape. Recovering so quickly from 20% losses has kept the investing public soothed and subdued, the politics of passive investing intact, and the wheels of industry churning, albeit at a lower crunch rate.
While stocks took this brief pre-holiday pause, interest rates were moving in the same direction, only with quickened pace. Negative interest rates rode across the plain of developed nations (Europe, Japan), suggesting that US treasuries were underpriced. Indeed, the long end of the curve was where most of the drama occurred, with the 30-year bond trimmed 21 basis points - from 2.41% to 2.22% - since November 8 (10 trading days). The 10-year note shed 17 basis points, slumping from 1.84% to 1.77% over the same period.
That's a trend sure to continue, as it represents a massive carry trade for investors outside the US. With yields in their native nations prefaced with minus signs, your bold-thinking French, German, Swiss, or Japanese investor is afforded a nearly risk-free two percent or more on money that otherwise would be eroded over time if held in sovereign securities. It's a neat trick that only the biggest and richest can perform. The rest of the population is unwittingly blinded by the stagnation and destruction ongoing behind the scenes.
Only a savvy few see negative interest rates for what they really are: a devious central bank device designed to wind down the fiat currency regime. In thirty to fifty years, the euro, yen, pound and even the dollar will be remnants of the industrial and information ages, replaced by something, we hope. while that may sound like a distant projection into the future, anybody in their 20s, 30s, or 40s might be best to be scared to death, because currency death-watches and funerals are morbid events played out over long periods of time.
Those of advanced age may better survive the utterly deflationary effects of negative interest rates and the impending currency decapitation in lower prices on everyday goods, but saving for retirement might best be measured in canned goods and precious metals instead of scraps of paper with important people on them or digitized numerical amounts on smart phone screens.
For many, the future is going to be destroyed before it arrives.
That's right. The world as it is now known will be a vastly different place in 2050 and it's unlikely to be prettier unless one has made the proper preparations into hard assets that will maintain value over harder times. Keeping up with the Joneses will be replaced by outrunning the Zombies. Fuel, food, water, shelter, and arable land - which, by the way, can be had on the cheap in some areas - are life-sustaining. Debt will be repudiated and rejected by a class of people similar to those of the depression era, whose lives were ruined by the influence of a currency they did not control, one which held neither value nor promise for a generation after 1929.
In case one is unconvinced of the effects of negative interest rates, just consider the math. Most pension plans in developed nations are already underfunded and have targets of six or seven percent annual gains written into their accountancy. If the best one can expect is two percent or less, a long-term shortfall is not only inevitable, it is assured.
All of this occurs over a long period of time, not all at once, but the effects on economies will nevertheless be devastating. Pension plans will not fail nor will sovereign debt default outright, but like rows of dominoes falling in super-slow motion, major currencies and first-world economies will gradually, inexorably decline and self-destruct.
Ah, but you say, these are negative thoughts marring the cheery landscape of the holidays.
Nay, if you get coal in your stockings this Christmas, consider yourself lucky. At least you will stay warm over the coming long winter.
At the Close, Friday, November 22, 2019:
Dow Jones Industrial Average: 27,875.62, +109.32 (+0.39%)
NASDAQ: 8,519.88, +13.67 (+0.16%)
S&P 500: 3,110.29, +6.75 (+0.22%0
NYSE Composite: 13,440.95, +34.55 (+0.26%)
For the week:
Dow: -129.27 (-0.46%)
NASDAQ: -20.94 (-0.25%)
S&P 500: -10.17 (-0.335)
NYSE Composite: -52.01 (-0.39%)
Friday, November 22, 2019
Stocks Lose Ground As US-China Trade Deal Stalls
Though not quite as quiet as last week, trading on US exchanges has been slow as the year winds down and the holiday season approaches.
What differentiates this week from last is the tenor of the trade, noticeably negative, with all of the major indices lower heading into Friday. The losses have not been significant, but Thursday marked three straight sessions in the red.
Losses have been very limited, however, with the Dow leading the downside, off by 0.81% through Thursday. Even a modest gain on Friday would push the averages back into record territory. The S&P 500 needs a gain of just 20 points to break out to new all-time highs.
There is still abundant interest in US-China trade relations, though the market has grown a bit weary of the on-again, off-again nature of the negotiations and is likely pricing in a positive outcome. This stalemate of sorts could last another year, with the Chinese playing the waiting game.
President Trump is up for re-election in November, 2020, and Chinese leaders are watching political developments in the US with jaded eyes. having Trump out of the way would suit their purposes. Getting back to the monstrous trade deficit imposed upon the US over the years seems to be the ultimate aim for China. Nobody wants to give up on a good thing, and trade relations with the US have been nothing short of spectacular for China over the past 30 years. Trump vowed to put an end to those practices in his election campaign and he's stuck to his guns, dealing the Chinese a hand they thought they'd never have to play.
A negative view of the ongoing feud would be an escalation of tariffs, leading to an overall slowdown and possible military actions. No wonder the market is pricing in a positive conclusion, because the alternative is more disruptive than anybody would ever hope.
At the Close, Thursday, November 21, 2019:
Dow Jones Industrial Average: 27,766.29, -54.80 (-0.20%)
NASDAQ: 8,506.21, -20.52 (-0.24%)
S&P 500: 3,103.54, -4.92 (-0.16%)
NYSE Composite: 13,406.42, -12.89 (-0.10%)
What differentiates this week from last is the tenor of the trade, noticeably negative, with all of the major indices lower heading into Friday. The losses have not been significant, but Thursday marked three straight sessions in the red.
Losses have been very limited, however, with the Dow leading the downside, off by 0.81% through Thursday. Even a modest gain on Friday would push the averages back into record territory. The S&P 500 needs a gain of just 20 points to break out to new all-time highs.
There is still abundant interest in US-China trade relations, though the market has grown a bit weary of the on-again, off-again nature of the negotiations and is likely pricing in a positive outcome. This stalemate of sorts could last another year, with the Chinese playing the waiting game.
President Trump is up for re-election in November, 2020, and Chinese leaders are watching political developments in the US with jaded eyes. having Trump out of the way would suit their purposes. Getting back to the monstrous trade deficit imposed upon the US over the years seems to be the ultimate aim for China. Nobody wants to give up on a good thing, and trade relations with the US have been nothing short of spectacular for China over the past 30 years. Trump vowed to put an end to those practices in his election campaign and he's stuck to his guns, dealing the Chinese a hand they thought they'd never have to play.
A negative view of the ongoing feud would be an escalation of tariffs, leading to an overall slowdown and possible military actions. No wonder the market is pricing in a positive conclusion, because the alternative is more disruptive than anybody would ever hope.
At the Close, Thursday, November 21, 2019:
Dow Jones Industrial Average: 27,766.29, -54.80 (-0.20%)
NASDAQ: 8,506.21, -20.52 (-0.24%)
S&P 500: 3,103.54, -4.92 (-0.16%)
NYSE Composite: 13,406.42, -12.89 (-0.10%)
Thursday, November 21, 2019
Disturbance in the Force? Stocks Suffer Losses
Dow Components Apple (AAPL) and Home Depot (HD) sent the Dow Industrials lower, dragging the tech sector, NASDAQ and S&P 500 down with it.
With third quarter results not as good as expectations, there's pressure on US stocks, especially now that China has balked again at phase one of the proposed on-again, off-again trade deal between the globe's two largest economies.
Also weighing on equites are repeated stories of recession fears from Europe, especially in the major economies: Germany, France, and Italy. Brexit is still not resolved and there's renewed optimism among remainers that the result of the 2016 referendum might still be overturned. As Europe is one of the major US trading powers, what happens over the pond affects many companies in the US.
Bond yields dipped again, especially at the long end of the treasury curve, with the 10-year note falling to a yield of 1.74%. With the Fed now officially on hold, bond vigilantes may have their day in the sun, pushing yields down to near record levels if the holiday season doesn't produce a bounty of stock buys.
Markets are at an unusual crossroads with many swirling stories that have the potential to send equities flying in either direction. What looks like a sideways trading regimen may hold sway the remainder of the year, though more and more economists and predictors are saying that a recession in the United States is not a foregone conclusion for 2020.
Third quarter results from a plethora of companies are now in the books and though most beat expectations, such were lowered and cannot be counted on to produce a buying frenzy. A repeat of last year's monumental losses in December could reoccur, though the Fed and nefarious forces behind the scenes have the power to deflect losses and turn indices around on various dimes.
Control is in the hands of the algorithms and central bankers. Don't expect much downside as long as hope for a trade deal remains present.
At the Close, Wednesday, November 20, 2019:
Dow Jones Industrial Average: 27,821.09, -112.93 (-0.40%)
NASDAQ: 8,526.73, -43.93 (-0.51%)
S&P 500: 3,108.46, -11.72 (-0.38%)
NYSE Composite: 13,419.30, -47.05 (-0.35%)
With third quarter results not as good as expectations, there's pressure on US stocks, especially now that China has balked again at phase one of the proposed on-again, off-again trade deal between the globe's two largest economies.
Also weighing on equites are repeated stories of recession fears from Europe, especially in the major economies: Germany, France, and Italy. Brexit is still not resolved and there's renewed optimism among remainers that the result of the 2016 referendum might still be overturned. As Europe is one of the major US trading powers, what happens over the pond affects many companies in the US.
Bond yields dipped again, especially at the long end of the treasury curve, with the 10-year note falling to a yield of 1.74%. With the Fed now officially on hold, bond vigilantes may have their day in the sun, pushing yields down to near record levels if the holiday season doesn't produce a bounty of stock buys.
Markets are at an unusual crossroads with many swirling stories that have the potential to send equities flying in either direction. What looks like a sideways trading regimen may hold sway the remainder of the year, though more and more economists and predictors are saying that a recession in the United States is not a foregone conclusion for 2020.
Third quarter results from a plethora of companies are now in the books and though most beat expectations, such were lowered and cannot be counted on to produce a buying frenzy. A repeat of last year's monumental losses in December could reoccur, though the Fed and nefarious forces behind the scenes have the power to deflect losses and turn indices around on various dimes.
Control is in the hands of the algorithms and central bankers. Don't expect much downside as long as hope for a trade deal remains present.
At the Close, Wednesday, November 20, 2019:
Dow Jones Industrial Average: 27,821.09, -112.93 (-0.40%)
NASDAQ: 8,526.73, -43.93 (-0.51%)
S&P 500: 3,108.46, -11.72 (-0.38%)
NYSE Composite: 13,419.30, -47.05 (-0.35%)
Tuesday, November 19, 2019
Stocks Close Lower
Once again, on the road, another drive-by post...
At the Close, Tuesday, November 19, 2019:
Dow Jones Industrial Average: 27,934.02, -102.20 (-0.36%)
NASDAQ: 8,570.66, +20.72 (+0.24%)
S&P 500: 3,120.18, -1.85 (-0.06%)
NYSE Composite: 13,466.35, -17.46 (-0.13%)
At the Close, Tuesday, November 19, 2019:
Dow Jones Industrial Average: 27,934.02, -102.20 (-0.36%)
NASDAQ: 8,570.66, +20.72 (+0.24%)
S&P 500: 3,120.18, -1.85 (-0.06%)
NYSE Composite: 13,466.35, -17.46 (-0.13%)
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