In what is beginning to look like a recurrent theme, stocks struggled to open the week, with all the major US indices down on the day.
This is the same condition that prevailed last week. Stocks were down hard to start the week, only to be rescued on Friday by a surprisingly good jobs report.
That may not be the case this time around. There will be no salvation by numbers later on the week. Market participants will have to deal with the troika of incessant impeachment hearings, troubling trade talks, and fruitless Federal Reserve operations.
It's no secret that the Fed has opened the spigots again, starting in September with what they're currently calling "not QE," a series of open market operations conducted on a daily basis that was originally intended to ease the malaise in overnight lending markets, and, while still performing that function, has morphed into another monstrosity, already having increased the size of the Fed balance sheet by some $300 billion.
And this will go on at least through the first quarter of next year, and probably further, because once the Fed shuts down the free money booth, there will be carnage, which is not to say there won't be carnage beforehand or that they will ever be able to completely close down their operations of largesse to the yield-starved banks.
Beyond the ordinary absurdities that has become the financial world, a moment of pause was given to mourn the passing of former Fed Chairman Paul Volker, who served in that post from August 1979 to August 1987, under presidents Carter and Reagan. Widely credited as the man to defeat the high inflation of the 70s and 80s through the use of tight money controls and ridiculously high interest rates, Volker was first seen as ridiculous, then hated, and finally emerged an American hero, rescuing the US economy from a terrific bout of inflation, unemployment, and a deep recession - caused, in part, by his raising of the federal funds rate from 11% to a record 20% - in 1981-82, that lasted 16 months.
Volker died Sunday. He was 92.
At the Close, Monday, December 9, 2019:
Dow Jones Industrial Average: 27,909.60, -105.46 (-0.38%)
NASDAQ: 8,621.83, -34.70 (-0.40%)
S&P 500: 3,135.96, -9.95 (-0.32%)
NYSE Composite: 13,555.07, -33.22 (-0.24%)
Tuesday, December 10, 2019
Sunday, December 8, 2019
WEEKEND WRAP: Stocks Flat After Week Of Turmoil; Media Concentration Killing Free Press
Due almost entirely to a stunning November non-farm payroll report, Friday's massive gains offset the losses incurred on the main US indices earlier in the week, leaving the Dow and NASDAQ with minimal losses and the S&P and NYSE Composite with smallish gains for the week.
With the prior month's job gains calculated to be 266,000, there was a great deal of encouragement for the US economy, despite almost no progress in US-China trade talks.
Though the week was a tumultuous one, ending with a bang, the overall arc was about as noticeable as the earth's curvature from a three-story building.
While stocks were going nowhere, crude caught a bid, as Saudi Arabia and OPEC nations vowed to cut another 500,000 barrels a day production in the first quarter of 2020. The move was seen as bullish for crude, though the cohesion of OPEC members remains questionable. The Saudi's are convinced that some members are failing to meet promised production cuts, putting lid on global oil prices. WTI crude oil closed out the week at $59.07. Gas prices shot up across the United States and Europe.
As is usually the case, gold and silver were beaten down during Friday's stock ramping. Gold ended at $1,458.40 per ounce, while silver bit the dust at $16.49.
Bonds were also whipsawed, with the 10-year note lost 11 basis points on Monday, with yield dropping from 1.83% to 1.72%, only to see it all eviscerated by Friday, finishing the week at 1.84%.
All markets appeared to be on unstable ground as the holiday season progressed and such condition may persist for the foreseeable future. The impeachment of President Trump continues apace in the House of Representatives, the trade war is likely to get hotter, holiday shopping usually lulls during the second and third week of December, and protests in Hong Kong and France (and in many other countries, over various issues) are taking a toll.
Oddly enough, America's mainstream media wishes to have nothing to do with protests in other countries, perhaps hoping that by not airing real news, Americans will not get any ideas about speaking up on issues that affect them. None of the major TV networks allowed any air time to the French protests over pensions, nor did the Washington Post. It's as though 800,000 people protesting in Paris, while the massive public transportation system was halted due to striking workers, actually did not happen. Americans are being kept in the dark about international developments unless it somehow fits their narrow narrative of "impeach Trump" and "trade war bad."
It wasn't long ago - maybe 30 years or so - that the United States had a free, fair, and balanced press. Since media cross ownership rules were relaxed, first in 1975, again in 1996, and again in 2003, media ownership concentration has gotten to the point at which we are today, where six or seven companies control roughly 95% of all mainstream media. It's no wonder that Americans are perplexed about world affairs, economics, and politics. The powers in the media have conspired together to keep the general public blissfully ignorant.
The internet has changed where Americans look for news to some degree, but, the large media companies own or control much of that as well, making it difficult for the average person to discern what is real, what is opinion, and what is fake. Until the FCC rolls back the liberalization of ownership concentration rules, Americans are almost certain to be shielded from news and stories that those overseeing network conglomerates believe to be too dangerous, too damaging, or simply to controversial to air.
The status quo, deep-state owned media in America is second only to congress as its own worst enemy and it may become even worse during the coming election year.
At the Close, Friday, December 6, 2019:
Dow Jones Industrial Average: 28,015.06, +337.27 (+1.22%)
NASDAQ: 8,656.53, +85.83 (+1.00%)
S&P 500: 3,145.91, +28.48 (+0.91%)
NYSE Composite: 13,588.29, +105.99 (+0.79%)
For the Week:
Dow: -36.35 (-0.13%)
NASDAQ: -8.94 (-0.10%)
S&P 500: +4.93 (+0.16%)
NYSE Composite: +43.08 (+0.32%)
With the prior month's job gains calculated to be 266,000, there was a great deal of encouragement for the US economy, despite almost no progress in US-China trade talks.
Though the week was a tumultuous one, ending with a bang, the overall arc was about as noticeable as the earth's curvature from a three-story building.
While stocks were going nowhere, crude caught a bid, as Saudi Arabia and OPEC nations vowed to cut another 500,000 barrels a day production in the first quarter of 2020. The move was seen as bullish for crude, though the cohesion of OPEC members remains questionable. The Saudi's are convinced that some members are failing to meet promised production cuts, putting lid on global oil prices. WTI crude oil closed out the week at $59.07. Gas prices shot up across the United States and Europe.
As is usually the case, gold and silver were beaten down during Friday's stock ramping. Gold ended at $1,458.40 per ounce, while silver bit the dust at $16.49.
Bonds were also whipsawed, with the 10-year note lost 11 basis points on Monday, with yield dropping from 1.83% to 1.72%, only to see it all eviscerated by Friday, finishing the week at 1.84%.
All markets appeared to be on unstable ground as the holiday season progressed and such condition may persist for the foreseeable future. The impeachment of President Trump continues apace in the House of Representatives, the trade war is likely to get hotter, holiday shopping usually lulls during the second and third week of December, and protests in Hong Kong and France (and in many other countries, over various issues) are taking a toll.
Oddly enough, America's mainstream media wishes to have nothing to do with protests in other countries, perhaps hoping that by not airing real news, Americans will not get any ideas about speaking up on issues that affect them. None of the major TV networks allowed any air time to the French protests over pensions, nor did the Washington Post. It's as though 800,000 people protesting in Paris, while the massive public transportation system was halted due to striking workers, actually did not happen. Americans are being kept in the dark about international developments unless it somehow fits their narrow narrative of "impeach Trump" and "trade war bad."
It wasn't long ago - maybe 30 years or so - that the United States had a free, fair, and balanced press. Since media cross ownership rules were relaxed, first in 1975, again in 1996, and again in 2003, media ownership concentration has gotten to the point at which we are today, where six or seven companies control roughly 95% of all mainstream media. It's no wonder that Americans are perplexed about world affairs, economics, and politics. The powers in the media have conspired together to keep the general public blissfully ignorant.
The internet has changed where Americans look for news to some degree, but, the large media companies own or control much of that as well, making it difficult for the average person to discern what is real, what is opinion, and what is fake. Until the FCC rolls back the liberalization of ownership concentration rules, Americans are almost certain to be shielded from news and stories that those overseeing network conglomerates believe to be too dangerous, too damaging, or simply to controversial to air.
The status quo, deep-state owned media in America is second only to congress as its own worst enemy and it may become even worse during the coming election year.
At the Close, Friday, December 6, 2019:
Dow Jones Industrial Average: 28,015.06, +337.27 (+1.22%)
NASDAQ: 8,656.53, +85.83 (+1.00%)
S&P 500: 3,145.91, +28.48 (+0.91%)
NYSE Composite: 13,588.29, +105.99 (+0.79%)
For the Week:
Dow: -36.35 (-0.13%)
NASDAQ: -8.94 (-0.10%)
S&P 500: +4.93 (+0.16%)
NYSE Composite: +43.08 (+0.32%)
Friday, December 6, 2019
Non-Farm Payrolls Up 266,000 In November, Unemployment At 50-Year Low
Since markets stalled out on Thursday in anticipation of the November non-farm payroll report from the Bureau of Labor Statistics (BLS), it's prudent to focus on what that report says about the US economy and prospects going forward.
Released at 8:30 am ET, the report concluded that there was an increase of 266,000 jobs created in November. That was well beyond all expectations, which centered around 185,000. The gain was the largest since January of this year, but is somewhat misleading since it includes 46,000 workers at GM plants in Michigan and Kentucky returning from a 40-day strike.
So, a more reliable, realistic number would be around 220,000, which is still much better than expected, and puts to rest the notion that the US job market had stalled out.
Wall Street is expectedly ebullient over the big surprise number which shows that the US economy is still moving forward and that the labor market remains tight. Unemployment dropped to a 50-year low of 3.5%
Another encouraging sign was wage growth, which shot up 3.1%. This is a strong signal that the economy is in good shape and that the labor market is tight. Employees are asking for - and receiving - pay increases and better benefits from employers.
A main takeaway from the retail sector in the pre-holiday period was that a mere 2,000 jobs were added, but the catch is in the distribution of that small gain. Within the industry, employment rose in general merchandise stores (+22,000) and in motor vehicle and parts dealers (+8,000), while clothing and clothing accessories stores were decimated, losing 18,000 jobs.
Attributable to the "Amazon effect" and to great strides over the years to online merchandising, as well as the overabundance of clothing outlets and their reliance on such a narrow segment, it is not surprising that purveyors of shirts, slacks, dresses, and accessories were hardest hit. Heightened competition in the space and slim profit margins due to heavy discounting also contributed to the demise of a good number of chains.
Among major chains that largely will be turning out the lights - or have already done so - in 2019 were Payless Shoes, Gymboree, Fred's, Charlotte Russe, Shopco.
Forever 21, Dressbarn, and Gap stores also announced a high number of store closings over the past year. The trend will continue, with as many as an additional 75,000 stores potentially lost by 2026, according to investment bank UBS.
The trend is clear. Shop online or at general merchandise retailers. The glory days of single sector retailing are long past.
At the Close, Thursday, December 5, 2019:
Dow Jones Industrial Average: 27,677.79, +28.01 (+0.10%)
NASDAQ: 8,570.70, +4.03 (+0.05%)
S&P 500: 3,117.43, +4.67 (+0.15%)
NYSE Composite: 13,482.30, +24.33 (+0.18%)
Released at 8:30 am ET, the report concluded that there was an increase of 266,000 jobs created in November. That was well beyond all expectations, which centered around 185,000. The gain was the largest since January of this year, but is somewhat misleading since it includes 46,000 workers at GM plants in Michigan and Kentucky returning from a 40-day strike.
So, a more reliable, realistic number would be around 220,000, which is still much better than expected, and puts to rest the notion that the US job market had stalled out.
Wall Street is expectedly ebullient over the big surprise number which shows that the US economy is still moving forward and that the labor market remains tight. Unemployment dropped to a 50-year low of 3.5%
Another encouraging sign was wage growth, which shot up 3.1%. This is a strong signal that the economy is in good shape and that the labor market is tight. Employees are asking for - and receiving - pay increases and better benefits from employers.
A main takeaway from the retail sector in the pre-holiday period was that a mere 2,000 jobs were added, but the catch is in the distribution of that small gain. Within the industry, employment rose in general merchandise stores (+22,000) and in motor vehicle and parts dealers (+8,000), while clothing and clothing accessories stores were decimated, losing 18,000 jobs.
Attributable to the "Amazon effect" and to great strides over the years to online merchandising, as well as the overabundance of clothing outlets and their reliance on such a narrow segment, it is not surprising that purveyors of shirts, slacks, dresses, and accessories were hardest hit. Heightened competition in the space and slim profit margins due to heavy discounting also contributed to the demise of a good number of chains.
Among major chains that largely will be turning out the lights - or have already done so - in 2019 were Payless Shoes, Gymboree, Fred's, Charlotte Russe, Shopco.
Forever 21, Dressbarn, and Gap stores also announced a high number of store closings over the past year. The trend will continue, with as many as an additional 75,000 stores potentially lost by 2026, according to investment bank UBS.
The trend is clear. Shop online or at general merchandise retailers. The glory days of single sector retailing are long past.
At the Close, Thursday, December 5, 2019:
Dow Jones Industrial Average: 27,677.79, +28.01 (+0.10%)
NASDAQ: 8,570.70, +4.03 (+0.05%)
S&P 500: 3,117.43, +4.67 (+0.15%)
NYSE Composite: 13,482.30, +24.33 (+0.18%)
Thursday, December 5, 2019
Stocks Reverse Course, But Do Not Recover Recent Losses; ADP Jobs Misses Target
After three days of losses, stocks bounced back on Wednesday, though they did not recover all of the ground lost.
Since the close Wednesday prior to Thanksgiving, the Dow is down over 500 points, the NASDAQ has shed 140 points, and the S&P 500 is off 40 points. The bounce on Wednesday, December 4, recovered less than half of the recent declines. Though the losses are nothing serious in the larger scheme of things, they are signaling that at least some of the investment community are not convinced the US economy, or US corporations, are in the best of ways. Thus, profits are being taken off the table. Further declines will feed into more year-end profit-taking and further loss prevention.
Recent movement in bonds also suggests that a countertrend is developing, with money shifting from risk assets into the bond market, where returns are low but widely accepted as safer than stocks. When money flows out of dividend-producing equities into treasuries or corporate debt, it's a sure sign that investors are nervous about the future direction. Last December witnessed massive declines, bordering on sending the stock market into bearish conditions, though at decline was stopped short by Treasury Secretary Steven Mnuchin, whose message to the President's Working Group on Financial Markets (AKA the Plunge Protection Team, or PPT) was clearly designed to rescue the stock market from rampant year-end selling.
Actions taken by the Working Group served to stem the tide of sellers and produce robust gains though the better part of 2019. With the year nearing an end, stocks are once again close to all-time highs, though recent data does not support such lofty valuations. From ISM manufacturing coming in below expectations, to Wednesday's ADP private sector jobs report for November, which reported an increase of just 67,000 jobs. The payroll number was well below the expected 150,000, and was the slowest growth since May.
Analysts are warning that the ADP number may be in stark contrast to what the BLS reports in Friday's non-farm payroll data, because the ADP report did not include General Motors workers returning from strike, whereas the BLS data will include those returning workers as "jobs added." The non-farm report for November is expected to show job gains in the range of 180,000 to 187,000 on Friday, up from 128,000 in October.
It makes reading the tea leaves of market sentiment and data just a little more confusing than it already is, given the daily up-and-down movements prompted by the changing signals regarding a US trade deal with China. The trade war has been and will continue to be the main directional driver of the stock market, probably for longer than most people would entertain. The Chinese appear intent on waiting out President Trump until the 2016 election in November, and it also appears that mr. Trump is fine with that.
A non-deal on trade can only cause more consternation for investors wishing to get a real perspective on the macro side of things, though one doesn't have to look far to see that global trade has been and continues to slip and slide away. Overall, global conditions are not suitable to induce a stock market rally, though they are also not severe enough to cause a crash. A slow grind down may be the path of least resistance, with days and weeks of gains and losses speckling the index charts.
At the Close, Wednesday, December 4, 2019:
Dow Jones Industrial Average: 27,649.78, +146.97 (+0.53%)
NASDAQ: 8,566.67, +46.03 (+0.54%)
S&P 500: 3,112.76, +19.56 (+0.63%)
NYSE Composite: 13,457.97, +91.88 (+0.69%)
Since the close Wednesday prior to Thanksgiving, the Dow is down over 500 points, the NASDAQ has shed 140 points, and the S&P 500 is off 40 points. The bounce on Wednesday, December 4, recovered less than half of the recent declines. Though the losses are nothing serious in the larger scheme of things, they are signaling that at least some of the investment community are not convinced the US economy, or US corporations, are in the best of ways. Thus, profits are being taken off the table. Further declines will feed into more year-end profit-taking and further loss prevention.
Recent movement in bonds also suggests that a countertrend is developing, with money shifting from risk assets into the bond market, where returns are low but widely accepted as safer than stocks. When money flows out of dividend-producing equities into treasuries or corporate debt, it's a sure sign that investors are nervous about the future direction. Last December witnessed massive declines, bordering on sending the stock market into bearish conditions, though at decline was stopped short by Treasury Secretary Steven Mnuchin, whose message to the President's Working Group on Financial Markets (AKA the Plunge Protection Team, or PPT) was clearly designed to rescue the stock market from rampant year-end selling.
Actions taken by the Working Group served to stem the tide of sellers and produce robust gains though the better part of 2019. With the year nearing an end, stocks are once again close to all-time highs, though recent data does not support such lofty valuations. From ISM manufacturing coming in below expectations, to Wednesday's ADP private sector jobs report for November, which reported an increase of just 67,000 jobs. The payroll number was well below the expected 150,000, and was the slowest growth since May.
Analysts are warning that the ADP number may be in stark contrast to what the BLS reports in Friday's non-farm payroll data, because the ADP report did not include General Motors workers returning from strike, whereas the BLS data will include those returning workers as "jobs added." The non-farm report for November is expected to show job gains in the range of 180,000 to 187,000 on Friday, up from 128,000 in October.
It makes reading the tea leaves of market sentiment and data just a little more confusing than it already is, given the daily up-and-down movements prompted by the changing signals regarding a US trade deal with China. The trade war has been and will continue to be the main directional driver of the stock market, probably for longer than most people would entertain. The Chinese appear intent on waiting out President Trump until the 2016 election in November, and it also appears that mr. Trump is fine with that.
A non-deal on trade can only cause more consternation for investors wishing to get a real perspective on the macro side of things, though one doesn't have to look far to see that global trade has been and continues to slip and slide away. Overall, global conditions are not suitable to induce a stock market rally, though they are also not severe enough to cause a crash. A slow grind down may be the path of least resistance, with days and weeks of gains and losses speckling the index charts.
At the Close, Wednesday, December 4, 2019:
Dow Jones Industrial Average: 27,649.78, +146.97 (+0.53%)
NASDAQ: 8,566.67, +46.03 (+0.54%)
S&P 500: 3,112.76, +19.56 (+0.63%)
NYSE Composite: 13,457.97, +91.88 (+0.69%)
Wednesday, December 4, 2019
Stocks Drop for Third Straight Session
For the third straight session, US stocks finished in the red, an occurrence that hasn't befallen US indices since the first week of August. Tuesday's losses were minimized by concerted buying after the indices bottomed out mid-morning. The Dow was down more than 450 points at its nadir.
More concerning than a mild adjustment in the value of stocks was the movement in US treasuries, as the 10-year note yield dropped 11 basis points on the day, falling to 1.72%, the lowest level since October 10. After spending the first seven months of 2019 with a yield in excess of 2.00%, the benchmark bond has steadfastly maintained a "one-handle" in subsequent months. A prolonged stock selloff would likely send yields to year-lows in a rush to safety.
The ten-year note bottomed out at 1.47% in late August, early September, closing at that yield on three separate occasions. That's still a way off, though there are signs that a repeat of last December's deep stock dive could be readying.
At the Close, Tuesday, December 3, 2019:
Dow Jones Industrial Average: 27,502.81, -280.23 (-1.01%)
NASDAQ: 8,520.64, -47.34 (-0.55%)
S&P 500: 3,093.20, -20.67 (-0.66%)
NYSE Composite: 13,366.09, -82.17 (-0.61%)
More concerning than a mild adjustment in the value of stocks was the movement in US treasuries, as the 10-year note yield dropped 11 basis points on the day, falling to 1.72%, the lowest level since October 10. After spending the first seven months of 2019 with a yield in excess of 2.00%, the benchmark bond has steadfastly maintained a "one-handle" in subsequent months. A prolonged stock selloff would likely send yields to year-lows in a rush to safety.
The ten-year note bottomed out at 1.47% in late August, early September, closing at that yield on three separate occasions. That's still a way off, though there are signs that a repeat of last December's deep stock dive could be readying.
At the Close, Tuesday, December 3, 2019:
Dow Jones Industrial Average: 27,502.81, -280.23 (-1.01%)
NASDAQ: 8,520.64, -47.34 (-0.55%)
S&P 500: 3,093.20, -20.67 (-0.66%)
NYSE Composite: 13,366.09, -82.17 (-0.61%)
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