Don't expect much in the way of big moves until Wednesday, when the FOMC is expected to announce no change in the federal funds rate, quelling fears of another 25 basis point rate hike like the one executed in December of last year, essentially taking the punch bowl of easy money further away from the drunken Wall Street partiers.
If the Fed somehow decides to hike rates again, it would spell doom for the four-week rally that has brought the Dow back a stunning 1200 points. from mid-February lows.
Should the Fed conform to the dictates of the stock market (which it does, but definitely should not), keeping the rate at 0.25-0.50%, there is some suggestion that stocks could rally further, though, with the first quarter winding down and earnings reports still a month out, that really doesn't appear to be a reasonable probability.
More likely would be for speculators to take some money off the table and go to cash for the short term, await the inevitable dip in selected stocks and dive in once again at some later date.
The wild card is still the Fed, which had promised three to four rate hikes this year, but remains, as they say, "data dependent." Otherwise, this is quite the dull market.
At least crude oil came off its recent highs. Expect the recent euphoria to turn toward a more realistic price, closer to $30/barrel in the near term.
S&P 500: 2,019.64, -2.55 (0.13%)
Dow: 17,229.13, +15.82 (0.09%)
NASDAQ: 4,750.28, +1.81 (0.04%)
Crude Oil 37.34 -3.01% Gold 1,236.00 -1.86% EUR/USD 1.1102 -0.49% 10-Yr Bond 1.9630 -0.71% Corn 368.75 +1.03% Copper 2.24 -0.07% Silver 15.36 -1.54% Natural Gas 1.82 -0.11% Russell 2000 1,084.25 -0.30% VIX 16.92 +2.55% BATS 1000 20,677.17 0.00% GBP/USD 1.4303 -0.53% USD/JPY 113.79 +0.06%
Monday, March 14, 2016
Friday, March 11, 2016
It's a Bear! It's a Bull! No, It's a Blur Market
Money Daily has sought to explain the crooked, maligned markets since 2006, without success, though today, at last, a breakthrough may be at hand.
At last, a definition with which everybody can agree.
After yesterday's quad-engulfing candlestick on the Dow Jones Industrial Average (DJIA), which would surely, under normal circumstances (whatever qualifies as normal since 2008, nobody is sure) qualify as a key reversal day, markets would have none of it, unless one is to be persuaded to believe that the reverse of a constant grind higher is a quick slam higher.
Up is down, Down is up. Slavery is liberty and all that 1984-ish doublespeak. (h/t to George Orwell)
Are we in a bear market? Hardly. A bull market? Doubtful.
Thus, we inaugurate the Blur Market, wherein all fundamentals are obfuscated by statistics, corrupt data from the BLS, manic pumping from the PPT, the machinations of the ESF (Exchange Stabilization Fund), jawboning from the likes of Mario Draghi, Shinzo Abe, Janet Yellen, Stanley Fisher or James Bullard.
It's a market driven by algorithms, unseen by human eyes, throttled up and down by unseen scientists in hidden caverns. The blur market is so fast, microseconds are not quick enough to front-run it. High Frequency Traders (HFTs) fight for nanoseconds of advantage. Didot typefaces print prices in a dadaist diaspora.
There's only one number that matters: 2,130.82
That was the all-time high close on the S&P 500, May 21, 2015. We are just about two months away from that being a year ago, so, are we headed to another all-time high or not?
If we are, the bull market lives on. If not, a bear market is in the cards.
For now, we're in a 'tween market. Not bear, nor bull, but something in between, a 'tween, or a beull or a bulear. Something like that. Maybe we could just call it a blur market, which works on a number of levels.
So, let us. It's all a BLUR.
Friday's massive rise capped the fourth straight week of gains on the major indices. For the Dow, up 7.5% in just the past 20 sessions, Friday's gains put the rally at a solid 1200 points. For the week, the DJIA was up 206.54 (1.21%); the S&P added 22.20 (1.11%); and the NASDAQ posted a gain of 31.44 (0.67%). Friday made certain that the rally did not end, at least on a weekly basis.
While impressive, this looks like nothing more than a cynical cyclical rally, with nothing but hot air and central bank jawboning behind it.
The Friday Blur:
S&P 500: 2,022.19, +32.62 (1.64%)
Dow: 17,213.31, +218.18 (1.28%)
NASDAQ: 4,748.47, +86.31 (1.85%)
Crude Oil 38.51 +1.77% Gold 1,259.50 -1.04% EUR/USD 1.1152 -0.23% 10-Yr Bond 1.9770 +2.49% Corn 364.50 +0.48% Copper 2.24 +1.06% Silver 15.62 +0.49% Natural Gas 1.83 +2.18% Russell 2000 1,086.77 +2.14% VIX 16.55 -8.31% BATS 1000 20,677.17 0.00% GBP/USD 1.4383 +0.66% USD/JPY 113.78 +0.56%
At last, a definition with which everybody can agree.
After yesterday's quad-engulfing candlestick on the Dow Jones Industrial Average (DJIA), which would surely, under normal circumstances (whatever qualifies as normal since 2008, nobody is sure) qualify as a key reversal day, markets would have none of it, unless one is to be persuaded to believe that the reverse of a constant grind higher is a quick slam higher.
Up is down, Down is up. Slavery is liberty and all that 1984-ish doublespeak. (h/t to George Orwell)
Are we in a bear market? Hardly. A bull market? Doubtful.
Thus, we inaugurate the Blur Market, wherein all fundamentals are obfuscated by statistics, corrupt data from the BLS, manic pumping from the PPT, the machinations of the ESF (Exchange Stabilization Fund), jawboning from the likes of Mario Draghi, Shinzo Abe, Janet Yellen, Stanley Fisher or James Bullard.
It's a market driven by algorithms, unseen by human eyes, throttled up and down by unseen scientists in hidden caverns. The blur market is so fast, microseconds are not quick enough to front-run it. High Frequency Traders (HFTs) fight for nanoseconds of advantage. Didot typefaces print prices in a dadaist diaspora.
There's only one number that matters: 2,130.82
That was the all-time high close on the S&P 500, May 21, 2015. We are just about two months away from that being a year ago, so, are we headed to another all-time high or not?
If we are, the bull market lives on. If not, a bear market is in the cards.
For now, we're in a 'tween market. Not bear, nor bull, but something in between, a 'tween, or a beull or a bulear. Something like that. Maybe we could just call it a blur market, which works on a number of levels.
So, let us. It's all a BLUR.
Friday's massive rise capped the fourth straight week of gains on the major indices. For the Dow, up 7.5% in just the past 20 sessions, Friday's gains put the rally at a solid 1200 points. For the week, the DJIA was up 206.54 (1.21%); the S&P added 22.20 (1.11%); and the NASDAQ posted a gain of 31.44 (0.67%). Friday made certain that the rally did not end, at least on a weekly basis.
While impressive, this looks like nothing more than a cynical cyclical rally, with nothing but hot air and central bank jawboning behind it.
The Friday Blur:
S&P 500: 2,022.19, +32.62 (1.64%)
Dow: 17,213.31, +218.18 (1.28%)
NASDAQ: 4,748.47, +86.31 (1.85%)
Crude Oil 38.51 +1.77% Gold 1,259.50 -1.04% EUR/USD 1.1152 -0.23% 10-Yr Bond 1.9770 +2.49% Corn 364.50 +0.48% Copper 2.24 +1.06% Silver 15.62 +0.49% Natural Gas 1.83 +2.18% Russell 2000 1,086.77 +2.14% VIX 16.55 -8.31% BATS 1000 20,677.17 0.00% GBP/USD 1.4383 +0.66% USD/JPY 113.78 +0.56%
Thursday, March 10, 2016
Key Reversal As Dow Candlestick Engulfs Previous Four Sessions; ECB's Draghi To Blame
Money Daily been covering about this rally for the past two weeks but really didn't see the handwriting on the wall throughout. While saying the market would continue to rally at least until the ECB rate announcement by Mario Draghi (today), and possibly Yellen and the FOMC (on the 16th), there was no way to know when exactly it would stop or why.
But, now we all know. It was "buy the rumor, sell the news," all along. Everybody figured Draghi would go all in on QE and lowering the reserve rate (rumor) and he did (news), so, therein lies the reasons for first the pump in stocks and then the midday dump as Draghi then backtracked at his press conference, saying not to expect more over-the-top policy moves anytime soon.
Why? Draghi was giving Yellen and the Fed cover to keep rates where they are, for at least another month or meeting.
The main aspects of Draghi's "bazooka" approach are:
-- The key interest rate is dropped from 0.05% to ZERO.
-- Cut its deposit rate by 10 basis points, further into negative territory to -0.4%
-- The marginal lending rate, paid by banks to borrow from the ECB overnight, was cut from 0.3% to to 0.25%
-- Expanded the QE programme to €80bn (£61bn) a month, up from €60n
-- Expanded the LTRTO, offering more easy loans to Eurozone banks
Then we saw the usual late-day comeback, leaving US equity markets virtually unchanged, on a day that was arguably noteworthy and newsworthy. The markets, the speculators, had all of this priced in, and the gyrations were only to square their winners and losers.
This is the game. It's nothing more than a game, has no root in reality, fundamentals, supply/demand or any other tired metric of what we used to fondly call "analysis."
Markets are nothing more than tools for public entertainment and consumption. The central bankers, so long as they have the power to conjure endless amounts of fiat out of thin air, have complete control over all markets.
Finally, we are beginning to see the light at the end of the tunnel, though it appears to be just a flickering candle about to be snuffed out.
As far as technical analysis is concerned - again, giving the CNBC types and the marketeers sufficient cover - the Dow candlestick chart shows today as a key reversal day, with today's action - up, then down, then back up - engulfing the previous four sessions on the Dow. Interesting also is the pint at which the rally ended, almost exactly at the 200-day moving average. It's almost as if it was planned, though that kind of statement might brand one as a wearer of tin-foil hats and a believer in astrology or Scientology.
These kinds of "outside" reversals almost always signal a change in direction, so, outside of more malignant market manipulation, stocks should head south on Friday and continue in that general direction heading up to the FOMC meeting Tuesday and Wednesday of next week.
Upon the Fed keeping rates unchanged, it will be "mission accomplished" for the time being. multiple flavors of options expire on Friday, so expect volatility heading into the end of next week.
Then again, one could hold real assets outside the system, those being anything raised without the assistance of fiat money (think animal husbandry, vegetable gardening and barter), or the hated precious metals and/or gemstones.
In he end, people use money or currency to buy the things they need to lead free, comfortable lives. If one were to master the ability to minimize dependence on the fiat money system and maximize the ability to produce energy, food and goods, there would be little need for any kind of currency except that controlled by the actual buyers and sellers.
There, the survivalist, off-the-grid types make perfect sense.
Thursday's Round-trip Extravaganza:
S&P 500: 1,989.57, +0.31 (0.02%)
Dow: 16,995.13, -5.23 (0.03%)
NASDAQ: 4,662.16, -12.22 (0.26%)
Crude Oil 37.88 -1.07% Gold 1,271.90 +1.15% EUR/USD 1.1179 +1.64% 10-Yr Bond 1.9290 +1.96% Corn 363.00 +0.97% Copper 2.23 -0.31% Silver 15.59 +1.43% Natural Gas 1.80 +3.03% Russell 2000 1,063.99 -0.82% VIX 18.05 -1.58% BATS 1000 20,677.17 0.00% GBP/USD 1.4282 +0.49% USD/JPY 113.2420
But, now we all know. It was "buy the rumor, sell the news," all along. Everybody figured Draghi would go all in on QE and lowering the reserve rate (rumor) and he did (news), so, therein lies the reasons for first the pump in stocks and then the midday dump as Draghi then backtracked at his press conference, saying not to expect more over-the-top policy moves anytime soon.
Why? Draghi was giving Yellen and the Fed cover to keep rates where they are, for at least another month or meeting.
The main aspects of Draghi's "bazooka" approach are:
-- The key interest rate is dropped from 0.05% to ZERO.
-- Cut its deposit rate by 10 basis points, further into negative territory to -0.4%
-- The marginal lending rate, paid by banks to borrow from the ECB overnight, was cut from 0.3% to to 0.25%
-- Expanded the QE programme to €80bn (£61bn) a month, up from €60n
-- Expanded the LTRTO, offering more easy loans to Eurozone banks
Then we saw the usual late-day comeback, leaving US equity markets virtually unchanged, on a day that was arguably noteworthy and newsworthy. The markets, the speculators, had all of this priced in, and the gyrations were only to square their winners and losers.
This is the game. It's nothing more than a game, has no root in reality, fundamentals, supply/demand or any other tired metric of what we used to fondly call "analysis."
Markets are nothing more than tools for public entertainment and consumption. The central bankers, so long as they have the power to conjure endless amounts of fiat out of thin air, have complete control over all markets.
Finally, we are beginning to see the light at the end of the tunnel, though it appears to be just a flickering candle about to be snuffed out.
As far as technical analysis is concerned - again, giving the CNBC types and the marketeers sufficient cover - the Dow candlestick chart shows today as a key reversal day, with today's action - up, then down, then back up - engulfing the previous four sessions on the Dow. Interesting also is the pint at which the rally ended, almost exactly at the 200-day moving average. It's almost as if it was planned, though that kind of statement might brand one as a wearer of tin-foil hats and a believer in astrology or Scientology.
These kinds of "outside" reversals almost always signal a change in direction, so, outside of more malignant market manipulation, stocks should head south on Friday and continue in that general direction heading up to the FOMC meeting Tuesday and Wednesday of next week.
Upon the Fed keeping rates unchanged, it will be "mission accomplished" for the time being. multiple flavors of options expire on Friday, so expect volatility heading into the end of next week.
Then again, one could hold real assets outside the system, those being anything raised without the assistance of fiat money (think animal husbandry, vegetable gardening and barter), or the hated precious metals and/or gemstones.
In he end, people use money or currency to buy the things they need to lead free, comfortable lives. If one were to master the ability to minimize dependence on the fiat money system and maximize the ability to produce energy, food and goods, there would be little need for any kind of currency except that controlled by the actual buyers and sellers.
There, the survivalist, off-the-grid types make perfect sense.
Thursday's Round-trip Extravaganza:
S&P 500: 1,989.57, +0.31 (0.02%)
Dow: 16,995.13, -5.23 (0.03%)
NASDAQ: 4,662.16, -12.22 (0.26%)
Crude Oil 37.88 -1.07% Gold 1,271.90 +1.15% EUR/USD 1.1179 +1.64% 10-Yr Bond 1.9290 +1.96% Corn 363.00 +0.97% Copper 2.23 -0.31% Silver 15.59 +1.43% Natural Gas 1.80 +3.03% Russell 2000 1,063.99 -0.82% VIX 18.05 -1.58% BATS 1000 20,677.17 0.00% GBP/USD 1.4282 +0.49% USD/JPY 113.2420
Wednesday, March 9, 2016
Oil Glut Yet Prices Higher; Gold, Silver Demand Up, Prices Down
There is a serious disturbance in the Farce called the global economy, and it is the role of central bankers who create absurd amounts of fiat currencies, literally out of thin air.
Policies adopted by the financial elite experts who control nearly all currencies worldwide have caused markets to virtually stop functioning. After seven years of base interest rates at near zero - and recently, below zero - endless stimulus programs otherwise known by the catchy name, quantitative easing, and a serious lack of transparency, regulation, and discipline in all markets, global growth is a non-starter for 2016 and the foreseeable future.
Businesses, fed a diet of easy money for nearly a decade (two decades, if one includes the Greenspan "put" years) are loathe to spend on capital improvements, labor or infrastructure. Businesses are, so to speak, "living off the land," by cutting budgets while fattening the salaries and bonuses of crony CEOs and others occupying the executive suites and boards of directors.
It's a horrible condition, with disinflation and outright deflation popping up in pockets like food production, energy, and most hard commodities (see natural gas and copper). Price discovery has become a function less of supply and demand and more driven by derivative bets, options, credit default swaps, and hedging. Over-finacialization of nearly all markets that matter has turned fundamentals on their heads and what once were functional markets into nothing more than trap-laden casinos. The effect has been to alienate a generation of investors (millenials), impoverish another (retirees) and overburden those not yet ready to enter the economy (the youth). In the middle is generation X, condemned to toil away towards an uncertain future.
The argument that fundamental supply and demand is defunct rests largely on the oil market, currently carrying the largest global glut on record, yet pushed to levels indicative of a shortage. Oil was ranging toward $25 per barrel just a month or so ago; today it is approaching $40, mostly a function of short-covering and naked short selling.
Much the same can be said of the markets for precious metals, the price held down by nefarious forces while the demand continues to expand. In many quarters, gold, silver, and gemstones are considered the only investments worth having and holding. They carry no counterparts risk, are relatively easy to transport and can be converted into money or any other asset with relative ease.
As Bill Bonner and his enlightened crew love to postulate, a day of reckoning is coming, though just exactly when that day arrives and how it is manifested are known to exactly nobody.
It's a mess. Better to put money in a mattress or buy canned goods than risk in capital markets, as moribund and compromised as they are. US equity indices peaked in May of 2015. It's nearly a year from the all-time highs without any rally catalysts in sight.
All eyes and ears will be tuned to the ECB tomorrow, when Mario Draghi does what he can only do, signal more easing, more fraud, and more of the relentless can-kicking that has typified the past seven years.
Nobody is holding his or her breath on this coming non-event because there is no longer any air to breathe.
Wednesday's Wackiness:
S&P 500: 1,989.26, +10.00 (0.51%)
Dow: 17,000.36, +36.26 (0.21%)
NASDAQ: 4,674.38, +25.55 (0.55%)
Crude Oil 38.23 +4.74% Gold 1,253.90 -0.71% EUR/USD 1.1001 -0.06% 10-Yr Bond 1.8920 +3.28% Corn 360.25 -0.07% Copper 2.23 +0.54% Silver 15.31 -0.52% Natural Gas 1.76 +2.92% Russell 2000 1,072.77 +0.46% VIX 18.34 -1.77% BATS 1000 20,677.17 0.00% GBP/USD 1.4217 +0.03% USD/JPY 113.3350 +0.60%
Policies adopted by the financial elite experts who control nearly all currencies worldwide have caused markets to virtually stop functioning. After seven years of base interest rates at near zero - and recently, below zero - endless stimulus programs otherwise known by the catchy name, quantitative easing, and a serious lack of transparency, regulation, and discipline in all markets, global growth is a non-starter for 2016 and the foreseeable future.
Businesses, fed a diet of easy money for nearly a decade (two decades, if one includes the Greenspan "put" years) are loathe to spend on capital improvements, labor or infrastructure. Businesses are, so to speak, "living off the land," by cutting budgets while fattening the salaries and bonuses of crony CEOs and others occupying the executive suites and boards of directors.
It's a horrible condition, with disinflation and outright deflation popping up in pockets like food production, energy, and most hard commodities (see natural gas and copper). Price discovery has become a function less of supply and demand and more driven by derivative bets, options, credit default swaps, and hedging. Over-finacialization of nearly all markets that matter has turned fundamentals on their heads and what once were functional markets into nothing more than trap-laden casinos. The effect has been to alienate a generation of investors (millenials), impoverish another (retirees) and overburden those not yet ready to enter the economy (the youth). In the middle is generation X, condemned to toil away towards an uncertain future.
The argument that fundamental supply and demand is defunct rests largely on the oil market, currently carrying the largest global glut on record, yet pushed to levels indicative of a shortage. Oil was ranging toward $25 per barrel just a month or so ago; today it is approaching $40, mostly a function of short-covering and naked short selling.
Much the same can be said of the markets for precious metals, the price held down by nefarious forces while the demand continues to expand. In many quarters, gold, silver, and gemstones are considered the only investments worth having and holding. They carry no counterparts risk, are relatively easy to transport and can be converted into money or any other asset with relative ease.
As Bill Bonner and his enlightened crew love to postulate, a day of reckoning is coming, though just exactly when that day arrives and how it is manifested are known to exactly nobody.
It's a mess. Better to put money in a mattress or buy canned goods than risk in capital markets, as moribund and compromised as they are. US equity indices peaked in May of 2015. It's nearly a year from the all-time highs without any rally catalysts in sight.
All eyes and ears will be tuned to the ECB tomorrow, when Mario Draghi does what he can only do, signal more easing, more fraud, and more of the relentless can-kicking that has typified the past seven years.
Nobody is holding his or her breath on this coming non-event because there is no longer any air to breathe.
Wednesday's Wackiness:
S&P 500: 1,989.26, +10.00 (0.51%)
Dow: 17,000.36, +36.26 (0.21%)
NASDAQ: 4,674.38, +25.55 (0.55%)
Crude Oil 38.23 +4.74% Gold 1,253.90 -0.71% EUR/USD 1.1001 -0.06% 10-Yr Bond 1.8920 +3.28% Corn 360.25 -0.07% Copper 2.23 +0.54% Silver 15.31 -0.52% Natural Gas 1.76 +2.92% Russell 2000 1,072.77 +0.46% VIX 18.34 -1.77% BATS 1000 20,677.17 0.00% GBP/USD 1.4217 +0.03% USD/JPY 113.3350 +0.60%
Tuesday, March 8, 2016
Oil Beaten Down Along With Gold, Silver, Stocks
After yesterday's run-up in crude, the obligatory return to red was the order of the day as WTI crude ended below $37/barrel. Not to be missed were the turn-about in gold and silver, but stocks remain mostly on hold for Mario Draghi and the ECB's rate announcement on Thursday.
This is what happens when the entire world revolves around central bankers: lots of nothing, and all investment vehicles returning essentially zero returns on capital, unless one's timing is extraordinary, you're a professional horse handicapper turned day-trader, or one of the various front-running HFTs.
Speaking of timing, Money Daily editor, Fearless Rick, has called out Dennis Gartman of the Gartman Letter, and his somewhat flimsy assertion that his proprietary fund is up 12.3% year-to-date. Mr. Rick emailed Gartman (see here), and tried to get a subscription to his newsletter, but has heard nothing yet. Money Daily will update with any developments (some interesting information on Mr. Gartman has already been discovered on the internet and a file is being updated... stay tuned)
Today's Mangled Mess:
S&P 500: 1,979.26, -22.50 (1.12%)
Dow: 16,964.10, -109.85 (0.64%)
NASDAQ: 4,648.82, -59.43 (1.26%)
Crude Oil 36.46 -3.80% Gold 1,263.20 -0.06% EUR/USD 1.1006 -0.08% 10-Yr Bond 1.8320 -3.68% Corn 360.75 +0.49% Copper 2.22 -2.89% Silver 15.43 -1.33% Natural Gas 1.72 +1.54% Russell 2000 1,068.18 -2.37% VIX 18.75 +8.07% BATS 1000 20,677.17 0.00% GBP/USD 1.4215 -0.33% USD/JPY 112.6420
This is what happens when the entire world revolves around central bankers: lots of nothing, and all investment vehicles returning essentially zero returns on capital, unless one's timing is extraordinary, you're a professional horse handicapper turned day-trader, or one of the various front-running HFTs.
Speaking of timing, Money Daily editor, Fearless Rick, has called out Dennis Gartman of the Gartman Letter, and his somewhat flimsy assertion that his proprietary fund is up 12.3% year-to-date. Mr. Rick emailed Gartman (see here), and tried to get a subscription to his newsletter, but has heard nothing yet. Money Daily will update with any developments (some interesting information on Mr. Gartman has already been discovered on the internet and a file is being updated... stay tuned)
Today's Mangled Mess:
S&P 500: 1,979.26, -22.50 (1.12%)
Dow: 16,964.10, -109.85 (0.64%)
NASDAQ: 4,648.82, -59.43 (1.26%)
Crude Oil 36.46 -3.80% Gold 1,263.20 -0.06% EUR/USD 1.1006 -0.08% 10-Yr Bond 1.8320 -3.68% Corn 360.75 +0.49% Copper 2.22 -2.89% Silver 15.43 -1.33% Natural Gas 1.72 +1.54% Russell 2000 1,068.18 -2.37% VIX 18.75 +8.07% BATS 1000 20,677.17 0.00% GBP/USD 1.4215 -0.33% USD/JPY 112.6420
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