August Jobs Report Disappoints, Traders Euphoric

The headline says what's so weird about markets in the central banking age: Bad news is good news.

In this instance, the August non-farm payroll report delivered only 151,000 net new jobs when expectations were for 180,000.

While it wasn't a huge miss, and, the BLS NFP report is one of the most conflated, untrustworthy, fragile and ultimately revisionist data points delivered to markets every month, it still holds water with the investing class.

The point taken here is that since there seems to be not enough jobs created to keep the economy humming along at anything more than a 1-1.5% growth rate, the Federal Reserve will not have any good reason to raise rates at their next meeting, in about two-and-a-half weeks.

Halelujah! The party continues.

Friday's Free-for-all:
Dow Jones Industrial Average
18,491.96, +72.66 (0.39%)

NASDAQ
5,249.90, +22.69 (0.43%)

S&P 500
2,179.98, +9.12 (0.42%)

NYSE Composite
10,856.92, +84.99 (0.79%)

For the Week:
Dow: +96.56 (+0.52%)
NASDAQ: +30.98 (+0.59%)
S&P 500: +10.94 (+0.50%)
NYSE Comp.: +107.59 (+1.00%)

FOMC Focus: Will Stocks Change Direction After Labor Day?

Today's headline offers a provocative suggestion, though the simple answer to the question is a flat-out "NO," simply because the overtly political Federal Reserve will not - under an circumstances - raise interest rates in September.

That is almost so widely accepted within the financial community as to make it nearly a fact, a fait accompli, a gospel truth.

There are any number of reasons why the FOMC will not raise the federal funds rate even one basis point at their upcoming meeting on September 20 and 21, not the least of which is the assumption that such a rash move would derail the presidential bid by the status quo candidate, the fair-haired-soon-to-be-liar-in-chief, Hillary Clinton.

Naturally, that's a one-sided argument which has nothing to do with economics, but the Fed has other issues behind their upcoming decision to stand pat on rates for the foreseeable future.

Among these issues are the ongoing candidacy of Mr. Donald J. Trump, who is seen as anathema to anything and everything establishment, and that means the Fed itself. A Trump victory in November would almost certainly foment much in the way of chaos, including a pre-emptive attack from the Fed itself, sensing an almost perfect opening to raise rates and crash the market, maybe even do away with the entire post-Bretton Woods arrangement via a wholesale financial collapse.

That might be fun, but the projections fro the US economy going forward are not, have not been for some time and will not be. That's the main reason the Fed is stuck at the near-zero bound, because not only the US economy, but that of almost all developed nations are not growing. Rather, they are growling with intense citizen upset, declining labor utilization rates and a demographic wall that current policies can and will never scale.

The Fed is boxed in, as are all central banks. They can't do anything except buy up more overpriced assets even though that effort has failed to produce their highly-anticipated inflation and associated growth. One might say that all the central bank coddling of the system has produced is a massive over-supply of everything and a deflationary vortex that challenges their Keynesian orthodoxy.

The Fed - unless Hillary Clinton is elected president, and even that's no clincher - is toast.

Thursday's Results:
Dow Jones Industrial Average
18,419.30, +18.42 (0.10)

NASDAQ
5,227.21, 13.99 (0.27%)

S&P 500
2,170.86, -0.09 (0.00%)
^NYA

NYSE Composite
10,771.91, +7.16 (0.07%)

Stocks Give Back On Tuesday After Explosive Market Monday

Following Monday's ramp-alooza based on absolutely nothing other than consumer spending hitting its target, stocks lost ground on Tuesday heading into the Labor Day holiday weekend.

Since this is absolutely the slowest week of the year for everybody except maybe vacation rentals, don't look for any kind of major move in either direction prior to next Tuesday.

A week of nothing, otherwise known as the pain trade. There should be some profit-taking and squaring down on risky positions, but, again, nothing overtly dramatic.

Everything has absolutely flattened out, except possibly the $/Yen pair, back up to 103 on the day.

Tuesday's Trauma:
Dow Jones Industrial Average
18,454.30, -48.69 (-0.26%)

NASDAQ
5,222.99, -9.34 (-0.18%)

S&P 500
2,176.12, -4.26 (-0.20%)

NYSE Composite
10,797.10, -14.24 (-0.13%)

Yellen Speaks, Markets More Confused After Comments By Fisher, Bullard, Lockhart

After a week-long wait for something of substance from Fed Chair Janet Yellen in her widely-anticipated speech at Jackson Hole Friday, markets were somewhat disappointed when what they got from the aging, dowdy Fed Chairwoman was more of the same, a garbled, directionless mumbling about a strengthening US economy and plenty of buts, ahs, and well maybes.

Yellen seemed to express that a rate hike was on the table in September - just as it was in February, June and July - but offered certain caveats, not the least of which was that unexpected events could derail any plans the Fed might have considered.

Adding to the dismay and confusion were three separate comments by Fed officials in the immediate aftermath of Yellen's speech.

Vice Chairman, Stanley Fischer first spoke up with a weak affirmation that a rate hike in September was possible, but quickly afterward, Atlanta president, Dennis Lockhart, and St. Louis president James Bullard offered a different view, questioning the wisdom of a rate hike in September or even December.

Since markets have been on a razor's edge since Brexit and will be until the presidential election in November, it does seem a stretch that the Fed would risk a market collapse triggered by a rate hike, such as what happened after their last 1/4 basis point increase last December.

The Fed being less stoic and more political than ever, risking injury to Hillary Clinton's election - the choice of the status quo - would be foolhardy and dangerous.

Not to say that the Fed is not both of those, but when there's a real risk that an outsider - Donald J. Trump - could ascend to the highest office in the land, the Fed will be watching its own best interests, which would imply that a federal funds rate increase in September is certainly a no-go.

Now that the Fed has wasted the better part of a month and delivered nearly nothing of substance, one wonders what they can do for an encore. Oh, that's right. Eight years of loose, experimental monetary policy and promises of more to come.

What fun.

Friday's Closing Data:
Dow Jones Industrial Average
18,395.40, -53.01 (-0.29%)

NASDAQ
5,218.92, +6.71 (0.13%)

S&P 500
2,169.04, -3.43 (-0.16%)

NYSE Composite
10,749.33, -35.04 (-0.32%)

For the Week:
Dow 30: -157.17 (-0.85%)
S&P 500: -14.83 (0.68%)
NASDAQ: -19.46 (-0.37%)
NYSE Composite: -79.83 (-0.74%)

Continued Sluggishness In Equity Markets Awaiting Janet Yellen At Jackson Hole

Investors (if that's what they're being called these days) are largely on hold in advance of Fed Chair Janet Yellen's speech at Jackson Hole tomorrow and a return to what passes for normal conditions following the Labor Day holiday.

Essentially, stocks have been treading water for the past month, since setting new all-time highs mid-July and making a double top earlier this month.

For whatever it's worth, the one bid by the Fed and its central bank allies has produced a very dull market, if that's what we're calling it these days.

Of particular note is the current odds for a rate hike in September, currently hovering around 18%. For a December rate hike, it's basically a 50-50 proposition, though neither is actually very likely considering the fragility of the global economy.

Thursday's Closing Prices:
Dow Jones Industrial Average
18,448.41, -33.07 (-0.18%)

NASDAQ Composite
5,212.20, -5.49 (-0.11%)

S&P 500
2,172.47, -2.97 (-0.14%)

NYSE Composite
10,780.23, -10.95 (-0.10%)