How important President Donald Trump's speech before a joint assembly on congress Tuesday night was is not easy to gauge, but, from a Wall Street perspective, he must have hit the high notes perfectly because all major averages were straight up at the opening bell and continued to add to gains throughout Wednesday's session.
The Dow, which blew away the 20,000 Rubicon less than a month ago, added nearly 1.5%, or 303 points, its largest one-day gain since early December. With Industrials leading the way, the other three major averages broke out as well, with the S&P pretty much reaching highs that analysts had been predicting as end-of-year results, yet we're barely two months into the new year.
How this kind of euphoria will eventually manifest itself is still a mystery, especially with stocks tacking higher despite consistent warnings of a valuation trap being set. While stocks continue to ramp on a daily basis, corporate reports are not following the same tune. Additionally, analysts from various houses also revised first quarter GDP estimates lower, with Goldman Sachs and the Atlanta Fed looking for 1.8% growth. JP Morgan and Bank of America are even more pessimistic, at 1.5% and 1.3%, respectively.
In the main, what companies behind the stocks are counting on is a relaxed regulatory environment under President Trump's administration. The President has already issued a variety of pro-business executive orders and his commitment to repealing and replacing the Affordable Care Act (Obamacare) is also being viewed as a positive on two fronts. First, it will free up consumer funds from an expensive mandated coverage nightmare; second, companies will probably get breaks as well in group coverage.
Adding to the speculative high spirits are items currently under the radar such as the President's budget, which includes massive cost-cutting across agencies, a one trillion dollar infrastruture plan that Mr. Trump touched on it in his speech, and trade negotiations with countries outside the framework of international treaties such as NAFTA, TPP and the World Bank.
All told, President Trump's first six weeks in office have been nothing short of miraculous for stocks, though it will take some time to see how it all plays out. Either stock pickers have been set up for a major catastrophe or the enthusiasm and honesty of the new president will indeed guide America and American business interests to new heights.
Lurking in the shadows behind the presidential bluster is the Federal Reserve, which meets in two weeks to decide whether to raise federal funds rates or keep them at current levels. Money is on them keeping the rates at the current 0.50-0.75, though even an increase of 25 basis points would seem to be inadequate to quiet Wall Street's enthusiasm.
At the Close, 3.1.17:
Dow: 21,115.55 +303.31 (1.46%)
NASDAQ: 5,904.03 +78.59 (1.35%)
S&P 500: 2,395.96, +32.32 (1.37%)
NYSE Composite: 11,661.22, +148.83 (1.29%)
Thursday, March 2, 2017
Wednesday, March 1, 2017
Dow Winning Streak Ends At 12, Should Resume Promptly
Stocks ended a historic run of 12 straight winning sessions on the Dow Jones Industrial Average, tying the mark set in January of 1987, finishing the month of February on a dour note, though overall, stocks were fantastic for the month and so far in 2017.
With a possible March rate hike still two weeks away, there's still plenty of time to jump upon the Wall Street bandwagon. Since stocks apparently have no downside, more money will be pumped into the market by the almighty algos, probably beginning on March 1.
The old adage, "don't fight the tape," is in play as fundamentals have been tossed to the curb in favor of momentum-chasing. Stocks should continue to climb until they don't.
At The Close, 2.28.17:
Dow: 20,812.24, -25.20 (-0.12%)
NASDAQ: 5,825.44, -36.46 (-0.62%)
S&P 500: 2,363.64, -6.11 (-0.26%)
NYSE Composite: 11,512.39, -45.96 (-0.40%)
With a possible March rate hike still two weeks away, there's still plenty of time to jump upon the Wall Street bandwagon. Since stocks apparently have no downside, more money will be pumped into the market by the almighty algos, probably beginning on March 1.
The old adage, "don't fight the tape," is in play as fundamentals have been tossed to the curb in favor of momentum-chasing. Stocks should continue to climb until they don't.
At The Close, 2.28.17:
Dow: 20,812.24, -25.20 (-0.12%)
NASDAQ: 5,825.44, -36.46 (-0.62%)
S&P 500: 2,363.64, -6.11 (-0.26%)
NYSE Composite: 11,512.39, -45.96 (-0.40%)
Tuesday, February 28, 2017
Coincidence Or Conspiracy? The Art Cashin - Fearless Rick Echo Chamber
Not one to expectantly toot one's own horn, Money Daily continues to display some market sense, the latest iteration being the confluence of the weekly market recap post from Sunday, February 26, Dow At Record Highs 11 Staight Sessions; Eye On PPT, Central Bank Intervention dovetailing with legendary floor trader Art Cashin's commentary at King World News the same day.
In the nearly 15-minute audio, Cashin, Director of Floor Operations for UBS, touched (near the end of the broadcast) on the very same subject matter as Money Daily, namely, central bank intervention in markets.
Like Fearless Editor and Publisher, Rick Gagliano, Cashin - undeniably a more expert analyst than our own - sees intervention as unsettling to markets, comparing the intrusion to a rigged poker game, and sees danger in such action. As is the usual case, Mr. Cashin plows some new ground as well, coining the phrase "intellectual civil war" in describing the conditions in Northern vs. Southern Italy and touching upon other established, mostly European nations.
In defense of his moderate style, Cashin opines that his success has been largely based upon, quoting him,
Good stuff, indeed, and well worth a listen.
Keeping in mind central bank intervention, i.e., buying at all-time highs, the Dow made a new record close for the 12th straight session, that, in itself, should be cause for alarm... the one that never goes off at market tops (Old Wall Street saying: "they never ring the bell at the top").
The Dow has never closed higher for 13 straight sessions, the most recent run tying the mark set in January 1987, which, as market observers know well, was the precursor of one of the most devastating crashes in market history.
At the Close, 2.27.17:
Dow: 20,837.44, +15.68 (0.08%)
NASDAQ: 5,861.90, +16.59 (0.28%)
S&P 500: 2,369.75, +2.41 (0.10%)
NYSE Composite: 11,558.35, +17.06 (0.15%)
In the nearly 15-minute audio, Cashin, Director of Floor Operations for UBS, touched (near the end of the broadcast) on the very same subject matter as Money Daily, namely, central bank intervention in markets.
Like Fearless Editor and Publisher, Rick Gagliano, Cashin - undeniably a more expert analyst than our own - sees intervention as unsettling to markets, comparing the intrusion to a rigged poker game, and sees danger in such action. As is the usual case, Mr. Cashin plows some new ground as well, coining the phrase "intellectual civil war" in describing the conditions in Northern vs. Southern Italy and touching upon other established, mostly European nations.
In defense of his moderate style, Cashin opines that his success has been largely based upon, quoting him,
...because the first thing I do when I enter a room is look for the exit signs.
Good stuff, indeed, and well worth a listen.
Keeping in mind central bank intervention, i.e., buying at all-time highs, the Dow made a new record close for the 12th straight session, that, in itself, should be cause for alarm... the one that never goes off at market tops (Old Wall Street saying: "they never ring the bell at the top").
The Dow has never closed higher for 13 straight sessions, the most recent run tying the mark set in January 1987, which, as market observers know well, was the precursor of one of the most devastating crashes in market history.
At the Close, 2.27.17:
Dow: 20,837.44, +15.68 (0.08%)
NASDAQ: 5,861.90, +16.59 (0.28%)
S&P 500: 2,369.75, +2.41 (0.10%)
NYSE Composite: 11,558.35, +17.06 (0.15%)
Sunday, February 26, 2017
Dow At Record Highs 11 Staight Sessions; Eye On PPT, Central Bank Intervention
As has been the case for multiple sessions over many years, a rally in the final hour of trading pushed the Dow Jones Industrial Average to a new all-time high, with the NASDAQ and S&P averages also closing up, but short of record highs. They NYSE Composite was fractionally lower.
In the red the entire session, the Dow gained 70 points from 3:00 to 4:00 pm ET, with other major averages also gaining. This kind of activity has been a market feature since at least 2001, when the existence of the Plunge Protection Team (PPT) turned from urban myth to global reality. The PPT, created by Presidential Order #12631, signed on March 18, 1988 by President Ronald Reagan is also known as The Working Group on Financial Markets, is, in reality, a body of financial authorities consisting of:
Thus, tin-foil-hat type conspiracies have continued to suggest that the Federal Reserve and other central banks have been manipulating markets higher for years, and, while such coordinated action has yet to be unearthed by the mainstream media, sites such as ZeroHedge.com and other fringe outlets report that while the PPT may or may not be always active in markets, there's no doubt that central banks, notable, the European Central Bank (ECB), Swiss National Bank (SNB) and Bank of Japan (BOJ) are heavily invested in US and other global equities, making a mockery of the global regime of fiat money.
There are those who say intervention by government-sponsored agencies is not altogether nefarious, and some who believe such market-rigging is a good and reliable replacement for Adam Smith's "invisible hand" of the markets, it cannot be understated adequately that such activity will eventually undermine the integrity of financial markets and instruments.
Being based almost entirely upon faith and trust, financial markets have become the backbone of the global economy. If that faith and trust is broken - an unlikely occurrence, as the central banks, governments, and major brokerages work hand-in-hand largely toward the same end (higher stock prices) - the fragile system would crumble. An antecedent (and, much larger market) to the inner workings of financial markets is the bond market, which has also been pistol-whipped regularly by central bank policy and directive. On Friday, the US Treasury 10-Year Note fell to its lowest level in nearly three months, closing out the week at 2.3170, a direct result of higher stock prices, also known in the investing world as TINA (There Is No Alternative... to stocks).
With central banks and government agencies regularly interjecting themselves and their policies into financial markets, the natural question becomes: how stable and trustworthy are these markets and who gains from such manipulation?
Answering the question bluntly, the markets are only as stable as the institutions behind them, which is today a matter of considerable conjecture and discordant viewpoints. Purists posit that the mountains of debt produced by individuals, businesses, and governments is simply unsustainable and that a rout and crash, while unpredictable, is inevitable. The obvious conclusion to the other half of the question "qui bono" (who gains) is those in power and in control of such vast swaths of money, the governments, oligarchs, commercial and central banks. Beyond that, those in power consider themselves to be benefactors of the millions who gain from higher stock prices, inflation and boosts to massively underfunded pension funds.
With this degree of chutzpah in and on the minds of the central bankers and government leaders of the world, there is little doubt that they believe their actions to be highly beneficial to the orderly running of global finances while also not taking into account the falsity and pervasive inequities that are given rise by those same actions. Those with power over financial markets hold an incredible degree of responsibility, a responsibility that seemingly has gone beyond the pale, over the moon and into its own orbit.
Essentially, those who have questioned or taken positions contrary to the policies of the Fed and their brethren central banks, especially since the GFC of 2008, have been serially decimated in the markets. With stock indices raging without underlying fundamental bases, the planet may have reached a point of no return, wherein all matters financial are no longer in the control of individuals, but, rather, controlled by an opaque group of self-appointed masters.
One can only hope that they are well-grounded and essentially good-natured, because the alternatives would be brazen in concept and bizarre in execution.
At The Close, 2.24.17:
Dow: 20,821.76, +11.44 (0.05%)
NASDAQ: 5,845.31, +9.80 (0.17%)
S&P 500: 2,367.34, +3.53 (0.15%)
NYSE Composite: 11,541.29, -14.87 (-0.02%)
For the Week:
Dow: +197.71 (0.96%)
NASDAQ: +6.73 (0.12%)
S&P 500: +16.18 (0.69%)
NYSE Composite: +30.38 (0.26)
In the red the entire session, the Dow gained 70 points from 3:00 to 4:00 pm ET, with other major averages also gaining. This kind of activity has been a market feature since at least 2001, when the existence of the Plunge Protection Team (PPT) turned from urban myth to global reality. The PPT, created by Presidential Order #12631, signed on March 18, 1988 by President Ronald Reagan is also known as The Working Group on Financial Markets, is, in reality, a body of financial authorities consisting of:
- The Secretary of the Treasury, or his or her designee (as Chairperson of the Working Group);
- The Chairperson of the Board of Governors of the Federal Reserve System, or his or her designee;
- The Chairperson of the Securities and Exchange Commission, or his or her designee; and
- The Chairperson of the Commodity Futures Trading Commission
Thus, tin-foil-hat type conspiracies have continued to suggest that the Federal Reserve and other central banks have been manipulating markets higher for years, and, while such coordinated action has yet to be unearthed by the mainstream media, sites such as ZeroHedge.com and other fringe outlets report that while the PPT may or may not be always active in markets, there's no doubt that central banks, notable, the European Central Bank (ECB), Swiss National Bank (SNB) and Bank of Japan (BOJ) are heavily invested in US and other global equities, making a mockery of the global regime of fiat money.
There are those who say intervention by government-sponsored agencies is not altogether nefarious, and some who believe such market-rigging is a good and reliable replacement for Adam Smith's "invisible hand" of the markets, it cannot be understated adequately that such activity will eventually undermine the integrity of financial markets and instruments.
Being based almost entirely upon faith and trust, financial markets have become the backbone of the global economy. If that faith and trust is broken - an unlikely occurrence, as the central banks, governments, and major brokerages work hand-in-hand largely toward the same end (higher stock prices) - the fragile system would crumble. An antecedent (and, much larger market) to the inner workings of financial markets is the bond market, which has also been pistol-whipped regularly by central bank policy and directive. On Friday, the US Treasury 10-Year Note fell to its lowest level in nearly three months, closing out the week at 2.3170, a direct result of higher stock prices, also known in the investing world as TINA (There Is No Alternative... to stocks).
With central banks and government agencies regularly interjecting themselves and their policies into financial markets, the natural question becomes: how stable and trustworthy are these markets and who gains from such manipulation?
Answering the question bluntly, the markets are only as stable as the institutions behind them, which is today a matter of considerable conjecture and discordant viewpoints. Purists posit that the mountains of debt produced by individuals, businesses, and governments is simply unsustainable and that a rout and crash, while unpredictable, is inevitable. The obvious conclusion to the other half of the question "qui bono" (who gains) is those in power and in control of such vast swaths of money, the governments, oligarchs, commercial and central banks. Beyond that, those in power consider themselves to be benefactors of the millions who gain from higher stock prices, inflation and boosts to massively underfunded pension funds.
With this degree of chutzpah in and on the minds of the central bankers and government leaders of the world, there is little doubt that they believe their actions to be highly beneficial to the orderly running of global finances while also not taking into account the falsity and pervasive inequities that are given rise by those same actions. Those with power over financial markets hold an incredible degree of responsibility, a responsibility that seemingly has gone beyond the pale, over the moon and into its own orbit.
Essentially, those who have questioned or taken positions contrary to the policies of the Fed and their brethren central banks, especially since the GFC of 2008, have been serially decimated in the markets. With stock indices raging without underlying fundamental bases, the planet may have reached a point of no return, wherein all matters financial are no longer in the control of individuals, but, rather, controlled by an opaque group of self-appointed masters.
One can only hope that they are well-grounded and essentially good-natured, because the alternatives would be brazen in concept and bizarre in execution.
At The Close, 2.24.17:
Dow: 20,821.76, +11.44 (0.05%)
NASDAQ: 5,845.31, +9.80 (0.17%)
S&P 500: 2,367.34, +3.53 (0.15%)
NYSE Composite: 11,541.29, -14.87 (-0.02%)
For the Week:
Dow: +197.71 (0.96%)
NASDAQ: +6.73 (0.12%)
S&P 500: +16.18 (0.69%)
NYSE Composite: +30.38 (0.26)
Wednesday, February 22, 2017
Fed Minutes Put March Rate Hike In Play
Editor's Note: With the luck of some extremely mild weather in Upstate New York (temps in the 60s today and expected the same for Thursday and Friday), the Money Daily team (Fearless Rick) has headed out to open up spring and summer camp a little early. That means the usual posting of Money Daily will not be the normal after the market close summary, but will be more sporadic for probably the next three to four weeks and may not be "daily" at all. Better weather brings on more responsibilities and a relaxed time frame.
Thanks,
Fearless Rick
Let's not beat around the bush. The Federal Reserve is intent on raising rates, which should surprise nobody, as the federal funds rate has been at or below one percent for the better part of 16 years.
Currently set at 0.50-0.75%, the key overnight rate has been largely responsible for a great deal of irresponsibility, not the least of which was the subprime disaster of 2008 and the resultant Great Financial Crisis which sent the global economy into one of the worst tailspins since the Great Depression of 1929-1938.
So, with the release today of the minutes from last month's FOMC meeting, it's compelling to think that a rate increase would be on the agenda at the next meeting, mid-March.
After all, the latest hike, in December of last year, hardly caused a ripple at all. Most experienced investors and money managers are aware of the need to "normalize" policy by the Fed and have preparing for such an event (or series of hikes, which is completely probable) since December of 2015.
With President Trump promising a fiscal stimulus plan, the Fed's belief that inflation will be the end result is a bit of a cockeyed argument, but, as always, the hyper-politicized Federal Reserve Board of Governors will say anything to get to their desired result. If the hikes come too quickly - they promised four this year - they can lay the blame on everybody's favorite political punching bag, Mr. Trump. Should things work out, the Fed will claim all the credit for "saving the financial system as we know it."
Either way, the Fed will come out smelling like the proverbial rose, even though they come closer to the stench of burning paper currency than that of a pretty flower.
March is now a "live" month for the Fed, though it should not go unnoticed that the Fed has and will likely continue to do not what they say, as in the case of last year's promise of three rate hikes, when in fact they actually performed just one (December).
With the stock indices hitting all-time highs on just about a daily basis, March would be as good a time as any to get rates another notch closer to one percent. In fact, a 50 basis point hike, to 1.00-1.25% wouldn't be such a bad idea. The stock markets are about to go belly up, despite being wildly overvalued.
Wall Street suffers from the absolute worst form of normalcy bias and that alone should prevent even a correction. Financial markets are in as weird a place as they've ever been, but expect the next crashing sounds to come from overseas, either to the West, as in Japan (or even China), or looking East at the failed experiment that is the European Union and the coming parity of the euro to the US dollar.
Thanks,
Fearless Rick
Let's not beat around the bush. The Federal Reserve is intent on raising rates, which should surprise nobody, as the federal funds rate has been at or below one percent for the better part of 16 years.
Currently set at 0.50-0.75%, the key overnight rate has been largely responsible for a great deal of irresponsibility, not the least of which was the subprime disaster of 2008 and the resultant Great Financial Crisis which sent the global economy into one of the worst tailspins since the Great Depression of 1929-1938.
So, with the release today of the minutes from last month's FOMC meeting, it's compelling to think that a rate increase would be on the agenda at the next meeting, mid-March.
After all, the latest hike, in December of last year, hardly caused a ripple at all. Most experienced investors and money managers are aware of the need to "normalize" policy by the Fed and have preparing for such an event (or series of hikes, which is completely probable) since December of 2015.
With President Trump promising a fiscal stimulus plan, the Fed's belief that inflation will be the end result is a bit of a cockeyed argument, but, as always, the hyper-politicized Federal Reserve Board of Governors will say anything to get to their desired result. If the hikes come too quickly - they promised four this year - they can lay the blame on everybody's favorite political punching bag, Mr. Trump. Should things work out, the Fed will claim all the credit for "saving the financial system as we know it."
Either way, the Fed will come out smelling like the proverbial rose, even though they come closer to the stench of burning paper currency than that of a pretty flower.
March is now a "live" month for the Fed, though it should not go unnoticed that the Fed has and will likely continue to do not what they say, as in the case of last year's promise of three rate hikes, when in fact they actually performed just one (December).
With the stock indices hitting all-time highs on just about a daily basis, March would be as good a time as any to get rates another notch closer to one percent. In fact, a 50 basis point hike, to 1.00-1.25% wouldn't be such a bad idea. The stock markets are about to go belly up, despite being wildly overvalued.
Wall Street suffers from the absolute worst form of normalcy bias and that alone should prevent even a correction. Financial markets are in as weird a place as they've ever been, but expect the next crashing sounds to come from overseas, either to the West, as in Japan (or even China), or looking East at the failed experiment that is the European Union and the coming parity of the euro to the US dollar.
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