Just a marker for the weekend notes interestingly that all of the huge NASDAQ gain was on Friday and the NYSE Composite actually posted a loss for the week.
This isn't really normal market behavior, but few are paying attention.
At the Close, Friday, October 27, 2017:
Dow: 23,434.19, +33.33 (+0.14%)
NASDAQ: 6,701.26, +144.48 (+2.20%)
S&P 500: 2,581.07, +20.67 (+0.81%)
NYSE Composite: 12,366.4346, +14.01 (+0.11%)
For the week:
Dow: +105.56, (+0.45%)
NASDAQ: +144.49 (+2.20%)
S&P 500: +5.86 (+0.23%)
NYSE Composite: -64.10 (-0.52%)
Monday, October 30, 2017
Friday, October 27, 2017
Stocks Rebound Thursday; 3rd Quarter GDP Increases 3%
Stocks bounced off of Wednesday's decline, with the Dow Industrials again leading the way on Thursday, shrugging off any suggestion that the economy or stock market was about to experience a slowdown.
On Friday morning, the Bureau of Economic Analysis (BEA) released the preliminary estimate of GDP for the third quarter, beating most of the positive projections, coming at at three percent growth.
Highlights of the report included a positive contribution from Personal Consumption Expenditures (PCE), offset by lower residential fixed investment and state and local government spending.
The 3.0% reading follows the second quarter's 3.1% advance, though the figures from the government are always subject to timely revisions (forever).
This should be good news for equity investors. The dollar is strengthening on the news.
Some are skeptical, however, noting that GDP is a very broad measure of economic strength or weakness and the fact that government spending is a component, which, at the federal level, is 40% borrowed money, making a mockery of the statistical importance of the data.
In other words, if a person borrowed $1000 to spend a total of $1800, one would not call that $1800 in spending, but $800 in real spending, plus $1000 in new debt, which, as everyone knows, should be repaid some day. As for the government and its $20 trillion - and growing - mountain of debt, that is probably never going to be repaid.
At the Close, Thursday, October 26, 2017:
Dow: 23,400.86, +71.40 (+0.31%)
NASDAQ: 6,556.77, -7.12 (-0.11%)
S&P 500: 2,560.40, +3.25 (+0.13%)
NYSE Composite: 12,352.43, +15.85 (+0.13%)
On Friday morning, the Bureau of Economic Analysis (BEA) released the preliminary estimate of GDP for the third quarter, beating most of the positive projections, coming at at three percent growth.
Highlights of the report included a positive contribution from Personal Consumption Expenditures (PCE), offset by lower residential fixed investment and state and local government spending.
The 3.0% reading follows the second quarter's 3.1% advance, though the figures from the government are always subject to timely revisions (forever).
This should be good news for equity investors. The dollar is strengthening on the news.
Some are skeptical, however, noting that GDP is a very broad measure of economic strength or weakness and the fact that government spending is a component, which, at the federal level, is 40% borrowed money, making a mockery of the statistical importance of the data.
In other words, if a person borrowed $1000 to spend a total of $1800, one would not call that $1800 in spending, but $800 in real spending, plus $1000 in new debt, which, as everyone knows, should be repaid some day. As for the government and its $20 trillion - and growing - mountain of debt, that is probably never going to be repaid.
At the Close, Thursday, October 26, 2017:
Dow: 23,400.86, +71.40 (+0.31%)
NASDAQ: 6,556.77, -7.12 (-0.11%)
S&P 500: 2,560.40, +3.25 (+0.13%)
NYSE Composite: 12,352.43, +15.85 (+0.13%)
Wednesday, October 25, 2017
Stocks slide as bond yields continue rising
Stocks took a rare turn to the downside after solid gains earlier in the week.
The selling was rather broad as interest rates worldwide began to reach levels that investors might be minimizing risk by tracking from stocks into bonds, particularly the 10-year note which has been rising steadily since mid-September when the Federal Reserve announced the beginning of their asset sales as they seek to trim their balance sheet.
The 10-year settled at 2.44%, a seven-month high. As recently as September 8, prior to the most recent FOMC policy meeting, the yield was 2.06%, representing a 10-month low, dating back to November 8, 2016, on the eve of the national election which put Donald J. Trump into the office of President of the United States.
Thus, yields are testing the buoyancy of the stock market, especially those stocks which produce dividends. While many blue chip-type companies yield similarly to the 10-year, they also carry risk that the US economy may stall and send stocks lower, which would reduce the effective yield and possibly decimate profits.
As the Federal Reserve intends to normalize rates - with another rate hike widely assumed to be coming in December - stocks will naturally come under pressure, though it is far too soon to tell exactly what the Fed will do should the long-winded bull market from 2009 stall.
There is considerable debate over the general health of the US and global economies, which have been aided to a great extent by easy monetary policy and massive stealth purchases by the central banks of Europe and Japan.
A single day of declines should not be taken too seriously, as stock indices have been recently making new highs almost on a daily basis, but, that said, this does not seem to be a time in which investors should throw caution to the wind. As always, the Fed stands ready with fresh injections of fiat or policy adjustments to ameliorate any kind of market detour.
Bull markets do not last forever, however, and there are significant headwinds to growth without the aid of fresh central bank intervention.
At the Close, Wednesday, October 25, 2017:
Dow: 23,329.46, -112.30 (-0.48%)
NASDAQ: 6,563.89, -34.54 (-0.52%)
S&P 500: 2,557.15, -11.98 (-0.47%)
NYSE Composite: 12,336.64, -68.35 (-0.55%)
The selling was rather broad as interest rates worldwide began to reach levels that investors might be minimizing risk by tracking from stocks into bonds, particularly the 10-year note which has been rising steadily since mid-September when the Federal Reserve announced the beginning of their asset sales as they seek to trim their balance sheet.
The 10-year settled at 2.44%, a seven-month high. As recently as September 8, prior to the most recent FOMC policy meeting, the yield was 2.06%, representing a 10-month low, dating back to November 8, 2016, on the eve of the national election which put Donald J. Trump into the office of President of the United States.
Thus, yields are testing the buoyancy of the stock market, especially those stocks which produce dividends. While many blue chip-type companies yield similarly to the 10-year, they also carry risk that the US economy may stall and send stocks lower, which would reduce the effective yield and possibly decimate profits.
As the Federal Reserve intends to normalize rates - with another rate hike widely assumed to be coming in December - stocks will naturally come under pressure, though it is far too soon to tell exactly what the Fed will do should the long-winded bull market from 2009 stall.
There is considerable debate over the general health of the US and global economies, which have been aided to a great extent by easy monetary policy and massive stealth purchases by the central banks of Europe and Japan.
A single day of declines should not be taken too seriously, as stock indices have been recently making new highs almost on a daily basis, but, that said, this does not seem to be a time in which investors should throw caution to the wind. As always, the Fed stands ready with fresh injections of fiat or policy adjustments to ameliorate any kind of market detour.
Bull markets do not last forever, however, and there are significant headwinds to growth without the aid of fresh central bank intervention.
At the Close, Wednesday, October 25, 2017:
Dow: 23,329.46, -112.30 (-0.48%)
NASDAQ: 6,563.89, -34.54 (-0.52%)
S&P 500: 2,557.15, -11.98 (-0.47%)
NYSE Composite: 12,336.64, -68.35 (-0.55%)
Dow Soars To New All-Time High, Paced By Caterpillar, 3M
Led by two of its highest-priced components, the Dow Jones Industrial Average blasted to another new high on Tuesday.
Caterpillar (CAT) and 3M (MMM) announced strong third quarter results with the maker of heavy industrial and earth-moving equipment was up nearly five percent, while 3M rose almost six percent on the day.
With those two posting extraordinary gains and the remainder of the Dow 30 rather muted, the blue chip index vastly outpaced the other main indices, putting 24,000 within sight just days after breaking through the 23,000 mark.
The Dow closed above 23,000 for the first time on October 18 and is up nearly 500 points in just one week.
Investors continue to chase returns, and, in the case of Dow components, dividend yield. Both 3M and Caterpillar offer dividend yields rivaling the 10-year treasury bill and are considered by analysts to be among the safest of equities to hold in a portfolio.
The other indices all ended the session with gains, but at much lower percentages than the Dow.
At the Close, Tuesday, October 24, 2017:
Dow: 23,448.20, +174.24 (+0.75%)
NASDAQ: 6,597.09, +10.26 (+0.16%)
S&P 500: 2,567.98, +3.00 (+0.12%)
NYSE Composite: 12,405.13, +20.70 (+0.17%)
Caterpillar (CAT) and 3M (MMM) announced strong third quarter results with the maker of heavy industrial and earth-moving equipment was up nearly five percent, while 3M rose almost six percent on the day.
With those two posting extraordinary gains and the remainder of the Dow 30 rather muted, the blue chip index vastly outpaced the other main indices, putting 24,000 within sight just days after breaking through the 23,000 mark.
The Dow closed above 23,000 for the first time on October 18 and is up nearly 500 points in just one week.
Investors continue to chase returns, and, in the case of Dow components, dividend yield. Both 3M and Caterpillar offer dividend yields rivaling the 10-year treasury bill and are considered by analysts to be among the safest of equities to hold in a portfolio.
The other indices all ended the session with gains, but at much lower percentages than the Dow.
At the Close, Tuesday, October 24, 2017:
Dow: 23,448.20, +174.24 (+0.75%)
NASDAQ: 6,597.09, +10.26 (+0.16%)
S&P 500: 2,567.98, +3.00 (+0.12%)
NYSE Composite: 12,405.13, +20.70 (+0.17%)
Tuesday, October 24, 2017
Don't Count on a Market Correction in this Environment
For a change, stocks took a little dip to open the week, but it was certainly nothing by which anybody was rattled or otherwise deterred from buying ever more expensive stocks.
Since the Great Financial Crisis of 2007-2009, the favorite acronym of traders has been BTD, otherwise known as Buy The Dip, which is exactly what is to be expected when markets open on Tuesday.
Almost without fail - actually, fully without fail - US equity indices, since March of 2009, have never fallen much more than a few percentage points before ramping back to new all-time highs. While there have been occasions in which the dip in stocks has persisted over a period of weeks or months, there has been no failure to recover in recent years.
Anybody invested on more than a casual basis is aware that central bank largesse and stock buybacks have been the primary drivers of stock market prosperity, and even with the Federal Reserve beginning to engage in the process of unwinding its balance sheet - selling off much of its horde of $4.5 million in bonds and other sketchy assets - there seems to be little to scare investors away from he equity bandwagon.
It's largely a controlled environment, nothing like the heydays of the 50s and 60s, when America was a growing concern and didn't need monetary boosts to fuel investment markets. Today's markets and investors are completely synthetic, consisting mainly of larger brokerages and funds of all types, from sovereign wealth types to hedges to mutuals to pensions. The general public and governments are so heavily invested in stocks that a collapse in markets would likely trigger catastrophic consequences to all parties. Private individuals would be harmed by pension promises unable to be met, while the large funds would face liquidation, bankruptcy or dissolution. Governments, likewise would be under attack for making pledges to the populace that could not be manifested over time, such as social security and other entitlements.
It is for those reasons, and the overall interconnectedness and fragility of markets that corrections do not occur. People in power would be without and instead of order, there would be chaos, and that is something that central bankers and their cohorts in the government realm simply cannot stomach.
At the Close, Monday, October 23, 2017:
Dow: 23,273.96, -54.67 (-0.23%)
NASDAQ: 6,586.83, -42.23 (-0.64%)
S&P 500: 2,564.98, -10.23 (-0.40%)
NYSE Composite: 12,384.42, -46.10 (-0.37%)
Since the Great Financial Crisis of 2007-2009, the favorite acronym of traders has been BTD, otherwise known as Buy The Dip, which is exactly what is to be expected when markets open on Tuesday.
Almost without fail - actually, fully without fail - US equity indices, since March of 2009, have never fallen much more than a few percentage points before ramping back to new all-time highs. While there have been occasions in which the dip in stocks has persisted over a period of weeks or months, there has been no failure to recover in recent years.
Anybody invested on more than a casual basis is aware that central bank largesse and stock buybacks have been the primary drivers of stock market prosperity, and even with the Federal Reserve beginning to engage in the process of unwinding its balance sheet - selling off much of its horde of $4.5 million in bonds and other sketchy assets - there seems to be little to scare investors away from he equity bandwagon.
It's largely a controlled environment, nothing like the heydays of the 50s and 60s, when America was a growing concern and didn't need monetary boosts to fuel investment markets. Today's markets and investors are completely synthetic, consisting mainly of larger brokerages and funds of all types, from sovereign wealth types to hedges to mutuals to pensions. The general public and governments are so heavily invested in stocks that a collapse in markets would likely trigger catastrophic consequences to all parties. Private individuals would be harmed by pension promises unable to be met, while the large funds would face liquidation, bankruptcy or dissolution. Governments, likewise would be under attack for making pledges to the populace that could not be manifested over time, such as social security and other entitlements.
It is for those reasons, and the overall interconnectedness and fragility of markets that corrections do not occur. People in power would be without and instead of order, there would be chaos, and that is something that central bankers and their cohorts in the government realm simply cannot stomach.
At the Close, Monday, October 23, 2017:
Dow: 23,273.96, -54.67 (-0.23%)
NASDAQ: 6,586.83, -42.23 (-0.64%)
S&P 500: 2,564.98, -10.23 (-0.40%)
NYSE Composite: 12,384.42, -46.10 (-0.37%)
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