• Tag Archives Stock Market
  • The Federal Reserve’s Unspoken Truth

    Originally posted at Briefing.com
    The Federal Reserve’s latest policy announcement has generated a lot of opinions about its implications for the capital markets. What it didn’t generate is a lot of movement in the stock market.
    The September Federal Open Market Committee (FOMC) meeting was a two-day affair that concluded on September 20 with the issuance of an updated policy directive, the release of updated economic and policy rate projections, an announcement that the Federal Reserve will start its balance sheet normalization process in October, and a press conference by Fed Chair Yellen to discuss it all.
    Check out Interview: Louise Yamada on Stocks, Tech, and Interest Rates
    There was a whole lot of information to digest. The key talking points from the Fed Day bonanza included the following:
    The target range for the fed funds rate was left unchanged at 1.00% to 1.25%. The vote was unanimous. The Federal Reserve said it will start its balance sheet normalization process in October in accord with the framework laid out in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans

    This post was published at FinancialSense on 09/22/2017.


  • Shiller Warns Against Complacency: “Today’s Market Looks Like It Did At The Peaks Before Last 13 Bear Markets”

    The US stock market today looks a lot like it did at the peak before all 13 previous price collapses. That doesn’t mean that a bear market is imminent, but it does amount to a stark warning against complacency.
    The U. S. stock market today is characterized by a seemingly unusual combination of very high valuations, following a period of strong earnings growth, and very low volatility.
    What do these ostensibly conflicting messages imply about the likelihood that the United States is headed toward a bear market in stocks?

    This post was published at Zero Hedge on Sep 22, 2017.


  • Fed QT Stocks, Gold Impact

    This week’s landmark Federal Open Market Committee decision to launch quantitative tightening is one of the most-important and most-consequential actions in the Federal Reserve’s entire 104-year history. QT changes everything for world financial markets levitated by years of quantitative easing. The advent of the QT era has enormous implications for stock markets and gold that all investors need to understand.
    This week’s FOMC decision to birth QT in early October certainly wasn’t a surprise. To the Fed’s credit, this unprecedented paradigm shift had been well-telegraphed. Back at its mid-June meeting, the FOMC warned ‘The Committee currently expects to begin implementing a balance sheet normalization program this year’. Its usual FOMC statement was accompanied by an addendum explaining how QT would likely unfold.
    That mid-June trial balloon didn’t tank stock markets, so this week the FOMC decided to implement it with no changes. The FOMC’s new statement from Wednesday declared, ‘In October, the Committee will initiate the balance sheet normalization program described in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans.’ And thus the long-feared QT era is now upon us.
    The Fed is well aware of how extraordinarily risky quantitative tightening is for QE-inflated stock markets, so it is starting slow. QT is necessary to unwind the vast quantities of bonds purchased since late 2008 via QE. Back in October 2008, the US stock markets experienced their first panic in 101 years. Ironically it was that earlier 1907 panic that led to the Federal Reserve’s creation in 1913 to help prevent future panics.
    Technically a stock panic is a 20%+ stock-market plunge within two weeks. The flagship S&P 500 stock index plummeted 25.9% in just 10 trading days leading into early October 2008, which was certainly a panic-grade plunge! The extreme fear generated by that rare anomaly led the Fed itself to panic, fearing a new depression driven by the wealth effect. When stocks plummet, people get scared and slash their spending.

    This post was published at ZEAL LLC on September 22, 2017.


  • Is Identity Politics Brewing a Holocaust?

    Signs of American collapse are everywhere. Apparently no one notices. The world continues to vote with the US in the UN. When even Russia and China serve as handmaidens to US foreign policy by voting with Washington against North Korea, it appears that the image of America as the exceptional and indispensable country is a propaganda success even among Washington’s most threatened enemies. When Russia and China follow Washington’s lead, it shows the world that there is no alternative to Washington’s leadership.
    A country with a $20 trillion public debt, an even larger private debt, a work force drowning in debt and employed in third world lowly paid domestic services, a stock market pumped up beyond all reason by Federal Reserve liquidity and companies using their profits to repurchase their own stock, a military that’s been tied down for 16 years by a few lightly armed Muslims, a propaganda ministry instead of a media with public ignorance the consequence, and with a total collapse of morality in public and private institutions along with the disappearance of courage, is nevertheless able to make the entire world dance to its tune. Washington is the Wizard of Oz.
    Washington in the past 16 years has destroyed in whole or part seven countries, murdering, maiming, orphaning, widowing, and displacing millions of peoples. Yet Washington still presents itself as the great defender of human rights, democracy, and all that is good. The American people have voiced few words of protest against the massive crimes against humanity committed by ‘their’ government.

    This post was published at Paul Craig Roberts on September 20, 2017.


  • Stock And Financial Markets Pause Ahead Of FOMC Statement, Yellen Comments

    World stock markets were mixed in subdued trading overnight. U. S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
    Gold prices are higher in pre-U. S.-session trading, on bargain hunting, short covering and some safe-haven demand following a fiery speech by U. S. President Trump at the U. N. on Tuesday. Trump threatened to completely destroy North Korea.
    Markets have paused ahead of the Federal Reserve’s Open Market Committee (FOMC) meeting that began Tuesday morning and ends Wednesday afternoon with a statement.

    This post was published at Wall Street Examiner on September 20, 2017.


  • What the Fed’s New $4.5 Trillion Balance Sheet Plan Means for the Stock Market Today

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    The Federal Reserve is set to announce more details about unwinding its massive $4.5 trillion balance sheet at today’s FOMC meeting. That will officially signal the end of the Fed’s stimulus program, going all the way back to 2007.
    The Five Top Stock Market Stories for Wednesday
    This afternoon, the U. S. Federal Reserve will conclude its two-day meeting on monetary policy. Fed Chair Janet Yellen will hold a press conference to announce the central bank’s plans on how it will unwind its massive balance sheet. This will be considered the official announcement by the Fed that it is ending its stimulus program that began after the financial crisis. Investors should remain cautious, as this truly is the great unknown regarding market risk. In fact, investors should read Lee Adler’s latest commentary on how the central bank’s stimulus programs work and what it means for your investments. Be sure to read Sure Money Investor.

    This post was published at Wall Street Examiner by Garrett Baldwin ‘ September 20, 2017.


  • What Happens When Inflation Walks In?

    If you watch and participate in markets long enough – and no, we’re not talking about, ‘On a long enough timeline…’ – you’ll appreciate or get bitten (as we certainly have from time to time) by the sardonic irony that often becomes exposed by a market’s cycle. Consider Mohamed El-Erian’s ‘New Normal’ market strategy, that aimed at the start of this decade to capture the anticipated outperformance of emerging over developed markets. Bear in mind that the phrase has stuck around since then, despite the fact that it was largely a narrative for a poor investment strategy.
    What happened? El-Erian and Gross were prescient in inventing the term ‘new normal’ to describe a very slow-growing global economy with heightened risks of recession, as befell much of Europe. But they were dead wrong in predicting that emerging markets would provide outsize stock returns, and they were wildly off base in their notion that developed-market stock returns would be deeply depressed. Emerging market stocks have stumbled since 2011, and emerging market bonds have lost ground this year. Meanwhile, developed-world stock markets have soared. The fund’s use of options and other techniques to hedge against ‘tail risk’ – which essentially means insuring against extremely bad markets – has also surely cost the fund a little in performance. – Kiplinger, November 14, 2013
    Not to overly pick on El-Erian here, who is typically a very thoughtful and creative macro thinker – not to mention many of his new normal predictions did prove prescient, with the very large exception of rising inflation that would have likely driven a successful investment strategy – not just a convenient catch phrase… but, ironically, it appears his timing earlier this year of calling for an end of the new normal, as selectively revisionist as they paint it, might provide a fitting bookend to the market’s wry sense of humor.
    Eight years later – and instead of just getting slow growth right in a developed economy like the US, as he initially suggested in May 2009, his other two major tenets of rising inflation and rising unemployment might eventually be realized domestically in the economy’s next chapter. In fact, from our perspective it seems more likely than not.

    This post was published at GoldSeek on 19 September 2017.


  • Gold Investment ‘Roars’ in Japan on N.Korea Tension But Rate-Rise Talk Hits Price as Stocks Rise

    Gold investment prices at multi-week lows against all major currencies except the Japanese Yen on Tuesday in London, erasing the last of September’s earlier 4.0% jump versus the Dollar as global stock markets edged up to set yet another new record high.
    Starting 2017 at fresh all-time highs just above the spring 2015 peak, the MSCI World index gained another 12.2% in Dollar terms by Monday’s close, as New York’s stock markets set new historic highs of their own.
    “The most eye-catching sign” in the US stock market’s near 9-year bull market, says a new third-quarter chart outlook from the technical analysis team at French bank Societe Generale, “is the lack of market breadth in the US small caps and their exacerbated relative underperformance.

    This post was published at FinancialSense on 09/19/2017.


  • Market View Update – September 2017

    When thinking about how to start a market view update, it is often helpful to pick up where the last one left off. Alas, that is what we will do.
    In mid-June, we wrote that the stock market has continued to defy calls for a correction and has held its ground time and again in the face of scary-sounding headlines due to the stabilizing force of strong earnings growth and the persistence of low-interest rates.
    We said at the time that, if there were to be a destabilizing force for the stock market, it would be disappointing earnings growth and/or rising interest rates that lessen the relative appeal of owning equities. That was an observation by the way and not a forecast.
    Since that time, market participants have learned that second-quarter earnings increased 10.4%, per FactSet, well above the estimated growth rate of 6.6% in front of the reporting period, and have seen the yield on the benchmark 10-year note tick up slightly to 2.20%, which is still 28 basis points lower than where it started the year.

    This post was published at FinancialSense on 09/19/2017.


  • Markets Pause As FOMC Meeting Begins Tuesday

    Global stock markets were mostly weaker overnight. U. S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
    Traders and investors worldwide are a bit cautious ahead of the U. S. Federal Reserve’s monetary policy meeting.
    Gold prices are slightly higher in pre-U. S. day session trading, on some tepid short covering following recent selling pressure that pushed prices to a three-week low on Monday.

    This post was published at Wall Street Examiner on September 19, 2017.


  • Toys ‘R’ Us Bankruptcy: Another Wall Street Debt Slave Falls

    The year 2017 is likely to be remembered for devastating hurricanes and storm surges, waves of retail bankruptcies amidst record-setting household debt and a stock market that carelessly sailed through these dangerous waters to record highs.
    Toys ‘R’ Us was the latest in a growing string of retail bankruptcies to hit the mat last evening. Its bonds have been telegraphing trouble for some time, with one bond due next year careening from 97 cents on the dollar to 22 cents in a little more than two weeks. On September 6, Wolf Richter at WolfStreet.com provided the short narrative of how Toys ‘R’ Us found itself driving toward the ditch. Citing its leveraged buyout in 2005 by private equity firms Bain Capital, KKR & Co. and real estate firm Vornado Realty Trust, Richter wrote:
    ‘So here’s what the three PE firms did to Toys R Us: they stripped out cash and loaded the company up with debt. And these are the results: At the end of its fiscal year 2004, the last full year before the buyout, Toys R Us had $2.2 billion in cash, cash equivalents, and short-term investments. By Q1 2017, this had collapsed to just $301 million. Over the same period, long-term debt has surged 126%, from $2.3 billion to $5.2 billion… It takes a lot of expertise and Wall Street connivance to pull this off.’
    If the name, Bain Capital, sounds familiar to you, it’s because it’s the private equity firm that was co-founded by Mitt Romney in 1984 and overseen by him in the 80s and 90s. In his book, Turnaround, Romney writes that he owned 100 percent of the shares of Bain Capital. Romney went on to become the Republican Party’s nominee for President in 2012 and his varnished version of just what Bain Capital did for a living came under close scrutiny.

    This post was published at Wall Street On Parade on September 19, 2017.


  • Bill Blain: “One Fund I Met Is Convinced Bond Markets Are On The Edge Of A Precipice”

    Blain’s Morning Porridge – September 19th 2017
    ‘I had to phone someone so I picked on you. Hey, that far out so you heard him too..’
    There is a veritable hurricane of new issues hitting the market. Like the new Ukraine deal they are being priced to sell – perhaps racing to get down before the rains come. There is the sure and certain knowledge this feeding frenzy is going to stop. With a thumping great crunch.
    But the new issue bond market is always feast/famine. There is bigger stuff happening. I managed to spend some time yesterday in the West End of London, speaking with a number of clients about where they think markets are going. Three big themes emerged:
    Much of the current ‘noise’ is utter distraction – including what’s really going on in Washington, the nuances of the Brexit negotiations, Korea and all the other political rumour and sigh hitting markets. Some of stories emanating from Whitehall, Brussels, Berlin and Washington are tremendous – I’d love to share them, but… Strip out the political flummery and noise, and the prospects for global stock markets should be positive. Every major economy that matters is now in positive growth, after 10-years we finally seem to have shaken off the Global Financial Crisis, and stock markets (which high) are not impossibly overvalued. The reflation trade is on. The fly in the ointment is the bond market. One fund I met is convinced Global bond markets and credit are on the edge of precipice and about to take that terminal step forward. Others fear the unintended consequences of taper and the ‘End of QE’ triggering a reset across global financial asset values – especially across the bond markets.

    This post was published at Zero Hedge on Sep 19, 2017.


  • Top Financial Expert Warns Stocks Need To Drop ‘Between 30 And 40 Percent’ As Bankruptcy Looms For Toys R Us

    Will there be a major stock market crash before the end of 2017? To many of us, it seems like we have been waiting for this ridiculous stock market bubble to burst for a very long time. The experts have been warning us over and over again that stocks cannot keep going up like this indefinitely, and yet this market has seemed absolutely determined to defy the laws of economics. But most people don’t remember that we went through a similar thing before the financial crisis of 2008 as well. I recently spoke to an investor that shorted the market three years ahead of that crash. In the end his long-term analysis was right on the money, but his timing was just a bit off, and the same thing will be true with many of the experts this time around.
    On Monday, I was quite stunned to learn what Brad McMillan had just said about the market. He is considered to be one of the brightest minds in the financial world, and he told CNBC that stocks would need to fall ‘somewhere between 30 and 40 percent just to get to fair value’…
    Brad McMillan – who counsels independent financial advisors representing $114 billion in assets under management – told CNBC on Monday that the stock market is way overvalued.
    ‘The market probably would have to drop somewhere between 30 and 40 percent to get to fair value, based on historical standards,’ said McMillan, chief investment officer at Massachusetts-based Commonwealth Financial Network.

    This post was published at The Economic Collapse Blog on September 18, 2017.


  • Yesterday, All My Market Troubles Seemed So Far Away…

    We’re finally here. About 9 years after QE1 began, QT is about to start. If one believes that the stock market still is a discounting mechanism, then have nothing to fear with QT and that maybe it will actually be like ‘watching paint dry’ as Fed members so desperately want it to be. After all, the S&P 500 is at an all-time high. If you think, like me, that the stock market is not the same discounting tool as it once was because of the major distortion and manipulation of markets via central market involvement and the dominance of machines that are reactive instead of proactive in response to news, then we must review again the previous experiences when major Fed changes took place. After all, they were all well telegraphed as this week’s likely news has been.
    Before I get to that, let me remind everyone that the 3rd mandate of QE was higher stock prices. Ben Bernanke in rationalizing the initiation of QE2 in a Washington Post editorial back in November 2010 said in regards to QE1 and the verbal preparation for QE2: ‘this approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action.’ He then went on to say ‘higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.’ Yes, the belief in the wealth effect which hasn’t worked in this expansion. Hence, the record high in stocks last week and the 2.9% y/o/y rise in core August retail sales, both below the 5-year average and well less than the average seen in the prior two expansions.

    This post was published at FinancialSense on 09/18/2017.


  • LIES, LIES & OMG MORE LIES

    ‘There are three types of lies – lies, damn lies, and statistics.’ – Benjamin Disraeli
    Every month the government apparatchiks at the Bureau of Lies and Scams (BLS) dutifully announces inflation is still running below 2%. Janet Yellen then gives a speech where she notes her concern inflation is too low and she needs to keep interest rates near zero to save humanity from the scourge of too low inflation. I don’t know how I could survive without 2% inflation reducing my purchasing power.
    This week they reported year over year inflation of 1.9%. Just right to keep Janet from raising rates and keeping the stock market on track for new record highs. According to our beloved bureaucrats, after they have sliced, diced, massaged and manipulated the data, you’ve experienced annual inflation of 2.1% since 2000. If you believe that, I’ve got a great real estate deal for you in North Korea on the border with South Korea.
    ‘Lies sound like facts to those who’ve been conditioned to mis-recognize the truth.’ ‘ DaShanne Stokes

    This post was published at The Burning Platform on Sept 17, 2017.


  • Beware “The False Peace” In Markets, Artemis’ Cole Warns Vol-Sellers’ Day Of Reckoning Looms

    ‘Volatility is an instrument of truth,” proclaims Artemis Capital’s Chris Cole in a wide-ranging interview with The New York Times, warning that “the more you deny the truth, the more the truth will find you through volatility.”
    ***
    In 2012, Artemis Capital’s founder wrote one of the most profound letters on volatility regimes in the new normal, tying together defaltion, hyperinflation, and the alchemy of risk, and now he is concerned that markets are too focused on short-term volatility and is betting that a spike in volatility is on the verge of rattling the stock market.
    ‘Optically, volatility is still very low, but fear is increasing,’ Mr. Cole said, pulling up a chart on one of his six trading windows. It showed that in the months beyond the 30-day period measured by the Chicago Board Options Exchange’s VIX index, investors were expecting some violent moves to come in the stock market.

    This post was published at Zero Hedge on Sep 16, 2017.


  • Stocks and Gold; Macro Pivot Window Upon Us

    On August 11 the potential and reasoning for anticipated pivots in the US stock market and the gold sector were noted in this article: Potential Pivots Upcoming for Stocks and Gold
    As for the stock market, several reasons were put forward in support of a 2nd half of September through Q4 danger period, for a correction (no need yet to talk bear market because that would be pure promotion of an agenda). Please note that standard technical analysis was not among those reasons. The stock market was then and is now, in an uptrend across all important time frames.
    The reasons for the correction view noted in the article ranged from the S&P 500’s 30 month cycle, to the Fed’s Funds cycle and its proximity to the 2yr yield (this has not yet made a bear signal) to the US dollar’s potential to rally (still waiting on that one) to a rough seasonal patch that begins in mid-September. Well, today is September 15, da boyz is back from da Hamptins and the rest is up to the market’s nature to take its course.

    This post was published at GoldSeek on 15 September 2017.


  • SWINDLING FUTURITY

    ‘The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.’ ‘ Thomas Jefferson

    Yesterday the government reported a ‘modest’ August budget deficit of $108 billion. That’s one month folks. This is another example of how the government and their mainstream media mouthpieces portray horrifically bad, extremely abnormal financial data as normal and expected. They pretend everything that has happened since 2008 is just standard operating procedure. They follow the Big Lie theory to the extreme. The masses have been so dumbed down, desensitized, and taught to believe delusions, they can’t distinguish the abnormal from the normal.
    Those in power pretend near zero interest rates eight years after the recession was supposedly over is normal. They pretend $500 billion to $1.4 trillion annual deficits are normal. They pretend 20% unemployment is really 4.4%. They pretend the stock market is at all-time highs due to an improving economy rather than central bank easy money and corporate stock buybacks. They pretend $20 trillion of debt and $200 trillion of unfunded welfare promises is no problem. We are living in the grand delusion.

    This post was published at The Burning Platform on Sept 14, 2017.


  • 1987 Versus 2017: Will History Repeat Or Just Echo?

    Authored by Sara Potter via FactSet,
    Last week, I detailed the various factors leading up to the stock market crash of October 19, 1987. As we approach the 30-year anniversary of Black Monday, are there signs that the bull market of 2017 could end in the same way? Let’s compare the financial, economic, and political factors now and then to paint a better picture.

    The U. S. stock market is currently in the ninth year of a bull market. As of close September 13, the S&P 500 is up 11.6% since the beginning of 2017 and 269% since March 9, 2009, the beginning of the current bull market. Through its peak on October 5, 1987, the S&P 500 was up 35.5% year-to-date, capping off a five-year bull run, during which the index surged by 220% (starting August 12, 1982).

    This post was published at Zero Hedge on Sep 15, 2017.