Monday, May 18, 2015

Transports continue to Diverge



This action continues to be monitored, the longer it continues the more meaning it may have. In a market controlled by FED action since 2009, it is hard to envision anything but a sideways to up market. Memories are short lived.

The REAL question we WILL get an answer to EVENTUALLY is, whether the FED'S manipulation helped us DODGE a bullet, or eventually puts one right into investors' head.

Nothing is for FREE, nothing lasts forever.

D

Wednesday, March 18, 2015

FED MEETING

Everyone is fixated on the statement being issued today by the Federal Reserve. It isn't a matter of if, but when will interest rates begin to " normalize"?

The Financial crisis was back in 2008/2009, but FRD funds rate is still at zero %, crisis levels.
This fixed rate , has screwed savers and gifted investors. Hey, it was a plan, and maybe it worked to stay a worse outcome. But for every yang , there is a YANG. And we don't know yet, what the cost will be, for bailing out the worlds economies, but more so the stock markets.

I believe the market is in the progress of putting in a top, doesn't happen overnight . Underneathe the soaring Netflix and Aaple stocks, are weakness that is broadening.

D

Friday, March 06, 2015

Perfect Storm

I've been gone for awhile hopefully not forgotten.

These are interesting times, IMHO the ship,has sailed on making the easy money. Many stocks have already fallen off the wagon into their own downward bear trends , but these mostly go unseen by the avg investor.

Who cares that hourly wages are falling, and have made a miserable recovery 5 plus years into the zero interest rate manipulated stock market mania. At the same time, in today's report, labor costs are rising which is a bad combo for profits.

A rising US $ is bad for many US company profits , especially the multi nationals.

Unemployment rate is now down to 5.5%, and the feckless FED still has rates pegged at 0%, a CRISIS level. Are we still in a crisis?

Here lies the problem. The world's central bankers are racing each other to lower their rates and weaken their currency, in hopes of stimulating their economy. It should be that easy.

Zirp has made the big players discard any caution and many have levered up large multiples to their cash holding, remember this is what the FED wants...throw caution to the wind and buy buy buy.
And this has caused an historic divergence between the 1% at the top and everyone else! nice going.

Is the weakness in gold, and the plunge in oil prices stemming from overproduction? Weak demand? Or hints of deflation.

Few months ago the Transports did not confirm the new highs in the Dow,  minor in size, but diverge nonetheless.

Now the FED has signaled, it will begin raising rates in 2015, many think this summer. There seem to be a lot more headwinds for US stock prices than there have been in awhile.

The level on the SPX of 1750 I deem important support, and needs to hold.

My own personal indicator has been on a BEAR warning for months. But one additional indicator has yet to confirm.

But I think the easy money has been made ....and one at a time, they must be eyeing the exits....

D

Saturday, January 03, 2015

Sunday, November 09, 2014

CONSEQUENCES DELAYED BUT INEVITABLE



I'm all for a bull market like the next guy. But can we just have one that is born, and lives on its own 2 feet? Or is the stock market just doomed to rinse and repeat.....

Organic natural growth would be a lasting one, where there is a natural balance to things and resources.

Instead we get an abomination of reality and manipulation. EACH END (2000, 2007) to the back room guys behind the curtain economy boom mania is an equally or more so bust and panic.

The most recent addition (2009- current) of a false dawn, carries with it historic measures to keep the man behind the curtain hidden, and so will follow with even greater consequences.

D

Sunday, November 02, 2014

DO whatever it takes


http://www.prudentbear.com/2014/10/kuroda-bubbles-and-king-dollar.html#.VFYsamK9KSM

"Importantly, the risks were deeply systemic. Policy responses were systemic. Draghi moved forward with “Do Whatever it Takes,” followed soon by open-ended QE from Bernanke and Kuroda. I never bought into the notion that Fed “money” printing was about U.S. jobs. I don’t believe Kuroda’s move Friday was about Japanese inflation. Policy responses have been akin to Benjamin Strong’s 1927 “coup de Whiskey,” but on a multi-shot global basis (with chaser). And over the past two years we’ve witnessed a 1927 to 1929-like market response, again on a globalized basis. 

Predictably, throwing Trillions of “money” at a global Bubble has only exacerbated instability. Throwing Trillions of “money” at dangerously maladjusted global financial and economic “systems” will surely only worsen the addiction. I see Kuroda’s move as further evidence of global central bank desperation. Global risks have inflated profoundly since 2012."

There are no sound money policies being followed by any world Central Bank, just print away so to speak and all our troubles will go away. Since 1980 with Greenspan, then Bernanke, now  Yellen LOW interest rates and the new QE gambit have given us 35 years of falling interest rates, rising bond prices, worlds longest running bull market , the bond bull. Nothing lasts forever.

What eventually follows EVERY bull market is a bear market. A bear market in bonds would mean rising interest rates. For 5 years now, savers have been punished with near 0 returns on savings. Savings are discouraged, speculating is encouraged. Asset appreciation, looks and feels good has been the aim of the FED since they began easing, then injecting trillions with QE into the speculating pool.

Looks good, feels good, but a false high.

You don't get prosperity  by printing money or every corner of the globe would be rocking. It would be that easy. These policies have made the inequalities around the globe even more pronounced between the upper crust and the stale bread.

Nothing comes for free and no cost, many do not care when or if the piper gets paid. But paid he will get, with more than a pound of flesh when the spring gets uncoiled. It is reaching that zenith in the law of diminishing returns. Just mention QE, throw money out of thin air, and watch the markets soar.

Nope, what me worry?

D

Saturday, October 25, 2014

How far will they go?

From Doug Noland @ prudent bear .com CBR
http://www.prudentbear.com/2014/10/more-wackoism.html#.VEuUFWK9KSM

"Seems an opportune time to revisit Fed governor Bernanke’s speech from almost 12 years ago, “Deflation: Making Sure ‘It’ Doesn't Happen Here.” Since Bernanke’s 2002 “U.S. government has a technology, called a printing press” dissertation, the Fed’s balance sheet has inflated from $800 billion to $4.5 TN. Treasury debt has inflated from about $4.5 TN to $12.6 TN. Total system marketable debt has jumped from about $30 TN to almost $60 TN. On the rate side, despite booming mortgage Credit growth, the Fed waited until June 2004 to nudge rates up 25 bps (to 1.25%). Rates didn’t make it to 4% until late 2005, just as mortgage Credit was wrapping up its fourth consecutive year of double-digit expansion. 

Bernanke: “But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation. Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior). Normally, money is injected into the economy through asset purchases by the Federal Reserve. To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys… Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.