GENERAL STOCK MARKET COMMENT: The U.S. stock indexes closed mixed today. There were no major, unsettling news developments occurred over the weekend, which limited selling interest in stock indexes. Focus is turning to the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve’s regular meeting Tuesday and Wednesday. As usual, the Wednesday afternoon statement from the FOMC at the conclusion of the meeting will be very closely scrutinized by the market place. Most believe the Fed will formally end its monthly bond-buying program, called quantitative easing. Attention is also on the two key “outside markets” that impact many other markets: the U.S. dollar and crude oil. The dollar index was weaker Monday but still hovering not far below its recent four-year high. Meantime, Nymex crude oil prices were lower and hovering near a two-year low. The next downside technical target for nearby crude oil is $75.00 a barrel, which I believe will be reached in the coming weeks. The much-anticipated stress test results on European Union financial institutions were released over the weekend. While there were some EU banks that failed the tests, overall the results were not deemed threatening to the EU financial system. There was another downbeat economic report coming out of the EU Monday, as Germany’s Ifo business confidence index came in at 103.2 in October, versus 104.7 in September. The Ifo reading this month was at a two-year low.
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Well, I am settling in on the idea that NFTRH.com will be used for subscriber oriented activity like interim updates, but also provide plenty of public content as Biiwii has done. This will tend to be the more technical content, often dovetailing well with NFTRH themes. Charts, geeky economic graphs and of course market ratios and indicators.
Note; the post also appears at nftrh.com, which is 90+% ready for prime time!
Our view has been that a stronger US dollar would eventually start to eat away at corporate results, especially in the manufacturing sector and at US based companies with a global customer base. The decline in revenues thus far is something to be watched because where revenues go, earnings eventually follow.
[edit: the segment previous to this one reviewed a contrast between strong earnings and sagging revenues with companies that have reported earnings thus far]
An article by Doug Short published at Business Insider on Friday illustrates how the Economic Cycle Research Institute (ECRI) called for a recession in 2011 and was promptly made to eat that call first by Operation Twist and then by balls out QE3. All the while as ZIRP has quietly whirred along in the background for 6 years.
ECRI’s weekly Leading Index is flashing warnings again…
…while the St. Louis Fed’s Leading Index (incl. ISM data, Treasury spreads and State level housing permits and unemployment data) continues to slog around its 30 year average after the big recovery out of 2009.
Oh, that sound you hear this morning is the distant roar of European equity markets puking after the latest round of phony bank “stress tests” — another exercise in pretend by financial authorities who understand, at least, the bottomless credulity of the news media and the complete mystification of the general public in monetary matters. I rather expect that roar to grow Niagara-like as US markets catch the urge to upchuck violently. Problem is, unlike Ebola victims, they can’t be quarantined.
The end of the “taper” is upon us like the night of the hunter, conveniently just a week before the US election. If the Federal Reserve is politicized, the indoctrination must have been conducted by the Three Stooges. America’s central bank never did explain the difference between tapering and exiting their purchases of US treasury paper. I guess that’s because it has other interventionary tricks up its sleeves. Three-card Monte with reverse repos… ventures into direct stock purchases… the setting up of new Maiden Lane type companies for scarfing up securities with that piquant dead carp aroma. Who knows what’s next? It’s amazing what you can do with money in a desperate polity with a few dozen lawyers.
October 21 – Reuters (Andreas Framke, Eva Taylor and Paul Carrel): “The European Central Bank is considering buying corporate bonds on the secondary market and may decide on the matter as soon as December with a view to begin buying early next year, several sources familiar with the situation told Reuters. The ECB has already carried out work on such purchases, which would widen out the private-sector asset-buying program it began on Monday – stimulus it is deploying to try to foster lending to businesses and thereby support the euro zone economy. ‘The pressure in this direction is high,’ said one person familiar with the work inside the ECB, speaking on condition of anonymity.”
Wall Street Is One Sick Puppy—–Thanks To Even Sicker Central Banks
Last Wednesday the markets plunged on a vague recognition that the central bank promoted recovery story might not be on the level. But that tremor didn’t last long.
Right on cue the next day, one of the very dimmest Fed heads—James Dullard of St Louis—-mumbled incoherently about a possible QE extension, causing the robo-traders to erupt with buy orders. By the end of the day Friday, with the market off just 5% from its all-time highs, the buy-the-dips crowd was back, proclaiming that the “bottom is in”. This week the market has been energetically retracing what remains of the October correction.
I cannot believe the volume of the news stories I am seeing in the financial media, with people worrying about impending deflation. And as any card-carrying contrarian knows, when a topic gets too popular, you are near a turning point.
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Well folks, in the interest of streamlining the message and getting up and running on a more reliable and scalable host, biiwii.com is now shifting its primary functions to nftrh.com. That applies to public posts as well as protected subscriber-only content.
Go check out nftrh.com and bookmark, RSS or subscribe to posts by email. Also, please spread the word! I’d very much appreciate it.
As for Biiwii, good old ‘but it is what it is’… it is eventually going to transfer to the new host as well and I am going to think about how best to have it move forward. So keep it on your radar as well. It is not finishing, it is just changing and will be complimentary. But for now, most of what has gone on here for the last decade is now going to go on there.