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Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
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Friday, October 15, 2021, 9:04 am ET
As the primary trend has been bearish since just after Labor Day, equity markets have gradually been building momentum to thwart the shorts, ever since congress got its houses in order and passed a continuing resolution to keep government operations running uninterrupted until early December, and passed a short term debt ceiling increase to avoid default probably through the end of the year.
Not to be fooled, these issues will need to be re-addressed shortly, but all technical indicators began turning positive the first full week of October (4-10) and have been trending positively since. Thursday's monster rally was the best one-day performance across the major indices since March, sending the Dow Jones Industrial Average to a close above its 50-day moving average for the first time in over a month (26 sessions), the S&P 500 right on its 50-day moving average, though the NASDAQ closed well below that respective level. The Dow also closed above its recent interim high from September 27 (34,869.37) and just below a key Fibonacci retracement level of 61.8%, as the intraday high put the retracement at 60.65%. The Industrials need only to gain intraday 21 points on Friday to level up at 61.8%.
Friends of Fibonacci (FOF) will ecall that Fibonacci retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%. While not officially a Fibonacci ratio, 50% is also used. The next key spot for the Dow Industrials is at 35,246.45, at the 78.6% retracement.
The Transportation Average closed just below a key level it needs to reverse the bearish trend, 14,986.80, the close on August 16, so the bear trend is not yet officially cancelled, though momentum and the force of the Fed in the market make it nearly a fait accompli.
We'll take a closer look at trends in Sunday's WEEKEND WRAP, which will include all the data from Friday's trading.
A number of items beyond the recent congressional action that are moving stocks include the bank earnings out this week and economic data. All of the big names have reported, the last being Goldman Sachs, which came out this morning with third quarter numbers that blew away expectations. Net earnings applicable to common shareholders rose to $5.28 billion in the quarter, from $3.23 billion a year ago, while EPS rose to $14.93 from $9.68 a year earlier.
Goldman was the last of the six biggest U.S. banks to report earnings. JPMorgan Chase (JPM), Bank of America (BAC), Morgan Stanley (MS), Citigroup (C), and Wells Fargo (WFC) all exceeded expectations for profit and revenue, helped by loan loss reserve releases and investment banking. Bank of America (BAC) closed Thursday at its highest level since November of 2007.
At 8:30 am ET, September Retail Sales showed a bounce of +0.7% on expectations of a 0.2% decline. August was revised upwards to +0.9%.
The University of Michigan Consumer Sentiment Survey is out at 10:00 am ET, but is unlikely to have much effect on stocks.
There are still issues to be resolved, however rosy the picture appears presently. China's Evergrande crisis has expanded to other property developers not making timely interest payments on loans. Oil prices are soaring, already affecting gas prices at the pump along with heating fuel for winter. Energy woes are at crisis levels in Europe and are only just now emerging in the United States and Canada.
Long story short, positive earnings from US companies should push stocks close to or beyond record levels over the next two to four weeks. NOTABLE: Bitcoin has risen to nearly $60,000 as the SEC plans to issue a ruling on Monday allowing the first Bitcoin futures ETF. This story is developing...
At the Close, Thursday, October 14, 2012:
Thursday, October 14, 2021, 9:02 am ET
Stocks ended Wednesday mostly higher, except for the Dow Industrials, which finished flat.
It was a rather dull session overall, highlighted by boring but positive third quarter results from JP Morgan Chase (JPM), which ended up losing on the day, down 4.36 (-2.64%), to 161.00. Its losses helped keep the Dow underwater. Other bank stocks such as Citigroup (C), Bank of America (BAC), and Wells Fargo (WFC) suffered smaller losses.
Thursday morning, Bank of America and Wells Fargo both posted third quarter results that beat estimates. Stocks of both companies are priced higher in pre-market trading. The bank earnings coming out this week all have been better than expected, though not overwhelmingly good enough to induce much in the way of new buying. JP Morgan may have been a case in point, with investors waiting until reports were filed on a "sell the news" basis.
If such a trend persists, it means major investors may be paring back their positions, forgoing dividend payments in lieu of falling equity prices. Overall, indices remain in a grey area between the 50-and-200-day moving averages. The S&P 500 and NASDAQ haven't made a new all-time high in over a month. The Dow Industrials made its last ATH on August 16 (35,625.40). As of Wednesday's close, it was down just 3.5% from the last high.
What became glaringly obvious on Wednesday was the willingness of Fed officials to begin slowing asset purchases right away, as last month's FOMC minutes were released. This was not really much of a secret and the opinions expressed by participants cae before the September non-farm payrolls was a huge miss.
Entering Thursday's cash market open, futures are higher across the board and European stocks are boasting sizable gains. PPI for September showed a record increase of 8.6% year-over-year, with energy and food leading the increases. Companies will be under pressure to pass along the price hikes to consumers, as the gap between CPI (5.4%) and PPI (8.6%) are at a record 3.2027.
None of this seemed to have any effect on sentiment as futures point to a moon shot at the bell.
At the Close, Wednesday, October 13, 2021:
Wednesday, October 13, 2021, 9:19 am ET
Stocks took another series of jabs to the midsection on Tuesday, with the Dow Industrials taking the worst of it, though the losses were nothing serious.
More important in the larger scheme was the rangebound nature of the day's trading. The NASDAQ was mired in a narrow band of 111 points; the S&P stuck in a range of just 32 points. The major averages - excepting the NYSE Composite - are now on a three-day losing streak which began last Friday, on the heels of the weak September non-farm payroll report.
Things could change dramatically on Wednesday, as earnings season for the third quarter gets underway. An odd coupling of banks and airlines report this week, kicked off by JP Morgan Chase (JPM), which reported earlier this morning.
The nation's largest bank by market cap reported EPS of $3.74, which beat estimates of $2.97 and was 82 cents above the $2.92 reported a year ago. The company reported a loan loss reserve release of $2.1 billion.
Adjusted revenue rose $0.5 billion year-over-year to $30.44 billion, beating the consensus estimate of $29.86 billion.
Delta Airlines (DAL) came in at 30 cents per share, doubling the estimate of 15 cents. It was the first profitable quarter since the start of the pandemic. Revenue was $9.15 billion, well ahead of analysts' estimates of an $8.39 billion. The company threw cold water on the report, however, warning that higher fuel prices would have a material impact on fourth quarter earnings.
In pre-market trading, Delta was down slightly while JP Morgan was bid higher.
At 8:30 am ET, the BLS issued its September CPI figures, showing that inflation was not going away, as expected, with food, shelter, and energy contributing the most to the rise.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in September on a seasonally adjusted basis after rising 0.3 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 5.4 percent before seasonal adjustment.
Even though the latest data was only slightly higher than August's, the release put a lid on stock futures, which had been rising after JP Morgan's third quarter earnings report.
With less than a half hour before the opening bell, futures have gone negative, European stocks are mixed, though mostly higher, as were Asian stocks.
The market appears to be somewhat lifeless presently, which is not surprising, given that the CPI data was nearly flat and the few earnings reports did not supply any kind of breakout numbers. The general consensus is that the US economy is bumping along, with inflation persistent and growth prospects dimmed. The biggest concerns are rising prices for food and fuel. There's at least partial relief on the debt limit and federal budget fronts, having kicked those issues down the road to December.
Keep an eye on the Dow Transportation Average, which has been particularly buoyant of late. While the other indices have put on losses the past three sessions, the Trannies have gained two of the last three, adding 134.52 points on Tuesday to close at 14,723.52 (+0.92%). This could be more technical than sustainable, reflecting an opinion that the Transports - consisting primarily of airlines and shipping companies - were oversold.
The Transportation Average is still down 7.65% from it's May high and has escaped correction territory. A continued rise in the transports would be net positive for stocks overall, though a resumption of the selloff would constitute a signal for trouble ahead.
At the Close, Tuesday, October 12, 2021
Tuesday, October 12, 2021, 10:15 am ET
There's no getting around Monday's quick departure for stocks from positive to negative. That's why there are charts: to prove the point and provide a basis for analysis.
It's not the same for other things, like election results (why is that?), or airline cancellations, or people's opinions on cryptocurrency. Oddly enough, for those mentioned, there are substantial statistics and comparisons by which to make an argument, and, in the case of cryptocurrencies like Bitcoin, Etherium and thousands of others, there are actual charts, and data, and currency changing hands.
The examples are brought up because they all make a difference. As far as elections are concerned, it should be obvious to anybody with even a few flawed brain cells to realize that Joe Biden was not the people's choice, otherwise, how can one account for his administration's utterly failed policies on border protection, foreign affairs (especially Afghanistan), vaccines, and a rash of other areas of concern.
Having an opinion on certain matters is a right in most places, or, at least it used to before social and mainstream media began the practice of dictating what was acceptable truth and what was not. The recent employment of "fact checkers" on popular public platforms has enabled people driven by agendas to shape the narrative in their direction by shading the truth, hiding the obvious, or most notoriously, calling what is true, false.
The use of the word "false" by social or mainstream media insiders is what poker players call a "tell," an often unconscious signal that a player has either a good or bad hand. How many times does Chuck Todd or Nora O'Donnell or network reporters or any of the thousands of mouth-breathing parroters on local TV have to tell us that claims that the 2020 election was stolen or claims that Trump won are false or lies before a large segment of the population begins to question why they are making such a big deal out of it? That horse has left the barn.
Another case in point are the very odd flight cancellations by Southwest Airlines (LUV) and the denial by the company that such are related to Joe Biden's vaccine mandates.
And, of course, here's Yahoo! News using the word "false" to describe allegations of a vaccine-mandate-induced walkout by crews, thus verifying it as fact.
The union rebutted the swirling false information, saying Saturday its pilots were not participating in any "official or unofficial job actions," which could refer to a strike, sickout, or walkout.
So, now you know what's really happening there.
Then, on Monday, JP Morgan Chase (JPM) CEO Jamie Dimon - who has previously called Bitcoin a "fraud" - made the claim (again) that Bitcoin is "worthless", suggesting that investors in cryptos would eventually be burned. Speculators and investors cashing in at $57,000 or more the past few days share a different view.
Mt. Dimon, whose firm offers its clients access to six different crypto products, is probably upset he didn't get in at a lower price and is trying to "jawbone" Bitcoin to more reasonable levels. Sorry, Jamie. Bitcoin may be volatile, but at least it's not consistently losing value, like your favored fiat, US dollars.
We could go on, as there are countless other examples, like the relentless effort to get "everybody" vaccinated against a virus that kills less than one in 10,000 under the age of 50, but our point is made. If the mainstream media says it's fake, it's real. If they call it false, it's true. If they characterize a statement as a lie, then you know it's the truth. When Facebook or Twitter starts fact-checking, issuing warnings, and going over the edge of sanity to ban opinions contrary to their narrative, you can rest assured they're hiding something, usually something that's harmful to people, to you, to your family, and getting paid quite well to do so.
In regards to stocks rising and falling on Monday in a pattern common to bear markets, it is all there in the charts. The Dow Industrials can't seem to escape from below the 50-day moving average. Ditto the S&P, NASDAQ and NYSE Composite.
The Transportation Average, which closed higher on Monday, still has a long way to rise to reverse the primary bearish trend. It needs to get nearly to 16,000 for that to happen. It's currently trending around 14,500.
Seek the truth. It will set you free.
At the Close, Monday, October 11, 2021:
Sunday, October 10, 2021, 11:30 am ET
Equity traders had quite the week, as stocks responded to any manner of news or data, especially Friday, when the BLS reported a September jobs gain in its non-farm payroll report of just 194,000. Being well below consensus estimates, the number squelched a three-day rally in stocks, after Monday's big dump on worries that the US government was about to become a deadbeat debtor, as congress wrangled over raising or suspending the debt ceiling.
Senate Minority Leader, Mitch McConnell, took care of that on Wednesday, offering an olive branch deal to extend the debt ceiling into December, thus saving face for the Democrats. The details were worked out on Thursday, 11 Republican senators crossed the aisle to vote with the Dems, and somebody in the White House made it official later in the day. The deal provides cover for the Democrat majority as they continue to struggle to get their agenda through a mostly-deadlocked congress. For his part, McConnell blustered over the weekend that he might not be so accommodating when the debt ceiling issue reappears in early December, though just about anybody with a working knowledge of congress understands that McConnell is mostly bark with no bite and he'll work something out so as not to look too "Scroogy" during the holidays. Seriously, the guy's a Class A wanker.
In any case the congressional short-term fix sent stocks soaring, but Friday's dismal jobs number brought focus onto the underlying economy, which seemed not to be expanding or "recovering" along the lines of the preferred narrative. The jobs number, which is usually massaged well enough to produce the desired result, left Wall Street all aflutter with new worries about whether or not the Fed would announce a tapering of asset purchases at the next FOMC meeting, November 2-3.
The timing of the next meeting and the next jobs report is intriguing. Chairman Powell will not have the latest jobs data, as that is embargoed until the morning of November 5, though the president (or whatever imposter is occupying the office), so he would be stuck with the stale September numbers in his "taper" calculations. Having access to other sources upon which to gauge the economy, the Fed won't actually be hamstrung. Whatever the case, Powell's mission is a fool's errand, as there are two immutable facts of life in 2021: Trump won, and, the Fed can't taper. On the latter, they will, but it will foment a buyer's strike on Wall Street. On the former, well, how do you like what you've gotten?
Another issue that the Fed has to weigh is the persistent inflationary forces at work throughout the economy. There will be a new CPI and PPI report this coming week. CPI and PPI figures for September will be released an hour prior to the opening bell, Wednesday and Thursday, respectively. There's no reason to believe that these numbers will ease significantly; it's more likely that they both will show inflation increasing rather than moderating, as the Fed would prefer, now saying that the "transitory" inflation - which they helped create by expanding the money supply along with other radical monetary policies - is probably going to persist a while longer.
The odds of the Fed making a mistake are quite good. They have a penchant for policies that aid banks and the elite one-percenters while destroying the middle class. They're about as good at their jobs as congress.
At the end of the week, the major indices remained below their 50-day moving averages, a space now occupied by the Dow Industrials for a full month. In the background, the Dow Transportation Index had a very positive week, gaining 389.75 points (2.73%), pulling it above its 50-day moving average, though still in a technical bear rocket unless it gains beyond 14,986. It closed Friday at 14,640.46, keeping the primary market trend in the bear camp.
While stocks were bouncing higher late in the week, treasury yields rocked higher, expressing inflation fears. Yield on the 10-year note was up 13 basis points, from 1.48% to 1.61%; the 30-year yielded 2.16%, up 12 basis points from the prior Friday's yield of 2.04. These amount to the highest yields since June on the long maturity issues.
Additionally, thanks to the short-term nature of the debt ceiling deal, there is a "kink" at the short end. While thirty day notes are rightly yielding 0.02%, yields on the 60-day bills shot up as high as 0.09% before closing the week at 0.07% over concerns that congress may stumble into another debt stalemate and eventually trigger a partial default or have to shut down the government over funding issues.
In a nutshell, the debate over a continuing resolution to fund government, the infrastructure bill, and the debt ceiling was merely kicked down the road into December. Americans should be prepared to have their pants scared off just in time for an expensive Christmas. The country is being run into the ground by various dunces, grifters, and crooks.
Oil prices continued higher through the week, ending at $79.35 per barrel of WTI crude, a huge gain from last week's closing NY price of $75.74. Price ramps in Europe and Asia on everything from coal to natural gas are now spilling over into the Western Hemisphere with oil as the tip of the spear. The price of crude oil has more than doubled since last November's election, acting as a tax on the middle class and putting considerable strain on the economy. The simple math says that the more people have to pay for car and household energy, the less they have to spend on everything else. With prices for just about everything - including, importantly, food - rising the middle class is rapidly being squeezed into poverty.
Almost all of the issues before the American people have been caused by the horribly unbalanced policies of the current, phony administration and the utterly worthless congress (both parties). The US government, or deep state, has clealy emerged as the greatest threats to freedom and prosperity in the United States, and, by extension, the rest of the world. This is what happens when elections are unfairly managed and the media sides with those who prevaricate and trample upon the constitution. Without a proper response from the American public, conditions in the country appear to be devolving rather than improving. The United States is on the cusp of either a depression or revolution, or both. In many ways, the federal government, in cahoots with the Federal Reserve System, seems hellbent upon destroying not only democracy, but the Republic itself. Policy and the public are heading towards a significant clash of values and neither side seems willing to compromise its position.
It should not go without notice that cryptocurrencies are all the rage again, especially after Fed Chairman Powell said he had no intention of banning cryptos.
Bitcoin had a banner week, up nearly 16% Sunday to Sunday, hitting a high of $56,113 Friday morning, and maintaining a price near that. As of Sunday morning, Bitcoin is trending around $55,150. Bitcoin's relentless rise of the July $30,000 low have the #1 cryptocurrency up nearly 400% over the past year. The crypto crowd is cheering as the price approaches April's all-time high of $64,899. Many of the main cheerleaders and promoters are still talking about a price of $100,000 or beyond by year's end.
While Bitcoin has re-appeared as a safety asset of choice, gold and silver continue to struggle to make gains, though the most recent prices are encouraging.
Gold price 10/1: $1761.00
Silver price 10/1: $22.53
Gold spiked as high as $1,783.00 on Friday before being beaten back down. Silver also rocked higher on Friday, to $23.27, though the gain was not sustained into the weekend close.
Stackers and speculators were encouraged by the Friday spike. Despite relentless price suppression by central banks, the LBMA and operators on the COMEX paper markets, buying continues brisk, premiums remain high, though supply now appears adequate to demand. Most online dealers have lifted their shipping restrictions and minimums. Some dealers are selling one to ten ounce silver bars and coins for 15-20% over spot, while one to ten ounce gold coins and bars are selling with premiums as low as four percent.
Here are the latest prices for common one ounce gold and silver items sold on eBay (numismatics excluded, shipping - often free - included):
Item: Low / High / Average / Median
The Single Ounce Silver Market Price Benchmark (SOSMPB) settled at $38.57, an notable increase of $2.32 from last week's price, $36.25.
As the week closed with a thud rather than a bang on Wall Street, stocks remain under pressure, as does the underlying economy. The forces of poor fiscal and monetary policy decisions, rampant inflation, the lingering effects of pandemic-related issues (vaccination mandates are wrecking businesses, relationships, and lives), and general distrust of institutions make for an uneven time in markets. While elitists dream of a fully socialized, feudally repressed planet, individuals crave freedom of choice and relief from government policies. The movement away from officially-sanctioned fiat currency also continues apace, as evidenced by the resurgence of cryptos and renewed interest in the old standards, gold and silver.
The coming weeks through to the holidays should prove to be challenging, not just for investors, but for all Americans, from congressional cretins to streetwise skateboarders. The country has become something of a bizarre clown world, a kakistocracy, where the worst lead the best and the rest suffer the consequences. There comes a reckoning, with or without reconciliation.
Have a great week!
At the Close, Friday, October 8, 2021:
For the Week:
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