We haven't gone anywhere on the Dow, S&P or NYSE since early March and we've lost 6% on the Nasdaq and 8.3% on the Russell yet, to hear the mainstream media tell it – there's no better time to invest.
Nazi propagandist Joseph Goebbels said: "If you tell a lie big enough and keep repeating it, people will eventually come to believe it." Clearly that's the template being used today by the MSM and even our politicians these days.
As you can see from Dave Fry's SPY chart, we got a very exciting pop into the close on Friday for no particular reason and now, for no particular reason the Futures have given back most of those gains. But don't worry, into the open, while the volume is still low, it's sure to get jammed back up again – just in time for the Funds to dump their shares on the retail crowd.
We don't care IF the game is rigged, as long as we can figure out HOW the game is rigged and play along. This morning I posted to our Members that Silver Futures (/SI ) were a long at $19.50 and that Gasoline Futures (/RB) were a short at $3. Already silver hit $19.65 for a $750 per contract gain and gasoline fell to $2.985 for a $630 per contract gain – and the Egg McMuffins are paid for!
We KNOW it's rigged and we KNOW the moves were fake so, when they hit good resistance points, we knew it was very unlikely they'd get past them. If they did get over the resistance, we'd take small, quick losses and be done with the trade. Of course we went over the news and the data from around the World to…
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $360.2 billion, a decrease of 0.5 percent from the previous month, but 4.8 percent above June 2009.
Total sales for the April through June 2010 period were up 6.8 percent from the same period a year ago. The April to May 2010 percent change was revised from -1.2 percent to -1.1 percent.
Retail trade sales were down 0.6 percent from May 2010, but 5.0 percent above last year. Nonstore retailers sales were up 12.1 percent from June 2009 and gasoline stations sales were up 8.8 percent from last year.
The only believable number in the report is gasoline sales. Otherwise the problem is in Census Bureau methodology.
The advance estimates are based on a subsample of the Census Bureau’s full retail and food services sample. A stratified random sampling method is used to select approximately 5,000 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms. Responding firms account for approximately 65% of the MARTS dollar volume estimate.
The methodology misses stores that went out of business and have no retail sales. Circuit City is a prime example but also note that thousands of small strip mall stores are now shuttered as well. Some of that volume went to the surveyed stores making it appear sales went up.
The only accurate way of computing retail sales is to look at state sales tax data. Even then, tax data can be misleading because one needs to factor in changes in tax policy, notably states increasing sales tax rates.
For example, a rise in the sales tax rate from 7% to 8% would result in a 14% increase in sales tax collections (all other things being equal).
The Rockefeller Institute reports "The growth in state tax revenues is not an indication of broad state fiscal recovery, but is mostly driven by legislated changes [massive tax increases] in two states — California and New York."
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $353.0 billion, a decrease of 0.3 percent (±0.5%)* from the previous month, but 5.4 percent (±0.5%) above December 2008. Total sales for the 12 months of 2009 were down 6.2 percent (±0.2%) from 2008. Total sales for the October through December 2009 period were up 1.9 percent (±0.3%) from the same period a year ago.
Now remember, Census has some funny methodology in that they don’t count sales unless both the prior and current month is returned by the same store. This means they overstate sales during declines in the economy, and understate them during expansions.
Looking inside the report we see a number of surprises in the year-over-year numbers.
Electronics were down – so much for the so-called "strong Christmas sales" in that category that everyone on ToutTV has been crowing about.
Food and beverage purchases were up – price inflation?
Gasoline was up huge, accounting for a huge percentage of the year/over/year increase all on its own. Gee, that happens when the gas price goes up a lot, right?
Indeed, while there were positive changes in other categories (online was up 10%, as just one example) gasoline sales increased in dollar volume by thirty-four percent and accounted for a stunning $8.7 billion of the total $17.9 billion increase – roughly half.
What’s there to like in here? I say "little or nothing" – gas sale increases are not positive, they’re negative as most gasoline demand is inelastic (you need it to get to work) as is food.
The bright lights, such as they were, had clothing up 5% and general merchandise up 2%, both annualized.
Rather uninspiring when one considers that the inelastic components were the big movers on the positive side and that’s not good for discretionary spending capacity.
On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months the index increased 1.8 percent before seasonal adjustment, the first positive 12-month change since February 2009.
Most of the change was due to energy; gasoline was up sharply (as we saw yesterday in the PPI.)
Core was a literal zero.
Food was up a bit, but I continued to be puzzled by the difference between gasoline and "fuel oil."
Why? Because "fuel oil" (that is, heating oil) is exactly the same thing as #2 diesel – that is, road diesel fuel. The only difference is the tax (and the presence of dye in the heating oil to denote that the tax has not been paid.) But for the legal (tax) issues you can run "heating oil" in your diesel car or truck, and vice-versa – they are identical products.
Used vehicles were also up materially – a reflection of the distortion from "cash for clunkers" still present in the data (it hit its maximum in October at +3.4%) Prices for new vehicles were also up (again, the maximum was in October) – again denoting the "back-door" bailout of the automakers from cash-for-clunkers. Unlike the new vehicle deal however, which you got a tax credit for, the buyer of a used car just got plain old-fashioned screwed through price-jacking caused by constraints in supply. (Just wait though – in the new year when people can’t make the payments on those CFC deals, you’ll see what happens to used car prices…. supply and demand you know.. )
Medical care was up as usual (gee, how come it keeps rising faster than overall inflation?) and shelter costs were down (remember, this is not "housing", as that would expose reality – it is "owners equivalent rent")
All in all a blah report – but given the PPI that’s expected – the fun and games in the CPI report resulting from yesterday’s PPI should show up in a month or two.
Colonial Pipeline Co., which operates the largest pipeline linking U.S. Gulf Coast refiners and East Coast markets, will limit shipments of gasoline because orders exceed the company’s ability to deliver fuel on time.
The Alpharetta, Georgia-based company issued the requirement, known as an allocation, in a bulletin to shippers for the 70th cycle. The restriction applies to shipments on Colonial pipelines north of Collins, Mississippi.
Companies will be able to ship a pro-rated portion of their original nomination, based on their shipping history over the past year, according to Colonial.
With the assistance of Jane Van Ryan at API, I contacted to Steve Baker at Colonial Pipeline, to find out what is happening. I discovered the oversubscription seems to be related to refinery shutdowns in the Northeast.
Many of you will remember that Colonial Pipeline is the big pipeline that carries finished oil products from the Gulf Coast up to the Northeast part of the United States.
Map showing route of Colonial Pipeline
I live in the Atlanta area, so I remember when there have been gasoline disruptions because of inadequate supply. This has happened twice: once following Hurricane Katrina in 2005, and again in September 2008, following two gulf hurricanes.
When I inquired, I found out that there are really two parallel pipelines. One carries only gasoline products; the other carries distillate products. The line that is running short of capacity is the gasoline pipeline. (If only one is running short of capacity, it is not too surprising that it is the gasoline line. Distillate products like diesel fuel are now in very abundant supply; gasoline is at closer to normal levels.)
When I asked why demand was so high for gasoline pipeline capacity, one of the reasons mentioned was that shutdowns in refinery capacity in the
Fed Chair Yellen will be presenting her semi-annual monetary policy testimony - sometimes called the "Humphrey-Hawkins" testimony - today (House Financial Services Committee) and tomorrow (Senate Banking Committee). Her prepared remarks offered little new information over the January FOMC Statement but the Q&A will likely be the most market-moving as politicians likely demand she "get back to work" for the good of the nation's shareholders.
The gap down had set up for a big bearish move lower, but the collapse never appeared. Instead, lows held as support. On the flip side, an attempt at a rally couldn't get off the ground, but markets were able to do enough to register a close above the open.
The S&P closed with a spinning top below support. Watch for a strong 'sell' signal in the MACD as other technicals remain bearish. The only positive is the strong relative performance against the Russell 2000.
The Nasdaq experienced a big gap down yesterday, and today offered a brief move to test the gap. Bulls need a gap higher to leave what could be a very good bullish ...
When assets reach prior highs, its time to pay attention from a Risk On & Risk Off basis.
The chart on the left is Silver, going back to the mid 1970’s. As you can see it reached $50 in the early 1980’s and then quickly reversed, losing over 90% of its value in the next 14-years. Then it embarked on a rally, starting in the early 1990’s. This rally took Silver back to the $50 level in 2011, which ended up being a “Double Top” nearly 30-years later. After hitting the $50 level again, buyers disappeared and sellers stepped forward....
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Throughout the past 30 days of wild volatility, here’s what I didn’t do.
Panic. Worry. Sell.
In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our mind and ignored it.
A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.
We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.
The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies--money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.
Last year, the S&P 500 large caps closed 2015 essentially flat on a total return basis, while the NASDAQ 100 showed a little better performance at +8.3% and the Russell 2000 small caps fell -5.9%. Overall, stocks disappointed even in the face of modest expectations, especially the small caps as market leadership was mostly limited to a handful of large and mega-cap darlings.
Notably, the full year chart for the S&P 500 looks very much like 2011. It got off to a good start, drifted sideways for...
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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