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Fed Fun Friday – Powell Seeks to Save the Market (again)

Related imageMore free money!  

Whenever the market begins to dip, the Fed jumps into the fray to prop things up.  That, of course, is not what the Fed is supposed to do – but they have morphed their mission into propping up the markets since the Banksters (which is who the Fed really works for) simply make more money in a bullish market – and these guys REALLY like money.  They like money so much, they are even helping Donald Trump keep his Presidency.  

Why?  Because it it's not Trump in 2021 it's very likely to be Elizabeth Warren and she is one of the few people in Congress who actually understands the banking system – not as an abstract – but with a Harvard Law Professor's understanding of every little line they put into their 20-page contracts and she can clearly see how and where the money is flowing.  You can't trick Elizabeth Warren and, for a profession that only exists to get people to part with their money – that's a bad, bad thing.

A Warren Presidency will cost banks BILLIONS in profits and it's likely to be no picnic for the Fossil Fuel Industry or Big Pharma either.  That's why Donald Trump pulled in $125M in donations last quarter – the "Never Warren" wing of the Republican Party has vey deep pockets indeed.  Those same donors are backing all the GOP Senators and Representatives too so don't get too deep in your liberal fantasies that 20 GOP Senators will walk away from their base AND their money in order to do the right thing and impeach Trump – it's very unlikely. 

Image result for pocahontasEither way though, the Democrats win as Trump staying on despite being obviously guilty is very likely to cause enough GOP Senators to lose their jobs to give the Democrats a majority in both houses and Trump is very unlikely to beat Warren in the General Election.  So far, the only dirt Trump could dig up on Warren after 4 years of trying is that she claimed to be part Native American (and it is but a very small part), calling her "Pocahontas", which any Disney fan (or Neil Young fan) knows is actually a compliment but Trump, despite having many kids – is not the kind of Dad that sits there watching Disney with them.

If Trump is impeached, likely in March, then the Senators defending him will look like idiots and again, the Dems have a good chance of taking the Senate and the GOP has little time to prepare a candidate to run against them AND there are other contenders for the GOP ticket already – so it would be a total mess.  Meanwhile, Warren and the Democrats' message to voters can be summed up in a song:

"You think you own whatever land you land on

The Earth is just a dead thing you can claim

But I know every rock and tree and creature

Has a life, has a spirit, has a name

 

You think the only people who are people

Are the people who look and think like you

But if you walk the footsteps of a stranger

You'll learn things you never knew, you never knew

 

Come run the hidden pine trails of the forest

Come taste the sun sweet berries of the Earth

Come roll in all the riches all around you

And for once, never wonder what they're worth"

Socialism!  No wonder Trump hates her so much…  

8:35 Update: Only 136,000 jobs were added in another anemic Non-Farm Payroll Report but that's GOOD for the market as it puts the Fed firmly bacx on the table into their Oct 30th meeting and, as I noted above, we will hear from Jerome Powell at 2pm but first Bostic at 10:25 and after Powell it's Brainard (2:10), Quarles (4pm) and George (4:45).  This is, so far, all going according to plan for the week as we expected the sell-off followed by a Fed save but how much of a save (ie. bounce) are we going to get after yet another 5% drop in the indexes?

We did hold 2,850 but we expected that and that's why we called for playing the Dow for the 200-point bounce off the 26,000 line yesterday so YOU'RE WELCOME for that $1,000 per contract gain on /YMClearly yesterday's PSW Report was worth the $3, right?

Notice on the above chart, it's the same S&P Chart we drew up on Aug 7th using the same lines because 5% Rule™ lines are not TA voodoo that changes with the wind - they are simply math formulas that predict the likely inflection points based on prior consolidations AND current valuation models.  In other words, it has a Fundamental basis that has nothing to do with TA – we simply express it on a chart to illustrate the point.

TECHNICALLY, it took all of June and most of July to get to 3,025 on the S&P 500 and then we dropped hard and fast to 2,850 and spent most of August there and then half of September getting back (not quite) and now only a week in October to lose it again.  Odds still favor a broader "M" pattern is forming and we'll see that lower weak bounce tested which, I'm sad to say, would mean the base line is still 2,600 on the S&P, not 2,850 and that would mean we still have another 10% to fall from here.  

We're in CASH!!! so we don't really care but you may want to short the indexes into the weekend if we don't hit our Strong Bounce lines into the close today.  As of yesterday's close, we were at:

  • Dow 25,000 is the mid-point and bounce lines are 25,550 (weak) and 26,100 (strong)
  • S&P 2,850 is the mid-point and bounce lines are 2,880 (weak) and 2,910 (strong)
  • Nasdaq 7,200 is the mid-point and bounce lines are 7,360 (weak) and 7,520 (strong)
  • Russell 1,440 is the mid-point and bounce lines are 1,472 (weak) and 1,504 (strong) 

We should be over the lines to start the day but it's how we finish that counts.  Trump's troubles got deeper overnight as text messages surfaced showing that he clearly withheld aid to the Ukraine for dirt on Biden – whether real or manufactured with the guidance of his personal attorney (Rudi).  Not only that but Trump's actions CLEARLY had repercussions in US foreign policy, just as hit request for Russia to dig up dirt on Hillary during his 2016 campaign led to him conceding many points to that country – including ignoring their interference in that election AND the 2018 election (in Trump and the GOP's favor). 

Now Trump, right on the White House Lawn, has asked China to assist him in digging up dirt on Joe Biden and who knows what favors he will end up trading for that if he's allowed to continue.  Impeachment is not about "getting" the President – it's about protecting our national interests from a guy who uses them to trade personal favors! 

Have a great weekend, 

- Phil

"I wish a was a trapper
I would give thousand pelts
To sleep with Pocahontas
And find out how she felt

In the morning
On the fields of green
In the homeland that
We've never seen" – Neil Young

 


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  1. Let's remember that we are spending $1T to create 135,000 jobs each month! With no wage growth.


  2. Buried in an executive order meant to help seniors:

    https://www.whitehouse.gov/presidential-actions/executive-order-protecting-improving-medicare-nations-seniors/

    The Secretary, in consultation with the Chairman of the Council of Economic Advisers, shall submit to the President, through the Assistants to the President for Domestic and Economic Policy, a report within 180 days from the date of this order that identifies approaches to modify Medicare FFS payments to more closely reflect the prices paid for services in MA and the commercial insurance market, to encourage more robust price competition, and otherwise to inject market pricing into Medicare FFS reimbursement.

    That means more money in the pocket of healthcare providers I think! Long healthcare now!


  3. Warren is going to cost banking oil and pharma billions! bwahahahaha! It’s gonna be awesome! /s


  4. Good Morning!


  5. Good morning! 

    AAPL blasting 2.5% higher – that's where 100% of the gains are coming from.  Good for 50 Dow points, 0.5% of the Nasdaq (20% of 2.5%), etc…

    Apple Stock Is Rising After Reports Suggest the New iPhone Isn’t a Dud After All

    This is why we ignored all the naysayer articles on the new IPhone – finally, on version 11, we've learned not to listen to these idiots. 

    Big Chart – Not bullish again until the 50 dmas are taken back (and held).  Still that would be surprisingly bullish if it happens.  Obviously not today but any time between now and Thanksgiving. 

    Spending/StJ – Good point.  

    Letter to Congress from Oversight Committee (Schiff).

    Yikes!  

    Image result for trump smoking gun cartoon

    That's what that China thing was yesterday on the WH Lawn – Trump's last-ditch strategy (now that all the other lies have been disproven) is to claim that it's "normal" to trade favors for information and he'll be mounting an "everybody does it" sort of defense.  

    And of course, trading favors is what trade and policy are all about – the difference is that this is for Trump's personal gain (a nuance he hopes his base won't understand or believe) - evidenced by the fact that he bypassed all official channels and had his personal attorney engage in foreign policy discussions.  Impeachment doesn't have to be over a crime – you are allowed to remove someone who simply sickens you! 

    Buried/StJ – Also sickening!  

    Billions/Dawg – She will NOT be good for the economy in the short run but will be just what we need over the long run.

    At the current rate of global emissions we may be back in the Pliocene by 2030 and we will have exceeded the 2°C Paris target. One of the most critical questions facing humanity is how much and how fast global sea levels will rise.

    According to the recent special report on the world’s oceans and cryosphere by the Intergovernmental Panel on Climate Change (IPCC), glaciers and polar ice sheets continue to lose mass at an accelerating rate, but the contribution of polar ice sheets, in particular the Antarctic ice sheet, to future sea level rise remains difficult to constrain.

    If we continue to follow our current emissions trajectory, the median (66% probability) global sea level reached by the end of the century will be 1.2 metres higher than now, with two metres a plausible upper limit (5% probability). But of course climate change doesn’t magically stop after the year 2100.

    Already, we are observing warm circumpolar deep water upwelling and entering ice shelf cavities in several sites around Antarctica today. Along the Amundsen Sea coast of West Antarctica, where the ocean has been heating the most, the ice sheet is thinning and retreating the fastest. One third of Antarctica’s ice sheet — the equivalent to up to 20 metres of sea-level rise — is grounded below sea level and vulnerable to widespread collapse from ocean heating.

    Image result for 20 meter sea level rise

    Image result for 20 meter sea level rise

    Related image

    Related image

    greta climate crisis greta thunberg un climate action summit GIF


  6. 3 Meters, by the way, is happening for sure by the end of the century, pretty much no matter what we do so bu-bye Miami and Fort Lauderdale and the Keys and $1Tn worth of other real estate (think of all those multi-million-dollar homes on she shore-lines) and that's just Florida.  That's why it's ridiculous to complain about the cost of fighting climate change – no matter why it's happening.  20 meters will wipe out the entire US coastline and NY, Boston, LA, SD, Chicago, Houston, etc.  by the time it's just 1 more meter – the flooding will be enough to convince people it's really happening and people will begin selling all shore real estate.  That's likely by no later than 2050 so 30 years but it's possible perception will change faster than that so any kind of lowland real estate is a real crap-shoot if it's your long-term plan!  

    Indexess up half a point now.  /RB really flying.

    We'll see if Dax can take back 12,000:







  7. Trump raised Biden with Xi in June call housed in highly secure server



  8. The trading fee war:

    https://awealthofcommonsense.com/2019/10/the-great-fee-war-of-the-2010s/

    These firms will figure out ways to make money in other ways. Robinhood is not a charity. They need to make money or they go out of business eventially. So they sell order flow to high frequency trading firms. A letter from one of the founders last year explained how this works:

    The revenue we receive from these rebates helps us cover the costs of operating our business and allows us to offer commission-free trading. Robinhood earns ~$0.00026 in rebates per dollar traded. That means if you buy a stock for $100.00, Robinhood earns 2.6 cents from the market maker. Other brokerages earn rebates and charge you a per-trade commission fee.

    The hope here is that passing these trades along to the HFTs will allow for better prices than they would on another exchange but it’s hard for customers to know for sure if they’re truly getting better execution.

    These firms can also make money on interest rate spreads for what they pay out on cash balances, margin loans, fund fees (for the ones that have their own line-ups) and financial advice. They’ll figure something out.


  9. Nice head-fake on /NG – almost all the way back to $2.25:

    Another chance to long /KC at $100

    If you want a bullish hedge (ie, you are too bearish) – Copper (/HG) at $2.54 might be a nice play on possible China progress next week (I'd put a stop below the $2.53 line):

    Senator Elizabeth Warren’s presidential campaign raised $24.6 million over the summer, a total that far exceeded Joe Biden’s fund-raising for the same period and narrowly trailed Bernie Sanders’s, another sign of her campaign’s rise

    Women gained 13 seats on the boards of S&P 500 companies, for a 27% share of directorships

    Donald J. Trump: “I think it’s outrages that a Whistleblower is a CIA Agent.”

    Seriously, I make spelling errors all the time but Trump seems to actually not know the difference when he spells things like "outrageous" completely wrong. 

    Palmer Report – Donald Trump's day so far:

    • - Kurt Volker gives damning testimony
    • - Trump quotes Washington Times
    • - What next, the National Enquirer?
    • - Misspells "outrageous"
    • - Misspells "you're"
    • - Peter Navarro melts down
    • - Rick Perry quits
    • - Trump is going to prison
    • - It's still only 10:30am

    KUDLOW TELLS FOX BUSINESS HE DOESN'T SEE A RECESSION `IN SIGHT'

    WHITE HOUSE ADVISER KUDLOW SAYS DEPUTIES IN U.S.-CHINA TRADE TALKS TO MEET MONDAY AND TUESDAY, PRINCIPALS TO MEET ON THURSDAY AND FRIDAY -FOX BUSINESS INTERVIEW

    Kudlow: Economy is doing great

    Navarro: Fed must cut rates now

    Trump: We need zero rates and QE. Fed's pathetic.

    Streaming Wars: DISNEY BANS NETFLIX ADS ACROSS ITS ENTERTAINMENT TV NETWORKS:DJ

    Image

    Image

    Image

    Image

    Image

    (CNN)The poll numbers are in on impeachment, and it's not good news for President Donald Trump. A clear plurality of Americans approve of the House's impeachment inquiry into Trump, and they are split on whether they want to impeach and remove him from office.

    Americans are more eager to impeach Trump now than they were at similar points in the impeachment sagas of Bill Clinton and Richard Nixon.
    Impeachment actions usually start off as being unpopular with the American public. After the House voted to start an impeachment inquiry of Clinton in October 1998, a CBS News/New York Times poll found that 45% approved and 53% disapproved.
    But with Trump, those numbers are reversed. In an average of polls taken since House Speaker Nancy Pelosi announced a formal inquiry last week, 51% support an impeachment inquiry. A minority, 44%, are against it.
    When it comes to impeaching and removing Trump from office, the difference is even more dramatic. An average of polls taken since early last week shows that 46% support impeaching and removing Trump from office. That's about equal with the 45% who are against such an action.
    Back in October 1998, the vast majority of Americans were against impeaching and removing Clinton from office. In a CNN poll from then, only 31% favored impeaching and removing. The vast majority, 63%, were against it. This -32 point gap for impeaching and removing Clinton stands in contrast to the +1 gap for impeaching and removing Trump.
    At no point during the impeachment proceedings against Clinton did anywhere close to a plurality of Americans want Clinton impeached and removed from office. Right now, you could argue that we're already at that point with Trump.
    More amazingly, more Americans are in favor of impeaching Trump now than they were at a similar time during the House's investigation of Nixon in 1973 and 1974.
    The House Judiciary Committee voted to start an impeachment inquiry of Nixon in late October 1973. This was following the infamous Saturday Night Massacre, in which Nixon ordered his attorney general to fire an independent prosecutor looking into the Watergate scandal. A Gallup poll taken in the immediate aftermath found that just 38% felt that Nixon should be impeached and compelled to leave the presidency. The majority, 53%, said that he shouldn't.

    Trump is ranting and raving now with reporters.  

    UBI/StJ – There's no other realistic solution for a world of robot workers – unless we want to go full Communist?

    Image result for robot workers chart

    Image result for robot workers chart

    Image result for robot workers chart


  10. Volume very subdued.


  11. Kudlow / Phil – When has the guy been accurate in his predictions in the last 30 years:

    1. Clinton tax increases will lead to an economic downturn and lower markets. Sell everything!
    2. The Bush Boom – expansion as far as the eyes can see even as far as 2008! Buy at these cheap prices!
    3. Obama will kill the economy and the markets, sell everything!

    The guy is a great indicator of things that won't happen!


  12. And I would like to also voice my strong support for Trump's policies of investigating all the business dealings of family members of past presidents and vice-presidents and even enlisting foreign government if needed. Can't leave any stone unturned. This should be standard operating procedures for new administrations.  





  13. Volume/Den – Very slow.  Maybe people waiting on Powell?

    Date Open High Low Close* Adj Close** Volume
    Oct 04, 2019 291.14 293.14 291.08 292.89 292.89 29,219,958
    Oct 03, 2019 287.81 290.45 284.82 290.42 290.42 85,278,800
    Oct 02, 2019 291.50 291.51 286.64 288.06 288.06 122,539,500
    Oct 01, 2019 297.74 298.46 293.00 293.24 293.24 88,242,400
    Sep 30, 2019 295.97 297.55 295.92 296.77 296.77 51,662,400
    Sep 27, 2019 297.83 297.95 293.69 295.40 295.40 84,746,600
    Sep 26, 2019 297.63 297.86 295.45 297.00 297.00 56,179,700
    Sep 25, 2019 295.96 298.11 294.33 297.62 297.62 71,854,000
    Sep 24, 2019 299.41 299.84 294.81 295.87 295.87 94,869,400
    Sep 23, 2019 297.55 299.00 297.27 298.21 298.21 43,476,800
    Sep 20, 2019 300.36 300.67 297.41 298.28 298.28 89,565,000

    Families/StJ – True, Trump is dooming his children.

    As to Kudlow:


  14. Powell – Wow!! Dow and S&P futures have been in an algo-driven range since noon. 


  15. Nonetheless, we have good bounces now but let's check the 5% Rule – not the long-term lines (above) but the short-term ones for this week's drop:

    Dow – We can call that 27,000 to 26,000 so 200-point bounces to 26,200 (weak) and 26,400 (strong) 

    S&P – 3,000 to 2,880 (though we know 2,850 is the 5% line – we never got there) so 120-point drop (4%) means 24-point bounces to 2,904 (weak) and 2,928 (strong)

    Nasdaq – Tricky as it started falling at 7,950 and broke down more slowly but I think we should use that and 7,550 is clearly the bottom so 400 points down is 80-point bounces but we know /NQ likes those 25-point moves and we also know 7,500 is MAJOR support (Nasdaq 5,000 to 7,500 is the major run we're dealing with) so I'm going to have to call the short-term bottom 7,500 – even though we only grazed it and that makes 7,875 the 5% up line from there ALTHOUGH it's not reciprocal and we measured the others from the top so the question is, what is 7,500 95% of?  And we're back to 7,900 – my first instincts were right but we'll call it 400 points down to 7,500 so weak bounce is 7,575 and strong is 7,650 and, thanks to AAPL – we've blown past that but talk about a narrow rally! 

    Russell – 1,580 to 1,480 is 6.3% and the bounces should be 20 to 1,500 (weak) and 1,520 (strong).  My issue is that we KNOW 1,600 is super-important and that -5% is 1,520 so that is the zone the RUT needs to get back to and THEN bounce strong before they are back on track.  Call it 15 points, not 16 and that would make the weak bounce 1,535 and the strong 1,550.  1,480 is the -7.5% line from 1,600 – that's the significance there.  

    Copper already up 0.02 and those contracts pay $250 per penny so +$500 is too good to leave on the table over an uncertain weekend – IMHO.


  16. Copper – Nice trade, Phil !


  17. It's a lot easier to call the futures when I'm not distracted by stocks!  

    Following a disappointing jobs report, which could have been worse on the headline payrolls print but was quite dismal in terms of wages, which actually dipped by 1 cent sequentially and rose at the slowest pace in a year, traders were looking ahead to the day's final event, the speech by Fed Chair Jerome Powell titled "Perspectives on Maximum Employment and Price Stability."

    However, anyone hoping for an advance look at the upcoming October and December FOMC decisions was disappointed, as Powell stuck close to the vest, repeating his now standard that the economy "faces some risks" but "overall it is in a good place."

    Some of the other highlights from the uncharacteristically short speech, via BBG:

    • Powell: Fed's Job Is to Keep Economy Expanding 'As Long as Possible'
    • Powell: Low Inflation and Low Interest Rates Leaves Fed With Less Room to Cut Rates in Downturns
    • Powell: Fed Is Examining Strategies to More Consistently Achieve 2% Inflation Target
    • Powell: Fed Listening Sessions Reinforce Importance of Sustaining Strong Job Market
    • Powell: Fed Has 'Significant Protections From Short-Term Political Pressures'
    • Powell: Political Independence Gives Fed an Obligation to Explain Actions

    The key sentences from the speech:

    • “Unemployment is near a half-century low, and inflation is running close to, but a bit below, our 2% objective,” Powell says without directly addressing Friday’s jobs report
    • “While we believe our strategy and tools have been and remain effective, the U.S. economy, like other advanced economies around the world, is facing some longer-term challenges — from low growth, low inflation, and low interest rates”
    • “Low can be good, but when inflation — and, consequently, interest rates—are too low, the Fed and other central banks have less room to cut rates to support the economy during downturns”

  18. Quite the finish to the week.

    Got about half the drop back but they played the China card and the Fed card to get there.  Now the actual China meeting and the Fed statement have to come through, which is why we're happy to sit October out!  

     Powell speaks Monday, Tuesday and Wednesday next week!   Very little data but a 10-year auction is Wednesday along with the Fed Minutes, so still interesting.


  19. Have a great weekend everyone, 

    - Phil


  20. Kashkari 4 times too – they are REALLY trying to get a message out there!




  21. Trump and His Henchmen in the Flames



  22. Scottish independence supporters gather for Edinburgh march


  23. Sanders' MI – this is odd. Initial reports were that Bernie had stents put into two cardiac arteries, then later reports were startled to state that Bernie had suffered a "heart attack", a myocardial infarct. Now, where I come from, "infarct" means loss of blood to tissue due to blocked blood supply, and "myocardial" means heart muscle. How does "he had two stents placed in blocked cardiac arteries" differ from "HE HAD A HEART ATTACK!". Not by much that I can see – maybe the attending docs spotted some tissue necrosis, and that's what's different? Anyway, something smells about this.




  24. Iran says Chinese state oil firm withdraws from $5B deal








  25. Miracle On 14th Street




  26. The Republicans





  27. When lies Trump truth