Posts Tagged ‘Federal Reserve’

Monday: Clear Proof of Massive Market Manipulation

SPY 5 MINUTERemember this?  

Sure you do, this was Friday's intra-day chart of SPY, the ETF that tracks the performance of the S&P 500.  It's pretty similar to what happened every day last week, with a high-volume (relatively) sell-off followed by a recovery on almost no volume into the close, giving us the impression that the markets are flat

Only Friday was a bit different.  On Friday, the market manipulators were so desperate to close the week on a high note and so greedy, that they also got sloppy and now we have some very clear evidence of what complete and utter BULLSHIT this market is:

What do we see here?  Despite a 0.45% rise in the S&P and a 0.39% rise in the NYSE, 0.4% in the Dow,  0.45% in the Nasdaq and 0.25% rise in the Russell, the FACT is that there were FAR MORE shares DECLINING than there were advancing.  In fact, on the NYSE MKT (what used to be called the AMEX), declining volume outpaced advancing volume by 115%.  115%!  Yet we get a 0.4% RISE in the index?  

On the NYSE itself, 2,079 stocks declined while only 1,057 (33%) of the stocks advanced and there was 56% more volume to the declining shares than the advancing shares yet, MIRACULOUSLY, 160 NYSE stocks made new 52-week (and, often, all-time) highs while just 30 made 52-week lows.  That's 84% positive!  Isn't that amazing?  Isn't that UNBELIEVABLE???  

It is unbelievable, as in – something that should not be believed by intelligent people.  When you see a magician on stage sawing a woman in half or levitating – you might be amazed at what a good trick it is but you don't start believing in magic, do you?  What if that magician asks you to bet your retirement on the fact that he is really levitating people or that his assistant can medically be cut into pieces and reassembled?  

You wouldn't risk your money on such obvious fakery, would you?  You wouldn't give your hard-earned money to a person whose job it was to…
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Friday Fedapalooza – 8 Fed Speakers in One Day + Draghi!

Hang on to your hats!  

Janet Yellen speaks at 10 am, EST and she's scheduled to discuss her "Labor Dashboard" and, from that, the pontiffs will then attempt to read the tea leaves of Future Fed action.  She'll likely note that the Labor Market is generally improving but that there is no immediate reason to raise rates.  The definition of immediate will be much debated.  

If that does not confuse us enough, we will hear from 7 of the Fed Dwarves as well including Williams, Lockhart, Plosser and Bullard.  Draghi takes the stage at 2pm, EST.  In case Yellen's empty promises don't do the trick, Draghi is sure to have even emptier ones – whatever it takes to end the week on a positive note!  

Still, we're playing the day bearish (we added bear plays in yesterday's Live Member Chat and we're short /YM below 17,000 along with other Futures) as it's hard to imagine what Yellen and company can possibly say that they haven't already said.  Unlimited amounts of FREE MONEY forever is already priced into market expectations – anything less will be a severe disappointment.  Any firm mention of ending QE in the next 12 months can send the markets down sharply.  As "clarified" by Goldman Sachs:

 

With opinions mixed as to whether or not Jackson Hole will be the forum for Yellen to say something new, many are trying to figure out if it is a buy the rumor and then buy more after the fact event, a buy the rumor sell the fact event, or a do nothing with the rumors and then buy the fact if the USD is actually rallying after the fact event.

 

According to Zero Hedge, only "Full Doveish" statements are likely to lift the markets at this point.  Those would be for Yellen to:

1) Argue that the


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Wednesday Worries – Will GDP Be Revised Down Again?

Does this look healthy to you?

We did manage to pull out of a tailspin back in 2011 – the last time our GDP went negative but, funny story – in July of 2011, the S&P fell from 1,350 to 1,100 by August 9th and it gyrated between 1,100 and 1,200 until October when the Fed's "Operation Twist" (because "Operation Screw the Poor" got bad test scores) gave us a boost.

Notice how this post picks up right where yesterday's post left off – I'm clever that way!  Yesterday we had the chart that showed us that 10% of our GDP ($1.5Tn) is the result of Fed fiddling and, without it, the GDP would be right back at those 2009 lows.  Whether or not you THINK QE will ever end, you sure as hell better have a plan for what you will do in case it does!  

Russell Investments put out their Economic Indicators Dashboard yesterday and it's a nice snapshot of the where the economy is.   

The lines over the boxes are the 3-month trends and, thanks to the Fed, 10-year yeilds are just 2.48% and that's keeping home prices high (because you don't buy a home, you buy a mortgage).

Inflation is creeping up and expansion (today's topic) is negative and getting lower.  Meanwhile, consumers remain oblivious as the Corporate Media fills them with happy talk.  Meanwhile, this BLS chart (via Barry Ritholtz) says it all as manufacturing (good) jobs continue to leave our country at alarming rates:

Almost all of the growth spots are from fracking with a little auto production picking up as well.  Overall, 1.6M net manufacturing jobs have been lost since 2007 and, much more alarming, the median household income for those lucky enough to still have jobs is down almost 10% over the same period of time.  

In other words, if it wasn't for Fed Money, we'd have no money at all!  In yesterday's Webinar (replay available here) we talked about how the Fed is like a guy spraying a hose on kids in the…
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Tempting Tuesday – Weak Dollar Props Up the Markets

UUP WEEKLYWhenever the manipulators need to boost the markets, they just crash the Dollar.  

And what a dive we've had!  As you can see from Dave Fry's Chart, the Dollar is down 7% since last summer and down 2.5% this year and that keeps stocks and commodities 2.5% higher – because we buy them with Dollars.  

Keep in mind, at the same time you are buying IBM shares for $200, someone is buying the same shares for 20,400 Yen and another guy is buying them for 340 British Pounds and yet another guy is buying them for 280 Euros.  

It's obvious that, if the value of the Pound or the Yen or the Euro changes, the price of IBM in those currencies will change to reflect the currrency valuation but Americans tend not to realize the same thing happens when the Dollar gets stronger or weaker too.  Once you do realize this – you have a huge advantage in trading the Futures (and we have a Live Futures Workshop this afternoon at 1pm).

SPX WEEKLYThe Fed's easy-money policies keep the Dollar weak (because we're printing another Trillion of them each year and, in this economy, no one is using them – ie. no demand) and that has goosed the market by 7% since last summer, when the S&P was about 1,650 – about 10% lower than it is now.  

That means that 75% of the gains in the S&P since last summer have been the result of a weak currency and have noting to do with a "strong" economy.  Now THAT makes sense, doesn't it?

"THEY" had to tank the Dollar to get us over the 1,600 level, which was a very key technical off our consolidated bottom at 800 during the crash.  It's no coincidence that we were hitting resistance there in May and pulling back to 1,560 and looking weak in July when, suddenly, the Fed went into a new round of crazy, which led to 6 months of fairly steady value erosion for every single Dollar you have worked for and saved your entire life.  

It's kind…
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A Thinly Veiled Bail

A Thinly Veiled Bail

By Ilene at Phil’s Stock World, with Lee Adler of the Wall Street Examiner (many thanks to Lee!)

The ECB is borrowing U.S. Dollars from the Fed to bailout European banks. And that is in addition to the Long Term Refinancing Operation (LTRO)

However, the "borrowing" is not called "borrowing."  It’s called a "temporary U.S. dollar liquidity swap arrangement."  Yet it is really borrowing because it’s going massively in one direction for the purpose of giving the ECB Dollars to lend to European banks, so the ECB can avoid lending more Euros. The ECB doesn’t want to tarnish its "inflation fighting" reputation and further devalue the Euro. Instead, the Fed is taking billions of Euros as collateral for the Dollar swap.  

As Gerald P. O’Driscoll Jr., former vice president and economic advisor at the Federal Reserve Bank of Dallas, and senior fellow at the Cato Institute, wrote in the WSJ (The Federal Reserve’s Covert Bailout of Europe): 

"The ECB would also prefer not to create boatloads of new euros, since it wants to keep its reputation as an inflation-fighter intact. To mitigate its euro lending, it borrows dollars to lend them to its banks. That keeps the supply of new euros down. This lending replaces dollar funding from U.S. banks and money-market institutions that are curtailing their lending to European banks—which need the dollars to finance trade, among other activities."

U.S. Banks and financial institutions do not want to lend European Banks more Dollars, and it would look bad for the Fed to do this unpopular lending directly, so the Fed has found an indirect route.  

"The two central banks are engaging in this roundabout procedure because each needs a fig leaf. The Fed was embarrassed by the revelations of its prior largess with foreign banks. It does not want the debt of foreign banks on its books. A currency swap with the ECB is not technically a loan."

In exchange for Euros as collateral, the ECB gets non-technically loaned Dollars which it then lends to European banks. The additional Dollars flowing to the EU banks enable the ECB not to release more Euros to the EU banks and into circulation. According to O’Driscoll, this "Byzantine financial arrangement" was designed perfectly to confuse people. 

"The Fed’s support is in addition to


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The Commodity Bubble

Courtesy of SurlyTrader 

In the future they might coin this the “Bernanke Effect” or maybe the great commodity bubble of 2011.  The truth is that commodity prices are rising…dramatically.  You might have started to notice this disconnect in your grocery store shopping or in gasoline prices, but if you were to ask our government they would tell you that a basket of goods consumed (CPI) is rising modestly.  How modest do these numbers appear to you?

Sugar and Corn? Those are luxury goods.

If the basic ingredients to food are skyrocketing, then prices of food will eventually have to keep pace which will directly hurt consumers.

Of the 853 ETF’s that I looked at, which unleveraged funds do you think had the greatest return over that same time period?  It is not a trick question: 

Are you noticing a theme?

My conclusion is simple:  this time is NOT different.  Commodity prices cannot go up forever and China will not continue to support the market regardless of prices.  What is this “Bernanke Effect” doing to farmland prices?  Well, according to a survey by Farmer’s National Company:

“non-irrigated crop land in central Kansas averaged $3,000 an acre, up 50 percent since June…

Crop prices have seen an extraordinary run since early July. A bushel of wheat priced about $4 a bushel on July 4 is now more than $8.50. Other crops have experienced similar increases.

As the land generates more income, it puts more cash in the pockets of the most likely buyers, nearby farmers. It also provides an attractive return for investors who then rent it out to farmers.

The result: Auctions are drawing twice the number of bidders as before, said area agents.”

As with all hot speculation, the commodity run will surely come to an end and will probably have repercussions for all financial markets.  We should have learned by now that large financial dislocations tend to not occur in isolation. 


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GRAPES OF WRATH – 2011

Excellent article comparing current situation with lead up to the Great Depression.  Well worth reading. – Ilene 

Courtesy of Jim Quinn at The Burning Platform

“And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need. And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.” – John Steinbeck – Grapes of Wrath

  

John Steinbeck wrote his masterpiece The Grapes of Wrath at the age of 37 in 1939, at the tail end of the Great Depression. Steinbeck won the Nobel Prize and Pulitzer Prize for literature. John Ford then made a classic film adaption in 1941, starring Henry Fonda.


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Ron Paul slams Fed’s bond-buying program; Political Pressure on Fed Mounts

Courtesy of Mish

MarketWatch reports Paul slams Fed’s bond-buying program

Outspoken Federal Reserve critic Rep. Ron Paul, R-Texas, slammed the central bank’s latest $600 billion bond-buying program on Wednesday, saying it and near-zero interest rates haven’t led to job creation in the United States.

“Over $4 trillion in bailout facilities and outright debt monetization, combined with interest rates near zero for over two years, have not and will not contribute to increased employment,” Paul said at a hearing of a House Financial Services subcommittee he heads.

“Debt monetization” is a reference by Paul and other Fed critics to the Fed’s latest bond-buying program — a characterization rejected by Fed Chairman Ben Bernanke.

In essence, Paul is charging that the central bank is enabling profligate spending by the government. The term “debt monetization” is a buzzword for how some poorer countries conducted policies in the post-World War II era.

Political Pressure on Fed Mounts

WSJ’s Sudeep Reddy reports on concerns the Federal Reserve could be facing political pressure from Congress, as Rep. Ron Paul holds the first hearing of a new Fed oversight committee. Separately, Fed Chairman Bernanke updates Congress on the economy.

If the above YouTube does not play here is a link: Rep. Ron Paul Ignites Fed Worry

Mike "Mish" Shedlock


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The Food Bubble

H/t Barry Ritholtz, Did the Fed Cause Unrest in the Arab World?

Visit msnbc.com for breaking news, world news, and news about the economy


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How the US Government Manipulates Inflation Data

The PCE bothered me yesterday.

The Government told us that the PCE core price index for December was 0% – no inflation at all.  I found that to be incredible – as in not credible at all and then Tuscadog asked me how long the Bernank could keep justifying his rampant money printing with fake government data, to which I responded: "I had many derogatory things to say about that but I was literally so sickened by that BS that I couldn’t bring myself to comment on it so I just left it alone but it’s a very sad joke that our government can tell us that there was no inflation in December while the whole planet is falling apart, isn’t it?"  

Fortunately, there was a helpful article in the WSJ by Brett Arends that pointed out that the way the government justifies their low inflation figures is through "substitution and hedonics," a topic expert Government BS detector, Barry Ritholtz had touched on as well.  As Barry says:

Hedonics asks the question: "How much of a product's price increase is a function of "inflation," and how much is quality improvement?" Thus, the entire late 1990's concept of Hedonics is premised upon a flawed assumption: that quality is static.  Hedonics is a variation of the old trick of comparing the present with the past, instead of the present. Measuring quality improvements is a distraction from the real measure of inflation: the purchasing power of a dollar.

 Hedonics opens the door to producing magical results: a lower inflation rate with generally rising prices, a higher growth rate although the economy may be weaker, and a higher productivity number, although productivity would have been declining without the hedonic imputations.

What BS, right?  Well, when I get mad, I do research and when my research uncovers something – I make an electronic puppet show

Forward this to your friends and Congresspeople – lets try to get our government to get real!  


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Zero Hedge

Electric Car-Owners Shocked: New Study Confirms EVs Considerably Worse For Climate Than Diesel Cars

Courtesy of ZeroHedge. View original post here.

The Brussel Times reports that a new German study exposes how electric vehicles will hardly decrease CO2 emissions in Europe over the coming years, as the introduction of electric vehicles won't lead to a reduction in CO2 emissions from highway traffic.

According to the study directed by Christoph Buch...



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Chart School

Weekly Market Recap Apr 21, 2019

Courtesy of Blain.

This past week was the definition of “consolidation” – a period of very little movement and volatility after a large move up to work off overbought conditions.  A slight gap up Tuesday was about it in terms of excitement for the week.  Bulls remain in full control.

We are in the midst of earnings season – it is not a great one but companies have lowered the bar enough that they will “beat”, everyone will clap and cheer, and we continue on.

The first-quarter earnings outlook has improved somewhat, according to CFRA, which said consensus estimates now call for a 2.3% fall in first-quarter operating earnings a share. That is up from the call for a 3% drop ahead of the kickoff of earnings season, but down from the 4.5% increase projected at the end of last year...



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Phil's Favorites

Visualizing The Happiest Country On Every Continent

Courtesy of Visual Capitalist's Imam Ghosh

The state of our world is shifting beneath our feet — economics alone no longer equate to satisfaction, let alone happiness.

Today’s visualization pulls data from the seventh World Happiness Report 2019, which ranks 156 countries by their happiness levels. We’ve previously shown the variables used to measure happiness in this report, but here, we break down rankings by continent and region for a clearer picture of where each country lies.

North America

Unhappy Americans have caused the country to tumble in rankings for a...



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Insider Scoop

Uber To Sell Minority Stake Of Its Autonomous Vehicle Unit To Japanese Consortium

Courtesy of Benzinga.

Uber Technologies is planning to sell a 14 percent stake in its autonomous vehicle unit to existing investor Softbank, Japanese automaker Toyota, and auto parts manufacturer Denso ahead of its much-anticipated initial public offering (IPO), which is expected to happen in May. Though...



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Digital Currencies

5 Cryptocurrency Tax Questions To Ask On April 15th

Courtesy of ZeroHedge. View original post here.

Authored by David Kemmerer via CoinTelegraph.com,

Depending on what country you live in, your cryptocurrency will be subject to different tax rules. The questions below address implications within the United States, but similar issues arise around the world. As always, check with a local tax professional to assess your own particular tax situation.

...



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Kimble Charting Solutions

Silver Bear Market Faces Big Price Support Test!

Courtesy of Chris Kimble.

When silver, gold, and the precious metals industry were red-hot bullish in the 2000’s, investors could do no wrong.

You could buy SILVER at just about any price and it would go higher.

In today’s chart, you can see three large green bullish ascending triangles from the 2000’s that lead to big gains. But that was the bull market before the current bear market.

The tables have turned since the 2011 price top. Silver quickly formed a bearish descending triangle and fell another 50 percent when that broke down. This sent a vicious bear mark...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Biotech

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

Reminder: We are available to chat with Members, comments are found below each post.

 

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

Assorted cannabis bud strains. Roxana Gonzalez/Shutterstock.com

Courtesy of James David Adams, University of Southern California

Medical marijuana is legal in 33 states as of November 2018. Yet the federal government still insists marijuana has no legal u...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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