Friday, June 7, 2013

Euphoria Is Back!

Stocks up 170 points in anticipation of more Fed easy money.

Euphoria! It's baaa-aaaack!

Stocks Rise On Mixed Data

Unemployment rate stayed the same at 7.6%.
175,000 jobs created -- modestly better than expected.
Manufacturing jobs contracted 3 consecutive months. Not good!
April jobs revised DOWN. Not good!

But stocks are higher. Wall St traders trade headlines, not fundamentals.

The bubble builds:

Interestingly, John Hussman said this earlier this week in his market commentary:
"...the most severe market losses on record have been accompanied by aggressive /Fed/ easing. Without question, quantitative easing has been very effective in suppressing spikes in risk premiums in recent years. More recently, it has been effective in removing any perception that stocks have risk and creating the impression that easy money is enough to override every possible economic or financial concern. But that is where perception has moved beyond reality. There is no evidence in the historical record for such optimism...It is superstition to believe that monetary easing is a panacea. Investors who recognize (actually, simply remember) this now are likely to fare better than those who are forced to relearn it later.

Needless to say, all of this will be summarily ignored by speculators who have been rewarded by the strategy of following the Fed in a mature, overvalued, overbought, overbullish, unfinished half-cycle that recently hit new highs."

"… the last two 50% market declines – both the 2001-2002 plunge and the 2008-2009 plunge – occurred in environments of aggressive, persistent Federal Reserve easing."

John Hussman, PhD

Morning Headlnes for June 7th

What a bizarre scenario when Wall St sees bad news as good for stocks, and a good jobs report would be perceived as BAD for stocks:

And stocks are holding onto yesterday's gains despite this morose news that Germany's economy is showing greater weakness.

Thursday, June 6, 2013

Dow Up 80 On This News

The bubble mentality persists!

Stocks Down Again

The Fed appears to be trying to pop the bond and stock bubbles by talking us off the ledge, without doing any harm to the broader economy. I have my doubts, but will be waiting to see the impact. Dow was down another 100 points a few minutes ago.

My hunch is that this will only cause the economy to revert back to its downward path. As interest rates rise, it will hurt consumers, corporate profits, and especially the housing sector. It won't take long to manifest itself, most likely by the end of the summer.

Wednesday, June 5, 2013

Dow Plunges 217 Points

Wow! This was an even bigger drop than last Friday's 209-point plunge!

Is It a Crash Yet?

I Love Bubbles

Wages Decline for Americans

Trade War

Trade wars were a major contributor to the depth of the Great Depression. This is point that historians of all political persuasions agreed upon.

Stocks Start Out Lower

ADP Shows only 135,000 jobs created.
Wages declined 4.3% in May.
And Wall St is betting big on risky CDOs.

Tuesday, June 4, 2013

Stocks Slide Even on Tuesday

Dow is down 123 thus far. It doesn't look like today is going to be another stock pump Tuesday. It will be the first down Tuesday in 21 weeks!

Monday, June 3, 2013

Cotton Limit Up; Coffee, Cocoa Up Following Downtrends

* Rally ends 9-day losing streak, rises almost 4 pct
    * Synthetic prices pointing higher
    * Bulls points to tighter supplies

    NEW YORK, June 3 (Reuters) - ICE cotton staged its biggest
one-day gain in over seven months and settled limit up on Monday
as speculative investors piled back in to buy after prices sank
to four-month lows at the end of last week.
    Bringing an end to a nine-day losing streak, prices jumped
2.5 cents per lb in the final 90 minutes of trading as
speculators piled back in betting on tighter U.S. supplies with
just two months until the end of the 2012/13 season.
    Traders saw no obvious trigger for the sudden surge late in
the morning, but Ron Lawson, a partner at commodity investment
firm LOGIC Advisors, said the market had finally woken up to the
bullish factors that he expects to support prices.
    "You had nine days down and it ran out of selling. The U.S.
is sold out. Australia is sold out. China's been buying. The
only cotton left is certified stock," he said. 
    The most-active July cotton contract on ICE Futures U.S.
 rose 3 cents, or 3.8 percent, to settle at 82.36 cents
per lb, its daily limit price. That was its best one-day
performance since October.

Stocks Higher Following ISM Disappointment

"More importantly, this was the worst ISM headline print since June 2009, the first sub-50 print since November 2012, while the New Orders of 48.8, was the worst since July 2012."
Not exactly what I would call "soaring", but the Dow is up 60 points, while the S&P is flat. It appears Wall St is already shrugging off not only last Friday's revelation from an internal Fed report indicating their concern that they have created stock and bond market(s) bubbles, but today's latest bad news also. That alone is classic bubble behavior!

I am currently reading Didier Sornett's erudite and esoteric book, Why Stock Markets Crash. I had to acquire it via an interlibrary loan from a university library.