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The Hong Kong Occupy Central and Umbrella Revolution continues with protestors refusing to
back down. The 100K or more protestors are demanding that leader CY Leung step
down, free and fair elections be permitted in Hong Kong and near-term
democratic reforms to begin right away. A deadline is set for tomorrow and if
the demands are not met the protestors will announce ne [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] 1102 teasing the psychological 1100 level. VIX 16.31. EWZ
drops another -0.6% as Rousseff is expected to be reelected in Brazil.
Oil slides lower desperately searching for a bid as the
dollar moves higher. WTIC crude oil is bludgeoned -3.2% to 91.32. The WTIC and
Brent spread is down to three dollars from 27 showing no demand for oil
overseas. The US dollar is above 86 at a four-year high and driving the
dollar/yen pair higher towards 110. Silver collapses -3% to 16.97. Gold drops
-0.5% to 1209. Dr Copper is beaten -1.2% to 3.00. Platinum, PLAT, is punished
-0.6% to 1299 losing the psychological 1300 level and down -15% in only two
months. Palladium, PALL, is down -2.3% to 773. The collapse over the last few
weeks in the metals is remarkable.
The month ends with the SPX down -1.6%, the Dow is down
fractionally -0.3%, the Nasdaq loses -1.9% in September and the RUT is the big
loser collapsing -6.2%. The third quarter ends today, EOQ3, and the broad stock
market (SPX, INDU, COMPQ) is up for seven straight quarters (21 months). The
RUT posts a loss for Q3 with small caps continuing to roll over. A huge near
80% of the Russell 2000 stocks are down during the third quarter; this will get
Technology and healthcare are the big winners in Q3 and utilities
and energy the losers. Biotech, IBB, is a huge winner up +6% in Q3. IPO’s RWLK,
LOCO, MBLY and GPRO are enjoying orgy rides of glory doubling and tripling from
the initial offering prices. Global M&A is very active in Q3. Crude oil
drops -13% in Q3. Emerging markets, Europe and the US small caps are weak this
The SEC charges two men with insider trading in HLF.
Activist investor Ackman is not involved. An analyst doing work for Ackman
mentioned to a friend that Herbalife would be named as a Ponzi scheme. The
friend told another friend and that man benefited by $47K playing the short
side with options ahead of the announcement.
The Hong Kong tensions continue with officials threatening
to call up the PLA (Peoples Liberation Army). The PLA is rarely deployed for
protests and would dramatically escalate the tension and violence. Tear gas and
pepper spray fills the air. The once peaceful Occupy Central protests have
turned ugly and violent. As the sun rises for a new day and week ahead,
protestors are blocking nearly 20 roads preventing commuters from traveling to
work. Schools are can [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] points, -0.3%,
to 17071 bouncing between the 50-day MA support at 16939 and overhead 20-day MA
resistance at 17100. The COMPQ is down 6 points, -0.1%, to 4506. The RUT is
down one point, -0.1%, to 1118. AAPL loses -0.6% as the EU tax probe creates negativity.
Equity markets are weak due to the Hong Kong unrest, Brazil
weakness ahead of elections, ongoing battles in Ukraine with soldiers dying despite
the cease-fire and the airstrikes in Iraq and Syria. The VIX prints a HOD at
17.08 and closes at 15.98. The higher volatility is causing the large intraday
and day to day point swings and Dow triple digit moves. When the VIX climbs
above 20 the Dow point swings will be over 200 points daily.
After the closing bell, CTAS reports earnings in line with
estimates up a touch over the prior year’s results. Cintas provides uniforms
for businesses in manufacturing and healthcare industries and is an excellent
economic indicator so the results verify a sideways stagnant economy growing at
a snail’s pace. CSC gains +5.5% on news of a leveraged buyout. F loses another
-1% in AH trading adding to the day’s losses.
FDX bounces after announcing a buyback. All hail
the central banker easy money and financial engineering that pumps stock prices
higher making the wealthy, that own stocks, wealthier. The near six years of central
banker intervention is obscene causing Caligula to blush. The Fed has created excessive
risk-taking in markets, buyback programs to boost stock prices and loss of
price discovery across all asset classes. No one truly knows what any asset is
actually worth anymore. How will it end?
The Hong Kong demonstrations turn violent with police using
tear gas and batons to disperse the crowd. Hong Kong and Chinese officials say
the demonstrations are illegal. The mainly student demonstrators don gas masks
and goggles preparing for the police aggression. Today is the first time tear
gas is used on a crowd in Hong Kong in nine years.
The Mt Ontake volcano in central Japan (about 120 miles (193
km) west of Tokyo) erupts throwing an ash cloud hu [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] ce riots, protest concerts and the middle class and poor realizing
they were sold out by the Fed and other central bankers is reminiscent of the turmoil
in the 1960’s and 1970’s. People become desperate and violent when there is
nothing more to lose. History may not repeat exactly but it often rhymes.
The Occupy Central protests in Hong Kong turn ugly with
students and police clashing. The students are practicing civil disobedience for
the last five days promoting fair future elections and democratic reforms.
Riots are i [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] the States, working
under the table means you work for cash to avoid paying taxes) more and paying
for services and goods with cash which will further strain governments to pay
the public pensions. The Fed and other central bankers have created a future
Hell that people do not yet realize.
Asia markets follow the US market weakness with the major
indexes down across the board. Australia is hit the worst with the SPASX200
down -1.3%. Miners are beaten and iron ore prices print [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] .8% to 17.65. Copper dumps -1.7%
this week so the doctor drags the broad indexes lower. The CRB recovers +0.3%
this week with a dead cat bounce after the drubbing from 315 to 277, -12%, over
the last 3-1/2 months. GTX prints negative on the week.
Coal stocks are burned
and buried this week. President Obama set out to destroy the coal industry and
has succeeded. KOL is down -5% this week. ACI collapses -21%. BTU -9%. WLT
-30%. The coal industry economically supports rural areas in states such as
Pennsylvania, Ohio and Kentucky but these families are now scrambling to find a
way to make ends meet as they watch the rich become filthy rich off the Fed’s
The Chicago airports remain closed with well over 1500
flights cancelled today and the downtime expected to continue for several days.
The FAA radar facility was set on fire deliberately by a worker that was told
he was being transferred. Bitcoin officials meet with US Special Ops to address
concerns over money-laundering and the movement of illegal goods using the virtual
A worker at Vaughn foods in Moore, Oklahoma,
USA, that recently converted to Islam beheads a female co-worker while shouting
Islamic prayers. Luckily, the COO at the facility had a gun and shot the nutcase
before he could behead a second woman. Domestic terrorism is increasing in
America. The Islamic community needs to speak up and condemn the sick act but instead
there is silence. An uneasiness increases in America due to the recent threat
of terrorism targeting the New York City and other major city subway systems as
well as Muslims unwilling to denounce the actions of violent Islamic radicals
such as ISIS.
Asia is in a happy mood following the US rally created by
ECB and Fed stimulus talk. Traders also expect China to increase stimulus which
buoys markets. The WSJ reports that Chinese President Xi Jinping may replace
Governor Zhou Xiaochuan at the PBOC with Guo Shuquing. The shift in personnel
may indicate that internal battles are occurring within the PBOC and Chinese
government concerning the economic path forward. Empty Chinese cities can only
collect dust [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] s that ‘if you bend your iPhone6 or drop it due to
the slipperiness do not look at us to replace it’. AAPL trades +0.6% higher.
President Obama announces the resignation of Attorney
General Eric Holder a long-time confidant of the president embroiled in many
ongoing Whitehouse scandals including the Benghazi and IRS cover-ups that led
to the president’s reelection victory in November 2012.
Asia is mixed. The NIKK is down -0.2% as the dollar/yen remains
soft at 108.65. Starbucks Japan jumps +4% on last evenings news that SBUX will
buy the remaining 61% interest in the company. Aeon drops -3% on n [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] lows. Dr Copper leads the economy or more
correctly used to lead the economy before the last six years of central banker intervention
has distorted all asset pricing.
AAPL drops -0.9% from the developing negative news with the
iPhone6. A new problem occurs as the IOS 8.0.1 software update is pulled. Customers
are losing connectivity when it is installed and are experiencing other
glitches. The update was supposed to handle the problem of the health care apps
not functioning. AAPL trades down -0.8% as the negativity increases for this
admired tech company. Discussions begin on warranty coverage and how Apple may
handle the bending phone problem. Apple is in crisis management mode and says
an investigation into the problems is ongoing. Placing the iPhone6 drama to one
side, the Apple Watch has zero buzz. The watch is received like any other
current tech-savvy watch on the market; with lackluster interest.
GPRO surges +8% to 78.46 on plans to offer a new camera. The
stock has tripled since its IPO offering and is the most successful IPO of 2014.
Trades are tripping over each other chasing GoPro higher willing to buy at any
price. The GoPro cameras are expected to be a top seller for the holiday season
so traders are riding the hype. GPRO may trade like a retail stock that drifts
higher into the holidays but is sold off in December-January after the wrapping
paper is placed in the trash can. The CFG IPO finishes at 23.08 versus the
21.50 offering price banking a +7.4% gain for its debut. BABA gains +4% and
regains the 90 level to 90.57 on its fourth day of trading.
After the closing bell, JBL jumps +6% after beating on earnings
receiving a boost from the iPhone sales. TIBX pops +7% on news a consortium is
planning an offer to takeover the software company. Adhesive-maker FUL collapses
-9% after reporting weak earnings. In a robust economy with strong
manufacturing, FUL should be strong. MTN reports lackluster earnings with operating
expenses continuing to climb. Skiing has become a sport for the wealthy that
have benefited from the Fed’s easy money policies. The middle class can no
longer afford an expensive day or vacation ski trip for the family.
The dollar/yen collapses to 108.31 but Japan receives a
reprieve since markets are closed for the Autumnal Equinox holiday. The
SPASX200 gains +1% recovering from recent beatings in miners and commodities.
The KOSPI drops -0.5% since the electronics and car manufacturer’s trade lower.
China’s HS [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] points, -0.9%, to 1119. The market bears hit hard
pushing equities strongly lower after the market highs late last week. AAPL is
a bright spot gaining +1.6%.
After the closing bell, BBBY jumps +8% on an earnings beat
reversing today’s negativity from the downgrade. Office furniture company Steelcase
earnings are in line and SCS shares trades flat. CELG trades higher after the
FDA approves the Otezla psoriasis drug. VIA is smacked-2% to one-year lows
after receiving a downgrade. SBUX trades sideways after announcing plans to buy
the remaining interest in Starbucks Japan. The move provides greater control
for Starbucks concerning expansion plans in Japan and Asia. The market selling
is drowning out any news from the global warming conference in New York.
The Citizens Bank IPO, owned by RBS, prices at 21.50 below
the 23-25 target range. The market makers MS and GS claim the offering is well
subscribed at the 21.50 price. The bank begins trading on the NYSE tomorrow
under the symbol CFG.
Traders ignore the market selling as proven by the ongoing
solid bullish sentiment. No one expects a multi-month or multi-year decline in
the stock market. Television pundits and fund managers are of universal mind
stating that all pullbacks should be bought. CNBC television trader Josh Brown
mocks the death cross pattern for the Russell 2000 citing data from 2001 (two
of the largest stock market rallies in history are in that period into the 2007
top and the ongoing rally from the March 2009 bottom to present). Looking at
the RUT chart, the golden cross (50-day MA above the 200-day MA) occurred in
early 2012 and has been a perfect predictor of the market upside to date.
Television personality James Cramer suggests that anyone selling the market
will likely regret it in the weeks forward. Cramer says, “I recommend staying
the course in the market.”
In the evening, Fed’s George speaks and says the Fed should
raise rates soon to stay ahead of inflation. George is a strong hawk stressing the
need to return to more normal Fed policy. She says financial markets are
distorted and investors are taking on too much risk. George does not want rates
to rise quickly but instead wants a slow gradual increase to begin.
Monday morning arrives in Asia. The week begins with the
BABA IPO and its +38% first day gain receiving lots of attention by global
traders. New Zealand’s incumbent Key claims a third term in a record win so the
current economic policies will continue without interruption. The NZX-50 Index
b [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] (luxury goods) are sold off but consumer staples are favored in the
down tape. Energy is punished with XLE losing -1.5% and now at lows not seen
since May. IBB -1%. Tech is sold off as evidenced by the Nasdaq collapse with
NFLX, AMZN and YHOO leading the way lower.
After the bell, HLF bounces +4% trading erratically off
rumors about activist investor’s Carl Icahn stake in the company. BABA loses
-2% in AH trading adding to the losses during the session down to 88.45. YHOO
continues puking losing another -2% adding to the -6% loss during the session
under 38. Silver Lake investors are pursuing a takeover of SFLY that jumps
+5.5% higher. Shutterfly is a very popular photo-sharing service. AAPL drops
-0.6% on news it will drop the Beats music service but Apple refutes the news.
Fed’s Kocherlakota speaks in the evening and says a rate
hike should not occur with inflation running below 2%. Kocherlakota is
concerned over loss of Fed credibility if a rate hike is made against the back
drop of low inflation (disinflation and deflation).
Treasury Secretary Lew announces a crack down on tax
inversions rules that will diminish or eliminate the popular strategy where a
US company will buy a foreign company in a lower tax nation and redomicile the
combined company in that nation. The company experiences great tax savings and
higher profits but US jobs are lost as well as the US tax base. The new tax
rules are temporary until permanent rules can be placed. The rules are not
retroactive. At least eight companies, mainly in the healthcare and pharma
sectors, will be affected including AZN, Shire, MDT and ABBV. The BKW tax inversion
may not be impacted by the new rules since Warren Buffett is involved and he is
friends with President Obama.
The California wild fires rage on destroying homes and
businesses. More nude celebrity photos are released on the Internet by computer
hackers. General Motors recalls 221K Impala and Cadillac models du [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] n and is receiving a larger smack in the face unable to sell produce at a reasonable price while Russians salivate for the delicious fruit and vegetables but instead eat bread. As President Putin, whose approval numbers remain high in Russia although the numbers are produced by the government, has said numerous times, “any sanctions against Russia will boomerang back at Europe.”
Kurds are fleeing Syria and Iraq into Turkey. As of 12 noon
EST, 70K Syrian refugees spill into Turkey. ISIS radicals are attacking Kurdish
towns along the border of Turkey and Syria. Turkish troops are fighting Syria
factions in a new escalation of the Syria, Iraq and ISIS war activity. At 6:30
PM EST, 100K Syrians flee to Turkey.
The ISIS radicals in Syria and Iraq continue to release
propaganda videos on the Internet. An American speaking militant is highlighted
in a video as several poor souls are shown digging their own graves and then
executed. ISIS is taking control of Kurdish towns along the Turkey border. US
Allies are losing confid [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] expenses for
the average family. Faber says a global recession may occur creating a black
swan style event. Faber is one of the lone negative voices in the stock market.
There is near universal consensus by traders, investors and money managers that
the stock market will continue higher since the global central bankers keep
printing money. The party rages on for nearly six years so the easy trade is to
keep raping the long side. The thrust higher in the stock market late last week
was driven by the PBOC pumping liquidity into Chinese banks and markets.
The PBOC cuts the 14-day repo rate from 3.7% to 3.5%.
Chinese officials are obviously concerned about the cracks in the property
market. The rate cut will ease the short-term borrowing costs for banks to
shore up the flailing housing sector and encourage growth. The PBOC announced
the $81 billion liquidity injection into the top five banks this week and also
injected $1.3 billion into [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] IPO ever. AAPL drops -0.6% as traders sell on the news as the
iPhone6 begins selling. TSLA -1.7%. SAP -4.4%.
For the week, the SPX gains +1.3%, the Dow is up +1.7%, COMPQ
+0.3% and RUT small caps are down on the week losing -1.2%. The bullish joy was
led by blue chips as traders ran into dividend stocks thinking they will
weather any down turn in the broad indexes; they will not. Dividend stocks will
get whacked like the others. XLP is up +1.5% and XLU +1.6% so traders are
seeking perceived safety in consumer staples and utilities.
Gold loses 15 dropping to 1217 this week at the lowest level
since the beginning of the year. Silver drops -5% this week to 17.79 the lowest
since 2010 four years ago. The stronger dollar (USD at 84.86) is whacking commodities.
WTIC crude loses -0.4% this week to 91.77 at levels not seen since early 2013.
Coal is beaten beyond recognition. BTU loses -8% this week now at lows not seen
for 10 years since late 2004. ACI plummets -11%. WLT collapses -27%. KOL -2.1%.
CNX -3%. President Obama set out to destroy the coal industry and he has succeeded;
West Virginia, Ohio and other coal states be damned.
The dollar/yen is above 108 to 108.86 as the dollar climbs to
84.8 and the yen weakens (six-year low against the dollar). Banzai! Japan
export data is better than expected due to the weaker yen. The dropping yen is
concerning to neighboring Asian nations especially South Korea that is losing a
competitive edge. Cars manufactured in Korea such as the Kia are now more
expensive compared to Japanese cars such as Toyota. In Korea, Hyundai Motor and
Kia Motors are bludgeone [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] al and personal information on the Chinese
BABA web site without worry? The Chinese government will receive and archive all
Alibaba is a conglomerate of many different smaller and
mid-size companies reminiscent of Enron in the late 1990’s, and even AMZN
currently, where the business is so complex with fingers in lots of pies that
makes the company difficult to value. Enron was an energy company that began
branching out into many different unrelated industries in the1990’s creating a
confusing conglomerate. Traders praised the company’s diversification and Enron
stock catapulted to great heights. Retail investors were tripping over each
other to buy Enron stock and then bragging about it at the office water cooler.
These folks were not bragging a few weeks and months later when their heads were
handed to them on a platter when the company collapsed with the dotcom bubble.
Many folks lost their entire life savings. And Enron was such a sure bet kind
of like Alibaba.
A Wall Street money manager provides a worrisome anecdote
concerning Alibaba when he describes a client that is desperately calling and searching
for BABA shares to buy. The client says, “I’ll buy Alibaba at any price it will
pay for my kid’s college.”
The dollar/yen moves sideways at 107.27 remaining above the
107 level. The NIKK finishes a touch lower call it flat. Sony guides lower on
poor results from its mobile business. Sony plans to cut 15% of its mobile workforce.
Aussie dollar 0.9075. The SPASX200 loses -0.7% as talk of a housing bubble
causes [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] Industrials from
a Dow Theory perspective and point to more market upside ahead. TRAN gains +1%
printing a new all-time intraday high at 8695.41 and all-time record closing
high at 8652.00.
The COMPQ is up 9 points, +0.2%, to 4562 well below the
14-1/2 year high above 4600 a couple weeks ago. The Nasdaq sits under the
20-day MA resistance at 4564. The RUT small caps are up 3 points, +0.3%, to
1154 sitting at the 50-day MA at 1152 and 200-day MA at 1151 with the death
cross likely to occur tomorrow (50-day stabbing down through the 200-day).
After the closing bell, permabull Jack Bouroudjian says,
“The green light is on” for the stock market. Bouroudjian says stocks are
heading higher and today is a positive turning point for markets. MLHR reports
positive earnings and furniture sales are a bellwether for the overall economy.
PIR is beaten -10.4% after reporting weak earnings. UNFI, a food supplier for
WFM, jumps +5% on strong earnings. FANG is declawed dropping -3% after planning
to offer more shares. FLXN is beaten -26% due to poor results for its pain
IBM identifies a minimum computer and technology skill level
that all employees must meet. The tech company targets the workers deficient in
the skills and requires they enter a training program that will reduce their
wages by -10% while they rebuild their skill set. IBM must be concerned over
the bottom line to reduce wages since the move will hurt company moral and
likely decrease productivity. IBM may not be as busy as thought if time is now
being allotted for training and skills development.
After all the praise around the new AAPL iPhone6 and Apple
quality, a bug is exposed in the iOS8 operating system that prevents the
loading of the Healthkit apps. The Healthkit will not be available until the
end of the month. Apple blames the health app software and not the operating
system similar to the iCloud hack attack a couple weeks ago where Apple insists
that the cloud was not compromised. AAPL controls the news flow to foster the
image of superior quality despite the problems. Cult-like enthusiasts praise
Apple products blindly even though the latest iPhone and operating system is
playing catch-up to the Samsung smartphones in respect to screen size and new
operating system commands. The demand for the new iPhone6 Plus is off the
charts and weeks and months will pass before production comes in line with
Asia indexes trade lower across the board except for the
KOSPI up +0.4%. Hyundai Heavy Industries is the big winner gaining +4%. Dollar/yen
107.10. Eastern Japan and Tokyo are hit with a 5.6 magnitude earthquake. The
NIKK drops -0.2% after returning from the Monday holiday. Softbank gains +3.5% since
it is a major shareholder of Alibaba like YHOO and will be richly rewarded when
BABA begins trading on Friday. The RBA releases Minutes from the last meeting
whe [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] minate the US reliance on Russia to send
American astronauts to and from the space station. Elon Musk’s SpaceX is also
partnering in the project. BA trades only slightly higher on the news.
ENDP jumps +1.2% after announcing plans to buy Auxilium
Pharma which is halted news pending. AUXL begins trading and catapults +41%
higher. The commercial glass maker APOG pops +6% on an earnings beat. RAX
collapses -16% AH’s after no longer deciding to explore strategic options (the
company is no longer up for sale). FedEx plans to raise rates shipping +5% next
year. FDX bounces +0.6% and UPS gains +0.2% riding the FedEx coattails.
The population of billionaires around the world is at an
all-time high rising from 2170 to 2325 over the last year an increase of +7%.
The Fed and other central banker money printing is making the wealthy wealthier
at the expense of the middle class and poor.
Australia trades -0.7% lower out of the gate and ends the
session down -1%. Australia’s largest investment bank, Macquarie, reports an
earnings beat and rallies +1% bucking the negative tape. Rare earth miners such
as MCP and REE continue to collapse lower over the last couple years [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] them as part-time thus avoiding having to provide health insurance.
Other companies are holding back on hiring since they want to stay under the
employee head count that triggers the law to provide health insurance for
employees. To further hurt workers and the overall economy, businesses are
raising the health insurance costs that employees pay and the insurance companies
are raising deductibles and co-pays.
A black cloud remains above Malaysian Airlines as Flight
MH198 bound for India must turn around due to a defect in the autopilot system.
A ferry sinks off the coast of the Philippines in high winds. 14 are rescued
but 70 remain missing.
Emergency meetings take place in London concerning the
tragic beheading of David Haines. Prime Minister Cameron says that ISIS is “a
massive security threat that cannot be ignored.” Cameron vows to “destroy ISIL
(I [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] na Life Insurance, Tencent Holdings, ENN Energy Holdings
and Fosun International. Other individuals and funds are snatching up portions
of the offering with everyone developing a love for the gas station business at
the same time. China is starting to diversify the State-owned enterprises.
Pope Francis says, “War is madness” while commemorating the
fallen soldiers from prior wars during a homily in northern Italy. The Pope
says war is irrational and begins with the motives of greed, intolerance and a
lust for power. He speaks of another world war, a third world war, WW III that
begins piecemeal with massacres and crimes against humanity. Pope Francis says
the ongoing world conflicts especially in Ukraine and across northern Africa
and the Middle East are h [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] an four decades ago. In the1970’s, only about
one-third of the US population was single. Couples are living together more
nowadays skewing the numbers but the single ranks are increasing year after
year. Even though men and women both regularly complain that ‘you can’t live
with them but can’t live without them’ it appears that more people are choosing
to live without them. Social internet stocks such as FB and TWTR and dating and
match-making web sites benefit from the demographic shift as single folks search
The US embassy in Uganda warns US citizens that the radical al-Shabaab
Islamic terrorist organization is planning an attack. The al-Shabaab militants
are seeking retribution for the killing of their leader one week ago. Uganda
authorities tell US citizens to stay home or seek a safe location and wait for
further instructions. Uganda is in eastern Africa west of Kenya and Somalia and
south of the Sudan. Tragically, the British hostage David Haines held by ISIS is
beheaded with the horrific act posted to the internet. ISIS threatened that
they would kill Haines in the previous video if Britain joins the coalition
against ISIS. UK Prime Minister David Cameron returns to London to set up
emergency meeting to handle the tragedy calling the murder “an act of pure
evil.” President Obama says, “the US stands shoulder to shoulder with Britain.”
Haines is the third beheading victim over the last month; the first was
American James Foley, the second American Steven Sotloff. The sick video of
Haines death ends with another British citizen shown in an orange jump suit and
likely the next beheading victim over the coming week or two.
The dollar/yen continues climbing at six-year highs at
107.39; a phenomenal level since the dollar/yen had a 101 handle only a few
weeks ago. The weaker yen sends the NIKK up +0.3% overnight. Softbank is up
+2.3% benefiting from the ongoing Alibaba hype. China’s SSEC jumps +0.9% after
the government’s fudged numbers show banks are loaning at the expected pace. Chinese
auto manufacturer stocks rise despite softening car sales. Hong Kong regulators
are investigating investment banking company CITIC so the stock drops -4% and
drags the HSI -0.3% lower.
Aussie banks are weak taking the SPASX200 -0.3% lower. Aussie
dollar 0.9053. The KOSPI gains +0.4% tugged to and fro each day by auto and
electronics exporters Kia Motors, Hyundai Motor a [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] ovish stance. Two lines in the Fed statement are key
next week; the line about a “considerable” time before the first rate hike
occurs (current projections are next summer) and the “slack in the labor market”
If Yellen replaces the considerable word with a more hawkish
word, the projections for the first rate hike would move forward to spring time
and the Treasury yields would be expected to move higher right away in
response. This explains the buoyancy in rates this week. It is very hard to
believe, however, that the Queen of the Doves will modify the Fed language. The
inflationists and those looking for higher Treasury rates immediately here on
out will likely be disappointed and left at the altar once again come Wednesday.
HSBC agrees to pay $550 million in fines to settle
litigation with the FHFA over the Fannie Mae and Freddie Mac mortgage fraud in
2007-2008. HSBC trades +0.5% as the fines are meaningless to the huge cash-cow
investment banks while FNMA and FMCC both trade nearly -3% lower.
The stock market weakness today is met with a yawn. Traders
remain bullish continuing to recommend buying stocks and indexes on the long
side. The CPC and CPCE put/call ratios remain subdued despite the sell off (traders
are not buying put protection) so there is no concern over a market pullback. The
VIX pokes above 14 but settles at 13.31 remaining calm reflecting the ongoing market
complacency. Piper Jaffray’s strategist Craig Johnson, who correctly predicted
SPX 2000, remains super confident and optimistic that SPX 2350 is destined to
print in the months ahead. Business Insider’s Joe Weisenthal announces the ‘humiliation
of the Fed haters’. Weisenthal berates the market bears saying that the Weimar
inflation worries have not occurred and the dollar has not turned into toilet
paper as the Fed haters predicted. Schwab’s strategist Liz Ann Sonders says the
markets remain in a secular bull.
Television personality Ben Stein urges viewers to buy the
SPY as it prints above 200. The future is so bright you have to wear shades;
rose-colored shades. Virtually no one, nada, expects a downturn in the stock
market that will last a few months or year or two. Those that do call for a
pullback of perhaps a few weeks duration say the secular bull market remains in
place and any selling is a buying opportunity. The Fed and other central banker
money printing has transformed traders into Pavlov’s dogs. The boat is fully
loaded on the starboard side with bulls partying like its 1999 without a care
in the world while the port side of the boat where the bears hang out displays empty
deck chairs. The bears are on the starboard side sipping Fed wine with the
bulls everyone buying stocks with reckless abandon staggering around and
The Reserve Bank of New Zealand holds the benchmark rate at
3.5%. Asia markets are lower failing to follow the US lead except for the NIKK
that gains +0.8% due to the weakening yen. The dollar/yen is running towards
107 and tags the new psychological level printing a high at 107.03. PM Shinzo
Abe meets with BOJ Governor Haruhiko Kuroda which hints at more money printing
on the way pumping Japan stocks higher. The central bankers control the
ma [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] .7%. The steel sector feels love with X popping
+5%. BBRY gains +5%. P is up +3.2% due to new licensing deals.
After the closing bell, beauty retailer ULTA reports strong
earnings and bounces a very pretty +13%. ADS announces plans to buy CNVR. Both
stocks are halted and when trading begins CNVR catapults +33% higher and ADS
gains +3.5%. Marketing company Alliance Data Systems buys digital advertising
company Conversant so FUEL jumps +5% higher riding the coattails. Fledgling
digital advertising company Rocket Fuel may become a takeover target. HPQ
trades lower after announcing an acquisition of software company Eucalyptus.
HTZ jumps +5% after the rental car company places three of activist investor
Carl Icahn’s people on the board.
The US budget deficit is $129 billion for last month in line
with the $130 billion expectations and under the $148 billion for August 2013.
Dr Marc Faber repeats his call for a -30% stock market selloff and cites the
weakness in stocks such as MCD indicating weaker earnings ahead. Faber correctly
points out that fewer and fewer stocks are making new highs and a greater
number of stocks are printing 12-week lows. Secretary of State Kerry says the US is not in a war against
ISIS creating confusion after the president’s talk last evening. Kerry says the
US is involved in a “very significant counter-terrorism operation that will
continue for some time.” Obviously, the word play is due to President Obama not
wanting to appear in the history books as having started a war in the Middle
East. Britain makes it clear that they will not participate in airstrikes in
Syria. At 6 PM, a man jumps the fence at the Whitehouse north lawn area and is
apprehended by police.
Asia follows Wall Street’s lead trading lower across the
board including Japan, China, Hong Kong and Australia. Australia consumer
sentiment takes a hit printing a surprisingly downbeat number. Auss [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] d expected to fall much further although as often is the
case, gasoline prices go up like a rocket but fall like a feather. Brazil is collapsing
this week with EWZ down -6.3%. Ditto emerging markets with EEM down -2.8%.
After the closing bell, retailers figure prominently. FIVE
earnings are in line but guidance is lowered so Five Below drops -5% below. MW is
up +1.2% after releasing earnings and increasing the dividend. Traders tell The
Men’s Warehouse we “like the way you look.” RH drops -4% and will need a
restoration after reporting weak same store sales and lowering guidance. Restoration
Hardware says inventories are increasing far faster than projections. Thus,
discounting and sales are probably on tap which will slice margins. Hot-shot
retailer and long darling WTSL is down -10% beaten like a wet seal after
reporting lackluster sales and profits. Retail Sales are reported on Friday
morning so trading in the retail sector will remain active. RTH is down -1.4% this
Telecom TMUS trades higher as subscriber numbers increase. JDSU
rocket launches +13% on news the company will split into two separately-traded
companies to unlock value. JDS Uniphase will need several months to complete
the transaction. SIGM trades +2.4% higher after beating on EPS by two pennies. TWTR
drops -2% after announcing plans to tap the debt market and raise cash
reserves. Twitter may be seeking takeover opportunities.
YUM trades slightly lower after announcing a dividend
increase. Yum! Brands keeps trying to right the ship after the recent meat
scandals that creates negativity against its flagship Taco Bell and Kentucky
Fried chicken restaurants. California remains in a severe drought with over
one-fourth of the rice crop in jeopardy.
Five million usernames and passwords appear on a bitcoin
forum. Russian hackers are suspected for the leak of user information but GOOGL
says the majority of the information is out-of-date and an investigation is
ongoing. S&P cuts New Jersey’s general obligation bonds from A-plus to A
the second downgrade this year. The 13th Anniversary of the 911 terrorist
attack is tomorrow and officials from Washington, DC, say there is no known
threat to the homeland by ISIS. The atmosphere is calm and relaxed in the US
with no one expecting any domestic terrorism on the 911 anniversary.
At 9 PM, President Obama interrupts prime time television to
address the nation concerning the Islamic State in Iraq and Syria. The
president pledges to defeat and destroy the radicals “with strength and resolve.”
He says there is no safe haven for ISIL. The counter-terrorism plan consists of
air strikes in Iraq with an expansion of strikes into Syria. About 150
airstrikes have been conducted over the last three weeks. The president is
sending 500 additional “personnel” to Iraq as he says ground troops will not
participate in the conflict. The president wants to continue building a
coalition of nations to fight ISIS.
The president’s approach is more of the same. Military
analysts and generals want to see stiffer action against the ISIS radicals and
feel the president underestimates the threat. Oddly, the president says the US
is safer than it was before his presidency but two Americans are beheaded over
the last couple weeks and he is standing before the nation discussing the escalating
war and terrorism. US futures are unresponsive printing slightly negative.
A solar flare occurs from the surface of the sun
a few hours ago with scientists determining the magnitude of the ejection.
High-frequency communications on Earth are already impacted with the potential growing
for larger interruptions to satellites, radio transmissions, communications and
the power grid in the hours ahead. Interestingly, the August 2011 stock market
waterfall crash began in concert with a strong solar flare.
The dollar/yen is running strongly higher above 106 gaining
one full point over the last 24 hours as the dollar drives higher. The US
dollar, USD, is above 84.4 continuing to run parabolic up from 79.7 to 84.4,
+6.4%, in only two months time a phenomenal move for a currency. The euro
weakness drives the dollar higher. The euro shorts remain at over two-year
highs while traders trip over each other to play the dollar long. You know what
happens over the short te [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] 14 points lower, -1.2%, to 1159. WB is up +7%. THC gains +3.4% in a down tape.
After the close, KKD delivers stale doughnuts dropping -5.5%
in AH trading on disappointing earnings. Internet security stock and long
trader darling PANW reports earnings in line with estimates and is rewarded up
+4%. Science, engineering and defense company SAIC beats on earnings and gains
+3.1%. AAPL trades -0.3% lower.
Activist investor Carl Icahn boosts his stake in Gannett to
8.5% which sends GCI up +1%. The Enterovirus
D-68 continues to spread in America affecting young children and teenagers.
Kids with allergies and asthma are most affected by the respiratory virus. Although
the symptoms mimic a cold and resolve over time, 15% of the children afflicted end
up in intensive care. Hospitals and healthcare facilities in numerous States
especially in the Midwest are treating a steady flow of patients.
The Whitehouse says President Obama’s speech
tomorrow outlining a plan to handle the ISIS threat in Iraq and Syria is
scheduled for prime time 9 PM EST interrupting regular programming. A night
time speech dramatically raises expectations.
Japan’s GDP drops to -7.1% versus the prior reading and expectation
at -6.8%; the weakest number since early 2009. The contraction is far worse
than expected. Japan remains very ill. Private consumption falls. Japan, China
and Taiwan markets are shut down due to the
Mid-Autumn Festival and other Asian stocks trade on light volume. The dollar/yen remains buoyant above 105.10. SoftBank, a
major holder of Alibaba stock, gains +2% as the hype around the BABA IPO
increase [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] weak especially oil-related companies but tech and small caps
TRAN drops -0.3% despite oil prices dropping. Brent oil
slips under 100 today but recovers. WTIC crude oil is down -0.3% but well off
the low print at 91.80; a 91 handle. The drop in oil creates an ugly day in the
oil patch. OIH -1.8%. XOM -1.5%. CVX -0.9%. NBR collapses -3.4%. DO -1.3%. RIG
-0.9%. Energy companies are whacked across the board. XLE -1.6%.
After the closing bell, FB trades at 78 at a new all-time
high with market cap exceeding $200 billion. General Mills announces plans to
buy Annie’s for $820 million so BNNY launches -37% and GIS trades slightly
higher. PBY drops after disappointing on earnings. FCEL loses -10% after earnings.
EBAY announces plans to allow the use of the digital currency bitcoin for
payments on PayPal.
Marin Cilic defeats Kei Nishikori to win the US Open tennis tournament
his first grand slam victory. The Croatian will try to capitalize on the win
and build sponsorships. The sponsors such as NKE backing the favored players go
President Obama will not improve his dropping approval
ratings after saying that he was not referring to ISIL (ISIS) when he made the JV
team comment a few weeks ago. In the States, the JV team is junior varsity
where the weaker players and underclassman compete. The star players compete at
the varsity level. The president said ISIS is JV insinuating that the terror
group is not a concern and poses no significant thread. He greatly miscalculated
and Iraq has now descended into chaos.
Instead of the president admitting a mistake by
underestimating the ISIS threat, he narcissistically tries to twist the statement
to rewrite history. This behavior destroys his credibility. Previous Whitehouse
staffers say that the threat of ISIS was known over one year ago but the
president remains without a strategy or plan. Instead of trying to twist words
and rearrange lies, the president needs to put the golf clubs away and develop
a plan and confident road ahead so the country can rally behind him.
The Ukraine cease-fire is holding but fragile. Sporadic gun
fire and limited rocket fire occurs but for now the fighting subsides. In
Somalia (eastern Africa), Al-Shabob militants are planning retaliation attacks
against the West for killing leader Ahmed Abdi Godane in an air strike last
Mond [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] the 18th career grandslam win
placing Williams in the top elite group of tennis players of all time. Sponsors
such as NKE, Wilson and Gatorade are happy.
A NSC train collides with a truck hauling fracking water
near Pittsburgh, Pennsylvania. The truck stalled on the tracks and the driver
ran to safety before the crash. The clean-up continues into the evening.
Norfolk Southern unit trains haul coal as the major commodity.
The death count from the Ebola outbreak overtakes 2000 with
officials saying there is a near 20% chance that Ebola will spread to the US.
Sierra Leone announces a four-day lockdown for all 6 million [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] onomy and do not have money to invest. Ratings will spike higher and
recover when the stock market peaks and crashes as the viewer data shows for 1999-2000
and 2007-2008. Wall Street was always thought to be a game for the wealthy and
after over five years of the Fed lining the pockets of the rich with easy money
stock market gains, the general populace has very little interest in watching
others benefit at their expense.
The dollar/yen prints at 105.70 at highs not seen since
October 2008 due to the stronger dollar created by the weaker euro. The weaker
yen that also contributes to a rising dollar/yen currency pair sends the Nikkei
Index higher at the start of the session but as the dollar/yen leaks lo [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] want a piece of BABA. The Alibaba offering will be
the largest IPO of the year with a valuation of over $150 billion. YHOO jumps
+1.4% on the news since it continue to hold a stake in BABA.
Fed’s Rosengren receives the Captain Obvious award for
saying, “the August jobs number is very disappointing.” Rosengren says there
remains “significant labor slack” the Fed’s favorite phrase for hinting that
the easy money will continue flowing indefinitely. The stock market chooses to
listen to the BABA and Rosengren market-pumping comments and ignores the
sanction news sending stocks wildly higher into the closing bell. The SPX
closes at the high.
The trading day and holiday-shortened week ends with the SPX
up 10 points, +0.5%, printing a new all-time closing high at 2007.71. The
all-time SPX intraday high occurs yesterday at 2011.04. The Dow gains 68
points, +0.4%, to 17137.36 less than one point away from the all-time closing
high at 17138.20 on 7/16/14 seven weeks ago. All eyes will be watching on
Monday to see if the Dow can finish the day with an 84 cent or more gain to
print a new all-time closing high, or not.
The COMPQ is up 21 points, +0.5%, to 4583 recovering over 40
points off the intraday low printed right before this morning’s Fed POMO pump. The
RUT small caps gain 3 points, +0.3%, to 1170. Tech and small caps did not
provide leadership today or for the entire week. AAPL recovers +0.9% helping
the Nasdaq and broader markets. SBUX gains +1%. Airlines are mixed with DAL
down but UAL up +0.6%.
The 10-year yield moves higher to 2.46% with the stock
market moving higher today. The 2.45%-2.51% is a critical resistance level for
the 10-year Treasury. The bond bears (lower prices higher yields) looking for
inflation win above 2.51% while the bond bulls (higher prices lower yields) looking
for deflation win under 2.45%.
For the week, the SPX is up 0.2% continuing the five-week
winning streak. The SPX weekly chart prints a doji candlestick (typically
indicates a trend change) with the chart indicators such as RSI, MACD,
histogram, stochastics and money flow all negatively diverged. The Dow gains
+0.2%, COMPQ +0.1% and RUT small caps are down -0.4%.
Trannies are on fire with TRAN up +2.3% this week printing
new all-time record highs as the oil price weakens. WTIC oil loses -2.5% this
week. Biotech takes a hit this week with IBB losing -2.2%. Consumer Staples,
XLP, are up +1% and utilities, XLU, are up +0.9% providing market leadership. These
sectors are safety plays so traders are seeking defensive strategies. Tech,
XLK, is flat this week and energy, XLE, is down -1.7% much to the chagrin of long
traders that continue to recommend energy stocks to Ma and Pa. NBR collapses
-6.8% this week and DO pukes -4.7%. RIG -2.7%.
The dollar prints the biggest gain in 17 years against the
euro. The euro is 1.2950 recovering off the 1.2918 low print. Gold drops -1.5%
this week but bounces off the critical 1250-1260 support area. Gold miners are
hit with GDX down -6.1% and GDXJ losing -6.7%. IAG -10%. NEM -4.1%. ABX -6.7%. The
Lumber Index collapses -3.5% despite all the happy talk about the housing
sector. Italy, Spain and Germany are big winners on the week with the Draghi
joy and decreased tensions in Ukraine. EWI +3.2%. EWP +2.8%. EWG gains +1.6%.
A military plane carrying 100 Americans from Afghanistan to Dubai
is forced to land in Iran after failing to provide a proper flight plan. The
plane and passengers are permitted to continue after a short detention.
Tensions continue in the Middle East.
Dollar/yen 104.95. The BOJ ends a two-day meeting
maintaining the ongoing record easing program as expected. Since the dollar/yen
drops under 105, the stronger yen sends the NIKK -0.3% lower. The central
bankers control the stock market through money printing. Asia is mixed overall
with the SSEC the big winner gaining +0.8%. Global traders anticipate more PBOC
stim [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology] money bazooka; central bankers can create higher stock
markets simply by edict. The ECB’s move into quantitative easing is called QE
Light since Draghi will not purchase sovereign government debt but instead
private debt. The German bund drifts higher to 0.97%. US equities leak lower
off the top since the VIX moves above 12. The dollar/yen runs to 105.34 as the
dollar index runs higher.
Oil Inventory data shows less of a loss in inventory than
expected so global demand remains challenged at the same time the world is
awash in oil supply. A gallon of oil remains cheaper than a gallon of milk. WTIC
is down -1% to 94.55. Ditto Brent oil sitting at 102. Natty gas is also down
-1% to 3.81. BP slips on an oil spill losing -5%. A US court rules that BP is
grossly negligent concerning the 2010 Gulf oil spill disaster so the oil giant
may be subject to greater penalties. BP plans to file an appeal.
Appaloosa Management’s notable bullish investor David Tepper
who has accurately called the bullish stock market based on the central banker
easy money policies, tells CNBC business television that today marks the
“beginning of the end for the bond rally.” Strategists, analysts and traders
have called the top in the 30-year bond rally for the last five years; all have
been wrong. Tepper also says the ECB move today “can’t be bad for stocks”
worldwide. Thus, Tepper expects the US stock market to continue higher while
bonds are sold off (Treasury yields moving higher); higher stocks with higher
yields. Typically, Tepper’s words would instantly impact the stock market
(several handles of SPX upside would be expected since Tepper is bullish the
stock market) but oddly, the SPX is unaffected ignoring his comments.
Consumer discretionary leads the upside with XLY gaining
+0.5%. AMZN is up +2.2%. DHI gains +1.3% after this morning’s upgrade and the
homebuilders move higher. TSLA moves higher from this morning up +1.7% as excitement
increases over the battery factory announcement. GPRO drops -5.4% but is
already a double in its short two-months of trading.
At 2 PM, the VIX is leaping higher towards 13 pounding
equities lower. The luster is off the Draghi rose. At 2:30 PM, equities
accelerate lower. The broad indexes place the low at 3:15 PM and recover
slightly into the closing bell. Energy is smacked in the face which hurts a
significant number of long traders that continue to tout the energy story for
this year. XLE loses -1.4% and is down from above 101 to 96 over the last two months.
The day ends with the SPX down 3 points, -0.2%, to 1998,
well off the LOD at 1992.54. The SPX prints a new all-time intraday high at
2011.17. The Dow drops 9 points, -0.1%, to 17070, printing a new all-time
intraday record high at 17161.55, but remains unable to print a new all-time closing
high above 17138.20. TRAN prints new all-time intraday and closing highs at
8550 and higher but the Dow Industrials are not yet able to close at a new
all-time high to verify the upside market rally from a Dow Theory perspective.
The COMPQ drops 10 points, -0.2%, to 4562 and ends the
streak of new 14-1/2 year highs. The RUT drops 5 points, -0.4%, to 1167. Equity
markets began the day happy after Draghi fired the QE money bazooka but faded
lower from 11 AM forward after the European markets closed. The lower euro will
benefit European companies but at the expense of US multinational companies.
After the bell, fast-food restaurateur LOCO goes crazy
leaping over +6% higher on its first-ever earnings report that meets on EPS and
beats by a hair on top line revenue. Long traders are tripping over each other
to buy the tasty chicken and the hot El Pollo Loco stock. Retailer ZQK is in
quicksand dropping -13% in the AH trading. GPS falls into the gap losing -6% ruining
the recent positivity. ZUMZ drops -7% after meeting on earnings but guiding
lower. KORS drops -4% after announcing a secondary stock offering (dilution). So
Quiksilver, Gap, Zumiez and Michael Kors are all taking the pipe and will weigh
negatively on the retail sector tomorrow. Contact lens maker COO misses on
The Financial Stability Oversight Council (FSOC) designates MET a
non-bank systemically important financial institution (SIFI). Metlife fights the
declaration since increased regulation and holding a larger capital position
will cut into profits. Metlife says they are a simple insurance company but the
government says otherwise. MET will see active trading tomorrow as the
ramifications of the new designation are identified.
Idiots begin forming a line in front of AAPL’s flagship New
York store ahead of the new iPhone 6 release on Tuesday. Publicity seekers are in
line to promote web sites or other business offerings since they will be
interviewed and others are paid to stand in line by wealthy individuals that
want to be first to show off the new iPhone.
Fed data shows that the wealthiest 10% of society was the
only social class that became wealthier over the last three years. Middle class
and poor families see their incomes drop during the same time period. As often
cited in the chronology, the wealthy are becoming wealthier due to the Fed’s
Keynesian money printing at the expense of the middle class and poor. The
funny, and sick, part of it all is that the banker and other corporate greed caused
the financial collapse in 2008 but these folks never paid a price for their nefarious
deeds and are now richer than ever.
The average American is making about 25% less than a few
years ago while the wealthy elite class is making 25% more than a few years ago
and enjoying huge stock market gains. The Fed created this mess, fully endorsed
by rich democratic and republican politicians, and President Obama since he
appointed Chair Yellen, which will lead to future social unrest in America as
the have not’s seek retribution against the have’s.
The dollar/yen remains above 105 so Japanese exporters
remain strong on the weaker yen and the NIKK gains +0.4%. Japan PM Abe unveils a
new cabinet trying to reinvigorate Abenomics although the k [Text is Redacted: Purchase September 2014-09 to Read the Complete Chronology]
After the closing bell, retailer PVH earnings are a beat
boosted by the Tommy Hilfiger and Calvin Klein brands. Drone-maker AVAV
nosedives -5% on an earnings miss. Engineering company and LNG facility design
and builder MTRX collapses -15% after reporting earnings.
The rampant market bullishness continues. The Investors
Intelligence bearish sentiment drops to 13.3% the lowest levels since 1987 when
the stock market crash occurred. Sentiment is a contrarian indicator where
complacency and lack of fear (low bearish sentiment and high bullish sentiment)
leads to a market top while fear and panic, and blood in the streets, is the
best time to enter the stock market long. Strategist Anthony Valeri at LPL
Financials says the market upside run is not over and US growth “will keep
pushing stock prices higher.” Investor Hugh Johnson says a correction may occur
but any pull back is in the context of an ongoing bull market. Johnson says, “Maintain
heavy exposure to equities.”
A couple of Jack’s chime in with notable permabull “invest for
the long term” Jack Bogle repeating his tried and true mantra to always buy the
stock market. Bogle says, “PE’s are not overextended.” By his own metrics using
actual earnings, Bogle says the market PE is 20 and is not at excessive
valuation levels. Permabull Jack Bouroudjian agrees cheering the stock market upside
stating the case that stocks are moving up because of earnings and a strengthening
economy and not the Fed and other central banker easy money policies. Please
hold your laughter.
Newsletter David C Jennet is bullish saying, “investors and
analysts are wasting their time trying to prove that stocks have formed a new
bubble.” Piper Jaffray maintains an SPX 2100 price target for this year and
says, “The stage is set for the broader market to make another leg higher” and “the
intermediate and long-term picture of the market remains bullish.” The bullish
euphoria examples are endless.
All the bullishness aside, there is a small chorus
developing singing a more negative tone. Real estate billionaire and proven
market timer Sam Zell says, “Something has to give.” Top line revenue for
companies across all sectors continue flat or lower as the stock market
catapults to new record highs. Any dissenting opinions, however, are shouted
down by the overwhelming bullish consensus. Global traders believe in the power
of central banker Keynesian monetary policies as evidenced by the 5-1/2 year
record stock market rally off the March 2009 bottom. The Fed (US), BOJ (Japan),
BOE (UK), ECB (Europe), PBOC (China) and other nations are running the printing
presses 24/7 devaluing their currencies to goose the stock market.
Long traders are raping the equity market upside, with no
long-term allegiance to the stock market, since the central bankers keep
printing money. The wealthy, that own stocks, have become filthy rich from the
Fed and other central banker policies, while the middle class and poor are paying
the way and suffering through structural unemployment. The separation of the US
into the have’s and have not’s will lead to social unrest in America in the
months and years ahead.