5th Time is a Charm

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Friends

The fifth time was a charm. After 5 tries since the 4th quarter of last year, the bulls finally penetrated the 2800 (2815 level to be exact) on the S&P, and were able hold it into the close. The economic data was mixed with consumer confidence and job openings stronger than expected, while the industrial production number was softer than expected. All this basically leads to the Fed being able to be “patient” with regards to monetary policy, but in the meantime the bulls can point to the fact that recession talk might have been premature.

As for today, by the close the Dow Jones Industrial Average was up 139 points to finish the day at 25,849. The S&P 500 was up 14 points to close at 2,822. Gold was up $6 to trade at $1,301 per ounce, while oil was down $.18 to trade at $58.43 per barrel WTI.

Despite the woes for Boeing, which weighed on the Dow, it was a good week for the bulls. Now that we have closed above 2815 on a daily and weekly basis, let’s see if the bulls have cleared a runway to the old highs of 2940 on the S&P. The FOMC meets next week, but we obviously don’t expect the Fed to change interest rates at this point. They might give us more clarity on the quantitative tightening (bond run off) program, which could add to the overall dovish tone that the Chair has exhibited recently. We’ll let you know how things play out next week. Stay tune.

Jim

And the Pendulum Swung

Sixth grade science teaches us that a pendulum can only swing so far in one direction.  It’s momentum is slowed, then eventually halted, by its center of gravity and gravity itself.  That wise professor Nancy Pelosi gave several freshman Democrats a refresher course in just how that pendulum “thing” works yesterday.

Just six weeks or so after hugs and smiles and poses for group pictures had the Democrat freshman representatives positively giddy about a progressive future without greenhouse gasses and that gas-bag Donald Trump guy able to get in the way, Nancy became the center of gravity.  And, suddenly the swing to the left met gravity.

Alexandria Octavio Cortez (AOC) has The Green New Deal and dozens of other far left newbies had the pitchforks and lanterns.  The hunt for green October and the head (figuratively) of Donald Trump was on.

Nancy cleared her throat and in her best Lee Corso voice, pencil in hand, said “not so fast my friends on the left.”  That’s right.  It took a left coast, left leaning liberal to slow the roast.  She said, “I’m not for impeachment. Impeachment is so divisive to the country that unless there’s something so compelling and overwhelming and bipartisan, I don’t think we should go down that path, because it divides the country. And he’s just not worth it.”   And just like that the old guard put the new guard in place all the while taking a cheap shot at The Donald.

And just like that the old guard put the new guard in place in 2014.  Then it was John Boehner, who took the gavel from Nancy, and Mitch McConnell who relegated the Tea Party incoming revolution to the last row of the Senate and House floors.   Marco Rubio, Ted Cruz and a band of brothers had the music momentum stopped.  These upstarts had gone just far enough.  Rhinos forever!  And just like that the darn center of gravity, like Father Time, remained undefeated.  The pendulum headed back towards the middle.

So, where to from here?  AOC and her nearly 60 new Democrat friends feel empowered by the progressive wave that retook the house.  Surely they can push the Green New Deal.  Cost might be a problem though.  Estimates to actually act on its merits range from 40 trillion to nearly 100 trillion, or between 8 and 25 times the yearly federal revenues tax dollars received.

The cost of a Chick-fil-A meal is far less than that.  Sarah Palin left an aforementioned Tea Party rally in 2013 and proudly bought a couple of no. 1 value meals. It made international headlines as a show of support for the conservative christian right led Tea Party and the conservative christian right leadership of Chick-fil-A.  The restaurant chain was under fire then because they closed (and still do) on Sundays.  Heathens demand that the right give them the right to chicken seven days a week.

Support came to the left led Green New Deal yesterday when noted nutritionist, right coast NY Mayor Bill de Blasio proudly announced that soon NY public school lunches would enact, drum roll please, “meatless Mondays.”  Surely this will be a great first step in reducing those pesky emissions all the while helping our young eat healthier.  Government sure knows how to look out for its tired and its poor who know no better.

Perhaps the long running,successful, cow survival campaign by ChickFilA is now dated.  In place of “Eat Mor Chikin” sparing cows it could be “Eat Mor Letus.”  You would save (not kill) two animals with one slogan.  PETA would be so proud.

Speaking of “Letus,” let us pray that sanity returns soon.

Or, it returns at least before the cows come home.

 

 

 

Jobs Data and The Past 10 Years

Independent Investment Management designed to protect and grow your wealth.

Friends

10 years ago today (actually March 9th 2009) in the midst of the great financial crisis, stocks finally bottomed after a more than 50% drop in a year and a half. At that moment it was the second more than 50% drop in the stock market in less than 10 years. I had been through the crash of October 1987 (at Merrill Lynch at the time), and the dot.com bubble bursting bear market which began in early 2000, but without a doubt the financial crisis bear market of 2008 and early 2009 was the worst period of time in my 34 years in the business. It really wasn’t about the stock market in 2008, it was more about the survival of the financial system. When liquidity disappeared, stocks were the only liquid game in town, and thus were under relentless selling pressure for months. In 2000, the dot.com craze pushed stocks to unsustainable levels. The subsequent downturn was a stock market event. But, not 2008 and 2009. Stocks were reasonably priced at the time. Unfortunately real estate was not.

This daily update was born in October of 2008. In an attempt to keep lines of communication open with our clients, at a time when no one really knew what was unfolding and what the future held, we decided that the only way to keep everyone informed and up to date on a daily basis was with an email. It would be impossible to talk to everyone every day, so this was our alternative. Well, as we found out, it became a comfort to our clients to hear from us each and every day, and though we didn’t necessarily have any answers, at least we kept them informed about what was going on. And, there was a lot going on. The Fed, Congress and the President all were grasping for answers, but solutions seemed difficult to agree upon. In the end, we got through it all and the S&P 500 is now more than 4 times higher than it was on March 9, 2009. Along the way, our clients seemed to enjoy the daily updates even when we weren’t in time of crisis, and thus I still try to write an update every day. I hope you continue to enjoy them.

As for today, stocks slumped after a surprisingly weak jobs number, but recovered most of those losses in the last hour of trading. Sure, the unemployment rate fell to 3.8% and wages continue to climb, but 20,000 new jobs was way lower than expected. Again, January’s number was way higher than expected, so averaged out the numbers seem about right.

For the day, the Dow Jones Industrial Average was down 23 points to close at 25,450. The S&P 500 was down 5 points to finish the day at 2,743. Gold was up $13 to trade at $1,300 per ounce, while oil was down $.57 to trade at $56.09 per barrel WTI.

We’ll leave it there for today. Let’s see what next week has in store for us.

Have a great weekend everyone.

Jim

A Dubious Anniversary For Stocks

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Friends

Stocks continue to lose a little bit of luster as we move into March. Today’s ADP private payroll number was about as expected and estimates are for Friday’s government non-farm payroll number to show about 180,000 new jobs were created in February. But, stocks seem to be experiencing a modest buyers strike at the moment. Volatility is still somewhat muted, but the direction has had a downward slope for several days now.

By the close, the Dow Jones Industrial Average was down 133 points to finish the day at 25,673. The S&P 500 was down 18 points to close at 2,771. Gold was up $2 to trade at $1,287 per ounce, while oil was down $.34 to trade at $56.22 per barrel WTI.

As we have mentioned, it’s not a bad thing that we would take a pause after such a robust rally off the Christmas Eve low, but it is a little disconcerting that we can’t get decisively above the 2800 resistance mark on the S&P. By the way, today marks the 10 year anniversary of the intraday market low of 666 on the S&P 500. The market didn’t bottom on a closing basis until the 9th of March 2009, but the March 6th intraday low was such an ominous number, market participants will never quiet forget it. It’s really amazing that we’re whining about 2800 10 years later. I can tell you with serious conviction, that on March 6, 2009 the S&P 500 reaching 2800 seemed like a fairy tale. Memories.

Have a nice evening everyone.

Jim

$22,103,879,734,119 and Counting. But, Who is Counting?

As a gloomy February gave way late last week to a gloomy early March, $21 trillion in US debt and climbing gave way to $22 trillion in US debt and climbing.  But who is counting?  Talking about grey skies and cold temperatures is about as sexy as talking about debt.  It depresses one we suppose.

But, we wonder as out loud as we can, shouldn’t we talking about the debt NOW?  And shouldn’t we do something about it NOW?  We wonder if this isn’t something that both sides of the very parted aisle in Washington could agree on.  Last year’s roughly $800 billion deficit (money the US government spent in excess of what it took in) will look like it’s been on the Keto diet compared to the $1 trillion guesstimate that 2019 is shaping up to be.

By the time Barrack Hussein Obama left the White House in early 2017 the debt of ALL of the nation’s drunken overspending actually doubled under his watch.  Before anyone says he had to do it to stimulate the economy, the answer is no he didn’t.  You don’t have to do anything except pay taxes.  And, apparently you aren’t paying enough, that is, unless you think you are already paying too much.

And there in lies the crux of it all.  Both sides of the argument want to spend on programs and projects that appeal to their base.  And both sides talk around a game of “we need to spend less.”  Yet, at least one side thinks that we are taxed too heavily.

Obama wasn’t the only prez in charge to see wildly ballooning debt.  George W. liked to dole it out big time too.   He may have gotten that bad habit from his dad who rang it up like another round with the boys at the club.

In round numbers the debt has now reached $60 thousand for every legal US citizen and $180 thousand for every taxpayer.  We could solve this today if you would reach for your checkbook, dust off the dust, and write a quick one to the US Treasury for $60k.  One problem is that each of your children would need to as well, and it’s doubtful that they will ever even know what a checkbook is.  Has anyone named a child Venmo yet?  Our guess is yes.

Donald Trump spoke about the debt while campaigning.  He said on a live broadcast to his biggest cheerleader, Sean Hannity, that he favored the penny plan to reduce the deficit and eventually the debt.  The penny plan simply was a commitment to spend 99 cents on all of that which you spent a dollar on the year prior.  If you did this in seven years you would actually retire the entire debt, then $20 trillion.  Meanwhile, in his first two years the debt has leapt up two more rungs.  Sad.

However doing so would be like committing to the Keto diet, or any diet for that matter.  What are you willing to give up?  Or, would you just prefer to gorge yourself to death?

US Debt live billboards are posted in a few places in our countryside, a very few places.  Each time we hit a another depressing trillion milestone somebody grumbles about it and then we forget about it until we hit another milestone.  It reminds us of the assault on “assault weapons.”  Children at school are shot.  Proponents of gun control say we told you so.  Someone in Congress introduces new, stricter gun control legislation.  It dies without a vote  just like the very unfortunate children whose tragedy prompted the legislation.  Then, no one talks about it until it happens again.  It’s like the instructions on the back of a shampoo bottle.  Wash.  Rinse.  Repeat.

The Keto diet craze is sweeping across America.  How about we put America’s spending on the same healthier path?

In the time it took to write this (about and hour) the debt has ballooned to $22,103,949,632,268 which is an increase of nearly $60 million.

Keto for President in 2020.  MALA.  Make America Lean Again!

 

 

Stocks Slump Despite Good Data

Independent Investment Management designed to protect and grow your wealth.

Friends

This morning’s GDP release was quite a pleasant surprise. With most analysts expecting a number south of 2% for the 4th quarter of 2018, it was a bit of a stunner that we saw 2.6% growth in the quarter. Even more surprising was how business investment contributed to the strong number, as did consumer spending. Along with that surprisingly good news, we got a robust and much better than expected Chicago PMI number. So, though we do seem to be in a bit of a slowdown, and almost assuredly a slowdown in corporate earnings (after the massive increase the past two years), the bulls can hang their hat on the fact that the slowdown sure doesn’t look like a recession- at least not at this point.

Despite the good economic data, stocks slumped, perhaps partially due to the lack of a deal with the North Koreans, but more likely we simply have run up against resistance in the middle of very overbought conditions. In other words, it wouldn’t be bad if we took a breather. For the day, the Dow Jones Industrial Average was down 69 points to close at 25,915. The S&P 500 was down 7 points to close at 2,784. Gold was down $6 to trade at $1,315 per ounce, while oil was up $.25 to trade at $57.19 per barrel WTI.

Stocks have shown signs of fatigue this week. Let’s see how we close out the week tomorrow. Stay tuned.

Have a nice evening everyone.

Jim

Elijah and the Karaoke Singers Hit a Few Low Notes.

Infrequent visits to karaoke bars have all resulted in the same result for this writer.   Friends, family, strangers, and bouncers alike all highly recommended that I “keep my day job.”  Well, their point is understood to a point.  Yesterday, if you had a day job good for you.  Those job responsibilities hopefully kept you safely away from a live stream or TV and therefore from watching the U.S. House of Representatives Oversight Committee hearings.

The plea deal guilty Michael Cohen, aka Donald Trump’s decade long plus personal lawyer, took an oath to tell the truth to answer questions from blood thirsty Republican and Democrat Representatives.  It was the same pledge he took a while back then summarily lied through his pearly whites.

His 30 minute long (unprecedentedly long some said) opening manifesto only occurred after a vote to postpone was rejected by the majority Democrats.  It seems like the Republicans didn’t take too kindly to the prior night’s coaching and prepping session Cohen took part in with honorable reps, Adam Schiff among them.  And so Cohen began his 1800 second assault on anything his attorney, Lanny Davis (the Clinton family’s honorable lawyer and confidant) and he could think about to poke, jab, and stab at President Trump.  The speech touched on racism, womanizing, Stormy Daniels, hush money, repayments, son’s of Trump, Russian collusion (except he couldn’t call it collusion because of that silly under oath thing), payoffs, Trump Towers, and the like.

It even painted a picture of a Donald Trump picture, er portrait.  Cohen orated that Trump instructed Cohen to insure that a straw bid occur at an auction where Trump’s portrait was up.   As the last item in the auction a 60k bid secured the piece and secured the fact that it was the highest price paid for any portrait offered.  Cohen told us in this rundown that Trump has a big ego.  The hearings likely cost taxpayers far greater than 60k a minute.  So America paid about 180k to learn that Trump has a high opinion of himself.  Quite revealing isn’t that?

Then the fun really began.  Democrats asked if Cohen knew of any Trump drug use.  They asked if he ever provided money to any woman for “personal healthcare.”  Each of the Republican reps spent their five minutes calling Cohen a convicted felon, known liar, jealous lawyer, and scorned “White House employee want to be.”

What substance came of all of it?  Little.  The Russian collusion theory should now be put to rest once and for all.  But it won’t be. Trump reimbursed Cohen over 12 months for silencing Stormy days before the election.  Shameful perhaps.  Criminal? Nah.  Paging the Mueller Investigation.  Mr. Mueller what have you?

When it was all done Oversight Committee Chairman Elijah Cummings eloquently and passionately told the honorable committee’s rank and file, Cohen, and a worldwide TV audience that “WE ARE BETTER THAN THIS!”  He also asked that we leave our democracy in a better place than we found it.  It sounded like he wanted to Make America Great Again.

Was this entire day the first step, launched by the Lanny Davis aided Cohen speech towards finding something/anything to eventually vote to impeach Donald Trump?  Perhaps.  Perhaps.

And perhaps it is once again a loud, Cummings loud, reminder that votes really, really matter.  The American people voted Trump into office in November 2016.  The American people voted and enough Democrats won in November 2018 to flip the House to the Democrats.  The Oversight Democrats voted to make disgraced and disbarred Michael Cohen their star witness to dig dirt on you know who.   It was these same Democrats that voted to not postpone the hearings with the coaching so fresh in Cohen’s mind.  If the House stayed red there would have been no Cohen testimony.

Will the next big vote that matters eventually be cast by the House to attempt to over throw Trump?  Or will it be in the general election in November of 2020 to vote for or against Trump?  Cohen warned us in his closing remarks that if it were the latter that he had concerns that the transition from Trump to “fill in the blank” could be accomplished peacefully.  Over Cohen’s right shoulder Lanny smiled.  Mission accomplished.

We looked carefully at how the committee conducted itself in its “day job.”

We hope that they can sing.

 

New York Makes an Amazonian Sized Mistake

It’s old news to you now that Amazon, Inc., try as it might to not, decided to pull the plug on their new New York headquarters #2.  A year-long “contest” ended with Virginia and New York both winning the “Amazon please be thy neighbor” prize.  But, then New York started acting like a petulant child.  The new news is a peek behind the curtain that fascinates.

This link is an open letter from a NY official that details the why of the wow.  Reading the details is like watching a train wreck in slow motion.   Wow indeed!

Start spreading the news, New York, New York failed to deliver a huge, gift wrapped economic boost to its people.

Stocks Rally To Close Higher For The Week

Independent Investment Management designed to protect and grow your wealth.

Friends

Stocks rallied today after yesterday’s modest selloff as hopes continue to build that a trade deal with China will eventually come to fruition. This, despite the continued weakening economic data and another disastrous earnings release from a large American icon Kraft Heinz. As we have mentioned, the weakening economy will surely keep the Fed on the sidelines for a while.

For the day, the Dow Jones Industrial Average was up 181 points to close at 26,032. The S&P 500 was up 17 points to close at 2,792. Gold was up $2 to trade at $1,330 per ounce, while oil was up $.25 to trade at $57.21 per barrel WTI.

Despite the less than perfect conditions, stocks posted gains for the week, as has been the case all year long. Every time the bears think they have an upper hand, the bulls sweep the carpet right out from under them. Let’s see if the bulls can keep the bears frustrated next week.

Have a great weekend everyone.

Jim

Weak Economic Data Weighs On Stocks

Independent Investment Management designed to protect and grow your wealth.

Friends

A plethora of less than stellar economic data finally put a little damper on the nearly 7 week rally. With interest rates extremely low and the Fed now firmly on the sidelines with regards to future rate hikes, the markets are going to have to decide going forward, if bad news is bad news for stocks or not. You know the drill, bad economic news guarantees an accommodative Fed therefore insuring that monetary policy is back to being a tailwind for stocks. With low interest rates, stocks become the only game in town, despite the fact that we are entering an earnings slowdown. This will be an interesting tug of war as we move towards the spring. Is bad news good news for stocks or not? Which is more important to market participants- dovish monetary policy/low interest rates or positive earnings growth?

As for today, by the close the Dow Jones Industrial Average was down 103 points to finish the day at 25,850. The S&P 500 was down 9 points to close at 2,774. Gold was down $19 to trade at $1,328 per ounce, while oil was down $.33 to trade at $56.83 per barrel WTI.

The bears finally had something to cheer about today, but I wouldn’t go so far as to say that they have claimed the high ground just yet. It is clear that the domestic economy as well as global economies are slowing, but what is not clear is what is more important to investors. Slow economies mean accommodative central banks around the world, and for about 10 years now, stocks have been the beneficiary (most of the time). Let’s see how the week finishes out tomorrow.

Have a nice evening everyone.

Jim