Dow Jones Industrial Average
During Monday's flash crashing mayhem, the fragility of the ETF pricing system was exposed for all to see. While common sense dictates that the extreme market moves, trading halts, and tripped circuit breakers may have had quite a lot to do with the epic divergences between NAV and unit pricing, the real culprit was a "computer glitch" caused by a botched "systems change" last Saturday. The fact that the trouble calculating NAVs across nearly 800 mutual funds happened on the very same day as the flash crash is strictly coincidence.
Every Federal Reserve Chair since 1979 has faced a notable challenge in the first 12-20 months of their tenure – something akin to capital markets “Bullies” hazing the new kid at school. Paul Volcker had the 1979-1980 Iranian oil shock/recession, Alan Greenspan the 1987 Stock Market Crash, and Ben Bernanke the 2007 Financial Crisis. Their responses shaped market perceptions about Federal Reserve priorities and set the stage for the remainder of their tenures, from Inflation-Fighting Volcker to Save-the-World Bernanke. Now, it is Chair Yellen’s turn...
The correction may soon morph into a full-fledged bear market if the Fed makes good on its supposed intentions to raise interest rates this year. Have no illusions, while most market observers are quick to blame the sell-off on China, this market was given life by the Fed, and the Fed is the only force that will keep it alive. Unfortunately for the Fed, it won't be able to get away with doing nothing for too much longer. Events may soon force it to show its hand. Then perhaps some may notice that the Fed is holding absolutely nothing and has been bluffing the entire time.
Last week, in the global currency war’s latest escalation, Kazakhstan instituted a free float for the tenge causing the currency to immediately plunge by some 25%. The rationale behind the move was clear enough. What might not be as clear is how recent events in developing economy FX markets stem from a seismic shift we began discussing late last year - namely, the death of the petrodollar system which has served to underwrite decades of dollar dominance and was, until recently, a fixture of the post-war global economic order.
The Dow Jones Industrial Average has gone nowhere since October 31st 2014 - The End of QE3...
It has now been 64 days since the last 52-week high in the Dow Jones Industrial Average (DJIA) on May 19. 50-day "droughts" before and after a 52-week high in the Dow Jones Industrial Average have marked several major tops.
Overall, the lack of revenue growth combined with full equity valuations (unless you think +17x is cheap) is all you need to know about the current market churn... and why it will likely continue.
Anyone tempted to gamble on buying the proverbial dip in Chinese equities after Monday’s dramatic 8.5% sell-off probably shouldn’t, says Tom DeMark, who called a top and shortly thereafter, a bottom, in the SHCOMP back in 2013. "The die has been cast. You just cannot manipulate the market."
With the mainstream media onslaught against precious metals climaxing this weekend as WSJ's Jason Zweig proclaimed gold "like a pet rock," describing owning gold as "an act of faith," we thought it worthwhile looking back at the last time 'everyone' was slamming gold and entirely enthused by the omnipotence of central bankers... May 4th, 1999 - "Who Needs Gold When We Have Greenspan?"
While the party in the 1990s ended badly, the festivities currently underway may end in outright disaster. The party-goers may not just awaken with hangovers, but with missing teeth, no memories, and Mike Tyson's tiger in their hotel room.
What began as a glitch in pre-market trading turned into the NYSE's longest trading halt since Hurrican Sandy battered the East Coast. The ever-increasing complexity of US equity markets combined with an ever-decreasing pool of greater fools leaves windows open on down days (for it appears these 'glitches' only ever occur on down days) for markets to break. While NYSE traders defended the very market structure they have abhorred in the past as evidence that today was "not a failure," we can't help but find CNBC's Scott Wapner's ignorant remarks that "if retail investors want low cost liquid trading they are going to have learn to live with it," the perfect post-mortem for a rigged system brimming with confident insiders ever excited to take mom-and-pop's money.
It’s happening. As expected, dynastic politics is prevailing in campaign 2016. After a tease about as long as Hillary’s, Jeb Bush (aka Jeb!) officially announced his presidential bid last week. Ultimately, the two of them will fight it out for the White House, while the nation’s wealthiest influencers will back their ludicrously expensive gambit. And here’s a hint: don’t bet on Jeb not to make it through the Republican gauntlet of 12 candidates (so far). After all, the really big money’s behind him.
Today will almost certainly be the busiest trading day of the year, as the Russell indexes go through their annual rebalancing/reconstitution. But, as ConvergEx's Nick Colas notes, Friday’s close will be the end of a trade that began almost 2 months ago, as traders began handicapping which equities would be included for the first time or swapped between various Russell indices. Since the beginning of May, for example, the stocks that will be added to the Russell 2000 are up 11%, and those being deleted from the same index are down 2% over the same time period. In short, for one day – and this is the day - every U.S. equity market participant, no matter what their investment mandate, needs to think like a trader. Throw in a little Greek drama going into the weekend, and it could be quite a day...
Today will go down in history as one of the worst times in history to be invested in the stock market. Virtually no one believes this statement. That is why it will prove to be true. Every valuation method known to mankind is flashing red. A crash is baked in the cake. Will the trigger be Greek default, a Chinese market crash, a Fed rate increase, a derivative bet going boom, a Middle East event, someone doing something stupid in the South China Sea, a Ukrainian eruption, or a butterfly flapping its wings? When greed turns to fear, for whatever reason, the house of cards will collapse for the 3rd time in 15 years. Thank the “brilliant” bankers at the Federal Reserve.
Since 1929, the Dow Jones Industrial Average has rarely ever been so close to a 52-week high while the Dow Transports AND Dow Utilities were so close to a 6-month low. Following this kind of divergence, the median return for the DJIA and DJT was negative on all time frames, from 1 month to 1 year. Things were particularly bad – and consistently so – at the 3-month marker.