Dow Jones Industrial Average
The old joke is "In America, you correct newspaper, but in Soviet Union, newspaper corrects you.” Switzerland is now experiencing the bond market equivalent.
What we see now is the recovery of price discovery, and therefore the functioning economy, and it shouldn’t be a big surprise that it doesn’t come in a smooth transition. Six years is a long time. Moreover, it was never just QE that distorted the markets, there was – and is – the ultra-low interest rate policy developed nations’ central banks adhere to like it was the gospel, and there’s always been the narrative of economic recovery just around the corner that the politico/media system incessantly drowned the world in. That the QE madness ended with the decapitation of the price of oil seems only fitting.
Alcoa delivers the daily lesson on how to full everyone with non-GAAP BS all the time.
History literally appears to be repeating. The mainstream media and our politicians are promising Americans that everything is going to be okay somehow, and that seems to be good enough for most people. But the signs that another massive financial crisis is on the horizon are everywhere.
"Some folks are selling stocks..." and, according to The White House, President Obama is closely monitoring it. As The Hill reports, despite the meme that lower-oil-prices-are-unequivocally-good-news-for-Americans, the Obama administration is monitoring whether the fall in oil prices is affecting the US stock market. Just over 5 years ago, President Obama explained to the American public that "profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal," so we can rest assured that our leaders are (for now) "hesitant" to say whether the fall of the stock market, which came as crude oil trades briefly dipped below $50, was related to oil prices.. so blamed Europe.
2014 may go down as the year when gold and silver conspiracy “theories” became conspiracy “facts” as banks globally were found to have conspired to rig the prices of gold, silver, currency and many other markets.
Having added further confusion to the markets by keeping "considerable" and adding "patient", suffered 3 dissents (1 dove, 2 hawks), and explaining that the energy price drop is "transitory", we suspect Fed Chair Janet Yellen will have some 'splainin' to do during today's press conference. Is "patient" longer than "considerable time" and just what (Dow Jones Industrial Average) data is the Fed dependent on now?
Another day, another record for the Dow Jones Industrial Average, Main Street’s favorite measure of Wall Street stock performance. How did we get here? The answer sits in a comfortable blend of good returns from a range of industry sectors. Seven of the Dow 30 names have added over 100 points to the total 1,303 point gain for the Average this year: Visa (251 points), UnitedHealth (185), Nike (136), 3M (129), Disney (116), Johnson & Johnson (111) and Home Depot (106). By contrast, there is just one 100 point loser: IBM (negative 137 points). The collapse in energy stocks hasn’t hurt the Dow very much – just 113 points year to date related to declines in ExxonMobil and Chevron. And to satisfy the most common “What if” scenarios we hear: adding Apple on its split day this June would have added an estimated 166 points, and Facebook’s whole-year 2014 performance would have pushed the Average higher by 162 points.
Investors have been lulled into a state of complacency due to a seemingly "unstoppable" rise in the financial markets. Bad news remains good news, and even small drawdowns are quickly reversed sending stocks surging higher. Eventually, the paradox of what happens when a seemingly unstoppable force collides with an immovable will be answered. Historically, such realizations have not been kind to investors. This weekend's reading list takes a look at the reasons why stocks could rise higher, and the potential they won't. The question to be answered is "What will you do when the immovable object is met."
One of the great myths about investing that we’re told by the mainstream investment education is that we should “buy and hold” for the long term. Let's look at the numbers...
December 5th 1996: After rising 210% off the 1987 crash lows, Alan Greenspan speaking at the American Enterprise Institute in Washington, asks: "But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?" The next day, the Dow Jones Industrial Average slumps by 1% to close at 6,381.94; over the next three years, the market nearly doubles...then crashes...then doubles... then crashes... and then triples in the last five years... "rational exuberance"
The ongoing slump in oil prices looks set to take their toll on London’s “super prime” property markets with attendant consequences for the rest of the London property market. Foreign money that had been flooding into the UK from a whole array of international sources and parking in London real estate is drying up.
Because nothing says "spend on Black Friday" like a fractionally positive Dow Jones Industrial Average closing in the green with a last minute surge that gets its from red to just barely green... and completely unrigged.
Following the October swoon, stocks have vaulted to all-time highs. As we discussed previously in "Sentiment Is Off The Charts Bullish," there have only been few occasions where investors have felt so "giddy" about the financial markets. Such periods of exuberance have never ended well for investors as they were deluded by near-term "greed" which blinded them to the building risks. One of the things that we pay attention to is the ratio of the S&P 500 compared to longer duration bonds.