Dow Jones Industrial Average

The IMF And Austrian Theory

Nobody in the economic intelligentsia is implying that the IMF is staffed by paranoid cranks. They continue to ignore and belittle the Austrian school. This pompous and undeserved behavior will go on until it’s too late. In the process, the ivory tower disciples of Keynes will only further prove their intellectual bankruptcy. The average person never trusted them to begin with. And things certainly won’t change now.

Deflation Flirts With America

"I see deflation flirting with America." Retail sales equals consumer spending equals velocity of money. And unless the money supply is rising, hardly likely in the taper, less spending is deflation by definition. Forget about PMI and all that kind of data, it’s much simpler than that. Central banks can do all kinds of stuff, but they can’t make us spend our money on things we don’t want or need. Let alone make us borrow to do so. And if we don’t, deflation is an inevitable fact. That doesn’t mean prices for some items won’t go up, but that’s not what counts. It’s about how fast we either spend the money we have – if we have any left – or how much we borrow. And if time is money, then borrowed money is borrowed time. So we really shouldn’t.

Frontrunning: October 16

  • Dallas County May Declare State of Disaster From Ebola Virus (BBG)
  • Markets on edge after worst turmoil in four years (Reuters)
  • Central bankers may have no quick fix as markets swoon, economy weakens (Reuters)
  • Risk of Deflation Feeds Global Fears  (Hilsenrath)
  • U.S. health official allowed new Ebola patient on plane with slight fever (Reuters)
  • Texas Hospital Fights Allegations About Ebola Protocols (BBG)
  • Treasuries Gain as Oil Drops Below $80 While Stocks Slide (BBG)
  • Greek Bonds Slump on Bailout Concern as Spain Misses Sale Target (BBG)
  • White House shifts into crisis mode on Ebola response (Reuters)
  • Obama Confronts Slippery Slope as Islamic State Advances (BBG)

Will The Fed Let The Stock Market Crash Before An Election?

If central banks have learned anything since 2008, it's that waiting around for the panic to deepen is not a winning strategy. Put yourself in their shoes. Isn't this what you would do, given the dearth of alternatives and the very real risks of implosion? Anyone in their position with the tools at hand would not have any other real option other than to buy stocks in whatever quantity is needed to reverse the selling and blow the shorts out of the water. If $1 trillion doesn't do the job, make it $3 trillion, or $5 trillion. At this point, it doesn't really matter, does it?

 

As Monday Looms, Experts Warn Japan's Half-Trillion Dollar Fat-Finger-Trade "Could Absolutely Happen" In The US

Just over a week ago, the Japanese stock market participants were stunned when stock orders amounting to a whopping $617 billion (yes Billion with a B) - more than the size of Sweden’s economy - were canceled for reasons still unknown in what was one of the biggest 'fat finger' trading errors of all time. Since then, US equity markets have suddenly become notably more volatile - and fallen significantly, VIX has seen odd intraday 'spikes', S&P futures saw the very odd 'satan signal', and USDJPY has suffered its worst losses in 3 years. This raises the question of whether US market microstructure is any better than Michael Lewis' Flash Boys' book describes.. (as we head into a bond market holiday, dismal liquidity, and a potential Black Monday), “That could absolutely happen here,” Tabb Group's Larry Tabb warns Bloomberg.

Have The S&P And Dow Seen Their Highs For The Year?

Have the S&P 500 and Dow Jones Industrial Average seen their highs for the year?  At this point in 2014, it’s probably a coin toss.  There are several factors in favor of a further rally, to be sure.  Corporate profits are still robust, revenue expectations are modest, and long term interest rates remain equity-friendly.  On the flip side of the U.S. equity market coin: long term valuations are toppy, plenty of other markets (commodities, bonds) seem to signal an impending global recession, and a host of geopolitical concerns now seem to be hitting a full boil. Also, let’s not forget that the Russell 2000 peaked in, oh, March (1209) and July (1208) and is down 8.8% from that last high. By that measure, equities are already rolling over. It is true that markets climb a wall of worry. Until it falls on them.

"Bales Of Cash On The Sidelines": The Average Billionaire Has A Record $600 Million In Cash

While the saying "cash on the sidelines" is patently wrong as all cash represents is a form of risk, asset and liquidity preference (and yes, for every buyer of stock there is a seller: repeat as many times as necessary until it clicks), we are confident the fact that the world's record number of billionaires, 2,325 in 2014 up from 2,170 a year ago, holding a record $7,291 trillion in assets or a little under half of the US GDP, have a record $600 million in cash on average, up from $540 million the year before.

Have We Forgotten What An Authentic Market Is?

The irony of maintaining a veneer of authenticity over a fundamentally inauthentic market is rich: the more the authorities manipulate the market to maintain high valuations and suppress turbulence, the greater the odds of a collapse of trust as inauthentic markets cannot self-correct or discover the price of assets, capital and risk. Once risk has been effectively hidden by perception management, participants lack the essential information they need to make informed decisions. And so their decisions will be catastrophically mis-informed. This is how declines morph into crashes.

5 Things To Ponder: Multifarious Cogitation

This weekend’s “Things To Ponder” is comprised of a variety of readings that cover a fairly broad spectrum from educational to informative and even a little bit sarcastic.

5 Things To Ponder: Buy The Dip Or Market Correction

Obviously, this weekend's reading list is focused on what to do now.  Is this just another "dip" that investors should buy into? OR, is this the beginning of the long overdue intermediate term correction or a "mean reverting" process?

August 1914: When Global Stock Markets Closed

Although the NYSE was closed between July 30 and December 12 of 1914, stocks were quoted by brokers and traded off the exchange.  Global Financial Data has gone back and collected stock prices during the closure of the NYSE to recreate the Dow Jones Industrial Average while the NYSE was closed.  We collected the data for the 20 stocks in the new DJIA 20 Industrials and calculated the average of the bid and ask prices from August 24, 1914 to December 12, 1914.  This enabled us to discover that the 1914 bottom for stocks actually occurred on November 2, 1914 when the DJIA hit 49.07, over a month before the NYSE reopened.  Few people realize that stocks in the US had already bottomed out and were heading into a new bull market when the NYSE reopened on December 12, 1914. The DJIA did not revisit this level until the Great Depression in 1932. 

Please Don't Blame The Fed: Alan Greenspan Says "Bubbles Are A Function Of Human Nature"

After all this time Greenspan still insists on blaming the people for the economic and financial havoc that he engendered from his perch in the Eccles Building. Indeed, posturing himself as some kind of latter day monetary Calvinist, he made it crystal clear in yesterday’s interview that the blame cannot be placed at his feet where it belongs:

"I have come to the conclusion that bubbles, as I noted, are a function of human nature."

C’mon.

GoldCore's picture

The MH-17 tragedy could mark a pivotal moment in the worst crisis between Russia and the West since the Cold War. Geopolitical risk is extremely high today. As it was in 1914. With the U.S. seeking to impose tough new sanctions on Russia, we appear to be on the verge of a new and more intense phase of currency wars and indeed of an economic war. Indeed, a millitary confronatation with all that entails cannot be ruled out ...

Wall Street "Throws In The Towel" On Q3/Q4 Revenue Growth Expectations

Wall Street analysts are "already throwing in the towel" on 3Q, 4Q revenue growth with forecasts for the 30 Dow Jones Industrial Avg. companies of 2.5%, 1.6% versus predictions of 3% or more just 2 months ago. ConvergEx's chief market strategist Nicholas Colas explains these lowered forecasts fly "in the face of a general consensus from the economic community, the Federal Reserve included, that the back half of 2014 will be better than the Polar Vortex-damaged first half of the year." As Colas warns, rather ominously, "we aren’t pricing 1.6% revenue growth for Q4 2014 with price/earnings multiples at 17-18x. If you are buying Dow 17,000 or S&P 1980, you expect better. Now, companies and the macro economy have to deliver."