I'm going to include a picture of where I will be Saturday.
This one's for you Mary ;)
30 Kasım 2010 Salı
Comment cleaner
I really don't have anything I want to post at the moment as I'm using everything for the premuim newsletter so I'll just use this as a comment cleaner.
I'm going to include a picture of where I will be Saturday.
This one's for you Mary ;)
I'm going to include a picture of where I will be Saturday.
This one's for you Mary ;)
King Dollar & Lower Taxes
How ironic. Ben Bernanke launches QE2 and everyone worries about a dollar collapse. But instead, it’s the euro that has collapsed, dropping 9.5 percent relative to the greenback. Overall, the dollar index has appreciated 7 percent.
Some, like Robert Mundell, believe sharp currency swings change monetary policy. In this case, as Euro-debt worries escalate, the rising dollar amounts to a tightening of Fed policy. Smaller than what happened last winter and spring during the Greece problem, but still significant.
This is partly why U.S. stocks have corrected lower by just under 4 percent. Tighter money slows the economy. It’s too bad, because the October numbers show an economic awakening, maybe influenced by GOP election confidence.
In any case, if the greenback keeps appreciating, economic concerns and stock jitters could deepen. All this despite booming corporate profits and strong holiday retail sales.
So, this would be a great time to make a deal on extending the Bush tax rates. Today’s White House meeting seemed to lean ever so slightly towards a deal. But nothing’s definite. Maybe lunch at Camp David.
But my macro point is this: A suddenly stronger King Dollar will be just fine as long as tax rates stay low. The Laffer-Mundell supply-side model argues for tight money and lower tax rates in order to maximize economic growth. That’s what we need now.
Some, like Robert Mundell, believe sharp currency swings change monetary policy. In this case, as Euro-debt worries escalate, the rising dollar amounts to a tightening of Fed policy. Smaller than what happened last winter and spring during the Greece problem, but still significant.
This is partly why U.S. stocks have corrected lower by just under 4 percent. Tighter money slows the economy. It’s too bad, because the October numbers show an economic awakening, maybe influenced by GOP election confidence.
In any case, if the greenback keeps appreciating, economic concerns and stock jitters could deepen. All this despite booming corporate profits and strong holiday retail sales.
So, this would be a great time to make a deal on extending the Bush tax rates. Today’s White House meeting seemed to lean ever so slightly towards a deal. But nothing’s definite. Maybe lunch at Camp David.
But my macro point is this: A suddenly stronger King Dollar will be just fine as long as tax rates stay low. The Laffer-Mundell supply-side model argues for tight money and lower tax rates in order to maximize economic growth. That’s what we need now.
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET on CNBC:GREAT ECON DATA: CHICAGO PMI & CONSUMER CONFIDENCE...WHAT'S DRAGGING ON THE MARKETS?....TAX SELLING WORRIES; LINGERING HOUSING CONCERNS; EURO DEBT CRISIS... SHOULD INVESTORS GET READY FOR A 4TH QUARTER COMEBACK?
- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Brian Wesbury, First Trust Advisors Chief Economist
- Jack Bouroudjian, CEO of Index Futures Group and a CNBC contributor
OBAMA'S BIPARTISAN LEADERSHIP SUMMIT
- CNBC chief Washington correspondent John Harwood reports from the White House.
TAX DEBATE: SHOULD THE CAP BE RAISED TO $1 MILLION?
- Mark Levine, Democratic Policy Analyst; Lobbyist
- Curtis Dubay, Heritage Foundation Senior Policy Analyst
WIKILEAKS TARGETS MAJOR U.S. BANK
- CNBC’s John Carney
- Dick Bove, Financial Strategist; Rochdale Securities
HOW TO AVOID GETTING BURNED BY EUROPE
- Michael Cuggino, Permanent Portfolio Family of Funds President & Portfolio Manager; Permanent Portfolio Fund
- Lee Munson, Portfolio Asset ManagementChief Investment Officer
DEFICIT COMMISSION REPORT
- Rep. Xavier Becerra (D-CA)
Please join us. The Kudlow Report. 7pm ET. CNBC.
Sovereign Debt Concerns Continue To Dominate The Action
The market rebounded nicely from its lows yesterday, but sellers are back this morning amid continued concerns about sovereign debt in Europe. The concerns have led to continued selling in the euro, and buying in the dollar.
The flight to safety trade is on, with the dollar higher, gold prices higher ($1383), and Treasury bonds higher also. At the same time, global equities and commodities are lower.
Asian markets were down across the board overnight, amid ongoing speculation about tighter monetary policy in China.
There was some good economic news in the form of a higher than expected Consumer Confidence reading this morning. Consumer Confidence for November rose to 54.1 from 49.9 the prior month.
Oil prices are lower, but still above $85 after yesterday's rally; the 10-year yield has fallen back to 2.77%; and the volatility index (VIX) is up +5% to 22.67 after a big reversal yesterday from its intraday highs.
Trading comment: The market continues to bend, but not break. The chart of the S&P 500 below shows that the market has been finding support at its 50-day average (blue line). Reversing from its lows yesterday to rally into the close was also bullish action.
So far the SPX remains 3-4% off its early November highs, so this correction has been mild in magnitude and is approaching its 4th week in duration. I said before that I wanted to see bearish sentiment surface, and the put/call ratios have begun to confirm that. The CBOE put/call ratio hit 0.98 yesterday and 0.96 this morning, while the ISEE call/put sank to 87 yesterday and 78 this morning. So that is a start. It will be interesting to see if the investment advisor sentiment surveys change much this week.
The flight to safety trade is on, with the dollar higher, gold prices higher ($1383), and Treasury bonds higher also. At the same time, global equities and commodities are lower.
Asian markets were down across the board overnight, amid ongoing speculation about tighter monetary policy in China.
There was some good economic news in the form of a higher than expected Consumer Confidence reading this morning. Consumer Confidence for November rose to 54.1 from 49.9 the prior month.
Oil prices are lower, but still above $85 after yesterday's rally; the 10-year yield has fallen back to 2.77%; and the volatility index (VIX) is up +5% to 22.67 after a big reversal yesterday from its intraday highs.
Trading comment: The market continues to bend, but not break. The chart of the S&P 500 below shows that the market has been finding support at its 50-day average (blue line). Reversing from its lows yesterday to rally into the close was also bullish action.
So far the SPX remains 3-4% off its early November highs, so this correction has been mild in magnitude and is approaching its 4th week in duration. I said before that I wanted to see bearish sentiment surface, and the put/call ratios have begun to confirm that. The CBOE put/call ratio hit 0.98 yesterday and 0.96 this morning, while the ISEE call/put sank to 87 yesterday and 78 this morning. So that is a start. It will be interesting to see if the investment advisor sentiment surveys change much this week.
29 Kasım 2010 Pazartesi
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET on CNBC:BRIGHT SPOT: RETAIL ROARS ON BLACK FRIDAY/ CYBER MONDAY...Is retail picture as rosy as it looks? Is it a reflection of optimistic consumer or saving-weary consumer? Are retailers discounting too much to turn a profit?
- Brian Sozzi, Equity Research Analyst
- Marshal Cohen, Chief Retail Analyst The NPD Group
- Loren Bendele, Founder & CEO of Savings.com
EUROPEAN DEBT CRISIS -- IS THIS A BUYING OPPORTUNITY?
- Robert Froehlich, The Hartford, Sr. Managing Director
- Peter Morici, University of Maryland Robert H. Smith School of Business Prof; U.S. International Trade Commission Fmr. Chief Economist
CONGRESS BACK IN SESSION
- Rep. Mike Pence (R-IN)
WILL THERE BE A TAX CUT EXTENSION? WHAT IS THE RIGHT COMPROMISE?
- Robert Reich, Fmr. Labor Secretary; "Aftershock" author; CNBC Contributor; Univ. of CA., Berkeley, Prof. of Public Policy
- Steve Moore, Senior Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author
WIKILEAKS & CHINA
- CNBC's Hampton Pearson.
HOW SHOULD INVESTORS NAVIGATE THESE TRICKY WATERS?
- Jon Najarian, Co-Founder, OptionMonster.com; Fast Money Contributor
- Alan Valdes, DME Securities Vice President
Please join us. The Kudlow Report. 7pm ET. CNBC.
Monday Morning Musings
News over the weekend of a bailout for Ireland has done little to calm the markets this morning. The $113 billion bailout is also weighing on the Euro and leading to a rally in the dollar. And as we know lately, strong dollar means weak stocks.
There are also continued tensions regarding the Korean situation, but despite those Asian markets finished mixed overnight. European markets are lower this morning, and the credit default swaps on major sovereign debt continue to push higher.
Among the sector ETFs, it is a big odd that financials (XLF) are bucking the weakness and trading slightly higher on the day. I think this shows a bit too much complacency in the face of this big debt mess in Europe. Healthcare (XLV) stocks are down the most, as a group.
The early numbers for Black Friday look pretty good. So far, Amazon (AMZN) is trading higher. I heard the retail figures for Thanksgiving day were also pretty good. And today we have Cyber Monday, which I'm sure will be heavily discussed later this week.
Oil prices are slightly higher to $84.05, while gold prices are off a bit to $1361. The flight to safety into Treasuries is pushing the yield on the 10-year Note down to 2.83%. And the volatility index (VIX) is up +4.5% today to a 2-month high of 23.22.
Trading comment: I have mentioned recently that I wanted to see how sentiment shaped up to help gauge when this correction might run its course. So far, I would have to say that I think investor sentiment remains too complacent.
Last week's put/call ratios were on the low side. Additionally, the investor sentiment surveys still show a lot of bullishness. The spread between bulls and bears in the AAII survey rose to +23 last week, while the II survey still hovered at +34. And the Rydex nova/ursa ratio hit fresh highs last week.
So far the S&P 500 is roughly 4% off its early November high. But given that I still think we have room to see these sentiment indicators move lower, I don't think the markets are ready to bottom yet and resume their rally. I expect continued choppy trading, but think the market will likely touch lower levels in order to bring out more bearishness before we see a meaningful bounce. And much also depends on this situation out of Europe, as we need to see the bad news slow down.
There are also continued tensions regarding the Korean situation, but despite those Asian markets finished mixed overnight. European markets are lower this morning, and the credit default swaps on major sovereign debt continue to push higher.
Among the sector ETFs, it is a big odd that financials (XLF) are bucking the weakness and trading slightly higher on the day. I think this shows a bit too much complacency in the face of this big debt mess in Europe. Healthcare (XLV) stocks are down the most, as a group.
The early numbers for Black Friday look pretty good. So far, Amazon (AMZN) is trading higher. I heard the retail figures for Thanksgiving day were also pretty good. And today we have Cyber Monday, which I'm sure will be heavily discussed later this week.
Oil prices are slightly higher to $84.05, while gold prices are off a bit to $1361. The flight to safety into Treasuries is pushing the yield on the 10-year Note down to 2.83%. And the volatility index (VIX) is up +4.5% today to a 2-month high of 23.22.
Trading comment: I have mentioned recently that I wanted to see how sentiment shaped up to help gauge when this correction might run its course. So far, I would have to say that I think investor sentiment remains too complacent.
Last week's put/call ratios were on the low side. Additionally, the investor sentiment surveys still show a lot of bullishness. The spread between bulls and bears in the AAII survey rose to +23 last week, while the II survey still hovered at +34. And the Rydex nova/ursa ratio hit fresh highs last week.
So far the S&P 500 is roughly 4% off its early November high. But given that I still think we have room to see these sentiment indicators move lower, I don't think the markets are ready to bottom yet and resume their rally. I expect continued choppy trading, but think the market will likely touch lower levels in order to bring out more bearishness before we see a meaningful bounce. And much also depends on this situation out of Europe, as we need to see the bad news slow down.
26 Kasım 2010 Cuma
Moving
I'm going to be moving this weekend. The weekend report probably won't be out till Saturday night or Sunday.
I'm going to be busy so answering emails will be sporadic also.
I'm going to be busy so answering emails will be sporadic also.
Market Finds Plenty To Worry About On Black Friday
Stocks opened lower this morning on a combination of concerns. Asian markets were lower overnight amid escalating tensions on the Korean Peninsula. There was also news out of Beijing that China is going to cut its loan targets in an effort to cool property prices.
European markets are also lower on continued concerns over sovereign debt issues in Europe. Portugal is said to be under pressure from other euro countries and the EU to accept an aid package, but officials deny they need one. Of course, that's the same thing Ireland and Greece said at the outset. I suspect next we will start to hear Spain mentioned in the discussions.
The dollar is bouncing on all of this news, as a safe haven, and this is weighing on the commodity complex. Gold prices are down $18 to $1354, while oil is down less than that to $83.50.
The 10-year yield is lower today to 2.86%; and the volatility index (VIX) is bouncing +6.5% from Wednesday's levels to 20.85.
Trading comment: Today is a holiday shortened session, so volume will be very light, and I wouldn't put too much emphasis on today's trading. Interestingly, many leading growth stocks are bucking the weakness and grinding higher. To wit, check out FFIV, ROVI, OPEN, APKT, IGTE, NFLX, CMG, and AAPL. These stocks have proven very resilient and shown the ability to quickly brush off any negative news and continue higher despite the overall market.
long AAPL, APKT, FFIV, IGTE, OPEN
European markets are also lower on continued concerns over sovereign debt issues in Europe. Portugal is said to be under pressure from other euro countries and the EU to accept an aid package, but officials deny they need one. Of course, that's the same thing Ireland and Greece said at the outset. I suspect next we will start to hear Spain mentioned in the discussions.
The dollar is bouncing on all of this news, as a safe haven, and this is weighing on the commodity complex. Gold prices are down $18 to $1354, while oil is down less than that to $83.50.
The 10-year yield is lower today to 2.86%; and the volatility index (VIX) is bouncing +6.5% from Wednesday's levels to 20.85.
Trading comment: Today is a holiday shortened session, so volume will be very light, and I wouldn't put too much emphasis on today's trading. Interestingly, many leading growth stocks are bucking the weakness and grinding higher. To wit, check out FFIV, ROVI, OPEN, APKT, IGTE, NFLX, CMG, and AAPL. These stocks have proven very resilient and shown the ability to quickly brush off any negative news and continue higher despite the overall market.
long AAPL, APKT, FFIV, IGTE, OPEN
24 Kasım 2010 Çarşamba
Stocks Show Continued Resilience And Bounce
The market continues to show its resilience and bounce sharply from yesterday's selloff. Recently, each time the market has experienced a big selloff, it has bounced back quickly. This is a positive trait to a consolidation, whereby the market bends but does not break.
I have been out the last couple of days, but a cursory look at the charts of many leading stocks shows continued positive price action. I think this bodes well to a constructive outlook.
This morning, there were mixed economic reports, but the market seems to be focusing on the positives. November Consumer Sentiment came in better than expected at 71.6, which is up nicely from last month. And initial jobless claims fell to a 2-year low on a better than expected report. A weak durable goods number, and a weak new home sales report don't seem to be gaining too much traction in early trading.
Asian markets were mixed overnight. The euro is bouncing a bit this morning, but wider yield spreads in Europe show that concern about debt issues remain. The dollar is roughly flat, with oil and gold prices higher. Oil is up to $81.67, while gold has bounced back to $1376. Gold prices recently found solid support at their 50-day average.
Among the sector ETFs, industrials are leading (+1.33%), followed by materials (+1.15%). Utilities (+0.32%) are lagging, followed by consumer staples (+0.46%).
The 10-year yield is bouncing to 2.88%; while the volatility index (VIX) is down a sharp -8.6% back below the 20 level to 18.85.
Trading comment: I think the price action has been constructive. I haven't had a chance yet to see how investor sentiment has been shaping up, so I still need to do that roundup. I will try to post a sentiment update on Friday to update readers. But as I mentioned before, many leading stocks continue to break out to new highs, or hold just below their 52-week highs.
If you look at the chart below, you'll see the S&P 500 has held above its 50-day average, and has been oscillating between its 50-day support and overhead 20-day average. I think this consolidation will soon be broken to the upside, based on the action I am seeing in individual stocks.
I have been out the last couple of days, but a cursory look at the charts of many leading stocks shows continued positive price action. I think this bodes well to a constructive outlook.
This morning, there were mixed economic reports, but the market seems to be focusing on the positives. November Consumer Sentiment came in better than expected at 71.6, which is up nicely from last month. And initial jobless claims fell to a 2-year low on a better than expected report. A weak durable goods number, and a weak new home sales report don't seem to be gaining too much traction in early trading.
Asian markets were mixed overnight. The euro is bouncing a bit this morning, but wider yield spreads in Europe show that concern about debt issues remain. The dollar is roughly flat, with oil and gold prices higher. Oil is up to $81.67, while gold has bounced back to $1376. Gold prices recently found solid support at their 50-day average.
Among the sector ETFs, industrials are leading (+1.33%), followed by materials (+1.15%). Utilities (+0.32%) are lagging, followed by consumer staples (+0.46%).
The 10-year yield is bouncing to 2.88%; while the volatility index (VIX) is down a sharp -8.6% back below the 20 level to 18.85.
Trading comment: I think the price action has been constructive. I haven't had a chance yet to see how investor sentiment has been shaping up, so I still need to do that roundup. I will try to post a sentiment update on Friday to update readers. But as I mentioned before, many leading stocks continue to break out to new highs, or hold just below their 52-week highs.
If you look at the chart below, you'll see the S&P 500 has held above its 50-day average, and has been oscillating between its 50-day support and overhead 20-day average. I think this consolidation will soon be broken to the upside, based on the action I am seeing in individual stocks.
To La LA Land
 |
| Jen, Isaac, John |
Jen and Isaac and I are now in Los Angeles. What a crazy fun trip!
 |
| Me, Aaron, Carolyn |
 |
| Amanda |
We finally hitch-hiked out of Moab on Tuesday of last week. Aaron had thrown us a going-away party at his hogan, Amanda traded my bulkier guitar case with her lighter travel one, Gregory and Beth did my laundry and sent me off with a sleeping bag and a food care package, John gave me his climber's backpack, and Travis and Kate gave me their hammock for Hawaii and walked us to our hitch-hiking spot on Highway 191.
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| Church Rock |
Roadies Again
A rock climber named Nick gave us our first ride out of Moab. His Suzuki car had a carrying capacity of just 650 pounds, causing us to weave all over the road. He took us to the Indian Creek turn-off. I remembered there was a cave at Church Rock, so we camped there that night.
The next morning a Boznian trucker named Denis took us all the way to Gallup, New Mexico. He said he used to hitch-hike all over Europe. It's funny how he described free-spirit hippy types as "real Americans", and how he was disappointed when he first got to the US to find that most Americans were slaves to jobs and money and talked about guns and war and US superiority all the time, not the "real Americans" that he admired from afar in Boznia. Denis gave us lunch on the road and dinner in Gallup, taking us to a Chinese restaurant there.
Hobos Again
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| Woody Guthrie |
We hopped a coal train out of Gallup, which took us as far as a small town in Arizona and dropped our car there. I knew from past experience we could hop another train from another town farther west in Arizona, but not from this one, so we started hitch-hiking again. We weren't having much luck with the three of us. But it was good, because it finally gave me a chance to pull out my guitar and play my Woody Guthrie roadie songs I'd been practicing (66 Highway Blues, Hitch Hike Blues, I Aint Got No Home In This World Any More). We were even hitching along Woody's old hitching Route 66 that he sung about. Okay, so we had only a few moments of hitch-hike blues and started walking down the highway until a guy whose name I forget, which means "bear," picked us up and took us to the town we wanted to go. We cooked and hung out at a campfire we built under an overpass and camped out there. The next morning we found an abandoned shopping cart, put our packs in it, and walked to the other end of town where we could catch a train out. Just as we were wheeling the cart near the tracks where we were planning to hop, a sheriff's deputy showed up. He said he wanted to check us out since we stuck out like sore thumbs and we were "close to the tracks," but he ended up being really friendly, telling us where shelters and food were located and warning us of wanna-be gangs in the area. He told us, "try to stay off the tracks," shook our hands, and left. Within 5 minutes, a stacker train ("hotshot") stopped, and we hopped on, and we managed not to touch the tracks :-) A hotshot was what I was looking for, since hotshots are "express" and would take us all the way to a major city like L.A., with no worries of being dropped in the middle of nowhere (as happened with the coal train).
Off we went, with spectacular views of Arizona and grins on our faces all day long. As it got colder, Isaac decided to open up one of the crate containers and we crawled into the warmth, bedding down on top of bags of cat food for the night. I wouldn't have thought to do that, and we would have been pretty miserable had we remained outside all night over the passes.
Homies Again
We slept through the night and the train arrived into a city by sunrise. We couldn't figure out where we were, but I suspected a burb of LA. The train stopped outside a train-yard there, and it would have been wise to hop off there. But we decided to sit tight and see how much farther the train would go, since we were clueless of our location. Unwise decision. The train started up again, took us into the yard and stopped, for good. There was activity all around us. We sat tight inside the container. Then one of those big upside-down horshoe-shaped lift thingies came along right above the car in front of us and started preparing to lift that crate out of the train! Talk about nervous! Nowhere to run without being seen, and our container was going to be lifted out, and we couldn't see where we could exit the yard! We finally had no choice but to run, so we scurried left. A service vehicle came by and we got non-chalant and pretended to not see it. The driver asked us where we were going, and we said, "out of this trainyard!" He said, with slight grimace, "Well, you better hurry before you get arrested!" So that we did, and we happened upon the gate and escaped with a sigh of relief.
However, after we walked about a block outside the yard, a "bull" (security truck) pulled up beside us and demanded we line up against the wall and produce identification. We ignored his request. He asked us if we had been on the train, and we simply said we were lost. He had zero authority outside the yard so we said "bye bye" and walked on. He followed us, trying to bluff us, and it was working. A couple other bulls drove up, too. We came to a tall barb wire fence in an alley and were cornered. We could have just ignored them and kept walking, but fear set in and I decided we should climb the fence into the private lot. Jen said, "now we are adding bad to bad and could get caught tresspassing." The bulls circled the block and kept yelling at us, but we sat tight. Finally they lost patience and went away, and we left the lot and walked to freedom.
Bless-ed Again
We found out we were in a burb of L.A. and walked to a park. It started raining, so we hung out in a community center there. We were the only white people around. The people around were refreshingly friendly. One man handed me $5, which I passed on to Isaac (although Jen and Isaac aren't using money on this trip either). Some other folks had had a kid's birthday party and gave us tons of left-over food from it, which we gladly snarfed down.
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| Gary |
I'm not used to the luxury of having a cell phone around. I decided to check email on Jen's phone and discovered that a dude named Gary was offering us a place to stay at a ranch he is caretaking north of LA if we happened to be in the LA area! So we called him and he gladly came to pick us up. We stayed at a primitive cabin at this charming ranch filled with funky artwork and animals and good people (e.g., Cici and Steven), and he offered us hospitality, grand conversation and joy for a couple days until the rain subsided. He then took us all the way back to LA and dropped us off at the ports there.
We found another abandoned shopping cart and wheeled it for miles into Long Beach. Real Bag People we were!
We found another abandoned shopping cart and wheeled it for miles into Long Beach. Real Bag People we were!
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| Roy, Silvia |
At the ports we got a message from Roy and his mom, who offered to pick us up and bring us to their home. So that's where we are now! So good to see Roy again, as well as his mom and Sylvia! They invited us to spend Thanksgiving with them. After that we plan to go back to the ports and figure out getting on a boat to Hawaii. If it doesn't work out in LA, we'll head to San Diego.
Roy's mom has been showering us with Mexican hospitality, feeding us splendid food, overflowing with generosity.
I feel so intensely grateful I'm traveling with Isaac and Jen. They are about as pleasant and easy-going and fun as you can get, never complaining about anything and open to everything, never saying anything bad about anybody.
Born Again, Continually
Yes, how blessed I feel.
23 Kasım 2010 Salı
No Time to Panic
Stocks are getting ripped by North Korea and Ireland, with all the fears that go along with those two stories. People should not panic. A lot of good news out there is suggesting a strong economy, regardless of what the Fed says.
Third-quarter real GDP was revised up from 2 to 2.5 percent, including better consumer spending. And inside the report, business equipment and software investment is growing 19 percent year-on-year. But the really important news in the revision is a continuation of strong business profits. After-tax profits are up 28 percent from year-ago levels. Domestic financial profits are up 28 percent. And domestic profits for non-financial corporations are up 40 percent.
Profits are the mother’s milk of stocks, business, and the economy.
We had a string of positive economic reports in October, including stronger retails sales and factory output. And via Mark Perry of the Carpe Diem blog, Thompson Reuters reports that mall traffic for November is showing a steep rise.
Employment trends are getting slightly better. Housing is not, and that’s the biggest glitch in my narrative. But it doesn’t seem to be getting any worse. And believe it or not, for whatever reasons, the dollar has been relatively steady of late. America is still a safe haven in times of stress.
What’s left to be done is a temporary extension of the Bush tax cuts. When that occurs, stocks could be poised for another large rally. Strong profits, a positive yield curve, the Fed greasing the wheels (for better or worse), improved business activity, and slowly recovering consumers all add up to positive market fundamentals.
Third-quarter real GDP was revised up from 2 to 2.5 percent, including better consumer spending. And inside the report, business equipment and software investment is growing 19 percent year-on-year. But the really important news in the revision is a continuation of strong business profits. After-tax profits are up 28 percent from year-ago levels. Domestic financial profits are up 28 percent. And domestic profits for non-financial corporations are up 40 percent.
Profits are the mother’s milk of stocks, business, and the economy.
We had a string of positive economic reports in October, including stronger retails sales and factory output. And via Mark Perry of the Carpe Diem blog, Thompson Reuters reports that mall traffic for November is showing a steep rise.
Employment trends are getting slightly better. Housing is not, and that’s the biggest glitch in my narrative. But it doesn’t seem to be getting any worse. And believe it or not, for whatever reasons, the dollar has been relatively steady of late. America is still a safe haven in times of stress.
What’s left to be done is a temporary extension of the Bush tax cuts. When that occurs, stocks could be poised for another large rally. Strong profits, a positive yield curve, the Fed greasing the wheels (for better or worse), improved business activity, and slowly recovering consumers all add up to positive market fundamentals.
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET on CNBC:HEADLINE RISKS:
REALITY OF MILITARY THREAT FROM N. KOREA...DOES IT TRANSLATE TO MARKET THREAT AT HOME?
WHAT YOU NEED TO KNOW TO PROTECT YOUR PORTFOLIO
- Zach Karabell, River Twice Research President; Economist; CNBC Fast Money Contributor
- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
- Frank Gaffney, Center for Security Policy President; Former Asst Secy of Defense for International Security Policy Under Reagan
HOW DEEP & HOW WIDE IS THE EUROPEAN DEBT THREAT?
- Andy Busch, BMO Capital Markets; CNBC Contributor
- Peter Navarro, "The Coming China Wars" Author; University Of California - Irvine Business Professor
IS IT TIME TO BUY THE MARKET?
- Art Hogan, Jefferies Managing Director, Global Equity Product
- Jim Iuorio, Options Action Contributor; Director, TJM Institutional Services
PART II OF THE GEORGE W. BUSH INTERVIEW
BUSH ON THE DOLLAR, SPENDING, TAXES & U.S. GLOBAL COMPETITIVENESS
HOW IMPORTANT IS A STRONG DOLLAR POLICY?
- Steve Moore, Senior Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author; Founder & Fmr. President of the Club for Growth
- Tony Fratto, CNBC Contributor; Fmr. White House Deputy Press Secretary
Please join us. The Kudlow Report. 7pm ET. CNBC.
22 Kasım 2010 Pazartesi
An Animated Conversation with Former President George W. Bush
I recently sat down with George W. Bush to discuss his new book, Decision Points.With the greatest respect to the former president, he and I disagreed on a number of issues, and let each other know about it.
In particular, the stock market's scorecard of his two terms, the collapsing dollar, and Too-Big-to-Fail Bailout Nation.
Click here to read the full transcript.
19 Kasım 2010 Cuma
A Lively Talk with George W. Bush
Former President George W. Bush told me in a CNBC interview today in Salt Lake City that the stock market was not a fair scorecard of his presidency. When he took office, the Dow was 10,600. At the height of the Bush boom, in October 2007, it reached 14,165. And on the day he left office, as the financial crisis continued, the index had fallen to 8,300. Like the Bush presidency, the Bush stock market was a rollercoaster.
But the former president stuck with his view that TARP Bailout Nation was necessary to avert a depression. And although there were other voices with different solutions inside his administration, he said there was no time for theoretical discussion.
I asked about crony capitalism in the Bailout Nation era, and whether ordinary Main Street folks felt the game had become rigged against them. Five Wall Street banks that received $135 billion in bailout money gained $125 million in fees for underwriting the IPO for GM, the car company that itself was bailed out for $50 billion.
Isn’t capitalism without failure like religion without sin? Mr. Bush says he believes in the free market, but to this day he still thinks he had to abandon market principles in order to save the free-market system. He told me today that he hopes future recessions will not be dominated by more bailouts.
I asked if our culture has changed. Are we now more like Western Europe? He said he hopes not.
He refused to discuss the Sarah Palin/GOP revolt against Ben Bernanke’s $600 billion pump-priming campaign. He also did not want to discuss the 35 percent collapse of the dollar under his watch.
He believes his tax cuts worked and hopes they are extended. He defended his spending record. And he does not believe the U.S. is falling behind China and other emerging countries around the world.
I asked if we are losing the new economic cold war. Mr. Bush said no. I asked if the best of the American way of life and prosperity is behind us. He said no. But he would not comment on current events, which has been his custom during his book tour.
It was a very lively interview.
It will be shown Monday and Tuesday (November 22 and 23) on CNBC’s Kudlow Report.
HOLDING THE 200
Last week the market regained the 200 week moving average. I suspect after the brief 2 day move back below that level we will see the market now hold above this major support level.
Yesterday's rally was strong enough to form a swing low and should mark the bottom of the daily cycle. I'm still expecting the new daily cycle to move back to new highs before topping in mid to late December and rolling over into a more substantial intermediate degree correction in January.
By the way, my good friend Doc, who most of you are familiar with either from his blog or from the insightful comments he posts in the SMT comments area, has offered a discounted rate for his newsletter to SMT readers. You can go here to take advantage of his offer thru Thanksgiving weekend. He might even buy me a chicken burrito or two if you sign up ;-)
http://www.thedocument.com/members/smt.cfm
Yesterday's rally was strong enough to form a swing low and should mark the bottom of the daily cycle. I'm still expecting the new daily cycle to move back to new highs before topping in mid to late December and rolling over into a more substantial intermediate degree correction in January.
By the way, my good friend Doc, who most of you are familiar with either from his blog or from the insightful comments he posts in the SMT comments area, has offered a discounted rate for his newsletter to SMT readers. You can go here to take advantage of his offer thru Thanksgiving weekend. He might even buy me a chicken burrito or two if you sign up ;-)
http://www.thedocument.com/members/smt.cfm
17 Kasım 2010 Çarşamba
Pence-Corker Inflation Target Aimed at QE2
The political attack on Ben Bernanke’s QE2 continues. House leader Mike Pence and Sen. Bob Corker submitted legislation to end the Fed’s dual mandate of balancing employment and inflation. Instead, they want to rewrite the late-’70s Humphrey-Hawkins act to mandate an inflation target for the Fed, dropping the employment part.
This new inflation target is aimed at QE2, and the Fed’s attempt to lower the unemployment rate by inflating the money supply and the price level. It’s a good idea, though I would prefer going straight to a King Dollar stabilization approach referenced to gold in order to capture inflationary expectations, and thereby guide the Fed’s interest-rate and money-supply operations.
But an inflation target does clarify the central bank’s role as a guardian of price stability, and moves it away from the all-powerful central-planning disease.
Meanwhile, in the short term, the threat of dollar decline has been temporarily mitigated by the Irish and European debt-contagion flare-up, which has caused a run into dollars and out of euros. Dollar-gold has fallen accordingly.
However, in the QE2 cease-and-desist category, there is no deflation for the manufacturing sector. Factory output increased 0.5 percent in October and is running 6.1 percent ahead of last year. Along with a strong retail sales number, it looks like the economy’s growth rate is getting a bit better, and certainly not worse.
The producer price report for business wholesale prices shows no deflation. In October it increased 0.4 percent, and is running 4.3 percent above year-ago. Intermediate and crude prices also are strong.
Today’s CPI report showed a two-tenths of 1 percent increase in October, and a 2.4 percent annual gain over the past three months. The Fed will undoubtedly point to the scant 1.2 percent year-on-year gain, but that’s not deflation. The CRB futures index is still 7 percent above year-ago. Gold is 17 percent ahead of last year.
And Treasury bonds in the 10-to-30-year zone are actually higher in yield than they were late last summer when Bernanke first mentioned QE2. Not surprisingly, if the goal of the central bank is to inflate, long-term bond rates also will inflate.
A political uproar over Fed pump-priming has moved Bernanke to meet with Senate Banking Committee folks in order to re-sell the policies that were so sorely unsold in the first place. So far we don’t know what transpired in that closed-door meeting. But it looks to me like the Democrats are the easy-money party and the Republicans are the harder-money partisans.
This new inflation target is aimed at QE2, and the Fed’s attempt to lower the unemployment rate by inflating the money supply and the price level. It’s a good idea, though I would prefer going straight to a King Dollar stabilization approach referenced to gold in order to capture inflationary expectations, and thereby guide the Fed’s interest-rate and money-supply operations.
But an inflation target does clarify the central bank’s role as a guardian of price stability, and moves it away from the all-powerful central-planning disease.
Meanwhile, in the short term, the threat of dollar decline has been temporarily mitigated by the Irish and European debt-contagion flare-up, which has caused a run into dollars and out of euros. Dollar-gold has fallen accordingly.
However, in the QE2 cease-and-desist category, there is no deflation for the manufacturing sector. Factory output increased 0.5 percent in October and is running 6.1 percent ahead of last year. Along with a strong retail sales number, it looks like the economy’s growth rate is getting a bit better, and certainly not worse.
The producer price report for business wholesale prices shows no deflation. In October it increased 0.4 percent, and is running 4.3 percent above year-ago. Intermediate and crude prices also are strong.
Today’s CPI report showed a two-tenths of 1 percent increase in October, and a 2.4 percent annual gain over the past three months. The Fed will undoubtedly point to the scant 1.2 percent year-on-year gain, but that’s not deflation. The CRB futures index is still 7 percent above year-ago. Gold is 17 percent ahead of last year.
And Treasury bonds in the 10-to-30-year zone are actually higher in yield than they were late last summer when Bernanke first mentioned QE2. Not surprisingly, if the goal of the central bank is to inflate, long-term bond rates also will inflate.
A political uproar over Fed pump-priming has moved Bernanke to meet with Senate Banking Committee folks in order to re-sell the policies that were so sorely unsold in the first place. So far we don’t know what transpired in that closed-door meeting. But it looks to me like the Democrats are the easy-money party and the Republicans are the harder-money partisans.
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET on CNBC:GM’s MONSTER IPO
- Jeremy Anwyl, Edmunds.com CEO
- Paul Ingrassia, CNBC Contributor; Pulitzer Prize Winner; "Crash Course" Author
- CNBC’s Phil LeBeau
DO GOV'T BAILOUTS WORK & WILL BAILOUT NATION CONTINUE?
- Jimmy Pethokoukis, Reuters Money & Politics Columnist; CNBC Contributor
MARKETS, CHINA, IRELAND, COMMODITIES
- Gary Shilling, A. Gary Shilling & Co. President
- David Gilmore, Foreign Exchange Analytics Partner
- Jim Iuorio; Options Action Contributor; Director, TJM Institutional Services
NBC/WSJ POLL ON SPENDING & TAX CUTS - NO POLITICAL WILL TO CUT?
- CNBC chief Washington correspondent John Harwood reports.
BERNANKE DEFENDS BOND-BUYING PLAN TO CONGRESS
- Sen. Judd Gregg, (R) New Hampshire; Budget Cmte Ranking Member
CONGRESS NET WORTH GOES UP WHILE REST OF COUNTRY'S FALL
- CNBC’s Eamon Javers reports.
LEGISLATIVE LOGJAM FOR TAX EXTENSIONS? … TRAINWRECK COMING IF THE BUSH TAX CUTS AREN'T EXTENDED?
- Steve Moore, WSJ Editorial Board; Founder & Fmr. President of the Club for Growth
Please join us. The Kudlow Report. 7pm ET. CNBC.
How Strong Will The Bounce Be?
Stocks are higher in early trading after yesterday's sharp selloff. The culprits for yesterday's decline haven't really gone away, but for now the focus has softened.
China announced price control guidelines, which could take some steam out of the commodity sail. And Ireland's Finance Minister confirmed they are in talks with the EU, ECB, and IMF. But the country remains hesitant to accept aid for its fiscal troubles so far.
Asian markets were mostly lower overnight, with China down another -1.9%. Europe was mixed this morning. The dollar is down a little today, helping gold bounce a little to $1341, while oil slides a bit more to $81.62.
The 10-year yield is down today to 2.81%; and the VIX is giving back -6% to 21.22 after yesterday's sharp spike higher.
Trading comment: Today's bounce looks tepid so far, but it is still early. The market has gotten oversold again, so a bounce should be expected. But I don't expect it to change the near-term trend overnight. I think it is more likely that after the market gets an oversold bounce, that there is another wave down which should produce a better buying opportunity.
The put/call ratios were not has high as I would have liked to see yesterday given the magnitude of the selloff. We need to see investor complacency get shaken up to help the market bottom and continue to climb the wall of worry.
I did a little buying yesterday, as I like to average in. You are never going to time the bottom perfectly, so it is better to put your money to work in stages. I'll wait for another down leg before putting more money to work. Patience.
China announced price control guidelines, which could take some steam out of the commodity sail. And Ireland's Finance Minister confirmed they are in talks with the EU, ECB, and IMF. But the country remains hesitant to accept aid for its fiscal troubles so far.
Asian markets were mostly lower overnight, with China down another -1.9%. Europe was mixed this morning. The dollar is down a little today, helping gold bounce a little to $1341, while oil slides a bit more to $81.62.
The 10-year yield is down today to 2.81%; and the VIX is giving back -6% to 21.22 after yesterday's sharp spike higher.
Trading comment: Today's bounce looks tepid so far, but it is still early. The market has gotten oversold again, so a bounce should be expected. But I don't expect it to change the near-term trend overnight. I think it is more likely that after the market gets an oversold bounce, that there is another wave down which should produce a better buying opportunity.
The put/call ratios were not has high as I would have liked to see yesterday given the magnitude of the selloff. We need to see investor complacency get shaken up to help the market bottom and continue to climb the wall of worry.
I did a little buying yesterday, as I like to average in. You are never going to time the bottom perfectly, so it is better to put your money to work in stages. I'll wait for another down leg before putting more money to work. Patience.
ABOUT TO HIT THE WALL
For the duration of the dollar's secular bear market the 200 week moving average has acted as pretty solid support and resistance.
The recent two week rally has now relieved the oversold conditions and in the process the dollar is about to hit the brick wall of a declining 200 week moving average. It's already hit the intermediate down trend line.
The dollar is now short term overbought, in a strong down trend, is pushing up against solid resistance, in a secular bear market, is caught in the grip of a left translated 3 year cycle decline, and in the early stages of a dollar crisis.
I don't like the dollars chances of pushing significantly above 80.
As soon as the dollar resumes its collapse into the 3 year cycle low I expect we will see stocks and commodities resume their upward advance.
By the way, my good friend Doc, who most of you are familiar with either from his blog or from the insightful comments he posts in the SMT comments area, has offered a discounted rate for his newsletter to SMT readers. You can go here to take advantage of his offer thru Thanksgiving weekend. He might even buy me a chicken burrito or two if you sign up ;-)
http://www.thedocument.com/members/smt.cfm
The recent two week rally has now relieved the oversold conditions and in the process the dollar is about to hit the brick wall of a declining 200 week moving average. It's already hit the intermediate down trend line.
The dollar is now short term overbought, in a strong down trend, is pushing up against solid resistance, in a secular bear market, is caught in the grip of a left translated 3 year cycle decline, and in the early stages of a dollar crisis.
I don't like the dollars chances of pushing significantly above 80.
As soon as the dollar resumes its collapse into the 3 year cycle low I expect we will see stocks and commodities resume their upward advance.
By the way, my good friend Doc, who most of you are familiar with either from his blog or from the insightful comments he posts in the SMT comments area, has offered a discounted rate for his newsletter to SMT readers. You can go here to take advantage of his offer thru Thanksgiving weekend. He might even buy me a chicken burrito or two if you sign up ;-)
http://www.thedocument.com/members/smt.cfm
16 Kasım 2010 Salı
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET on CNBC:WALL STREET GROWS WORLD-WARY
Global markets fall as investors fret over China & Europe
- David Goldman, Senior Editor First Things Magazine; Fmr. Wall St. Economist
- Mike Khouw, Cantor Fitzgerald Director, U.S. Equity Derivatives Trading; Options
- Boris Schlossberg, GFT Forex Director Of Currency Research
PENCE & CORKER CALL FOR END TO FED'S DUAL MANDATE
- Rep. Mike Pence, (R) Indiana; House Republican Conference Chair
BOND MARKET DEFIES THE FED
- Brian Wesbury; First Trust Advisors Chief Economist
- Vince Reinhart, American Enterprise Institute resident scholarformer director of monetary affairs at the FOMC
U.S. STOCKS: EXPECTED CORRECTION OR SOMETHING WORSE?
- Bob Froehlich, The Hartford, Sr. Managing Director
- Lee Munson, Portfolio Asset Management Chief Investment Officer
GM IPO SHENANIGANS?
- Ronald Kruszewski, Stifel, Nicolaus Chairman & CEO
Please join us. The Kudlow Report. 7pm ET. CNBC.
Quick Look: Dollar Up, Stocks & Commodities Down
The market is under heavy selling pressure this morning, following lingering concerns over European sovereign debt as well as interest rate hikes in Asia. Greece is in the news again as there is debate about the Greek funding situation, as some members of the EU don't think Greece is doing enough to address its problems.
Asian markets were down overnight, after Korea raised interest rates to 2.5%. This stoked fears that China will tighten rates further as well. The dollar is higher on the weak euro, and this combined with fears of China slowing is hitting commodities pretty hard. Gold prices are back down to $1350 and oil has pulled back to $83.10.
The 10-year yield is up again to 2.94%. This has to bug the Fed. And the VIX is surging +11.1% to 22.45, back above its 50-day average.
One bright spot its Urban Outfitters (URBN), which we added last week. The company reported in-line earnings, but the stock had already pulled back so much that it is spiking higher today, +11% so far this morning. Not bad.
Trading comment: This is why I always say to keep some powder dry. You never know how long a selloff will last, or how far it will pullback. Volume today will be key, to see how much selling pressure there is. I also will be monitoring the put/call ratios to see if there is a jump in bearish sentiment.
Technically, the major indexes have broken their 20-day averages, but are not yet at support at their 50-days. I think most stocks will pull back to their respective 50-days, so I want to be patient and wait for those levels to buy into.
long URBN
Asian markets were down overnight, after Korea raised interest rates to 2.5%. This stoked fears that China will tighten rates further as well. The dollar is higher on the weak euro, and this combined with fears of China slowing is hitting commodities pretty hard. Gold prices are back down to $1350 and oil has pulled back to $83.10.
The 10-year yield is up again to 2.94%. This has to bug the Fed. And the VIX is surging +11.1% to 22.45, back above its 50-day average.
One bright spot its Urban Outfitters (URBN), which we added last week. The company reported in-line earnings, but the stock had already pulled back so much that it is spiking higher today, +11% so far this morning. Not bad.
Trading comment: This is why I always say to keep some powder dry. You never know how long a selloff will last, or how far it will pullback. Volume today will be key, to see how much selling pressure there is. I also will be monitoring the put/call ratios to see if there is a jump in bearish sentiment.
Technically, the major indexes have broken their 20-day averages, but are not yet at support at their 50-days. I think most stocks will pull back to their respective 50-days, so I want to be patient and wait for those levels to buy into.
long URBN
CORRECTION SET TO GAP DOWN TO SUPPORT
If the premarket weakness holds into the open the market will gap down to the 200 week moving average this morning.
In April the 200 WMA acted as resistance and turned the market down into the extended multi-month correction. Now the market has regained that important resistance level. I have my doubts that it will spend very long below that level if at all now that it has been recovered.
I've been harping all along on the fact that we needed to see an "obvious" correction before we could consider that we have a move into a daily cycle low. We now have it and it is taking the form of a bull flag on mild volume.
Usually a bull flag will break sharply higher as it is normally a bullish pattern. Unless we get a sharp break down out of the flag traders need to stay nimble as we could put in a bottom at any time. A swing low this late in the daily cycle will have high odds of marking a bottom.
By the way, my good friend Doc, who most of you are familiar with either from his blog or from the insightful comments he posts in the SMT comments area, has offered a discounted rate for his newsletter to SMT readers. You can go here to take advantage of his offer thru Thanksgiving weekend. He might even buy me a chicken burrito or two if you sign up ;-)
http://www.thedocument.com/members/smt.cfm
In April the 200 WMA acted as resistance and turned the market down into the extended multi-month correction. Now the market has regained that important resistance level. I have my doubts that it will spend very long below that level if at all now that it has been recovered.
I've been harping all along on the fact that we needed to see an "obvious" correction before we could consider that we have a move into a daily cycle low. We now have it and it is taking the form of a bull flag on mild volume.
Usually a bull flag will break sharply higher as it is normally a bullish pattern. Unless we get a sharp break down out of the flag traders need to stay nimble as we could put in a bottom at any time. A swing low this late in the daily cycle will have high odds of marking a bottom.
By the way, my good friend Doc, who most of you are familiar with either from his blog or from the insightful comments he posts in the SMT comments area, has offered a discounted rate for his newsletter to SMT readers. You can go here to take advantage of his offer thru Thanksgiving weekend. He might even buy me a chicken burrito or two if you sign up ;-)
http://www.thedocument.com/members/smt.cfm
15 Kasım 2010 Pazartesi
Strong Retail Sales Warn the Fed: Cease and Desist
The headline story in this morning’s Wall Street Journal is a beauty. Republican economists, hedge fund managers, and even some presidential candidates are blasting the Fed for its $600 billion QE2 pump-priming operation. Quite sensibly, the group that signed an open letter to Ben Bernanke argues against dollar devaluation and inflation. At least a couple of the signees are Democrats. And following Sarah Palin’s Bernanke broadside, potential presidential candidate Mike Pence is on the hustings attacking the central bank.
All this is good. King Dollar politics.
During the 19th century, many presidential campaigns were fought on the issue of the dollar and its gold or silver backing. So history may repeat itself. Will we have Keynesian fine-tuning, or stable money backed by commodities including gold?
But here’s another reason why the Fed should cease and desist: There’s more evidence that the economy looks to be picking up. Today’s retail sales report showed a 1.2 percent rise for October, printing to an 11.8 percent annual increase over the last three months. Core retail sales that feed into GDP increased 6.3 percent annually over the past three months.
This won’t calculate into the 6 or 8 percent recovery growth that the country really needs. But it does look like business and consumer confidence improved in the run-up to the GOP election sweep.
And it’s worth noting that incomes are rising a bit faster, with hours worked combining with wage increases to produce some spending power. And of course, cash-rich companies remain highly profitable.
Meanwhile, on the inflation front, the CRB futures index is up 11.5 percent over the past twelve months. So does the Fed really want to ease into an improving economy, backed by an ominous commodity increase?
Final point: With better economic stats, the U.S. dollar is rising, not falling. And long-term bond rates are rising, not falling. Along with a better economy, the consensus has it wrong, at least for the moment. Go figure.
All this is good. King Dollar politics.
During the 19th century, many presidential campaigns were fought on the issue of the dollar and its gold or silver backing. So history may repeat itself. Will we have Keynesian fine-tuning, or stable money backed by commodities including gold?
But here’s another reason why the Fed should cease and desist: There’s more evidence that the economy looks to be picking up. Today’s retail sales report showed a 1.2 percent rise for October, printing to an 11.8 percent annual increase over the last three months. Core retail sales that feed into GDP increased 6.3 percent annually over the past three months.
This won’t calculate into the 6 or 8 percent recovery growth that the country really needs. But it does look like business and consumer confidence improved in the run-up to the GOP election sweep.
And it’s worth noting that incomes are rising a bit faster, with hours worked combining with wage increases to produce some spending power. And of course, cash-rich companies remain highly profitable.
Meanwhile, on the inflation front, the CRB futures index is up 11.5 percent over the past twelve months. So does the Fed really want to ease into an improving economy, backed by an ominous commodity increase?
Final point: With better economic stats, the U.S. dollar is rising, not falling. And long-term bond rates are rising, not falling. Along with a better economy, the consensus has it wrong, at least for the moment. Go figure.
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET on CNBC:ECONOMY GETTING STRONGER ... IS EVERYONE OBSESSING ABOUT THE FED TOO MUCH?
- Charles Reinhard, Morgan Stanley Smith Barney Global Investment Strategist
- Joe Battipaglia, Stifel Nicolaus Market Strategist
- Jack Bouroudjian, CEO of Index Futures Group
FRESH ATTACK ON FED MOVE: POLITICS OF THE FED & KING DOLLAR ... IS A BOND CRISIS COMING?
- CNBC's Hampton Pearson reports.
ECONOMIC COLD WAR BREWING...IS AMERICA GOING TO LOSE IT?
Is the Fed bankrupting government, destroying the dollar & making U.S. a second-rate rate economic power?
- Andy Busch, BMO Capital Markets; CNBC Contributor
- Bob McTeer, CNBC Contributor; Fmr. Dallas Federal Reserve Bank Pres. & CEO
LAME DUCK SESSION: GOP EARMARKS VOTE TOMORROW- McCONNELL JOINS GOP BRETHREN TO SUPPORT EARMARK BAN; TAXES & BUDGET
- CNBC chief Washington correspondent John Harwood reports.
WILL THE LAME DUCKS STOP THE TAXING AND SPENDING IN ORDER TO PROMOTE AMERICAN PROSPERITY?
- Robert Reich, Fmr. Labor Secretary; "Aftershock: The Next Economy and America's Future" author; CNBC Contributor; Univ. of CA., Berkeley
- Dan Mitchell, CATO Senior Fellow
LAME DUCK INVESTING
- Jim LaCamp, Macroportfolio Advisors Portfolio Manager & Advisor
- Ned Riley, Riley Asset Management CEO
SENIOR BOOM BEGINS AMID ECONOMIC BUST: IS SOCIAL SECURITY GOING BANKRUPT LIKE THE REST OF THE GOVT & WHAT'S THAT MEAN FOR THE BOOMERS?
- Frederick Lynch, Professor at Claremont McKenna College
Please join us. The Kudlow Report. 7pm ET. CNBC.
Merger Monday
I don't know of a better feeling for an investor than waking up on a Monday morning and seeing that one of your stocks got a buyout offer over the weekend. That's how I felt this morning when I saw that Isilon (ISLN) was being bought for a 30% premium by EMC. Bucyrus (BUCY) is also being bought for a 30% premium by CAT, but I don't own any of that one.
In economic news, advance retail sales for October rose 1.2%, much stronger than the 0.7% expected increase.
The dollar is up slightly, mostly due to the drop in the Euro amid continued sovereign debt concerns. The Portugal finance minister made comments that they are at high risk of needing a bailout. Asian markets were mostly higher overnight.
Among the sector ETFs, financials are strongest (+1.20%), followed by industrials (+0.65%). Materials are the weakest, along with energy. Both are roughly flat to slightly down in early trading.
The 10-year yield is higher again to 2.85%; and the VIX is down -3.9% to 19.80.
Trading comment: The market is slightly higher this morning, but Internet stocks are standing out as laggards. Moreover, leading stocks like Akamai (AKAM) are breaking down below their 50-day averages. This would be a change in character for the market if more stocks followed AKAM's lead and began to break down. So how these stocks hold up should be a key "tell" for the market.
Overall, the major indexes showed a couple of distribution days last week, but are still above their 20-day moving averages. If we break below these levels, then I would look for support to come in at the 50-day averages. That means overall, we could be looking at a 3-5% pullback from the highs, which would not be a big deal and could be construed as healthy longer-term.
long ISLN
In economic news, advance retail sales for October rose 1.2%, much stronger than the 0.7% expected increase.
The dollar is up slightly, mostly due to the drop in the Euro amid continued sovereign debt concerns. The Portugal finance minister made comments that they are at high risk of needing a bailout. Asian markets were mostly higher overnight.
Among the sector ETFs, financials are strongest (+1.20%), followed by industrials (+0.65%). Materials are the weakest, along with energy. Both are roughly flat to slightly down in early trading.
The 10-year yield is higher again to 2.85%; and the VIX is down -3.9% to 19.80.
Trading comment: The market is slightly higher this morning, but Internet stocks are standing out as laggards. Moreover, leading stocks like Akamai (AKAM) are breaking down below their 50-day averages. This would be a change in character for the market if more stocks followed AKAM's lead and began to break down. So how these stocks hold up should be a key "tell" for the market.
Overall, the major indexes showed a couple of distribution days last week, but are still above their 20-day moving averages. If we break below these levels, then I would look for support to come in at the 50-day averages. That means overall, we could be looking at a 3-5% pullback from the highs, which would not be a big deal and could be construed as healthy longer-term.
long ISLN
13 Kasım 2010 Cumartesi
I'M NOT BUYING IT
The general consensus now appears to be that all asset classes have put in an intermediate top and that the dollar has made an intermediate bottom. I jumped to that conclusion myself the other day. After further consideration I'm not buying it any more for several reasons.
First, the cyclical structure of the stock market is not set up for an intermediate top unless we are on the verge of another 2 month horror show like we saw this summer. I don't think for a second that with another 900 billion scheduled to be thrown at the market, of which 110 billion will come in the first month, that we are going to see the market roll over into an extended correction during the traditionally bullish Christmas season.
The intermediate gold and dollar cycles also aren't set up for an intermediate top. Ever since March of `09 the Fed's QE programs have stretched cycles, not caused them to contract. Here are the last 5 intermediate gold cycles.
Every single one of them has run long except one and that one was followed by a very stretched 30 week cycle. If the current cycle follows the pattern of the last two years then it's too early to expect an intermediate top, and the current correction is nothing more than the normal move down into a daily cycle low. Once that bottom is in place (possibly sometime next week) it should be followed by one more daily cycle higher before putting in the larger degree intermediate top.
But more importantly the dollar cycle is way too short to be looking for an intermediate bottom. In order for stocks and gold to form an intermediate top we would need to see the dollar form an intermediate bottom.
You can see in the above chart that the Fed's monetary policy has led to normal to slightly stretched dollar cycles also. The current cycle would have to have bottomed on the 13th week. This would also have to correspond to the yearly cycle low.
Now what are the odds of a yearly cycle low, a major bottom, being put in above 74, in a shortened cycle, with sentiment never hitting true bearish extremes? (The recent public opinion poll had bulls at 29% and I've seen it as low as 22% at prior yearly cycle lows) Pretty slim in my opinion.
There is no question the dollar is now in the grip of the three year cycle decline and in the beginning stages of a currency crisis. That being the case I seriously doubt the dollar will be able to move significantly above major resistance at the 80 pivot. It's already half way there now. If this is an intermediate bottom the rally is about to hit a brick wall that I have serious doubts it will be able to penetrate for more than a day or two, if at all.
Far more likely in my opinion that the dollar rally will fail at 80 and roll over into the natural timing band for an intermediate cycle low sometime in mid to late December. This should drive stocks and gold higher into December before finally rolling over into intermediate degree corrections in January or early February.
Finally, to top it off, we still haven't seen the large selling on strength day or days that occur at virtually all intermediate tops. Until we see signs that big money is sneaking out the back door I'm going to assume the intermediate rally is still intact.
First, the cyclical structure of the stock market is not set up for an intermediate top unless we are on the verge of another 2 month horror show like we saw this summer. I don't think for a second that with another 900 billion scheduled to be thrown at the market, of which 110 billion will come in the first month, that we are going to see the market roll over into an extended correction during the traditionally bullish Christmas season.
The intermediate gold and dollar cycles also aren't set up for an intermediate top. Ever since March of `09 the Fed's QE programs have stretched cycles, not caused them to contract. Here are the last 5 intermediate gold cycles.
Every single one of them has run long except one and that one was followed by a very stretched 30 week cycle. If the current cycle follows the pattern of the last two years then it's too early to expect an intermediate top, and the current correction is nothing more than the normal move down into a daily cycle low. Once that bottom is in place (possibly sometime next week) it should be followed by one more daily cycle higher before putting in the larger degree intermediate top.
But more importantly the dollar cycle is way too short to be looking for an intermediate bottom. In order for stocks and gold to form an intermediate top we would need to see the dollar form an intermediate bottom.
You can see in the above chart that the Fed's monetary policy has led to normal to slightly stretched dollar cycles also. The current cycle would have to have bottomed on the 13th week. This would also have to correspond to the yearly cycle low.
Now what are the odds of a yearly cycle low, a major bottom, being put in above 74, in a shortened cycle, with sentiment never hitting true bearish extremes? (The recent public opinion poll had bulls at 29% and I've seen it as low as 22% at prior yearly cycle lows) Pretty slim in my opinion.
There is no question the dollar is now in the grip of the three year cycle decline and in the beginning stages of a currency crisis. That being the case I seriously doubt the dollar will be able to move significantly above major resistance at the 80 pivot. It's already half way there now. If this is an intermediate bottom the rally is about to hit a brick wall that I have serious doubts it will be able to penetrate for more than a day or two, if at all.
Far more likely in my opinion that the dollar rally will fail at 80 and roll over into the natural timing band for an intermediate cycle low sometime in mid to late December. This should drive stocks and gold higher into December before finally rolling over into intermediate degree corrections in January or early February.
Finally, to top it off, we still haven't seen the large selling on strength day or days that occur at virtually all intermediate tops. Until we see signs that big money is sneaking out the back door I'm going to assume the intermediate rally is still intact.
By the way, my good friend Doc, who most of you are familiar with either from his blog or from the insightful comments he posts in the SMT comments area, has offered a discounted rate for his newsletter to SMT readers. You can go here to take advantage of his offer thru Thanksgiving weekend. He might even buy me a chicken burrito or two if you sign up ;-)
12 Kasım 2010 Cuma
Falling Leaves and Winter Migration
Chasing the Setting Sun Over the Sea
It looks like I'm blowing out of Moab soon for the winter, heading west. Every year I talk about hopping a boat to Hawaii without money, but I never quite get inspired enough to do it. This year all my talk infected my friends Isaac and Jen, and their passion to do it pushed me off the fence. So we plan to hitch to San Diego and wait around until we can hop a random boat! It's a shot in the dark, but I know of people who have done it. Last winter was like Siberia here, so I'm itching to go to warmer climes. Another person might be coming to join us (but I won't give his name until/if/when he actually comes).
I decided to bring the guitar that I found in the dumpster. I can't believe how into playing it I am (since I was not much interested in it in my youth). This old dog is learning. I wrote down some Woody Guthrie roadie/hobo songs that I'm wanting to master as we go west. Maybe I can write a few of my own when I get better.
Gift Economists' Cyber-Meeting
Since I last blogged, quite a bit has happened. Twelve of us moneyless folks in the world had our cybermeeting on Oct 27th. We were, besides me:
Heidemarie (Germany)
elf Pavik (Germany)
Offie (Germany)
Mark (UK)
Sonja (South Africa)
Adin (South Africa)
Tomi (Finland)
Hugo (Brazil)
Raphael (Germany)
Benji (Holland)
The 2 girlfriends of Raphael and Benji (who just joined them. Sorry, can't remember their names).
(Raphael, Benji, and their 2 girlfriends are currently traveling in Central America)
To see links to websites/blogs for some of the above friends, see
Lifestyle Gift Economists
We spent a lot of time trying to figure out how the cyber thing worked, so there wasn't much substantial conversation. It was mostly a chance to see some moving faces of our clan with a bit of chatting, and it was fun and heart-warming.We couldn't get some faces (like Mark's and Heidemarie's) to show up, but here's a few:
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| (L-R) elf, me, Sonja, Adin, Hugo |
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| (L-R) Adin, Raphael & Benji's partners, Sonja, me, elf |
It turns out Hugo, Sonja, and Roy are no longer on the moneyless path.
New Friends Joining Me, Coming and Going
Roy didn't get a chance to join our cyber-meeting (he was busy hitching moneyless into Mexicali, Mexico!). It also so happens that, shortly after, Roy quit the moneyless path and decided to settle in LA and be with his daughter. I think it's a good decision. He's one of the few who actually gave up all his money to join me. He then hitch-hiked out to the east coast and back here without money, then to LA and back and back again, then down to Mexicali!
A mellow dude named Braedyn came down from Canada for about a week with his guitar. I was looking forward to getting to know him better, and have him join us in our go-west adventure, but it seems there were some family complications calling him back to Canada.
Shortly after that, Carolyn left to see her family for the winter. She plans to come back to Moab in the Spring. I'm also hoping to be back here then (If the Hawaii *cruise* happens and we find a boat back!). Carloyn spent 7 months here, and added sparkling joy to my life. I did a lot of fun and unique things I don't think I would have done had she not been here. She was also by me through some intense, down times and helped keep me going.
Freegan Ponderings
Free Meal in Moab has also been a total joy, on both ends of it: eating and preparing. It has brought a lot of people together in Moab, like a daily party. New people from in and out of town meet all the time. Just like Food Not Bombs in other cities, I am often pleased at how close I feel with people there. You can go to clubs and churches and jobs and organizations, supposedly to meet people you have things in common with, but it's not the same. What we have in common is food, and it's freely given. That's it. That's what Communion, (Eucharist) really is. All food is my body, your body, one body. No ideologies, no trend stuff. Free Meal is not classist or hand-down like your classic soup kitchen or welfare program. It is hand-across. Folks from all classes and needs and no-needs show up and sit down together for food that would otherwise be thrown out.
But I do think there's a certain kind of person who is willing to go to eat at something like Free Meal or Food Not Bombs. It's a person willing to forget class and ideology and sit humble on the grass with everybody else and just be sincerely human. I'm realizing that that's what's the only real common among us all: simple human-ness. When we try to find people with things "in common" with us, trying to find people who "think" like us, that's not the common I'm talking about here. Our common-ness isn't in what we think. Our common-ness is when we give up thinking. It's not about belief, it's about Being, which is the True Faith. This is why I feel so passionate about the freegan path (freely giving, freely receiving), the path that every natural creature in the infinite universe follows. That is the One True Church, the One Mind.
It sounds like I'm idealizing. But idealizing is seeing Idea rather than Reality. Realizing is not eutopic but is just Being, accepting the bad and the good, the downs and the ups. Commerical civilization is base upon eutopism, trying to eliminate the negatives and stockpile the positives. Realism is based upon Reality, accepting the negatives and the positives as they naturally come. Realism is balance, peace, contentment. Eutopism is a pipe dream that shatters. Realism, ironically, feels more eutopic than any eutopia we chase after.
Free Meal, like everything in the universe, is precarious and could end tomorrow. But there's a principle there that is the essence of all life. That's what doesn't end and what we can every day cultivate within ourselves.
Catching Cynical Comments Before They Come Yet Another... Yawn... Time
Some cynical joker with a stick in his or her hinder parts will invariably come along and say all these free things couldn't happen without the businesses that create them and caste them off. Never mind that few say anything when enough food is thrown away in the US alone to feed the entire starving world. [Note added Nov 13: My statement probably is exaggerated, and even if it were accurate, I should have references. Now I'm dealing with the consequences of quickly writing a post without editing or fact checking before I hit the road. I won't be able to rectify this for some time, so I'll just leave this disclaimer for now. But what we do know is that the waste in both this country & in Europe is beyond obscene in a world where millions are malnourished. I recommend Tristram Stuart's writing to get these facts straight.] Never mind that few consider that businesses couldn't exist without the sun and the clouds that freely give, expecting nothing in return, sending sun and rain on both the "deserving" and the "undeserving", or without the earth which few seem to have problems taking from beyond her capacity. And a separate entity like free meal wouldn't need to exist if we didn't have commercial civilization. Again and again, I say, freely giving and freely receiving, without thought of credit and debt, is the essence of all of nature.
China Corrects In A Big Way
The market is pulling back again today, led by big declines in Asia overnight and a continued correction in commodities after their big run. China was down the most overnight, declining 5.2% on profit taking over concern that China's central bank may have to raise rates more to fend off inflation.
This led to further selling in other Asian markets, and Europe is lower this morning also. The dollar is a bit weaker today, but that isn't helping oil and gold, both of which are lower. Oil prices are near $86.35 and gold has pulled back to $1388.
There isn't all that much in the way of market moving news here in the U.S. The G20 is meeting, but so far there have been few headlines crossing the wires.
Today is the first day of the Fed's new QE2 program, but I'm hearing their buying has been delayed due to technical issues. For its part, the 10-year yield is climbing to 2.68%. It will be interesting to see if longer-term yields continue to rise in the face of the Fed buying.
Trading comment: The market is finally pulling back a bit, and I want to start doing a little buying. The S&P 500 is approaching 1200, which would represent a 2% pullback from its highs. Leading stocks continue to hold up well, and that is where I will look to add exposure.
There are some yellow flags popping up, like rising investor bullishness and low put/call ratios, but they haven't turned to red flags yet. I still think after some pause/consolidation, the market will have another move to the upside into year-end.
This led to further selling in other Asian markets, and Europe is lower this morning also. The dollar is a bit weaker today, but that isn't helping oil and gold, both of which are lower. Oil prices are near $86.35 and gold has pulled back to $1388.
There isn't all that much in the way of market moving news here in the U.S. The G20 is meeting, but so far there have been few headlines crossing the wires.
Today is the first day of the Fed's new QE2 program, but I'm hearing their buying has been delayed due to technical issues. For its part, the 10-year yield is climbing to 2.68%. It will be interesting to see if longer-term yields continue to rise in the face of the Fed buying.
Trading comment: The market is finally pulling back a bit, and I want to start doing a little buying. The S&P 500 is approaching 1200, which would represent a 2% pullback from its highs. Leading stocks continue to hold up well, and that is where I will look to add exposure.
There are some yellow flags popping up, like rising investor bullishness and low put/call ratios, but they haven't turned to red flags yet. I still think after some pause/consolidation, the market will have another move to the upside into year-end.
11 Kasım 2010 Perşembe
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET on CNBC:MARKETS…LEGENDARY INVESTOR JEREMY GRANTHAM SAYS IF YOU'RE CONSERVATIVE NOW, HOLD SOME CASH....BUT SHOULD WE BE GOING INTO CASH? HOW SHOULD AN INVESTOR PLAY THIS MARKET?
- Warren Meyers- DME Securities CNBC Market Analyst
- Michael Cuggino- Permanent Portfolio Funds President & Portfolio Manager
ARE SLASH AND BURN BUDGET CUTS THE KEY TO ECONOMIC RECOVERY?
- Rep. Paul Ryan- (R) Wisconsin /House Ways & Means Cmte. & Ranking
BUSH TAX CUT EXTENSION/DEFICIT COMMISSION: WHAT'S THE STOCK MARKET IMPACT?
-Andy Busch - CNBC Contributor; BMO Capital Markets Global Currency & Public Policy Strategist
- Jeff Matthews - founder of the hedge fund Ram Partners LP /author of "Pilgrimage to Warren Buffett's Omaha"
TOMORROW'S UNVEILING OF QE2...IS THE LAUNCH OF QE2 REALLY SO BULLISH FOR THE STOCK AND THE ECONOMY?
-Joe LaVorgna - Deutsche Bank Chief U.S. Economist & CNBC Contributor
-Vince Reinhart - Former Federal Reserve Board's Division of Monetary Affairs Director
-Jim Iuorio - Options Action Contributor /Director, TJM Institutional Services
IS TEAM OBAMA CAVING ON BUSH TAX CUTS?
*Boyce Watkins- Syracuse University Finance Professor
*Jimmy Pethokoukis - Reuters BreakingViews Money & Politics Columnist
Please join us. The Kudlow Report. 7pm ET. CNBC.
10 Kasım 2010 Çarşamba
Deficit Commission on Right Track . . .
My first cut at the Bowles-Simpson deficit-commission recommendation is that it basically moves the ball in the right direction. It goes after entitlements, domestic and defense discretionary. It puts some kind of freeze on federal hiring and salaries. It lowers the corporate tax, flattens the personal tax, and gets rid of a bunch of tax-expenditure loopholes.However, it should be much, much tougher on spending. By 2015 the baseline should be lowered by at least $500 billion, if not more — not just $200 billion.
And there should be a much more aggressive, true, flat-tax reform, with no more than two brackets of 15 and 28 percent, and preferably one bracket somewhere south of 20 percent. Plus, capital gains and dividends, which would go up under the commission, should be abolished altogether, along with the estate tax. And corporate tax reform should have a lower top rate and should include full cash expensing for new investment in plants and equipment.
And finally, to ensure economic growth over the long run, we need a King Dollar currency reform linked to a gold reference point to stabilize and protect the value of our money.
However, if Dick Durbin and Nancy Pelosi oppose the Bowles-Simpson commission, then I know I’m right that the new proposals are at least on the right track.
What I gather is that 14 votes from the 18-member commission guarantees an up or down vote in Congress. That makes it interesting.
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET on CNBC:DEBT COMMISSION'S PROPOSAL: DRAMATIC TAX REFORM; SPENDING CUTS; SOCIAL SECURITY....WHAT'S AT STAKE FOR STOCKS?
-CNBC’s Eamon Javers reports.
Panel:
- Lee Munson, Portfolio Asset Management Chief Investment Officer
- Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer
- Barry Ritholtz, Fusion IQ CEO, Director of Equity Research
MORE FEDERAL WORKERS PAY TOPS $150,000
- CNBC’s Hampton Pearson reports.
HOW TO SAVE AMERICA'S ECONOMY
- Thomas Sowell, Hoover Institute Senior Fellow
WHAT DOES EURO/IRISH DEBT THREAT MEAN FOR STOCKS & DOLLAR?
- Russ Koesterich, Head of Investment Strategy; Barclays Global Investors
- Chris Whalen, Institutional Risk Analytics
FROM THE CORNER OFFICE: FUTURE OIL PRICES & WHAT THE NEW CONGRESS MEANS FOR THE ENERGY SECTOR
- John Richels, Devon Energy Pres. & CEO
OUTRAGE: "HOW TO BE A PEDOPHILE" ON AMAZON
- CNBC’s Bertha Coombs reports.
Please join us. The Kudlow Report. 7pm ET. CNBC.
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