The market is roughly flat in early trading. If the SPX were to finish at these levels, it would be up less than 0.40% for the year. I think I heard CNBC say that would be the flattest year since 1970. Nevermind the volatility along the way that saw the SPX get as high as 1370 and as low as 1074. I for one am hoping for a decrease in volatility for 2012.
There is very little newsflow today both on the corporate front as well as any economic data. Yesterday saw broad-based buying but on very thin volume, which of course pushed things higher. Volume will likely be lighter today ahead of the holiday and with the US markets closed on Monday.
Asian markets were barely higher overnight, and Europe is mixed this morning. The dollar index is lower this morning which is helping boost commodities. Oil prices are near $99.35 but gold prices have bounced to $1571. Copper and silver prices are higher also.
The 10-year yield is a bit lower again today near 1.88%; and the VIX is up a little to just below the 23 level (22.89).
Trading comment: The SPX got back above its 200-day average yesterday. That means it was only below that key average for one day, which normally would be a bullish sign. With volume very light yesterday and year-end window dressing in effect, its hard to place a lot of significance on yesterday's action. I don't want to completely discount it, but I think we will get a better sense of the action when traders are back in full force next week. So I would give the nod to the bullish side of the equation here, but wait for confirmation next week before adding to my long positions. We still have seen fewer breakouts in leading growth stocks than we would normally see if a new upleg in the market were at hand. Let's hope 2012 brings more winners.
Happy new year to everyone--
30 Aralık 2011 Cuma
29 Aralık 2011 Perşembe
Art for Newt
“The purpose of economic policy is growth, jobs, and prosperity,” supply-side founder Art Laffer told me today. As such, Laffer has endorsed Newt Gingrich and the Gingrich 15 percent flat-tax plan, which includes the 12.5 percent corporate-tax reform. “It’s nothing against the other candidates,” Laffer said. “But Newt’s plan is right, and therefore endorsing him is the right thing to do.”
Laffer is concerned with the fact that Mitt Romney has no tax-reform plan, and he worries that Romney doesn’t believe in the incentive model of economic growth. “He’s a good man,” Laffer said. “And he would make a good president. But he needs a bold tax plan.”
Art Laffer believes the Gingrich plan would help jolt the economy to 4 or 5 percent growth. And he also is impressed that Gingrich has been talking about King Dollar on the campaign trail along with his supply-side tax strategy.
Was Gingrich actually one of the original supply-siders? Well, no. But he did hang around with Jack Kemp and others during the early 1980s in what became known as the Opportunity Society. So Newt’s bona fides are there.
Laffer also is impressed with Gingrich’s bipartisan abilities. He noted that Newt worked with Bill Clinton during the “Contract with America” 1990s to get welfare reform and a lower capital-gains tax.
What about the inevitable criticism from Obama that a flat tax is a huge tax cut for the rich? “Listen,” Art told me. “We want to make the poor, rich. And you can’t love jobs while hating job-creators.”
Whether Gingrich’s supply-side bus tour and Art Laffer’s endorsement help him in the remaining days of the Iowa campaign remains to be seen. Polls suggest that Newt is a stock still looking for a bottom. His campaign to use federal marshals to haul judges before Congress is way off the economic-growth message and did him a lot of damage. That’s what the latest polls suggest.
Now, if Gingrich can stay on message, and stick with supply-side solutions for growth, jobs, and prosperity, he could still bounce back over the next five days. But he must be disciplined and stay on message.
Euro Lower On Lackluster Italian Auction
The newsflow is relatively light this morning, and surprisingly our markets are higher despite the euro moving lower. The results from an Italian bond auction this morning were okay, but not strong enough to help boost the euro. Yields offered on the bonds were lower than last month's auctions, but still relatively high. 10-year yields in Italy remain above 7.0%.
The weakness in the euro is boosting the dollar and hurting most commodities. Oil prices have fallen back to $98.50, and gold is down again to $1530.
In the U.S., pending home sales for November came in above expectations with an increase of 7.3%. And the Chicago PMI for December was also above expectations at 62.5, in-line with the prior month.
The 10-year yield is fractionally higher to 1.92%; and the VIX is lower by 2% so far near the 23.0 level.
Trading comment: We haven't done a lot on the trading side of things this week. As portfolio managers know well, this is a busy week for us in terms of last minute tax-loss harvesting to offset capital gains, last minute IRA contributions, as well as any year-end rebalancing. So while you hear a lot of stories about trading slowing down, it is anything but slow at our firm. And next week the fireworks will start in earnest again.
The weakness in the euro is boosting the dollar and hurting most commodities. Oil prices have fallen back to $98.50, and gold is down again to $1530.
In the U.S., pending home sales for November came in above expectations with an increase of 7.3%. And the Chicago PMI for December was also above expectations at 62.5, in-line with the prior month.
The 10-year yield is fractionally higher to 1.92%; and the VIX is lower by 2% so far near the 23.0 level.
Trading comment: We haven't done a lot on the trading side of things this week. As portfolio managers know well, this is a busy week for us in terms of last minute tax-loss harvesting to offset capital gains, last minute IRA contributions, as well as any year-end rebalancing. So while you hear a lot of stories about trading slowing down, it is anything but slow at our firm. And next week the fireworks will start in earnest again.
GOLD'S D-WAVE CONFIRMED
With the move below $1535 this morning gold has confirmed that it is still moving down into a D-Wave bottom. There has been some question as to whether or not the D-Wave had bottomed in September. The penetration of that intermediate low this morning confirms that the D-Wave did not end during the overnight selloff on September 26.
In the chart below I have marked with blue arrows the last several yearly cycle lows. As you can see they tend to occur in January or February. The timing band for the next cycle low should occur sometime in early to mid January. That should mark the bottom of this D-Wave decline with the slight possibility that there could be one more short daily cycle down bottoming in early February. This will almost certainly be dependent on whether the dollar cycle has one or two more daily cycles higher before rolling over into an intermediate decline. Current sentiment levels on the dollar index are suggesting only one daily cycle higher, which should signal a final bottom in the gold market sometime in the next 2-3 weeks.
If gold can make it back to the 50% retracement in the next couple of weeks I would probably be inclined to call a yearly cycle low at that point. If however gold holds above $1500 at the next daily cycle low due in early to mid-January then I would be wary of one more daily cycle down to test the 2010 consolidation zone and 50% retracement ($1400) sometime in early February.
The combination of the dollar rally out of its three year cycle low, a yearly cycle low, and a D-Wave decline are going to produce a very sharp correction in the gold bull market. Before this is over most analysts will declare the gold bull dead. On the contrary sometime early next year you are going to get the single best buying opportunity we will ever have to reenter the secular gold bull in preparation for the bubble phase that should top in late 2014 or early 2015.
As a matter of fact now that we have confirmed that this is an ongoing D-Wave decline Once that bottom has formed it will generate a violent A-wave advance that should test the 1800 to $1900 level rather quickly later this spring.
Serious money will be made during the A-wave advance. One just needs the patience to wait for the D-Wave to bottom before jumping back into the pool.
In the chart below I have marked with blue arrows the last several yearly cycle lows. As you can see they tend to occur in January or February. The timing band for the next cycle low should occur sometime in early to mid January. That should mark the bottom of this D-Wave decline with the slight possibility that there could be one more short daily cycle down bottoming in early February. This will almost certainly be dependent on whether the dollar cycle has one or two more daily cycles higher before rolling over into an intermediate decline. Current sentiment levels on the dollar index are suggesting only one daily cycle higher, which should signal a final bottom in the gold market sometime in the next 2-3 weeks.
If gold can make it back to the 50% retracement in the next couple of weeks I would probably be inclined to call a yearly cycle low at that point. If however gold holds above $1500 at the next daily cycle low due in early to mid-January then I would be wary of one more daily cycle down to test the 2010 consolidation zone and 50% retracement ($1400) sometime in early February.
The combination of the dollar rally out of its three year cycle low, a yearly cycle low, and a D-Wave decline are going to produce a very sharp correction in the gold bull market. Before this is over most analysts will declare the gold bull dead. On the contrary sometime early next year you are going to get the single best buying opportunity we will ever have to reenter the secular gold bull in preparation for the bubble phase that should top in late 2014 or early 2015.
As a matter of fact now that we have confirmed that this is an ongoing D-Wave decline Once that bottom has formed it will generate a violent A-wave advance that should test the 1800 to $1900 level rather quickly later this spring.
Serious money will be made during the A-wave advance. One just needs the patience to wait for the D-Wave to bottom before jumping back into the pool.
28 Aralık 2011 Çarşamba
Euro Breaks Recent Support
In recent months, I have said repeatedly that all you need to do is look at what the euro is doing to know how stocks are faring. This morning the euro is breaking recent support levels and falling to fresh lows.
The drop in sentiment comes on news that the ECB's balance sheet has grown to a record 2.73 trillion euros. And despite positive Italian bond auctions this morning, bank deposits at the ECB are now at a record 452 billion euros. So although the stress in the U.S. stock market has eased in recent months, the stress on the interbank lending markets in Europe remains high.
Asian markets were slightly lower overnight, while Europe is mixed this morning. The drop in the euro and rise in the dollar is also weighing on commodities. Oil prices have eased back to $100.33, but are still high amid tensions with Iran threatening to close the Straight of Hormuz (a key shipping route for crude oil). Gold prices are also lower, down to $1575.
The 10-year yield was able to get above 2.0% for a couple days, but is back below those levels today. It is currently down near 1.94% after running into overhead resistance at its 50-day average.
As for the VIX, it is up another 5.25% right now above the 23 level. A lot of traders were looking for volatility to continue lower as we neared the end of the year and another 3-day weekend, but the last 2 days have seen a fair bounce in the VIX. That said, the VIX is still well off of its highs from recent months and much closer to getting back below the 20 level where it was before the market fell out of bed in August.
Trading comment: We have been pretty quiet here in year-end trading. The SPX is at key technical levels. Yesterday it close above its overhead 200-day average near 1259. A couple of consecutive closes above this level would have put the bulls back in front. But today we are trading back down below those key levels. We will have to see how the market fares into the close, but a quick turnaround back below the 200-day in one day's time isn't what the bulls were hoping for. The SPX has been up for 5 straight days, so I would expect some normal consolidation. But I would like to see a mild price drop.
The drop in sentiment comes on news that the ECB's balance sheet has grown to a record 2.73 trillion euros. And despite positive Italian bond auctions this morning, bank deposits at the ECB are now at a record 452 billion euros. So although the stress in the U.S. stock market has eased in recent months, the stress on the interbank lending markets in Europe remains high.
Asian markets were slightly lower overnight, while Europe is mixed this morning. The drop in the euro and rise in the dollar is also weighing on commodities. Oil prices have eased back to $100.33, but are still high amid tensions with Iran threatening to close the Straight of Hormuz (a key shipping route for crude oil). Gold prices are also lower, down to $1575.
The 10-year yield was able to get above 2.0% for a couple days, but is back below those levels today. It is currently down near 1.94% after running into overhead resistance at its 50-day average.
As for the VIX, it is up another 5.25% right now above the 23 level. A lot of traders were looking for volatility to continue lower as we neared the end of the year and another 3-day weekend, but the last 2 days have seen a fair bounce in the VIX. That said, the VIX is still well off of its highs from recent months and much closer to getting back below the 20 level where it was before the market fell out of bed in August.
Trading comment: We have been pretty quiet here in year-end trading. The SPX is at key technical levels. Yesterday it close above its overhead 200-day average near 1259. A couple of consecutive closes above this level would have put the bulls back in front. But today we are trading back down below those key levels. We will have to see how the market fares into the close, but a quick turnaround back below the 200-day in one day's time isn't what the bulls were hoping for. The SPX has been up for 5 straight days, so I would expect some normal consolidation. But I would like to see a mild price drop.
27 Aralık 2011 Salı
Monday Morning Musings
The market has opened fairly sluggish, possibly nursing a small hangover from the holiday festivities. I took Friday off for a little golf as the weather in LA has been sunny and nice. Now its back to the grind and seeing if the markets can add to their nice finish to last week.
Asian markets were mostly lower overnight, with Hong Kong still closed. And Europe's markets were mostly higher today despite the yield on Italian bonds hovering back near 7.0% again.
Volume levels will likely remain light for this shortened week. Corporate news is relatively light this morning, but SHLD is getting whacked on poor retail sales and the announcement that it will close more stores and draw funds from its credit facility.
In economic news, the Case-Shiller home price index showed another decline in home prices for October, as prices fell 3.4%. But the Consumer Confidence index for December rose much more than expected to 64.5 from 56.0 last month. We have seen some strong consumer confidence numbers this month and it will be interesting to see if that sort of sentiment continues in early 2012.
The dollar is a bit lower but so are most commodities. Gold prices have slipped below $1600 and copper and silver prices are lower as well. Oil prices are above $100, but this has more to do with comments out of Iran about possible supply disruptions.
The 10-year yield is roughly flat near 2.01%. And the VIX, which had gotten down near the 20 level last week, is spiking +6% to 22.15 currently despite the flat market. It could be that traders are anticipating a pickup in volatility in January and are buying ahead of the turn of the calendar. This is actually a trade that I am considering.
Trading comment: The market finished last week on a strong note after 4 straight up days. I had said I was looking for an early Santa Claus rally, and it will be interesting to see how things shape up this week. I have a sense that trading could simply be quiet as traders look to just hang on into year-end. But we could also see another push higher as last minute window dressing plays out. I would start looking for things that could reverse in January. Some stocks are very extended in here, and looked primed for a pullback. Other stocks are likely being sold just to take the losses and could rebound in January. But for now I am focusing on the former.
Asian markets were mostly lower overnight, with Hong Kong still closed. And Europe's markets were mostly higher today despite the yield on Italian bonds hovering back near 7.0% again.
Volume levels will likely remain light for this shortened week. Corporate news is relatively light this morning, but SHLD is getting whacked on poor retail sales and the announcement that it will close more stores and draw funds from its credit facility.
In economic news, the Case-Shiller home price index showed another decline in home prices for October, as prices fell 3.4%. But the Consumer Confidence index for December rose much more than expected to 64.5 from 56.0 last month. We have seen some strong consumer confidence numbers this month and it will be interesting to see if that sort of sentiment continues in early 2012.
The dollar is a bit lower but so are most commodities. Gold prices have slipped below $1600 and copper and silver prices are lower as well. Oil prices are above $100, but this has more to do with comments out of Iran about possible supply disruptions.
The 10-year yield is roughly flat near 2.01%. And the VIX, which had gotten down near the 20 level last week, is spiking +6% to 22.15 currently despite the flat market. It could be that traders are anticipating a pickup in volatility in January and are buying ahead of the turn of the calendar. This is actually a trade that I am considering.
Trading comment: The market finished last week on a strong note after 4 straight up days. I had said I was looking for an early Santa Claus rally, and it will be interesting to see how things shape up this week. I have a sense that trading could simply be quiet as traders look to just hang on into year-end. But we could also see another push higher as last minute window dressing plays out. I would start looking for things that could reverse in January. Some stocks are very extended in here, and looked primed for a pullback. Other stocks are likely being sold just to take the losses and could rebound in January. But for now I am focusing on the former.
22 Aralık 2011 Perşembe
Slight Downward Revisions to Q3 GDP
I'm getting a bit of a late start today, which is often the case when my parents are in town visiting. My kids are so excited to have them there, its hard to keep them from running in and waking my folks at the crack of dawn.
The markets are higher this morning, which would make for three straight gains in the SPX if it holds. Those waiting for the Santa Claus rally to start next week might be a little late to the party.
Asian markets were mostly lower overnight, but Europe is higher today after the ECB released results from its latest liquidity program, the Long-Term Refinancing Operation (LTRO). There was strong bank participation, which hopefully will prove to be a good think like TARP was in the U.S. (even though it was unpopular).
In economic news, Q3 GDP was revised downward a bit to 1.8% from its last estimate of 2.0%. But early Q4 estimates are for growth above those levels. The December Univ. of Michigan consumer sentiment reading came in at 69.9 which is up nicely from last month's reading of 67.7. And this week's jobless claims were lower than expected. So net-net, I view today's economic data as a glass half-full.
The dollar is flattish and commodities are mixed. Gold prices are lower to $1607, while oil prices are higher back to $99.60. Copper prices are higher also.
The 10-year yield is down slightly to 1.95%; and the VIX is falling further down to the 21.0 level. I view this as bullish in the short-term, but would probably look to get long volatility and expect another pickup in Q1.
Trading comment: The SPX continues to act well since bottoming on Monday. It is outperforming the Nazz this week after reversing yesterday's lows and finishing in the green. The chart below shows that today is the third day (so far) above the 50-day average, and now the overhead 200-day is in sight. It currently sits near SPX 1259. I think if this rally continues and people look to put more money to work into year-end we could take out those levels, but I don't expect it to be a straight shot. I also think money will be put to work in the winners, not the laggards, as portfolio managers try to add to their winners and make it look like they had big positions in those stocks.
The markets are higher this morning, which would make for three straight gains in the SPX if it holds. Those waiting for the Santa Claus rally to start next week might be a little late to the party.
Asian markets were mostly lower overnight, but Europe is higher today after the ECB released results from its latest liquidity program, the Long-Term Refinancing Operation (LTRO). There was strong bank participation, which hopefully will prove to be a good think like TARP was in the U.S. (even though it was unpopular).
In economic news, Q3 GDP was revised downward a bit to 1.8% from its last estimate of 2.0%. But early Q4 estimates are for growth above those levels. The December Univ. of Michigan consumer sentiment reading came in at 69.9 which is up nicely from last month's reading of 67.7. And this week's jobless claims were lower than expected. So net-net, I view today's economic data as a glass half-full.
The dollar is flattish and commodities are mixed. Gold prices are lower to $1607, while oil prices are higher back to $99.60. Copper prices are higher also.
The 10-year yield is down slightly to 1.95%; and the VIX is falling further down to the 21.0 level. I view this as bullish in the short-term, but would probably look to get long volatility and expect another pickup in Q1.
Trading comment: The SPX continues to act well since bottoming on Monday. It is outperforming the Nazz this week after reversing yesterday's lows and finishing in the green. The chart below shows that today is the third day (so far) above the 50-day average, and now the overhead 200-day is in sight. It currently sits near SPX 1259. I think if this rally continues and people look to put more money to work into year-end we could take out those levels, but I don't expect it to be a straight shot. I also think money will be put to work in the winners, not the laggards, as portfolio managers try to add to their winners and make it look like they had big positions in those stocks.
21 Aralık 2011 Çarşamba
Oracle Takes Away The Punch Bowl
Asian markets rallied overnight, following the strong showing on Wall St. yesterday. European markets were also higher this morning on a report from the ECB that bank borrowing needs are being adequately met.
But following ORCL's disappointing quarterly report, tech shares are down heavily this morning and that is weighing on the overall market. ORCL's stock is getting hit and hurting anything that is related to CRM, cloud computing, etc. The Nasdaq 100 is down -2.0% early, while the S&P 500 is off -0.65%.
Among sectors, tech is down the most, while defensive areas like consumer staples and utilities are bucking the weakness so far and trading in positive territory. If will be interesting to see if dip buyers show up today in tech stocks.
On the plus side, Nike (NKE) had a solid quarterly report and its stocks is up nicely today, almost back to 52-week highs.
The dollar is higher vs. the euro today, which is weighing on some commodities. Oil prices are higher near $98.38, but gold is down to $1615 and silver and copper prices are lower as well.
The 10-year yield is adding a bit to get to 1.92%; and although the market is down this morning, the VIX is also nearly 3% lower to 22.55. I still think this continues to bode well for the bulls into year-end.
Trading comment: Tech stocks are getting destroyed this morning if they are related to cloud computing, etc. Stocks like AAPL and GOOG are holding up better. It will be interesting to see which stocks bounce back first. But those that don't bounce and continue to act as laggards should be avoided for now as year-end selling of losers could continue to weigh on them. As for the SPX, it has pulled back exactly to its 50-day average, which is acting as support so far. I think that is important. A 2nd close above the 50-day would be a bullish sign, and supportive of another move higher for the senior index. I would also like to see volume on today's pullback come in lighter than yesterday's rally. So let's watch for that.
long AAPL, GOOG
But following ORCL's disappointing quarterly report, tech shares are down heavily this morning and that is weighing on the overall market. ORCL's stock is getting hit and hurting anything that is related to CRM, cloud computing, etc. The Nasdaq 100 is down -2.0% early, while the S&P 500 is off -0.65%.
Among sectors, tech is down the most, while defensive areas like consumer staples and utilities are bucking the weakness so far and trading in positive territory. If will be interesting to see if dip buyers show up today in tech stocks.
On the plus side, Nike (NKE) had a solid quarterly report and its stocks is up nicely today, almost back to 52-week highs.
The dollar is higher vs. the euro today, which is weighing on some commodities. Oil prices are higher near $98.38, but gold is down to $1615 and silver and copper prices are lower as well.
The 10-year yield is adding a bit to get to 1.92%; and although the market is down this morning, the VIX is also nearly 3% lower to 22.55. I still think this continues to bode well for the bulls into year-end.
Trading comment: Tech stocks are getting destroyed this morning if they are related to cloud computing, etc. Stocks like AAPL and GOOG are holding up better. It will be interesting to see which stocks bounce back first. But those that don't bounce and continue to act as laggards should be avoided for now as year-end selling of losers could continue to weigh on them. As for the SPX, it has pulled back exactly to its 50-day average, which is acting as support so far. I think that is important. A 2nd close above the 50-day would be a bullish sign, and supportive of another move higher for the senior index. I would also like to see volume on today's pullback come in lighter than yesterday's rally. So let's watch for that.
long AAPL, GOOG
20 Aralık 2011 Salı
Is Santa In The House?
Yesterday I mentioned that the stock market was getting oversold again and sentiment was getting more bearish, but that for the market to rally we just needed some catalyst.
Well along comes Spain and out of the blue they hold a debt auction that was stronger than expected. That really improved sentiment in Europe, along with some solid sentiment surveys in Germany and the UK, and got the euro rallying. We know that lately if the euro is higher, the stock market is higher.
Asian markets were up slightly overnight, but Europe's markets are up nicely today. The Dow has spiked nearly 300 points so far. In economic news in the US, housing starts and building permits were both better than expected. Homebuilder stocks are rallying on the news.
In corporate news, General Mills (GIS) came up short of consensus estimates and its stocks is lower. CVS issued an in-line outlook and hiked its dividend by 30%. Its stock is nicely higher.
The dollar is lower, which is boosting commodities. Oil prices have spiked up to $97.25, while gold prices are back above $1600 near $1618. Silver and copper prices are higher also.
The 10-year yield is getting a big boost to 1.90%, which is still a pretty low yield overall. And the VIX is down sharply again, falling more than 9% so far. The VIX is currently at 22.60 and if it closed at these levels it would be the lowest reading since late July.
Trading comment: It didn't feel very good to do some buying yesterday, but I feel much better about it today, lol. The SPX had been turned down by its overhead 50-day average the last few times. At the time, I said that I felt that was normal and that after a pullback and some consolidation we could see a successful move above that key moving average. So far today the SPX has broken above its 50-day which was at 1230. A solid close above that level should embolden bulls to do more buying and bears to cover shorts. We are still long are trading positions in SCSS, TSCO, ULTA, and STMP. We also added some IWM yesterday to add overall exposure.
KAM Advisors has long positions in all stocks mentioned
Well along comes Spain and out of the blue they hold a debt auction that was stronger than expected. That really improved sentiment in Europe, along with some solid sentiment surveys in Germany and the UK, and got the euro rallying. We know that lately if the euro is higher, the stock market is higher.
Asian markets were up slightly overnight, but Europe's markets are up nicely today. The Dow has spiked nearly 300 points so far. In economic news in the US, housing starts and building permits were both better than expected. Homebuilder stocks are rallying on the news.
In corporate news, General Mills (GIS) came up short of consensus estimates and its stocks is lower. CVS issued an in-line outlook and hiked its dividend by 30%. Its stock is nicely higher.
The dollar is lower, which is boosting commodities. Oil prices have spiked up to $97.25, while gold prices are back above $1600 near $1618. Silver and copper prices are higher also.
The 10-year yield is getting a big boost to 1.90%, which is still a pretty low yield overall. And the VIX is down sharply again, falling more than 9% so far. The VIX is currently at 22.60 and if it closed at these levels it would be the lowest reading since late July.
Trading comment: It didn't feel very good to do some buying yesterday, but I feel much better about it today, lol. The SPX had been turned down by its overhead 50-day average the last few times. At the time, I said that I felt that was normal and that after a pullback and some consolidation we could see a successful move above that key moving average. So far today the SPX has broken above its 50-day which was at 1230. A solid close above that level should embolden bulls to do more buying and bears to cover shorts. We are still long are trading positions in SCSS, TSCO, ULTA, and STMP. We also added some IWM yesterday to add overall exposure.
KAM Advisors has long positions in all stocks mentioned
19 Aralık 2011 Pazartesi
Lack of Catalysts To Drive Markets Higher
The markets were higher in early trading, but have since faded as a lack of any significant catalysts exist today to help drive markets higher. There have been very few economic or corporate announcements. News out of Europe was also quiet over the weekend, with some continued chatter about whether the ECB will step up its bond purchases.
The big news even was the death of Kim Jong Il in N. Korea, and what that might mean for the transition of leadership in that country. Asian markets were down across the board overnight amid the uncertainty.
Financials have led the reversal lower this morning after the Basel committee said they would like higher capital requirements for the banks. Financials are down the most so far today, while healthcare stocks are up the most.
The dollar is up a bit today, which is weighing on commodities slightly. Oil prices are flattish near $93.60 and gold prices are also a bit lower near $1595.
The 10-year yield continues to languish down around 1.84%; and the VIX is currently up 3% right to the 25.0 level.
Trading comment: The major indexes were down an average of 3% last week, and the market is now back into oversold territory. I expect choppy trading to continue in this news driven market, but I think this week's trading will have an upward bias as people look for a potential Santa Claus rally to surface. Trading will likely continue to be light as many folks have simply called it a year and closed up their trading books. The rest of us will continue looking for profitable trades in investments on a daily basis.
The big news even was the death of Kim Jong Il in N. Korea, and what that might mean for the transition of leadership in that country. Asian markets were down across the board overnight amid the uncertainty.
Financials have led the reversal lower this morning after the Basel committee said they would like higher capital requirements for the banks. Financials are down the most so far today, while healthcare stocks are up the most.
The dollar is up a bit today, which is weighing on commodities slightly. Oil prices are flattish near $93.60 and gold prices are also a bit lower near $1595.
The 10-year yield continues to languish down around 1.84%; and the VIX is currently up 3% right to the 25.0 level.
Trading comment: The major indexes were down an average of 3% last week, and the market is now back into oversold territory. I expect choppy trading to continue in this news driven market, but I think this week's trading will have an upward bias as people look for a potential Santa Claus rally to surface. Trading will likely continue to be light as many folks have simply called it a year and closed up their trading books. The rest of us will continue looking for profitable trades in investments on a daily basis.
17 Aralık 2011 Cumartesi
Are There Any Good Reasons For Blocking Ports?
I'm stepping out of my usual again, because this is very critical. I'm bracing myself to disappoint or lose readers. Okay... take a deep breath and click "publish"...
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If your daughter is being raped, you're not going to talk spiritual platitudes or go away and pray, you're going to act. And your previous spiritual development will give you power to act well.
There is a time to silently sit in lotus position in the womb, and there's a time to be born with a cry.
I'm going to present the arguments for and against blocking ports, and you can make up your own mind.
Here's Why People Are Pissed Off at the Port Occupiers:
Lots and lots of people, inside and outside the Occupy movement, are intensely pissed off at those Occupiers who blocked the ports. Both liberals and conservatives, leaders and populace, are pissed off at port Occupiers. I got into a heated discussion with local intensely-pissed-off Moabites about this.
Block the ports, and dockworkers, distributors, and merchants lose income. Dockworkers, distributors, and merchants have families to feed. How could people not get pissed off?
Some port Occupiers claimed they had union support--at least the support of union members, not necessarily the official support of union leaders. But many unionists stepped up to condemn the port Occupiers.
Yes, people say the Occupiers usurped the position of the unions, and that working-class people, including union workers, are the ones now suffering from the Occupiers' actions, not the elite 1%!
And people are saying the Occupiers are young, foolish, privileged, egotistical, not understanding what it means to make a living, support a family. They're accused of getting support from mommy and daddy and government, and now biting the hand that feeds them.
But our country is doomed unless multinational corporations end. No conventional union leadership is going to support ending their employers! This is the dilemma. Stop the corporation, and people lose their livelihood (our own dockworkers, distributors and merchants, as well as overseas sweatshop slaves). The union’s goal is not to end people’s corporate livelihood but to improve it.
Yeah, But Instead of Blocking Corporations We Should Create Sustainable Alternatives, Right?
Naturally, the answer to avoid this problem would be to first establish sustainable jobs here, starting with localized agriculture. But I know by experience the majority don’t have time for such hippy things, because they have corporate jobs to serve and families to feed! A round robin!
So we’re backed into a corner. Now we don’t see a way we’re going to produce locally and sustainably except by cutting off all dependency to multinational corporations! This will cause loss of jobs, sacrifice, suffering. And whatever time we start cutting off dependency will never seem like the right time.
If my right arm has gangrene, cut it off. I'm going to be way pissed off, screaming, calling the amputator names, even wanting to kill him, as the saw cuts through nerves and bones, unless I keep my mind on the health of my whole body, focused and centered. Keeping my mind on the health of the whole body is the very nature of spirituality. To be spiritual is to act.
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If your daughter is being raped, you're not going to talk spiritual platitudes or go away and pray, you're going to act. And your previous spiritual development will give you power to act well.
There is a time to silently sit in lotus position in the womb, and there's a time to be born with a cry.
I'm going to present the arguments for and against blocking ports, and you can make up your own mind.
Here's Why People Are Pissed Off at the Port Occupiers:
Lots and lots of people, inside and outside the Occupy movement, are intensely pissed off at those Occupiers who blocked the ports. Both liberals and conservatives, leaders and populace, are pissed off at port Occupiers. I got into a heated discussion with local intensely-pissed-off Moabites about this.
Block the ports, and dockworkers, distributors, and merchants lose income. Dockworkers, distributors, and merchants have families to feed. How could people not get pissed off?
Some port Occupiers claimed they had union support--at least the support of union members, not necessarily the official support of union leaders. But many unionists stepped up to condemn the port Occupiers.
Yes, people say the Occupiers usurped the position of the unions, and that working-class people, including union workers, are the ones now suffering from the Occupiers' actions, not the elite 1%!
And people are saying the Occupiers are young, foolish, privileged, egotistical, not understanding what it means to make a living, support a family. They're accused of getting support from mommy and daddy and government, and now biting the hand that feeds them.
Here's Why People Blocked the Ports:
Step back and look at the big picture.
A country is doomed if it depends on imports, not locally sustainable--not to mention our earth's ecology is doomed. Corporations have outsourced jobs and goods. Such corporations must end if our country is to survive.
The point of a conventional union is to improve labor conditions and wages under corporate rule. The point of the Boston Tea Party and Gandhi’s movement was not to improve labor conditions and wages under multinational-corporate rule; it was to end multinational-corporate rule. Both the USA and India could not be independent under corporate rule.
But such corporations have us by the balls. Yes, the livelihood of our dockworkers, distributors, merchants, as well as sweatshop slaves overseas, depend on these corporations, and vise versa. And why have these corporations outsourced themselves, colonized overseas? Because they don’t want to pay just wages or abide by just laws brought about by unions! I’m not necessarily saying this is the union’s fault, but the fault of deregulation allowing corporations to colonize overseas. Corporations removed themselves from the unions’ power. How? They lobbied (bribed) our nation’s Republican and Democratic leaders. Our nation's leaders let themselves be bribed, because their loyalty is to money, not to truth.
But such corporations have us by the balls. Yes, the livelihood of our dockworkers, distributors, merchants, as well as sweatshop slaves overseas, depend on these corporations, and vise versa. And why have these corporations outsourced themselves, colonized overseas? Because they don’t want to pay just wages or abide by just laws brought about by unions! I’m not necessarily saying this is the union’s fault, but the fault of deregulation allowing corporations to colonize overseas. Corporations removed themselves from the unions’ power. How? They lobbied (bribed) our nation’s Republican and Democratic leaders. Our nation's leaders let themselves be bribed, because their loyalty is to money, not to truth.
But our country is doomed unless multinational corporations end. No conventional union leadership is going to support ending their employers! This is the dilemma. Stop the corporation, and people lose their livelihood (our own dockworkers, distributors and merchants, as well as overseas sweatshop slaves). The union’s goal is not to end people’s corporate livelihood but to improve it.
The conventional union was a good thing when it had power over the corporation. But now that corporations have moved overseas, the unions have lost their power. Now the general people must act, as happened with the Boston Tea Party and Gandhi's movement.
Yeah, But Instead of Blocking Corporations We Should Create Sustainable Alternatives, Right?
Naturally, the answer to avoid this problem would be to first establish sustainable jobs here, starting with localized agriculture. But I know by experience the majority don’t have time for such hippy things, because they have corporate jobs to serve and families to feed! A round robin!
So we’re backed into a corner. Now we don’t see a way we’re going to produce locally and sustainably except by cutting off all dependency to multinational corporations! This will cause loss of jobs, sacrifice, suffering. And whatever time we start cutting off dependency will never seem like the right time.
In the same way, end opium and cocaine trade, and droves of families in Afghanistan and Columbia would lose their livelihood.
Understandably, those who advocate cutting off dependency to multinational corporations are going to be tarred and feathered, imprisoned, even killed, but something mysterious makes them still stand firm.
"To know and not to do is, in fact, not to know" --Confucius
"As the body without the spirit is dead,
so faith without action is dead." --James 2:26
If somebody knows a simpler, easier way, speak it.
16 Aralık 2011 Cuma
Financials Lead Early Action Despite Fitch Downgrade
The markets are higher again in early trading. Yesterday the rally faded as the trading session wore on. We shall see if the market can hang on to its early gains today. Today is also options expiration Friday which could make things a little more volatile, but usually most of the action happens at the open on these expiration days.
Financials are leading the early action. This despite Fitch downgrading the debt ratings of Bank of America, Goldman Sachs, and several European banks.
In economic news, the overall CPI came in flat for November, which was lower than consensus expectations. The core CPI rose 0.2%.
Asian markets were higher overnight, and most European markets are up this morning as euro bonds have seen a pullback in yields which has helped improve sentiment for the time being. The latest country looking for a bailout from the EU and IMF is Hungary.
The bounce in the euro and pullback in the dollar is helping gold prices bounce back to the $1600 level following a sharp 3-4 day selloff in the yellow metal. Oil prices are roughly flat near the $94 level. (We are still short oil via the SCO etf).
The 10-year yield continues to languish and has fallen all the way down to 1.86%. The bond market would seem to be pricing in more of an economic slowdown that most of the GDP forecasts that I have seen.
As for the VIX, it is now well below the 25 level which would signal a decline in the wild volatility that has been with us for months. It got as low as 23.50 this morning and is currently hovering just above the 24 level.
Trading comment: The SPX has bounced off of its overhead 50-day average both yesterday and again this morning. The 50-day sits near SPX 1228. That is the first level we need to close above for this rally to continue. Hopefully we don't get any more earnings warnings like we got from Intel. If so, I still think there is a shot for another push higher into year-end. I have been premature with this call, but did correctly point out that after the SPX tested its overhead 200-day moving average there would likely be a pullback and some consolidation first.
Financials are leading the early action. This despite Fitch downgrading the debt ratings of Bank of America, Goldman Sachs, and several European banks.
In economic news, the overall CPI came in flat for November, which was lower than consensus expectations. The core CPI rose 0.2%.
Asian markets were higher overnight, and most European markets are up this morning as euro bonds have seen a pullback in yields which has helped improve sentiment for the time being. The latest country looking for a bailout from the EU and IMF is Hungary.
The bounce in the euro and pullback in the dollar is helping gold prices bounce back to the $1600 level following a sharp 3-4 day selloff in the yellow metal. Oil prices are roughly flat near the $94 level. (We are still short oil via the SCO etf).
The 10-year yield continues to languish and has fallen all the way down to 1.86%. The bond market would seem to be pricing in more of an economic slowdown that most of the GDP forecasts that I have seen.
As for the VIX, it is now well below the 25 level which would signal a decline in the wild volatility that has been with us for months. It got as low as 23.50 this morning and is currently hovering just above the 24 level.
Trading comment: The SPX has bounced off of its overhead 50-day average both yesterday and again this morning. The 50-day sits near SPX 1228. That is the first level we need to close above for this rally to continue. Hopefully we don't get any more earnings warnings like we got from Intel. If so, I still think there is a shot for another push higher into year-end. I have been premature with this call, but did correctly point out that after the SPX tested its overhead 200-day moving average there would likely be a pullback and some consolidation first.
15 Aralık 2011 Perşembe
GOLD IS ON THE VERGE OF MOVING INTO THE BUBBLE PHASE OF THE BULL MARKET
I know that during a correction of the magnitude we are seeing right now it seems more like the gold bull is dead than on the verge of moving into what I expect will be one of the greatest parabolic moves in history.
However, all of the conditions necessary to launch the bubble phase are now in place. Gold is in the process of putting in an intermediate degree bottom. That bottom, which is only days away if it didn't already happen today, is going to be the single greatest buying opportunity, probably of the decade.
Gold sentiment is at multiyear lows. Retail traders that bought at $1900 have gotten wiped out. The media is full of stories calling for the death of the gold bull. Institutional traders from John Paulson, George Soros, and Dennis Gartman have all gotten knocked off the bull.
Breadth in the universally hated mining sector is back down to levels that have only been exceeded during the crash in 2008.
All the conditions are in place to launch the next stage of the secular bull market.
Up until now my expectation has been that we would see gold consolidate for probably the better part of a year before the next C-wave breaks out to new highs.
However, the scenario that is unfolding in the CRB and dollar indexes has me wondering if the gold bull isn’t going to start evolving much faster than I originally expected. Let’s just say that if I am correct and the dollar is on the verge of topping then we are probably going to see a much shorter consolidation than originally expected. Gold could launch much more quickly out of the B-Wave bottom than I expected and move to new all-time highs as early as the next intermediate cycle.
As a matter of fact I’m pretty confident that if the dollar turns down it is going to trigger the beginning of the third and final, bubble phase, in the gold bull market.
The public is already starting to become aware of the gold bull. All we need at this point to start the flood is for gold to recover quickly from this selloff. If gold quickly shoots back up and tags, or penetrates that big psychological $2000 number I expect it will be the siren call that draws the public into the bull market. And it is the public coming into a market that triggers the bubble phase.
During this phase of the bull I expect we will see the normal ABCD wave pattern break down as gold starts to accelerate into what will almost certainly be the most incredible parabolic advance, maybe in history. By the fall of 2014 I expect we will see gold somewhere between $7,000 and $20,000 an ounce.
I think tonight's premium report is important enough that I'm going to reopen the $1 trial subscription for two days. You will have access to the entire site for the next two days for the price of one George Washington. You can either keep your subscription and it will convert to a monthly at the end of the trial period or cancel it and you won't be charged another dime. Either way you will get access to a report that I think is important for every gold investor to read.
If you decide to cancel do so by following the directions on the home page of the website. Please allow one day to process your one dollar payment before canceling. Click on the link above to go to the premium website and then click the subscribe link on the upper right side to link to the subscription page.
Offer only valid for new subscribers. Former subscribers or previous $1 trial subscriptions will auto charge at the monthly rate.
However, all of the conditions necessary to launch the bubble phase are now in place. Gold is in the process of putting in an intermediate degree bottom. That bottom, which is only days away if it didn't already happen today, is going to be the single greatest buying opportunity, probably of the decade.
Gold sentiment is at multiyear lows. Retail traders that bought at $1900 have gotten wiped out. The media is full of stories calling for the death of the gold bull. Institutional traders from John Paulson, George Soros, and Dennis Gartman have all gotten knocked off the bull.
Breadth in the universally hated mining sector is back down to levels that have only been exceeded during the crash in 2008.
This sector has consolidated for so long that no one believes in mining stocks anymore. This is exactly the same sentiment that was prevalent in the silver market in the fall of 2010.
All the conditions are in place to launch the next stage of the secular bull market.
Up until now my expectation has been that we would see gold consolidate for probably the better part of a year before the next C-wave breaks out to new highs.
However, the scenario that is unfolding in the CRB and dollar indexes has me wondering if the gold bull isn’t going to start evolving much faster than I originally expected. Let’s just say that if I am correct and the dollar is on the verge of topping then we are probably going to see a much shorter consolidation than originally expected. Gold could launch much more quickly out of the B-Wave bottom than I expected and move to new all-time highs as early as the next intermediate cycle.
As a matter of fact I’m pretty confident that if the dollar turns down it is going to trigger the beginning of the third and final, bubble phase, in the gold bull market.
The public is already starting to become aware of the gold bull. All we need at this point to start the flood is for gold to recover quickly from this selloff. If gold quickly shoots back up and tags, or penetrates that big psychological $2000 number I expect it will be the siren call that draws the public into the bull market. And it is the public coming into a market that triggers the bubble phase.
During this phase of the bull I expect we will see the normal ABCD wave pattern break down as gold starts to accelerate into what will almost certainly be the most incredible parabolic advance, maybe in history. By the fall of 2014 I expect we will see gold somewhere between $7,000 and $20,000 an ounce.
I think tonight's premium report is important enough that I'm going to reopen the $1 trial subscription for two days. You will have access to the entire site for the next two days for the price of one George Washington. You can either keep your subscription and it will convert to a monthly at the end of the trial period or cancel it and you won't be charged another dime. Either way you will get access to a report that I think is important for every gold investor to read.
If you decide to cancel do so by following the directions on the home page of the website. Please allow one day to process your one dollar payment before canceling. Click on the link above to go to the premium website and then click the subscribe link on the upper right side to link to the subscription page.
Offer only valid for new subscribers. Former subscribers or previous $1 trial subscriptions will auto charge at the monthly rate.
The $1 offer has expired.
Chart of the Day: Is The Run In Gold Over?
Below is the chart of gold. Over the last few days, gold prices have plunged and taken out some long-term support levels. You can see in the chart below that the gold etf (GLD) has now broken below its 200-day moving average. We have not seen this support breached in years.
If the 200-day is recaptured quickly, it could mean a shallow correction for gold. But if that key moving average is not recaptured in short order, it likely means gold prices are in for a longer, deeper correction process.
Gold prices often move inversely to the U.S. dollar, so that is a wild card in this scenario. In recent days, the euro has been very weak and there has been a flight-to-safety into dollars. If the debt situation in Europe continues to deteriorate I would expect the dollar to continue to act as a safe harbor. But I also wouldn't rule out EU officials making more announcements about "plans" to deal with the crisis which could continue to prop up their currency.
The next chart is the longer-term chart of the GLD going back to 2009. You can see that this is the first time that the long-term moving average has not held as support going all the way back to the early breakout in gold in 2009. So the recent price action is meaningful and as such I plan to keep the GLD front an center on my screens for the near-future.
If the 200-day is recaptured quickly, it could mean a shallow correction for gold. But if that key moving average is not recaptured in short order, it likely means gold prices are in for a longer, deeper correction process.
Gold prices often move inversely to the U.S. dollar, so that is a wild card in this scenario. In recent days, the euro has been very weak and there has been a flight-to-safety into dollars. If the debt situation in Europe continues to deteriorate I would expect the dollar to continue to act as a safe harbor. But I also wouldn't rule out EU officials making more announcements about "plans" to deal with the crisis which could continue to prop up their currency.The next chart is the longer-term chart of the GLD going back to 2009. You can see that this is the first time that the long-term moving average has not held as support going all the way back to the early breakout in gold in 2009. So the recent price action is meaningful and as such I plan to keep the GLD front an center on my screens for the near-future.
Mock portfolio change
The mock portfolio change has been posted to the website. I need as many people as possible to try and login so we can determine if the bandwidth we added yesterday is sufficient.
14 Aralık 2011 Çarşamba
The Euro Is In Charge
In recent months I have mentioned from time to time that if you want to know if the market is up or down on a given day, all you had to do was ask how the euro was doing. For the last few days, the euro has been under pressure and that has been weighing on the market.
Today, the euro is breaking down further and nearing a one-year low. Results from debt auctions in Germany and Italy failed to inspire any confidence. And the credit gauges in euroland have been deteriorating for weeks. I hope EU officials develop more of a sense of urgency.
The weak euro has pushed the dollar higher and led to a sharp selloff in commodities. Metals are down across the board today, led by silver. But gold prices are also getting hit hard and are now well below the $1600 level. Oil prices have also fallen down to the $96 level, a big drop from yesterday's rally to $100.
All of the 10 major sectors are lower so far, led by energy. Healthcare and utilities are down the least. Interestingly, REITs are actually mostly green on the day. Growth stocks are down the most relative to value stocks.
The 10-year yield is lower to 1.92%. It sure didn't stay above 2.0% for long. As for the VIX, it is up +7.7% today to 27.37, but still well below last weeks highs and yesterday it briefly dipped below 25 for the first time in months.
Trading comment: I have been trying to remain constructive on stocks, but this latest euro plunge is garnering all of the market's attention this week. The market is no longer overbought, and soon will be back to oversold levels. The SPX has broken below its 50-day average near 1226 and is currently trading near 1210. I don't want to see this 50-day average become resistance, so we need to see it recaptured in short order. Also, keep an eye on leading growth stocks, which had been looking okay but today are taking the brunt of the selling. I am watching our recent trades like RVBD, SCSS, TSCO, and ULTA closely.
long RVBD, SCO, SCSS, TSCO, ULTA
Today, the euro is breaking down further and nearing a one-year low. Results from debt auctions in Germany and Italy failed to inspire any confidence. And the credit gauges in euroland have been deteriorating for weeks. I hope EU officials develop more of a sense of urgency.
The weak euro has pushed the dollar higher and led to a sharp selloff in commodities. Metals are down across the board today, led by silver. But gold prices are also getting hit hard and are now well below the $1600 level. Oil prices have also fallen down to the $96 level, a big drop from yesterday's rally to $100.
All of the 10 major sectors are lower so far, led by energy. Healthcare and utilities are down the least. Interestingly, REITs are actually mostly green on the day. Growth stocks are down the most relative to value stocks.
The 10-year yield is lower to 1.92%. It sure didn't stay above 2.0% for long. As for the VIX, it is up +7.7% today to 27.37, but still well below last weeks highs and yesterday it briefly dipped below 25 for the first time in months.
Trading comment: I have been trying to remain constructive on stocks, but this latest euro plunge is garnering all of the market's attention this week. The market is no longer overbought, and soon will be back to oversold levels. The SPX has broken below its 50-day average near 1226 and is currently trading near 1210. I don't want to see this 50-day average become resistance, so we need to see it recaptured in short order. Also, keep an eye on leading growth stocks, which had been looking okay but today are taking the brunt of the selling. I am watching our recent trades like RVBD, SCSS, TSCO, and ULTA closely.
long RVBD, SCO, SCSS, TSCO, ULTA
13 Aralık 2011 Salı
Market Better Off Now than a Week Ago: Bob Doll
While Europe still struggles with its debt crisis, things are moving in the right direction in the United States and China, Bob Doll, Chief Equity Strategist at BlackRock, told Larry Kudlow Monday. And he thinks cyclical stocks will reap the benefits.
According to him, a few months ago, “the U.S. was heading into a recession, Europe was falling apart, China was going to have a strong landing and we had a lot of tightening going on.”
Now, the U.S. economy is showing a little growth and China is “a little less bad, maybe eventually good,” Doll said. “I think cyclicals will benefit.”
Stocks tumbled Monday, with the Dow dropping 163 points, after investors soured on a European Union plan adopted last week to enhance fiscal discipline in the euro zone in the hopes of quelling a two-year-old debt crisis.
There will be days like this when the market doesn’t think Europe can rescue its banks in time, Doll said. But he pointed out that it is not a “one way street.” And despite the volatile market, he thinks things are looking a little better.
“I think we are better off today than we were a week ago, but we’re still not where we need to be,” Doll said.
He also added, what’s happening in China is important to the global economy, noting that China’s inflation rate in November fell to the lowest level in more than a year.
“This is a step in the right direction that should allow more reserve requirement reductions.”
Dip Buyers Surface In Early Trading
The market is higher in early trading, as buyers have stepped up to buy the latest dip that was yesterday's selloff. There isn't a whole lot in the way of positive news, but that hasn't gotten in the way of this morning's agenda to put some money to work.
The FOMC meets today and while there is some rumors of the Fed announcing further QE initiatives, I think the most likely scenario is to hear more of the same and that the Fed remains accomodative.
In corporate news, Best Buy (BBY) reported earnings that missed consensus estimates and its stocks is getting hit.
In economic news, retail sales were up 0.2% in November, which is less than expected. The combination of this report and poor BBY results is weighing on the retail sector this morning.
Asian markets were lower overnight, while Europe is getting a bounce this morning on little new news. There was some encouraging data out of Germany, but the euro is lower on the day so far.
Commodities are mixed. Gold prices are up a bit near $1670. Oil prices have been up the most, above $100 earlier, as news leaked out that Iran was looking to shut the Straight of Hormuz in some sort of military operation. But as news has come out that it remains open, oil has eased back from its highs.
The 10-year yield is getting a nice bounce near 2.05%. I think it would be a big positive for sentiment towards the economy if the 10-year yield could lift a little more. It did get up to 2.40% in October, but that rally was short-lived.
Probably the biggest suprise today was when I came in and saw the volatility index (VIX) down 9%. The VIX got as low as 23.27, although it has bounced from there. I actually bought a little VXX for a daytrade as these morning drops in the VIX never seem to stick for the entire session. But it is still a big positive if it can close below the 25 level.
Trading comment: Stocks are already off of the earlier highs as I finish this blog post. I expect trading to be relatively quiet until after the FOMC announcement when the fireworks usually begin. I don't expect any big surprises, but the market could still rally afterwards. Yesterday the SPX got down close to its 50-day support before bouncing. So the index has been squeezed between its overhead 200-day and its 50-day below. While the credit indicators are still flashing caution, I still believe we will see another push higher before year-end.
long SCO, VXX
The FOMC meets today and while there is some rumors of the Fed announcing further QE initiatives, I think the most likely scenario is to hear more of the same and that the Fed remains accomodative.
In corporate news, Best Buy (BBY) reported earnings that missed consensus estimates and its stocks is getting hit.
In economic news, retail sales were up 0.2% in November, which is less than expected. The combination of this report and poor BBY results is weighing on the retail sector this morning.
Asian markets were lower overnight, while Europe is getting a bounce this morning on little new news. There was some encouraging data out of Germany, but the euro is lower on the day so far.
Commodities are mixed. Gold prices are up a bit near $1670. Oil prices have been up the most, above $100 earlier, as news leaked out that Iran was looking to shut the Straight of Hormuz in some sort of military operation. But as news has come out that it remains open, oil has eased back from its highs.
The 10-year yield is getting a nice bounce near 2.05%. I think it would be a big positive for sentiment towards the economy if the 10-year yield could lift a little more. It did get up to 2.40% in October, but that rally was short-lived.
Probably the biggest suprise today was when I came in and saw the volatility index (VIX) down 9%. The VIX got as low as 23.27, although it has bounced from there. I actually bought a little VXX for a daytrade as these morning drops in the VIX never seem to stick for the entire session. But it is still a big positive if it can close below the 25 level.
Trading comment: Stocks are already off of the earlier highs as I finish this blog post. I expect trading to be relatively quiet until after the FOMC announcement when the fireworks usually begin. I don't expect any big surprises, but the market could still rally afterwards. Yesterday the SPX got down close to its 50-day support before bouncing. So the index has been squeezed between its overhead 200-day and its 50-day below. While the credit indicators are still flashing caution, I still believe we will see another push higher before year-end.
long SCO, VXX
Obama's Big Class-Warfare Theme
Following the GOP debate that nearly the whole world watched on Saturday night, the president on Sunday made it very clear that he will not back off his class-warfare vision in the coming year. Obama told Steve Kroft on 60 Minutes that middle-class inequality will be his big theme, and that somehow successful earners, investors, and small-business owners are to blame.
The president said that while fat-cat incomes went up 200 to 300 percent over the last few decades, middle-class incomes didn’t grow. This is not true, according to James Pethokoukis, whose blog posts citing various studies show that real median income rose at least 40 to 50 percent.
In any case, whatever the exact numbers, it’s still a mystery to me why successful people getting ahead cause anybody to fall behind. The Jack Kemp idea was always to foster a rising tide that would lift all boats. How can this happen if we penalize success and raise top tax rates on work and investment to 50 percent or more? That’s a mystery.
I should think, in a system of democratic capitalism, that more millionaires are a good thing. Show me a system of redistribution, and I’ll show you a system of economic stagnation.
Elsewhere in the interview the president said he did not overpromise on the results of his stimulus package. But actually, according to the original February 2009 stimulus documents, today’s unemployment rate should be close to 6 percent, not 8.6 percent. The president is now backing off by saying economic recovery is a long-term project that will take more than one term and more than one president.
By the way, Obama told the Today Show’s Matt Lauer in February 2009 that if he doesn’t “have this done in three years, then it’s going to be a one-term proposition.”
Which leads me to this thought regarding the GOP race: Since we basically know what Obama’s vision will be, which candidate will be better at besting Obama and his vision?
It’s going to be a battle between FDR’s 1930s and Ronald Reagan/Jack Kemp prosperity optimism.
12 Aralık 2011 Pazartesi
Monday Morning Musings
The markets are down sharply in early trading. So much for that bounce on Friday. As of now, it looks more like that was just a reprieve to the selling that started in earnest on Thursday. But let's see how the day shapes up.
Increased skepticism with Europe's latest "plan" has led to yields in countries like Italy and Spain rising again. Other credit metrics are also deteriorating today. Europe's stocks markets and the euro are all lower this morning.
The drop in the euro is boosting the dollar and hurting commodities. Oil prices are down to $97.65, and gold prices have plunged all the way to $1661. Copper and silver prices are also down sharply.
Asian markets were mixed overnight, with Japan higher but China down again. Some numbers out over the weekend suggested that growth decelerated for China in November.
Here in the U.S., Intel (INTC) lowered its outlook for the current quarter and that weighed on the tech sector and the overall market. INTC is blaming it on disk drive shortages (Thai flood), but most think it is also related to overall PC demand.
The 10-year yield is hovering just above that 2.00% level at 2.01%; And the VIX is up 4% so far near 27.45, but still well below last week's highs after that sharp move lower on Friday.
Trading comment: Selling has picked up again as the choppy trading since hitting the 200-day average continues. The lows on the SPX from Thursday are near 1231. So far today we have not broke below those levels, but if 1231 gives way we could see selling pick up steam. The enthusiasm over the can kicking from the EU summit last week seems to have faded quickly. I have mentioned that I thought most folks would be in dip buying mode into year end, and I still think that is the case. But I acknowledged the likely possibility of a pullback and more consolidation before the SPX made another stab at taking out is overhead 200-day resistance. I think that is what we are seeing now, but I still think buyers will step up again. So I will be patient and look for stocks that are holding up well to add to into this decline.
long SH
Increased skepticism with Europe's latest "plan" has led to yields in countries like Italy and Spain rising again. Other credit metrics are also deteriorating today. Europe's stocks markets and the euro are all lower this morning.
The drop in the euro is boosting the dollar and hurting commodities. Oil prices are down to $97.65, and gold prices have plunged all the way to $1661. Copper and silver prices are also down sharply.
Asian markets were mixed overnight, with Japan higher but China down again. Some numbers out over the weekend suggested that growth decelerated for China in November.
Here in the U.S., Intel (INTC) lowered its outlook for the current quarter and that weighed on the tech sector and the overall market. INTC is blaming it on disk drive shortages (Thai flood), but most think it is also related to overall PC demand.
The 10-year yield is hovering just above that 2.00% level at 2.01%; And the VIX is up 4% so far near 27.45, but still well below last week's highs after that sharp move lower on Friday.
Trading comment: Selling has picked up again as the choppy trading since hitting the 200-day average continues. The lows on the SPX from Thursday are near 1231. So far today we have not broke below those levels, but if 1231 gives way we could see selling pick up steam. The enthusiasm over the can kicking from the EU summit last week seems to have faded quickly. I have mentioned that I thought most folks would be in dip buying mode into year end, and I still think that is the case. But I acknowledged the likely possibility of a pullback and more consolidation before the SPX made another stab at taking out is overhead 200-day resistance. I think that is what we are seeing now, but I still think buyers will step up again. So I will be patient and look for stocks that are holding up well to add to into this decline.
long SH
10 Aralık 2011 Cumartesi
WEEKEND REPORT
I think this weekend's report is probably one of the most important reports I've written for gold traders and investors as to what I think is in store the next couple of months.
I'm going to make the report available over the weekend for $1. Actually you will have access to the entire site for the next two days for the price of one George Washington. You can either keep your subscription and it will convert to a monthly on Tuesday morning or cancel it Monday night and you won't be charged another dime. Either way you will get access to a report that I think is important for every gold investor to read.
If you decide to cancel do so by following the directions on the home page of the website.
Click on the link above to go to the premium website and then click the subscribe link on the upper right side to link to the subscription page.
THE OFFER HAS NOW EXPIRED
I'm going to make the report available over the weekend for $1. Actually you will have access to the entire site for the next two days for the price of one George Washington. You can either keep your subscription and it will convert to a monthly on Tuesday morning or cancel it Monday night and you won't be charged another dime. Either way you will get access to a report that I think is important for every gold investor to read.
If you decide to cancel do so by following the directions on the home page of the website.
Click on the link above to go to the premium website and then click the subscribe link on the upper right side to link to the subscription page.
9 Aralık 2011 Cuma
Stocks React Positively To EU Summit Announcement
There weren't a ton of details provided about the new agreements that came out of the EU summit, but after yesterday's sharp selloff the news was enough to spur buyers back into the market.
The members agreed to tighter fiscal controls, with penalties for member nations that exceed budget deficits of more than 3% of GDP. They also stepped up the time table with which the ESM should enter the picture. But it looked to me like the dollar amounts they are talking about are still not enough to really ringfence the problems. Also, Britain decided not to sign and join into the agreement as they don't want to cede any fiscal sovereignty.
Asian markets were lower overnight, despite a CPI figure out of China that looked better than expected. Europe's markets are higher this morning, and the euro is getting a slight boost as well.
Commodities are mostly higher, except for oil prices which have been slight lower near $98.20 this morning. Gold prices are up to $1716, and copper and silver prices are higher as well.
In corporate news, both Texas Instruments (TXN) and DuPont (DD) lowered their forecasts. Those stocks are getting hit, but are not weighing on the rest of the market for the most part.
The 10-year yield is trying to get back above the 2.00% level after falling below it in yesterday's trading. And the VIX is down 7% so far down to 28.40 after spiking back above the 30 level yesterday.
Trading comment: We still have a long way to go into today's session, but so far buyers have already stepped up to the plate. I have said I thought we were in the timeframe of the year where most investors would be in buy-the-dip mode. And since yesterday was a pretty big dip by most measures, it is not surprising to see buyers come into the market. The SPX continues to consolidate underneath its 200-day average. I still believe it will make a successful breakout before year-end. But I also realized the credit gauges have not improved, and the chances for another correction in Q112 remain high.
Jordan Kahn and/or KAM clients are: long GLD, SCO, SLV, and SH
The members agreed to tighter fiscal controls, with penalties for member nations that exceed budget deficits of more than 3% of GDP. They also stepped up the time table with which the ESM should enter the picture. But it looked to me like the dollar amounts they are talking about are still not enough to really ringfence the problems. Also, Britain decided not to sign and join into the agreement as they don't want to cede any fiscal sovereignty.
Asian markets were lower overnight, despite a CPI figure out of China that looked better than expected. Europe's markets are higher this morning, and the euro is getting a slight boost as well.
Commodities are mostly higher, except for oil prices which have been slight lower near $98.20 this morning. Gold prices are up to $1716, and copper and silver prices are higher as well.
In corporate news, both Texas Instruments (TXN) and DuPont (DD) lowered their forecasts. Those stocks are getting hit, but are not weighing on the rest of the market for the most part.
The 10-year yield is trying to get back above the 2.00% level after falling below it in yesterday's trading. And the VIX is down 7% so far down to 28.40 after spiking back above the 30 level yesterday.
Trading comment: We still have a long way to go into today's session, but so far buyers have already stepped up to the plate. I have said I thought we were in the timeframe of the year where most investors would be in buy-the-dip mode. And since yesterday was a pretty big dip by most measures, it is not surprising to see buyers come into the market. The SPX continues to consolidate underneath its 200-day average. I still believe it will make a successful breakout before year-end. But I also realized the credit gauges have not improved, and the chances for another correction in Q112 remain high.
Jordan Kahn and/or KAM clients are: long GLD, SCO, SLV, and SH
8 Aralık 2011 Perşembe
Quote of the Day
From the UK paper The Telegraph:
"Draghi's insistence that the fiscal contract eurozone leaders are attempting to thrash out at their latest summit will be sufficient in itself to restore confidence is cloud cuckoo land. He cannot sincerely believe it. The problem in the eurozone is not fiscal indiscipline, though there has certainly been a lot of it, but current account imbalances entrenched by big differences in competitiveness. These cannot be made to go away with repeated rounds of growth stifling austerity, and as for Mr Draghi's claim that it is possible to have both fiscal austerity and decent growth provided competitiveness is improved, it's simply naive to believe that's what is going to happen in practice. In fact, most of the evidence from the eurozone periphery is that it is continuing to lose competitiveness against the surplus north, with Germany progressively improving its share of an ever-shrinking market. As long as that goes on, the debt problem is going to get worse, not better. This weekend's summit will do little to solve the fundamentals of this crisis. Only a fully functioning fiscal and political union, with tax and spending decisions centralised in one authority across all 17 nations can do that. Even turbo-charged by financial and economic crisis, that's a very long road indeed."
"Draghi's insistence that the fiscal contract eurozone leaders are attempting to thrash out at their latest summit will be sufficient in itself to restore confidence is cloud cuckoo land. He cannot sincerely believe it. The problem in the eurozone is not fiscal indiscipline, though there has certainly been a lot of it, but current account imbalances entrenched by big differences in competitiveness. These cannot be made to go away with repeated rounds of growth stifling austerity, and as for Mr Draghi's claim that it is possible to have both fiscal austerity and decent growth provided competitiveness is improved, it's simply naive to believe that's what is going to happen in practice. In fact, most of the evidence from the eurozone periphery is that it is continuing to lose competitiveness against the surplus north, with Germany progressively improving its share of an ever-shrinking market. As long as that goes on, the debt problem is going to get worse, not better. This weekend's summit will do little to solve the fundamentals of this crisis. Only a fully functioning fiscal and political union, with tax and spending decisions centralised in one authority across all 17 nations can do that. Even turbo-charged by financial and economic crisis, that's a very long road indeed."
Draghi Pours Cold Water On ECB Bond Purchases
The market is lower in early trading after a disappointing reaction to comments by ECB Pres. Draghi, who implied that the ECB would not step up its bond buying program beyond what has been discussed already. It's unclear to me why he is taking this tone, unless he is trying to get other players to get more involved. The EU summit is tomorrow (tonight actually) and maybe this is posturing ahead of it. We still don't know to what extent the IMF may get involved.
The ECB also cuts its main lending rate 25 bps to 1.00%. Draghi said there was no talk of 50 bps, and that the vote was not unanimous. The ECB also lowered its marginal lending facility to 1.75% from 2.00%. The Bank of England held its rate steady at 0.50%. And the Danish central bank cut its rate from 1.20% to 0.80%. So the liquidity spigot in Europe is opening, but I'm not sure even a fire hose can help more than just a temporary stop-gap.
The euro is lower on the rate cut news, and that is weighing on commodities also. Gold prices are lower near $1715, and oil prices are down to $98.75.
In the U.S., jobless claims fell more than expected to 381,000, but folks are already complaining that this figure was seasonally adjusted and is thus skewed.
The 10-year yield has eased back to 2.00%, that key level that we can never seem to hold above for too long. And the VIX is spiking +4% higher so far and has touched the 30 level again (currently 29.80).
Jon Corzine is testifying before Congress this morning about the MF Global disaster. He'll probably say that he just didn't know about the fund diversion. I don't expect them to get a lot of answers and clarity from him. What a fall from grace.
Trading comment: The biggest news item this week will be the announcement that follows tonight's EU summit. The market has recently rallied up to overhead resistance, so its normal to see a pullback from those levels. The hard part is gauging how the market will react to tomorrow's announcement. A positive reaction could result in a successful breakout above recent resistance. But a negative reaction could easily take the SPX back down to its 50-day average below. I'm betting we have a little more correcting to do, but hoping its not too big. I still think that most participants are in buy-the-dip mode into year-end. That said, I hope the EU officials bring out the howitzer.
The ECB also cuts its main lending rate 25 bps to 1.00%. Draghi said there was no talk of 50 bps, and that the vote was not unanimous. The ECB also lowered its marginal lending facility to 1.75% from 2.00%. The Bank of England held its rate steady at 0.50%. And the Danish central bank cut its rate from 1.20% to 0.80%. So the liquidity spigot in Europe is opening, but I'm not sure even a fire hose can help more than just a temporary stop-gap.
The euro is lower on the rate cut news, and that is weighing on commodities also. Gold prices are lower near $1715, and oil prices are down to $98.75.
In the U.S., jobless claims fell more than expected to 381,000, but folks are already complaining that this figure was seasonally adjusted and is thus skewed.
The 10-year yield has eased back to 2.00%, that key level that we can never seem to hold above for too long. And the VIX is spiking +4% higher so far and has touched the 30 level again (currently 29.80).
Jon Corzine is testifying before Congress this morning about the MF Global disaster. He'll probably say that he just didn't know about the fund diversion. I don't expect them to get a lot of answers and clarity from him. What a fall from grace.
Trading comment: The biggest news item this week will be the announcement that follows tonight's EU summit. The market has recently rallied up to overhead resistance, so its normal to see a pullback from those levels. The hard part is gauging how the market will react to tomorrow's announcement. A positive reaction could result in a successful breakout above recent resistance. But a negative reaction could easily take the SPX back down to its 50-day average below. I'm betting we have a little more correcting to do, but hoping its not too big. I still think that most participants are in buy-the-dip mode into year-end. That said, I hope the EU officials bring out the howitzer.
7 Aralık 2011 Çarşamba
ECB Extending More Liquidity
The markets are lower in early trading, but there has not been much news. Asian markets were higher across the board overnight, while Europe is up slightly this morning.
The ECB has said that it will loosen the criteria for loan collateral, which is an attempt to provide more liquidity to member nations. Tomorrow the ECB will have its policy announcement and many investors are hoping that they ease monetary policy further with an actual rate cut. Of course, the big event this week is the outcome of the EU summit on Friday and what they will say in terms of any big initiatives to deal with the debt crisis.
The euro is down slightly on the news, and most commodities are flat. Gold prices are actually up a bit near $1734, but oil prices are lower and have broken the $100 level.
Energy and financials are lagging the action so far this morning, while healthcare and utilities are down the least.
The 10-year yield is lower to 2.06%; and the VIX is +3.5% higher near 29.25.
Trading comment: If you pull up that chart of the S&P 500 you can see that once again we were turned away at overhead resistance near the 200-day average, which sits near 1264. The market hit that level again yesterday but faded, and this morning is moving lower still. I expect some consolidation around these levels, with an eventual successful push above these resistance levels. I would actually prefer to see the market pullback ahead of the EU summit meeting. I worry that if we rallied straight into the meeting, that might increase the chances of selling off harder after the news comes out.
The ECB has said that it will loosen the criteria for loan collateral, which is an attempt to provide more liquidity to member nations. Tomorrow the ECB will have its policy announcement and many investors are hoping that they ease monetary policy further with an actual rate cut. Of course, the big event this week is the outcome of the EU summit on Friday and what they will say in terms of any big initiatives to deal with the debt crisis.
The euro is down slightly on the news, and most commodities are flat. Gold prices are actually up a bit near $1734, but oil prices are lower and have broken the $100 level.
Energy and financials are lagging the action so far this morning, while healthcare and utilities are down the least.
The 10-year yield is lower to 2.06%; and the VIX is +3.5% higher near 29.25.
Trading comment: If you pull up that chart of the S&P 500 you can see that once again we were turned away at overhead resistance near the 200-day average, which sits near 1264. The market hit that level again yesterday but faded, and this morning is moving lower still. I expect some consolidation around these levels, with an eventual successful push above these resistance levels. I would actually prefer to see the market pullback ahead of the EU summit meeting. I worry that if we rallied straight into the meeting, that might increase the chances of selling off harder after the news comes out.
One-on-One with Newt Gingrich
It’s now just 29 days until voters head to the polls in Iowa. There's a clear new front-runner in the GOP race for president. The latest in national Gallop poll shows former House Speaker Newt Gingrich soaring to a 15 point lead over Mitt Romney, 37-to-22. Ron Paul and Rick Perry are trailing in single digits.
Joining me now for a first on CNBC interview is the aforementioned GOP front-runner, Newt Gingrich.
Mr. Speaker, welcome. We appreciate it very much.
Mr. NEWT GINGRICH: Thanks. It's great to be here, Larry.
KUDLOW: I want to ask you about Barack Obama on the campaign trail today, or whatever trail he's on. He's pushing his temporary payroll tax cut in order to have a permanent increase on millionaires and billionaires. And he says Republicans who oppose this are discredited, "you're-on-your-own style of economics." You're-on-your-own style of economics.' What is your response to that?
Mr. GINGRICH: I think we all have to recognize that the president is a student of Saul Alinsky. He represents a hard-left radicalism. He is opposed to free enterprise. He is opposed to capitalism. He's opposed to virtually everything which made America great, and he keeps using wild rhetoric that is simply false. I happen to favor keeping the tax cut because I like tax cuts.
KUDLOW: Why is that, though? That's a--you want to finance by higher taxes on millionaires?
Mr. GINGRICH: No. I want to finance it by cutting government.
KUDLOW: Well, that's what they want. They want to finance it with higher taxes on millionaires.
Mr. GINGRICH: But that's--but that's because--look, they know they want higher taxes on millionaires, they just need to know what this week's argument is. But they know what the answer is. My answer is government's too big. We don't have a problem of being undertaxed, we have a problem of being overspent. And so I would cut a tremendous amount out of the federal government. And I would--one of the things that we've developed with Peter Ferrara's help is a block grant program. There are 185 different federal programs to help the low-income American, 185 separate bureaucracies. Put them into two or three block grants, cut out all the federal bureaucracy, send it back to the states. You save hundreds of billions of dollars. The people at Strong America Now have a program on applying lean six sigma to the federal government. You can save, they believe, $500 billion a year through better government.
So my attitude is, I like the lowest possible taxes. If the Democrats want to give me a tax cut on working Americas by--on the Social Security level, fine.
KUDLOW: Yeah, but, Newt Gingrich, I'm going to challenge you on that. You were a close friend and associate of my mentor Jack Kemp.
Mr. GINGRICH: Right.
KUDLOW: We never believed in temporary one-yearlong tax cuts.
Mr. GINGRICH: Right.
KUDLOW: Whatever. They're just rebates. We believed in lower marginal tax rates which would improve after tax incentive to work and invest.
Mr. GINGRICH: I do, too.
KUDLOW: Are you going to sell me that this temporary one-year cut, which did nothing last year except waste money, is going to do nothing this year? Why are you so--why do you favor it?
Mr. GINGRICH: Look, I don't think...
KUDLOW: Why aren't you out there asking for pro-growth tax reform...
Mr. GINGRICH: I do.
KUDLOW: ...across the board?
Mr. GINGRICH: If you go to newt.org and you look at the things I recommend...
KUDLOW: Ah.
Mr. GINGRICH: ...you'll see lots of stuff I favor that's exactly what you believe in. All right? And I like pro-growth tax cuts. Listen, I'm for zero capital gains tax.
KUDLOW: Mm-hmm.
Mr. GINGRICH: I'm for abolishing the death tax. I'm for 100 percent expensing for all new equipment. I'm for a 12 1/2 percent corporate tax rate. I'm for an optional 15 percent flat tax on the--on the Hong Kong model. So I'm happy to match--you know, I was with you and Wanniski and Laffer and Kemp when this game started.
KUDLOW: Mm-hmm. That's...
Mr. GINGRICH: But, politically, psychologically, middle-class Americans sitting out here going, `OK, you don't want--you don't want to repeal the Bush tax cuts. You want to keep all those tax cuts. You say don't, don't let them go back up. But now we're going to let taxes go back up on every single working American.' I don't think psychologically you can make that case.
KUDLOW: All right.
Mr. GINGRICH: And so--and so I'd rather say to every single working American, `Not only am I with you, I want to pay for it by cutting out government waste, unlike Obama.'
KUDLOW: But the GOP has got to make that clear.
Mr. GINGRICH: Yeah, exactly.
KUDLOW: I mean, they really have to make--now I want to ask you a related question. I want to stay with President Obama for second. You can see with clarity on the campaign trail, and including this tax proposal which is about raising tax rates on the rich, is the whole election in 2012--if you're the candidate or whoever is the candidate against Obama, is it going to be about class warfare? Is it going to be about the 1 percent vs. the 99 percent?
Mr. GINGRICH: Absolutely.
KUDLOW: And what's your response? How will you rebut that?
Mr. GINGRICH: This is going to be the finest exercise in self-government in your lifetime. We're going to have the candidate of food stamps, the finest food stamp president in American history in Barack Obama, and we have a candidate of paychecks. And I'm going to make a simple case. You want class warfare, fine. You're going to get stuck on food stamps because it's going to kill jobs. You want really high tax rates? Fine. You're going to get stuck on food stamps because it's going to kill jobs. You want to watch America decay and China become the leading country in the world? Obama's got a model for getting you there. It's called Sal Alinsky's entire book.
Now, would you like to create jobs? The kind--I want to get equality by bringing people up. He wants to get equality by bringing people down. You know, Reagan use to have this great line about the British worker who stood by the road with his son or daughter, and a man goes by in a Rolls Royce, he says, `Someday we'll get him out of that car.' American worker stood by the side of the road with his son or daughter. A Cadillac went by and he said, `Someday you'll buy that car.'
KUDLOW: Ah, right.
Mr. GINGRICH: So I want to be the guy who says, `I want to help every American have a better future.' He wants to make sure that he levels Americans down so we all have an equally mediocre future.
KUDLOW: And yet, he is now calling himself a follower of Theodore Roosevelt, Teddy Roosevelt. And you have called yourself a follower of Teddy Roosevelt. And I'm trying to figure out--I know what his message is. Roosevelt did want to raise taxes on the--Roosevelt was a government activist. He was a regulator.
Mr. GINGRICH: Sure.
KUDLOW: But you're not. Why do you say you favor Teddy Roosevelt? And are you actually the conservative candidate that so many people are hoping you are?
Mr. GINGRICH: Well, first of all, there are a lot of different Teddy Roosevelts. He was a very complicated man. And the Theodore Roosevelt as president is very different than the Theodore Roosevelt in 1912 running for president on a very aggressive big government strategy. I like Roosevelt, first of all, because he was for conservation. I liked what he did in saving forests and saving national parks and doing things, caring about the inheritance we give our children and grandchildren of a wonderful country. I like the Roosevelt who is common sense about regulations. We got a food and drug act because back then there were no rules, and people were eating meat that was basically poisonous. People were literally dying from food.
When I was a kid, and we were stationed in Europe--my dad was in the Army—the sense that America actually had clean water was remarkable. I mean, I go anywhere in America, I'm relatively confident the water is good.
KUDLOW: But we don't--we don't lack for regulations.
Mr. GINGRICH: No.
KUDLOW: I mean, it's a different era than TR.
Mr. GINGRICH: But, no, it's a different era. But I'm just saying, but here was a guy who, as a pragmatic person looked around and said, `I want to fix these things. I want to find solutions.' He's also a great American nationalist. I mean, he's the guy who--the modern Navy was in part built by guys like Theodore Roosevelt.
KUDLOW: All right. I'm going to leave it there. Some people are going to say you're a big government conservative, a big government conservative rather than a small government conservative. I mean, why aren't you saying, `I'm a Ronald Reagan conservative.'
Mr. GINGRICH: I am a Ronald Reagan conservative.
KUDLOW: Or, `I'm a Jack Kemp conservative.'
Mr. GINGRICH: Look, I'm...
KUDLOW: I don't want to get stuck up on TR, but I just...
Mr. GINGRICH: Wait a second. Wait a sec--wait a second.
KUDLOW: I just want...
Mr. GINGRICH: Wait a second. I...
KUDLOW: You're a historian, and you're an intellectual historian. You know this stuff.
Mr. GINGRICH: Yeah. But you take a line out of context. I've done a movie on Ronald Reagan called "Rendezvous with Destiny."
KUDLOW: I understand.
Mr. GINGRICH: Callista and I did. We've done a book on Ronald Reagan. You know, I campaigned with Reagan. I first met with Reagan in '74. I'm very happy to talk about Ronald Reagan. And, in fact, I would argue that the 1994 contract was just Reaganism revisited. So I'm very comfortable. If you look at my speeches and things, I drive the left crazy by quoting Reagan.
KUDLOW: All right. We'll leave that one there.
Now, let me ask you some nastier stuff, not coming from me, but I want you to react. Big story at the top of Drudge today. Ron Paul is running ads slamming you, basically. OK? He's calling you hypocritical. He's saying you are an influence peddler for Freddie Mac and for drug companies and pharmaceutical associations. What's your reaction to that? He's running a lot of ads in Iowa.
Mr. GINGRICH: You know, he's got to make up a lot of lost ground. He's going to say something. My reaction is, you know, I'm a 90 percent American Conservative Union conservative, lifetime voting record. I am the only person in your lifetime--the only speaker of the House in your lifetime who has balanced the budget for four consecutive years. I helped craft and pass welfare reform, the largest entitlement reform in your lifetime. Two out of three people went back to work or went to school. I helped pass the first tax cut in 16 years and the largest capital gains tax cut in history. Unemployment dropped to 4.2 percent. In the four years I was speaker, we—11 million new jobs were created. We went from a projected deficit over 10 years of 2.7 trillion when I came in. Four years later when I left, there was a projected surplus of 2.3 trillion over the next 10 years. That's a swing of $5 trillion.
KUDLOW: I think it's all...
Mr. GINGRICH: OK. So my point...
KUDLOW: I think it's all great, and I think it's all factual.
Mr. GINGRICH: OK.
KUDLOW: But I want to ask you, do you regret, in hindsight, do you regret working for Freddie Mac to defend their point of view? Do you regret working for the pharmaceutical companies...
Mr. GINGRICH: Well, I...
KUDLOW: ...working for the drug entitlement, which so many...
Mr. GINGRICH: Wait a second.
KUDLOW: ...tea party, grassroots, conservative Republicans were appalled when George W. Bush pushed through that entitlement. Do you regret working on that side?
Mr. GINGRICH: Let me draw a distinction. First of all, I do no lobbying. I have never done any lobbying. It's written in our contracts that we do not do any lobbying of any kind. OK? I offer strategic advice. I--by--the advice I offered Fannie Mae was in--or Freddie Mac, was, in fact, aimed at how do you help people get into housing, and how do you--and I don't think government-sponsored enterprises are inherently evil. I think they've been bad--these two have been badly run. I favor breaking them up into four or five smaller units each because I think they're unmanageable at their current size. But I don't think the concept of a government-sponsored enterprise, which is as old as the country, is an inherently bad thing.
Second, I was--I was for the drug benefit for a practical reason. When Medicare was developed in 1965, there were no pharmaceuticals that mattered, so they designed a health benefit that didn't take care of pharmaceuticals. We were in a position, and we said to people, `We will give you kidney dialysis for the rest of your life, but we will not help you get insulin.' Now, that's both inhumane, and it's really a bad health policy, and it's stupid fiscally.
KUDLOW: I liked--I loved the health. I love the science. I didn't like the fiscal side of it. It was never paid for.
Mr. GINGRICH: Well, I don't like that, but what we....
KUDLOW: And it pushed--put Bush behind the--I mean, it really helped spawn the tea party. And so I just wonder, in retrospect, would you rather not have been on that side or would you rather have had your own plan, which would have financed it properly.
Mr. GINGRICH: Well, no. I'd--well, first of all, I think we're going to have to reform Medicare. I led the Medicare reform task force in 1996. We saved $200 billion over 10 years. We did it so well that nobody opposed us. I mean, we've never gotten any credit for having saved Medicare in '96, but, in fact, we did. But we did it with AARP being happy and with Clinton not fighting with us; and, therefore, it became a non-event in this city.
I think you're going to have to rethink all health care. I helped found the Center for Health Transformation. But the two big sidesteps that you had in--that are important in the Medicare bill in 2003 were, we created a
Medicare advantage option...
KUDLOW: Yes.
Mr. GINGRICH: ...which really began to allow Medicare to reach in...
KUDLOW: The best part of the bill. The single best part of the bill.
Mr. GINGRICH: Well, and, we also created health savings accounts.
KUDLOW: Yes. Yes.
Mr. GINGRICH: OK. Those two, in my mind, were the beginning of the right direction. And I tried for five years and couldn't get the Bush administration to realize they had begun a transition that would, frankly, have pre-empted the Obamacare approach.
KUDLOW: All right. So the Ron Paul ad also attacks you for your TV ad with Nancy Pelosi on global warning. I interviewed Ron Paul. I said, `Newt has said it was a bad, dumb thing to do. Will you forgive him?' And I think Ron Paul forgave you for that.
Mr. GINGRICH: Good.
KUDLOW: But I am impelled, I have to ask you, regarding Nancy Pelosi, her latest charge...
Mr. GINGRICH: Sure.
KUDLOW: ...that she has new information on your ethics investigation years ago. What's your response to that?
Mr. GINGRICH: Well, first of all, it tells you how political she was on the ethics committee. And it tells you--I called it a Christmas gift. And she can't--if she releases any of it, she has violated the rules of the House. But it also, just a reminder, that committee was extraordinarily partisan. The job of the Democrats was to get Newt Gingrich. They couldn't beat any of our ideas, so they decided to try to beat the messenger. And I think it actually will help people understand what happened in that period and how much of it was partisan.
KUDLOW: She--all right. Granted. But she's saying that she's not going to give unpublished information. She's going to help people cull through the public information. Is there anything in there that you can imagine that's going to pop out?
Mr. GINGRICH: We turned over a million pages of material. We cooperated in every way. They published a report. One of the things that made her mad was I said, at one point in a planning session--this was in the documentary turnover--that, you know, Bill Clinton might well decide to sell out the left and sign welfare reform, and if he did there's nothing we can do about it.
KUDLOW: She didn't like that.
Mr. GINGRICH: Well, she said, `Why would you say that?' I said, `Now, don't be mad at me. It's Clinton who sold you out, not me.'
KUDLOW: But didn't you help cut that deal?
Mr. GINGRICH: Of course I did, because it got us welfare reform.
KUDLOW: All right. Let me go on. Final point. And I appreciate your being here. Mitt Romney. Romney says you don't understand the economy and you can't recover it and grow it because you spent your entire life in professional politics. What's your answer to Mr. Romney?
Mr. GINGRICH: You are the worst possible questioner.
KUDLOW: The worst.
Mr. GINGRICH: You and I worked together with...
KUDLOW: I...
Mr. GINGRICH: ...with Richard Rahn, Jude Wanniski...
KUDLOW: I understand. But I'm doing my job.
Mr. GINGRICH: ...Art Laffer. I'm just saying.
KUDLOW: I'm doing my job.
Mr. GINGRICH: But you're a witness to this. I was part of Kemp's little cabal of supply-siders who, I think, largely by helping convince Reagan and then working with Reagan, profoundly changed the entire trajectory of the American economy in the 1980s. You can make an argument that I helped Mitt Romney get to be rich because I helped pass the legislations that...
KUDLOW: Not a bad argument. Have you ever made that argument to him?
Mr. GINGRICH: I am as of right this minute. Just occurred to me.
KUDLOW: You--you're the incentive models, the lower tax rates, the smaller government and the welfare reform...
Mr. GINGRICH: That's right.
KUDLOW: ...helped make him rich from Bain Capital.
Mr. GINGRICH: He should be thanking me. He should be thanking me because I did the macroeconomic things necessary to make his career possible.
KUDLOW: Yeah. Well, I'm going to get a response on that.
Mr. GINGRICH: I bet you will.
KUDLOW: I want to ask you--regarding Bain Capital, this is a tough time. I mean, the country has turned against Wall Street.
Mr. GINGRICH: Yeah.
KUDLOW: Against the Wall Street bailouts. Because Mr. Romney was successful--and I say God bless him he was successful--can he win as a financial guy, as a Wall Street guy?
Mr. GINGRICH: Sure.
KUDLOW: Is that a big issue for him?
Mr. GINGRICH: Sure. Can he win against Obama?
KUDLOW: Can he win against you in the Republican primaries?
Mr. GINGRICH: No. But that's--I hope not.
KUDLOW: Why...
Mr. GINGRICH: I can't--I can't sit here and offer advice on how he could
beat me.
KUDLOW: Well, you've done well. You've already said you've helped him.
Mr. GINGRICH: Look, I think Mitt Romney's a very smart man. I think—I think that he--any Republican could be proud to have him as their nominee, and I think he'd be very formidable against Obama. I happen to think I would be a better candidate than Mitt, but that's, I mean, we are, after all, competing here. But I'm not going to say anything negative about him. I think he's a terrific person. And, candidly, we, all of us who believe in free enterprise, have to be committed to explaining to people that the process of improving the economy, the process of becoming more competitive, the process of being more effective in the world market is best done in the private sector by people who, literally, in the tradition of Adam Smith, while following their own interest, create a dramatically better general interest. And we can't allow socialist and left-wing radicals to browbeat us and seize the moral high ground. Because they represent the future of poverty and impoverishment, and destruction and food stamps, and that isn't a good enough future for any American.
KUDLOW: And economic freedom is a moral issue.
Mr. GINGRICH: It is a moral issue, and it's at the heart of freedom. If you don't--the Founding Fathers almost wrote in "the right to property" instead of "the pursuit of happiness."
KUDLOW: That's right. That's what it was. Thank you. Newt Gingrich...
Mr. GINGRICH: Good to be with you.
KUDLOW: ...former speaker of the House, Republican front-runner. We appreciate you're here...
Mr. GINGRICH: Thank you.
6 Aralık 2011 Salı
One-on-One with Jon Huntsman
GOP Presidential Candidate Jon Huntsman dismissed Donald Trump and the debate the real estate mogul and reality TV star will be moderating, and told Larry Kudlow he’s the only consistent conservative in the race.
The former Utah Governor and former ambassador to China likened the Newsmax-sponsored presidential debate to a reality show, and said he would not be participating.
“There’s some dignity associated with a run for the highest office in the land, and it shouldn’t be trivialized and it shouldn’t be dumbed down,” he said. “If Don Trump cares about our nation’s future, he should have been a candidate for president. He shouldn’t be manipulating the process from the sidelines.”
His statement was the latest in an ongoing war of words with Trump. Huntsman also denied Trump’s claim that he called several times to schedule a meeting in hopes of getting Trump’s endorsement.
“I called him once after he got out of the race, just like I called Tim Pawlenty, as a courtesy call,” Huntsman said. “Not looking for a meeting, not looking for support or anything else.”
One debate Huntsman said he will be doing is the “Lincoln-Douglas” debate Newt Gingrich in New Hampshire on December 12. He thinks it will provide an opportunity for an in-depth discussion of the issues.
“You can only get so much in 30 second sound bites,” he said. “People fall back on rehearsed lines and that doesn’t serve the purpose of educating the voting public about who you are and what it is you stand for.”
Huntsman also touted his conservative credentials, saying “You’re not going to find a more committed conservative in the race … I am a consistent conservative.”
He pointed to his pro-life, pro-second amendment stances. He also said as governor of Utah he delivered the largest tax cut in the history of the state and signed the second school choice voucher bill in the country.
Mitt Romney, on the other hand is a “flip-flopper conservative,” Huntsman said, adding that he thinks Newt Gingrich is “grandiose and a little bombastic.”
And while many may not know of his conservative views, Huntsman said he’s not going to pander for votes.
“I’m going to be who I am. I’m not going to contort myself into a pretzel,” he said. “I want a steady, substantive rise and that’s exactly what we’re getting in New Hampshire.”
The former Utah Governor and former ambassador to China likened the Newsmax-sponsored presidential debate to a reality show, and said he would not be participating.
“There’s some dignity associated with a run for the highest office in the land, and it shouldn’t be trivialized and it shouldn’t be dumbed down,” he said. “If Don Trump cares about our nation’s future, he should have been a candidate for president. He shouldn’t be manipulating the process from the sidelines.”
His statement was the latest in an ongoing war of words with Trump. Huntsman also denied Trump’s claim that he called several times to schedule a meeting in hopes of getting Trump’s endorsement.
“I called him once after he got out of the race, just like I called Tim Pawlenty, as a courtesy call,” Huntsman said. “Not looking for a meeting, not looking for support or anything else.”
One debate Huntsman said he will be doing is the “Lincoln-Douglas” debate Newt Gingrich in New Hampshire on December 12. He thinks it will provide an opportunity for an in-depth discussion of the issues.
“You can only get so much in 30 second sound bites,” he said. “People fall back on rehearsed lines and that doesn’t serve the purpose of educating the voting public about who you are and what it is you stand for.”
Huntsman also touted his conservative credentials, saying “You’re not going to find a more committed conservative in the race … I am a consistent conservative.”
He pointed to his pro-life, pro-second amendment stances. He also said as governor of Utah he delivered the largest tax cut in the history of the state and signed the second school choice voucher bill in the country.
Mitt Romney, on the other hand is a “flip-flopper conservative,” Huntsman said, adding that he thinks Newt Gingrich is “grandiose and a little bombastic.”
And while many may not know of his conservative views, Huntsman said he’s not going to pander for votes.
“I’m going to be who I am. I’m not going to contort myself into a pretzel,” he said. “I want a steady, substantive rise and that’s exactly what we’re getting in New Hampshire.”
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