PRE MARKET STUFF

Futures flattish.

Divergence city. Doesn’t mean markets are in trouble but:

While the S&P hits highs…nothing else does. The DOW, NASDAQ, NDX are a little behind but the TRANSPORTS, THE SMALL CAPS, THE MID CAPS, FOREIGN MARKETS and a bunch of other stuff not even close. This is something to watch.

GOLD/GOLD STOCKS look great on a daily and weekly. Pullbacks preferable but this looks more real than the many aborted moves it has had in the past.

“EASY MONEY IS BACK”

We like Barrons. But…that was the title cover this weekend of their financial magazine. Our message to Barrons…really? When did the easy money ever leave? The definition of easy money is the following…recently…

Negative Bond Yields through…
30 yrs: Switzerland
15 yrs: Germany, Netherlands
10 yrs: Japan, Denmark, Austria, Finland, Sweden
9 yrs: France, Belgium
8 yrs: Slovakia
7 yrs: Ireland, Slovenia
6 yrs: Spain
5 yrs: Portugal
3 yrs: Malta, Bulgaria
1 yr: Italy

$13 trillion of bonds around the globe are negative. Depending on which abacus you use, $20 trillion has been printed around the globe. Australia and India just lowered again. China is infusing trillions even though they say GDP is in the 6.5% range. The ECB telegraphed lower rates and more money printing even though rates are negative and have already printed a ton. The Bank of Japan owns over 50% of their ETFs and over 4% of their whole market. Our brave central bank changes stance every time markets take a hit and tops out at a whopping 2.5% fed funds. Sorry…the easy money never went away. And this is not just easy money. Easy money used to be a quarter point here and there.

SOME WORDS OF ADVICE

Don’t drink to excess…and frankly, don’t drink at all.

Don’t do drugs.

Work out several times/week keeping your weight in line with norms.

Eat right.

Don’t smoke anything. (We are beside ourselves that government, in their bid to make more money, has made marijuana mainstream.)

Compliment people.

Consider joining philanthropic organizations that do good.

Do something for someone you need absolutely nothing from.

Have a great weekend.

 

MARKETS AND NO YIELD

—-The DOW and S&P are on the verge of breaking out of a big range starting way back in early 2018. The stronger NASDAQ/NDX are on the verge of breaking out of range that started last August. If this occurs, we would think it would be somewhat akin to the breakouts in the first week of 2013 and the breakout the week of the November 2016 election. This would not include many areas as small caps, mid caps, transports, foreign markets, financials are not even close. This would be a big difference from those other breakouts.We would also expect the dollar to swoon and gold to get going out of range. As always, with markets, we will adjust if new clues show up but today looks to be an important day and will be imperative the market does not experience a big reversal.—–
—-And to repeat from last night’s report, this is all occurring because:—-
Negative Bond Yields through…
30 yrs: Switzerland
15 yrs: Germany, Netherlands
10 yrs: Japan, Denmark, Austria, Finland, Sweden
9 yrs: France, Belgium
8 yrs: Slovakia
7 yrs: Ireland, Slovenia
6 yrs: Spain
5 yrs: Portugal
3 yrs: Malta, Bulgaria
1 yr: Italy
——In Switzerland, you are paying the government to loan THEM money…and for 30 years. Who in their right mind would do that? In recent weeks, we have seen India and Australia lower rates. We have seen China add over a trillion to their system, Just this week, the ECB announced the potential for more rate cuts and more printed money even though their rates were already negative and they have already printed trillions.—–
—-And then there is us. Let’s see…—-
—-U.S. Large cap indices are back near all time highs.
Unemployment is in the 3s.
GDP was 3.2% last quarter.
Oil prices are dropping helping the consumer and business big time.
The 10 year is yielding 2% making mortgages much cheaper for the average American’s largest purchase.
80% of IPOs that have been coming out have losses, some with huge losses.
Froth is showing up in the market. Think fake plant-based meat.—-
—-With all that, one would expect a central bank would be tightening. At least that is what would have happened back in the good old responsible days. But instead, from Jay Powell:—-
—-“PARTICIPANTS SEE A STRONGER CASE FOR RATE CUTS!”
“PARTICIPANTS SEE A BETTER CASE FOR ACCOMMODATION”—-
—-Needless to say, we remain in unprecedented…and we mean unprecedented easy money times…as the debt/deficit/leverage can these central banks have enabled gets kicked even farther down the road.—–

EASING MONEY AT OR NEAR THE HIGHS

——We have studied markets going back to day one. Our software allows us to backdate. We have studied central banks. We have studied market reactions to central banks. For years, we have told you the past 10 years saw central banks both here and around the globe time their easy money moves to markets. We have seen the Bank of Japan have no problem with owning over 4% of their market and over 50% of their ETFs. We can go on and on. But 10 years into this experiment with easy money, it looks like we may be just getting started. We do not know what is at work here but take a gander at this:——

Negative Bond Yields through…
30 yrs: Switzerland
15 yrs: Germany, Netherlands
10 yrs: Japan, Denmark, Austria, Finland, Sweden
9 yrs: France, Belgium
8 yrs: Slovakia
7 yrs: Ireland, Slovenia
6 yrs: Spain
5 yrs: Portugal
3 yrs: Malta, Bulgaria
1 yr: Italy
——In Switzerland, you are paying the government to loan THEM money…and for 30 years. Who in their right mind would do that? In recent weeks, we have seen India and Australia lower rates. We have seen China add over a trillion to their system, Just this week, the ECB announced the potential for more rate cuts and more printed money even though their rates were already negative and they have already printed trillions.—–
—-And then there is us. Let’s see…—-
U.S. Large cap indices are back near all time highs.
Unemployment is in the 3s.
GDP was 3.2% last quarter.
Oil prices are dropping helping the consumer and business big time.
The 10 year is yielding 2% making mortgages much cheaper for the average American’s largest purchase.
80% of IPOs that have been coming out have losses, some with huge losses.
Froth is showing up in the market. Think fake plant-based meat.
—–With all that, one would expect a central bank would be tightening. At least that is what would have happened back in the good old responsible days. But instead:—–
PARTICIPANTS SEE A STRONGER CASE FOR RATE CUTS
PARTICIPANTS SEE A BETTER CASE FOR ACCOMMODATION
—–Yup…it looks like Jay Powell earned back his invitation to the Christmas party at Mar-A-Lago.—-
—–We wish we could tell you what is in all these maniac’s minds that run central banks around the globe. We can’t. We are just letting you know the getting stronger big-cap market here combined with a new round of easy money could lead to some climactic action to the upside. No…we do not predict anything. We always let the market action be our guide. But we know easy money and we know the outcome of easy money. If price breaks out of range to the upside in the majors, it could get interesting. But warning….none of this is normal…and guess what happens to late climactic moves? Gonna be an interesting ride from here.—-
—–And one last note: We heard Gundlach tell Neil Cavuto today that he expected a recession in the next year. Two things: 1) If that is to occur, markets will know it a few months in advance and go into bearish mode. 2) If that is to occur, we guarantee you this fed will take rates back to 0% and start another round of maniacal money printing. Yippee!—–

THE OPEN

Amazing what the market reacts to. The president tweets something about China which was old news and the China trade turns up. The down and out SEMIS ramp hard. On top of that, the ECB going to lower rates even though rates are negative. Actually, we are not surprised.

 

BIG CAP indices edged above range…and now we await our fed. Yippee. More easy money.

 

Will have a lot more after our fed gets out of the way. We have no clue what they do but we said before anyone else they would be cutting again soon.

IF AT 100TH YOU DON’T SUCCEED

–If at 100th you don’t succeed, try try again. That has been the motto of central banks for over a decade and continues to be the motto. This morning:–
–In spite of the ECB having negative rates, in spite of the trillions of printed money, in spite of the 10 year German Bund amazingly yielding negative, Mario (I can do one better than Bernanke) Draghi announced this morning that they can actually print even more money and get this, lower rates to even more negative. Yes…a negative 0.4 is not easy enough. Overnight futures reversed on this news. Juices are flowing as a money losing, fake meat company is up another 10% this morning and more money losing IPOs are foisted upon an unwary public. —
–The amazing part about all this is that the easy money has not worked. Europe has continued to under-perform with many areas contracting. Most don’t or don’t want to understand that the easy money is what has created the problem…and continues to this day. The easy money has enabled massive debt and deficits. Guess what the debt and deficits cause? Correctomundo…a headwind to the economic growth they are looking for. Guess what the easy money does? It screws the savers while trying to bubble up asset prices which in turn causes economic inequality…you know, the thing they rail against.–
–And next up is our easy money dolts as every time markets take a hit, they take a turn. The latest is our fed going from “patience” to “uh, uh, uh, hmm, we can now look to lower rates!” Don’t worry about the more than $1 trillion yearly deficits. Don’t worry about the $22 trillion and counting of debt. Don’t worry about this year, the first $550 billion of our precious tax dollars are going to interest. That’s right. Not to the poor, the downtrodden, the kids, the elderly, the roads, the bridges…but to interest…all because of what the fed has enabled and the politicians have created. Nancy Pelosi keeps whining about the Constitution and how it must be upheld. Funny…not sure we read anything in the Constitution about politicians like Pelosi putting us into $22 trillion of debt. President Trump said that he would cut debt and deficits by half. Funny…the president immediately, with Paul Ryan (now gone) and Mitch McConnell raised federal spending $250 billion/year ad infinitum. Love them conservative RepubliCONS!–
–But don’t worry. Rates are coming down both here and around the globe. Negative rates already pervade. More printing will continue. The president is actually jealous this morning as he is tweeting that it is unfair the ECB keeps easing while we have not. Don’t worry Mr. President. We are next. As long as markets cooperate, everything is fine.–
–Sound pessimistic? We have never been more optimistic…about the people. The great, hard working people of this country continue to work hard, sweat, toil, risk capital and succeed. Unfortunately, we have never been more pessimistic about them as no one running this country on the left and no one on the right…gives a crap about what they have created. And when all hell breaks loose, the culprits will be either lobbying, working on Wall Street or just plain history.–