What about the other side about all the supposed bad earnings reports to come out?

We felt it necessary to write to you about something we are reading about every day…and in numerous articles. That is all the talk about the bad earnings that will be reported in the weeks ahead for the past quarter.

First off, let us say we think all this talk about poor earnings are correct. We have walked through a ton of guidance and frankly, it does not look too good. Even taking into account the normal “beat the number” game, the numbers still look anemic. But we think it important to mention what we perceive to be potentially the most important part of the earning’s equation and that is:  EVERYONE ALREADY KNOWS EARNINGS WILL BE CRAPPY. EVERYONE IS ALREADY REPORTING EARNINGS WILL BE CRAPPY. And maybe, just maybe, we can go back to the tried and true…when everyone already knows something and when everyone is already reporting something, it is already in the market….potentially!

Of course, we now sit and watch the numbers but for us, the reaction is what counts most. We would also like to mention another potential positive and that is the dollar. The dollar was a heavy weight on earnings and sales for many companies but in the past 3 months, the dollar has swooned. So again, maybe just maybe, companies will guide better as the effects of a strong dollar wear off.

So there!

We love Italy. We do not love their central bankers!

Italian officials and bank executives have agreed to create a €5 billion ($5.7 billion) fund to help lenders that are in quite the trouble. Only one problem…there is about €360 billion of bad loans. There is a lot more where this came from in many other countries. Remember what we have told you, places like Greece were not fixed. All the maniacs did were write a bigger credit card to pay for the previous credit cards. All the maniacs did were to make the kicked can even bigger as “down the road” will be much worse than need be. And remember, we are the doofusses with $19 trillion of debt. But don’t worry!

The Morning Look

Stock Market Overview: 

Futures are a little higher ahead of Tuesday’s open as investors digest last week’s decline. The US dollar fell to a fresh 9-month low yesterday and remains weak.


Economic Data:

  • NFIB Small Business Optimism Index 6:00 AM ET
  • Import and Export Prices 8:30 AM ET
  • Redbook 8:55 AM ET
  • Patrick Harper Speaks 9:00 AM ET
  • Treasury Budget 2:00 PM ET
  • John Williams Speaks 3:00 PM ET
  • Jeffrey Lacker Speaks 4:00 PM ET

Highlights Of The Day:

  • Chesapeake Pledges Almost Entire Company as Debt Collateral
    Gary’s Thoughts: Yummy! Debt is good?
  • Tesla Recalls 2,700 Model X SUVS to Fix Third-Row Seats
    Gary’s Thoughts: Shorts killed in stock recently.

The Closing Look

Stocks opened higher but ended near their lows as seller showed up in the afternoon. Before the open, rumor spread that central banks and governments should begin buying bank stocks to boost the market. Meanwhile, the US dollar fell to a fresh 9-month low which sent gold, silver and several other commodities higher. In other news, Goldman Sachs ($GS) will pay $5 billion to settle federal and state probes from before the financial crisis. The Justice Department settled with GS regarding the sale of mortgage-backed securities.

Gary’s Thoughts: Another day of gapping up only to sell off. Normally, we would be very negative on that but with central banks and governments now targeting stocks???????

Gold…gold…gold…gold stocks are leading.

Goldman produced product…sold that product…and then shorted it at the same time! Enough said!

Concerted effort to boost financial stocks.

We wrote to you this morning about Italy talking about using their money (debt) to buy up their beleaguered bank stocks. We once wrote to you years ago and asked sarcastically “why don’t central banks just buy up the whole f—ing S&P? Well…now comes this:

By Nishant Kumar
(Bloomberg) — Central bank policy makers in Europe and
Japan may have to authorize the purchase of shares in lenders if
they want to boost economic growth, according to Man Group Plc
President Luke Ellis.
“What’s happening with the banks is causing the weakness in
economies, not the other way round,” Ellis said in a Bloomberg
Television interview Monday. “The starting point is the pressure
on the banks.”
Negative interest-rate policies being pursued by the
European Central Bank and the Bank of Japan are triggering
concern that policy makers are leaning too much on extraordinary
monetary policies in their attempts to fuel economic growth. The
BoJ surprised markets by adopting negative rates in January,
more than a year and a half after the ECB became the first major
institution of its kind to venture below zero.
“At some point, they will probably all end up buying shares
in banks to try to support them,” said Ellis, adding that
negative rates are “awful” for Japanese banks because they are
pressuring earnings.
Man Group, the world’s largest listed hedge-fund firm,
managed $78.7 billion at the end of 2015.



April 11,2016

We do not make this stuff up! The first two paragraphs are from this morning:

Italian Treasury and central bank officials will meet with executives of major banks, including UniCredit
SpA and Intesa Sanpaolo SpA, on Monday to discuss the creation of a fund that would buy bank shares and help the institutions tackle non-performing loans, according to people with knowledge
of the talks.

In the latest revelation of just how far China, and its central bank, are willing to go to prop up its ailing local stock market, on Thursday the official Shanghai Securities News reported that China’s foreign exchange regulator has bought mainland stocks worth over 27 billion yuan ($4.18 billion) via three low-profile investment firms it controls.


With a bunch of countries going deeper into negative rates, with a bunch of countries continuing to print money as well as add to the printing of money and recently, Janet Yellen’s money quote:
“Even if the federal funds rate were to return to near zero, the FOMC would still have considerable scope to provide additional accommodation. In particular, we could use the approaches that we and other central banks successfully employed in the wake of the financial crisis to put additional downward pressure on long-term interest rates and so support the economy–specifically, forward guidance about the future path of the federal funds rate and increases in the size or duration of our holdings of long-term securities.  While these tools may entail some risks and costs that do not apply to the federal funds rate, we used them effectively to strengthen the recovery from the Great Recession, and we would do so again if needed.”

In case you did not know, this quote (which was under-reported) specifically states the potential for not only going back to 0% rates, but the potential for more printing of money. Remember these people say and do nothing by accident. It is all planned out. It is all coordinated and it is all in concert. The fact is only a quarter point hike here in the US was having world markets melting down thus they have come to the conclusion they have to roll it back or else. Notice the word “economy” in bold. Replace the word “economy” with the word “market!”

Earnings growth does not matter. Sales growth does not matter. GDP does not matter. (expected GDP this quarter is expected to be around a big fat 0%) Debt, we mean massive debt does not matter. Leverage, we mean massive leverage does not matter. Communist presidential candidates do not matter. Crooked presidential candidates do not matter. A presidential candidate who changes moronic stances every hour does not matter. All that matters is back to all that has mattered over the past several years and that is the maneuvers of a select few maniacal central bankers around the globe. We have already written to you on numerous occasions about what they have done. 0% interest rates going on a decade now with negative interest rates becoming something of the new norm. It’s no longer the printing of trillions. It is the printing of tens of trillions. No number is too high! The fact is and it is our contention the only thing that matters to the select few is markets holding up or going up.

We hear Obama is meeting with Yellen today. We suspect the prez will give her big hugs and kisses for keeping rates at 0% and all the coordinated printing of money as it has propped things up while masking the underlying problems and enabled this “debt president” to increase debt over $8 trillion while in office.

As we come into this week, a few thoughts:

The not so good:

Big and small financials are still acting poorly and are a drag on the markets.

Retail stocks are rolling over badly.

Small caps continue to woefully underperform large caps.

Europe and Asia (especially Japan) continue to underperform the U.S. by a wide margin.

The good:

Our markets refuse to pull back in a meaningful fashion.

Gold stocks are breaking out…leading the metal, which is usually a bullish occurrence.

Biotechs may have bottomed for now. They have been a huge drag on the Nasdaq.

Energy-related issues continue to hold their recent moves off the lows…but plenty of work left to do. Other commodity areas like steel also continue to have the bid. The same for commodity countries as we had told you in recent weeks that everything that led down for 18 months had turned the corner.

Most of the talk is about how bad earnings are going to be. When everyone is talking about something, it is usually already in the market. We’ll know starting next week.

Other areas that remain stronger are Food, drugs, beverages, alcohol, household products, reits, utilities.

Gary Kaltbaum

Answering a emailer’s valid question!

“How the hell can a market look so bad on a Thursday and just gap up big on Friday?”

We would just love to know the answer to this question. The fact is we have had some great days, only to gap down the next day. Our best answer is when you have so many maniac central bankers around the globe not only making moves but in non-stop yapping, markets can be influcenced overnight. Today, it is risk on as Europe says they can go even further…yes, even further easing than they already have. We have had a U.S. central banker talk about going to 0% rates again. We do not know if that is the exact reason for this morning but we do know they are an influence. In today’s case, the first thing we saw was the big move in Oil and knew futures would be up nicely. Technically, while fiancials are very suspect, other things are emerging like the aforementioned biotech off the lows…and we remain in an environment where pullbacks last a couple of days.

We also wanted to repeat something we saw this morning. It is of interest. Surprisingly, we woke up and read the newspapers as usual…and we must say, most all of the articles had a negative bent to them. That cannot be all bad for markets.

The Morning Look

Stock Market Overview: 

Futures are up ahead of Friday’s open as investors digest this week’s decline.

Gary’s Thoughts:  And we indeed get the obligatory gap to the upside today. Remember, Yellen is going to lower rates and print more money. That is our belief. By they way, did you notice nothing but negative market articles this morning?

Economic Data:

  • William Dudley Speaks 8:30 AM ET
  • Rob Kaplan Speaks 9:30 AM ET
  • Wholesale Trade 10:00 AM ET
  • Baker-Hughes Rig Count 1:00 PM ET

Highlights Of The Day:

  • JPM’s Dimon Says His Bank Is Too Big Not To Succeed
    Gary’s Thoughts: Not too big? 

The Closing Look

Stocks fell on Thursday as sellers finally showed up. The selling began in Asia and Europe and continued in the U.S. Japan’s stock market continued to fall as the Yen soared. European stock markets were mostly lower even though the European Central Bank (ECB) hinted at even more easy money! President Mario Draghi wrote in the bank’s annual report today that they won’t “surrender” to excessively low price growth. Then, the ECB’s Chief Economist Peter Praet, spoke at a conference in Frankfurt and made it clear that further stimulus would be provided, if needed. Big financials dragged U.S. markets lower as many big banks broke below their respective 50 DMA lines.

Gary’s Thoughts: Don’t worry. We’ll just gap up tomorrow. Our biggest issue remains those Financials. Acting awful…but enough acting just fine. A little bit of distribution up here but no biggie yet.

The Morning Look

Stock Market Overview: 

Futures are lower ahead of Thursday’s open as markets remain lower for the week.

Gary’s Thoughts: We expected to wake up from our let lagged fog to see a strong Europe and Asia overnight but nothing doing. As we mentioned last night, they are lagging badly. Not sure it is meaningful…but something to watch. Futures down a wee bit but that’s a no biggie after yesterday’s beta day. 

Economic Data:

  • Chain Store Sales
  • Jobless Claims 8:30 AM ET
  • Bloomberg Consumer Comfort Index 9:45 AM ET
  • EIA Natural Gas Report 10:30 AM ET
  • Consumer Credit 3:00 PM ET
  • Fed Balance Sheet 4:30 PM ET
  • Money Supply 4:30 PM ET
  • Janet Yellen Speaks 5:30 PM ET
  • Esther George Speaks 8:15 PM ET

Highlights Of The Day:

  • Fed Minutes Show Easy Money Here To Stay
    Gary’s Thoughts: Ya think! We will bet anyone the next fed move is lower rates back to 0%!
  • Three Pfizer Presidents Still Get $1 Million After Failed Deal
    Gary’s Thoughts: Good for them!