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!

The Closing Look

Stocks rallied on Wednesday, helped by more easy money from the Fed and a big rally in a slew of Biotech (IBB) and Healthcare (XLV) stocks. Transportation stocks lagged for most of the day as they pause to digest the recent rally. The Fed released the minutes of their latest meeting and the minutes reiterated the view that Fed officials are in no rush to raise rates. In other news, oil prices vaulted over 5% after a surprise drop in in U.S. crude supply.

Gary’s Thoughts: Will have big report on Fed over the weekend. Yesterday was a beta day. Seems like every Fed day is a beta day. That was one strong biotech move off its bear market lows. Europe and Asia still an issue as they are not even close to keeping up with the U.S.

The Morning Look

Stock Market Overview: 

Futures are up a little ahead of Wednesday’s open as stock markets across the globe fell on Tuesday, led by steep declines in Europe and Japan.

Gary’s Thoughts: Watching oil prices up sharply this morning. Oils/energy been on rest/pullback past few weeks. Otherwise, refer to what we said last night. Massive earnings just ahead! Pay attention.

Economic Data:

  • MBA Mortgage Applications 7:00 AM ET
  • Gallup U.S. Job Creation Index 8:30 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • Loretta Mester Speaks 12:20 PM ET
  • FOMC Minutes 2:00 PM ET
  • Rob Kaplan Speaks 8:00 PM ET

Highlights Of The Day:

  • Iceland PM resigns after Panama Papers
    Gary’s Thoughts: Tip of the iceberg! Pun intended.
  • Trump Would Make Mexico Pay for Wall by Blocking Money Transfers
    Gary’s Thoughts: Trump who?

The Closing Look

Stocks fell on Tuesday as global selling continued on sluggish global economic growth. Japanese and European stock markets fell after the IMF warned of a global economic slowdown. Overnight, India’s Central Bank joined the easy money party and lowered its key interest rate to 6.5%, from 6.75%. Meanwhile, Australia’s Central Bank held rates stead. In the U.S. the PMI Service index rose to 51.3, higher than the prior reading of 49.7 and just above the boom/bust level of 50. The ISM service index came in at 54.5, beating estimates for 54.

Gary’s Thoughts: Icky day! Massive overhead resistance. Overbought. Bears turned into bulls. We shall see. We said on radio yesterday to watch closely here. Not thrilled with action in Financials. Not thrilled with Asian and European markets aas they are now waaaaay underperforming U.S. markets. Something to watch. Just keep in mind, we are 99.9% sure Yellen going to lower rates back to 0% and then print again. Just a matter of when!

The Morning Look

Stock Market Overview: 

Futures are lower ahead of Tuesday’s open as investors pause to digest the recent and very strong 7-week rally.

Gary’s Thoughts:   Japan and Asia markets rolling over. European markets look the same. This is not an opinion. Pay heed. 

Economic Data:

  • Trade Balance (8:30): -$46.3 bn expected
  • Markit US Services PMI (9:45)
  • Markit US Composite PMI (9:45)
  • ISM Non-Manuf. (10:00): 54.1 expected

Highlights Of The Day:

  • Tesla’s Model 3 Gets 250k Pre-Orders
    Gary’s Thoughts: And then they lower numbers.
  • Alaska Air Agrees to Buy Virgin America
    Gary’s Thoughts: Good move but passengers screwed even more.

The Closing Look

Stocks fell on Monday as markets paused to digest the very strong rally we have seen over the past 8 weeks. Commodities dragged stocks lower even though the US dollar also fell. Alaska Air ($ALK) said it plans to acquire Virgin America (VA) in a deal valued at $4 billion. Groupon (GRPN) rallied after the company said Comcast will invest $250 million. Comcast will work with Groupon on potential strategic partnership opportunities. In Europe, unemployment fell to 10.3% in February which was the lowest level since 2011. The IMF said a Greek deal is far off which weighed on investor confidence.

Gary’s Thoughts: Mushy but no biggie yet. Just beware foreign markets suspect!

Back from China!

We are back from China. We will have our thoughts on China and the economy later in the week but first:

Earnings growth does not matter. Sales growth does not matter. GDP does not matter. 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 are 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. Here is the latest money quote from Janet Yellen. That’s all you need to know that the next move is back to zero and the next move after that is QE4. 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 getting world markets melting down thus they have come to the conclusion they have to roll it back or else. And the 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.”

Look what happened as markets were being hit. Credit and the access to credit and debt was drying up. It is this access to credit and debt that keeps the game going. If not for this access to this credit and debt, all hell breaks loose. You don’t believe us? Then just ask yourself the question why do they have to continue to ratchet up the easy money? What possible reason is there to go to 20 trillion, 25 trillion, 30 trillion of printed money? It should be obvious that no number is too high as the bar keeps being raised. We continue to believe that at the end of this road, the longer and higher the easy money continues, the bigger the meltdown is going to be. As we have always told you, we have no idea from what point or how long it lasts or how bad it is going to be, we just know by precedent, it is going to end badly. All those trillions and we grow 1% here…maybe!

 

The good news is we are technicians first and the market continues to improve. In fact, we were somewhat amazed by Friday’s action in that Japan’s market is rolling over, European markets look like they’re rolling over and we opened up badly but the boys would have none of it. Markets reversed here and nicely.

YELLEN EASED MONETARY POLICY YESTERDAY

March 30,2016

Greetings from Shanghai where it is 7:15 pm Wednesday night. Hoping you are doing well as we will be back from our trip this coming Saturday. We have a lot to say in two parts.

Firstly, we do not know what you’re hearing but here is what happened yesterday. Janet Yellen just eased monetary policy. Yes, after a whopping 1/4% rate hike, Janet Yellen stopped dead in her tracks and eased monetary policy. You don’t have to print to ease. You don’t have to lower to ease. You just have to yap away to ease. Everything this woman said for months has now been turned on its back. And to be clear and in case you did not know, this is just the culmination of a coordinated global effort to stave off market trouble. You don’t believe us? In just the past 6-8 weeks, the Bank of Japan went into negative rates a week after saying they wouldn’t. They have also bought up their market and injected a ton of money into the system. The People’s Bank of China just recently injected $100 billion into the system and has been buying up their market and lowering rates.The European Central Bank cut rates even further into negative territory and added more printing of money. Norway cut rates. Yes, that Norway. But the cherry on top of the big cake of easy money was first, Janet Yellen cutting the rate outlook once and then just yesterday, a second time but this time even more emphatically.

Here are just a few other tidbits. The deposit rate of the European Central Bank is -.40%. Switzerland is -.75%. Sweden is -.35%. The Bank of Japan is now negative. More than $26 trillion of government bonds now trade at yields below 1% and depending on which abacus you are using, there is between $7 and $10 trillion yielding  less than 0%.

All this and we haven’t even mentioned the years and years of 0% rates. We haven’t even mentioned that every time markets drop, central banks around the globe add more stimulus. With Mrs. bubble blinking, the game is back on. Again, leave no doubt this is a coordinated effort to stop the market carnage. It has been our contention for a very long time that there’s never a problem until markets say so. Every time markets started to say so, Central banks just go deeper into their bag of goodies to stanch the bleeding. It only took one little rate hike to cause serious damage in markets around the globe. They finally got on their bat phones and realized that they had no choice

but to go back to the old playbook and pray that it would work again.
Which leads us to the second half of our thoughts:the market. To review, we thought a good low was being put in on February 11 and February 12. Last Wednesday was the first day since the low that we thought could’ve been a sign of trouble. We immediately changed that stance on Thursday when the market finished flat after a big down open and the realization we werel heading into the end-of-quarter window dressing. As we have told you, window dressing is illegal, so it never happens. Wink, wink, nod, nod.

To be blunt, yesterday’s action was quite meaningful technically as markets got back the few days of pullback in minutes as Janet shot off her bazooka. This enabled several important areas to move back to the high of recent ranges and some above.  On top of that, the new yearly high list finally started to pick up and also noticed the risk juices flowing as a bunch of glamour growth names moved out of range. The Nasdaq is back to leading for this second.

A lot of fundamentalists are pulling their hair out of their head not understanding how a market can go up when just last week, GDP projections were lowered. Does not matter! A lot of permabears who have gotten the macro correct, now have to deal with a market again going up even though earnings and sales growth are going down. Doesn’t matter! The fact is the only thing that matters and has mattered is the policy decisions of a select few people that are following each other into a continued frenzy of easy money in order to goose markets up. This has nothing to do with their economies. This has 100% to do with the markets. So the rally off the lows continues. Until distribution rears its ugly head, it is folly to argue with what is now the tens of trillions of conjured up bucks around the globe. Wall Street knows it is ultimately a monstrous mistake because it can never, ever, ever be rolled back but Wall Street likes higher markets. If distribution does show up, we will let you know. Could always come out of nowhere!

Gary Kaltbaum

A lot of not much!

Greetings from Hong Kong…on the way to Shanghai today. Will have a complete report on China this coming weekend.

Was up overnight watching and the best way to describe the action is a lot of not much. A lot of sitting, a lot of back and forth, a few things not so well, a few things act well. But a glance at new yearly highs find the same…utilities, reits, food, beverage and stuff like that. Sure…a smattering of other things but just a smattering.

We told you over the weekend that end of quarter is usually bought up or held up. Right now…held up. But this contracted volatility could lead to higher prices once done but there will need to be a lot more improvement as plenty still not working. Contracted volatility usually does not last too long but on occasion it has.

 

Greetings from Hong Kong

Greetings. It is Monday morning here in Hong Kong where I got a bout of food poisoning past couple of days. Let’s just say…no fun. Feeling much better this morning after sleeping 12 hours straight. Have a few thoughts this morning on things I am seeing.

Japan announces they will add even more stimulus. More? The latest and not making this up…just handing out money in the way of vouchers. Money you can save. Vouchers would have to be spent. So government goes more into debt so others can spend. Sure…that will work in the end.

Trump vs Cruz? WTF! Wrestlemania is this coming Sunday. How about a good old fashioned Texas Bullrope match made popular by the man I used to watch every Wednesday at Miami Beach Convention Center back in the 70s…the American Dream Dusty Rhodes! Frankly, I am not sure what we are watching when it comes to Republican presidential politics. It looks like Trump will win the nomination but who knows what they try to pull at the convention. And I guess…TRUMP IS TRUMP!

The Belgium attacks: What do you expect? It really seems governments only put the hammer down AFTER something happens. We say prayers and wish them well. We pray that leaders figure out there is only one way to stop vicious animals.

We have also received many emails asking us to comment on President Obama’s reaction…dancing the Tango, going to baseball games and all that crap. All of the emails were livid that the President would not stop his schedule and were doubly livid about the optics of dancing. We won’t quibble but have to ask…is anyone surprised? There are no “Katrina” moments for this President. You remember “Katrina!” The media (on purpose) turned it into a moment to use against Bush for the rest of his whole presidency. They would never do that with Obama. They may complain for a day…but it is immediately dropped. Thus, this President can and does do what he wants. This President would not even go to France when attacks occurred there even though just about every other head of state was there. The president’s answer to all this is that he will not let terrorism stop his schedule. We will let you decide.

After my 12 hours of sleep,  found out the Communist beat the crook handily in a few states but that doesn’t matter…does it? The crook will be the nominee. Nevertheless, Trump versus the crook will be huuuuge for ratings! And don’t ask me why I call her “the crook!” If you have to ask, you have not done your homework!

As far as markets, one little audible from us. Last Wednesday, we thought that day was going to mark a decent top. Thursday’s early action was less than thrilling. But Thursday’s pre-holiday close was darn good. The most important areas right now are commodities and industrial-types. It is these areas that are leading the market. They reversed up. As long as they continue to hold, market should be ok. On top of that, this week is end of quarter. End of quarter and end of month window dressing is illegal so it does not happen. (BAZINGA!) Otherwise, we are still into the meat of resistance with a massive amount of stimulus being produced to directly keep markets from dropping. Earnings just around the corner.

As far as the oft-mentioned Gold, still think we have a near-term high put in off of the distribution we told you about at the highs.

Enjoy your week. Heading to Shanghai tomorrow.