Central banks never stop!
“CENTRAL BANKS NEVER STOP!”
February 4,2016
By Gary Kaltbaum
garyk.com
@GaryKaltbaum
Fox News Business Contributor
We were thrilled when we heard there were no central bank meetings in February. We want these people to go away for an extended vacation. We actually emailed the Fed with the suggestion of only 4 Fed meetings each year. We heard nothing back. We wanted more quiet but looks like that is asking for too much. Japan starts it up with their not so surprising negative rates. Markets rallied for a day before again getting yonked. Remember, we are no longer in a bull market. But that was just the beginning as the maniacs are in full swing. Lo and behold, a dude named Dudley, one of our team came out and said the magic words:
“One thing I think we can say with more confidence is that financial conditions are considerably tighter than they were at the time of the December meeting, So if those financial conditions were to remain in place by the time we get to the March meeting, we would have to take that into consideration in terms of that monetary policy decision,”
He then went on to say:
Additional strength of the U.S. dollar could have “significant consequences” for the U.S. economy.
You all know what happened next! The dollar started breaking down as the bet easily now is to NOT raise rates! So:
Some important changes may be at hand:
The dollar is breaking down which (duh) means currencies against the dollar are breaking out.
IF the dollar continues to break down, this will help commodities (gold and gold stocks are already emerging) and could possibly help all the multinationals that have suffered under the weight of a strong dollar. Keep in mind, the dollar is not strong because we are strong. It is strong because others are so weak. We do not care to bet on why except the thought that there is no way Yellen will raise rates again any time soon.
So…markets got the bid yesterday off the early yuck. The NAS/NDX were being killed as glamour names of FB,GOOG and AMZN were being hit. Google gave back everything and lots more from the perceived good news of earnings.
Recent washout lows continue to hold but we remain less than thrilled. If the dollar continues to sink, we must watch for a “changing of the guard” as central banks are doing their best to jerk currencies and economies around. We have a strong opinion on these miscreants but would rather pay attention to the market…and right now, things starting again to act like jello moving on a shaking plate.
Ladies and gentlemen, these geniuses continue to ruin the integrity of markets. But now, it just looks like they are flailing away,trying to come up with anything, experimenting with anything, saying anything all in hopes of moving things the way they want. But the problem is THEY ARE THE PROBLEM….THEY ARE THE CAUSE OF THE PROBLEM YET THEY ARE THE ONES STILL MAKING DECISIONS ON HOW TO FIX THE PROBLEM THEY CREATED! It is simply a race to the bottom now and we have to sit there and take it as we have no say in the matter.
Did you see the Dax?….it is threatening to take out the Jan low already due to the strong euro. Not sure if the weak dollar will help Financials based on yesterdays gap down.
When the DJIA hit an all time high of 1054 in late 1982 nobody called it the beginning of a new secular bull market. In 1984 we had about a 20% pullback in the first half of the year and it was heralded as a resumption of the secular bear market (which had actually ended in 1982). I don’t remember hardly anyone calling that a secular bull market until maybe in the mid to late 1990’s when it was 13 to 15 years old. in April of 2013 we busted through 1565 on the S and P 500 — shattered it — much like we shattered 1054 DJIA in 1982. I agree with you Gary that we are in some kind of bear market even if not confirmed just yet by the S and P or DJIA but obviously the average stock is in a bear market. But it will be interesting years from now if this will be a cyclical bear market within a secular bull market like the corrections of ‘84,87 (lot more than a correction in price but not much in time just 67 days) ,90, 97,98 or as the Elliot Wavers would have you believe the beginning of the end and DJIA of I don’t know what they are saying 500? I guess my point is when you are in a secular bull market it is easy to get whipsawed in the 20 to 25% cyclical bears that occur along the way and lose sight of the longer secular trend. And in all fairness, maybe the bears who predict this is going to be a 50% or 75% decline are right. Or maybe this is just another normal 25 to 30% cyclical bear. Kind of like the bull market in treasury bonds from 1981 to 2012 was interrupted several times by cyclical bear markets in bonds. It was hard to hang in there with that 15% coupon the whole ride. I only had two clients who did.
If the dollar can stay down at least 1Q,
that should be the cat that gets under the bull.
What to do with Gold? Short? Long? Stay away?