Baltic Dry Index. 1395 -11 Brent Crude 56.58
Alan Schwartz, CEO Bear Stearns, March 12, 2008.
Bust March 16, 2008.
The big day is
finally here. It is show down day for the Fed v President Trump. Will the Fed
cave in and leave interest rates unchanged, as President Trump has all but
ordered, probably triggering a late Santa Claus relief rally, or will they poke
President Trump and stocks in the eye with another rate hike.
My money is on the
latter, with some soothing oily talk about falling oil prices lowering the need
for further hikes next year. A weak year-end short covering rally then probably
ensues. Even so, 2019 looks challenging for global stocks, to say the least.
“It is hard for us, without being flippant, to even see a scenario
within any kind of realm of reason that would see us losing one dollar in any
of those [CDS] transactions.”
Joseph J. Cassano, the former A.I.G. London executive, August 2007, on
Credit Default Swaps that wiped out A.I.G in 2008.
Asia tenses for Fed call, oil slide boosts bonds
December 19, 2018 / 12:18 AM
SYDNEY (Reuters) - Asian share markets
played second string to bonds on Wednesday as a spectacular fall in the price
of oil spurred speculation the U.S. Federal Reserve might be done with
tightening after its policy meeting later in the session.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.4 percent, while Shanghai blue chips .CSI300 were flat.
Japan's Nikkei .N225 steadied after an early dip and E-Mini futures for the S&P 500 ESc1 added 0.4 percent.
Oil had stolen the show as a supply glut saw Brent shed almost 6 percent overnight. U.S. crude was last down another 13 cents at $46.11 a barrel, while Brent LCOc1 recouped just 4 cents to $56.30. [O/R]
Brent’s 35 percent plunge since October is sending a disinflationary pulse through the world at a time when trade and economic activity are already cooling.
That has only added to pressure on the Fed
to abandon its commitment to yet more hikes.
U.S. President Donald Trump on Tuesday warned the central bank not to
“make yet another mistake”, while a Wall Street Journal editorial called for a
pause.
So far, the futures market <0> is sticking with a two-in-three
chance of a rate increase on Wednesday.
“Despite recent market volatility we think that it is still more likely
than not that the Fed will raise rates,” said ANZ senior economist Tom Kenny.
“But we lean slightly toward the Fed removing the reference to the need
for ‘further gradual increases’.”
He also expects the median Fed forecast, or dot plots, to drop to two
rate rises for next year, from the three projected back in September. The
market is well ahead of that and pricing in less than one rise in 2019.
More
The S&P 500’s lower low warns that the worst is yet to come
By Tomi Kilgore
Published: Dec 17, 2018 6:16 p.m. ET
The S&P 500 index just did something that a widely followed, century-old
theory of market analysis would say is a sign that warns the worst may be yet
to come.The S&P 500 SPX, -2.08% fell 2.1% Monday, to close at the lowest level since Oct. 9, 2017. Following a recent pattern of lower recovery highs, the Dow Theory would suggest the primary trend is now down.
“Quite simply, upside follow-through has been lacking, keeping negative momentum in the driver’s seat,” said Frank Cappelleri, executive director and technical analyst at Instinet. “And if this doesn’t change, the same scenario will persist.”
The Dow Theory has remained relevant with investors for over 100 years, because it’s more about how investors behave when fear and greed take over, which hasn’t changed, than about monitoring numbers on a chart. The theory looks to identify major trends, with the idea being the best way to make money is to follow the market’s trend, not to try to beat the market by picking turning points.
Don’t miss: Don’t dis the Dow Theory just because it’s over 100 years old.
One of the Dow Theory’s six basic tenets says the definition of a downtrend is when a charted instrument makes successively lower peaks and troughs, according to the CMT Association. It’s like the tide — when it is ebbing, each wave stops a little before the last one.
The S&P 500’s sharp bounce to its Nov. 7 closing high of 2,813.89, which was well below the Sept. 20 record close of 2,930.75, marked the first lower peak, and the Nov. 23 close of 2,632.56, which was below the Oct. 29 close of 2,641.25, was the first lower trough. After the index’s next bounce topped out at 2,790.37 on Dec. 3 — another lower high — Monday’s drop below the Nov. 23 close, as well as the Feb. 8 low of 2581.00, confirmed the bearish pattern.
Technical analyst Mark Arbeter, president of Arbeter Investments LLC, said the S&P 500 has broken “key support” at the 2,600 level, while recent bullish underlying technical developments have been ignored. He said that’s the type of activity seen during major corrections or bear markets.
---- The Dow Theory also states that the Dow Jones Industrial Average DJIA, -2.11% and the Dow Jones Transportation Average DJT, -1.16% must confirm each other by sending signals they are following the same primary trend. The idea being the economy can’t be too strong if the transports aren’t taking what the industrials are making.
The Dow transports fell 1.2% on Monday to a 15-month low, following a lower high earlier this month, while the Dow industrials tumbled 507.53 points, or 2.1%, hitting its second lower low to go with two lower highs since its record close in early October.
More
More than half of S&P 500 stocks are now in a bear market
By Philip
van Doorn Published: Dec 17,
2018 7:15 p.m. ET
Even after the recent pain in the stock market, the S&P 500 Index is
down only 3% in 2018 (excluding dividends). That’s not so bad when you consider
the benchmark index rose 19% in 2017. Still, more than half of the stocks in the index are in bear-market territory, showing how broad the decline has been.
A correction is typically defined as a 10% drop for a stock or an index from a recent peak, while a bear market is a 20%-plus decrease. Data supplied by FactSet show that 264 (53%) of S&P 500 SPX, -2.08% companies are in bear markets.
Here’s where the broad indices were as of the close on Dec. 14, when compared with their 52-week intraday highs:
|
Index
|
Decline from
52-week intraday high
|
|
Dow Jones Industrial Average DJIA,
-2.11%
|
-10.6%
|
|
Nasdaq Composite Index COMP,
-2.27%
|
-15.0%
|
|
S&P 500 Index SPX,
-2.08%
|
-11.6%
|
|
S&P 400 Mid Cap Index MID,
-2.22%
|
-15.6%
|
|
S&P 600 Small Cap Index SML,
-2.34%
|
-20.2%
|
|
S&P Composite 1500 Index
|
-11.8%
|
|
Source: FactSet
|
|
More
Freedom
is the right to tell people what they do not want to hear.
George
Orwell.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over
banksters and politicians.
As goes France so goes the rest of Europe? Is violent anarchy the future
of Europe in 2019?
"On
the whole human beings want to be good, but not too good, and not quite all the
time.”
George
Orwell.
Chaos on French highways as 'yellow vests' torch toll booths
by Reuters Tuesday, 18 December 2018 14:56 GMT
PARIS, Dec 18 (Reuters) - French "yellow vest" protesters
caused transport chaos on Tuesday after occupying highway toll booths and
setting some of them on fire.
France's biggest toll road operator, Vinci Autoroutes , said
demonstrations were under way at some 40 sites in its network and that several
highway intersections had been heavily damaged, notably in the south of France.
The Bandol toll station, east of Marseille in the south of France,
suffered fire damage overnight into Tuesday and the A50 highway was closed,
said Vinci, whose network is mainly in the south and west of the country.
"Motorists should take utmost care as they approach toll gates and
motorway access ramps due to the presence of numerous pedestrians," Vinci
said in a statement.
Several people have died in roadside accidents at yellow vest roadblocks
in recent weeks, mostly at the many roundabouts blocked by groups of
demonstrators.
The 'yellow vests' protesters - named after the fluorescent jackets
French motorists must have in their cars - have blocked roads and roundabouts
across France since mid-November.
The demonstrations began as a protest against fuel tax increases, but
have since grown into a bigger backlash against the policies of French
President Emmanuel Macron.
Over the past four Saturdays, demonstrators have torched cars, looted
shops and clashed with police in Paris and other French cities, although
protests in the capital last weekend were smaller and more peaceful than
previous ones.
Protesters angry about high fuel costs and new speed limits have also covered,
damaged or torched hundreds of traffic radars across France.
Radars-auto.com, a site that tracks traffic radars, estimated that by
the middle of last week at least 1,600 radars, about half of all French traffic
radars, had been damaged. More than 250 have been entirely destroyed, it said.
The French state will also lose several tens of millions of euros in
revenues, it said, adding that in 2017 the radars had yielded on average 84
million euros ($96 million) per month.
Vinci estimates the damages to its installations will cost "several
tens of millions" of euros since the start of the protests, not including
lost revenue as the protesters have allowed thousands of motorists onto the
highways for free.
Vinci plans to send an invoice to motorists who drove past the toll
booths without paying and whose licence plates were captured on surveillance
cameras in the past four weeks.
Off the radar practically everywhere outside of the USA, Washington is
heading to another shutdown at midnight Friday. If it happens, another blow to
Christmas 2018 and the US economy. Hopefully, belatedly, everyone has come back
to common sense. This is no way to run a banana republic let alone the world’s
leading economy.
GOP talks Trump off the shutdown ledge
Senate Majority Leader Mitch McConnell declared that the
government would stay open and that the White House would be ‘flexible’ on its
border wall demands.
Mitch McConnell thinks he’s gotten President Donald Trump to back off
his shutdown threat. And it’s looking increasingly likely to come with a
short-term punt.
The Senate majority leader emerged from a lengthy party lunch after a
flurry of mixed signals from the White House to declare there will be no
partial shutdown on Friday evening, when a quarter of government funding
expires. The GOP majority may have to settle for a short-term delay, but
McConnell said the White House is now “flexible” on border wall funding, just
one week after Trump said he’d be “proud” to shut down the government in a
fight over border security.
“He can speak for himself. But I think a government shutdown is not a
good idea. That’s my view. The American people don’t like it,” McConnell told
reporters. Asked whether he believes a shutdown could now be avoided ahead of
the holidays, he responded: “Yeah, I do.”
McConnell’s efforts to soothe an inflamed debate between the president
and Democratic leaders capped a day of unsuccessful negotiations between
McConnell and Senate Minority Leader Chuck Schumer of New York and a softening
public position from the White House. Press secretary Sarah Huckabee Sanders
indicated the president could accept less than the $5 billion from Congress that
he had previously demanded, and Schumer did not rule out a short-term spending
bill that would punt the border fight to next year.
Trump,
of course, revels in the daily drama and, on Tuesday, refused to admit defeat
or pledge that he would win the standoff. After McConnell and Schumer spoke to
reporters, the president said he wants more border security and was coy on
whether he'll sign whatever Congress sends him. “We’ll see what happens,” he
told the news media.
More
“If
you're not gonna pull the trigger, don't point the gun.”
James
Baker. United States Secretary of the Treasury under President Ronald Reagan,
and U.S. Secretary of State and White House Chief of Staff under President
George H. W. Bush.
Technology Update.
With events happening fast in the
development of solar power and graphene, I’ve added this section. Updates as
they get reported. Is converting sunlight to usable cheap AC or DC energy
mankind’s future from the 21st century onwards?
A 13-year-old won $25,000 for a solar-panel invention that can locate the sun at any time
December 18 2018.
A 13-year-old scientist from California has won $25,000 for inventing a
solar-panel system that can determine where the sun is at any given time.
Georgia Hutchinson, from Woodside, California, took the top prize at the
Broadcom Masters nationwide STEM competition for middle-school students. She
placed first in a pool of 30 finalists, who received a total of $100,000 in
prize money.
The Society for Science & the Public and the Broadcom Foundation,
which supported the competition, also gave $1,000 to the STEM — science,
technology, engineering, and math — program at Hutchinson's middle school.
Hutchinson's invention, which she calls a data-driven dual-axis solar
tracker, relies on publicly available data from the National Oceanic and
Atmospheric Administration to track the sun and make solar panels more
efficient. Instead of using costly sensors, the invention uses a computer
program designed to figure out the sun's location and tilt solar panels for
optimal power production.
Hutchinson
said she hoped that by helping solar panels produce more energy, the invention
would provide an economic incentive for people to invest in solar power.
Focusing on renewable resources to reduce our carbon footprint is crucial if we
want to avoid extreme weather conditions, she said.
Near Hutchinson's
home in the San Francisco Bay Area, those kinds of weather conditions have led
to disaster. In early November, Northern
California was hit by the most devastating fire in the state's history;
it killed at least 86 civilians.
"The smoke
was so bad that thousands of schools all over the state had to be closed down
because of the smoke," Hutchinson told Business Insider. "We're
seeing right now the effects of climate change, and the data-driven dual-axis
solar tracker I built is designed to make solar energy more
economical."
Hutchinson said
she was working with a lawyer to get her invention patented, adding that she
would use the prize money for her education.
Results! Why, man, I have
gotten a lot of results. I know several thousand things that won't work.
Thomas A. Edison
Once again, another year draws to a close and it’s
time for my annual appeal. If you are one of the regular LIR readers of this
usually six days a week update, that helps support my efforts with the
occasional donation via the Paypal button, once again I sincerely thank you. A
special thanks this year to the very kind reader that so generously helped me
with my vet bills for the operation on my late border collie Rosie. After 12
years, Christmas won’t be the same without Rosie.
If you are a regular reader who finds the LIR
informative, interesting, occasionally amusing or entertaining, please consider
making a small donation via the Paypal button on the right of the LIR website.
For obvious reasons in our new age of mainstream media fake news, I want to
keep the LIR advertising free. But in any event thank you for reading and
sending along helpful articles and suggestions.
The monthly Coppock Indicators finished November.
DJIA: 25,538 +157 Down. NASDAQ:
7,331 +205 Down. SP500: 2,760 +129 Down.
All three slow indicators are
signalling more correction to come, although not necessarily ahead of the
year-end. However, if a tidal wave of stock fund redemptions hits in December,
2018 could end in a great rising wave of panic selling into a generally thin
markets trading year-end.
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