Saturday 22 December 2018

Weekend Update 23/12/2018 Bear – Grizzly Or Black?


Baltic Dry Index 1279 -39   Brent Crude 53.82

A very happy, healthy, safe and prosperous Christmas 2018 to all LIR readers. The next daily LIR will be on Wednesday December 26th.

“Goldilocks was dead, to begin with. There is no doubt whatever about that. The register of her burial was signed by the clergyman, the clerk, the undertaker, and the chief mourner. Jerome Powell signed it. And Powell's name was good upon 'Change for anything he chose to put his hand to. Old Goldilocks was as dead as a door-nail.”

With apologies to Charles Dickens.

An interesting Christmas lies ahead. Can President Trump turn America and the world into a banana republic? Probably not, at least not over Christmas and the New Year, but for most it’s definitely time to add a little more fully paid up physical gold and silver held outside of banks and brokerages.

Below, what kind of bear just showed up? My money, given all the unrepayable debt, is on Grizzly.

Trump has reportedly discussed firing Fed Chairman Powell

Published: Dec 22, 2018 12:12 a.m. ET
President Donald Trump has discussed firing Federal Reserve Chairman Jerome Powell, Bloomberg reported late Friday night, as his frustration with Powell intensified after this week's interest-rate increase and stock-market losses. The report said advisers close to Trump are not convinced he would move against Powell.

White House spokespeople and a Fed spokeswoman declined to comment for the Bloomberg story. The report notes it's unclear how much legal authority the president has to fire the central bank chief.

Nasdaq confirms bear market; economic worries sink Wall Street

December 21, 2018 / 1:56 PM
NEW YORK (Reuters) - Wall Street stocks fell sharply in volatile trading on Friday, with the Nasdaq confirming it is in a bear market, as concerns of slowing economic growth led investors to flee stocks in high-valuation sectors such as technology and communication services.

The major U.S. stocks indexes accelerated declines in the last hour of trading after White House trade adviser Peter Navarro said the United States and China might not reach a trade deal at the close of a 90-day negotiating window unless Beijing can agree to a profound overhaul of its economic policies.

With Friday’s losses, the Nasdaq has fallen nearly 22 percent from its Aug. 29 high. The tech-heavy index dropped to its lowest level since August 2017.

The benchmark S&P 500 index, already on pace for its biggest percentage decline in December since the Great Depression, hit its lowest level since July 2017. It is now down 17.5 percent from its closing high on Sept. 20. The Dow Industrials fell to its lowest level since October 2017 and has declined 16.3 percent from its Oct. 3 closing high.

The mid-cap S&P 400 also confirmed it is in a bear market.

Navarro’s comments added to already-mounting concerns over political uncertainty and the possibility of a slowdown in economic growth.
More

This brutal stock-market rout mirrors the 1987 crash in 1 important way

By Mark DeCambre Published: Dec 21, 2018 5:29 p.m. ET

Average daily moves for three stock gauges are the worst since 1987, according to Dow Jones Market Data

As the Dow Jones Industrial Average confronts its ugliest December loss since 1931, the time of the Great Depression, there is another notable way to put the severity of this persistent bout of losses into historical context.

If current conditions hold, it would mark the worst average daily moves for the Dow DJIA, -1.81% the S&P 500 index SPX, -2.06%  and the Russell 2000 index RUT, -2.56%  since October of 1987, according to Dow Jones Market Data.

In market lore, October of 1987 is a period that remains infamous. On Oct. 19, the Dow sank 22.6% in a single session, marking its steepest percentage drop ever, with trading during that period under pressure all month until the final crash.

There’s a similar downtrend that is taking hold in December, despite the seasonal tendency for that month to enjoy a pre-Christmas updraft, typically known as a Santa rally, with institutional investors finding the month a good time to buy looking ahead to the new year.

Here’s how the December moves have shaped up:
  • The S&P 500 has had an average daily move of negative 0.80%
  • The Dow has had average daily move of negative 0.78, as of 2:30 p.m. ET trade Friday
  • The Russell 2000 index has had an average daily move of negative 1.05%
For those equity benchmarks, that is the worst performance since that dreaded month more than 30 years ago, based on market levels at 2:30 p.m. Eastern Time.

The Nasdaq Composite Index COMP, -2.99% which was set to close in a bear market, widely defined as a drop of at least 20% from a recent peak, has seen an average move of 0.8%, on track for its worst daily moves in a month since September of 2001.

On Friday, stocks extended withering losses that have been driven by a litany of investor concerns, cropping up after Wall Street enjoyed one of its best years in recent memory in 2017. Those fears include the Federal Reserve’s pace of interest-rate increases, the health of the U.S. economy, a looming government shutdown, trade-war jitters and an international economic landscape that shows signs of stalling.
More
https://www.marketwatch.com/story/this-brutal-stock-market-rout-mirrors-the-1987-crash-in-1-important-way-2018-12-21?mod=MW_story_top_stories

U.S. government partially shuts down as Congress resists funding Trump’s border wall

By Robert Schroeder  Published: Dec 22, 2018 12:02 a.m. ET
The federal government partially shut down for the third time this year early Saturday as lawmakers in Washington continued to wrangle over funding for President Donald Trump’s proposed border wall.

With the impasse continuing, funding expired for the Commerce, Interior, Treasury and other departments. Some economic-data releases will be delayed if the shutdown continues into next week, and many federal workers will be furloughed. A shutdown won’t affect agencies including the Pentagon and Health and Human Services whose operations have already been funded.

After warning of a potentially lengthy shutdown, Trump spent Friday attempting to pin blame on Democrats, about a week after he said he would be “proud” to shut parts of the government in an effort to beef up border security via the construction of a physical wall.

Fears of a partial shutdown gripped Wall Street on Friday, helping to send U.S. stocks lower. The Dow Jones Industrial Average DJIA, -1.81% finished the day lower and logged its worst week since October 2008. The U.S. dollar DXY, +0.58% rallied versus its major rivals.
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World’s biggest hedge fund says stocks aren’t pricing in ‘near-recession’ U.S. growth next year

By Barbara Kollmeyer  Published: Dec 21, 2018 9:31 a.m. ET
Winter is coming, literally, as Friday marks the winter solstice and the shortest day of the year— though Wall Street has been feeling the chill since October.

Global equities continued to wobble and Europe’s main index, along with the Nasdaq Composite, was flirting with a close in bear-market territory. Add a shutdown threat and quadruple-witching Friday, and it’s hard to see where the breaks are going to come, as big money managers start to leave for vacation ahead of the holidays.

“Without their guiding hand, more emotional retail traders are in control of the market and they love overreacting to every bump in the road,” says CrackedMarket’s Jani Ziedins. Here’s hoping a few more old hands are on deck to guide us through an update coming later on U.S. growth — at the heart of some hand-wringing these days.

Read: The stock index that powered the bull rally is on the precipice of a bear market — and that would make history

That brings us to our call of the day , which pretty much screams “growth worries are us."

Here’s Greg Jensen, co-chief investment officer of Bridgewater Associates, the biggest hedge fund in the world: “The biggest theme developing is that you are going to have significantly weaker growth, near recession-level growth in 2019, based on our measures, and the markets are generally not pricing that in,” Jensen told Reuters in an interview.

Bridgewater expects U.S. GDP near a paltry 1% in 2019, with the rest of the world faring slightly worse. Consider that the most recent estimate of third-quarter growth was 3.5%, and that investors stampeded out of stocks this week partly because the Fed trimmed its own forecast to 2.3% from 2.5%.
More

U.S. third-quarter growth trimmed; business spending slowing

December 21, 2018 / 2:35 PM / Updated 12 hours ago
WASHINGTON (Reuters) - The U.S. economy slowed slightly more than previously estimated in the third quarter and momentum appears to have moderated further in the fourth quarter, with new orders and shipments of manufactured capital goods falling in November.
More

Oil and Stocks Are Locked Together in a Downward Spiral

By Alex Nussbaum and Brandon Kochkodin
Updated on 21 December 2018, 05:01 GMT
·        

Brent crude now strongly correlated with S&P, unlike in 2014
·         Restoring economic confidence is ‘only’ solution: analyst
https://www.bloomberg.com/news/articles/2018-12-20/sorry-opec-oil-and-stocks-are-locked-in-a-downward-spiral

It is hard to believe that a man is telling the truth when you know that you would lie if you were in his place.

H. L. Mencken

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 hit 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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