Market Talk — December 30, 2015
Asia finished a mixed session with gains in Shanghai (+0.25%) and Japan (+0.27%), countered with a small decline in the HSI (-0.53%). For Japan, today was the last trading day for 2015 and returned a yearly gain of just over 9%.
European core indices fell across the spectrum with losses for DAX (-1.08%), CAC (-0.52%), and finally FTSE (-0.64%). Commodities were blamed, yet again, for depressed equity markets, but that is assuming we need a reason for each price movement.
Yes, oil on both sides of the Atlantic lost over 3% today with WTI remaining above the price of Brent. Nat Gas was also weaker reversing much of this weeks gains (currently down 6%).
U.S. stocks fell in thin year-end trading at the close of the session with the DOW registering a decline of over 120 points at the close. New home sales fell 0.9% in November, but given the poor trading volume dealers were inclined to keep books flat for year-end.
The bond market had a quieter day despite the $29bn 7yr auction. Average yield was awarded at 2.16% with a bid/cover ratio of 2.34 versus the usual average at 2.46. A tighter range was seen across the curve with 5s at the pivot of weakness. The 2yr note fell 2bp (0.21%) 5s were unchanged at 1.80% with further weakness for 10s and bonds (30s) both declining by 1bp (closing 2.30% and 3.04% respectively). Bear flattening could well be the theme for 2016…
Gold saw some renewed selling into year-end, lost $9, and was last seen at $1059 (-0.80%). Silver also traded heavy (down 0.7%) at $13.83. A closing for gold tomorrow BELOW 1044 will warn this may get very ugly next year. Silver is much weaker and a simple closing beneath 14.75 will also warn that new lows are likely in 2016.
The U.S. Dollar Index (DXY) was also stronger but in light volume flow. It was last seen at 98.30 was up 0.15% on the day.
China Shuts Down FOREX at Foreign Banks to Try to Stop Dollar Rise
China has suspended FOREX business at three main foreign banks for the first quarter of 2016 in an effort to curb the outflow of capital into the rising dollar. This is an interesting attempt to curb the rise in the dollar and it is clearly showing the overall trend in motion.
It is interesting that China has taken this approach for we have elected ALL FOURof the Monthly Bullish Reversals from the January 1, 2014, low in the dollar, confirming the change in trend. We still recommend that China just float its currency, for the West will blame it for manipulation when, in fact, the global trend is toward a strong dollar into 2017.
Fundamentalists & their Formulas
QUESTION: Marty, I believe that the traditional way of looking at even value no longer applies. Take the claimed doctrine in finance named the dividend discount model. They assume that the price of a common stock is the present value of its future cash flows discounted by the rate of interest. What happens when interest rates are manipulated to negative? Does any theory or model make any sense any more?
ANSWER: No. The value of a stock isABSOLUTELY in no way determined by such a formula. That is up there with the random walk. It has no relationship to market trends whatsoever because markets trade on ANTICIPATION — not on fact.
The dot.com bubble is one example. They treated the auto stocks the same during the late 1920s. The South Sea bubble and the Mississippi bubble were the same, as was the Russian Bubble which burst in 1998 and resulted in the collapse of Long-Term Management. The book written on that one was entitled, “When Genius Failed”. These are made up by fundamentalists who waste their time looking for some magic formula that does not exist because it is far more dynamic than they can possibly imagine.
Head of Swiss Army Sees Rising Civil Unrest & Calls Upon the Country to Arm Itself
On Sunday, Swiss army chief André Blattmann warned directly to a Swiss newspaper that social unrest in Europe is rising. He warned that the increasing aggression in public discourse is becoming “dangerously aggressive” among Europeans. In general, tensions are rising and it presents a major political risk. He stated bluntly that “social unrest cannot be ruled out.” Blattmann also warned that the basis of Swiss prosperity, “has long been once again called into question.” He further called upon Switzerland to arm itself.
Happy New Year — Bail-In Passed for Europe’s Banks
The mainstream media is not extensively reporting on the “experimental” bail-in that the EU imposed on Cyrus. The bail-in, that they swore would never be applied to Europe, will officially begin in January. This new power will be in the interest of taxpayers as they will no longer be forced to pay for failed banks that were created by the childish structure of the euro that was created by lawyers who never understood the economy. But wait a minute — aren’t taxpayers the people with deposits in banks? Hm. Moving to electronic money is also about preventing bank runs. The bottom-line here is that they will just take your money to save bankers. Eliminating cash accomplishes two things: (1) they get to tax everything, and (2) you cannot withdraw money from banks.
The bail-in directive was agreed upon on January 1, 2015, and the bail-in system will take effect on January 1, 2016. So here we are, just in case you missed this one. Their website states:
Parliament and Council Presidency negotiators reached a political agreement Wednesday on the draft bank recovery and resolution directive, the first step towards setting up an EU system to deal with struggling banks. This directive will introduce the “bail-in” principle by January 2016, thereby ensuring that taxpayers will not be first in line to pay for bank failures.
The entire system of insuring banks after their collapse during the Great Depression was to restore confidence to end the hoarding and revitalize the economy. Now they have allowed bankers to do everything they did before, and they have reversed the insurance created to restore confidence in banking. They justify this by claiming taxpayers will not have to pay for the failed banks.
Over 9,000 banks failed during the Great Depression in the United States; an estimated 4,000 banks failed in 1933 alone. Roosevelt’s fifteen-minute radio address to the American people on Sunday evening, March 12, was his first Fireside Chat. He told the public that only sound banks would be licensed to reopen by the U.S. Treasury: “I can assure you that it is safer to keep your money in a reopened bank than under the mattress.”
When the institutions reopened for business on March 13, 1933, depositors stood in line to return their hoarded cash to neighborhood banks. Within two weeks, Americans had redeposited more than half of the currency that they had withdrawn from the banks due to the collapse in confidence.
Banks failed even after the bank holiday. The process was indeed a “bail-in”. People would get whatever the scraps were worth upon the collapse of the bank. Absolutely everything the governments did to restore confidence has been reversed in Europe. Yet, they try to “stimulate” the economy with QE? Just brain-dead.
The European Army Loyal to Brussels Only
The EU is using the Muslim invasion and Paris attack as a means to achieve its dream of federalizing Europe. They are now moving to create a European Army, answerable only to Brussels. This has been the agenda all along. They will get there. It’s just a question of the media manipulating the public into their open arms for power. They are already creating a special “Rapid Forces Division” with German and Dutch troops.
No comments:
Post a Comment