NOTE: "GRA Running Commentary/Data" will go closed content (available to subscribers only) during June... Further details to follow.
___
TUESDAY, JUNE 13, 2006
0620 ET
Stocks: More and more, the equity market is assuming the feel of the summer of 2002. Considering the magnitude of the carnage of that period, I realize this is a pretty strong statement. We will know more about whether the possible similarities between then and now are valid as this week continues to unfold, and we get a better handle on the possible fate of this week's expiration on Friday. However, were today to turn out looking anything like yesterday did, the prognosis for the expiration would worsen materially!
Economic Data: Later this morning, the Labor Department reports on producer prices for May. The consensus looks for an overall increase of something around 0.4%, not great in its ownright, even worse, though, considering it would follow April's 0.9% increase. And for those people who insist on continuing to insult their own intelligence in public (mostly on CNBC and similar places) by talking up the moronic "core" nonsense, the expectation is for a May increase of 0.2%, versus April's 0.1% rise.
MONDAY, JUNE 12, 2006
0900 ET
Eco Data: The moment I saw last Thursday's trade data, I knew something was wrong -- very wrong. On the other hand, what was wrong actually was right, or was sensible, considering the "end-justifies-means" governance under which we more and more labor, thanks to the folks in Washington.
A brief excerpt from a Shadow Government Statistics' "Alert" published this morning by John Williams ("Trade Manipulation Uncovered"):
"The reporting of March's sharp trade improvement appears to have been a deliberate fabrication, aimed at salving the troubled financial markets of the time! Benchmark revisions released along with the monthly April trade data show that the sharp 'improvement' in the March trade deficit -- reported at a time of high U.S. dollar and political stress -- was rigged.
"While it is standard practice by the statistical agencies to adjust pre-benchmark revision reporting to coincide with the benchmarks, such adjustments are made to month-to-month or quarter-to-quarter changes, not to the absolute level. To my knowledge, pre-adjusting the level of a series such as the trade deficit is unprecedented.
"The Bureau of Economic Analysis (BEA) is more politicized than the Census Bureau. The BEA now 'participates' in the trade release with Census, which once handled the monthly number exclusively. Violating common reporting principles with the trade data, the BEA likely repeated the process in the GDP reporting."
More to follow...
SATURDAY, JUNE 10, 2006
0830 ET
Last Sunday evening, as the likely result of some spoiled shellfish, I became ill -- I mean violently ill! By Wednesday, however, I felt improved enough to make the classic mistake often committed in such situations -- I behaved as if I were 100% well. This indeed was a giant mistake, to which sizable additional bedtime on Thursday and yesterday will attest.
So there is lots to catch up on. With any luck, the weekend will prove helpful with this mission, and I heartily apologize for any inconvenience or problems this situation may have caused.
There are two items docketed for immediate attention: (1) Later today, I will post on the GRA website the latest installment -- #25 -- in Ned Schmidt's "Moneyization" series. As usual, I will also send out an e-mail notification that it has been posted.
(2) Also later today, or by first thing tomorrow, I want to get out something of a "potpourri" missive. As the name suggests, it will address some research areas I think need some relatively immediate attention. The recent trade data will be included, since colleague, John Williams, has turned up some serious hanky-panky regarding these numbers.
FRIDAY, JUNE 9, 2006
0700 ET
Apologies: On Wednesday morning, I foolishly tempted fate by declaring that I was "bouncing back" from my food poisoning incident of last Sunday. By Wedesday afternoon, it was serious relapse time, so I simply took it easy yesterday, and I currently plan the same for today.
Of course, there has been plenty going on that will require updating, which it will get. Take, for instance, the stock market's recent shellacking. I'm not much in arrears here, since the recent behavior has been much in line with my strong cautions, etc. dating back to March.
Was yesterday's sharp reversal it for a while? Respectively, the DJIA, S&P 500 and NASDAQ 100 closed yesterday 1.7%, 1.8% and 2.3% above their lows. Ironically, though, the ranges were so large that they beg full-fledged retests!
Eco Data: Later this morning, the Commerce Department will report on April trade data, with the consensus forecast looking for a deficit of around $65.0 billion. This would represent a material widening of March's $62.01 billion shortfall, which came in a good deal lower than expectation.
Also later this morning, the Labor Department will release Mayimport/export price data. With the dollar's growing exchange-rate weakness of recent months, these numbers take on increasing importance.
Yesterday, the Federal Reserve released its latest flow-of-funds data, current through March 31, 2006. As usual, there are many interesting items relating to foreign investment flows, but start with this one. As of 3/31/06, the United States' net financial-asset liabilities to the rest of the world totaled $6.319 trillion. This was up a tidy $447 billion or 7.6% from the end of 2005!
WEDNESDAY, JUNE 7, 2006
1625 ET
Midweek Market Wrap
Selected Stock-Market Returns
-- Week to Date
---------------------------------
06/07 WTD
---------------------------------
S&P 500 1,256 -2.5%
DJIA 10,931 -2.8%
NASDAQ 100 1,565 -3.0%
---------------------------------
US Treasury Yield Curve --
Week-to-Date Change Through
Wednesday, June 7, 2006
---------------------------------
90-D 2-Y 5-Y 10-Y 30-Y
Bill Note Note Note Bond
---------------------------------
Late Session 06/07
----------------------
4.85% 5.01% 4.97% 5.02% 5.09%
WTD Yield Change
--------------------
5p 10bp 7bp 3bp -1bp
---------------------------------
Dollar Index & Selected Commodities
-- Week-to-Date Change Through
Wednesday, June 7, 2006
----------------------------------------
Contract 06/07* WTD
----------------------------------------
US $ Index Spot 85.02 1.2%
----------------------------------------
Crude Oil July 70.82 -2.1%
Natural Gas do. 5.974 -9.8%
Unl. Gasoline do. 2.1240 -3.3%
Home Heating Oil do. 1.9950 -1.0%
Copper do. 3.5840 -0.1%
Gold Spot 625.90 -1.8%
Silver Spot 11.79 -2.9%
----------------------------------------
*Near close/settled price.
----------------------------------------
Summary of Stock-Market Sale
Recommendation Made on 3/20/06
--------------------------------------
06/07 03/20
Close Value* Change
--------------------------------------
DJIA 10,931 11,275 -3.1%
S&P 500 1,256 1,306 -3.8%
NASDAQ 100 1,565 1,687 -7.2%
--------------------------------------
Average -4.7%
--------------------------------------
*Level of respective measure
at time of recommendation.
--------------------------------------
0735 ET
Call Me a Baby: I am now bouncing back from the ugly "FP" ("food poisoning") affair and expect to whip out a good deal of work over the next few days. So far, the experience has been horrendous!
I did publish the detailed look at the Institute of Supply Management's recent manufacturing/service-sector yesterday. This is always important work, particularly considering that the weak May results probably played a role in the stock market's recent swoon.
Late tomorrow morning, the Federal Reserve is scheduled to release its latest flow-of-funds data, a cornerstone of some the analysis I do each quarter on foreign investment flows. I will attempt to give this installment a quick turnaround and have something out by Friday afternoon.
Meanwhile, earlier this morning, we published the June edition of John Williams' Shadow Government Statistics. A very short excerpt follows, and if you are not yet familiar with John's outstanding work, be sure to visit Shadow Government Statistics.
From John's June edition:
"In general, the broad economic outlook has not changed, but the financial markets are beginning to catch up with underlying reality.
"Faltering economic activity and mounting inflation have created a nightmarish conundrum for the political operatives both in the Bush Administration and at the Federal Reserve. Soft economic numbers and high inflation are being nonsensically spun as "conflicting data." An inflationary recession is in play, and there is little the Administration or the Fed can do about it.
"The pabulum fed to the investing public -- that a weak economy means low inflation and interest rates -- cannot work in the current environment. Any conflicts that arise are not in the economic data but in simplistic views on economic activity espoused by Wall Street, or in the statistical manipulation goals of the politicians. Those latter issues explain recent Administration and Fed activities -- ranging from Fed Chairman Bernanke's tap dancing on the inflation outlook to the appointment of a new Treasury Secretary -- all anchored in putting a positive spin on an impossible situation and avoiding a financial-market meltdown before November 7th.
"The markets are not cooperating. Dollar selling and gold buying have just begun, and so have the negative reactions in the credit and equity markets."
MONDAY, JUNE 5, 2006
0700 ET
Agenda: What is the old saying about the best laid plans?
I was having an exceptionally productive weekend, tending to a host of administrative matters that are precursors to what I think will be some nifty additions/improvements to my research work and the GRA website in the weeks ahead. This included constructing new databases as well as updating some old ones -- intricate, time-consuming work, but time invested in projects that over time should prove very value-adding.
Then, yesterday afternoon, diaster struck. A bad batch of crab, I suspect, led to a meaningful case of food poisoning and an absolutely horrendous night, replete with much moaning and groaning! And, regrettably, this also resulted in several hours of intended but unfinished work.
Nevertheless, I shall prevail in getting everything planned for this week completed this week, merely a little later or out of its intended sequence. This will include a brief look later today at ISM's service-sector report, with the usual, more-detailed follow-up.
Also during the week, I will fit in the next edition of "Market Thoughts," which will deal primarily with last Friday's recommendation to sell longer-dated bond holdings. The operative levels for this recommendation: 10-year T-Note = 5.00%, 30-year T-Bond = 5.10%.
Thanks in advance for your understanding and patience!
FRIDAY, JUNE 2, 2006
0510 ET
ISP Problems: Yesterday was a day from hell with regard to America Online. For most of the day, I did not have the ability either to send or to receive e-mail, and I'm not sure the e-mails I did send went anywhere. I am told there were problems with other ISPs as well. Maybe it was a terrorist attack on cyberpace? On the other hand, there are those who think that this is what using AOL is all about 24/7/365!
At any rate, I am going to spend today trying to clean up yesterday's mess. If you should receive e-mail from me today that is a duplication of material received yesterday, I apologize in advance. Now, at least you will know why!
I am going to wait until Monday to introduce "Thought of the Day" to this column, as well as to publish the material from "Dr. Dorn -- The Trading Doctor."
THURSDAY, JUNE 1, 2006
0545 ET
The Markets: Yesterday's headline event was the early afternoon release of the minutes of the FOMC's policy meeting of May 10th. In some key respects, this was at least a semi-scary document, taken as such by the bond market. Initially, the stock market did not like it either. But stocks had a mission yesterday that excluded worrying about those silly fundamentals. Instead, of primary importance yesterday was to hold the recent lows!
Which the stock market did. That it succeeded did not surprise me, but how it succeeded -- the day's trading configuration -- did surprise me. If I were a bull, which I am anything but, I would have been disappointed in yesterday's overall outcome, or again, how the outcome came. In my view, it was a successful retest of last week's lows that lacked conviction. Thus, the market is likely to experience yet another retest of the lows -- and soon. It better be of higher quality than yesterday's was, or a new set of lower lows is the highly probable result.
The Economy: Later this morning (1000 ET), the Institute for Supply Management will release the May results of its closely watched manufacturing index. The Street buzz is that the number will come in "better than expected," based on the results of yesterday's Chicago PMI. (The consensus expectation for today's ISM number is for a couple-point decline from April's 57.3 reading.) Nevertheless, the most important part of today's report, at least in my opinion, will involve the index's price component, particularly considering some of what showed up in the FOMC minutes yesterday. More later...
A New Feature will appear in tomorrow's "GRA Running Commentary..." To wit: look for the first posting of "Thought of the Day," accompanied by an explanation of what it is.
Also appearing tomorrow will be some enlightening thoughts on financial-market trading from "Janice Dorn -- The Trading Doctor."
WEDNESDAY, MAY 31,2006
1630 ET
Midweek Market Wrap
Selected Stock-Market Returns
-- Week to Date
---------------------------------
05/31 WTD
---------------------------------
S&P 500 1,270 -0.8%
DJIA 11,168 -1.0%
NASDAQ 100 1,580 -1.6%
---------------------------------
US Treasury Yield Curve --
Week-to-Date Change Through
Wednesday, May 31, 2006
---------------------------------
90-D 2-Y 5-Y 10-Y 30-Y
Bill Note Note Note Bond
---------------------------------
Late Session 05/31
----------------------
4.84% 5.04% 5.04% 5.12% 5.22%
WTD Yield Change
--------------------
2p 10bp 10bp 7bp 6bp
---------------------------------
Dollar Index & Selected Commodities
-- Week-to-Date Change Through
Wednesday, May 31, 2006
----------------------------------------
Contract 05/31* WTD
----------------------------------------
US $ Index Spot 84.67 -0.6%
----------------------------------------
Crude Oil July 71.29 -0.1%
Natural Gas do. 6.384 3.7%
Unl. Gasoline do. 2.2551 6.6%
Home Heating Oil do. 1.9953 0.2%
Copper do. 3.6240 -5.0%
Gold Spot 645.00 -1.3%
Silver Spot 12.61 -0.9%
----------------------------------------
*Near close/settled price.
----------------------------------------
Summary of Stock-Market Sale
Recommendation Made on 3/20/06
--------------------------------------
05/31 03/20
Close Value* Change
--------------------------------------
DJIA 11,168 11,275 -0.9%
S&P 500 1,270 1,306 -2.8%
NASDAQ 100 1,580 1,687 -6.3%
--------------------------------------
Average -3.3%
--------------------------------------
*Level of respective measure
at time of recommendation.
--------------------------------------
0410 ET
Stocks - In the Trenches: The table below, using the GRA tracking group as a proxy, is a clear indication of how close the stock market is to falling of the next cliff. Or, possibly how close the stock market is to a successful retest of last weeks lows.
As the data indicate, the DJIA and the Russell 2000 made very marginal new closing lows yesterday. Most of the other measures almost did.
As I write this, overnight futures in the US are basically flat. Meanwhile and on balance, the Asian markets had a rough night, with the Nikkei down almost 2.5%. European markets have opened on the weak side.
Thus, I am expecting more turbulence in US markets today, with one of two outcomes. (1) A very rugged trading session, but a close for the bellwether measures at or above yesterday's numbers, thereby giving the appearance of a successful retest of last week's lows. (2) A very rugged trading session, punctuated with intraday rallies, but where there is decided weakness going into and at the close, thereby giving the appearance that last week's lows are history.
If really pressed, my gut instinct is that number two is the one that prevails. Either way, though, the stock market is in trouble and is likely heading for a good deal more trouble as the year progresses. Therefore, what happens today is certainly of interest, but in my view, while it may alter timing a little, it will not alter what is now the market's primary, longer-term trend -- which is down!
---------------------------------------------------------
SELECTED STOCK-MARKET MEASURES
(GRA Seven-Measure "Tracking Group)
---------------------------------------------------------
05/30/06
05/30/06 2006 Low Versus
Close Close / Date Low
---------------------------------------------------------
NYSE Comp. 8110.99 8062.93 05/24 0.60%
Wilsh. 5000 12724.22 12689.60 05/23 0.27%
S&P 500 1259.84 1256.58 05/23 0.26%
NASDAQ 100 1571.29 1569.01 05/23 0.15%
Value Line (G) 422.89 422.67 05/24 0.05%
Russ. 2000 711.04 711.27 05/23 -0.03%
DJIA 11094.43 11098.35 05/23 -0.04%
---------------------------------------------------------
Average 0.18%
Median 0.15%
---------------------------------------------------------
TUESDAY, MAY 30, 2006
0335 ET
The Economy/Financial Markets: The table below lists the more important economic releases due out this week, including the consensus forecast for each series. At least a few of these reports have market-moving potential.
Thursday contains several releases, the more important of which from a market perspective are the Labor Department's final report on first-quarter productivity and the Institute for Supply Management's assessment of the economy's manufacturing activity during May. With regard to the latter, of special importance could be the behavior of prices. In its combined March and April releases, ISM reported a nine-point, 14.4% increase in this component of its overall manufacturing index, with more than half occurring in April.
On Friday comes the monthly employment report from the Labor Department. This release always titillates the markets, the change in payroll jobs in particular. But there has growing attention to the wage component in recent months, with signs here that some inflationary pressures could be building in this area.
Selected Economic Releases for the Week of 05/29/06
-------------------------------------------------------------
Covering
Release Mo./Wk. Consensus Est.
Date Ended Series /Last Report
-------------------------------------------------------------
05/30 May Consumer Confidence 100.0/109.2
05/31 May Chicago Purchasing Mgrs. 56.2/57.2
06/01 05/27 Initial Jobless Claims 320k/329k
06/01 May ISM Manufacturing Activity 55.7/57.3
06/01 1Q2006 Final Productivity 4.2/3.2
06/01 April Construction Spending 0.0/0.9
06/01 May Auto Sales 5.6m/5.6m
06/02 April Factory Orders -1.5/+4.2
06/02 May Employment - Uenmpl. Rate 4.7/4.7
- Payroll Jobs 170k/138k
- Avg. Hourly Earn. 0.3/0.5
-------------------------------------------------------------
SATURDAY, MAY 27, 2006
Memorial Day Remembrance: A few days ago, a friend forwarded to me the text of the letter appearing below. I believe it is making the rounds; you may already have seen it. Immediately upon reading it, it struck me as something absolutely perfect to help put Monday in a proper perspective.
The e-mail containing the letter also contained a zip file with two pictures, taken by award-winning photographer, Todd Heisler. Initially, I was going to offer to forward them to anyone requesting them. However, I was able to find a link containing not only these two pictures but several similar ones as well. The link ("Pulitzer Prize Winners") is found after the text of the following letter:
"Last week, while traveling to Chicago on business, I noticed a Marine sergeant traveling with a folded flag, but did not put two and two together. After we boarded our flight, I turned to the sergeant, who'd been invited to sit in First Class (across from me), and inquired if he was heading home.
"'No,' he responded.
"Heading out, I asked?
"'No. I'm escorting a soldier home.'
"Going to pick him up?
"'No. He is with me right now. He was killed in Iraq. I'm taking him home to his family.'
"The realization of what he had been asked to do hit me like a punch to the gut. It was an honor for him. He told me that, although he didn't know the soldier, he had delivered the news of his passing to the soldier's family and felt as if he knew them after many conversations in so few days. I turned back to him, extended my hand, and said, Thank you. Thank you for doing what you do so my family and I can do what we do.
"Upon landing in Chicago, the pilot stopped short of the gate and made the following announcement over the intercom.
"'Ladies and gentlemen, I would like to note that we have had the honor of having Sergeant Steeley of the United States Marine Corps join us on this flight. He is escorting a fallen comrade back home to his family. I ask that you please remain in your seats when we open the forward door to allow Sergeant Steeley to deplane and receive his fellow soldier. We will then turn off the seat belt sign.'
"Without a sound, all went as requested. I noticed the sergeant saluting the casket as it was brought off the plane, and his action made me realize that I am proud to be an American.
"So here's a public 'Thank You' to our military men and women for what you do so we can live the way we do.
"Stuart Margel, Washington, D.C."
SEMPER FI, AND GOD BLESS AMERICA!
2006 Pulitzer Prize Winners
FRIDAY, MAY 26, 2006
0550 ET
The Markets: Yesterday's GDP report helped materially in giving the stock market the lift I was anticipating and prediciting. Lest there be any confusion, though, about my position:
(1) I remain steadfastly dedicated to my strong stock-market sell recommendation of March 20th, and
(2) For those who continue to have too much exposure to equities to weather comfortably the significantly lower prices I foresee over coming months, rallies should be viwed and used as opportunities to raise cash!
So, lower stock prices, higher longer-dated interest rates, and a lower exchange-rate value for the US dollar all remain very operative in my financial-market outlook, and I will be using the long weekend to put together a more detailed update.
THURSDAY, MAY 25, 2006
0540 ET
The Economy: In a few hours, we will see if the Commerce Department comes up with the large upward GDP revision most are looking for. Of equal importance, though, is if realized, will the upward revision provide enough firepower for CNBC, et al to "stabilize" the stock market. Few people have been more bearish on stocks over the last two months than I have. Perhaps I have not been bearish enough?
Politics: No one I know was around for the fall of the Roman Empire. Nevertheless, those watching C-SPAN recently have been treated to a graphic real-time depiction of the process. I speak, of course, of the machinations of the imperial United States Senate, re: immigration. Now, an overwhelming majority of Americans better appreciate how the citizens of Rome felt in the waning days of their republic. Fortunately, there is still genuine hope the US House of Representatives will stop the Senate's madness.
And to add serious insult to the proverbial injury, who happens to be in the US as the imperial US Senate prepares to flaunt the will of the people it purports to represent? None other than -- Comandante Vincente Fox! Seriously, how many Americans (beyond members of the Bush family) really see the government of Mexico as anything more than a criminal enterprise ruled by an authentic regime?
WEDNESDAY, MAY 24, 2006
1635 ET
Midweek Market Wrap
Selected Stock-Market Returns
-- Week to Date
---------------------------------
05/24 WTD
---------------------------------
DJIA 11,117 -0.2%
S&P 500 1,259 -0.6%
NASDAQ 100 1,580 -1.3%
---------------------------------
US Treasury Yield Curve --
Week-to-Date Change Through
Wednesday, May 24, 2006
---------------------------------
90-D 2-Y 5-Y 10-Y 30-Y
Bill Note Note Note Bond
---------------------------------
Late Session 05/24
----------------------
4.82% 4.93% 4.94% 5.04% 5.14%
WTD Yield Change
--------------------
1p -3bp -2bp -2bp 0bp
---------------------------------
Dollar Index & Selected Commodities
-- Week-to-Date Change Through
Wednesday, May 24, 2006
----------------------------------------
Contract 05/24* WTD
----------------------------------------
US $ Index Spot 84.93 0.1%
----------------------------------------
Crude Oil July 69.86 1.9%
Natural Gas do. 6.170 3.5%
Unl. Gasoline do. 2.0075 -1.5%
Home Heating Oil do. 1.9619 2.2%
Copper do. 3.6390 4.9%
Gold Spot 642.55 -2.2%
Silver Spot 12.51 0.4%
----------------------------------------
*Near close/settled price.
----------------------------------------
Summary of Stock-Market Sale
Recommendation Made on 3/20/06
--------------------------------------
05/24 03/20
Close Value* Change
--------------------------------------
DJIA 11,117 11,275 -1.4%
S&P 500 1,259 1,306 -3.6%
NASDAQ 100 1,580 1,687 -6.3%
--------------------------------------
*Level of respective measure
at time of recommendation.
--------------------------------------
0935 ET
Stocks: Yesterday's stretch run was, ah, shall we say, "disappointing?" The market's negative close was bad enough; how it came to pass was worse.
After being up 0.7% during the day, the DJIA managed to close down 0.2%. Versus the Russell 2000's performance, the Dow did well. At its high yesterday, the Russell was ahead by 1.8%, only to finish the session down almost 0.6%. Thus, to accomplish this, the Russell sold off about 2.3% from its high yesterday.
Bulls simply hate configuration's like yesterday's. Still, at least the market attempted, and succeeded, at a rally for most of the session. A better time lies ahead. When it arrives, however, will it have sustainability? A reading of my latest "Market Thoughts" provides the answer, which is -- NO!
Here is one short-term possibility. Stocks rally again today, but they succeed in having a positive close. Then, tomorrow morning, the Commerce Department reports a big upward revision to first-quarter gross domestic product. The bulls go wild in promoting it; the stock rally continues. On a couple occasions recently, I've talked about tomorrow's GDP release as being the cause celebre the bullish camp would use to attempt to reignite the stock market. As the situation has evolved, the overall timeline for such an attempt is even better than I thought it might be.
If today turns into a good segue for tomorrow, as in today being an up day for stocks, then I suspect the ingredients could be in place for a decent rally, albeit a volatile, choppy one. How far for how long? Great questions for which I have less-than-great answers at the moment. However, I would view any decent markup in stock prices occurring over the relatively immediate future as a wonderful selling opportunity.
Be assured that I will soon put together some possible timing and other parameters. At this precise moment, though, not everything necessary to be able to attempt this has fallen into place.
TUESDAY, MAY 23, 2006
0655 ET
Politics: Is anyone watching what is going on in the US Senate, I mean really watching?
The 100 people who "serve" there certainly hope that voters are not watching too carefully, since what the Senate is up to on immigration remains at sharp, sharp variance with what qualifies as one of the larger, most consistent desires of the people as ever expressed in polling data. Moreover, the skew in the numbers, heavily against what the President has requested and the Senate is fashioning, shows up in the polls of several different organizations, but the overall results are highly consistent. Our elected officials, at least in the Senate, are out of touch and out of control!
Some of the critical "falsehoods" (euphemism for something less respectful) being perpetrated on Americans by the President and the Senate in their strident efforts to swing public opinion on this matter are beginning to crumble, thanks to the efforts of some to dig deeper into this 600+-page legislative atrocity. Take, for instance, some of the findings outlined in Bob Novak's Sun-Times column yesterday:
"* The bill supposedly would protect American workers by ensuring that new immigrants would not take away jobs. However, the bill's definition of 'United States worker' includes temporary foreign guest workers, so the protection is meaningless.
"* It extends the Davis-Bacon Act's requirement for the payment of 'prevailing wage' to all temporary guest workers. That puts them ahead of Americans, who have this protection only on federal job sites.
"* Foreign guest farm workers, admitted under the bill, cannot be 'terminated from employment by any employer ... except for just cause.' In contrast, American ag workers can be fired for any reason."
The entire column is available at "Hard to Love This Immigration Bill." I warn you, though, that you may wish to read this on an empty stomach, as well as be prepared to hop into the shower immediately thereafter!
MONDAY, MAY 22, 2006
0640 ET
The Stock Market: Tokyo turned lower overnight, and as I write this, the European markets are struggling, too. Here in the States,
S&P futures quotes are presently "weak," to say the least.
It is entirely possible -- even probable -- one of the potential perils of last week's expiration will emerge as a market force early this week. What I have in mind and something mentioned in last week's edition of "Market Thoughts" are large amounts of equity option puts that were exercised, and that will now be liquidated.
From last week's "Market Thoughts (#20)," dated 5/15:
"A very short-term consideration about what happens next could revolve around this week's options expiration... Last week's net declines were sharp enough that were the market to follow through to the downside early this week, there could be some serious 'tilt' in the wrong direction... As just one example of what last week potentially set up, the S&P 500 fell 33.90 points Wednesday through Friday, inclusive [5/10 through 5/12]. In turn, this was equal to 6.78 strike prices on SPX puts.
"The greater danger, though, of an expiration gone bad usually sits over in the world of equity options, where real stock changes hands. I have not done any finite analysis of what evil might be lurking there in the way of puts that have gone or could go into the money. However, my guess is that the potential exposure could be quite meaningful..."
Be assured that CNBC and other similar places in the regular bullish propaganda loop will be out in force this week to tell people that everything is just fine. Maybe we'll even see an appearance by the "Plunge Protection Team"? After all, the Bush Presidency has been in a lot of trouble against the backdrop of a decent stock market. It won't take much of a bad market climate to add to the President's growing problems.
I can virtually promise that Thursday's GDP revision will be a critical event in the sugar-and-spice syndrome. More on this later today or early tomorrow when I publish the next edition of "Market Thoughts."
SUNDAY, MAY 21, 2006
1800 ET
TCNJ Wins NCAA Division III Women's National Lacrosse Title: The Gettysburg College women's lacrosse team simply was overpowered today, as it dropped a 10-4 verdict to The College of New Jersey in the final game of the 2006 NCAA Div. III women's lacrosse championship. Thus, the Lady Lions of TCNJ successfully defended their 2005 championship, as well as won their 13th national title dating back to the 1980s.
By virtue of today's victory, the Lions also avenged their 9-8 loss to the Gettysburg Lady Bullets during the regular season. TCNJ of finished its championship season with an overall record of 15-2. Gettysburg brought the curtain down on a highly successfuly 21-1 campaign.
In today's contest, TCNJ dominated early play, holding a 5-1 lead at halftime. The Lions ran the advantage to 9-1 in the second half, before Gettysburg could muster a rally that proved too little, too late, in route to the 10-4 loss.
"No. 4 TCNJ Wins National Championship with 10-4 Win over No. 1 Gettysburg"
SATURDAY, MAY 20, 2006
0825 ET
The Markets: On the agenda is a new edition of "Market Thoughts," with probable publication on Monday. It will review the recent market carnage.
The Economy: Also on the agenda are updates on GDP, trade, and April inflation data. All are due to be published during the coming week.
Be sure that stock bulls are recharging their batteries, preparing their next assault on higher prices. Over the short run, they may succeed. One coming economic release in particular is likely to aid their cause.
Next Thursday, the Commerce Department will release revised GDP data for the first quarter. The initial estimate (released 4/28) indicated growth at a 4.8% annual rate, up sharply from last year's fourth-quarter rate of 1.7%. The consensus estimate is looking for next week's revision to come in at 5.8%. If so, much of the higher number will probably come from the major improvement shown in March trade data, a number I viewed as highly specious.
Following are some of next week's more important data releases:
Selected Economic Releases for the Week of 05/22/06
-------------------------------------------------------------
Covering
Release Mo./Wk. Consensus Est.
Date Ended Series /Last Report
-------------------------------------------------------------
05/24 April Durable Goods Orders -0.5%/+6.4%
05/24 April New Home Sales 1150k/1213k
05/25 1Q2006 Prel. Gross Domestic Prod. 5.8%/4.8%
Chain-Weight Defl. 3.3%/3.3%
05/25 05/20 Initial Jobless Claims 315k/367k
05/25 April Help-Wanted Index 38/38
05/25 April Existing Home Sales 6.79m/6.92m
05/26 April Personal Income 0.7%/0.5%
05/26 April Personal Spending 0.6%/0.6%
05/26 May Univ. of Michigan Sentiment 79.5/79.0
-------------------------------------------------------------
FRIDAY, MAY 19, 2006
More Bad News for Bush: And more bad news for Messrs. Limbaugh and Hannity, too, in their continuing efforts to save the Bush Presidency. This endevor took another step backward yesterday, with the release of the latest Rasmussen Reports polling data. I make heavy use of Rasmussen numbers, since according to conservative talk radio's dynamic duo, Rasmussen gives Bush the fairest shake.
(DISCLOSURE NOTE: I personally am a devout political conservative of many decades standing. This said, I strongly suspect that both Rush and Sean would quickly dismiss me as one of those "evil seminar callers," their knee-jerk mechanism for offing people who disagree with them. Based on my unscientific observations, this is more and more of their respective audiences!)
At any rate, according to Rasmussen:
"Thursday May 18, 2006 --Thirty-six percent (36%) of Americans Approve of the way that George W. Bush is performing his role as President. Just 15% Strongly Approve. Those are the lowest levels ever measured by Rasmussen Reports. Just 65% of Republicans approve of the President's Job Performance, also a new low."
The other evening, going into the Bush "immigration speech," I opined that it might become the event people would look back on as more or less delineating the end of the Bush Presidency. It's far too early to conclude that this is/was the case, but based on the balance of Rasmussen's latest critique, Jack Bauer did a helluva lot better on Monday night than George Bush did! Have a look for yourself at Rasmussen Reports.
THURSDAY, MAY 18, 2006
1000 ET
Following is an excerpt of John Williams' far, far more extensive May edition of Shadow Government Statistics, published yesterday morning. If you think you might be interested in subscribing and would like additional information, feel free to contact me at gsrdr@aol.com.
Soon, John and I will be teaming up on a proejct we think people will find of immesne insterest. In addition, if Rush Limbaugh and Sean Hannity read it, they will finally understand why Americans are not nearly as giddy about the Bush economy as Rush and Sean believe should be the case!
More on John's and my project soon. In the meantime, from the May edition of JW'SGS:
"The 2005 to 2007 inflationary recession has moved well beyond stagflation. Circumstances deteriorated markedly in the last month, and market perceptions of same have begun to surface, as exhibited by strong gold and a weak dollar. Moreover, the trouble is not confined to a weak economy and higher inflation. It also includes a foundering administration and increasing odds of a shift of power coming out of November's election.
"Signs that the economy is not doing too well abound. Housing starts appear ready to signal recession, and the housing sector has been one of very few bright spots in economic activity over the last six years or so. Aside from politically-gimmicked GDP reporting, most numbers, net of inflation, have been soft to down over the last month, including retail sales, purchasing managers new orders, help wanted advertising, narrow money growth, real earnings, consumer sentiment and even the employment report. Exceptions have included strong industrial production, volatile new orders for durable goods and an improved but still staggering trade deficit.
"Although purposely suppressed in the 'official' data (PPI and CPI), there is an inflation problem. It is driven by oil, and increasingly, it also is being driven by dollar woes. These are factors separate from strong economic activity that commonly is viewed as the source of inflation.
"In like manner, Fed tightening -- designed in theory to slow the economy in order to slow inflation -- will do little to cool the current problem, shy of Volckerish rate hikes aimed at triggering such a severe downturn that prices are pulled down along with business activity into a depression. Quite to the contrary, current Fed activity has been the reverse of the jawboned inflation fighting, aimed at stimulating liquidity, not killing it. While short-term interest rates have been increased, broad money growth also has been soaring, at least prior to its reporting cut-off. Excessive money growth tends to be an inflation stimulant, not a retardant.
"In general, the broad economic outlook has not changed. The 2005 to 2007 inflationary recession continues to deepen. Recession, inflation and risks of heavy dollar selling are upon us, gaining greater market credence, and they continue to offer a nightmarish environment for somewhat less Pollyannaish financial markets than were in place last month.
"The Shadow Government Statistics' Early Warning System (EWS) was activated in May 2005 and signaled the onset of a formal recession in July 2005. The EWS looks at historical growth patterns of key leading economic indicators in advance of major economic booms and busts and sets growth trigger points that generate warnings of major upturns or downturns when predetermined growth limits are breached. Since the beginning of 2005 a number of key indicators have been nearing or at their fail-safe points, with four indicators moving beyond those levels, signaling a recession. Once beyond their fail-safe points, these indicators have never sent out false alarms, either for an economic boom or bust. Housing starts appears ready to generate such a signal in the next month or so.
"With a resumed economic boom massaged into first-quarter GDP reporting, negative GDP growth is not likely to surface in regular government reporting until after the November 2006 election, given the rampant political manipulation of most key numbers. The National Bureau of Economic Research (NBER) should time the downturn to mid-2005 and announce same also sometime after the election, so as not to be deemed politically motivated in its timing.
"Whether or not there is a recession will be a hot topic in the popular financial media, with politics helping to fuel the debate as the election nears. Those Wall Street economists who act as shills for the market will keep up their 'strong growth is just around the corner' hype regardless of any and all evidence to the contrary."
WEDNESDAY, MAY 17, 2006
1625 ET
Midweek Market Wrap
Selected Stock-Market Returns
-- Week to Date
---------------------------------
05/17 WTD
---------------------------------
DJIA 11,206 -1.5%
S&P 500 1,270 -1.6%
NASDAQ 100 1,599 -2.3%
---------------------------------
US Treasury Yield Curve --
Week-to-Date Change Through
Wednesday, May 17, 2006
---------------------------------
90-D 2-Y 5-Y 10-Y 30-Y
Bill Note Note Note Bond
---------------------------------
Late Session 05/17
----------------------
4.83% 4.96% 5.03% 5.16% 5.28%
WTD Yield Change
--------------------
1p -4bp 0bp -3bp -2bp
---------------------------------
Dollar Index & Selected Commodities
-- Week-to-Date Change Through
Wednesday, May 17, 2006
----------------------------------------
Contract 05/17* WTD
----------------------------------------
US $ Index Spot 84.85 1.2%
----------------------------------------
Crude Oil Jun. 68.69 -4.7%
Natural Gas do. 6.129 -2.4%
Unl. Gasoline do. 1.9751 -9.3%
Home Heating Oil do. 1.9212 -6.1%
Copper do. 3.7505 -4.5%
Gold Spot 685.30 -4.1%
Silver Spot 13.02 -9.3%
----------------------------------------
*Near close/settled price.
----------------------------------------
Summary of Stock-Market Sale
Recommendation Made on 3/20/06
--------------------------------------
05/17 03/20
Close Value* Change
--------------------------------------
DJIA 11,206 11,275 -0.6%
S&P 500 1,270 1,306 -2.8%
NASDAQ 100 1,599 1,687 -5.2%
--------------------------------------
*Level of respective measure
at time of recommendation.
--------------------------------------
0610 ET
The Economy: Later this morning, the Labor Department will more than likely again irritate sensibilities, when it releases consumer price data for April. If the folks running Fantasyland on the Potomac wonder why the American people now score DC's integrity at levels below those of used car salesmen, they merely need peruse the increasingly bogus economic data being foisted on the nation by federal bureaucrats.
All is not bleak in this regard, however. Later today, John Williams will publish the May edition of his Shadow Government Statistics. As usual, it will contain a different take on many of Washington's economic data. I will post an excerpt here later on.
The Markets: Apparently, you simply cannot keep a sick dollar up. As I write this, the Dollar Index has receded again t having an 83 handle. Physical gold loves it, however!
On the other hand, apparently you simply cannot keep a manipulated stock market down. At least you can't during an expiration week, as the LaSalle Street and Wall Street axis powers, with their usual help from CNBC and such places, again work so diligently playing their monthly game. And Wednesday's are generally an important day regarding the game.
Pre-opening stock futures have been quite strong. Let's see, however, where matters stand at 4:00 PM. I have a hunch that dip-buying is about to give way to something less pleasant for the bulls.
TUESDAY, MAY 16, 2006
0710 ET
The Economy: At 0830 ET this morning, the Labor Department reports on the performance of producer priced during April. Wall Street is looking for a sharp jump in the overall PPI, due to the behavior of energy prices. I often wonder, though, if these expectations are not purposely inflated, so after the DC bureaucrats report a lesser number, the folks over at Tout TV and at the other regular propaganda outlets can immediately begin their moronic "better-than-expected" chant.
Safe Borders in Our Time: I personally was underwhelmed by what I heard from the Oval Office last night. The portion of the President's speech of greatest interest to me was its de facto confession for years of neglect in even attempting to secure the borders in the nation's war on terrorism. While watching Mr. Bush last evening, I found it impossible to expunge the memory of the President's embarrassing behavior in Mexico a fews weeks ago, while in the presence of Comandante Fox.
MONDAY, MAY 15, 2006
1925 ET
Bush Immigration Speech: In less than one hour, the President of the United States will take to the airwaves to give it his best at attempting, I fear, to fool as many people as possible on the immigration bill now before the US Senate. This proposed piece of legislation could become one of the great congressional disasters of all time, and believe me, I fully realize the scope and magnitude of some of the past disasters my statement covers!
Although I certainly would not argue against the view, it was Mark Twain, not I, who once characterized Congress as the distinct "native American criminal class." And this was more than 100 years ago. Just imagine how he would feel after watching today's public servants in action.
The Senate immigration bill (the "Comprehensive Immigration Reform Act," S.2611) surely has the endorsement of the entire New World Order crowd, which likely explains the Bush family's support. I wish I could get every citizen of the United States to read the article linked below. Alas, I cannot, but I hope at least to get everyone who looks at this column to read it. The Heritage Foundation does excellent work, which is something you should bear in mind as you read the piece. I warn you, though, the article's findings are are absolutely horrifying! "Immigration, Citizenship and Border Security - Senate Immigration Bill Would Allow 100 Million Legal Immigrants over the Next Twenty Years."
0610 ET
The Markets: In progress is a new edition of "Market Thoughts," which will examine whether last week was merely an aberration, or whether it was the real deal. It will contain extensive statistical backup and should be out sometime this afternoon.
Meanwhile, the nation awaits a major TV address by its President tonight. There is a chance, albeit a very small one, this event could mark something approximating the official end to the Bush Presidency.
FRIDAY, MAY 12, 2006
0635 ET
Ambiguity: "Ambiguity" must have been Wall Street's talking-point word of the day yesterday. I heard it several times, used to explain why the markets got bombed. It was because of the ambiguity in the statement the FOMC issued after its policy meeting on Wednesday, or so said the spin surgeons.
I've argued for a long time now that the markets were likely to get into much deeper doo-doo once the Federal Reserve became more ambiguous about its future actions. The dollar, for instance, would be a prime candidate for not liking such an environment. The greenback's behaivor of late certainly seems to bear this out. Moreover, such an environment would likely strike incremental fear in the hearts of investors in long-dated, fixed-rate debt obligations, as they became increasingly worried the Fed would fall behind the curve. A look at what has happened recently at the longer end of the Treasury curve would seem to bear this out, too.
The "pause" scenario has been something the stock bulls have wanted very badly. However, their selfish interests perhaps failed to account adequately for the fact that it's a big world out there, and that serving their greedy desires just might be bad enough for the dollar and open-market interest rates that it would result in serious problems for the stock market as well!
On Wednesday, I said I would let that day's post-FOMC dust settle, then inventory the markets' reaction to Ben Bernanke, Act II. Here it is:
Change
05/11 From
Close 05/10
----------------------------------
90-Day T-Bill 4.81% -6bp
5-Yr. T-Note 5.03% 1bp
10-Yr. T-Note 5.15% 3bp
30-Yr. T-Bond 5.23% 4bp
----------------------------------
DJIA 11,501 -1.2%
S&P 500 1,306 -1.3%
NASDAQ 100 1,657 -2.2%
----------------------------------
US $ Index (Spot) 84.35 -0.2%
----------------------------------
CRB Index 398.56 1.4%
Crude Oil (June) $73.32 1.6%
Unl. Gas (June) $2.2196 2.3%
Copper (June) $3.9830 6.4%
Gold (Spot) $712.90 0.9%
Silver (Spot) $14.76 2.3%
----------------------------------
THURSDAY, MAY 11, 2006
0600 ET
The Markets: It's Fed Plus One and all is well. As the bulls spin the daylights out of yesterday's Fed meeting, the dollar is firmer, and stock futures are positive. Life is good!
Or is it? The entire Treasury curve is weak (higher yields) this morning, and the new three-year note sold on Tuesday is slightly under water from its auction price. Later today, the Treasury concludes its May refunding by auctioning $13 billion in 10-year notes.
Gold currently is up another buck or two. Its positive daily behavior is becoming as predictable as that of the stock market. (As someone who has been highly constructive on bullion from much lower prices, and who remains very constructive for the longer run, I'd love to see the yellow metal take a rest.)
Over the immediate future, it is the dollar that remains on top of the most-important-things-to-watch list. At the moment it is enjoying a little respite from its recent thrashing, but I expect this to be an ephemeral development. In fact, in the months ahead, it is quite easy to envision that Bernanke & Company will be raising rates some more just to support the dollar.
WEDNESDAY, MAY 10, 2006
1620 ET
Midweek Market Wrap
Selected Stock-Market Returns
-- Week to Date
---------------------------------
05/10 WTD
---------------------------------
DJIA 11,643 0.6%
S&P 500 1,323 -0.2%
NASDAQ 100 1,695 -1.1%
---------------------------------
US Treasury Yield Curve --
Week-to-Date Change Through
Wednesday, May 10, 2006
---------------------------------
90-D 2-Y 5-Y 10-Y 30-Y
Bill Note Note Note Bond
---------------------------------
Late Session 05/10
----------------------
4.87% 4.98% 5.02% 5.12% 5.19%
WTD Yield Change
--------------------
6p 5bp 4bp 2bp 0bp
---------------------------------
Dollar Index & Selected Commodities
-- Week-to-Date Change Through
Wednesday, May 10, 2006
----------------------------------------
Contract 05/10* WTD
----------------------------------------
US $ Index Spot 84.53 -0.7%
----------------------------------------
Crude Oil Jun. 72.13 2.8%
Natural Gas do. 6.900 1.8%
Unl. Gasoline do. 2.1694 6.3%
Home Heating Oil do. 2.0647 5.6%
Copper do. 3.7430 5.6%
Gold Spot 706.85 3.4%
Silver Spot 14.43 3.1%
----------------------------------------
*Near close/settled price.
----------------------------------------
Summary of Stock-Market Sale
Recommendation Made on 3/20/06
--------------------------------------
05/10 03/20
Close Value* Change
--------------------------------------
DJIA 11,643 11,275 3.3%
S&P 500 1,323 1,306 1.3%
NASDAQ 100 1,695 1,687 0.5%
--------------------------------------
*Level of respective measure
at time of recommendation.
--------------------------------------
0555 ET
The Fed: The Federal Open Market Committee conducts a policy meeting today at which it is a virtual certainty it will raise the Federal Funds Rate by another 25 basis points, to 5.00%. If so, it will mark the 16th such increase dating back to June 2004, when the funds rate stood at 1%.
The "big deal" today comes at 2:15 PM (ET), when the FOMC releases its post-meeting statement. What will be said about possible additional rate hikes going forward? This will be the most important (and trickiest) communique the Fed has issued since it began raising rates almost two years ago. The bullish camp is convinced it will get what it wants, as in language strongly suggesting a "puase" from here forward. However, a Fed goof in portraying intentions will exacerbate the dollar's travail, and the greenback already is in serious trouble. This is a development Wall Street greedmeisters pretty much have ignored. However, additional dollar weakness from current levels will render this ignorance-is-bliss approach impossible.
How about this? A rate hike of 50 basis points and some pause language in the after-meeting statement? Highly doubttful -- it is too much like serious monetary policy!
The Markets: Interest Rates: Based on the relatively strong 2.31 bid-to-cover ratio achieved in yesterday's three-year T-Note auction, the general presumption is that the sale went well. As stated yesterday, I'm not convinced that given the fullness of a little time, the auction went as well as the consensus is opining. I think that in the current environment, the 4.875% coupon is too thin -- it should have been 5.00%.
The Dollar: One word does it in describing the dollar's behavior, to wit: "awful!" It is acting badly for all the right reasons, too. Moreover, incorporated in the lousy performance is the assumption the Fed will raise rates another quarter point today -- precisely why the FOMC should strongly consider a 50 basis-point outcome.
MAJOR REMINDER: The stock-market crash in 1987 had its genesis months earlier with dollar weakness that accelerated as the summer progressed, forcing up interest rates, ultimately blowing up the stock market!
Gold: The dollar's loss is gold's gain, although bullion continues to have a good deal more going for it than just a stinko greenback.
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