Monday, stocks fell 0.3% in Asia and 0.5% in Europe as well as the U.S. on low moderate volume. Tuesday, in Asia stocks fell 0.3%, but in Europe and the U.S. they rose 0.8% and 1.2% respectively on low moderate volume. This pushed the NYSE Index well above the 10,000 mark again.
The reason for the buying spree was bad news is good news. Two of the news negatives were in industrial production and manufacturing data releases. The VXO fell 6% to close at 22.64, and the 10-Year U.S Treasury Bond yield moved 5% higher to close at 2.28%. Silver Wheaton had a good day based on their announcement that they have received authorization for and have the intent to buy back their stock because its price is well below intrinsic value. That resulted in a 3% gain for the stock in reaction to the news.
Wednesday, Standard and Poors downgraded Japan’s bonds due to the apparent failure of Abenomics. Despite the downgrade, stocks in Asia moved strongly higher — gaining 1.6%. Stocks in Europe also gained 1.6% while in the U.S. they gained 1.3% on low moderate volume as “investors” anticipated the very likely can kick from a central bank. The VXO fell 5% to close at 21.53. Precious metals gained 2.5% and their miners gained more than twice that amount.
Thursday, stocks rose slightly in Asia and fell slightly in Europe. As expected, the FOMC did not raise interest rates.
After a little Kool-Aid euphoria, stocks in the U.S. settled back to a 0.3% loss for the day on moderate volume. The 10-Year U.S Treasury Bond yield moved 4% higher to close at 2.22%. Precious metals and their miners gained about 2.5% for the day.
Friday, stocks rose in Asia 0.9% while they fell in Europe 1.9% to bring stocks down to even for the year. In the U.S., stocks tumbled 1.8% on moderate volume as the euphoria of the previous day turned to fear, and the VXO rose 5% to close at 23.20. Oil slide 4% to close at 45.27, and the 10-Year U.S Treasury Bond yield moved 4% lower to close at 2.13%.
Perhaps some “investors” caught on that the FOMC has blown smoke for the last time and is at this point hopelessly behind the curve. Like a deer in the headlights, a paralyzed Fed — even a very dovish one — does not engender investor confidence as daily the pressure of a stock market downturn builds. Being paralyzed with ones’ foot stuck pedal-to-the-metal is not a comforting prospect.