Monday, Asia closed up 1.1%, Europe ended down 0.7%, and the U.S. declined 1% on moderate volume. This was enough to drag the S&P 500 below 1900, but not quite enough to pull the Dow below 16,000. The VXO rose 0.6% to close at 24.47 while crude oil slid 8% to close at 29.74. Here’s an interesting article regarding that looks at total world central bank money flows.
Tuesday, stocks in Asia fell 1.9% but rose in Europe 0.9%. In the U.S. everything rose presumably in celebration of what the FMOC will say on Wednesday to make it all better. Stocks rose 1.8% on moderate volume. In another “mission accomplished” day, The Dow Jones Industrial average broke above the 16,000 level while the S&P 500 Index eked out a gain just above 1900. Precious metals gained 2% and their miners rose twice that amount. Oil shot up 6% to close at 31.50.
As a mater of fact, nearly every investment category (bonds, stocks, oil, gold, etc.) was up on this euphoric day as “traders” hoped for renewed words of Kool-Aid from the FOMC. The only category of investment that I could find that closed substantially down was biotech. I believe “traders” will be badly disappointed.
Clearly, the FOMC has decided to use its influence to try to gradually let the air out of the massive, grotesque asset bubble that they blew. That gradual objective is the reason for the lunacy we’re seeing in the markets recently. Despite all of the central bank meddling and to aid you in keeping a proper perspective, here’s an interesting perspective on the best-performing “currency” in this millennium
Wednesday, Asia shot up 1.6%, Europe up 0.4%, U.S. off 0.6% on moderate volume. Interestingly, both this day and the day before the VXO changed relatively little. The decline was enough to pull the Dow, S&P, and NASDAQ below their benchmark 16,000, 1900, and 4500 levels respectively.
Part of the problem was a disappointing quarterly report from Apple which in these days of obscenely narrow breadth, nearly single-handedly determines the direction of major stock indices. Then, the FOMC dashed Tuesday’s hope for more Kool-Aid.
Thursday, stocks fell slightly in Asia but fell 1.7% in Europe. In the U.S., “investors” were cheered by the highly suspect quarterly report from turkey-stock Facebook. In the U.S., stocks gained 0.3% on moderate volume. This modest gain was enough to push the Dow and NASDAQ above the benchmarks 16,000 and 4500 respectively and kept the S&P well above that danger zone of 1863.
Friday, stocks ramped up in Asia 1.6% as the Bank of Japan surprised the markets by making a desperate foray into the abyss of negative interest rates. Of course, with interest rates below the inflation rate, we’re already experiencing negative effective rates, but nominal negative interest rates have further implications — like people pulling cash out of banks and holding it. This, of course, will further reduce velocity of money and add to the downward deflationary spiral. Another option is to buy precious metals. The hottest commodity has to be U.S. Treasuries in this present scenario. Perhaps that’s what the central bank cartel intended with China dumping them at a furious pace.
This was another day like Wednesday when virtually every class of investment (even biotech) was up. Stocks rallied 2.3% in Europe and 2.5% in the U.S. on strong volume. This completed the “mission accomplished” for the week by pumping the S&P 500 Index well above the 1900 level again. The VXO plummeted 10% to close at 21.10 and oil shot up 2% to close at 33.74 while the 10-Year U.S. Treasury Bond yield fell 3% to close at 1.93.
For the week, stocks gained 2.4% as big oil price gains also supported the rise. Despite this last-ditch pumping effort at the end of the month, January still turned out to be a very negative month for stocks with a 5% loss. This is especially shocking to the crowd that believes stocks always move up.