No Excuses

With the FOMC meeting approaching and major stock indices making daily all-time highs, the committee risks being blamed for further stoking the stock market at a time when they need to normalize interest rates. A quarter-point rise would likely have little effect other than create greater demand for the dollar as opposed to other major currencies paying negative rates on their bonds. Will they do it? Based on spineless past actions, I would guess that they will not.

Monday, in Asia stocks closed little changed. In Europe and the U.S. they closed up slightly on low volume. This was enough though to propel the Dow and S&P 500 indices to new closing highs. Tuesday, stocks fell in Asia 0.3%, in Europe 0.4%, and in the U.S. 0.3% on low volume. The 10-Year U.S. Treasury Bond yield fell 2% to close at 1.56. Despite the lackluster trading day, the Dow posted another record closing high.

Wednesday, stocks changed little in Asia, rose 1% in Europe, and rose 0.3% in the U.S. on low volume. This was enough for the Dow and S&P 500 indices to set new closing records again. Precious metals fell over 2% and their miners lost three times that amount.

Thursday, in Asia stocks gained 0.8%, changed little in Europe, and fell 0.3% in the U.S. on light volume. Despite the down day in stocks, the VXO fell 11% to close at the unsustainable level of 10.04 and further confirming the blow-off run we are seeing. Precious metals dropped 2% and their miners shed twice that amount. Friday, stocks fell 0.5% in Asia, closed nearly unchanged in Europe, and up 0.4% in the U.S. on light volume.

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