US Markets opened lower and then melted up to new 2016 highs. Traders and investors alike are looking at the tea leaves and see conflicting data. One indicator shows some more steam left in the SP500 and another shows we are at the top of a downward trend line. Crude prices have stalled in the high 41's, The US dollar remains weak and gold has slipped.
Here is the current market situation from CNN Money
North and South American markets are mixed. The S&P 500 is higher by 0.44%, while the IPC is leading the Bovespa lower. They are down 0.40% and 0.03% respectively.
NEW YORK (Reuters) - Oil prices steadied on Monday after a Kuwaiti workers' strike slashed the country's oil output by more than half, offsetting worries about a scuttled plan by major oil producers to freeze production.
(Reuters) - Minneapolis Federal Reserve Bank President Neel Kashkari on Monday doubled down on his call for reforms to the U.S. banking system, saying that failing to make changes could leave taxpayers on the hook for big bank bailouts in any future financial crisis.
SAN FRANCISCO (Reuters) - The dramatic drop in the price of oil since 2014 has delivered only a muted boost to the U.S. economy, but that could change if households start figuring cheap oil is here to stay.
NEW YORK (Reuters) - U.S. economic conditions are "mostly favorable" yet the Federal Reserve remains cautious in raising interest rates because threats loom, New York Fed President William Dudley said on Monday.
(Reuters) - Hasbro Inc , the No. 2 U.S. toymaker, reported better-than-expected quarterly profit and revenue, driven by strong demand for "Star Wars" action figures and the addition of Disney Princess dolls to its basket of toys.
Former Federal Reserve Chairman Alan Greenspan admitted in an interview with Sara Eisen that quantitative easing did what it was supposed to do, which was to inflate stock prices and drive multiple expansion.
He was confused as to why things such as corporate earnings, capital spending, and productivity have declined given how much QE was pumped into the system. The answer to the riddle of course, is that QE was never intended to help fix anything fundamentally, it was as Kyle Bass said recently, simply a mechanism to transfer wealth and make the rich richer.
"Monetary policy has done everything it can, unless you want to put additional QEs on and QEs on, they're not helping that much.
What ultimately determines whether or not you're getting an effect from the QEs are what has happened to the price/earnings ratio, and that obviously has done what you'd expect it to do.
You bring long-term rates down, and the price/earnings ratios in the equity markets go up, which is exactly what they planned to do and it's happened that way."
All of this is precisely what we've been saying all along, which is that QE has always been about one thing, and that is to take wealth from many (savers), and transfer it to a select few (asset owners).
The elephant's not even in the room, which is why the 2016 election campaign is such a soap opera. The elephant outside the room is named Discontinuity. That's perhaps an intimidating word, but it is exactly what the USA is in for. It means that a lot of familiar things come to an end, stop, don't work the way they are supposed to - beginning, manifestly, with the election process now underway in all its unprecedented bizarreness.
One reason it's difficult to comprehend discontinuity is because so many operations and institutions of daily life in America have insidiously become rackets, meaning that they are kept going only by dishonest means. If we didn't lie to ourselves about them, they couldn't continue.
For instance the automobile racket. Without a solid, solvent middle-class, you can't sell cars. Americans are used to paying for cars on installment loans. If the middle class is so crippled by prior debt and the disappearance of good-paying jobs that they can't qualify for car loans, well, the answer is to give them loans anyway, on terms that don't really pencil out — such as 7-year loans at 0 percent interest for used cars (that will be worth next to nothing long before the loan expires).
This will go on until it can't, which is what discontinuity is all about. The car companies and the banks (with help from government regulators and political cheerleaders) have created this work-around by treating "sub-prime" car loans the ...
Currently the US Dollar, traded on the stock market as (UUP), and (USDU); is the world's reserve currency. Although there is talk of the fall of the US Dollar as the world reserve currency, it's all talk and there's no signs that this will happen any time soon. Hungary recently issued sovereign bonds in Yuan - but so what? It's just a drop in the bucket. The practical fact is there is no real threat to the US Dollar's status as a reserve currency. However, there may be one. When Richard Nixon essentially created the modern Forex system by defaulting on the previous Breton Woods agreement, he cleverly supported the US Dollar with the one commodity the world needs most: Oil. By making an agreement with Saudi Arabia and then other Oil producing nations, it created natural support of the US Dollar. Nixon told them the following: Sell Oil in US Dollars, and we'll provide you with military technology, security, and other benefits. We'll do business, you'll invest in our markets, and recycle those dollars you get from our partners. It all works like a well oiled machine (pun intended) for 40+ years. There's only one thing that could disrupt it - Saudi Arabia chooses to end it. And they've threatened to do so, if the US releases classified documents about 911 which implicate Saudi Arabia.
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