Tuesday, June 10, 2014

Tuesday, June 10, 2014

Good Morning America, How Are You?


I have a huge amount of repairs I must make to my underground sprinkler system.  I won't bore you how many, but it is several days work even if I can find the parts (which I cannot do locally for sure). 


Have a great day.  Enjoy your food, wine and your family. 



Summary: 

  • 1.   Scary thought: Each and every single day (including holidays and weekends) the USA spends $200 Million more than they take in. 
    • 2.   The consequence is that contrary to what politicians in Washington (including the Whitehouse) says, they are desperate to weaken the dollar.  But as I told you yesterday, the Eurozone is desperate to weaken the Euro, Japan is desperate to weaken the Yen, and the UK is desperate to weaken the Pound.
  • 3.   The dollar yesterday decided to go up.  There was no news I'm aware of that caused the up-tick in the dollar.  Gold also went down yesterday. 
  • 4.   Last month the major US exchanges reported the lowest level VOLUME for May since the financial crises.  Volume hit a peak in 2009.  What is the cause for the lack of either volume or price range?

a.    One guess is that traditional investment firms (Merrill Lynch, Morgan Stanley, Goldman, etc) have successfully moved their majority of the advisers to more hands-off investing approaches.  It is estimated those firms listed control 50% of all invested household wealth in the USA.  If this is the cause, it is a huge amount of volume that would normally be churning in the market. 
b.    The argument suggests these firms are now more fee-driven than transaction commission driven (meaning they take a % of the wealth to manage the account rather than deriving most income from commissions).  The change in organizational incentive is altering the behavior of market participants.  In other words, there is no longer an incentive for advisers to pick stocks or trade.
c.    Reformed Broker: "“In 2005, fee-based accounts directly managed by financial advisers and brokers totaled $198 billion. As of year-end 2013, that figure had soared to over $1.29 trillion – more than a sextupling in under a decade. It is safe to say that, while some of these fee-based accounts are managed actively (brokers picking stocks, selling options and whatnot), the vast majority are not.”
There are no major news releases today.  The market drove higher on low volume, and today, it looks like the market may open lower.  That same pattern was shown yesterday, with the S&P opening down, then climbing slowly.  Then at 8:45 taking off to the downside, only to recover about 11:15 PDT. 

My observations yesterday was for exactly what happened in yesterday's market action.  Chop. 

Look for more chop today.

The National Federation of Independent Business has reported small business owners optimism has risen to highest levels since May 2007. (Warning... remember what happened in 2007?)   reported that small business optimism rose to its highest level in May since September 2007.  Good news...  The bad news, they noted, that job openings, job creation plans, inventory, and capital spending plans -- the four components tied most closely to GDP and employment growth -- collectively declined by one point in May.  Well, maybe not too optimistic, eh? 


Small business is just not going along with Big Government controlled by Big Business.  

6:56 AM PDT - Market is choppy.  The NASDAQ opened down, went straight up well above yesterday's closing, and is chopping away in a narrow range for the first hour trading range.  JOLT news report is due at 7:00 AM, and maybe it will give a JOLT to the market, eh?


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