Nasdaq finishes above 5,000

http://money.cnn.com/2000/03/09/markets/markets_newyork/


NEW YORK (CNNfn) - The Nasdaq composite index closed above 5,000 for the first time Thursday as investors poured money into chipmakers, wireless providers and Internet firms.
    In the tug-of-war contest going on between old-economy stocks and new-economy stocks -- it was the new-economy issues that carried the day Thursday, allowing investors to forget all about the Dow's 374-point drop on Tuesday.
    Thanks to a boost from two key technology components, the blue-chip index rallied to close above the key 10,000 mark. But the gauge -- born in the 19th century and home to many industrial firms, financial companies and drug makers -- is still down 13 percent this year.
    In the same period, the Nasdaq is up a stunning 24 percent, reflecting a growing belief on Wall Street that technology stocks will continue to rise even if the Federal Reserve hikes interest rates.
    "It's amazing to see intellectual capital turn into profits so quickly." Phil Dow, stock market strategist at Dain Rauscher Wessels, told CNN's Street Sweep.
    Quickly, indeed. The Nasdaq, which doubled in little more than a year, first crossed the 4,000 mark just over two months ago.
    On Thursday, the Nasdaq rose 149.60 points, or 3 percent, to 5,046.83 -- the fifth biggest point gain in its 29-year history.
    The Dow, meanwhile, jumped 154.20 points, or 1.6 percent, to 10,010.73, recovering from a 117-point slide earlier in the session. But the gains are misleading. Hewlett-Packard and Microsoft -both so-called� "new economy" stocks --combined for 77 Dow points.
    The S&P 500, meanwhile, rose 34.99 points, or 2.6 percent, to 1,401.69.
    The Russell 2000 index of smaller companies, one of the year's best performing market gauges, rose to its 14th record of the year, gaining 11.37 points, or 2 percent, to 606.05.
    More stocks rose than fell. Advancing issues on the New York Stock Exchange led decliners 1,691 to 1,273. Trading volume topped 1.2 billion shares. Nasdaq winners beat losers 2,476 to 1,826. More than 1.9 billion shares changed hands.
    In other markets, Treasury securities rose. The dollar fell against the yen and was little changed vs. the euro.
   
The road to a milestone
    While the Nasdaq's surge is about the growth prospects of its members, it owes some of its performance to momentum.
    "When you break through 5,000 everyone wants to be in the game and everyone want to be in the growing technology space," Brian Finnerty," head of Nasdaq stock trading at C.E. Unterberg Towbin
    Art Hogan, senior chief market strategist at Jefferies & Co. agreed.
    "Fifty-two percent of the households in America are invested in the U.S. stock market and they want to invest in the things that had 70 percent growth last year," Hogan said. "As long as the money keeps flowing into equity mutual funds and they are targeted toward Nasdaq stocks, we are going to see this go on for a while."
    The usual suspects led the gains. Dell �(DELL: Research, Estimates) rose 3-1/5 to 50-7/16, Microsoft �(MSFT: Research, Estimates) jumped 4-7/16 to 100, Cisco Systems �(CSCO: Research, Estimates) climbed 6-15/16 and Intel (INTC: Research, Estimates) gained 3-7/16 to 118-3/8.
    A $1,000 investment in Cisco five years ago would be worth $31,000 today.
     The battered Dow
    With investors chasing high-growth companies they believe will grow despite higher interest rates, money has fled blue chips whose profits are seen as more sensitive to tighter credit.
    The trend let up slightly Thursday. Still, one third of the Dow's stocks fell, with International Paper �(IP: Research, Estimates) losing 1-9/32 to 34-3/4, Eastman Kodak �(EK: Research, Estimates) shedding 1-1/2 to 54-15/16, and 3M (MMM: Research, Estimates).
    Harvey Hirschhorn, executive vice president at Stein Roe Farnham, told CNNfn's market coverage that he sees this Nasdaq/Dow divergence continuing. (531K WAV) (531K AIFF).
    "People ask and say why should I pay 30 times (earnings) for something that may grow at only 10 or 15 percent," Jim Glickenhaus, portfolio manager at Glickenhaus & Co., told CNNfn's talking stocks. "The question is: Is it as exciting as something like Texas Instruments that I believe is going to grow at 25 percent or 30 percent for the next 10 years?"
    The Dow fell 374 points Tuesday after Procter & Gamble, one of the nation's most dependable blue-chip performers, rattled Wall Street with an earnings warning.
    Cautiousness continued Thursday, with Procter & Gamble  (PG: Research, Estimates) falling 1/16 to 57-15/16.
    "The P&G story is a lot more significant than just its relationship to P&G," said Barry Hyman, chief market strategist at Ehrenkrantz King & Nussbaum.
     The Fed ahead
    In economic indicators, the number of Americans filing for first-time jobless claims rose to 280,000 for the week ended Mar. 4 from 275,000 the week before, the Department of Labor said. The figure, though higher, is consistent with the tight labor markets that have existed the past few years.
    Separately, wholesale inventories rose 0.7 percent in January, the government said. That's higher than the 0.4 percent gain expected by analysts surveyed by Briefing.com.
    The latest batch of strong data may give Federal Reserve inflation fighters one more reason to raise interest rates later this month. The central bank tightened credit four times since June, bringing its main lending rate to 5.75 percent.
    Stock investors fret that higher rates will hurt corporate profits by raising borrowing costs.
    Fed Chairman Alan Greenspan has warned that rising stock prices are fueling a surge in consumer spending that must be quelled with higher interest rates. But these threats create a problem for the world's most powerful banker. Higher rates have hurt most of the stock market but have not stopped money from pouring into technology stocks.
    Consider this: If the Nasdaq doubles again in the next 12 months and the Dow continues to stagnate, the Nasdaq will overtake the blue-chip index in value.  

"Nothing Else Matters": Central Banks Have Bought A Record $1.5 Trillion In Assets In 2017

One month ago, when observing the record low vol coupled with record high stock prices, we reported a stunning statistic: central banks have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, "the largest CB buying on record" according to Bank of America. Today BofA's Michael Hartnett provides an update on this number: he writes that central bank balance sheets have now grown to a record $15.1 trillion, up from $14.6 trillion in late April, and says that "central banks have bought a record $1.5 trillion in assets YTD."

The latest data means that contrary to previous calculations, central banks are now injecting a record $300 billion in liquidity per month, above the $200 billion which Deutsche Bank recently warned is a "red-line" indicator for risk assets.

This, as we said last month, is why "nothing else matters" in a market addicted to what is now record central bank generosity.

What is ironic is that this unprecedented central bank buying spree comes as a time when the global economy is supposedly in a "coordinated recovery" and when the Fed, and more recently, the ECB and BOJ have been warning about tighter monetary conditions, raising rates and tapering QE.
To this, Hartnett responds that "Fed hikes next week & "rhetorical tightening" by ECB & BoJ beginning, but we fear too late to prevent Icarus" by which he means that no matter what central banks do, a final blow-off top in the stock market is imminent.
He is probably correct, especially when looking at the "big 5" tech stocks, whose performance has an uncanny correlation with the size of the consolidated central bank balance sheet.

The drivers of this modern day Dutch Tulip phenomenon are the so-called “Five Horsemen” stocks – AAPL, AMZN, FB, GOOG,MSFT

http://investmentresearchdynamics.com/portrait-of-a-stock-bubble/

Portrait Of A Stock Bubble

June 7, 2017Financial Markets, Housing Market, Market Manipulation, Precious Metals, U.S. EconomyAmazon, Bitcoin, cryptocurrencies, ethereum, stock bubble, Tesla

Just like the Dutch Tulip Bulb bubble, internet stock bubble, and the  mid-2000’s financial asset bubble, the current stock market is no longer  a price-discovery mechanism.   It has deteriorated into a venue in which Central Bank-manufctured liquidity – in the form of printed currency and credit creation – has flooded into the system, enabling investors to chase the few stocks rising in price at the highest velocity (click to enlarge, graph on the left sourced from Jesse’s Cafe Americain).

The drivers of this modern day Dutch Tulip phenomenon are the so-called “Five Horsemen” stocks – AAPL, AMZN, FB, GOOG,MSFT. To that grouping I toss in TSLA.  Among all of those bubble stocks, TSLA has become, by far, the most disconnected from any remote intrinsic, fundamental value.  AAPL alone is responsible for 25% of the YTD gain in the Dow and 13% of the YTD gain in the S&P 500. AAPL’s revenues and operating income have declined over the last three years (2014 to 2016).  More often than not, even on days when the S&P/Dow are red, most if not all of the Five Horsemen + TSLA  seem to close green.
Eventually, the music will stop and this “no-price-discovery-possible” market will become a “can’t find a seat” market.  The abruptness and rate of decline will be breathtaking. Perhaps only matched by the outflow of capital from the cryptos by “investors” who leveraged up their cryptocurrency holdings to throw more “money” at TSLA.
The good news is that a lot of money can be made shorting stocks.  Since April, stocks like IBM, GS, SHLD, BZH and GE presented in the Short Seller’s Journal as shorts have outperformed the SPX/Dow.  SHLD is down 47% in 7 weeks – a home run.  BZH is down 18% in three weeks.  In the next issue, a “funky” financial stock will be featured that has the potential to drop at least 50% over the next 12 months if not sooner.
No one knows what event will trigger the stock bubble collapse.  One possibility is the ongoing financial implosion of the State of Illinois.  In stock bubble periods, all news is imbued with “the glass is half full.”  As an example, Illinois’ credit rating was reduced recently to BB+/Baa3.  That is a junk rating. But the media characterizes it as a “the lowest investment grade” rating – i.e. the “glass is half full.”
Both rating agencies never downgraded Enron to junk until it was weeks from Chapter 7 bankruptcy.  Illinois is on the brink of financial disaster.   See this article as an example:  Illinois Owes Billions.  This problem is absolutely dwarfed by Illinios’ public pension problem, which Illinois underfunded by a couple hundred billion (officially about $130 billion but that’s not on a true mark-to-market basis).
When the music finally stops, the perma-bubble bulls will be looking for that proverbial “seat” in all the wrong places.  But the next stampede of capital will be out of stocks, bonds, cryptos and “investment” homes and into physical gold, silver and mining stocks.

EIA vs. API: Comparing Crude Inventories Announcements

EIA vs. API: Comparing Crude Inventories Announcements http://www.investopedia.com/articles/investing-strategy/090816/eia-vs-api-comparing-crude-inventories-announcements.asp

 

 

The weekly update on the amount of crude oil inventories in the United States is one of the most important pieces of data regarding the oil market. Oil traders and analysts closely watch changes in inventory levels and use them in their analyses and expectations for oil prices. Inventory data is so important because the amount of oil inventories serves as a proxy to oil demand. If crude oil inventories increase weekly, it indicates that demand for oil is falling short of supply, while if the oil inventories data shows a decline in oil inventories, it indicates that demand is surpassing supply. With the supply and demand balance one of the most crucial facts in a commodity's price, this inventory data has a direct impact on oil prices. Live oil prices often swing dramatically when the week-over-week change in oil inventories is significantly different from what analysts forecast.
The two main reports that traders use for a reading on weekly petroleum stockpiles are the reports released by industry group The American Petroleum Institute (API) and the government report released by the U.S. Energy Information Administration (EIA). Among the two reports, The EIA report is more highly regarded. Find out why.

The American Petroleum Institute

The API is an industry group that represents American companies involved in producing, refining and distributing petroleum and petroleum products. The API produces the Weekly Statistical Bulletin, which reports on refinery operations and production of the most important petroleum products that account for more than 80% of total refinery production. Crude oil inventories are included in this report. The API normally releases its Weekly Statistical Bulletin on Tuesday at 4:30 p.m. ET. After a Monday holiday, it is released on Wednesday.

The Energy Information Administration

The EIA publishes the EIA Weekly Petroleum Status Report on Wednesday at 10:30 a.m. ET, but after a Monday holiday, it is released on Thursday at 11 a.m. ET. The EIS report provides information on the supply of oil and the level of inventories of crude oil and refined products.

Data Collection

The EIA requires major oil companies to complete their oil inventory surveys. The EIA surveys include a stern disclosure for noncompliance or intentional wrongdoing, and there are civil and criminal penalties for failure to file accurate and timely data. The American Petroleum Institute collects that data “at will,” but according to the API, the average sample coverage of the API data is about 90%. The stern disclosures the EIA data includes have analysts and traders believing that the EIA’s data is more accurate that the API’s.

Congruency of Reports

The API data is often taken as a prelude to the EIA data, as it is released the evening before the EIA report. There is definitely a relationship between the two data sets; 80% of the time the data is directionally aligned. While the data is often similar, at times there have been large discrepancies. For example, on March 29, 2015, the API reported that weekly crude oil inventories increased by 2.9 million barrels, but the following day, the EIA reported an increase of 10.3 million barrels. Because there is a relationship, and due to the strictness of the EIA collection, it is relied upon in a higher regard.

Other Differences

Although traders may hold the EIA data in higher regard, they have been relying on the API data for a longer period. Since 1929, the API has been reporting oil inventory data weekly. The EIA started releasing its weekly inventory report in 1979. Of note, the EIA also collects and reports oil production data and, therefore, provides a more complete picture of the state of the U.S. oil market.

Read more: EIA vs. API: Comparing Crude Inventories Announcements | Investopedia http://www.investopedia.com/articles/investing-strategy/090816/eia-vs-api-comparing-crude-inventories-announcements.asp#ixzz4jQBXLPYX
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http://oilprice.com/Energy/Oil-Prices/Flaws-In-Weekly-EIA-Inventory-Reports.html

Flaws in Weekly EIA Inventory Reports

By Editorial Dept - Mar 26, 2010, 12:09 AM CDT

"The numbers in this report can't be right -- and yet the market is reacting to them!" -- there's a complaint we've heard so many times about USDA reports, but this time it's the oil industry and the weekly government crude oil inventory report that's in the spotlight.
Brian Baskin, reporting for the Wall Street Journal last Friday, used internal Dept. of Energy documents to uncover what he said were errors in the Energy Information Agency's weekly inventory report, "including one (last) September that was large enough to cause a jump in oil prices, and a litany of problems with its data collection, including the use of ancient technology and out-of-date methodology, that make it nearly impossible for staff to detect errors."

The EIA has been releasing its weekly inventory report on Wednesday mornings since the early 80s, and, like USDA's weekly export sales, inspections, crop progress and crop production reports, the report is "a major event for oil markets."

EIA "collects data from thousands of facilities, all reporting the number of barrels held in storage around the nation. But many of its systems haven't been updated for 30 years, and much of the data input is done manually, according to one report commissioned for the EIA, prepared by consultants SAIC Inc.," Baskin stated.
EIA's director, Stephen Harvey, told Baskin he wasn't surprised with the findings. The SAIC report concluded that EIA faces an uphill battle just to maintain its current level of accuracy, although Harvey said the agency has put in place some changes despite the lack of funding.
The current version of the 2011 fiscal budget includes $18 million in additional funding requested by Energy Secretary Steven Chu for the EIA, the WSJ said.
For some perspective on the WSJ piece, DTN Refined Fuels Editor Brian Milne and DTN Senior Analyst Darin Newsom shared the following sentiments, "there has always been a question mark around the EIA weekly reports. Some will look at the interrelation of data, i.e. weekly output, imports, implied demand and the stock change, and say, that doesn't add up. There's also a big sigh when the EIA does make a revision.  "This news will definitely trigger cynicism.
"However, the data remains the best public information available. The EIA was created 32 years ago to provide some sense of transparency in the market. The event that triggered its creation was the OPEC's oil embargo to western nations in the early 1970s.
"Absent the EIA data, small companies that don't have the resources to mine all of this data would need to trust what the big companies tell them. Before the EIA was created, the big companies knew what was going on, but the little guys and the government were clueless.
"Every good analyst knows that a week's worth of data does not make a trend. The problems found internally and with the assistance of the consultant shows more caution should be administered before putting on a trade solely based on the results of the weekly data.

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"Bottom line; the data will remain a critical component in oil trading."
The WSJ article raises another question for DTN Senior Analyst Darin Newsom.  Newsom said, "I just don't buy the argument anymore that small commercials or traders are at a disadvantage to larger entities, relying on them for information. I hear the same thing all the time in the grains as well. The fact is that in this day and age of instantaneous information and heavily traded markets, market information is available to all.
"I don't think EIA reports hold any more influence over long-term energy traders than USDA reports do over grain traders. I think the large money has moved well beyond these reports, realizing they are as faulty as the article reports. That is one part of the evolution of the markets that is actually in the right direction."
Milne is not swayed by Newsom's argument.  His response: "Question though; how does government set energy policy void of data? Realizing that the article is critical on the weekly reports, the EIA does a great deal of long-term projections and studies. Data is not confirmed for months later, and those surveyed for the information, including weekly surveys, face large fines or worse for falsely reporting data.
"The amount of energy consumption is critical to know when setting a broad array of policy impacting all arrays of business as well as environmental issues.
"And how do you have transparency without a supply base of information? That transparency would dry up as quickly as Lehman's assets ahead of its failure in 2008.
"Until all trades including OTC are cleared on an exchange and reported in real-time, the market's prices could be swayed by those armed with information. The small guy would be at a disadvantage in oil trading absent some public or reliable third party source of data. Absent the reports, the data sources would be the oil majors and the big investment banks.
"If anything, the article argues for more resources to get this correct. It can't be just about trading; that's been gamed before."
By. Energy Hedge Funds

THE US JOBS MARKET : MUCH WORSE THAN THE OFFICIAL DATA SUGGEST

https://static1.squarespace.com/static/53c13267e4b00e8d041c41f1/t/5927f27d197aea91f0020119/1495790213715/The+US+Jobs+Market+-+Much+Worse+Than+The+Official+Data+Suggest.pdf


The US jobs market has been described as the backbone of the recovery – 82 months of continuous jobs growth with unemployment hitting 4.5% – the lowest since 2007. However the perceived strength in jobs creation is at odds with other economic indicators. President Trump ran on a campaign that repeatedly touted “jobs, jobs, jobs.” His emphasis on jobs creation and bringing employment back to America struck a chord with voters. Trump’s election in itself contradicts the popular narrative that the US jobs market is tight and robust. Wages, disposable income and real earnings growth along with low productivity and overall slow economic growth all challenge the BLS’s jobs numbers and thus Wall Street’s perception that the jobs market is tight.
Since the monthly jobs report is eagerly awaited as the most important piece of economic data for financial markets, it warrants a deep dive in order to understand what is going on under the hood. Before we delve into the data, here are some highlights of our findings.

 The Bureau of Labor Statistics (BLS) has been systemically overstating the number of jobs created, especially in the current economic cycle.

 The BLS has failed to account for the rise in part-time and contractual work arrangements, while all evidence points to a significant and rapid increase in the so-called contingent workforce.

 Full-time jobs are being replaced by part-time positions, resulting in double and triple counting of jobs via the Establishment Survey.

 A full 93% of the new jobs reported since 2008 and 40% of the jobs in 2016 alone were added through the business birth and death model – a highly controversial model which is not supported by the data. On the contrary, all data on establishment births and deaths point to an ongoing decrease in entrepreneurship.

CNBC Covfefe: Bitcoin Price Could Hit $100,000 in 10 Years

https://cointelegraph.com/news/cnbc-covfefe-bitcoin-price-could-hit-100000-in-10-years

Kay Van-Petersen, an analyst at Saxo Bank, told CNBC that Bitcoin price could hit $100,000 in the next 10 years.

Cointelegraph previously reported that the daily trading volume of the cryptocurrency market was nearing that of major stock markets. However, the cryptocurrency market’s trading volume is still only a fraction of leading stock markets such as NASDAQ.

In order for the cryptocurrency market to surpass the trading volumes of major stock markets, it has to surpass a trillion dollar market cap. In an interview with CNBC, Van-Petersen stated that Bitcoin alone will most likely achieve a trillion dollar market cap in the next 10 years and a price of $100,000.

More to that, Van-Petersen predicted the daily trading volume of the cryptocurrency market to account for at least 10 percent of the average daily volumes of fiat currency trades which is a $500 bln trading volume.

Milestone

Currently, the daily trading volume of the cryptocurrency market is around $4.3 bln and for it to surpass 10 percent of the daily volumes of fiat currency trades, it needs to increase by a factor of 100. Considering Bitcoin and Ethereum’s exponential growth over the past few years, it is not entirely impossible for the cryptocurrency market to achieve such a milestone in the next 10 years.

Van-Petersen, who is also a Bitcoin investor, told CNBC:

"This is not a fad, cryptocurrencies are here to stay. There will emerge two to three main ones. Bitcoin will be one of those. And the reason is the first-mover advantage, the scale and the pioneering."

Van-Petersen also emphasized that Bitcoin is being used as a digital currency in remote parts of the world in countries which lack a stable monetary system and financial networks. In countries such as Venezuela, Bitcoin is a lifeline for citizens who are struggling to finance day-to-day operations.

Volatility

Leading economies such as Japan are also rapidly adopting Bitcoin as a digital currency, with some of its largest conglomerates accepting Bitcoin as payment. Most recently, Japan’s most popular budget airline Peach and largest electronics retailer Bic Camera began to accept Bitcoin as an official payment method.

Van-Petersen says:

"Volumes are going up, volatility is going down. A lot of people talk about the volatility, but if you are in Zimbabwe or Venezuela, this volatility is nothing. This is the interesting thing to me. I think in the West, a lot of people view it is as speculative, but emerging markets will get it, their needs will be different.”

Ultimately, Van-Petersen sees the market cap of Bitcoin rising to $1.75 trillion in the next 10 years. For this to happen, Bitcoin needs to mature as a technology, solve all of its scaling issues and become adopted as a digital currency and digital cash system, instead of a safe haven asset and long-term investment.