All Posts
What a surprise! Consumers are in debt trouble
Credit card debt surged again during the third quarter and so did the number of people missing payments, according to data released today, November 7, by the Federal reserve Bank of New York. Credit card balances rose by $48 billion in the third quarter to a record high of $1.08 trillion The $154 billion year-over-year gain in debt was the largest such increase since of this beginning of this data in 1999.
Does the red for the Russell 2000 tell us something about the duration of this rally?
The small-cap Russell 2000 fell today by 1.29% at the close. All the other major indexes were up: the Standard & Poor; 500 gained 0.18%; the Dow Jones Industrial Average added 0.10%; the NASDAQ Composite tacked on 0.30%; and the NASDAQ 100 climbed 0.37%. I find this “interesting.” That’s “interesting” as in “watch out” and not “interesting” as in “I’m buying this rally.”
Are financial markets getting interest rates wrong again?
The financial markets continue to swing from extreme to extreme in sentiment. The markets were wrong at the beginning of last week. It’s likely the markets are wrong again.
Saturday Night Quarterback says, For the week ahead expect…
Nothing this week from new House Speaker Mike Johnson suggests that Congress will act in time to prevent a U.S. government shutdown on November 17.
The small-cap Russell 2000 is up 8.5% in a week–time to go short
On Monday, I will add to my short position in the small-cap Russell 2000 by buying more of the ProShares Short Russell 2000 ETF (RWM) for my Jubak Picks Portfolio. This buy will give me two positions in the ProShares Short Russell ETF. The first position, added to the portfolio on July 23, 2023 is up 0.08% as of the close on November 3. Why go all in on shorting the Russell now?
All it took was a weak jobs report and stocks are off to the races
The U.S. economy added “only” 150,000 jobs in October, the Bureau of Labor Statistics announced this morning, November 3. Economists had projected that the economy would add 180,000 jobs for the month. The unemployment rate climbed slightly to 3.9% from 3.8%, And the government statisticians revised September’s shocking 336,000 job increase the month down to 297,000 and revisions to the August and September totals took 101,000 jobs out of the totals for those to months. The Wall Street conclusion: The Fed has done its job and the economy has slowed.
Apple revenue falls again, warns holiday quarter will be flat
So let’s see how the market takes this tomorrow.
Today stocks staged an impressive upside more. The Standard & Poor’s 500 closed up 1.89% and the NASDAQ Composite ended the day 1.78% higher. The small cap Russell 2000 was the day’s best performer with a win of 2.67% Tomorrow? Well, the October jobs report released at 8:30 will certainly help set the tone for the day with a weak report likely to reinforce the belief that the Federal Reserve is done aiding interest rates. But given how much of the recent bounce has been fueled by a return of optimism about technology stocks, it’s likely that Apple’s disappointing results, announced after the close of trading today, Thursday, November 2, will determine the direction of the trend.
The biggest good news from Barrick Gold’s earnings aren’t the earnings
Yesterday, Thursday, November 2, Barrick Gold (GOLD) reported earnings of 24 cents a share for the company’s this quarter. That was ahead of the 21 cents a share consensus estimate among Wall Street analysts. In the third quarter of quarter of 2022, the company reported earnings of 13 cents a share. The surprise was the fourth for Barrack in the last four quarters. But to me other news overshadowed the earnings themselves.
Are you glad that the stock market correction is all over? So why am I buying more VIX Call Options?
Whew. Glad that’s done with. No more worries about rising interest rates or higher bond yields. No more fretting over lower earnings and revenue guidance for the fourth quarter and 2024. No more nightmares about a wider Middle East war. Or a government shutdown on November 17. Or…
Well, you get the idea.
I don’t think any of these things are behind us. The rally of the last day and a half–I’m writing this at 1 p.m. Nw work time on Thursday–is a product of a little bit of possible good news from the Fed and from the U.S. Treasury (on a small reduction in the size of the next Treasury auction) and a temporarily oversold market resulting from a lot of bad days in a row. I’m not saying this is just a dead cat bounce (you know the image–even dead cats bounce, but they don’t bounce far). Good news from Apple (AAPL) on earning and revenue after the close today. And tomorrow’s jobs report for October could be weak enough to keep the “Fed is done” narrative going without being so weak that it resurrects fears of an economic slowdown.
Federal Reserve holds rates steady as expected, so why did 10-year yields fall 18 basis points?
Certainly, it wasn’t any surprise that at today’s meeting the Federal Reserve decided to keep its policy rate steady at 5.25% to 5.50%. Going into the meeting the CME FedWatch tool put the odds of the Fed standing pat on rates at close to 100%. So why then the huge rally in the 10-year Treasury that pushed yields down 18 basis points on the day to 4.76%?
We are rightly skeptical of all of China’s economic data–but we KNOW the unemployment figures are cooked
Anyone who has followed China’s economy or invested in the country’s stocks is righty skeptical of all of the country’s economic data. The GDP growth numbers, for example, always seem to come in near target even when other measures show that the economy has hit a pothole. But right now, when the country faces a huge employment crisis and millions of migrant workers have no jobs and no safety net and millions of recent college graduates can’t find work, we know that the official numbers are a crock of chicken manure. And how do we know this? Because the Chinese government tells us so.
Not quite as bad as expected–Treasury increases its bond sales to just $112 billion and not the $114 billion feared
I guess it’s good news. Today the U.S. Treasury Department said it will slow the pace of increases in its longer-dated debt auctions in the November 2023 to January 2024 quarter to just $112 billion in the next auction, up from $103 billion. Primary dealers surveyed by Bloomberg had expected an increase to $114 billion in next week’s quarterly refunding.
And don’t forget Friday’s report on October jobs–will we get another surprise?
The “experts” expect that the Labor Department’s employment situation report on Friday, November 3, will show that the U.S. economy added 190,000 jobs in October. That would be a big drop from the 336,000 jobs added in September. But remember that these experts were projecting that the economy would add just 170,000 jobs before the September report.
The “other” big interest rate news tomorrow: How big will the Treasury’s bond auctions be?
The Federal Reserve will announce its interest rate decision on Wednesday–the market currently expects no change to policy interest rates. But I’d argue that the bigger news on internet rates for the day will come when the Treasury announces how many notes and bonds it intends to sell in auctions from November through January. Right now, it looks to me like the bond market is driving interest rates rather than the Fed so the number of bonds Treasury needs to sell is likely to set interest rate trends for the next few weeks. Bloomberg’s survey of Wall Street primary bond dealers shows that the consensus projection for the quarterly refunding sales announcement—including 3-, 10- and 30-year Treasuries— is for a $114 billion total, up from the $103 billion total three months ago.
Step #8 in my Special Report: Sell DE, CAT and BHP tomorrow
Today I posted Step #8 in my Special Report: 8 Steps to Protect Your Portfolio from the Global Debt Bomb. I recommended selling Deere (DE), Caterpillar (CAT), and BHP Group (BHP) out of portfolios ahead of rising yields i the bond market. (In the case of Deere, I said I would keep my position in my long-term portfolio but sell the position in my 12-18 month portfolio.) Here’s what I posted in my Special Report
Jim’s Stock Alerts
Download Jim’s eBook for Free
