December’s Cover Highlights;
FOMC RAISES RATES
STOCKS PRINT ALL-TIME RECORD
HIGHS
SPX 2278 INDU 19988 (only 13
points away from 20K!) COMPQ 5512 RUT 1393 NDX 4992 FTSE 7143
DOW 20K WATCH
DOW THEORY CONFIRMATION
2016 MARKET STATISTICS
TRUMP RALLY
GLOBAL POPULISM
ITALIAN BANK TROUBLE
The month of December is
historic. The Italian referendum shows the door to PM Renzi. Stocks fall for a
few minutes then rally strongly just like after the Brexit vote and US
election. The stock markets do not sell off to any great extent since traders
know the central bankers will keep pumping equities higher with easy money.
The Fed raises rates in
mid-December and stocks rally again. The bulls are buying stocks with reckless
abandon. The Dow 20,000 watch continues with the INDU, or DJI, coming within 13
points of the coveted 20K only to fall on its sword to end the year. A Dow
Theory confirmation signal was given when the trannies (TRAN; Dow Transports) printed
a new all-time record high confirming the highs on the Dow Industrials.
However, the transports have driven lower in the back half of December.
The Italian banking problem
continues to fester and stink like garbage in the hot summer sun. Monte dei
Paschi, the world’s oldest bank, is also the biggest piece of rubbish. Central
bankers are figuring a way to bailout the troubled lender but the problems
continue with other Italian banks as well as Portuguese and Spanish banks. Any
of these banks may create global contagion a la Lehman Brothers in late 2008
that precipitated the global financial crisis. The global populism movement
continues with elections on tap this spring in Netherlands and France.
The chronology explains
the reaction in stocks, bonds and currencies to key events and economic data
releases. If you are trying to make sense of the markets this is the
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meetings, etc...
The chronology records economic history preventing revisionist tampering in future years. Many of the same asset managers telling everyone to go long the market in 2007-2008 repeat the same mantra in 2015-2016. The stock market topped out in May 2015 which places anyone that listened to television pundits over the last couple years either flat or underwater on their long trades. The global central banker go juice has pumped stocks higher from February of this year creating new all-time highs and rewarding the Keynesian loyalists.
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