Commodities and oil prices are in a position to go higher going forward no matter what, not because of Syria, but because they are in a position to resume their secular bull market. Syria has very little impact on oil prices.
Stock Market News
This is going to promise to be a disgusting month of war and mayhem. We already got President Obama this weekend saying that he does not need a Congressional authorization to start a war, but he is going to give us a gift of allowing Congress to debate it and vote on it first.
Yesterday gold and European markets went up, but trading on the Nasdaq was halted throughout most of the day. Apparently there was a computer glitch and the rulers of the Nasdaq decided to shut all Nasdaq computer trading down.
Yesterday the S&P 500 fell 9 points and the DOW fell over 90. Thank goodness for the pullback. What we did not want see is the S&P 500 explode higher for a climatic crazy one day reversal. You see we did not want to see the S&P 500 go up 30 points on some "good" news yesterday and then close in the red, because that would signal the start of a big correction.
Yesterday the stock market rallied hard again after Ben Bernanke reaffirmed his QE money printing policies after the close Wednesday. He repudiated all his supposed tough talk about trimming back the size of QE last month.
The stock market is gapping up a little today as CNBC reports that Alcoa has beaten its earnings estimates. It does just about every single quarter as analysts always underestimates its earnings. That helps provoke good news for the company and gets them some media attention too. In reality the company lost a lot of money.
If you say that if he means what he says, then you believe in Father Christmas. He said if the economy does not meet the expectations of the fed in one years' time, they will consider additional measures. In other words, if the economy has not fully recovered by mid-2014, more QE will be forthcoming. As I said already three years ago, we are going to go with the Fed to QE99.
Markets got hit after Bernanke talked and everything is getting sold this morning. Gold is below its recent lows. I still think it is likely to turn around and begin a bull market soon so I am watching it closely. I want to see what it does by the end of the day.
There is a lot of talk that the Fed is going to stop buying bonds and get tight. I don't believe any of this, because I don't think it can.
Well we just saw two days of shaky stock market action. All the market did though was pull back off of its highs, but that is enough to get some Fed members to get on TV and proclaim that the Fed will not be ending QE anytime soon.
Hedge fund manager Kyle Bass has been pushing a short Japanese bond trade for years, eventually he may be right.
Here are some stories today that caught my eye.
"A person familiar with Goldman's equities trading business said Taylor's trading position was significant - representing roughly 20 percent of e-mini trading volume the day it was established. The market moved against Taylor's position, leading to the loss, said the person, who declined to be named."
As I wrote in this weekend's monthly newsletter I think the US stock market at this point has very limited upside and for the short-term the risks are too the downside. I don't want to go through all of the reasons now as I outlined them in the newsletter, but the upside potential for the US stock market right now is like 1550 on the S&P 500, which would be a gain of about 3.3% from here. It's hard for me to justify trying to "play" the market at this point to try to make such a little return.
My view is a little different than Faber's - my guess is we get some sort of dip in February/March and then not much volatility in the US stock market after that. I don't think we are going to see some big crash this year or huge rally this summer once this move dies out. I think the market action will just fade out and we'll see rallies in commodities and world markets which diverge from the US. More on this in my next monthly newsletter.
I bought VIP back in August and it has been one of my best performing stocks. The Russian telecom company has gone up 26% since I bought it. Today it announced that it is going to pay an eighty cents dividend to shareholders of record at the end of the month. That's like a seven percent dividend.
Pretty nice. It's the largest telecom company in Russia and Eastern Europe.
I don't know what is going to happen with the "fiscal cliff." I don't know if Obama and the Republicans will come to a deal before the end of the year to prevent it from happening or not. If it does happen I don't think it will have a huge impact on the economy or the stock market - not in the big picture. However, it probably will cause some short-term selling. Really they don't seem to be to concerned about it.
Today the Fed is going to release a new FOMC statement at 12:30 PM. People are anticipating that they will announce a new QE money printing operation on top of the one they announced a few months ago. They are hoping for a new money pump that will force the stock market to go even higher. You see the US stock market is now fully valued so this is what it takes to make it go up nowadays.
The big news of the week caused a big upward movement in equity values. Despite economic announcements pointing toward a further slowdown at home and abroad, it was the announcement by EU leaders of an agreement to allow member countries to relax harsh austerity measures that flavored market moves.