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Mon, 20th February 2017

Anirudh Sethi Report

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Archives of “Wall Street Crash of 1929” Tag

Overnight US Market :Dow closes back above 20,000, Nasdaq hits record

Banks and other financial companies led stocks higher on Wall Street Friday as President Trump prepares to scale back financial industry regulations. Buyers were also encouraged by a pickup in hiring in January. Small-company stocks, which stand to benefit more than others from stronger economic growth, make sharp gains.

The Dow Jones industrial average jumped back above the 20,000 level as the blue-chip index rose 186.55 points, or 0.9%, to close at 20,071.46. The Standard & Poor’s 500 index gained 16.57, or 0.7%, to 2297.43, moving within one point of its record closing high of 2298.37. The Nasdaq composite index added 30.57, or 0.5%, to set a new record closing high of 5666.77.

The Russell 2000 index of smaller-company stocks climbed 1.5% to 1,377.84. Smaller, domestically-focused companies may have more to gain than their larger peers from faster growth in the U.S. The Russell made large gains at the end of 2016 based on those hopes.

The stock market rally kicked off early after the government reported that U.S. employers added 227,000 jobs in January, higher than last year’s average monthly gain of 187,000 and a sign that President Donald Trump has inherited a robust job market. The unemployment rate ticked up to a low 4.8% from 4.7% in December, but for a good reason: More people started looking for work. The percentage of adults working or looking for jobs increased to its highest level since September.

Financial firms rose after President Donald Trump took his first steps aimed at scaling back regulations on the industry. He signed an order that directs the Treasury Secretary to look for potential changes to the Dodd-Frank law, which reshaped financial regulations after the 2008-09 financial crisis and created the Consumer Financial Protection Bureau.

The order doesn’t have any immediate impact, but suggests Trump is intent on reducing regulations, which could boost profits for financial companies and banks.

Dow components Visa (V) and Goldman Sachs (GS) jumped 4.6%, JPMorgan Chase (JPM) added 3.1% and American Express (AXP) gained 2%. Smaller banks, which could find it easier to lend money if regulations are cut, also traded higher.

My take on how to read financial news headlines

Headline: Stocks Rose/Fell Today by 1% Because of _______
How to read it: Millions of shares traded hands today because investors all have different goals, strategies, risk profiles, holding periods and ideas.

Headline: [Popular economist/fund manager] Expects Market Volatility to Pick Up Later This Year
How to read it: Saying you expect volatility to pick up at some point in the future is like saying you expect it to rain at some point in the future. And volatility works both ways — to the upside and the downside — so really this is just a way of saying the markets will fluctuate, which of course they will.

Headline: George Soros Gained/Lost $1 Billion
How to read it: Soros has around $25 billion so what he does with his money shouldn’t concern most investors.

Headline: Markets Got Slaughtered Today: A Sign of Worse Things to Come?
How to read it: No one ever really knows why stocks rise or fall on a single day. The market is up just over 50% of all trading days and down just under 50% of all trading days so you can never put too much stock in any one day.

Headline: Investors Are Dealing With More Uncertainty
How to read it: The future is always uncertain. The past just feels more certain because now we know what really happened.

Headline: Are Market Overbought Here? 
How to read it: Ask us again in a few months.

Headline: [Democrats/Republicans/current or past president] Caused X% of Economic or Stock Market Growth
How to read it: Presidents or political parties don’t personally control economies or stock markets made up of millions of participants and trillions of dollars all wrapped up within a complex adaptive system. These things don’t come with levers that you can pull to make them rise or fall.

Headline: The Stock Market Enters a Painful Correction
How to read it: Retirement savers rejoice as stocks fall on the week. Those with decades to save & invest should hope it continues.

Headline: _____ Could Cause Gold Could Rise to $1500/oz.
How to read it: Total guess. No one has a clue.

Headline: Is This the Stock-Picker’s Market We’ve Been Waiting For?
How to read it: It’s both always and never a stock-picker’s markets because it all depends on the quality of the stock-picker, not the market.

Headline: Goldman Sachs Expects Stocks to Rally For the Next 3 Months
How to read it: Big financial firms have so many strategists that there will surely be a research piece put out in the coming days that totally contradicts whatever they just predicted.

Headline: When Will the Fed Raise Rates?
How to read it: Has Fed policy really ever helped you make better investment decisions? Even if you knew exactly what they were going to do in the future you still have no idea how other investors will react. 

Headline: Investors Panic as Stocks Enter a Bear Market
How to read it: Don’t panic — expected returns and dividend yields go up during bear markets. This is a good thing for long-term investors.

Headline: A Perfect Storm Caused Markets to Fall
How to read it: Stuff happens in the markets and we like to attach important-sounding narratives to everything. 100-year storms now seem to come around once a month or so.

Barron’s: Next Stop Dow 30,000… On One Condition

The financial magazine which has made an art out of calling for big, round numbers in the Dow Jones Financial Index (as a reminder over 20% of the Dow’s surge since the election is due entirely to Goldman Sachs), most recently with its “get ready for Dow 20,000” call from just over a month ago, has done it again:

While there are still those – pretty much anyone who still cares about fundamentals – who are scratching their heads at Dow20K, according to Barrons “the Dow hitting 20,000 was no fluke. Today’s stock prices are well supported by solid prospects for corporate earnings and economic growth.” 

In fact, Dow 30,000 is just around the corner… well by 2025. All President Donald Trump has to do, according to Barron’s, is avoid stumbling into a trade war—or a real war.” Some of the profound insight behind this forecast so reminiscent of the infamous “Dow 36,000” prediction which hit just around the time of the last market bubble.

Clearly, part of the propulsion behind stocks has been the Trump administration and its flurry of business-friendly edicts. If Trump can succeed in reducing regulation and lowering corporate taxes, stocks should surge further this year. An additional 5% or even 10% gain in 2017 wouldn’t be surprising. Our projection of 30,000 by 2025 is based on our analysis of historical data provided by Jeremy Schwartz, director of research at WisdomTree. This data, which looks at stock market returns for rolling five-year periods dating back to 1871, suggest stock market gains will fall below the market’s typical annual gain of 6% after inflation in the next five years before accelerating above the average in the years after that.

Overnight US Market :Dow closed +32 points

Stock indexes wavered between small gains and losses before ending mixed Thursday as investors sized up the latest company earnings news. Consumer goods and industrial stocks climbed the most, while health care and utilities were among the biggest laggards.

The Dow Jones industrial average climbed further above the 20,000 level it passed Wednesday. gaining 32 points, or 0.2% to 20,100.91.

Wall Street came off solid gains from the day before. The Dow Jones industrial average, after topping the magic 20K milestone and staying there, hit a record closing high along with the Nasdaq composite and the S&P 500.

On Thursday the Nasdaq slipped fractionally, losing just 0.02% to 5655.18. Off a little less than 0.1% was the S&P 500, now at 2296.68.

It’s been a record-making week on Wall Street. The S&P 500 index and Nasdaq composite closed at all-time highs on Tuesday and Wednesday. The Dow, which tracks 30 major industrial companies, added its own milestone Wednesday after it breached the 20,000 mark for the first time.

The market is getting a general boost from strong company earnings and investor optimism that the Trump administration’s policies on taxes, regulation and trade will be good for business.

Oil  prices jumped as benchmark U.S. crude oil was up $1.07, or 2%, at $53.82 per barrel in New York. Brent crude, used to price international oils, was up $1.08, or 1.9%, at $56.50 a barrel in London.

“China’s Carl Icahn” Hedge Fund Billionaire Sentenced To Five And A Half Years In Prison

Back in late 2015, when the Chinese stock bubble had violently burst and was suffering daily moves of 10% in either direction as retail traders scrambled to get out of what until recently was a “sure thing”, Beijing did what it does best, and found a convenient scapegoat on which to blame the market crash – which was function of the country’s relentless debt bubble and lack of trading regulations – in late 2015 it arrested one of the most prominent hedge fund traders, Xu Xiang, also known as “hedge fund brother No. 1” and “China’s Carl Icahn” for his phenomenal, and rigged, winning record in the stock market, who ran the Shanghai-based Zexi Investment.

 Which is not to say that Xu wasn’t engaged in shady activites: while the country’s stock prices plummeted in 2015, Zexi’s investments earned an average 218%, far more than the second-most profitable player, Shen Zhou Mu Fund, which reported a 94% yield, according to market analysis website Licai.com.

44 Years Ago, The Dow Crossed 1,000 For The First Time – Here’s What Happened Next

With all eyes desperately urging The Dow to cross 20,000 and prove that everything in the world of Trumplandia is awesome, we thought some reflection on another major milestone in the omnipresent Stock Index would be worthwhile…

As The New York Times reported 44 years ago… The Dow Jones industrial average closed above the 1,000 mark yesterday for the first time in history.

 It finished at 1,003.16 for a gain of 6.09 points in what many Wall Streeters consider the equivalent of the initial breaking of the four-minute mile.

“This thing has an obvious psychological effect,” declared one brokerage-house partner. “It’s a hell of a news item. As for the perminence of it — well, I just don’t know.”

The Dow finally put it all together, the peace rally, the re-election of President Nixon, the surging economy, booming corporate profits and lessening fears about inflation and taxes and controls and other uncertainties of 1973.

With such kingpin issues leading the forward surge, the market fed on its own momentum. The Dow forged past 1,000 at 1:30 P.M. and it kept gaining almost consistently until the final bell.

At 3:29 P.M., red light bars flashed on above and below each of the time clocks surrounding the trading floor of the New York Stock Exchange. This was the traditional visual signal to show that one minute of training time remained. At the same moment, a bell began clanging on the speaker’s rostrum – the auditory warning.

Traders, brokers and clerks on the floor – aware that history was in the making – broke into cheers that lasted about 20 seconds. Some paper was tossed in the air and drifted down like confetti.

Several hundred persons on the floor then turned to face newsreel cameras grinding away on the member’s gallery, some brokers waving like fans at a football game.

An office broker, watching the stock tape from his desk downtown, murmured in wonderment: “There’s a sort of renewed confidence in the whole economic outlook.”

Overnight US Market :Dow closed -9 points ( 157 points to kiss 20000 )

Stocks lost steam Friday as the Dow failed in another attempt at topping the 20,000 mark for the first time ever.

The Dow Jones industrial average lost less than 0.1%, down 8 points to finish at 19,843.41. The S&P 500 fell 0.2%, while the Nasdaq composite shed 0.4%.

After an initial jolt from the Fed’s interest rate hike decision this week, markets adjusted to the prospect of more increases that policymakers signaled were in store as they move to “normalize” interest rates. The Fed raised rates for only the second time in a decade and hinted three more hikes are on the way in 2017, rattling markets used to ultralow borrowing costs that have fueled a multiyear stock boom. The Fed’s move now shifts the focus from central bank policy to economic growth as the driver of stock market performance.

Bond yields gave up some of their big gains from the last few days.The yield on the 10-year Treasury fell to 2.58% from 2.60% late Thursday, putting at least a temporary halt to its strong rally since last month’s presidential election.

Overnight US Market :DOW Closed + 114 points.S&P 500 Up 15 points

The trek to Dow 20,000 continues.

It’s taken nearly 120 years to get close to this point as the Dow Jones industrial average came within 47 points Tuesday of its biggest milestone yet.

The race to 20,000 for the blue chip stock index, which began way back in 1896, picked up speed after Election Day on hopes that president-elect Donald Trump’s policies will stoke growth.

At its afternoon intraday record peak, the Dow was up more than 155 points, or 0.8%, to a high of 19,953.75, before pulling back slightly to close up 114.78 points, or 0.6%, to close at 19,911.21.

Since Election Day the Dow has surged about 9%, from around 18,300 . The Dow made history back during the Internet stock boom in 1999 when it first crossed the 10,000 mark.

Since then, the Dow has suffered through two brutal bear markets, the first in 2000-2002 following the dot-com stock crash and then 2007-2009 during the Great Recession.

Overnight US Market :Dow closed + 142 points.Now just 243 points away to kiss 20k

Not even the threat of an interest rate hike next week from the Federal Reserve could derail the U.S. stock market’s record-setting run as Wall Street posted its best five days since the presidential election and doubled down on its bet of better times ahead under new political leadership at the White House.

The bullish vibe on Wall Street is best illustrated by the blue chip Dow Jones industrial average, which surged nearly 600 points, or 3.1%, on its way to posting a fresh all-time high on each trading day of the just-ended week.

The Dow, which is up 13.4% this year, is now within 243 points of Dow 20,000, a milestone few imagined was possible at the bottom of the bear market back on March 9, 2009, when the Dow fell to 6,547.05.

The Standard & Poor’s 500 index, Nasdaq composite and small-stock Russell 2000 also finished the week at record levels.

The big gains came even though Wall Street is pricing in a nearly 100% chance of an interest rate hike from the Federal Reserve Wednesday, its final meeting of the year. Wall Street is expecting a quarter of a percentage point rise by the Fed, which would mark the U.S. central bank’s first rate hike of 2016, despite forecasts at the start of the year for three or four hikes.

Following the Fed’s meeting Wednesday, Wall Street’s attention will turn to its policy statement, its updated projections for the economy, inflation and future rate hikes, as well as Fed chair Janet Yellen’s comments during a press conference with reporters.

The big run-up in stock prices, up to this point, has been based mainly on hopes that Trump’s policies will boost economic growth as well as corporate sales and profits

Overnight Dow Jones closed up 65 points.New High Continues….

Stocks gained Thursday, the Nasdaq joining the Dow, S&P 500 and Russell 2000 in record territory as all four indexes hit new all-time closing highs.

After a quiet start, major U.S. stock indexes jumped in afternoon trading as the market built on a surge the previous day. Banks and basic materials companies made the biggest gains, and technology companies also climbed. Defense contractors and other industrial companies took losses.

The small-stock Russell 2000 surged 1.5%.

Meanwhile the Dow Jones industrial average ended up about 65 points, or 0.3%. The Standard & Poor’s 500 index rose 0.2%. The Nasdaq composite jumped 0.4%.

These are the new closing highs for the four indexes:

► Dow: 19,614.81
► S&P 500: 2246.19
► Nasdaq: 5417.36
► Russell 2000: 1386.37

U.S. government bond prices fell, sending yields higher. The yield on the 10-year Treasury note rose to 2.40% from 2.34%. That drove banks stocks up since higher interest rates will allow banks to charge more for lending money. Goldman Sachs (GS), which has surged 32% since the presidential election and is trading at a nine-year high, was up 2.5%, and Bank of America (BAC) picked up 1.7%.

European stocks climbed for the second day in a row. Germany’s DAX index was up 1.8% and France’s CA 40 index gained 0.9%. London’s FTSE 100 rose 0.4%.