Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: S&P 500 Index

More “Fake News?” Trump Behind Wednesday’s Stock Market Dump

This article was published by The McAlvany Intelligence Advisor on Friday, May 19, 2017:

Cover of "The Intelligent Investor: The D...

It’s almost too trite to say that the mainstream media engages in “fake news,” but its nearly unanimous claim that Wednesday’s selloff in stocks was due to Trump’s troubles borders on fake news. It certainly violates a primary rule of logic: post hoc, ergo propter hoc – after this, therefore because of this.

Here is a perfect, but certainly not the only, example. From Marketwatch one learns that “The sell-off came in the wake of a bombshell report in the New York Times that notes from fired FBI Director James Comey revealed President Donald Trump had asked Comey to stop the FBI’s investigation into fired National Security Adviser Michael Flynn’s ties to Russia.”

The tortured logic is this: Trump’s controversies, including those concerning Comey, are going to distract him and his administration from accomplishing many of the policy goals upon which the stock market was banking. Hence, the market will be disappointed.

Other MSM outlets lined up:

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Trump Didn’t Cause Stock Market Decline

This article appeared online at TheNewAmerican.com on Thursday, May 18, 2017:  

According to nearly every major news outlet, Wednesday’s 372-point decline in the Dow Jones Industrial Average was Trump’s fault. CNN Money said “Trump drama rattles market” while CNBC blamed the selloff “on Trump fears.” NPR said the decline was because “Trump remains embroiled in controversy” with CBC News saying it was due to “uncertainty around Trump.”

Precious few deviated from their mission to blame everything on Trump to look at the real reason behind Wednesday’s modest selloff:

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Stock Market’s Complacency Index Highest in 24 Years

This article appeared online at TheNewAmerican.com on Monday, May 8, 2017:  

Wall Street’s “complacency index” — a measure of confidence that stock prices will continue to rise — hit the highest level since 1993 on Monday. Alternatively called the VIX (for volatility index), it is often referred to as Wall Street’s “investor fear gauge.”

Translation: Investors presently appear to have no fear. The index compares investors betting, through their purchases of options, that the market will go up, to those betting to the contrary. When investor fear is high, the VIX will move above 30 or even higher. When fear declines, the VIX trades below 20. During the day on Monday the VIX touched 9.72, a level not seen in 24 years.

So complacent have investors become that the VIX has dropped by 45 percent just since April 13. By comparison,

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Pew Research: Gap Between Promises and Assets Widens for State Pensions

This article appeared online at TheNewAmerican.com on Monday, April 24, 2017:

A RETIRED COUPLE FROM CALIFORNIA STOP TO FISH ...

After reviewing the investment results for 230 public pension plans for the last two years, Pew reported last Thursday that, despite strong recent stock market performance, the gap between liabilities (promises) and assets for those plans widened by 17 percent, to $1.4 trillion. Put another way, those plans should have nearly $4 trillion in assets to enable them to keep their promises. The latest data shows them with just over $2.5 trillion instead.

Said Greg Mennis, director of the project,

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Three Stock Market Indicators Spell Trouble for Pension Fund Managers

This article was published by The McAlvany Intelligence Advisor on Monday, April 24, 2017:

Warren Buffett speaking to a group of students...

Warren Buffett

Michael Lombardi is a bear. Canadian-born, Lombardi has been dishing out investment advice for decades. He is getting nervous. And so should pension fund managers trying to make up for lost time.

In his March newsletter, Lombardi looked at the Warren Buffett Indicator:

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Wall Street Facing Headwinds as Boomers Forced to Liquidate Their IRAs, 401Ks

This article appeared online at TheNewAmerican.com on Tuesday, March 28, 2017:

New York Stock Exchange on Wall Street in New ...

Under the law those reaching age 70 and a half must start taking their “required minimum distributions” (RMDs) from their various tax-deferred accounts. These include IRAs, 401Ks, profit-sharing plans, and SEPs. The trouble is that there are so many of them, and they control so many assets, that their RMDs are going to put enormous pressure on the stock market, according to Chris Hamilton, writing at his Econimica blog.

The Baby Boom population cohort is nearly 80 million people, and those born in 1946 are now 71, with millions following right behind. The top one percent own or control about one-third of that cohort’s assets, while the top 10 percent own more than two-thirds, according to the Congressional Budget Office.

The real question, according to Hamilton, is this:

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Update on Warren Buffett’s “The Bet” (or How Your Money Finds Its Way to Wall Street)

This article was published by The McAlvany Intelligence Advisor on Wednesday, March 1, 2017:

Warren Buffett speaking to a group of students...

Warren Buffett speaking to a group of students from the Kansas University School of Business (Photo credit: Wikipedia)

In the latest shareholder letter just released by Berkshire Hathaway, Warren Buffett brought his fans up to date on “The Bet.” On its face it seems simple: Buffett was willing to bet good money that any S&P 500 index fund would beat, over a period of time, the performance of the best money managers in the business. But no one took him up on his wager:

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Harvard’s New Endowment Manager Shakes Things Up After Dismal Performance

This article appeared online at TheNewAmerican.com on Tuesday, February 28, 2017:

English: Harvard University Harvard Yard Harva...

Harvard University Harvard Yard

The new CEO of Harvard Management Company (HMC), N.P. “Narv” Narvekar, fired half of his staff last December, and in a letter announcing the moves, stated:

Major change is never easy and will require an extended period of time to bear fruit. Transitioning away from practices that have been ingrained in HMC’s culture for decades will no doubt be challenging at times.

 

But we must evolve to be successful, and we must withstand the associated growing pains to achieve our goals.

To each of those approximately 115 staffers who were let go, Narv offered his condolences: “It is exceptionally difficult to see such a large number of our colleagues leave the firm, and we will be very supportive of these individuals in their transition. We are grateful for their committed service to Harvard and wish them the very best in their future endeavors.”

Narvekar is the eighth permanent or interim chief executive in the last decade at the helm of HMC as returns from its $35 billion endowment continue to under-perform not only the stock market in general but its peers at Yale, Columbia, and other Ivy League schools, as well.

The company’s performance was so bad that

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Large Pension Plans Adjusting Their Targets Downward

This article appeared online at TheNewAmerican.com on Wednesday, December 21, 2016:  

English: Jerry Brown's official picture as Att...

California Governor Jerry Brown

Heading into negotiations this past weekend between the California governor’s office, teachers’ unions, and pension plan trustees managing the California Public Employees’ Retirement System (CalPERS), Governor Jerry Brown spoke the truth: “There’s no doubt CalPERS needs to start aligning its rate of return expectations with reality.”

Coming out of the meeting, the gap between the plan’s target rate of return and reality remained immense.

The last time CalPERS faced reality and flinched was in 2012 when

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U.S. Steel Latest to Bring Jobs Back to the United States

This article appeared online at TheNewAmerican.com on Thursday, December 8, 2016:  

U.S. Steel

In an interview with CNBC on Wednesday, U.S. Steel’s CEO Mario Longhi said he’d like to bring back up to 10,000 jobs to the United States:

We’re already structured to do some things, but when you see in the near future improvements to the tax laws, improvements to regulation, those two things by themselves may be a significant driver to what we’re going to do….

 

I’d be more than happy to bring back the employees we’ve been forced to lay off during [the Great Recession].

His company used to employ 37,000 people but that dropped to just 21,000 as of last December, thanks not only to the Great Recession and its almost immeasurably small recovery but also due to excessive regulations:

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Three Election Models Pick Trump to Win on Tuesday

English: Donald Trump at a press conference an...

This article appeared online at TheNewAmerican.com on Monday, November 7, 2016:  

Poll-watching junkies are having a field day. There is one poll or another publishing its results on an almost hourly basis. As this is being written on noon Sunday, for instance, Investors Business Daily (IBD), which touts its survey as “the most accurate poll in recent presidential elections,” has Donald Trump ahead of Hillary Clinton by one point. The USC Dornsife/Los Angeles Times’ “Daybreak” poll shows Trump ahead of Clinton by five points.

Nate Silver, in his FiveThirtyEight 2016 Election Forecast, has Clinton’s chance of winning at 64.7 percent versus Trump’s 35.3 percent. Silver predicts Clinton will win 48.4 percent of the popular vote (versus Trump’s 45.5 percent, which will give her 291 Electoral College votes to Trump’s 246.

In its running summary of other polls, Real Clear Politics shows Clinton up by 1.8 percent over Trump in the popular vote, while in the Electoral College it’s Clinton with 216 and Trump with 164, leaving 158 votes as “toss ups.”

There are at least two other prognosticators who don’t rely on polls at all, and they are predicting Trump will win on Tuesday. The first was explained by Tyler Durden at ZeroHedge back in January when he said that the stock market would predict November’s winner:

This relationship occurs because the stock market reflects the economic outlook in the weeks leading up to the election. A rising stock market indicates an improving economy, which means rising confidence and increases the chances of the incumbent party’s re-election.

 

Therefore, your time might be better spent from August through October watching the stock market rather than the debates if you want to know who will be President for the next four years.

Right on cue the stock market has declined nine days in a row (through last Friday), the first time that has happened since 1980. But more importantly is how it has behaved since Monday, August 1. The S&P 500 Index has declined by 4.5 percent which, according to Durden, translates into an 86 percent chance of Trump’s winning on Tuesday.

And then there’s the professor from Stony Brook University, Helmut Norpoth, and his “Primary Model”. Writes Norpoth on his website:

Winning early primaries is a major key for electoral victory in November. Trump won the Republican primaries in both New Hampshire and South Carolina, while Hillary Clinton and Bernie Sanders split the Democratic primaries in those states….

 

For the record the Primary Model … has correctly predicted the winner of the popular vote in all five presidential elections since it was introduced in 1996….

 

For elections from 1912 to 2012 the Primary Model [has retroactively picked] the winner … every time except in 1960.

 

Accordingly, Norpoth gives Trump an 87 percent chance of winning Tuesday’s election.

There’s also his “pendulum” model:

What favors the GOP in 2016 as well … is the cycle of presidential elections. After two terms of Democrat Barack Obama in the White House the electoral pendulum is poised to swing to the GOP this year….

 

Donald Trump is predicted to defeat Hillary Clinton by 52.5 percent to 47.5 percent.

In the “for what it’s worth” category, as this is being written, futures for Monday’s open are also turning negative. If the market closes down again on Monday, the 10th day in a row, it will only add validity to both Durden’s and Norpoth’s prediction: Trump will win on Tuesday.

Also, Professor Norpoth has such confidence in his models that he is using his own money to bet on Trump to win.

The S&P 500 is Picking Trump to Win

This article was published by The McAlvany Intelligence Advisor on Monday, November 7, 2016:

Back in January, Tyler Durden (a pseudonym), writing at ZeroHedge, said one would be far better off watching the markets than the debates if one wanted to know who the next president would be:

This relationship occurs because the stock market reflects the economic outlook in the weeks leading up to the election. A rising stock market indicates an improving economy, which means rising confidence and increases the chances of the incumbent party’s re-election.

 

Therefore, your time might be better spent from August through October watching the stock market rather than the debates if you want to know who will be President for the next four years.

Right on cue, the stock market has declined nine days in a row (through last Friday), the first time that has happened since 1980. But more importantly

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California’s Pension Plans Report Dismal Results, Increasing Shortfalls

This article appeared online at TheNewAmerican.com on Wednesday, July 20, 2016:  

Ted Eliopoulos, the chief investment officer of the country’s largest pension plan, the California Public Employees Retirement System (CalPERS), did the best he could with the bad news: “Positive performance in a year of turbulent financial markets is an accomplishment that we are proud of.” That “positive performance” was a measly 0.61-percent return from July 1, 2015 through June 30, 2016, on his $300 billion pension plan. That means that the fund is now about $100 billion short of meeting its future obligations.

But that $100 billion number greatly understates the real liability because it’s based on a pixie-dust assumption that the plan can earn an average

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Markit Ltd. Says U.S. Economy Is Faltering

This article appeared online at TheNewAmerican.com on Tuesday, March 22, 2016:  

Markit Ltd., the London-based global financial information behemoth, issued an early warning about signs of the coming recession in late February when it published its services purchasing managers’ index. It went negative for the first time in more than two years. At the time, Chris Williamson, Markit’s chief economist, said:

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Stocks to Fall Further, Say Market Bears

This article was published by The McAlvany Intelligence Advisor on Wednesday, August 26, 2015:  

Marc Faber, the bearish financial commentator from Thailand whom financial talking heads in the media love to hate, really doesn’t care what people think. He’s old enough to know his own mind (he’s 69), and he’s been right often enough that his opinions carry plenty of weight. He’s also a curmudgeon. In his June 2008 newsletter, following the arrival of $600 “stimulus” checks in everyone’s mailbox, Faber wrote this, belittling the idea that much if any of that free money would help stimulate the US’s moribund economy:

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“The most Bullish thing the Stock Market can do is go up.”

This article was published by The McAlvany Intelligence Advisor on Wednesday, June 10, 2015: 

Charles Dow -an American journalist who co-fou...

Charles Dow -an American journalist who co-founded Dow Jones & Company with Edward Jones and Charles Bergstresser.

 

Right up until early April, that is. The Value Line Geometric Index, the unweighted index of approximately 1,700 stocks that fund manager Dana Lyons likes to watch, topped out at 522 and has declined by almost 10 percent since then.

By Monday, June 8 the Dow’s decline had wiped out all of its gains and is now flat for the year. The Dow Transportation Index fell 2 percent that day, its worst day since January 6, wiping out its 11 percent year-to-date gain. The Dow Utilities Index has suffered an even greater decline, erasing all of its 16 percent gain.

The Dow is one of the primary leading indicators used by financial advisors like Bruce Bittles, the chief investment strategist at RW Baird. Bittles manages $100 billion of other peoples’ money, and he’d better be right. Now, he’s getting nervous:

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Stock Market Wipes Out All Gains for the Year

This article first appeared online at TheNewAmerican.com on Tuesday, June 9, 2015:

On Monday, June 8, the Dow Jones Industrial Average (DJIA) declined by enough to wipe out all gains investors thought they had made in stocks since January 1. It was confirmed by action in the Dow Jones Transportation Index (DJTA), which is even older than the Dow and reflects the price performance of the stocks of 20 transportation companies such as Avis, Delta Airlines, and FedEx. On Monday that index fell by two percent, its worst day since January 6, bringing that index to a loss of nearly 11 percent from its high earlier in the year.

The decline in the Dow was further confirmed by

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Crude Oil Price Declines Reveal Who’s Swimming Naked

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, December 3, 2014: 

Ali Al Naimi

Ali Al Naimi

One of the most famous homespun quotes Warren Buffett ever uttered is this: “Only when the tide goes out do you discover who’s been swimming naked.” With the decline in crude oil prices of nearly 50 percent since June, more and more people are finding themselves swimming naked, or they’re about to.

Consider the formerly invincible oil cartel, OPEC, which seems to be suffering from delusions of its former glory by taking on oil producers in America. Instead of cutting production in order to “stabilize” oil prices, the cartel, led by the aging big kahuna, Saudi Arabia, has decided to

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Stock Market Gains Failing to Bail Out Pension Plans

This article first appeared at The McAlvany Intelligence Advisor on Friday, September 26, 2014: 

Pension managers’ hopes that investment returns – i.e., pixie dust – would bail them out from their bad assumptions, and keep their plans solvent and fully funded so that they would be able to keep every promise made, have finally crashed on the rocks of reality. Just three months ago, the Center for Retirement Research at Boston College released a study showing that the shortfall between promises and assets to pay them for 25 of the largest public defined-benefit pension plans in the country amounted to more than

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Despite Stock Market Gains, Public Pension Plans Fall Further Behind

This article first appeared at TheNewAmerican.com on Thursday, September 25, 2014:

 

In its latest report on public pension plans, Moody’s announced on Thursday that, despite recent historic gains in the stock market, those plans’ liabilities are increasing even more quickly. Reporting on the 25 largest public defined benefit pension plans in the country, Moody’s Global Credit Research estimates that those plans are now $2 trillion short of where they need to be to pay out all the benefits promised to their beneficiaries. This has occurred despite record gains in the stock market, which,

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.