Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also provide analysis and charts for David Stockman's Contra Corner which I developed for Mr. Stockman. I’ve had a wide variety of finance related jobs in the past 44 years, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today.

Here’s How The Primary Dealers Have Created A Doomsday Scenario

The Primary Dealers are the trading and market making behemoths who are tasked and privileged by the Fed with being the Fed’s sole counterparty in conducting the monetary policy operations. They are also the Primary Dealers for the US Treasury when the Treasury sells debt to the public, which it does almost every day now. Today those debt sales average more than $100 billion in new money per month.

It can be a big source of profits for the dealers. It can also be a doomsday machine. Here’s how

The post Here’s How The Primary Dealers Have Created A Doomsday Scenario appeared first on Lee Adler’s Sure Money.

This Chart Shows Why Dealer Positions Are a Catastrophe in the Making

Liquidity Moves Markets – Follow The Money!Liquidity is money. Regardless of where in the world that money originates, eventually it flows to and through Wall Street. So if you want to know the direction of the next big moves in stocks and bonds, just follow the money. Lee Adler’s Liquidity Trader tracks and analyzes the…

Beware: The Real Reason The Fed Reversed Its Guidance Is This Ticking Time Bomb

At his recent dog and pony show with the beloved Wall Street media crowd, Fed Chair Powell laid out the outlines of a supposedly new policy. He said the Fed would adjust the rate of the bloodletting of its balance sheet under “normalization,” in response to bad things that might happen in the financial markets. He did this apparently because it has suddenly been revealed to the Fed through their keen powers of observation that “bad” market behavior might, just might, be related to that balance sheet “normalization.”

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Will wonders never cease.

Now, lo and behold, we discover that that which Mr. Powell said the Fed might do, it has already started to do. The Fed has already started to slow the bloodletting — the rate at which it shrinks its balance sheet and pulls money out of the banking system.

But does that matter? Read on to find out, and what to do about it.

The post Beware: The Real Reason The Fed Reversed Its Guidance Is This Ticking Time Bomb appeared first on Lee Adler’s Sure Money.

May the Greatest Stock Market Indicator In History Rest In Peace – For Now

17 years ago I developed an indicator to track the amount of cash that the Fed was pumping into Primary Dealer Trading accounts. The indicator proved its mettle over time. It was one of the best predictors of stock market behavior because Primary Dealers literally “make” the markets. Market price levels reflect how much cash the dealers have on hand to ignite the cycle of securities inventory markups and markdowns that drive market price trends.

The indicator is composed of the cumulative value of operations which the Fed conducted directly with Primary Dealers in Open Market Operations (OMO). It measures the flow of cash into Primary Dealer accounts that came from the Fed’s purchases of securities from them. It’s similar to some of the charts you see of how the market tracks the Fed’s balance sheet. But there are some important distinctions that made it work better for us.

There’s just one problem.

Those distinctions no longer matter.

The Fed isn’t buying securities from Primary Dealers any more. It’s no longer pumping cash into the markets. It stopped doing that in October 2017, when it started the systemic bloodletting program known as “normalization” that has caused so much consternation in the market.

And it isn’t selling securities to the dealers under that program either. That would be one way to shrink its balance sheet and pull money out of the banking system. The Fed has opted for another way. That is to simply redeem its holdings of US Treasury notes and bonds as they mature. The Fed also allows its mortgage backed securities (MBS) to be paid off by normal prepayments over time.

It’s a passive approach, but insidious and dangerous.

Here’s how it worked, why it doesn’t work anymore, and what we can to do about it to stay on top of the liquidity game.

The post May the Greatest Stock Market Indicator In History Rest In Peace – For Now appeared first on Lee Adler’s Sure Money.

This Chart Reveals the Hard Truth That Wall Street Doesn’t Want You To Remember About Inflation

Does the Fed have an inflation problem? The media narrative of late has been that inflation is tame. No worries! But maybe their own semantic games have them hopelessly confused. Either that, or it’s deliberate. The economic establishment and the Wall Street media mob like to pretend that inflation only applies to consumer prices. That’s […]

The post This Chart Reveals the Hard Truth That Wall Street Doesn’t Want You To Remember About Inflation appeared first on Lee Adler’s Sure Money.

January Tax Collections Make You Wonder Why Fed Panicked – Correction

Liquidity Moves Markets – Follow The Money!Liquidity is money. Regardless of where in the world that money originates, eventually it flows to and through Wall Street. So if you want to know the direction of the next big moves in stocks and bonds, just follow the money. Lee Adler’s Liquidity Trader tracks and analyzes the…

Lies, Damned Lies, and the Bureau of Labor Statistics

Mark Twain famously wrote, “There are three kinds of lies: lies, damned lies, and statistics.”

Twain attributed the quote to British Prime Minister Benjamin Disraeli, but Disraeli never used it. Other British luminaries apparently did use it, but it was Twain who made it famous.

If it were up to me I’d phrase it, “There are three kinds of lies: lies, damned lies, and BLS statistics.” The BLS is that agency of the US Labor Department that brings us the monthly reports on the CPI and jobs, including non-farm payrolls and the unemployment rate.

In compiling those reports, the Bureau surveys tiny samples of business establishments and households. It then applies all kinds of statistical manipulation to project numbers that purport to show a snapshot of the entire US economy.

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I have been actively tracking this data for 19 years. I must tell you that I have not been impressed with the quality of the BLS headline numbers that the Wall Street media dutifully spins to the public. With Twain in mind, forgive me if I refer to the BLS as the Bureau of Liar Statistics.

The BLS’s biggest and longest ongoing manipulation of the truth is probably the fact that they stopped including actual US housing prices in the CPI in 1982. That’s an issue I have brought to your attention several times in these pages. Since the beginning of the recovery in housing inflation in 2012 it has resulted in the CPI being understated by about 1% point on average.

While the CPI has this built in long running fudge factor, the jobs data is manipulated in so many ways my head spins at the thought of trying to figure it all out. The just released January payrolls data may have been one of the biggest whoppers a US government economic statistical agency has ever told.

And that matters. It matters because it influences monetary policymaking. So let’s take a look at what they misrepresented

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