Posts By Lee Adler

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Tax Data Shows That The Latest Market “Narrative” is Really a “Myth”

There’s a special report that I look forward to on the 8th business day of the month. This month, that was the 11th. Only this month, it wasn’t there. It’s the Monthly Treasury Statement for the preceding month from the US Treasury.

We love that data because it’s raw, unadulterated, and unmanipulated. It gives us an inside look at critical sectors of the US economy. It covers the entire month, not just a snapshot on a given day, and it’s only 8 days old when they give it to us.

Even better is the end of month Daily Treasury Statement, which is released the day after the month ends. I’ve been accumulating that data for years. Not only is it pure unmanipulated reality, it’s real time.

I issue a detailed monthly report about key line items, like withholding, non-withheld, corporate and excise taxes. And I’m always happy to pull a juicy tidbit from that report for you every so often.

Then around the middle of the month, I report on the Monthly Treasury Statement. The monthly data provides additional details on Social Security versus income tax withheld, and in the categories of Excise taxes. Those are like Federal sales taxes on numerous items, like guns, alcohol, your phone bill, tobacco,  as well as the better known levies on  aviation, and gas at the pump.

It’s great data and I was looking forward to finding and reporting something interesting for you. But alas, this month it’s nowhere to be found. The government shutdown has delayed it. I guess  we’ll just have to go without for now.

But that’s the nice thing about the Daily Treasury Statement. They’re still publishing it and we need not wait until the end of the month. And boy does it have an interesting story to tell this month.

A chart of the data shows that the current market narrative is really a myth! Click here to see for yourself.

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This Chart Shows The Bad News That Bankers Are More In LaLa Land Than 2000 Or 2007

You’ve seen all the headline news stories about the Fed changing its tone in recent weeks. The Fed is going to pause rate hikes. And it will think about slowing the pace of balance sheet “normalization,” if the market seems to need it. As you know, normalization is just a euphemism for shrinking its balance sheet and draining money from the banking system. And that is assuredly something frightful. The Fed is now doing its darndest to make it seem less so.

Along with the Fed suddenly singing soothing lullabies to the market we’ve all heard the sweet talk from the US Treasury about calling in the bankers and the PPT, all of whom cheerily profess to love you and caring about you and your investments. It’s all about feeling good.

Whether they were really manipulating the market or not, I would hope that you have no doubt that the manipulators were doing their best to manipulate you and your fellow investors over the past few weeks. But what about all those soothing words? Do they matter? Or is it true that money talks, and you know what walks?

Well here’s something for you to look at that should concern you. It suggests that bankers have all too quickly forgotten the lessons of the past, and that once again they have their heads up their… cloud servers.  Yeah, that’s it, cloud servers. 

I mean, you should see their behavior. In fact you will see it because I’m going to share a picture of it with you. I just found a little history that is very disturbing indeed in terms of what it teaches about the present.

Click here to see what it is

The post This Chart Shows The Bad News That Bankers Are More In LaLa Land Than 2000 Or 2007 appeared first on Lee Adler’s Sure Money.

Here’s How To Name That Tune To Beat The Wall Street Bleat

The December market meltdown spooked the Fed enough so that it changed its tune about the balance sheet bloodletting being on autopilot. “Autopilot…autopilot…autopilot…”  had been the zombielike mantra whenever any financial infotainment reporters asked the Fed about it. Which was almost never to begin with. There was a kind of conspiracy of silence. No one wanted to awaken the sheep.

But in October, the pressure of that $50 billion per month in Fed balance sheet reductions started to cause pain. Since then, the mouthpieces of the Primary Dealer mob and a few buy side behemoths have regularly been trotted out to bleat about it to their breathless captured media crowd.

Before that, while I had been warning you about what would be coming for a year, the Wall Street media remained dead silent. Apparently they had been read their rights. As in, “Anything you say, can and will be used against you.”  

The dealers and a few sharp professional investors knew, but they didn’t want others to know, particularly clueless whale institutional investors who think that the economy and the trend of business drive stock prices.

Here’s What They, and You Knew, and Now Need to Know to Protect Yourself and Profit

The post Here’s How To Name That Tune To Beat The Wall Street Bleat appeared first on Lee Adler’s Sure Money.

Wall Street Teases You About A Rate Pause But What’s Really Short Term Bullish Will Shock You

If you missed it, here’s Part 1 of this report. I was going to use the same headline and just call this part 2, but as I was doing my usual first rewrite to tweak the structure, something new dawned on me. I had to largely rewrite the post. And that called for a new headline.

While the mainstream media focuses on the interest rate issue, if you’ve been reading Suremoney for a while, you know the rates thing is a red herring, anyway. The only thing that really matters is the bloodletting, as the “normalization” of the Fed’s balance sheet currently drains $50 billion per month from the system. Well, that and the fact that the Treasury is sopping at least $100 billion in cash out of the market every month.

In its 25 paragraph report about the FOMC December meeting minutes, the Wall Street Journal was silent on this until the 22nd paragraph. It essentially buried what should have been the lead of the report, instead giving the issue just a few offhand comments.

Here’s their comment. The added emphasis is mine.

“Separately, the minutes showed the Fed made more progress but reached no final decisions around how and when it will stop shrinking its $4.1 trillion portfolio of bonds and other assets. The minutes indicate officials aren’t looking to slow the winddown as part of their policy stance, a change advocated in recent weeks by some prominent investors and Mr. Trump.”

In fact, I saw no discussion at all about slowing the rate of draining as I read through the minutes. Only in recent days have numerous Fedheads, including head honcho Powell, begun discussing that possibility. These remarks, while clearly scripted, have come up since the December FOMC meeting.

It’s a new wrinkle that we’ll definitely need to pay attention to because it establishes a bit of a timeline. But I’m not worried about it yet, in terms of changing my outlook. Normally it takes 6 to 9 months after the Fed starts trial balloons for the idea to make its way into policy. And each time the market rallies like this, that takes the pressure off the Fed to do anything. Rallies like this one just push any Fed policy counteraction further over the horizon.  

But there’s one other thing that is bullish in the short run, and you’ll never believe what it is!

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While Wall Street Tries To Get You Excited About A Rate Pause, Here’s What Really Matters –  Part 1

Were you watching CNBC yesterday? If you were you know all about the Fed meeting minutes. They were all over the online financial media too. The universal take was that the Fed has turned dovish, and that it will pause raising rates. And everyone agreed that that’s bullish!

But is it?

Previously, Chairman Powell had held firm to the idea that the Fed would only loosen policy if the economy materially weakened. He had said that the Fed wasn’t concerned about possible stock market declines, but would be motivated to ease policy only if the economy contracted as a result, particularly if housing was the cause.

But the stock market selloff in the fourth quarter combined with relentless pressure from the White House spooked him and his cohorts on the FOMC. Apparently Chairman Powell is no Paul Volcker and no Chairman Pow! Faced with a challenge from the market, he turned into Mr. Softee. Wall Street concluded that, yes Virginia, there really is a Powell put. 

The Wall Street Journal led the story with the headline and subhead, Fed Is Unlikely to Raise Rates in Next Months, Minutes Show – Recent market volatility and signs of slowing global growth made ‘extent and timing of further policy firming less clear’

Reporter Nick Timaraos explained, “Federal Reserve officials signaled they are unlikely to raise interest rates for at least a few months while they assess the impact of recent market volatility on the U.S. economy.”  He went on to say that stocks sold off because “Powell presented a confident outlook in a postmeeting press conference that conveyed to some investors a greater bias toward rate increases than they anticipated.”

And here I thought that the markets were weak because they were starved for liquidity! Indeed they were. But naturally there’s more to the story that Wall Street isn’t telling you, but I will. Click here to find out what it’s really all about.

The post While Wall Street Tries To Get You Excited About A Rate Pause, Here’s What Really Matters –  Part 1 appeared first on Lee Adler’s Sure Money.

Here’s How Much Higher this Bear Market Rally Will Go

Bear markets have big rallies. They tend to be short and sharp. Bull markets have long, typically slow moving uplegs.

But there’s a problem. That’s because the first leg of a new bull market typically looks like a bear market rally. It’s hard to tell the difference when you’re in that situation, like now. But does it matter?

No. You don’t need to rush in.

So let’s take a look at where we are now, and decide if we’re still in a bull or bear market.

The post Here’s How Much Higher this Bear Market Rally Will Go appeared first on Lee Adler’s Sure Money.

It Will Help You Save The Bacon if You Smell a Rat in the Jobs Report

When you average December’s blowout jobs number, which few foresaw, with November’s weak number, which nobody foresaw, what do you get?

Nothing.

That’s right, nothing. The average of the two months isn’t materially different than the average gain of the past year, or the past 7 years for that matter. This was much ado about nothing.  

But as the Wall Street Journal put it,

Strong U.S. Job and Wage Growth Provides Assurance on Economy

Employers added 312,000 jobs last month and 2.64 million in 2018, the best year since 2015

Wow! They sure were excited. It was a perfect excuse for them to be bullish, when I would have thought that more jobs would keep the Fed on a tightening path, which is bearish.

Fed Chairman Jerome Powell disabused us of that notion later in the day. In a panel discussion with his predecessors, Jerome went all soft hearted on us and announced that Fed balance sheet “normalization” (a euphemism for tightening) wouldn’t be on autopilot after all. Now that’s not the same as saying they would print, but the market took it as a gift, which it most assuredly isn’t.

Here’s why it isn’t, and what you should do about it.

The post It Will Help You Save The Bacon if You Smell a Rat in the Jobs Report appeared first on Lee Adler’s Sure Money.

Beware of How The False Market Narrative Works To Separate You From Your Money

Every day the financial infotainment media feels obligated to come up with a reason for that day’s gyrations in the stock market. Since I’m in France these days, I like to call it the “raison du jour.”  It’s kind of like the daily special at the local lunch counter, the soup du jour. Only it’s not  the “soup of the day;” it’s the reason of the day. Or more often, the “excuse du jour.” No need to translate that!

Lately, the excuse du jou, has been the idea that investors are worried about a weakening economy. Now, the Wall Street PR flacks usually modify that as a weakening global economy, and certainly, I’ve seen plenty of evidence for that in my regular tracking of European banking system data for many months. So there’s some truth in that.

Whether it’s the impetus for the US stock market downtrend, is another matter. You know what I think. It’s not the economy, it’s the liquidity!

But what about the excuse du jour for the bond market rally and the crash in US Treasury yields. The rationale, or what’s commonly called the market “narrative,” for that is that the US economy is weakening, and that that will lead to lower inflation, lower bond yields, and looser Fed policy.

Is there any truth to that narrative, and should it matter to us as stock investors and traders? Because if it’s not true, then Wall Street is leading you down the garden path, as always doing its best to separate you from your money.

Lucky for you, you’re reading Sure Money and have access to the best data there is to assess the current state of the US economy. What makes it even better than conventional economic data is that it’s real time, it’s unmassaged, and nobody, but nobody pays any attention to it except us! So we are able to stay ahead of the crowd.

So let’s take a look at it!

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Here’s Why Primary Dealers Are Getting Buried, and That’s Bad for Us Too

Once upon a time, the US Treasury had to borrow a lot of money…

OK that’s all the time.  Unfortunately, now more than ever. And that’s a very big problem, despite the fact that it doesn’t looks so bad right now. After all, Treasuries have staged a massive rally for a month now. It’s all good, right?

Well, not so much.  Here’s why.

Demand for Treasuries at the regular auctions has risen more than the increase in new issuance lately. Both stocks and bonds have rallied over the past week. Accompanying that has been a gigantic surge in bank buying, and lending by non-banks.

This doesn’t bode well for the sustainability of the rally. Banks have a poor record of market timing, and rallies driven by leverage, as opposed to cash, grow increasingly fragile.  

The problem for the Treasury market is that these stock liquidations come in waves. One of those waves has just ended. Within the next few weeks,  the underlying shortage of money liquidity relative to Treasury supply will reassert itself. Treasury prices will start falling and yields will start rising again.

However, another plunge in stock prices could drive more Treasury demand. The markets remain very thin in both directions. Over the past 5 trading sessions the volatility has mostly been to the upside. But we can’t make a bet in that direction because of the underlying dynamics of the Fed pulling $50 billion per month out of the banking system. That exerts continuous drag, which will sap demand. Timing is the tricky part, which we must leave to technical analysis. I cover that for stocks in the Wall Street Examiner Pro Trader Market Updates and for bonds in the Treasury Market Updates

Meanwhile, Primary Dealers, the guys who essentially own and run the Wall Street casino, and who have special relationships with the Fed and Treasury, aren’t doing so well. 

Here’s what you need to know to avoid getting sick along with them.

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