Jay's Daily Posts As Guest Host of Doug's Diary on Realmoneypro.com Aug 7

Dow Falls on Fed Fears

AUG 7, 2015 | 4:47 PM EDT

Well, there you have it -- the Dow closed lower for the seventh consecutive day thanks to the Fed overhang. The DJIA is also 460 points or so below where it closed on Jan. 2, the year's first trading day.

Despite anticipation after the market's initial moves, stocks sank pretty much all day as investors digested the ramifications of today's mostly in-line jobs data.

Of course, we still have one more jobs report to go before the mid-September Federal Open Market Committee meeting -- and some pundits are already billing that as the year's most important jobs-data release. Give me a break, man!

As Jim Cramer wondered in an article today, will this Fed fixation mean that we go down every day until the FOMC raises rates?

I say we don't. However, I think the markets will remain hostage to every word from every Fed head until the central bank raises rates.

That's why I say that if they're going to tighten, they might as well just do an inter-meeting increase now and get it over with so we can all move on with our lives. Otherwise, we're going to have an awfully rough five or six weeks ahead, with these Fed heads almost always shooting their mouths off.

But however all of this plays out over the next several weeks, it's time for the weekend. So, let's shut down the turrets and worry about all of this all over again come Monday morning!  

Until the next time, thanks for reading my thoughts today (and thanks for putting up with a "substitute teacher"). Professor Kass will be back on Monday.

Have a safe and fun-filled weekend everyone!

Position: None

I'm Fed Up

AUG 7, 2015 | 3:20 PM EDT

To continue along the theme of the day -- which should be "Investors Paralyzed by Fears of a Rate Hike" -- a Reuters poll shows that 13 of 19 primary dealers now expect a Fed rate increase in September. Nine of the 19 are also expecting two rate hikes this year.

I say that things can change 180 degrees in a millisecond.

Riddle me this: What happens when we have this, that or the other Fed head come out and say, "Hold your horses"? You know, like what Fed Gov. Jerome Powell said this week after the Atlanta Fed's Dennis Lockhart had said it was "all systems go"?

How long will this madness continue? It's already been more than a year since the prospect of a Fed rate hike began hanging over global financial markets. Frankly, nothing tires Chuckles more than our very own Federal Reserve.

Position: None

Raising Rates in a Risky World

AUG 7, 2015 | 12:43 PM EDT

I'm sitting here and wondering what happens if the Fed does raise rates next month and things go south -- either here at home or further south in China (or within the Eurozone with Greece, Spain, etc.).

What if Brazil's problems worsen? Consider this report from The Economist last week: "The price of insuring Brazil's government bonds against default shot up in the wake of last week's announcement (raising rates instead of a cut). It is now higher than for Turkish bonds, which S&P rates as junk."


If one or more of the above problems happen, will the Fed just say "oops"?

Position: None

Don't Sell a Burrito to Buy a Review

AUG 7, 2015 | 12:25 PM EDT
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I've been watching my screens all day and one thing that jumps out at me is the fact that most investors seem to be selling companies that have had very strong earnings (and very strong positive reactions to their earnings).

Frankly, it should be the other way around.

Using your winners as an ATM to pour money into your losers is probably the worst thing you can do -- but very often, we all fall into that trap (right or wrong).

Selling a burrito (CMG) to buy a review (YELP) might be the dumbest move you can make.

That said, selling a burrito to ring the register might not be so bad given the panic over the Fed in the last few weeks -- especially after the jobs data today.

Position: None

Report Cites iPhone 6s Production Snag

AUG 7, 2015 | 10:14 AM EDT
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As has been the case for the longest time in memory, the negative Apple (AAPL) rumor mill is now at full tilt. 

The latest negative piece of news, from BGR, being that Apple has hit production snagsfor the iPhone 6s but that there should not be a delay in the scheduled September launch for the new iPhones. 

Just passing it on.

Position: Long AAPL calls and puts

Odds Now Favor a Rate Hike

AUG 7, 2015 | 9:01 AM EDT

From Benzinga, the odds of a rate hike at the Fed's September meeting just jumped to 56% from 48% last night and 46% just before the data was out this morning. Odds of a rate hike at the December meeting just went up to 79% from 72% just before the data was out this morning.

Position: None

Signs from Nvidia, JD.com

AUG 7, 2015 | 8:45 AM EDT
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Back to stocks and markets.

I must say the report from Nvidia (NVDA) last night was a totally pleasant surprise and a sign that all things in the personal computer chain might not be bad.

Also, JD.com (JD) showed us this morning that there is a lot of China "noise" and a warning for us that the Chinese economy is not just going to roll over and die no matter what the pundits say and how hard they wring their hands and how copiously their tears flow.

Position: None

Jobs A Bit Below Expectations

AUG 7, 2015 | 8:39 AM EDT

The non-farm payroll numbers are in.

There were 215,000 jobs added in July. That was below what the Street was expecting, which was 220,000.

The unemployment rate stays steady at 5.3%. 

Average hourly wages tick higher by 0.2% to $24.99

The U.S. dollar jumps higher.

The futures are flat to slightly lower.

Let the "will they, won't they" raise rates in September continue yet again.

Position: None

It's Jobs Data Day!

AUG 7, 2015 | 7:09 AM EDT

Global markets are mixed as we await the jobs data from July due out this morning. 

In Asia, the Shanghai Comp was up 2.3%, Shenzhen was higher by 3%, the Nikkei was up 0.30%, the Hang Seng closed higher by 70 basis points while the Sensex was down 0.2%.

Across the pond, the major European markets are basically flat to slightly lower.

Commodities also will be the focus today and, while ahead of the jobs number, current Fed Funds futures are pricing in a 50% probability that the Fed moves in September. Depending on the data, if that probability were to rise, I would look for gold to make another new low for the year, which also would be a new six-year low for the yellow metal. Thus far gold has not made new lows as equity markets are weak across the globe as they wait for this morning's data.

Yesterday, the Dow closed down for its sixth consecutive day and also made a new six-month closing low. 

As most of you know, I am a huge critic of our Fed, and I say this "will they, won't they" business has to stop when it comes to a rate hike. One side of me says they should pull the trigger and hike in September just to get them off our backs. But then the other side of me says a rate hike in September could make things a lot worse globally no matter what filth spews out of various Fed heads' mouths. Those Fed heads are all looking for their million-dollar payoffs via board seats, consulting jobs and speaking engagements once they are done with their stint at the Federal Reserve, ala Alan "Easy Al" Greenspan and Ben "The Beard" Bernanke.

Position: None

Hey, Fed, Hold Your Horses

AUG 7, 2015 | 6:58 AM EDT

It has been a while since I filled in for Professor Kass in doing his Diary and it feels good to be back here. Enjoy Tanglewood, Doug.

Well, we have yet another big bad event just ahead of us, which is the July jobs data. Most investors think that a September rate hike hinges on the strength of this data, and that may be so. However, what most don't know is that this data, released monthly by U.S. Department of Labor, is totally misleading and plain wrong.

Currently, the press, the White House and yes, even Wall Street, are out with their pom poms ablaze about the 5.6% unemployment rate. The problem is that number is a lie. But, as long as it is swept under the rug, most of us don't even know how false that data point, among many others, actually is.

The reality is that at the moment there are more than 32 million-plus Americans who either are sitting around having totally given hope on ever finding gainful employment, or who are working in jobs that severely underpay or are below their educational or skill levels. These 32 million-plus Americans are not counted in the beautiful statistics put out by the Department of Labor every month, after which we have to put up with watching Labor Secretary Tom Perez trot out on national TV and almost break his arm patting himself on the shoulder.

Going back to the data itself, even a strong number does not warrant a rate hike in September, given the current macroeconomic uncertainty globally. China is not out of the woods stock marketwise and economically, and neither are Greece and maybe even Spain and Portugal.

Yesterday we saw the Bank of England correctly stand pat on rates despite widespread consensus that they would hike rates. I suggest our Fed heads led by Janet "Rebel" Yellen take a page from their book and stand down as well.

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