Still banging its head on resistance, and watching for some Bullish cue from the Fed. The real issues are: 1.) The economy is slowing, 2.) oil is too low; and, now, just today, 3.) news broke of another debt-bomb issue I knew of, and was waiting to publicly hear about. We are experiencing record-breaking auto sales, which is a great sign of economic strength, right? BUT, no less than 27% are of a sub-prime auto loan nature, and the rate of default among those is rising rapidly! And, there’s some $1 trillion worth of these things. The point is, there are multiple debt-bomb fronts beginning to blow up. One is the energy company high-yield bonds I’ve mentioned a number of times. Now, a second is beginning to be noticed; the sub-prime auto loan fiasco… and, the third yet to get much coverage lately, but also worsening by the day… school loan debt. Tons of this is going belly up. It’s a perfect storm and trifecta of debt service failure that is going to result in an incredible economic dislocation here… likely before this year of 2016 is done… the Fed not withstanding tomorrow.
Oil is $37.72 as of 6:15 pm EST Tuesday… up a bit today, but nowhere near enough to help anybody. And, while the major indexes looked to have been pretty stable, but a bit mixed… the underlying market was actually seriously giving way! Yes, it was… and, once again, volume was miserable, too! And, there was more underlying flight to safety into utilities and consumer staples among the 10 S&P industry groups, while nearly all the others were in decline.
On the plus side… the daily analysts’ earnings revisions have stopped falling for the S&P 500, as of this date, and actually turned upward a smidge, but still off 8.46% just since 12/28… and, I’m quite sure that my data gets to me almost 2 weeks after it is first generated. As you go down the market cap sized indexes to the mid and small cap indexes, the EPS revisions are still falling in further decline. SPY saw some solid volume growth in its last 10 minutes today… and the after hours has taken it another couple of pennies higher.
There will be more important oil news Thursday, but continue to follow the Oil Price News at theweek.co.uk. They really stay right on top of that every business day! As oil ultimately goes, so will go the world’s stock markets, and much more besides! More later…
Oil is at $36.91… been climbing, but still cannot save the overly-indebted, and won’t. Asia closed off some, Europe is up some, as is our index futures, but only slightly. There’s huge hope for a positive Fed announcement this afternoon at 2:30. They can make sweet sounds, but they cannot stave off what is coming. Markets might find room for some rise, but the overhead resistance is going to take an awful lot of volume to wade thru, and it’s not yet begun to do anything like that. So, we’ll see! Read TheWeek.co.uk, News, Oil price column, and click the live link in it to Oilprice.com. Be in the know! This is the truly pertinent stuff right now!
Here’s to your successful investing!
Harold F Crowell