Is breakout of Dow to new high really a positive?
Saturday, March 23, 11:00 a.m. The Dow reached its old highs and broke out to still higher highs. It doesn’t seem worried about the Cyprus situation. Congress has just successfully passed the first annual Federal budget in four years. The FOMC meeting this week indicated the Fed is more positive in its outlook for the [...]

Saturday, March 23, 11:00 a.m.

The Dow reached its old highs and broke out to still higher highs. It doesn’t seem worried about the Cyprus situation. Congress has just successfully passed the first annual Federal budget in four years. The FOMC meeting this week indicated the Fed is more positive in its outlook for the economy. 

So, will the Dow maintain its breakout and the positive trend until the end of the market’s favorable season in April or May?

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Some global markets that have been in that position before indicate it may not be a positive situation to be in.

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It does make you wonder, particularly with the DJ Transportation Avg, which often leads the economy, so unusually over-extended above its long-term 200-day m.a.

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What? Larry Kudlow is becoming a Bernanke fan?

For years ultra-conservative CNBC host Larry Kudlow has been one of the most vitriolic critics of Fed Chairman Ben Bernanke and the easy money policies the Fed adopted in attempting to rescue the economy from the 2008 financial crisis and ‘Great Recession’.

But in his article in The National Review this week he wrote:

“All this is to say that the demand for cash and cash equivalence by consumers and banks is so strong in a risk-averse environment that all the Fed has really done is meet those cash demands. It’s not working the printing presses overtime.

In fact, the inflation rate during this whole period has been trending around 2 percent or less, far below the expectations of Fed critics (including myself). Over the past year, M2 growth has been about 7.5 percent and M2 velocity has fallen by about 3.5 percent. So the rise in nominal GDP is a historically low 3.5 percent.

Interestingly, while the inflation rate has remained subdued, so have market-price indicators, such as gold, the dollar, and commodity indexes. The suggestion here is that Bernanke, rather than mounting a high-inflation policy, has been avoiding deflation.

At the end of the day, the Federal Reserve is not the engine of growth. Low tax rates, light regulation, and limited government spending create the incentives for more rapid economic expansion and prosperity-inducing opportunities.

But if I have this story right, the market monetarists want the central bank to enforce a nominal GDP growth rule, which will avoid both deflation and inflation, and thus give fiscal incentives breathing room for a more rapid job-creating expansion.

I don’t agree with Bernanke’s unemployment target or his criticism of lower government spending. But I confess that he may have the monetary-stability story more right than I originally thought.

If gold remains soft, and King Dollar steady, perhaps the former Princeton professor deserves a little more credit. He may have gotten that story right.”

It’s not often that someone of Kudlow’s stature makes such an admission.

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Yesterday in the U.S. Market.

A quite positive day in spite of lingering concerns about Cyprus, making for only fractional losses for the week in the U.S. Trading volume was quite light at only 0.6 billion shares traded on the NYSE, 1.6 billion on the Nasdaq.

The Dow closed up 90 points, or 0.6%. The S&P 500 also closed up 0.7%. The NYSE Composite closed up 0.6%. The Nasdaq closed up 0.7%. The Nasdaq 100 closed up 0.9%. The Russell 2000 closed up 0.3%. The DJ Transportation Avg. closed up 1.0%. The DJ Utilities Avg closed up 0.2%.

Gold closed down $6 an ounce at $1,608.

Oil closed up $1.40 a barrel at $93.85.

The U.S. dollar etf UUP closed down 0.6%.

The U.S. Treasury bond etf TLT closed up 0.1%.

Asian markets closed down in their last session of the week.

The Asia Dow closed down 0.7% Thursday night (Friday in Asia).

Among individual Asian markets:

Australia closed up 0.1%. China closed up 0.2%. Hong Kong closed down 0.5%. India closed down 0.1%. Indonesia closed down 1.7%. Japan closed down 1.8%. Malaysia closed down 0.4%. South Korea closed down 0.1%. Singapore closed down 0.3%. Taiwan closed down 0.2%. Thailand closed down 3.3%.

Yesterday in European Markets.

European markets closed mixed yesterday. The London FTSE closed up 0.1%. The German DAX closed down 0.3%. France’s CAC closed down 0.1%. Greece closed up 0.6%. Ireland closed down 0.2%. Italy closed up 0.7%. Spain closed down 0.3%. Switzerland closed down 0.2%.

Global markets for the week.

A mildly negative week in the U.S. but fairly ugly elsewhere.


THIS WEEK (March 22)
DJIA14512- 0.01%
S&P 5001556- 0.3%
NYSE9065- 0.6%
NASDAQ3245- 0.1%
NASD 1002800+ 0.1%
Russ 2000946- 0.7%
DJTransprts6179- 1.5%
DJ Utilities497+ 0.4%
XOI Oils1,357- 0.2%
Gold bull.1,608+ 1.1%
GoldStcks136.96+ 1.9%
Canada12757- 0.6%
London6392- 1.5%
Germany7911- 1.6%
France3770- 1.9%
Hong Kong22115- 1.9%
Japan12338- 1.8%
Australia4980- 2.9%
S. Korea1948- 1.9%
India18735- 3.6%
Indonesia4723- 2.0%
Brazil55207- 2.9%
Mexico42686+ 0.2%
China2437+ 2.2%
LAST WEEK (March 15)
DJIA14514+ 0.8%
S&P 5001560+ 0.6%
NYSE9116+ 0.7%
NASDAQ3249+ 0.2%
NASD 1002799- 0.2%
Russ 2000952+ 1.1%
DJTransprts6272+ 2.1%
DJ Utilities495+ 1.4%
XOI Oils1,360+ 1.0%
Gold bull.1,591+ 0.8%
GoldStcks134.46+ 0.9%
Canada12830- 0.1%
London6489+ 0.1%
Germany8042+ 0.7%
France3844+ 0.1%
Hong Kong22533- 2.4%
Japan12560+ 2.3%
Australia5129- 0.2%
S. Korea1986- 1.0%
India19427- 1.3%
Indonesia4819- 1.1%
Brazil56864- 2.7%
Mexico42605- 3.9%
China2384- 1.7%
PREVIOUS WEEK (March 8)
DJIA14397+ 2.2%
S&P 5001551+ 2.2%
NYSE9054+ 2.0%
NASDAQ3244+ 2.4%
NASD 1002804+ 2.1%
Russ 2000942+ 3.0%
DJTransprts6143+ 2.7%
DJ Utilities488+ 1.5%
XOI Oils1,347+ 1.6%
Gold bull.1,578+ 0.2%
GoldStcks133.30+ 0.01%
Canada12835+ 0.5%
London6483+ 1.7%
Germany7986+ 3.6%
France3840+ 3.8%
Hong Kong23091+ 0.9%
Japan12283+ 5.8%
Australia5137+ 0.7%
S. Korea2006- 1.0%
India19683+ 4.0%
Indonesia4874+ 1.3%
Brazil58432+ 2.7%
Mexico44322+ 0.7%
China2426- 1.7%

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