Wall Street Str...'s  Instablog

By Carlos Guillen

Equity markets are continuing to rise, with the Dow Jones Industrial Average reaching another record closing price yesterday after dovish comments from two Fed officials. And today comments from Fed Chairman Ben Bernanke have set the stage for the Dow to close at yet another record level.

Yesterday Federal Reserve Bank of St. Louis President James Bullard said that the central bank should continue its bond buying because it's the best available option for policy makers to boost growth that is slower than expected. Perhaps not so clear cut, soon after Bullard's comment, New York Fed President William Dudley said he could not at that point be sure whether policymakers will next reduce or increase the amount of purchases, due to the "uncertain" economic outlook. While not crystal clear, his comments of "uncertain" economic outlook were interpreted as no deviation from the current easy monetary policy trajectory, and this lifted stock markets.

Perhaps already anticipated, Fed Chairman Ben Bernanke's comments today were along the same lines as those depicted by Bullard and Dudley. Ben Bernanke testified before the Joint Economic Committee of Congress earlier today and warned that premature tightening in policy could strangle the economic recovery. And while lawmakers tried to nail down when the Fed will taper its bond-buying program, with one official asking if it could occur before Labor Day, Bernanke evaded the question by saying that the Fed could slow down its asset purchases in its next few meetings.

Of course, investors have once again received further confirmation that the current 85 billion a month asset-purchase program will not slow down in the near term. As such, stock markets have received a boost, lifting the Dow to another intra-day record high and setting the index on track to close at its second record closing price this week.

Existing Homes

Existing home sales were up 0.6% in April, which was just slightly slower growth than the Street was looking for but still a decent result as home sales continue their steady recovery. In the meantime, median prices were also up 11.0% year over year and 4.8% month over month. One yellow flag was a strangely large 11.9% increase in inventory month over month, although at 5.2 months' supply it remains quite low in the grand scheme.

This, together with a blowout quarterly result from Toll Brothers, is lifting the industry to new multi-year highs.

https://www.wstreet.com/user/register.asp?source=3

By Carlos Guillen

After some instability earlier in the trading session, equity markets are on track once again to reach new record highs. Despite a second day of lacking economic drivers, investors have not been dissuaded from jumping into stocks, and today comments from a Fed official have tipped the scale in favor of equities.

Federal Reserve Bank of St. Louis President James Bullard said earlier today that the central bank should continue its bond buying because it's the best available option for policy makers to boost growth that is slower than expected. This has once again served to give investors further confidence that the Fed will very likely continue with its easy monetary policy trajectory. According to Bullard, quantitative easing maneuvers have been improving financial conditions and can be adjusted as needed, and as such should remain active.

Later in today's trading session, New York Fed President William Dudley will also offer his views and insights into the outlook for the Fed's asset-purchase program. And more importantly tomorrow, Fed Chairman Ben Bernanke will testify before Congress, and the minutes of the most recent meeting of the Fed's monetary-policy committee will be released.

While there were some companies that had rather encouraging earnings results including Home Depot, Best Buy, Auto Zone, and TJX Co., the main driver continues to be easy money from the Fed. As such, if Ben Bernanke tomorrow gives any indication of a winding down of asset purchases, we can expect markets to make a sharp reversal. Ladies and gent hang on to your seats!

Apple Gets Grilled
By David Urani

It's not so easy being Apple these days. Just eight months ago when the stock was $700 you could ask anyone and they'd probably tell you it was the greatest company in the world and that the latest iPhone was revolutionary. In fact, ask someone on the Street and they probably would have even assumed the company was somehow "green" even though they aren't.

It's funny how things change. Now the stock is $435 and all of a sudden the latest gadget from Samsung steals all the buzz while Apple gets criticized for not innovating (and what ever happened to that iTV anyway?). Heck, even washed up old Microsoft seems to be sneaking itself back into some of Apple's lost limelight with its big new Xbox reveal later today.

And it's only now that Congress feels the need to prod Apple over its "shady" taxes, or lack thereof. I honestly wonder if the Company would have been scrutinized over something like this back in September when AAPL was $700. In reality though Congress' grilling of Apple today goes beyond just Apple, which is the highest profile example of a company that goes to great lengths to minimize its taxes (all perfectly legally, I might add).

The fact is, any competitive company is going to pay as little in taxes as it can. Apple is not a tax cheat, but rather one of the greatest business success stories of all time, and if the leadership in this government wants to publicly shame the company for all to see, then shame on them. It's not Apple that should be being criticized today but Congress itself for offering up this overly complex, cryptic, burdensome tax code, and all the many loopholes that go with it.

Ultimately Congress needs to leave this meeting looking at themselves. And therein lies another problem. There's a high likelihood this is a discussion that it designed to bring up tax reform, and surely the White House's agenda is to confiscate more of Apple's wealth for itself, and any other international US business for that matter. And along the way the government has found a way to tarnish American success once again.

https://www.wstreet.com/user/register.asp?source=3

It is simply remarkable how equity markets are continuing to climb to record highs with very few breaks in between. Just last week there were three sessions in which the Dow Jones Industrial Average ended the trading session at record closing levels, and today the Dow appears to be attempting to make small gains that can take it to yet another record high closing price. What is remarkable is that despite the lack of any macroeconomic drivers today, investors appear to be increasingly more allured into stocks. Clearly, the sentiment out there is very positive and is serving to lift markets today, although not by much.

Today there are no economic drivers being presented, and tomorrow will be no different either. However, Richard Fisher, president of the Federal Reserve Bank of Dallas, today reiterated his stance that the Federal Reserve should dial back its monthly bond-buying program because it's no longer effective in stimulating the economy. According to Fisher, the Fed has made rich people richer, but the question is what it has done for the working men and women of America.

Later on today Charles Evans, Chicago Fed president, will discuss monetary policy and the economic outlook. However, more importantly on Wednesday, Fed Chairman Ben Bernanke will be testifying before Congress about the economic outlook, and the FOMC will release minutes from its most recent policy meeting.

At the moment the Dow is slightly up, over 15 points, which is not a whole lot, but given the market's amazing uptrend during the last couple of weeks, it is remarkable that the upward momentum is still maintaining its overall magnitude.

Wild Trade in Gold and Silver
By David Urani

The action in the precious metals markets today is anything but normal. In fact, the abnormal activity really began last month with April's mysterious plunge in gold from approximately $1,550 an ounce to $1,350 in just a couple of days. Today's action started earlier this morning, particularly with silver futures which sank as much as 9%, having been halted four times on the way down. There's been no concrete explanation for why, although there's a suggestion that another spike-up in the yen may have contributed, causing traders to cover for currency losses. Whatever the case, that sell-off has now been reversed big-time with silver now suddenly up 2% on the day, an intraday recovery of approximately 11%. Meanwhile gold has also run higher, including a $20 spike in just a couple of minutes right at noon.

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And as far as today's sudden bounce goes perhaps a technical stand at support, the April low for gold at $1,360, triggered some buying and/or short covering. Yet just this morning, especially for silver, it seemed the metals would plummet through those multiyear lows before traders had a major change of heart.

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