Blog Posts by Jeff Macke

Marc Chandler, head of global currency strategy at Brown Brothers Harriman, has both good news and bad news for the legions of Ben Bernanke haters. The good news is that Chandler expects Bernanke to obey the "informal rule" of two term limits for FOMC chairman. The bad news, for the haters of current policy, is that nothing is going to change if and when Bernanke leaves at the end of his term next January.

Conventional wisdom is that vice chair of the Board of Governors, Janet Yellen, will take the helm next, but that's of little consequence. What matters is policy and, more specifically, when the FOMC starts weaning the markets off years of Quantitative Easing (QE).

With economic data coming in slightly better than expected and junk debt yields dropping below a somewhat preposterous 5%, the market is starting to toy with the notion that QE may be coming to a halt sooner than expected. Chandler says the Fed is going to see more than just another "phase" of stronger data before calling a halt to the most controversial economic stimulus program since FDR was in office.

Related: Bernanke Must Come Clean on 'the Big Lie' Says Whalen

No one uses the term anymore, but Chandler describes the Fed as being in a box. They want to stimulate to assist job creation but can't do so at the expense of savers or those currently being baited into high-risk investments by the Fed's perversely low interest rates. Pushing investors out on the risk curve and then burning the bridge behind them is bad form and bad policy. The Fed only has "blunt tools" with which to work, Chandler maintains. It doesn't matter whether QE ends abruptly or with tapering, it's going to hurt when it happens.

Best Buy (BBY) reported earnings with a little something for everyone. For the bears there were shrinking revenues, declining margins and diminishing sales on a comparable store basis and just about every other numerical measure of results. The company pronounced the reported 32-cents non-GAAP and 29-cents GAAP profits to be "better-than-expected" but said more about expectations than Best Buy's quarter.

Noting that the stock is up 125% in 2013, my Breakout co-host Matt Nesto is unimpressed. "Now the question is, do you believe these guys?" Nesto grumbles in the attached clip. "Why would you get on board the ship at these levels?"

The answer depends on where you look. Last March BBY CEO Hubert Joly laid out the six focus areas of his Renew Blue turnaround plan. As discussed on Breakout at the time, those measures would be the appropriate way to gauge Best Buy's progress, particularly since the company itself suspended financial guidance. Applying these metrics to the results released this morning shows BBY making some degree of progress.

Best Buy grew online sales 16%, struck a deal to establish Samsung Experience Shops, "negotiated overall rent reductions at a number of stores," ripped another $175 million of annualized SG&A expenses out of the supply chain and sold off its European operations. While the turnaround remains very much a work in progress, the company has a plan and is sticking to it — even if they aren't absolutely certain what the end result will be.

As is the case with grief, there are five stages of bull markets.

Stage one is residual fear of the prior bear market.

Stage two is denial that a bull market exists at all.

Stage three is anger at having missed out on enormous profits. This has been the most hated rally in market history since at least October of 2009. That qualifies as anger.

Stage 4 is when strangers ask me if it's too late to buy Tesla (TSLA). Last weekend the bull market entered Stage 4.

If you're still deciding whether or not to buy stocks it's safe to say you missed the bottom. What matters is where we go from here and how investors can dip a toe into stocks without feeling like the unwitting sucker at a high-stakes poker game.

In the attached video, Greg Troccoli, co-founder of ChartLabPro.com, suggests giving the market room to run but not without a backstop. Troccoli, who suggested stocks could be poised to rally when he joined Breakout in March, says the 1,700s aren't outside the realm of possibility now that resistance has been broken.

Related: The Last Resistance Level Before a Major S&P 500 Breakout

Troccoli is a technician; he takes the stages of bull markets and all other emotion out of the equation and lets the charts guide him. Right now he's dispassionately rolling up his stops to avoid giving back his gains. At the moment Troccoli's sell signal is a close below support on the S&P 500.

$615 million doesn't go as far as it used to. That is how much SAC Capital Advisors paid to settle a civil case with the SEC in March. As part of the settlement, SAC neither admitted nor denied wrongdoing. Apparently that wasn't good enough. Over the weekend SAC founder and billionaire Steven A. Cohen received a subpoena to testify before a grand jury as part of a different investigation into insider trading.

The fact that the government has been trying to build a case against Cohen is hardly news. Cohen has been playing Moby Dick to a series of would-be Ahabs in the government. The chase has been well documented, most recently in an exhaustive Vanity Fair piece, which cast U.S. Attorney Preet Bharara as the current harpoon thrower.

If Cohen is charged and convicted it would be the most significant blow against the Wall Street Insider Club since the 80s, when Rudy Giuliani took down Michael Milken. There have been high-profile cases since, but none of the targets were as central to the day-to-day business of trading as in the case against Cohen. Bernie Madoff was a one-off Ponzi scheme, massive in scale but relatively obscure. After Madoff's fraud was exposed, the collapse was swift and conviction was a foregone conclusion.

SAC is different because it is of the Wall Street system. The firm reportedly pays more total brokerage commissions every year than any other group on earth. Cohen isn't just a Moby Dick to ambitious politicians like Bharara; he's also a whale to every firm on Wall Street. Instead of spears, brokerages and analysts bombard SAC with ideas, edges, speedy fills and every other micro-advantage that comes with being a target customer.

"His advantage over those many years has been some kind of trading savvy but also just minute advantages of information," says Yahoo! senior columnist Michael Santoli. "It seems as if that's been exactly the ethos of the firm, to stretch for the last piece of information."

Gold and silver prices are down big, hitting new multi-year lows to start off the week. Retail investors still clinging to the idea that the decline in precious metals was transitory have been getting battered in 2013 with the SPDR Gold Trust (GLD) and iShares Silver Trust (SLV) ETFs falling 19% and 27% respectively.

Louise Yamada, head of LY Technical Research Advisors, says the glitter twins of trading need to rebuild from the ground up, a process that will take years. "It's like a steel ball wrecking crane coming through your house; it's going to take time for the mason, the carpenter and electrician to put it all back together."

Yamada gently suggests it might be time to consider the possibility that the enormous bull run might not be resting. It could be dead. "The chart is still broken," Yamada insists. Whether you're a chartist or think of technical analysis to be voodoo, breakdowns are easy to understand in human terms. As an asset recovers disappointed buyers come in and sell every move higher, thankful just to get out alive.

The best case scenario for gold bulls is that the recent lows hold, allowing some sort of consolidation in the charts. $1,539 is where gold broke down and $1,321 is the trading low made in April. The latter mark is under fire today. Should gold close under that support expect another round of panic selling.

It's hard to believe but a year ago at this time everyone cared about Facebook (FB). The company was culturally relevant. The idea of owning the stock had investors giddy pre-IPO and miserable literally a day later. The only question was not if but how the geniuses at Facebook were going to make inroads into mobility while maximizing profits from conventional desktop users.

As it turned out, Facebook's didn't have any real idea how to address mobile. What they've done is use the $16 billion of IPO proceeds to throw money into an abyss of laughably bad initiatives and promotional events designed to convince advertisers that users of Facebook mobile apps aren't turned off by product placements.

To be fair every ad-based internet company on earth has the same problem. The others get a pass on their efforts to crack the code on "monetization" because they don't have much riding on mobile bets and haven't been as splashily inept in their efforts.

In January FB hyped up what was supposed to be a game changing new pillar of their business model. The result was Graph Search. Suffice it to say Google (GOOG) remains the market leader in search.

A month ago at another over-hyped event as Facebook unleashed Home. It was a product that was teased to be a Facebook Phone and turned out to be little more than an app that hijacked user's phones. To say customers disliked Home is to suggest they cared about it at all. Fewer than .1% of Facebook users have downloaded Home and the product is reportedly being overhauled.

Here's what you need to know about economics: the price of everything is determined by supply and demand. There are no exceptions to the relationship between supply, demand, and price. By logical extension there is no such thing as a "fake price."

That doesn't mean prices can't be manipulated. It means that such manipulation requires either soaking up supply (e.g., the Fed buying $85 billion a month of paper) or increasing demand (e.g., paying $200 for a dozen roses because it's Valentine's Day).

If you're looking for a unifying theory to explain the stock market rally consider this: buybacks. According to FactSet, year over year buybacks by dollar value increased roughly 10% last year. In fact, $384 billion of shares were repurchased last year. There were about $40 billion worth of IPOs in 2012. Simply put, supply of shares is shrinking.

Demand for stocks is rising. Stock inflows are rising. It doesn't matter why you think that may be. It's simply math. Money is going into equities. Demand is growing.

"You're getting actually a shortage of stocks and too much liquidity not just from the Federal Reserve but all over the planet right now," says Jeff Saut of Raymond James in the attached video.

Lock up the dogs and hide the children. Something wicked will this way come tonight when JC Penney (JCP) allows its earnings to slither out of Dallas. Unlike many earnings reports there isn't a lot of suspense on this one: the company is going to miss and it's going to be ugly. Official estimates are for a loss of 74-cents on revenues of $2.74b compared to a 75-cent loss on $3.2 billion for the same period last year.

How individual investors feel about the results depends entirely on their entry price. JCP stock has risen almost 25% in the last month in a knee-jerk burst of enthusiasm after the firing of former CEO Ron Johnson, an investment by the Soros group, and a $1.75 billion debt deal that ensured the retailer's survival for at least another year.

Those are the good things. On the downside is everything else about the company. The current CEO is the guy Johnson replaced. That means, unlike new bosses who come in to "clean house," Myron "Mike" Ullman actually has a vested interest in Penney's former business model. That being the case, Wall Street's reaction to tonight's earnings report isn't about economics but vision. Specifically, how does Ullman plan to reassemble a company stuck halfway between a radical overhaul that's left stores literally in shambles.

Brian Sozzi of Belus Capital Advisors has been sneaking around the stores taking videos lately and he doesn't like what he sees. "I'm seeing a hodge podge of strategies," frets Sozzi. The stores are an amalgamation of Johnson's hipster colors and lack of discounts coupled with Ullman's hyper-promotional brand of retailing. No one knows what to make of the stores at this point, including management.