Tuesday, November 30, 2010

Dow Down 400+ Points Since QE2

Since the inception of the Fed's QE2 program, throwing billions of dollars at Primary Dealers in exchange for Treasuries - essentially monetizing the government's debt - stocks have suffered mightily, posting losses in 11 of the past 16 sessions and dropping a whopping 445 points since November 7.

Currently, the scapegoat is the dastardly Irish, who chose a most inopportune time for their banks to become wholly insolvent and in needs of rescue by the European Union. With debt contagion spreading across to the continent in rapid fashion, the Euro has declined against the greenback, taking the fun of a weak currency trade along with it. As the dollar has strengthened, US stocks have nose-dived, and the rout is clearly underway, whether Ben Bernanke wishes to admit it or not.

Action on the markets today was entirely below the 50-day moving average on the Dow, and ended, after a midday respite, to the downside for the third session in a row. Blaming the Irish may be good sport for Fed bankers, but problems in the Eurozone certainly don't bode well for the ailing US economy. The slow-motion train wreck of Western economies which began in 2007 with the sub--prime mortgage unwind, is, after a $20 trillion reprieve from 2008 to the present, set to gather momentum and careen off the tracks again.

What will eventually prove to be the US economic undoing is still debatable. An expose of Bank of America's immoral and despicable practices in the mortgage arena has been put on the table by Wikileaks' founder Julien Assange. Shares of the Charlotte, NC-based bank fell to a 2-year low, closing at 10.95, on fears of such an event.

Perhaps Ireland's Parliament will just say no to the bank bailout being shoved down their throats by the equally-corrupt European Union, which itself may be a forgotten relic of a failed experiment in a few year's time.

Closer to home, it appears that the lame-duck congress has its hands full in the dwindling time before they decide to do what they do best - go home and do nothing - tackling issues such as the Bush tax cuts and jobless benefits have seen little movement. Congress must also pass a continuing resolution to keep the government operating by December 4, which just happens to be this Friday.

Tomorrow, ADP releases its normal private sector employment report, this one for the month of November, as a precursor to the BLS non-farm payroll data on Friday, which could also sway markets. Consensus seems to be calling for the nation to have created 130-150,000 new jobs in the month. Any number less robust than that could set off investor alarms again.

For today, another $6 billion pumped from the Fed to Primary dealers did little to stem the tide of selling. Stocks rebounded off their morning lows, but suffered a setback in the final hour, all major indices finishing deep in red ink.

Dow 11,006.02, -46.47 (0.42%)
NASDAQ 2,498.23, -26.99 (1.07%)
S&P 500 1,180.55, -7.21 (0.61%)
NYSE Composite 7,430.94, -52.40 (0.70%)

Losses were widespread as losers outnumbered gainers, 4290-2137. New highs numbered 156, while new lows closed to gap, at 103. In an obvious sign of weakness, volume ramped up to numbers not seen since election day.

NASDAQ Volume 2,429,697,750
NYSE Volume 5,643,896,500

Oil took a solid hit, losing $1.62, to $84.11, though it remains at elevated levels. Gold was a star, shooting up $19.20, to $1,386.70 per ounce. Silver also posted a strong gain of 89 cents, to finish at $28.09 on the COMEX.

FUD (Fear, uncertainty and doubt) are on the rise again and the Fed seems powerless to do anything but print more money.

Monday, November 29, 2010

Day-Traders Paradise

Forget fundamentals.

There is no reason to even bother examining a stock's recent performance, p/e ratio, cash flow, balance sheet or any other metric which might have some impact on earnings or performance because the stock market in the USA is now run by computers, and computers don't care about stocks, they only care about momentum, price and volume.

Add to that the fact that these computers are programmed by PhD's who don't know squat about markets, and even less about individual stocks. After that, add in near-infinite liquidity (free money) courtesy of the Federal Reserve's QE2 program and you have the makings for one very dysfunctional investment landscape.

Therefore, mere humans, especially those trading from the comforts of home, are at a distinct disadvantage. Only the major brokerages and banks are allowed to reap huge profits, not mere mortals who suffer from emotion and are terribly slow compared to the market-busting super-computers employed by the big firms and the HFTs.

Today was a perfect example of the dysfunction prevalent throughout the securities complex. In the morning, amid fears of growing problems in Europe on the back of the Ireland bank-bailout, stocks suffered enormous losses, with the Dow dipping by as many as 162 points shortly after 10:00 am. Of course, that was before the Fed floated some $9 billion to their pals on Wall Street to stage a comeback.

The day-trading slobs, like Lloyd Blanfien, CEO of Goldman Sachs, surely made a killing, as they do every day, manipulating the markets to their own delight and profit, all the while hammering the small investor and mutual fund managers at the margins.

Dow 11,052.49, -39.51 (0.36%)
NASDAQ 2,525.22, -9.34 (0.37%)
S&P 500 1,187.76, -1.64 (0.14%)
NYSE Composite 7,483.34, -17.20 (0.23%)

By the final bell, things were still in the red, though only slightly. Losers beat winners by a margin of 3645-2787; 155 issues made new highs, 85 recorded new lows. Volume was as usual: pathetic, but that's what you get when only computers are playing. Someday - and we can only hope it is soon - the computers will be forced to prey upon each other.

NASDAQ Volume 1,693,482,250
NYSE Volume 4,207,444,500

Oil priced itself another $1.87 higher, to $85.73 a barrel. Gold bounded all over the place, last showing a gain of $3.20, at $1367.40. Silver added 43 cents, to $27.13.

Just for those who think they've got it rough, here's a touching story about a family who blew $14 million in ten years. A great read, if you dislike people with money who are simply morons.

And, in the latest pandering PR move from the White House, President Obama called for a two-year wage freeze for civilian federal employees. The timing of this is particularly amusing, since federal wages reached an all-time high in 2010. The proposal needs congressional approval, so we'll see if the Tea Partiers recently elected to congress have any bite. It should be noted that some of them ran on platforms that called for cutting federal pay by 7-10%.

Good luck with that.

The final piece of sobering news is how governments will readily use public trust money to ensure than wealthy bondholders don't suffer any losses. The case in point is Ireland's 85 billion Euro aid package, which will be funded in part from government pension reserves, to the tune of 17.5 billion Euros.

That's how it's going to play out here in America, too, folks. All you people thinking you're going to get a nice pension check every month better start learning the new math. Cut that check in half by 2015, if you're lucky. As for Social Security, the Ponzi scheme of the past century, one would be well-advised to not count on that at all.

Friday, November 26, 2010

Main Street's Black Friday Turns Blood Red on Wall Street

Mmmm, that's going to leave a mark...

In the continuing control fraud series of gap up/down opens, stocks took the predictable nosedive version today - predictable in that Wednesday's close was greatly to the upside.

With the Dow opening at around 11,100, about 85 points below the previous close, we have the now-well-known condition of trapped longs, who bought and held during Wednesday's uptick rally. In general terms, if you bought on Wednesday and sold on Friday, unhedged, you lost and are now puking up the remnants of your Thanksgiving dinner.

A wiser course of action might have been avoiding the stock markets altogether and making some illegal wagers on football games via the internet. At least you might have won, with the added bonus of the winnings being tax-free. Even had you lost your bets, you could mentally write off the sour investment as entertainment value.

Stocks skidded pretty badly, and, devoid of volume, had no inclination of reversing course, especially since it was a half-day and trading was even more scarce than normal. The run rate was even worse than some of the slowest days - and there have been many since the 2008 collapse - making Black Friday look like a blood-drip from the arteries of the Wall Street Scam money machinery.

Dow 11,092.00, -95.28 (0.85%)
NASDAQ 2,534.56, -8.56 (0.34%)
S&P 500 1,189.40, -8.95 (0.75%)
NYSE Composite 7,500.54, -78.72 (1.04%)

Declining issues dominated winners, 4054-2064. New highs:185; New lows: 51. Volume: fagetaboutit.

NASDAQ Volume 623,831,125
NYSE Volume 1,778,664,375

Oil finished unchanged, at $83.86 per barrel, keeping the price just high enough to extend the prices at the gas pumps for the remainder of the holiday weekend. Gold last printed at $1364.20, down $10.90 on the day, while silver kicked 89 cents lower, to $26.70. Those awaiting a reversion in silver may be seeing the beginning of a 50% pullback of the recent rally, which would put the lustrous metal at $23 and change. A 67% retracement would send it to about $21, at which point one would be highly inclined to begin accumulation for the next leg up, to $35 in the first half of 2011. Of course, a global deflation may take all technical data off the table, rendering all asset classes subject to major price reversals.

Speculation in land may be a viable alternative in the first half of 2011, though another round of descending prices should occur with a massive number of defaults and possible widespread bank failures.

Bank of America continues to be the stock to watch as far as real estate is concerned, as they have - through their 2007 purchase of Countrywide - the largest exposure in residential real estate of any of the major players. The stock hit all cherries today, closing at 11.11, remaining in the bottom of its recent range, and lower than the October 25 close, at the tail end of the "foreclosure crisis." Bank of American (BAC) is signaling what's ahead for homeowners, with already more than 25% of homes with mortgages "underwater," more pain to come, resulting in slower sales at lower prices for the truly most distressed of a growing mountain of distressed sellers.

2011 may turn out to be the year everything finally goes over the edge. Congress and the president haven't yet address the mortgage/banking fraud in any meaningful way, except to hand the banks more money with which to shore up their aching balance sheets and kick the fraud further down the road. Without a workable solution that includes 30-40% principal forgiveness - anathema to any blue-blooded banker - expect real estate prices to decline another 20-25% overall and the US economy to continue floundering like a beached whale.

While many believe we've avoided the dreaded "double-dip" recession scenario for this year, the next one may prove to be even more severe than the first, though even a minor recession leaves the Fed, White House and congress without any useful policy tools. The likely outcome would be to print more money, unless Tea Partiers in congress force the Fed's hand by denying any raise of the debt ceiling in early 2011. An unlikely outcome, but still potentially the best - though painful to the extreme - medicine.

2010 continues to grind towards its conclusion, with optimism bolstered by millions of shoppers on the busiest day of the year. If Christmas saves the retailers and wider stock market, there may be a significant overhang heading into the new year which could collapse stocks as earnings peak out with nowhere to go but down.

Lovely, isn't it?

Wednesday, November 24, 2010

The Greatest Scam on Earth Run by Tyrants, Thieves and Traitors

If one didn't know any better, one might come to the conclusion - after viewing market activity on the NYSE and NASDAQ for a few days - that the markets are somehow rigged to never give correct signals and to never follow the same pattern as the day before.

And so it is with our markets, constantly being churned by the big players who will use CNBC as their foil to gin up any kind of story that fits the desired narrative of the day. Yesterday, Ireland's bailout, a flare-up in tensions on the North-South Korea border and raids on hedge funds by the FBI (no, CNBC barely mentions that dirty bit of business), sent stocks down for the day, with the Dow surrendering 142 points.

Today, based solely on improved numbers from the greasy BLS stack of initial unemployment claims (407,000 for the week, a short week at that and sure to be revised higher as they do 90% of the time) stocks gapped up as though yesterday's event occurred in a vacuum or were never really a big deal after all. What gap ups or downs at the open do is trap traders in overnight positions. Only the deft day-trading sharpies at Merrill, Goldman Sachs, et. al., are able to slide seamlessly in and out of stocks without mishap. Individual investors have the deck stacked entirely against them, suffering from limited knowledge, and, as the FBI raids confirm, widespread use of illegal inside information.

Trading in US stocks has become such an open scam that it's laughable to even think of investing in any listed companies. The markets have become completely the province of sophisticated high-rollers who daily prey on the wealth of those invested in mutual funds, 401K plans or individual stocks.

No further proof is needed. It's so blatant and obvious, just compare the trading yesterday and today (scroll down for yesterday's final numbers), and you can see for yourself that the Wall Street mob is running a game more crooked than any three-card monty would ever aspire to be.

In case you're unconvinced, consider that "traders" today completely ignored a 28% drop in new home sales year-over-year and a 3.3% decline in durable goods orders from the previous month.

The closing numbers for the two days are virtually a mirror image with only the plus and minus signs the only differential. What was down yesterday was up today, and the same thing happens over and over and over, until, of course, the big money wants to take it all radically higher or lower and then they induce panic or a two month rally, like the one we just had, lasting from September through the end of October.

A recent government report implied that 20% of Americans are mentally ill, but the number of suckers stuck in retirement plans and mutual funds that are invested in stocks suggests that the number should be much higher, because one would have to be out of their mind to invest in what is nothing more than a rigged carnival game, complete with the same bells at the open and close that one would hear at a casino when the slot machines hit a jackpot.

Except in the case of Wall Street the jackpot is only for the privileged few.

Dow 11,187.28, +150.91 (1.37%)
NASDAQ 2,543.12, +48.17 (1.93%)
S&P 500 1,198.35, +17.62 (1.49%)
NYSE Composite 7,579.26, +108.49 (1.45%)

Advancing issues ramped up well beyond decliners, 5191-1273. New Highs topped new lows, 329-53. Volume was at its lowest level in weeks, which the absolute moronic explanation would be due to the impending holiday, though it really is only more evidence of fraud.

NASDAQ Volume 1,648,491,625
NYSE Volume 3,743,356,250

Another big surprise was the rise in the price of oil, which is tied to gasoline prices at the pump, which shot up $2.61, to $83.86, just before one of the busiest driving periods of the year. Again, big surprise.

Gold fell $3.90, to $1372.60. Silver added six cents, to finish at $27.57. One can clearly see more evidence of fraud on a day that the dollar is up sharply and oil sets off on its own. The normal relationship is for oil to lessen in price when the dollar strengthens and increase when the dollar falls. It's what we've come to expect, though one should suppose that with the now-permanently rigged markets, the only relationship that matters is the big money trying to take more from unprotected individuals.

The FBI raids are a unique feature of the completed control market. Those being raided are the low-hanging fruit. We're tantalized by Goldman Sachs being mentioned as part of the probe, though we know they are exempt. No truly big players will ever receive as much as a subpoena, as the government needs those guys to keep funding their illicit raiding and fining procedures.

And that's all it's about. The government isn't squeezing enough money out of ordinary taxpayers - that well's run dry - so they go after the low hanging fruit that is the hedge fund industry.

Will the fraud and abuse ever end? Absolutely, but the price paid will be either buckets of blood from patriots willing to stand against the oppressive, fascist government-finance coalition, or the lives and livelihoods of millions of Americans and their children and grandchildren, a longer, more devastating prospect.

One need not look for this writer in the bread lines or poverty camps. He'll gladly die for what's right than live a lie, without a future. The frauds must be exposed and the guilty tried, jailed and made to make restitution for the billions stolen from ordinary Americans. That day may never come, but if it does, it will be none too soon.

Be thankful for what we have today, but bear in mind that we are being denied much more, as long as we remain in the grip of tyrants, thieves and traitors.

Tuesday, November 23, 2010

Investor Pain Spreading Rapidly

Ireland's continuing crisis, more trouble ahead in the Eurozone, a skirmish on the Korean border and general unease led to the stock markets finally breaking in a definitive way to the downside.

Unlike yesterday's miracle, out-of-the-blue rally, there was no such respite or savior for stocks today as the realization that while many businesses are doing well, the general global economy continues to display weakness in slack demand, collapsing governments and seas of debt.

Dow 11,036.37, -142.21 (1.27%)
NASDAQ 2,494.95, -37.07 (1.46%)
S&P 500 1,180.73, -17.11 (1.43%)
NYSE Composite 7,470.77, -139.53 (1.83%)

Declining issues crushed advancers, 4960-1560, though it was much worse through much of the session. Combined NYSE and NASDAQ new highs were 92, edged by 93 new lows. Volume was a little better than previous sessions, though that's not necessarily good news as investors were selling en masse.

NASDAQ Volume 1,902,546,250
NYSE Volume 4,711,580,500

Oil closed down 49 cents, at $81.25. Gold surged $19.80, to $1,377.60 and silver added 11 cents, at $27.57.

The Fed released minutes of their most recent meeting (November 2-3), which revealed that there was a sizable split between factions for and against a second round of qualitative easing. It would appear that Chairman Ben Barnanke does not have the support he might desire in his mad dash to destroy the US currency.

Seven days into QE2, the markets have gone straight backwards and interest rates on 5-and-10-year Treasury bonds have spiked, though they have leveled off over the past few days. It's evident to anyone with half a brain that the US economy and the banking sector, in particular, are still suffering from the strains of near-collapse and the methods employed to contain the damage, which, to date, haven't worked.

If Ban Bernanke is hell-bent on throwing away $700-800 billion dollars, the taxpayers should not be on the hook for it, but try telling that to our do-nothing president, largely absent and presumably on mood-altering drugs Congress, insipid Treasury Secretary and invisible Attorney General.

They're not listening, so you should not be paying. Period.

Monday, November 22, 2010

Ireland and FBI Hedge Fund Raid Don't Dent POMO-Driven Market

According to the World Bank, the population of Ireland (circa. 2008) is 4,425,675. On Sunday, ministers from the ECB, EC, IMF and the Irish government announced a bailout plan for the nation worth roughly $110 billion, or, $24,853.00 for each and every citizen on the island nation.

Naturally, the citizenry won't be getting any of the money. That's going to the banks. The public will be saddled with the debt, an amount so monstrous that one would wisely assume that it will never be repaid. The reason: the banks. Why would it be any other entity running up amazing mountains of debt. Earlier this year, the Irish government bailed out the banks to the tune of about $60 billion, but apparently, that wasn't quite enough, and now the government itself is threatened, by the populace on one side and the IMF and European Union on the other.

Some members of the government are already saying that they won't vote in favor of the package, and are calling for new elections in January. Protests sprung up on Monday, though they were small, organized by Sinn Fein, the political arm of the IRA.

Essentially, Ireland is the second in line - after Greece - for where most of Southern Europe is going: begging to the other members of the EU and the IMF for more money to keep their bankrupt economies going. Portugal is widely believed to be next, then Spain and Italy. These nations, should they accept the same or similar terms as the Irish, will be indentured to global banking interests until they default on the loans or rise up and through out the bankers and overthrow their governments. Either way, the populace will be the worse off for it, as tax hikes are certain on the one hand, and desperation and poverty in an every man for himself environment on the other.

There are those, and their numbers are growing, who believe that it's time for the people to take back their nations, though nobody is particularly keen on the idea of any brutal government crackdown that would surely come in response to a popular uprising.

Thus, the question on the minds of many Europeans tonight is: Would you rather pay taxes and just work your life away, saving nothing, to preserve the present order, or take the chance that things might be better after a bloody coup, a period of anarchy and a reformed Europe that isn't under the thumb of the banking and government oligarchy?

Good question. Only the future holds the answer. Ireland is giving us clues, though, thus far, most prefer the status quo, no violence and payment of tribute without end to governments which have proven to be at least incompetent and at worst, corrupt to the core.

Here in America, the condition is not nearly so dire, but it's close. Our $14 trillion debt is not going away any time soon, our government seems to stumble from one crisis to the next, never fixing anything, while the banks keep hiding their losses off their balance sheets through eased accounting rules and the help of the Federal Reserve.

Today's POMO (money for Wall Street) was a paltry $8.3 billion. More is scheduled for tomorrow, then after a break for Wednesday and Thursday, the injections of cash will continue without respite every business day through December 9. It's how we here in America have now confronted our massive, non-payable debt. We print more money.

The other major story today involved FBI raids on three hedge funds suspected of insider trading. That sent stocks - already down on the rising dollar and Irish blarney - to their lowest levels of the day, the Dow down by nearly 150 points just before 1:00 pm. But - and there's always a "but" these days - with all that POMO money sloshing around, this decline, like all others before it, was viewed as a buying opportunity by the Primary Dealers, flush with cash and stocks rallied for the remainder of the session, closing with marginal losses on the major exchanges, the NASDAQ actually sporting a solid advance.

Dow 11,178.58, -24.97 (0.22%)
NASDAQ 2,532.02, +13.90 (0.55%)
S&P 500 1,197.84, -1.89 (0.16%)
NYSE Composite 7,610.30, -30.78 (0.40%)

Advancers narrowly defeated decliners, 3249-3198. There were 368 new highs and just 68 new lows. Volume, the broken record, was laughably low.

NASDAQ Volume 1,865,878,625
NYSE Volume 4,305,755,500

Oil finished the day down just 24 cents, at $81.74, though it was off more than a dollar earlier in the day. Gold was lower earlier, but rallied to $1366.60, a gain of $12.50. Silver also showed upside, gaining 52 cents, to $27.87.

Friday, November 19, 2010

Dull End to a Wild Fortnight

At the end of a wild two weeks, everybody needed a break and they got one, in one of the slowest trading days in some time. News flow was also minimal.

In sync with the rest of the market, General Motors (GM), on its second day of trading as a new, reformed entity, fell almost back to its IPO price, hitting 33.11 at just about 10:00 am. The stock and the rest of the market (Dow was down 62 points) took a sudden turn and churned to slight, positive gains by the sessions end.

Overall, the major indices have barely moved since the mid-term elections. The Fed's incessant currency devaluation efforts have also, thus far been for naught.

Dow 11,203.55, +22.32 (0.20%)
NASDAQ 2,518.12, +3.72 (0.15%)
S&P 500 1,199.73, +3.04 (0.25%)
NYSE Composite 7,641.08, +21.14 (0.28%)
NASDAQ Volume 1,878,265,250
NYSE Volume 3,921,869,500

Advancers finished well ahead of losers, 3546-2632. There were 279 new highs and 73 new lows. Volume was extremely light.

Oil was flat, at $81.85. Silver last printed 27.35, +0.36. Gold spot closed at $1354.10, up 60 cents.

Rinse, repeat, ponder the future. Ireland remains in talks with the EC, ECB and IMF. They're getting the "full monty" from the financiers, if you will.

Thursday, November 18, 2010

Market Motors Ahead on GM IPO

The entire trading day was a well-orchestrated event staged by the power brokers of Wall Street, the government and the shills on CNBC, designed exclusively to give the pet project of the bailout bunch, General Motors, a bright and cheery IPO send-off.

Shares of GM's rebirth IPO (initial public offering - somewhat of an oxymoron in this case) priced the previous day at $33 and opened with immediate upticks shortly after the general markets had commenced trading. That it would get a positive set up was assured by a gargantuan ramp-up in the futures, ostensibly on news that Ireland was veering toward accepting a bailout from either the EU or the IMF or a combination of both. Only in these wacky times can the fact that a nation is being saved from ruin by the very same bankers who ruined it foment a powerful rally, but, that's the world in which we now live.

The set-up got GM off to a nice start with the rest of he market despite fears that some traders would "flip" the stock, and surely some did. Shares of GM hit a high of 35.99 shortly after the open and retreated the rest of the day, hitting a low of 33.89 before settling at 34.19 at the close for a gain of 3.61%, no big deal.

The Fed pumped more money in the direction of the primary dealers. This is a permanent fixture now as the Fed has already set down a timetable for a daily POMO through December 9, with the exception of the Wednesday before and the Friday after Thanksgiving (next week).

Another interesting note was news that Warren Buffet was to receive the Medal of Freedom, just a day after practically falling all over himself in praise of the government in his NY Times op-ed. At least he'll be in equally-suspect company. German Chancellor Angela Merkel and former US President George H.W. Bush are among other recipients named by President Obama.

From this we can only surmise that the level of greed, corruption and naked narcissism has finally reached critical mass amongst the elitists.

Dow 11,181.23, +173.35 (1.57%)
NASDAQ 2,514.40, +38.39 (1.55%)
S&P 500 1,196.69, +18.10 (1.54%)
NYSE Composite 7,619.94, +131.18 (1.75%)
NASDAQ Volume 2,083,305,250.00
NYSE Volume 5,373,779,000

Advancers trounced decliners, 5093-1419; new highs surpassed new lows for the second straight session, 299-59, but volume, up to 20% of which on the NYSE was attributed to trades on GM, was weak.

Commodities also ramped up. The front end of the crude oil futures gained $1.41, to $81.85. Gold picked up $16.10, to $1,353.00, while silver rose more than 5%, up by $1.32, to $26.83.

Unemployment claims were little changed from the previous week and October stock options expire tomorrow. The latest word from the continent is that Irish leaders are still resistant to a bailout, though the pressure is building for them to take the money and plunge the country into an even worse situation, with bills and interest owing to the IMF with no hope of ever paying its way out. This same thing has happened before, in Argentina and other South American countries. The usual outcome is the rape of the nation's wealth to the detriment of the populace.

Erin go Bragh, indeed.

Wednesday, November 17, 2010

A Fairly Quiet Day Awakens Warren Buffett

Ireland didn't accept the EU or IMF offers for a bank bailout, nor did they default on their debt, and the mortgage/housing/foreclosure problems also didn't go away because the AGs of 50 states are in negotiations on a settlement with the banks.

But Warren Buffet's fawning praise for the worst scoundrels in the government, published today as an op-ed "letter" from "Nephew Warren" to Uncle Sam raised more than just eyebrows around the financial world and in the public conscience.

Buffet, one of the world's richest men, benefitted greatly from the 2008 bank bailouts, snatching up a piece of Goldman Sachs (about $5 billion worth) and Wells Fargo, putting the Oracle of Omaha clearly in the camp of the serial monetary abusers atop our grand government/industry pyramid.

His effort at humor or insight was simply lost on most people, especially those wh have been kicked out of their homes, lost jobs or simply are having trouble making ends meet in the worst economy since the Great Depression. Buffet singled out Hank Paulson, Sheila Bair, Tim Geithner, George W. Bush and Ben Bernanke for acting with "courage and dispatch" amidst the evolving crisis.

The piece came as somewhat of a surprise from Buffett, normally fairly apolitical, expressing thanks from a government of which he is often critical.

Other than that, the Fed pumped another $7..9 billion into the primary dealers and stocks stalled once again. So far, even though it's still early in the game, the Fed's QE2 hasn't amounted to much of anything, and since the money goes to banks, who will likely keep it rather than lend it, it isn't going to do anything. In truth, QE2 is nothing more than a backdoor bailout for the banks suffering with heavy real estate losses both on and off their books. But, who's looking?

Dow 11,007.88, -15.62 (0.14%)
NASDAQ 2,476.01, +6.17 (0.25%)
S&P 500 1,178.59, +0.25 (0.02%)
NYSE Composite 7,488.76, +16.13 (0.22%)

Advancing issues led decliners, 4719-2726, and new highs took back the advantage from new lows after relinquishing control for a day, yesterday, 179-80. There's quite a bit of pumping in individual issues keeping the lows and highs separated at this point. Obviously, with options expiration just two days off, there's plenty of arbitrage between stock prices, puts and calls to call this any kind of "orderly" market. It is anything but.

Volume continued in the doldrums as it has for the entire year.

NASDAQ Volume 1,836,918,250.00
NYSE Volume 4,508,769,500

Oil continued to nosedive, losing another $1.90 on the day, to $80.44. It had been nearly 90 just a week ago. Gold fell $1.50, to $1,336.90. Silver bucked the trend, up 28 cents, to $25.51.

Tuesday, November 16, 2010

Fed's QE2 an Abject Failure; Ireland Says NO to EU, IMF

Events are developing, albeit slowly, but as far as one can tell, the incessant pumping of cash into markets by the Fed (another $6 billion today) has not fixed anything, solved anything, nor does it appear that it ever will amount to anything other than another massive debt upon US taxpayers.

With that in mind, maybe it's time for taxpayers to consider exactly what purpose does what they're paying to the government purport. Basically, every dime a taxpayer has sent to Washington, DC in the past two years has been very much like throwing said dime into a wishing well. Nothing changes, no charges will ever be brought against the openly criminal banks and congress simply covers up for them.

In Ireland, forces are at work trying to get the Irish government to accept austerity measures from either the EU or IMF or both, expressly to BAIL OUT THEIR INSOLVENT BANKS. It's an important distinction that the Irish people and the Irish government are not - by and large - not in default, it is the banks that are in deep, deep trouble, trouble that threatens - and should - spill over to Portugal, Italy, Spain, Greece, then France, the UK and eventually here to the US.

The entire financial disaster we have been suffering over the past two years has been entirely the fault of the banks, in every country, who pledge allegiance to no nation, only to money. The time has come for the people of countries around the world to DEMAND that their governmental representatives refuse any further dealings with the banks, to come to the truth that the banks are criminals of the grandest scale, and that they need to be charged, prosecuted and made to make reparations and serve time AS CRIMINALS.

The banks have brought the world to a standstill, yet the politicians - save a few brave souls in Ireland, possibly - have neither the inclination nor the raw nerve to speak the truth and bring JUSTICE.

We will shortly learn that even state Attorneys General have no backbone and are likely paid handsomely by the banks, having already wrapped up their investigations and are seeking a settlement with the banks rather than prosecuting them for the widespread abuses that have recently come to light in residential foreclosures.

The banks continue to steal the wealth of the people and the politicians are only interested in sweeping the problems under various rugs which now are so lumpy that one cannot walk upon them.

In light of ongoing developments, we advise withdrawing all unnecessary funds from any large bank, those being mostly Bank of America, JP Morgan Chase, Wells Fargo and Citigroup, and having as little to do with them as possible. If the banks have no means of accessing the money of people, they will die a long, slow, painful death. While a quick resolution via the truth is preferable, a long slow turning of the screws may have to do.

God save us; we are all slaves to the banks.

Meanwhile, Wall Street voiced its general displeasure with all things once again, for the fifth time in the last seven session (six of seven for the S&P and NASDAQ) by selling off, this time in more pronounced fashion.

Dow 11,023.50, -178.47 (1.59%)
NASDAQ 2,469.84, -43.98 (1.75%)
S&P 500 1,178.34, -19.41 (1.62%)
NYSE Composite 7,472.63, -144.88 (1.90%)

Declining issues shellacked advancers in the broadest selling seen in months, 5399-1146. New lows took the edge over new highs, ending a long string of wins for the highs stretching back to March, 2009, 237-176. This flip should serve as an absolute, without-a-doubt sell signal to anybody who still has skin in the game. As the author of this blog has advised against stocks since 2007, preferring only cash, silver, gold, raw land and tools of trade as "investments", there will be no pain felt from any market decline, correction or crash, though it appears evident that we are on the cusp of one of the latter two options.

Volume was quite high, another sell signal, considering the depth of today's decline.

NASDAQ Volume 2,261,298,250
NYSE Volume 6,063,200,500

Stocks weren't the only investments losing value. Commodities were roundly hammered. Crude oil fell another $2.52, to $82.34. Foodstuffs - wheat, corn and soybeans - all suffered more than five percent declines in price on the Chicago Board of Trade. Gold's last print was off $31.10, to $1338.40. Silver fell 86 cents, to $25.23, as exchanges continue to increase margin requirements on not just the precious metals but on many diverse commodities.

The global financial system once again is stressed beyond its means, mainly because losses at the world's largest banks have not been realized. Unstable conditions will continue to be the norm until these losses are realized and written down. That has not been an option the banks or the politicians are willing to consider.

There is only one solution which will solve much of the crisis, and that is to shut down many of the global banking interests, including central banks, and limit government's ability to borrow.

Monday, November 15, 2010

QE2 Flops Again: Stocks Down, Bond Yields UP!

Pumping another $7.9 billion into the coffers of the Primary Dealers (the usual crooks: JP Morgan, BofA, Goldman Sachs, et. al.) seems to be working wonders for... just about nobody, unless you were convinced it was such a bad idea you went short stocks, bonds and commodities all at the same time. Stocks were initially up, but took an abrupt about-face at 3:00, with the NASDAQ and S&P finishing marginally lower and the Dow closing with single digit gains.

If that's what we're getting for a mere $7.9 billion, what should we expect when the Fed's QE2 program runs its course and delivers the total blow of more than $800 billion? By June, the 10-year note, which was under 2.5% before the Fed commenced its dangerous liquidity action, and is over 2.94% now, will probably be running at 6-8%, and if that's not good enough, stocks will be off significantly, maybe the Dow in the range of 4-5000 strikes your fancy or the S&P toying with the 850 mark makes your day.

Our intrepid Captain Blowhard Bernanke, obviously a complete toady to powers well beyond his control, is attempting to stimulate the economy (or so he says) by pushing on a string. His relentless injections of capital into markets are already causing such extreme distortions in all capital markets that 23 high-level economists, strategists and analysts sent a letter requesting he curtail his actions.

Obviously, Bernanke isn't listening to anyone and the US public pays for it every passing day that he is allowed to pursue his reckless and possibly destructive policies. One would like to believe that congress would eventually exert some control, but that's not an option for at least another two months, as the current congress is of the lame duck variety and the new one won't get down to business until the third week of january, 2011.

So, we're stuck with probably about $200 billion going up in smoke on the wing and a prayer that it will somehow cause inflation that will stimulate the economy. While his rampant spending spree (just in time for Christmas) will almost certainly result in inflation, that's not considered a good thing by the vast majority of Americans. And even if we spend more because everything costs more, where's the gain?

Somebody needs to put an end to this madman's reign of financial terror. Perhaps the American people could find the will to protest at some point, though that seems about as good a possibility as Dallas winning the Super Bowl this season.

And, since no bad deed gets punished these days, the financial press will continue to place the blame on Ireland or Portugal or the first EU nation that officially defaults. The global financial condition continues to worsen by the day, thanks to the very people who are supposed to have a handle on such things.

Dow 11,201.97 9.39 (0.08%)
NASDAQ 2,513.82 4.39 (0.17%)
S&P 500 1,197.75 1.46 (0.12%)
NYSE Compos 7,617.51 5.73 (0.08%)

Losers edged out winners by a narrow margin, 3234-3187. New highs continued to shrink while new lows expanded again, with the tally at 183-95. If this indicator flips, its usually a sure sign that lower stock market prices are dead ahead and would continue for some time. What many are calling a "blip" may turn into a rout. Volume remained sluggish, if one can even call it that. Markets are so blatantly manipulated (as today's rise and sell-off would argue), the next round of theft may come in the form of another major correction to the downside.

NASDAQ Volume 1,866,283,250
NYSE Volume 4,075,506,000.00

The front end NYMEX light sweet crude oil contract finished unchanged again, at $84.88. Gold slid once more, this time to a one-month low of $1360.40, off $8.40. Silver dropped 56 cents, to $25.48. Who knows, maybe silver will come back to the low 20s or even the teens, making for a tantalizing entry point for renewed buying. A 50% retracement of the recent gains would bring it back to around $24.00, which should spur buying interest into the end of the year.

Friday, November 12, 2010

Bernanke Steers QE2 Over Cliff

All week pundits, economists and investors have been concerned about the effects of the great Federal Reserve experiment, Quantitative Easing, Round 2, A/K/A QE2, which got underway this morning with an $8 billion injection of fresh scads of cash delivered through repurchasing of Treasuries from Primary Dealers.

While for weeks and months the arguments have centered around how high the additional liquidity would take the stock markets and how low yields on bonds would go, today's efforts resulted in exactly the opposite. Stocks were hammered across the board and bond yields rose to multi-month highs. The Fed's expressed purpose was to lower bond yields to induce more house buying, using the completely flawed logical argument that lower rates would kick-start housing.

Just a few words for Mr. Bernanke (as opposed to the words Donald Trump would use: "you're fired"): people need money and jobs to buy houses. Even if interest rates were zero (oh, I'm sorry, they already are), they're not buying, because they can't afford to and the banks won't lend BECAUSE THEY HAVE NO JOBS AND NO MONEY.

Now, even a moron, a simpleton, a dunce could see this is the case in America, where real unemployment hovers around 18-22% nationally, and in some places, like most of California and Southern Florida, it's even worse. Without people earning paychecks, how, pray tell, are they going to buy homes?

No, I'm afraid that what I warned about yesterday, that if the stock market didn't make gains, that if bonds yields didn't go lower, that if gold and silver didn't rise, then all bets are off because this is just more of a massive fraud, the same one denied and overlooked by the Fed for years. The housing menage is what's fueling all of the madness and the money from QE2 is going directly into the coffers of Bank of America, JP Morgan Chase, Wells Fargo and Citigroup to cover up massive defaults and losses in mortgage backed securities.

The Justice Department - if we had one - should be investigating the banks and the Fed for malfeasance, fraud, securities fraud and treason, for they are surely the biggest national security risk on the planet, yet they go on their merry way, printing money to cover up their crimes while the rest of the world is supposed to just play along with them.

I say it's OVER! It's high time for the Congress to step in and shut down the Federal Reserve and all of the aforementioned banks. Obviously, Mr. Bernanke either doesn't have a clue as to what he's doing or he knows exactly what he's doing and is lying to the congress and the public. Or he's telling the congress and they're all lying to the public. And, in case somebody happens to know the whereabouts of of our invisible Attorney General, Eric Holder, please call 1-800-WAKE-THE-F--K-UP!

Let's see stocks lose more value next week when the Fed starts pumping more money on a daily basis into the primary dealers (those aforementioned banks again) and they invest it in repairing their bottom lines. Or maybe they'll make the stock market go up a little to quiet everyone down. Of course, they can always claim that it's those damn Europeans - the Irish, Italians, Spaniards and Portugese, to say nothing of the lay-about Greeks - or the Chinese, who won't devalue their currency and are running inflationary policies, that are causing all the dislocations in the market.

Ben Bernanke should be behind bars with Henry Paulson, Tim Geithner and the heads of all the largest banks. There's no good outcome to their policies, except to make life tougher for most Americans while covering up the crime of the century, the housing/mortgage/securitization/foreclose scam that's been at the heart of the US and global financial problems since 2007.

It's time to put down the trading tools and pick up the handcuffs. Unfortunately, nobody is home at DofJ and the other regulatory agencies are likely equally complicit. It's getting to the point at which some very drastic and draconian measures are going to need to be taken by the American people - if we can find a few with enough courage - to fix this mess before it goes any further.

The longer the Fed is allowed to print money out of thin air and cover up its own crimes and those of many of its member banks, the worse the solution will be. We don't have until 2012 to wait for the election of Ron Paul as President. We probably don't even have another six months before the United States of America is reduced to a pile of stinking rubble by a gang of criminals masquerading as bankers in suits. It's completely disgusting.

Market action needs few words. Here are the results for today:

Dow 11,192.58, -90.52 (0.80%)
NASDAQ 2,518.21, -37.31 (1.46%)
S&P 500 1,199.21, -14.33 (1.18%)
NYSE Composite 7,623.24, -100.00 (1.29%)

The headline numbers hardly tell the real damage show by the internals. Advancers were absolutely routed by declining issues, 5283-1193, a better-than 4:1 ratio. New highs continued to descend, but remained somehow ahead of new lows, 211-64. Volume was again a joke, hardly enough to entertain more than a small brokerage. The entire market is being manipulated by the Fed and primary dealers (the banks), down to the high-low figures. If, however, these turn around, with the lows overwhelming the highs, that would serve as a clear sell signal (for the three guys still trading in these absurd markets), but would also raise warning flags - as though there aren't enough of them already - about the US and global economy and the likelihood of a double dip, as soon as this quarter.

With the housing market about as screwed up as a an ADHD head-banger on ecstasy because of the foreclosure moratorium, which started in October and has not really ended, the drain on the economy will be evident in 4th quarter GDP. If the government claims anything better than 1% growth for the 4th quarter (we won't know until the end of January, which is likely to already be too late), it will be another statistical lie, like most of the others they produce.

Jobs aren't being created, incomes aren't rising, and the economy limps along on the back of transfer payments like social security, veteran's benefits, disability payments, welfare and food stamps. The private sector is reeling already and a poor Christmas season could be the final knife-thrust that makes the economy tilt over and die.

NASDAQ Volume 2,039,983,750
NYSE Volume 4,865,655,000

The good news is that oil was also slammed to the earth, losing $2.93 (3.34%), to $84.88. Most other commodities also suffered deep declines, such as cotton, live hogs, corn, wheat, soybeans and live cattle. It's almost as though the force of deflation came back with a vengeance in opposition to the policy missteps of the Federal Reserve. Real damage was seen in the precious metals, though these moves were more likely caused by JP Morgan meddling in silver and profit taking in gold. Silver was last quoted at $26.05, down $1.63, a huge move. Gold fell $40.30, to $1368.60.

If, on Monday, the sun rises in the East and the markets are open, we may be in for more downside, the result of decades of corruption and fraud coming home to roost. Or, the manipulators in charge could just manufacture a rally out of thin air.

They print money, don't they?

Thursday, November 11, 2010

Grantham Calls Fed Manipulator; Cisco Cramps Tech

Many of us in the business of watching and reporting on the markets and money make light of CNBC - and for good reason - but sometimes, as in Maria Bartiroma's interview below with Jeremy Grantham, they bring to light some of the more terrifying aspects of our world, such as, as Grantham sates, without prodding, "the Fed has spent most of the last fifteen, twenty years manipulating the stock market."

Wow! Now, if anybody has taken issue with my frequent claims that US stock markets are manipulated, I urge them to take it up with Sir Grantham, one of the world's brightest and most influential economic minds. Since my views - often called radical or conspiratorial - mirror his, then maybe it's time people begin paying just a little more attention to the dangers we face now, in the near term and in our long-term future.

Please, please, please, watch the video, at least the first ten minutes. We should all be protesting against the Fed and the do-nothing congress. Sadly, most of America is either too misinformed by our compromised mainstream media, or completely uninformed, or too busy trying to make ends meet in an economic climate that is crushing the middle and lower classes, to do anything.

Keeping up on the recurrent theme of "oligarchies versus the people," protests in Germany have driven police forces close to their breaking point. The German people are fed up with government and media lies. Americans would be well-advised to keep up with events in Europe as a precursor to what will - when it's already too late - eventually happen here.

German people in unprecedented rebellion against government: 1000 injured in protests in nuclear protests: police at breaking point

As for the markets, the crooks were in early today, snatching up shares as the market opened at session lows. This is surely a sign of manipulation, as trapped sellers were forced out of stocks while the organized crime gang quietly bought at reduced prices. The NASDAQ, as a case n point, was down 44 points within the first seven minutes, but gradually gained ground all day.

The poor open was due largely to Cisco (CSCO), which reported earnings after the close on Wednesday, and had a generally good quarter, but CEO John Chambers drastically cut forecasts which sent the stock to 17-month lows, closing down 16% for the day at 20.52. The volume - 10 times normal - accounted for much of the high volume figure on the NASDAQ. It was an absolute tech bloodbath and Chambers' remarks a full repudiation of the markets and all discussion of US economic recovery.

The closing prices marked the third down day out of the past four, a condition not seen since August. Stocks are on track to post their first weekly loss in nine weeks, though with the first of many injections of liquidity by the Fed beginning tomorrow, nobody really can tell if stocks are headed lower or if the Fed intervention will save the day and the week.

The Fed's QE is such a mammoth distortion ($105 billion through December 9 just for openers) that it's difficult to tell traders that stocks are overvalued, some wildly so. It will have to be played out according to the whims and whirring of the computer algos which direct most (upwards of 70%) of the trading. The grand experiment begins in earnest tomorrow with a $6 billion injection of phony money, created at the press of a button at the Federal Reserve.

Dow 11,283.10, -73.94 (0.65%)
NASDAQ 2,555.52, -23.26 (0.90%)
S&P 500 1,213.54, -5.17 (0.42%)
NYSE Composite 7,723.24, -24.22 (0.31%)

Declining issues hammered advancers, 4191-2217, though it could have been much worse. Decliners led advancers by a margin greater than 3:1 in the early going before the machines caught onto the inherent buying opportunity. The gap between new highs and new lows continued to narrow, with 349 new highs and 73 new lows. Volume was poor on the NYSE, but, as mentioned above, higher on the NASDAQ due to the outlandish trading in Cisco.

NASDAQ Volume 2,467,640,250
NYSE Volume 4,389,113,000

Oil closed completely flat at $87.81, but the precious metals got back to their appreciative ways. Gold printed at $1409.90, a gain of $6.50, while silver posted a solid 62 cent gain, to $27.76. There is no holding back silver at this point. A price of $30 by year's end is almost baked in, with most experts in the market viewing $45-50 as a target for 2011. It's possibly the most misunderstood commodity on the planet and still trades at an enormous discount to gold, far outside historical norms of 15-17 times.

Today being Veteran's Day, bond markets were closed, so there may have been more of a focus on equities than normal. That said, if you haven't already done so, treat a veteran kindly today or remember those who have served and gone on to greener pastures. They sacrificed for the sake of their fellow man, a calling of which there is no higher honor.

Wednesday, November 10, 2010

Fed Plans Not Going So Smoothly; Harrisburg, PA on the Edge

Since the Federal Reserve announced last Wednesday that they would be injecting $600-900 billion into the monetary system through outright purchases of Treasury bond issuance, the cacophony of protest and derision has been boisterous and unrelenting. Chairman Ben Bernanke's purposeful nuking of the value of the world's reserve currency, the US Dollar, has raised eyebrows and voices from Shanghai to Sao Paulo as global finance leaders attempt to adjust their currencies to meet the expected influx of freshly-printed greenbacks.

Along with complaints from the global financial community, voices inside the United States have also weighed in, mostly condemning the action as unneeded, unwanted and eventually, inflationary.

What's worse, it doesn't seem to be working very well, as evidenced by today's 30-year bond auction, which saw lowered levels of participation and the highest yield in five months, exactly the opposite of what the liquidity tsunami was supposed to accomplish.

It's likely too early to tell, as the Fed has only today set down their Tentative Outright Treasury Operation Schedule, or TOTO, which as we all know, was the name of Dorothy's little dog in the movie, "The Wizard of Oz," an appropriate, if not slightly cynical metaphor for Mr. Bernanke standing behind a curtain pulling the levels and strings of the global economy.

Interested investors may want to print out the Fed's schedule as it should provide some guidance into which days would be better to buy or sell (warning: the Fed does not want you to sell) stocks. Those days with "operations" should be the prime selling days, and those without, opportunities to buy as the market will, no doubt, be on hold or falling. So much for free, fair and open markets. The Fed's interventionist policies have made Wall Street even more of a casino than it already was, and now they're using stocked decks and loaded die.

Things got off to another bad start for Bennie and his buddies this morning, as stocks backslid right out of the open, with the Dow falling 91 points, to its low of the day, shortly after 10:00 am. After that, however, with the banks holding firmly to the silver shorts which torpedoed a wicked rally in the precious metals late yesterday, it was once again off to the races, though the markets' pace more resembled that of a snail than a thoroughbred.

After two days of losses, the markets shrugged off middling new unemployment claims at 435,000 (below estimates, but sure to be revised higher next week), and, having convinced the sixteen suckers still trading via their e-trade accounts that the direction was negative, began the process of fleecing the sheep, all led to slaughter by the Fed-Wall Street money crunching machine.

Dow 11,357.04, +10.29 (0.09%)
NASDAQ 2,578.78, +15.80 (0.62%)
S&P 500 1,218.71, +5.31 (0.44%)
NYSE Composite 7,747.46, +45.15 (0.59%)
NASDAQ Volume 2,023,686,125
NYSE Volume 5,268,140,500

Advancing issues turned the tide on decliners, 4158-2329. New highs numbered only 362, a notable change from the kinds of numbers reported over the past three weeks. Only 49 stocks made new lows. Volume was right about average on a day in which the dollar was up against most other currencies.

So, the Fed may be getting what it wants when it turns on the money spigot on Friday with the first of 18 monetary injections. They'll keep at it every day except the days immediately before and after Thanksgiving, for a total of about $105 billion, through December 9. If that doesn't get stocks flying higher than a redneck on meth, nothing will, and that's just the Fed's point, to make asset values climb, staving off the dastardly deflation, a condition that would suit most Americans just fine. A big THANK YOU VERY MUCH to Mr. Bernanke from the middle class.

Most commodity prices are already much higher than they were just two months ago, when Bernanke first began to whisper loudly about the now-imminent liquidity push. Cotton, corn, wheat and almost all foodstuffs have been on a tear, so much so that the exchanges have been slapping on tighter margin requirements for many.

Crude oil was up $1.09 on the day, to a 2010 high of $87.81. Just in time for Christmas, the Fed's policies are about to send gas prices through the roof. Thanks again, Mr. Ben! After yesterday's drubbing, gold gained $10.70, to $1403.40 at last print. Silver also caught a bid, trading at $27.14, up 19 cents on the day.

Meanwhile in the aftermath of mortgage insurer Ambac's bankruptcy filing Monday (and delisting as of today),the city of Harrisburg, PA, the state capitol, hired the law firm of Cravath, Swaine & Moore to advise on a potential municipal bankruptcy, which has been rumored for many months. with the fall of Ambac, the dominoes may begin tumbling, first among other mortgage insurers, then to municipalities and into credit default swaps mostly in the hands of the nation's largest banks.

Considering the timing of the Fed's dramatic money creation scheme, might these funds be nothing more than a backdoor backstop to the banks again? They certainly were aware of Ambac's condition and that of the handful of other illiquid mortgage insurers. If this were the case, then all bets are off concerning market gains, as the money will never see the light of day. It will be parceled out among the nation's greatest criminals to cover their corrosive and rapidly depreciating swaps and guarantees between each other.

While Ambac's portfolio may be only a few billion short, the forward effect is to cause other defaults along the chain, and once the genie gets out of the unregulated CDS bottle, there's likely no putting her back in. The cascading effect of illiquid assets turning enterprises wholly insolvent could happen within split seconds, without warning, and it's already apparent that the band-aids applied to the insolvent banks thus far have not proved remedial.

Higher interest rates on Treasuries going forward will be a sure sign that the financial structure is about to topple, with over $600 TRILLION of notional exposure ready to come crashing down. This is the conditions under which we watch our financial markets these final days of 2010. If Bernanke's plan does not cause stocks to rise, interest rates to fall and general inflation (bad enough), it's a safe bet that financial reckoning day may come sooner rather than later.

Tracing out the scenario, the Fed would probably not allow everything to simply collapse in a heap. After a few days of severe declines in the stock markets, highlighted by drops in financial stocks, the president would likely call a bank holiday stretching anywhere from a week to a month in an effort toward calmness. Unfortunately, the effect of that would be wide-eyed panic, as most people would be without cash and maybe denied access to credit cards as well.

After that, who knows? Emergency powers? Martial law? A complete overhaul of the Fed and Treasury? The ripples would be worldwide.

It's the nightmare scenario, but in the current climate, the possibility of a massive failure is possible and palpable.

Tuesday, November 9, 2010

There's Something Very Wrong and the Tea Party Knows It

Stocks were down for the second straight session, as criticism of the Federal Reserve's recently-announced QE2 has ramped up and is nearing a fever pitch. While the Fed seeks to embark on another round of handing easy money to criminals on Wall Street, the rest of the world is not exactly enamored with Chairman Ben Bernanke.

Europe is beset with its own problems, stemming from unstable, out-of-control government spending in the PIIGS countries, but particularly Ireland and Portugal, which have gone from bad to mush worse over the past six months. That has kept the US dollar from appreciating against the Euro to any great degree, only because money seeks its safest refuge, and in currency markets, the US still appears to be a safer bet than most of Europe.

The Chinese expressed their displeasure by having their ratings agency, Dagong Global Credit Rating Co. Ltd cut the U.S. local and foreign currency long-term sovereign credit rating to A-plus from AA.

Throughout the day, stocks were sent lower as gold and silver, especially, caromed ever higher, with gold spiking to $1425.50 and silver hitting $29.38. By the end of the day, however, the fiat money-makers had had enough and the CME announced an increase in margin requirements to buy silver from $5000 per contract to $6500 (silver is traded in 5000 oz. increments).

That may have been cover for some serious naked shorting of both gold and silver, because while it may explain the late day selloff in silver, it would have had little effect on gold, which also crashed late in the day (see chart at right). At the moment, the bid on gold is $1393.00, and silver has been smashed down to $26.95. The obvious take-away is that the Bernanke put - his $600-900 billion in USSS created right out of thin air, is receiving some serious competition from real money, that being gold and silver, and the Fed, through their proxies on the trading floors had to do something.

They're likely to try to tamp down gold and silver prices in order to garner more bids on their beloved US stock markets, though it's unclear at this time whether anything they do can stem the tide rising against them. In the long run, though most people will never notice, gold and silver are going to become the basis for currency, not Federal Reserve Notes (FRNs) and debt. Sides are being drawn and this battle will end with few winners. Most of the losers will be stockholders and owners of paper currencies. Gold and silver - as they have over thousands of years - will prevail.

Dow 11,346.75, -60.09 (0.53%)
NASDAQ 2,562.98, -17.07 (0.66%)
S&P 500 1,213.40, -9.85 (0.81%)
NYSE Composite 7,702.31, -79.89 (1.03%)
NASDAQ Volume 2,204,733,500
NYSE Volume 5,605,771,500

Declining issues rocked advancers, 4709-1789. There were still 777 new highs to a paltry 82 new lows, but volume was much higher than yesterday's session and better than most days during the run-up of the past two months, a discouraging sign for stock investors, but probably the best news for the long-term, in which the stock market becomes a game of last-man standing.

Oil even came down for a change, dropping 34 cents, to $86.72, and if the stock market continues to slide, expect oil to diverge from gold and silver, following stocks down the deflationary path. Bernanke's big money bet notwithstanding, the next few weeks and into the end of the year may be very hazardous times for trading in anything.

With a pickup of sixty seats in the House, the Republican party has taken control, spurred onward by the success of anywhere from 30-40 Tea Party candidates. In the wide-ranging report from PBS below, some of the nuances are Rand Paul's hint that he may cut federal employee paychecks by 10%, Utah Senator Mike Lee pondering a constitutional amendment to balance the budget, cut the Department of Education and voting NO on raising the debt ceiling, a vote that is likely to come up early in the next term (March-May, 2011).

Monday, November 8, 2010

Currency Wars: Gold/Silver vs. US$ vs. Euro

While there wasn't much of a downdraft in stocks today (the NASDAQ was positive at the close), currency watchers had plenty to occupy their attention as the dollar appreciated against the Euro, though the big winners were Gold and Silver (the shining star of the past two months).

The Fed offered up $6.5 billion to Wall Street in the form or a POMO, but the boys said, "oh, no" and continued their selling of overpriced stocks in the face of Euro woes.

The European answer to Ben Bernanke's blind monkey monetary policy (QE2) was expressly Continental. As Ireland, Greece, Portugal and Spain teeter on the brink of insolvency, the European response was a curt, "you're not so bad; we're worse," as the race to the bottom of the currency abyss accelerated to a manic pace.

The big beneficiaries were manifested in pronounced moves in gold and silver, the former reaching new all-time highs, the latter continuing it's crusade against anything fiat. At the end of the day, owning gold, silver or dollars was the correct bet, against the wishes of Mr. Bernanke, and, at least for today, a complete repudiation of his overt, repulsive monetarism.

One outlier worth note was Bank of America (BAC), which defied all logic and sound investing strategy by posting another in a series of gains. Shares of the nation's largest mortgage lender finished up 24 cents, to $12.60, equaling its close on October 14. Shares had sunk as low as 11.16 (October 25), but have since found new life, though the stock is so heavily shorted, it may be merely a shaking out of weak hands. The stock gapped up at the open and made its best advances in the afternoon, trading as high as 12.73 before settling lower.

Oddly enough, the euphoria from last week, spurred by the Fed's announcement that it would monetize up to $900 billion in debt over the next eight months and sweeping victories in the House by the Republican party, seemed to fade in the light of the new week. Doubters of Fed policy are numerous and many have loudly decried Mr. Bernanke's QE as the wrong prescription for the US and global economies. Among them, US Representative Ron Paul from Texas, who expressed a view that the Fed would fail on its own and that gold should compete with Federal Reserve Notes as currency (see video below).

Additionally, Paul took aim at entitlements on his congressional website, calling for a rejection of the welfare state and offered a position to make Social Security voluntary.

Dow 11,406.84, -37.24 (0.33%)
NASDAQ 2,580.05, +1.07 (0.04%)
S&P 500 1,223.25, -2.60 (0.21%)
NYSE Composite 7,782.20, -18.46 (0.24%)

With the first downturn in the last seven sessions, declining issues paraded past advancers, 3437-3012. New highs led new lows, 691-53, so there's obviously still a good deal of speculation continuing. Volume, however, returned to moribund levels that prevailed prior to last week.

NASDAQ Volume 1,824,770,375.00
NYSE Volume 4,468,926,000

Oil continued to surge, despite the higher dollar, gaining 21 cents, to $87.06, on the front-end contract. The latest print on gold was up $15.30, to $1409.40, while silver amazed again, gaining 95 cents, to $27.71.

Friday, November 5, 2010

US Stock Markets Are Absurdly Manipulated

Here's a message to the people manipulating the markets:

We know what you're doing because you're so bad at it. Like today. Stocks were down all day, except for the last 20 minutes, you and your fat-cat cohorts boosted everything just to show a positive print. Very lame!

Really, folks, the markets are so out of touch, they're not to be touched. I had planned to write a bit about the blowback from the financial community over Bernanke's relentless pumping, a la QE2, but I'm so thoroughly disgusted, I just can't bring myself to write it. Suffice it to say that most of the rest of the world thinks his tinkering is bad monetary policy, and you can count me as one of that group.

Dow 11,444.08, +9.24 (0.08%)
NASDAQ 2,578.98, +1.64 (0.06%)
S&P 500 1,225.85, +4.79 (0.39%)
NYSE Composite 7,800.66, +18.23 (0.23%)

Advancing issues topped decliners, 3679-2767. There were 1069 new highs and 96 new lows. Volume was strong for the second straight day.

NASDAQ Volume 1,984,391,875.00
NYSE Volume 6,297,631,000

The abhorrent non-farm payroll figures - a complete fabrication - came in at +151,000, though most of the increase was surely artificial, boosted by the birth-death model and seasonal adjustments. It's all part of the feel-good story the politicians and bankers keep trying to spin, while real unemployment stands at about 20%. Go to a big city or any medium sized city in the South and you can see first hand what's really going on in America.

The poor are being kicked completely to the curb, the middle class soon to join them. Mainstream media has become nothing more than a mouthpiece for corporate America. It's really quite sad.

Since September 1, the Dow Jones Industrials are up nearly 1400 points, a 14% increase, as though we were in the midst of a massive recovery.

Crude oil tacked on another 36 cents on Friday, to $86.85. Expect $4.00 gas by Spring. Gold finished another $1.10 higher, another all-time high, at $1394.00. Silver continued its meteoric ascent, adding 38 cents, to $26.75.

The Fed has depreciated the value of the dollar some 95% since its inception in 1913. They are in the process of squeezing the final 5% out of it. Be ready for some serious holiday inflation, but enjoy the weekend!

Thursday, November 4, 2010

POMO + QE2 = Stocks to the Moon, Silver Soaring

One of the side effects of Ben Bernanke's $800 billion gambit - and there are many - is to send stocks directly upward, while also giving silver and gold somewhat of a boost.

A day after the announcement of $600 billion in QE2, plus another $150-200 billion more in re-allocated MBS, the Fed hit the trifecta with a 4$.5 billion POMO today and sent stocks to the their best levels since the crash of 2008.

Yes, siree! We're back on easy street thanks to Uncle Benji debasing the currency. Now all you people worried about your pension funds and 401Ks can rest easy, Uncle Ben's got ya covered.

Another side affect of QE is runaway inflation, but let's not talk about that now. Let's talk about that when gas is $4.25 a gallon, because that's where this is evidently headed. And word has it that if this round of stimulus via magic money creation isn't enough, don't worry, Ben can just conjure up some more. Isn't capitalism nice, easy, fun?

Oh, and you people who have saved diligently and are now in fixed income securities, bonds, and money markets, well, you're screwed. You'll still have money; it just won't be worth much, and, as an added bonus, it will buy even less in years ahead. Happy Retirement!

To the uninitiated, typical, dumb-ass American, they'll just see that the Dow was up AGAIN! and their stocks are doing well, so all is good in America. We've got a whole slew of newly-minted Republicans in the House of Representatives all set to slash taxes (for corporations), cut spending (on social programs) and usher in a new era of prosperity for the good old USA.

The problem with this scenario is that it's just all bunk. We're headed down the path of the Weimar Republic or, more recently, Zimbabwe, places where inflation was so out of control that restaurants asked patrons to pay in advance because by the time they'd finish their meal, it would cost more. The currency became essentially worthless in a matter of days and weeks.

Don't worry, though, we're just getting started. The fun part of hyper-inflation won't come until the dollar index hits something like 45. It's still above 75, or at least it was this afternoon. That could have changed.

Dow 11,434.84, +219.71 (1.96%)
NASDAQ 2,577.34, +37.07 (1.46%)
S&P 500 1,221.06, +23.10 (1.93%)
NYSE Composite 7,782.43, +174.02 (2.29%)

Gainers decimated losers on the day, 5265-1295. The new highs, new lows numbers were simply amazing: 1343 new highs; perhaps more amazing were the 112 new lows. From where did those come?

Volume was exceptional, for once, though considering that the Fed has only begun to pump nearly a trillion dollars into the stock market, we could see volume spikes which dwarf this in weeks and months to come. Today was a day to just pick some stocks you like and throw a bunch of money at them. They're almost guaranteed to go up. Even Bank of America (BAC) was up nearly 5%, despite the news that they may be on the hook for over $120 Billion in mortgage put-backs. In other words, the bank will be munching on those loans for years to come and, in fact, their exposure is probably more on the order of double or triple that.

NASDAQ Volume 2,533,570,750.00
NYSE Volume 6,609,444,500

The good news is that gold and silver went off like rockets today as well, because the really smart money (which gold and silver are) is into this space in expectation of enormous inflation and destruction of the dollar and other currencies. Gold was up $44.10, hitting a new all-time record high of $1392.90. Silver, in percentage terms, did even better, gaining $1.53, to $26.37, as JP Morgan and HSBC face criminal and class action lawsuits related to shorting and manipulating the silver market. Ouchie for them; great for anyone who loves silver.

It's a wild world out there; every man, woman and child for themselves.

Just a note in the wind. Keep an eye on House of Representative member Ron Paul, and his newly-elected Senator son, Rand. I'm promoting a Paul-Paul ticket for president and VP in 2012. A father-son team in the White House. Looks like a natural to me.

Oh, and never mind that unemployment claims were up 20,000 this week, to 457,000. That number will grow ever larger, likely to surpass 500,000 in December or by late January at the latest, while the stock market soars. Hey, who needs employees when you've got the Fed's printing presses on your side.

Tomorrow's non-farm payroll report for October should be a non-event, as will most fabricated economic data from now on. with money creation out the wazoo, there's no sense in measuring anything except the thickness of your bankroll.

Yippie! We're all going to be rich!

Wednesday, November 3, 2010

Quickly, the News and QE2 and You

The news from the election front from last night: Republicans take control of House of Representatives, have a majority of roughly 60 seats. Democrats retained control of the Senate, though barely. 51 confirmed Democrats, enough to thwart any advances made by the newly-Republican House, guarantees the gridlock which will plunge the nation deeper into depression.

Obama, now neutered, leaves Thursday on a 10-day trip to India.

The FOMC kept rates unchanged at ZERO. The Fed did announce that it would be making additional purchases of Treasuries and other bonds to add to its already bloated balance sheet. Essentially, the Fed - though they won't say this in so many words - is sopping up more government debt and bad MBS from BofA, JP Morgan Chase, Citigroup and Wells Fargo.

The Fed announced that the size of what's known as QE2 (Quantitative Easing, Round 2) will be $600 billion, spread over eight months, or, additional purchases of $75 billion per month, beginning now and ending in June, 2011. All this amounts to, since the money will never actually be lent into circulation, is that the Fed is even more now the buyer of bad debts of last resort, the bag-holder for the broken banking community and bankrupt government.

Even if this money were to go into circulation, the effect of it, in simple terms, would be an additional $250 per month for every person in America. Now, for a family of four, that would be $1000, but the money will supposedly stop in June of next year. Were the Fed to actually do this, instead of playing their silly "we're so smart, you don't understand economics" game, it would actually be a short-term boost to the economy, but would not create a single job nor produce any desirable long-term result.

It would be similar to cash-for-clunkers or the $8000 home-buyer tax credit, a short-term boost, which basically steals sales from the future. In reality, when it ends (it probably won't) there will be a market correction, though, since it won't really end and isn't really stimulative since it's just journal entries and money changing hands between the banks and the Fed, the only real effect will be on the stock market, which is expected to rise because that's where the banks will invest their money.

Yes, it's a Ponzi scheme.

The market reaction to the major news that the Republican party had seized control of the House and the Fed's QE2: Not much.

Dow 11,215.13, +26.41 (0.24%)
NASDAQ 2,540.27, +6.75 (0.27%)
S&P 500 1,197.96, +4.39 (0.37%)
NYSE Composite 7,608.41, +26.27 (0.35%)
NASDAQ Volume 2,018,516,000.00
NYSE Volume 5,412,413,000.0

Advancing issues topped decliners, 3685-2692. There were 628 new highs to 84 new lows. Volume was a little more robust than normal, as evidence that the PPT is still operating behind the scenes appeared after the Fed announcement. Stocks slid quickly, then were boosted back to the positive. Apparently, some quants and hedge funds were unimpressed with the measly $600 billion pledged by the Fed, but the PPT quickly stepped in and quelled the uprising.

Commodites were little changed, though crude is getting a little out of hand, reaching $84.69 on a gain of 79 cents today. $90 per barrel appears to be the target, exacerbated by the weakening dollar. Gold was kept in check, down $8.70, to $1348.80, along with silver, a loser of 10 cents, to $24.84.

The Fed's QE2 is a curiosity to many, though to those in the know, it's nothing other than a temporary loan to the US economy to keep the powers that be in power for some time longer. It staves off the eventual economic collapse that many Americans are feeling first-hand and allows the government and the banks cover for more theft and stripping of middle class wealth.

Conventional wisdom says that commodities will rise if the currency is debased, though, since QE2 is not de facto currency debasement - a nice try, but no cigar - deflation will commence with renewed vigor, further depressing all asset classes outside of stocks, and that would include commodities and precious metals by definition.

Ergo, cash is once again king. Bookmark this post and check back in a few months to see if I'm not right. We will not have runaway inflation. The Fed is afraid of deflation and with good cause, but they are also too timid to actually confront it with blunt force, so they tip-toe towards it, throwing not enough money at it which the deflation monster merrily chomps upon, following the Fed down the primrose path to depression.

Cash is king again. Watch the dollar index rise.

Tuesday, November 2, 2010

The End (of the ruling elite) is Here for the Taking... but is anybody listening?

Today is election day, but, for most of us, it is meaningless. The new bodies elected with do about the same as the ones being replaced: nothing, or make matters worse. To buttress my argument, I direct you to reading a post by Jim Quinn, detailing precisely how the government, with a grand assist by the private Federal Reserve, has misspent our fortune and has destined us to a future of depression and depravity. His tome is somewhat inappropriately titled, Suicide is Painless, because most people simply do not see that they and their neighbors are being slowly starved and/or bled to death, so maybe "assisted suicide is painless" would be preferable.

Now, how do we (wait, you did read the article linked above, right?) go about the destruction of the ruling elite?

Dispensing with the final scene of Fight Club, which would be thrilling and decisive, aleit never possible in the real world, we must find other means to our end.

We can start today by not voting, or voting for anybody but the candidates on the ballots (actually, the machines will change our votes to whatever they like, so just avoiding the polling places may be the best tactic).

Next, we must starve the beast. Grow your own fruits and veggies and instruct others to do the same. Cut out the Monsantos and McDonald's.

Cut utility bills by using less. Install a small solar panel or two, maybe a wind turbine, get the wasters (I have a neighbor who insists on keeping lights on in every room and two more outdoors almost all night long) to stop their own madness by showing them the reality of lower utility bills. If they don't listen, ridicule them, make them feel shame for their waste.

Kill the big banks. Take all money out of the 15 largest banks and put it in local banks or credit unions.

Keep buying gold and silver.

Fight and avoid taxation at every opportunity.

If opportunity presents itself, harm the interests of corporations. Be creative.

Foster an environment in which everybody is encouraged to be more self-reliant, less wasteful and point out the true enemies: banks, corporations, government at all levels.

It's a small start, but we must begin to take back the nation.

As for the markets, same old story. More gains on low volume.

Dow 11,188.72, +64.10 (0.58%)
NASDAQ 2,533.52, +28.68 (1.14%)
S&P 500 1,193.57, +9.19 (0.78%)
NYSE Composite 7,582.14, +72.93 (0.97%)

Advancers ran roughshod over declining issues, 4795-1663. There were 615 new highs and just 72 new lows. Volume: no comment.

NASDAQ Volume 1,923,377,125
NYSE Volume 4,254,097,500

My data is showing no change for oil, at $82.95, though I know it traded higher than that. Gold popped by $6.60, to $1,356.90; silver was also higher, up 28 cents, to $24.84.

There is a slew of data coming through on Wednesday, but tonight everybody will be focused on the election results. Somehow, Wall Street and their ilk believe that change is good or that somehow, electing a large number of nutjob, Tea Party Republicans is going to change policy in Washington. At best, it will produce a stalemate, which is exactly what is not needed. Change is needed. Changes in regulations, taxes, rules, but mostly in how we are governed and how the federal government communicates with the public. But that won't happen; we know it won't.

Wall Street, the real control of politicians, is full of itself and some other stuff that's usually found on cow pastures.

The data stream for tomorrow begins at 7:30 AM with the Challenger Job Cuts for October. At 8:15 AM, the release of ADP Employment Change for October, followed by the 10:00 AM release of ISM Services and Factory Orders. After the 10:30 AM release of Crude Inventories, the market will hold its collective breath, awaiting the FOMC Rate Decision at 2:15 PM, which is not really a rate decision, as federal funds rates are permanently stuck at ZERO, but the world expects to hear details on just how quickly the Fed is going to finish off the US economy through inflation, otherwise known as QE2, or, printing gazillions of dollars with nothing backing them.

Best guess moving forward is the Republicans gain control of the House, nothing changes, but the Fed produces runaway inflation in food, fuel and utilities, further crushing the middle class. Stocks will go to the moon, but the economy will be dead with unemployment approaching 25%.

There's a way out, but it requires a thinking, functioning populace that isn't dependent on the government for anything. Considering the 47 million people already on food stamps and even more on some form of government assistance (along the lines of 50% of the population), hope is fading fast.

Every man for himself? Could be.

Monday, November 1, 2010

Thank Heavens the Elections Are Almost Over

Tomorrow, millions of Americans will go to the polls to elect another batch of worthless hooligans, crooks, thieves of all variety and generally people who can't do anything else but steal and spend other people's wealth.

The American system of representative democracy is so completely and irrevocably broken that there's little hope of it ever being repaired. People who are "elected" (make that "selected" by those in control of voting machines that don't produce a paper trail and are easily hacked) are supposed to represent the people of their district, city, town or state.

Sadly - and this has been an ongoing feature for quite some time - both newly-minted and re-elected representatives will be representing not the people, but the interests of the people who gave to their campaigns, mostly corporations or rich donors seeking special treatment. And they will get it, no matter the detriment to the public.

Anyone who cannot see that this is the operative nature of our politics is either not paying very close attention or is blinder than blind.

Essentially, the "big" races are those for control of the House of Representative and the US Senate. The Republican party, largely responsible for the fiscal calamity that is the US government and economy, is already claiming victory in the House, on the uncertain claim that they will restore "American values." It's the same old line that seems to be trotted out every couple of years, by both parties, both equally corrupt and useless.

Any change that occurs will no doubt be to the detriment of the majority of Americans, especially those known as middle class, now an endangered species.

Thank heavens this election cycle is finally coming to an end. Maybe the American public will have peace for a few weeks, or even days. We'd be better off if all the politicians just went home and stopped making so much noise.

In an apparent vote of no-confidence in anything, the markets today staged an incredible about-face on the back of a $2.5 billion POMO, otherwise known as quiet QE by the Fed. Stocks soared in the early going. Just after 10:00 am, the Dow was up almost 125 points, but spent the remainder of the session declining, actually going red for a short time, before a late-day rally boosted it back to break-even.

The S&P also ended marginally in the money, though the NYSE and NASDAQ weren't quite so fortunate. For those of the ilk that the Republicans will deliver peace, prosperity and zillions of new jobs, today's action was hardly reassuring. The market knows the economy stinks and congress will do little to change that. We are in the midst of a depression, one which neither party is willing to take blame for, though the truth is that both caused it.

Dow 11,124.62, +6.13 (0.06%)
NASDAQ 2,504.84, -2.57 (0.10%)
S&P 500 1,184.38, +1.12 (0.09%)
NYSE Composite 7,509.21, -4.14 (0.06%)
NASDAQ Volume 1,922,047,000.00
NYSE Volume 4,461,449,000

Oddly enough, declining issues far outweighed advancers, mostly on the NASDAQ, 3521-2915. New highs stretched to 540, against a mere 80 new lows. Volume was normal, meaning poor.

Crude oil was up $1.52, to $82.95. Gold fell $7.00, to close at $1,350.60. Silver lost a penny, finishing at $24.55.

Two things are for certain: 1. The USA is in a heap of trouble economically, and 2. looking to congress for answers is a huge mistake.

Is it too late to just cancel the elections and start over?