Friday, January 28, 2011

More Blood on Wall Street than in Egypt's Streets

The events taking place in Egypt - and soon to follow in Lebanon, Syria, Algeria and elsewhere - sent shock waves down the canyons of Wall Street where even the most resolute bulls were seen to be shedding long positions and running for cover, metaphorically, of course.

Egypt is only the most prescient of what appears to be a global movement to oust corrupt governments. It may soon reach Asian nations, then Europe and eventually the United States, run by the cruelest and most virulent oligarchs in the world.

But first, the thieves must flee with their loot, as they did today, sending shares on the major indices to their steepest losses in over six months, an event long overdue. Certainly, there is more blood to be let on Wall Street, while nations around the globe yearn to be free.

A conversation last night with a friend went something like this:

Friend: The countries want democratic government.

Me: So do Americans.

Both: (Nervous laughter.)

It is true, however, that many Americans - mostly middle class types - feel shortchanged and without a true voice for their condition in the halls of the mighty. It is time that Americans awaken from their iPad-and-TV-induced stupor and seek change. We no longer wish to be ruled by a separate class of bankers and politicians who play by different rules and govern by different laws than those we are subject to. It is time for real examination of the issues of our banking class and prosecutions of those who caused the collapse of 2008 and extend its worst effects even to the present.

Perhaps the sell-off today was keyed by events in the geo-political realm, or perhaps there's more to it, under the surface. Maybe there's little will to invest in companies based in the US which pay little to no taxes and employ nary an American citizen. Perhaps the 3.2% GDP estimate announced today was not nearly enough for a population seeking better answers, better results, from their leaders.

Whatever is the case, it surely appears to be only the beginning. Our first taste of the fruits of global revolt will be gasoline at $3.50 a gallon, then $4, then more. What will be the tipping point in America? Will it come before the government shuts down the internet, as happened today in Egypt? Only time will tell.

Dow 11,823.70, -166.13 (1.39%)
NASDAQ 2,686.89, -68.39 (2.48%)
S&P 500 1,276.34, -23.20 (1.79%)
NYSE Composite 8,062.64, -144.42 (1.76%)

Declining issues led advancers by a mammoth margin, 5397-1195. The NASDAQ was witness to 101 new highs and 24 new lows. On the NYSE, there were 148 new highs and only 19 new lows. These figures are unsurprising, considering how over-inflated stocks have become in the first month of 2011.

Volume was the key to where this is all heading. It was the highest volume day of the year and probably the highest in the last three months, all heading lower. Big volume on a big losing day makes bulls turn tail and run, which is exactly what happened today.

NASDAQ Volume 2,393,749,000
NYSE Volume 6,313,925,500

The commodity complex was also highlighted as NYMEX crude gained $3.70, to $89.34, mostly in concert with the developments in the oil-rich region of North Africa and fears that the Suez Canal might be shut down. Gold reappeared as a safe haven, rising $22.30, to $1,340.70. Silver also abruptly ended its month-long decline, adding 89 cents, to $27.92.

As far as the markets are concerned, the Dow 12,000 hats can be safely put away for another few years and the cheerleading crony capitalist reporters can begin acting more like adults for a change (though we doubt this will happen).

Logically, the end to economic catastrophes, such as the one which began in 2008 and has not ended, is war, and that may be what we're seeing the beginning of in Egypt and surrounding nations. Sooner or later, the Egyptian side of the blockade of the Gaza Strip will be opened wide and when that happens, well, they may as well be the gates of hell.

This story is sure to be continued, though the likelihood of US markets continuing their collapse in a straight line is not prominent. The powers that have been running the markets for the last three years will paper this over on Monday and attempt to contain the damage. It will not do them any good, as the geopolitical issues will not hide to corruption and illiquid conditions of the major banking institutions, to say nothing of the government which supports them and adds debt and deficits by the minute.

No, this is only the beginning of more lies and stupidity.

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