Wednesday, February 2, 2011

Flat City

Maybe Tuesday's ramp-up was a little too much, or investors are actually a little concerned about events unfolding in Egypt, but whatever the case or cause, markets didn't do anything other than flatline on Wednesday.

The Dow traded in a 45-point range, while the S&P and NASDAQ were bound by 10 and 5-point ranges, respectively, proving that three's nothing like pushing already overvalued stocks even higher to stall out trading completely.

ADP released its monthly employment report, which suggested private payrolls grew by 187,000 in January, and revised December's report down 50,000, to 247,000. The revision means that the initial report was off by a factor of 16%, making it about as reliable an indicator as anything coming out of the Bureau of Labor Statistics (BLS), which, by the way, is the "official" measure of everything employment-related in the USA.

Market reaction to the number was a big yawn and the rest of the session more resembled churning of butter or grape-stomping rather than orderly markets. The day was a mash, and a dull one, at that.

Dow 12,041.97, +1.81 (0.02%)
NASDAQ 2,750.16, -1.03 (0.04%)
S&P 500 1,304.03, -3.56 (0.27%)
NYSE Composite 8,272.57, -17.52 (0.21%)

Losing issues took control over gainers on the day, 3569-2893. The NASDAQ recorded 158 new highs and 15 new lows, while the NYSE had 255 new highs and 6 new lows. This indicator has been stuck at roughly these levels for the past two months with no signal that they are going to change any time soon, thanks largely to the Fed's easy money policies of ZIRP and QE2. Volume was back at the usual moribund levels.

NASDAQ Volume 2,011,206,000
NYSE Volume 4,553,074,500

Commodities took the day off, especially crude futures, which registered a smallish gain of 9 cents, to $90.86. The precious metals continued to be depressed, with gold down $8.20, to $1,332.10 and silver off 23 cents, to $28.29.

Thursday will bring initial unemployment claims at 8:30 am and Friday will be the big number, the BLS' non-farm payroll report. Of course, none of these indicators really matter much with the Super Bowl on Sunday. As mentioned in previous posts, there won't be any real movement in markets (other than straight up) until after the big game.

Inflation remains a hot topic, with the official government CPI proclaiming it to be hovering in the 1 1/2-2% area, when everyone in the real world knows it's really 5-8% or higher, especially concerning food and fuel.

One area not experiencing inflation are payrolls, which haven't budged much in the last 10 years for most middle class jobs. How long the government can keep the Ponzi scheme of rising prices and stagnant wages going before the USA turns into either Ireland, Greece or Egypt is an open question, though considering the general stupidity and apathetic nature of the American public, it could carry on for some time, measured more in years than months.

But then again, nobody in the "official" world saw the Sub-prime or banking collapse coming, so the next Black Swan could be right around the corner, say, in Pakistan.

Leaders in Washington have been particularly silent of late, focused more on in-fighting than any meaningful, needed reforms, and that condition is unlikely to change. After all the next big congressional and presidential elections are only 21 months away. It's actually quite astounding that nobody from the Republican camp has declared themselves a candidate.

Maybe they're all scared of Sarah Palin, or something worse. But, is there anything worse than the former Alaska governor? Well, there is Michele Bachmann, the woman who keeps John Boehner in tears.

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