Tuesday, March 13, 2012

Can This Fairy Tale Market Be Believed? Fed Stress Tests; Jaime Dimon Pumps JP Morgan

Just a day after the lowest volume session in the last ten years or so, stocks jumped out of the gate and skyrocketed after the usual FOMC we're-doing-nothing release and JP Morgan's announcement of a quarterly dividend hike of $0.05 (from 25 to 30 cents) and a $15 billion stock buyback program.

Apparently Jaime Dimon, Morgan's CEO, thinks his company's stock is too cheap and could not contain his excitement as he jumped the shark, upstaging the Fed's bank stress test announcements which were released just after the close. Hard to figure, since JPM was already up (at yesterday's close) more than 43% since it bottomed out at a close of 28.18 on November 23, just about 3 1/2 months ago. Apparently, Jaime subscribes to the banker's creed, "math is so overrated."

Morgan's timing was appropriate, coming right after the Fed-speak, precisely at 3:00 pm ET, which everyone knows is the "magic hour" for stocks and whirring HFTs. The algos really cranked up hard in the final hour of trading, sending the Dow up by more than 100 points and the NASDAQ shooting past 3000 at the close for the first time since 2000.

As to those stress tests, 15 of 19 banks tested passed with flying colors, of course, being - according to the Fed - sufficiently capitalized to sustain conditions such as 13% unemployment, a 21% decline in housing prices and probably Lindsay Lohan failing another sobriety check. Among those which failed were Citigroup, Sun Trust, Met Life and Ally Financial. It's simply ludicrous to believe in test results administered to subjects which are wholly funded, pampered and coddled by the test-giver.

The Fed's stress tests were supposed to have been released at 4:30 pm ET on Thursday, but apparently some bright economist at the Fed realized that most of America would be occupied with first round games of the NCAA tournament at that juncture, so they, without announcement, sent them out to the rabid financial press corps today, right after the closing bell. Nothing like a little pile on to get the new out on what would have otherwise been a fairly uneventful Tuesday afternoon.

The whole afternoon was such a departure into overt silliness that it can hardly be believed that it's anything more than pure pumping by the financial entities which now own the entire market, from opening trade to closing casino-sounding bells and whistles.

Since individual investors have been pouring out of stocks at a record pace since 2008, the message is pretty clear. Despite all the jolly good news, nobody believes it and nobody is going to be buying it, especially at these new nose-bleed levels.

Join the club. Get completely out of stocks and just watch the stupid party. US euity markets are not real anymore. Since everything is going so swimmingly, who needs stocks? We'll all be millionaires several times over with all the money sloshing around these days. And, even if the markets are completely contrived and meaningless, it's all about perception, anyhow, no?

Dow 13,177.68, +217.97 (1.68%)
NASDAQ 3,039.88, +56.22 (1.88%)
S&P 500 1,395.96, +24.87 (1.81%)
NYSE Composite 8,234.48, +148.20 (1.83%)
NASDAQ Volume 1,681,104,625
NYSE Volume 4,329,381,000
Combined NYSE & NASDAQ Advance - Decline: 4496-1184
Combined NYSE & NASDAQ New highs - New lows: 375-27 (Zounds!)
WTI crude oil: 106.71, +0.37
Gold: 1,694.20, -5.60
Silver: 33.58, +0.17

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