Wednesday, July 25, 2012

Sandy Weill, Hypocrite Bankster; Apple Sends S&P, NASDAQ Lower, Housing Bottom, NOT!

Like mountains that are climbed, we watch CNBC because it's there, not because they offer something other than the capitalist-claptrap-company-line of "buy stocks and keep buying stocks." They don't, usually, unless Rick Santelli is ranting or somebody like Sandy Weill says something so hypocritical that it cannot go unchallenged.

Weill, the former CEO of Citigroup, was the man most responsible for the repeal of the Glass-Steagall act during the Clinton administration years, which set in motion the deregulation of banks, ungodly high leverage, the sub-prime circus and eventually the global catastrophe of international finance through which we are all currently suffering, was polluting this morning's air with calls to break up the big banks.

Weill was on this morning's "Squawk Box," the normally tiresome pre-market news show, opining that the big banks need to be broken up. This is quite the turnabout from the man who, back in the 1990s, engineered the business model of the banking/financial supermarket, where customers could purchase not only CDs and checking accounts, but stocks, bonds, and all manner of derivative products, and where the bank would securitize obligations, repackaging and reselling to willing investors.

One should note that Weill profited greatly from the deregulation of the banking industry and that he is still very rich, though now, more than 15 years hence, his PR team has probably advised him that calling for the breakup of the too-big-to-fail (TBTF) banks would be a marvelous boost for his personal profile. No doubt, Weill has a profit motive behind his pronouncement, or is keying in a on lucrative, influential government position, which is all America needs right now, is another hypocritical bankster who puts self-interest far above public service running the Treasury Department, or maybe the Office of Thrift Supervision.

There really is no end or outer limit to the hubris of the banker class, but Weill's sudden change of heart, no doubt politically expedient, is the worst form of hypocritical doublespeak imaginable. Even Orwell would be amazed, abused, or, amused.

After Tuesday's post-market-close earnings miss by Apple (AAPL), the markets did as obedient markets will, as the S&P and NASDAQ, of which Apple is a huge component of both, sold off viciously right out of the gate.

The NASDAQ was down a quick 22 points, the S&P shedding seven points in the early going, but, with Ben Bernanke and the Fed providing cover, ostensibly standing ready with their bazooka loaded with QE stimulus, stocks gained ground and eventually turned positive (the Dow was in the green all day), before fading into the close. The Dow gave up more than half its gains, even though Apple is not a Dow component.

The current idea - floated around yesterday afternoon by the Fed's chief propagandist, Wall Street Journal writer John Hilsenrath - was that the Fed may act as soon as their very next FOMC meeting, which occurs next week, July 31 - August 1. About all the Fed can do, besides buying up more worthless MBS or some vague extension of Operation Twist, or more simple jawboning, all ideas which have been tried and proven failures.

But, the market being as rigged as it is, (according to Paul Criag Roberts, all markets are now rigged), the Federal Reserve must come off not looking like the powerless goon it really is, but rather as an engaged participant ready to swing into action to save the American people.

Tripe. The Fed has been without bullets or a gun for the better part of the past two years, and now, like the boy who cried "wolf," nobody is bothering to listen. QE1 and QE2 didn't fix anything and likely made matters worse, so QE3 isn't going to matter one iota.

For those who think the housing market has hit bottom, again! today's data must have been a chilling reminder of not only where we've been, but where the millions of underwater homes are headed: deeper into the blue, after new home sales for June plunged to an annualized rate of 350,000, well below the expected 373,000. The drop was made worse by the upward revision of the May data, from 369,000 to 382,000, but it was still a mighty miss by any standards.

The real estate market being diverse, there are some areas of strength, but, overall, the heartland of America is still suffering from the worst housing bust since the Great Depression, and it's not over with yet.

So, some big numbers and events are coming soon. Friday will witness the initial estimate of second quarter GDP, expected to be anywhere from 1.5% to 2.2% to the good, then there's the FOMC meeting Tuesday and Wednesday of next week, followed by next Friday's July non-farm payroll data.

Among all the usual market noise, new lows exceeded new highs for a third straight session, but, as we know, it won't last, because the Fed is coming to the rescue.

This is really beginning to get interesting.

Dow 12,676.05, +58.73 (0.47%)
NASDAQ 2,854.24, -8.75 (0.31%)
S&P 500 1,337.89, -0.42 (0.03%)
NYSE Composite 7,604.56, +13.94 (0.18%)
NASDAQ Volume 1,725,712,125
NYSE Volume 3,391,726,000
Combined NYSE & NASDAQ Advance - Decline: 3085-2522
Combined NYSE & NASDAQ New highs - New lows: 119-165
WTI crude oil: 88.97, +0.47
Gold: 1,608.10, +31.90
Silver: 27.47, +0.66

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