Monday, April 30, 2012

Window Dressing Day Spoiled by Chicago PMI; Fantasy Economics Meets Reality

Normally, the last day of the month is marked by incessant buying of momentum stocks by fund managers and other hucksters hoping to impress clients by owning shares of the most popular companies, but today's shopping spree was truncated by a terrible Chicago PMI report, which weighed down markets, sending all of the major indices into the red.

The PMI report, which was released to the public just fifteen minutes into the session, printed at 56.2, the lowest number since November, 2009, missing expectations of 60.0 by a country mile.

Despite any and all opinions to the contrary, this number was just another in a string of disappointing economic data, highlighted by last week's first estimate of first quarter GDP of 2.2% annualized growth. While commentators have thus far downplayed the importance of the GDP figure, the evidence is stark, especially when reinforced by the PMI today.

Not wishing to face the bitter truth that the US - and by many measures, the global - economy has stalled out once again, Wall Street refuses to set about the arduous task of taking profits and marking stocks down to reasonable valuations, whatever those might be. Stocks have been trading far from fundamentals and investors haven't paid heed to the undercurrents of decline in Europe, Asia and here in the Western Hemisphere, though that line of thinking may be changing soon.

Sell in May and Stay Away goes the timeless adage. Why stocks should encounter such a seasonal variation is of questionable veracity, but if oil prices (which declined today) remain elevated as they have been through the summer, the banking and investing goons and their paid servants in Washington DC might get a dose of bad medicine courtesy of Mr. Market, delivered by Adam Smith's fabled invisible hand that routinely cycles in and out of market dynamics and pays special attention to bubbles and irrationality.

Beyond high oil prices, the US housing industry is still in a shambles, despite the clarion call to investors rushing in to snatch up foreclosed properties with the intent to turn them into rentals. This current calamity-in-the-making ignores the most basic tenet of community: home ownership is an issue of pride. Taking what were once owner-occupied dwellings and turning them into rentals (to whom and at what price we do not know) is a basic destructor of neighborhoods and communities. The dwellings fall into disrepair, the neighborhood deteriorates and eventually, the fine "rental investment" becomes a rat hole and drug house, surrounded by wary neighbors who decry their falling property values and eventually abandon the area.

Once a neighborhood changes from owner-occupied to rental status, the changes, though subtle, are irreversible, the tipping point likely reached when at least 40% of the properties assume rental status. The changes may take years or even decades in normal times, though in the current situation, in which home values have already been whacked for a loop, buying at bargain basement prices, while alluring to investors and productive of cash flow, may turn out to be just the beginning of a non-virtuous cycle. Renters move in, neighborhoods decline, property values continue to fall and recouping the original investment may never materialize. The next step in the process is that of the investors walking away, having milked the value from the properties via rental income, the community destroyed by their ravenous profit appetite. That's why neighborhoods become ghettos in the first place and stay ghettos, ever after. Wash, rinse, repeat.

Beside the ill-conceived notion that the real estate market has bottomed (a laughable and lamentable idea if ever there was one - it was the topic of a one-page feature in the current issue of Esquire, so there's that canard), the Fed is stalling on plans for more stimulus, which is apparently needed, even though it doesn't work long run, and Europe is fast-falling into recession. China's growth is being internalized, austerity policies haven't done squiddly-doo to revamp broken sovereign balance sheets and the debt bubble continues to expand.

Some day, the Keynesians in and out of government and the policy houses will finally be outed by forces of markets which are stronger than any academic noise and nonsense. The real world doesn't always cooperate with economic theory and we are seeing it played out at breathtaking pace.

There's truly only one solution for an overhang of malinvestment and debt: loss. And it will surely visit those who have the most to lose.

Mark down April as the worst month for stocks thus far, but lay bets that there will be worse to come.

Dow 13,213.63, -14.68 (0.11%)
NASDAQ 3,046.36, -22.84 (0.74%)
S&P 500 1,397.91, -5.45 (0.39%)
NYSE Composite 8,118.95, -32.96 (0.40%)
NASDAQ Volume 1,585,325,125
NYSE Volume 3,379,976,250
Combined NYSE & NASDAQ Advance - Decline: 2056-3568
Combined NYSE & NASDAQ New highs - New lows: 190-40
WTI crude oil: 104.87, -0.06
Gold: 1,664.20, -0.60
Silver: 30.96, -0.39

Saturday, April 28, 2012

Debt Collection Agencies Must Follow the Law

The financial calamity of 2008 and the recession it produced took its toll on business and consumers across America. Personal and business bankruptcies have been a common thread to the weak recovery since the near-fatal economic collapse, and many people still struggle with high debt loads and unrealistic repayment schedules.

Conditions such as have existed for most of the past four years have led to a boom in collections, but also a great deal of abuse by banks, phony credit counseling agencies and the collections firms themselves. Mostly innocent consumers have been berated by phone calls, threatening letters and outlandish demands from unscrupulous operators seeking to capitalize on the misfortune of others.

Fortunately, there are strict laws in almost every state and federal statutes that prohibit many of these bad practices, such as threats of job loss, excessive phone calls at unusual hours and other abhorrent behavior. while the majority of collection firms abide by the laws, there are shady operators who skirt the boundaries and make life miserable for many.

In the Golden State, where the calamity of mortgage debt, job scarcity and personal indebtedness have created a perfect storm for collection agencies, there are many law firms and counseling centers which help stop collection harassment California through advocacy, letter writing and legal tactics that often bring the violators to justice.

Proper procedures must be followed by the collection companies, and they are enumerated by a strong set of laws throughout the country which can help stop collection harassment for good. Collectors, for instance, are prohibited from threatening or harassing consumers. The proper and prohibited procedures are spelled out in simple language in the Fair Debt Collections Practices Act (FDCPA), which gives power back to the people instead of in the hands of the banks and collections agencies.

Having excessive debt isn't always one's own fault, nor is the inability to make timely payments. Fortunately, there are laws which protect consumers and good-hearted companies and lawyers that can help make dealing with debt collectors a little less daunting and in line with the law.

Friday, April 27, 2012

Stocks Finish Week Dull; 2.2% GDP Gives Pause

Despite first quarter GDP printing at 2.2% prior to the opening bell, there was simply no holding back the animal spirits, as investors continued to shrug off any hint of bad news for the economy and push stocks to nosebleed levels.

Though gains were modest, they nevertheless were gains, based on nothing other than sentiment and greed. New highs expanded dramatically over a paucity of new lows.

Oil, gold and silver all posted modest gains. Overall, it was one of the duller sessions of the year, the typical low volume dynamic fully in play.

Dow 13,228.31, +23.69 (0.18%)
NASDAQ 3,069.20, +18.59 (0.61%)
S&P 500 1,403.36, +3.38 (0.24%)
NYSE Composite 8,151.91, +28.84 (0.36%)
NASDAQ Volume 1,807,514,500
NYSE Volume 3,645,831,750
Combined NYSE & NASDAQ Advance - Decline: 3714-1855
Combined NYSE & NASDAQ New highs - New lows: 347-42
WTI crude oil: 104.93, +0.38
Gold: 1,664.80, +4.30
Silver: 31.35, +0.14

Thursday, April 26, 2012

Markets Churn Higher on Absence of Data

There was little to move stocks in either direction today, but the algorithm-driven dynamic kept the same tone as it has pretty much since October and churned higher without any heed to downside risk.

Initial unemployment claims continued to be elevated, coming in at 388K after last week's revised 389K reading. The most positive news was pending home sales for March coming in 4.1% higher, a significant beat of expectations of a mere 0.5% gain.

Otherwise, there were a number of misses on corporate first quarter earnings reports, including UPS (UPS) and Dow Chemical (DD), but that didn't hold back stocks in the least as they started the day slowly and continued higher throughout the session, reaching the highs for the day shortly after 3:00 pm EDT.

There was a slight pullback into the close, but the final figures left the Dow Jones Industrials just 60 points from fresh four-year highs and the S&P 500 closing just two cents shy of 1400, a mark the index has not closed above since April 3rd.

Europe finished mixed, though the gains and losses of the particular exchanges were marginal. As has been the case over the past six to seven months, the absence of any kind of news out of Europe - which has been routinely bad - gives US markets a nudge higher, and such was the case on today's trading.

Analysts are hopeful that the week's gains can be sustained after Friday's first estimate of first quarter 2012 GDP, which will be announced prior to the market open. Market expectations are for somewhere between 2.5% and 3.0% growth, which would not be surprising, given a US economy that is being spoon-fed by government largesse, with more than 45 million Americans on food stamps and millions more receiving some form of government assistance while the Fed continues to dole out money hand over fist through its Operation Twist.

While all this stealth stimulus may be giving stocks a relatively easy time of it, at some point the government will have to deal with the monstrous deficits and the growing underfunding of the entitlement programs.

Being an election year, however, neither congress nor the president will go legislatively within earshot of those issues except in well-rehearsed campaign speeches, so, the current conditions will continue uninterrupted - barring some unforeseen event - until November. On the other hand, the Fed's current easing cycle will end in June, and it will be interesting to note how well the markets handle any lack of support.

Until further notice, it appears to be smooth sailing for stock hawkers, traders and investors. Somewhat counterintuitive, the precious metals had their best showing in weeks, though they remain range-bound.

Dow 13,204.62, +113.90 (0.87%)
NASDAQ 3,050.61, +20.98 (0.69%)
S&P 500 1,399.98, +9.29 (0.67%)
NYSE Composite 8,123.07, +52.29 (0.65%)
NASDAQ Volume 1,722,965,375
NYSE Volume 3,864,227,750
Combined NYSE & NASDAQ Advance - Decline: 3682-1910
Combined NYSE & NASDAQ New highs - New lows: 259-46
WTI crude oil: 104.55, +0.43
Gold: 1,660.50, +18.20
Silver: 31.21, +0.85

Wednesday, April 25, 2012

Computer-driven Market Continues to Defy Gravity

Following Apple's huge beat on first quarter earnings after yesterday's closing bell, nothing was going to stop the Wall Street horde from bidding up everything tech and everything else, for that matter.

Stocks roared out of the gate, despite the worst durable goods orders in more than three years. The 4.2% decline for March was the worst print since January of 2009.

Even such a negative report on a critical indicator could not stop the flurry of computer-driven orders (now a full 83% of the total market) from diving headlong into equities. Apple (AAPL) opened the trading day more than 50 points to the upside (nearly 9%) and held steady through the remainder of the session, finishing with a gain of 49.72 to close at 610, rendering the sharp losses of the past two weeks to the dustbin of history.

When the FOMC announced no change in interest rate policy - keeping the targeted federal funds rate at 0 to 25 basis points - and little change in the wording of their statement (though slightly more hawkish), there was barely a reaction, as computers programmed to buy don't react to announcements of no change to a failed macro-economic policy.

This is truly not your father's stock market. Algorithmic trading has turned what once was the engine of the financial world into a complete farce where humans have little to do or say and fundamentals do not matter. There is rarely a reasoned reaction to any economic news, only an incessant grind higher. In addition to the computer-driven market dynamics, the advent of weekly options trading has turned US markets into a carnival that would give honest casinos a bad name.

Daily swings of enormous percentages are now the norm, as the algos follow each other into buying patterns that do not recognize downside risk. There is no place for the individual investor as the machines have a huge advantage in both timing and speed of execution, which is why stocks trade more or less on the futures, causing massive gaps to either the upside or downside upon market opening, locking out small limit orders. There is no way to play in such a controlled sandbox, as any gains will already be taken by the HFT machines and their controllers before an order can be properly executed.

That is why volume will continue to remain on the light side. Individual investors stand no chance of making profits and have stayed away, despite the outlandish and often ridiculous gains.

Global thermo-nuclear war could break out and the computers would still trade stocks higher. It's like a bad Terminator movie, in which the puny humans are no match for the pre-programmed droids.

Dow 13,090.72, +89.16 (0.69%)
NASDAQ 3,029.63, +68.03 (2.30%)
S&P 500 1,390.69, +18.72 (1.36%)
NYSE Composite 8,070.84, +82.82 (1.04%)
NASDAQ Volume 1,697,138,250
NYSE Volume 3,981,364,750
Combined NYSE & NASDAQ Advance - Decline: 4223-1395
Combined NYSE & NASDAQ New highs - New lows: 215-42
WTI crude oil: 104.12, +0.57
Gold: 1,642.30, -1.50
Silver: 30.36, -0.39

Tuesday, April 24, 2012

NASDAQ Slides in (Unfounded) Apple Anticipation Fears; FOMC Meeting Concludes Wednesday

US markets rebounded from Monday's sharp selloff, though the S&P and NASDAQ were weighed down on fears that Apple (AAPL) would not deliver the usual stellar results after AT&T reported a decline in Apple iPhone activations in the first quarter.

The mercurial company founded and made famous by the recently-deceased Steve Jobs had been ramped up to become the most wealthy company on the planet earlier this year, though investors have been ravenously taking profits in recent weeks. Apple shares, which hit an all-time closing high of 636.23 on April 9th, has sold off viciously over the past two weeks, leading up to today's first quarter earnings announcement, after the closing bell.

Shares have fallen more than 15% to today's close at 560.28, the 10th day the stock has traded lower in the last 11.

After the bell, earnings were released, showing that Apple blew away estimates, as usual. Analysts were looking for earnings per share of $10.04 on revenue of $36.8 billion. Apple's first quarter results were $12.30 per share on $39.2 billion in revenue. Shares were up more than 40 points in after-hours trading, putting AAPL back above $600 per share.

Besides the interest in Apple, there were other issues on the minds of investors, primarily the ongoing FOMC meeting which concludes Wednesday afternoon, at which time the Fed governors are expected to keep interest rates where they have been for more than two years, approaching zero, though market analysts and Fed watchers will be poring over the text of the release and dissecting Fed chairman Ben Bernanke's new conference following the policy statement for any hints that may indicate the Fed leaning toward more QE, without which US markets would likely contract in a big way.

Currently in the final weeks of "Operation Twist," which expires in June, investors are hungry for more free money from the Fed and a continuation of the policy of easy money which has supported stocks since the financial collapse of 2008.

They'll all have to wait until 2:15 pm on Wednesday and thereafter for the news conference, though most see a continuation of QE in some form as a distinct possibility, though the Fed has let some time go by after the first two rounds - QE1 and QE2 - before embarking on further easing.

Dow 13,001.56, +74.39 (0.58%)
NASDAQ 2,961.60, -8.85 (0.30%)
S&P 500 1,371.97, +5.03 (0.37%)
NYSE Composite 7,988.01, +47.28 (0.60%)
NASDAQ Volume 1,691,154,875
NYSE Volume 3,592,090,500
Combined NYSE & NASDAQ Advance - Decline: 2715-1920
Combined NYSE & NASDAQ New highs - New lows: 109-61
WTI crude oil: 103.55, +0.44
Gold: 1,643.80, +11.20
Silver: 30.75, +0.22

Monday, April 23, 2012

Storm of Events Leading Markets and Economies Down Financial Abyss

As far as headwinds were concerned, the Spring storm which raged across the Northeast was nothing compared to the global typhoon of financial and economic news on Monday.

On Sunday, the French people went to the polls and pulled more levers for Socialist candidate Francois Hollande than for current conservative president Nicolas Sarkozy in the first round of voting. Sarkozy and Hollande will compete for the presidency in the next round of voting, in two weeks time, but the results are being characterized as investor-unfriendly, not only because Hollande's stance will be less favorable toward the Euro than Sarkozy's, but also because far right candidate Marine Le Pen took third place with 17.9 percent of the vote, signaling that French anger over unemployment and austerity are reaching fever pitch.

Overnight, China's "flash" PMI showed a sixth straight month of contraction at 49.1. Even though the reading was better than expected, the news fueled continued fears of a hard landing for China's economy.

As the week began in Europe, two events sent European stocks into a tailspin. The Central Bank of Spain reported that it was officially in recession, as its GDP shrank for the second straight quarter, down 0.4% for the first quarter of 2012, while in the Netherlands, the government collapsed - Prime Minister Mark Rutte and all cabinet members resigning - after failing to reach agreement on an austerity plan within EU strictures.

As if that wasn't enough for the opening of markets in the US, the scandal that Wal-Mart executives bribed Mexican officials for favorable results on building permits was exploding late Sunday into Monday after the New York Times broke the story on Sunday.

While the fact that a large American corporation would bribe officials in a foreign country to receive favorable treatment - the same is done legally in the US, though here it is called "lobbying" - is nothing new, the idea that Wal-Mart executives chose to cover up the scandalous behavior was a bit of an eye-opener.

However, as everyone in big business knows, payola, bribes, payoffs and other forms of cheating are all just part of the global domination game played every day around the world. It's like saying the recent Secret Service dalliances in Columbia were the first time that kind of activity ever occurred.

So, with enough negative news to shake down even the most ardent perma-bull, futures blazed red prior to the open and stocks fell quickly at the opening bell, reaching the lows of the day right around 11:00 am EDT. Even though stocks recovered in the afternoon, technical damage was done, with all four major indices closing below their 50-day moving averages, with the broadest measures - the NYSE Composite and NASDAQ - suffering the worst of it.

With all that news sloshing about, Wall Streeters were in no mood to hear that the nation's largest entitlement programs - Social Security and Medicare - would be running out of money sooner than expected. The trustees of the plans released their annual statements, saying that the Social Security trust fund would be exhausted in 2035, three years sooner than stated just last year. It added that the trust fund for its disability program, which serves 11 million people, would run out in 2016, just four years from now. Medicare was slated to go bankrupt in 2024, the same estimated date as last year's forecast, though the projections were based on very conservative considerations.

The impact of these projections are based on congress making no changes to any of the programs, though both Republicans and Democrats have proposed various plans to keep the Ponzi-scheme entitlements going. The reaction to this announcement should be a loud hue and cry from the American public, with proponents and detractors on both sides of the issue, but the reality is that any man or woman aged 45 or less should expect absolutely nothing in future years and consider the "deductions" from their weekly or bi-weekly paychecks nothing more than outright theft by decree.

Overall, today's news and events only paint the picture of global economic collapse in darker shades, with the rush toward implosion seeming to accelerate with each passing day.

One has to consider that having only papered over the immense losses from the 2008 crash, the next serious event could have ramifications far more severe than what was encountered just four years ago. Global leaders are at a loss for solutions other than adding more liquidity to problems that are solvency-based. Metaphorically, it's similar to the BP oil spill in the Gulf of Mexico, hoping that long-term environment problems would somehow be magically whisked away by vastness of the body of water diluting the harmful effects of the toxic spill.

Throwing more money at insolvent institutions - most major banks and the governments of developed and developing nations - won't fix the problems. It will only delay the ultimate solution and make conditions worse for even larger numbers of people.

Meanwhile, in Washington, all the politicians currently care about is getting re-elected, whereas on Wall Street the bankers to the world have proven to be numb to even the most stark global conditions.

Dow 12,926.86, -102.40 (0.79%)
NASDAQ 2,970.45, -30.00 (1.00%)
S&P 500 1,366.94, -11.59 (0.84%)
NYSE Composite 7,938.82, -86.72 (1.08%)
NASDAQ Volume 1,736,082,250
NYSE Volume 3,568,057,250
Combined NYSE & NASDAQ Advance - Decline: 1439-4198
Combined NYSE & NASDAQ New highs - New lows: 47-147
WTI crude oil: 103.11, -0.77
Gold: 1,632.60, -10.20
Silver: 30.53, -1.12

Friday, April 20, 2012

Friday Vapor Rally Runs Out of Steam

When rallies are built on nothing but hope and hype, i.e., pre-market futures - which were up outlandishly this morning - the end result is usually something along the lines of what happened today.

For the Dow, it meant, by the close, giving back nearly half the gains it had built by midday. For the NASDAQ and the S&P 500, the results were worse, being that Apple (AAPL) was whacked again today, losing another 2.5% on top of sizable losses earlier this week.

The NASDAQ gave up all of its gains and then some, finishing in the red, while the S&P gained just over a point-and-a-half by day's end.

There was nothing pushing this rally besides the absence of any kind of news, which, in current Wall Street parlance, is meant to be good news. Any hint of further malaise in Europe or on the US housing or employment fronts - which had already been well-disseminated earlier this week - would have sent stocks screaming for mercy into the weekend.

As such, nothing other than a few earnings reports were just barely enough to keep the stock wizards occupied, though the same classic bear market chart pattern as on Thursday emerged: up in the morning with a sell-off the remainder of the day.

Dow 13,029.26, +65.16 (0.50%)
NASDAQ 3,000.45, -7.11 (0.24%)
S&P 500 1,378.53, +1.61 (0.12%)
NYSE Composite 8,025.44, +29.52 (0.37%)
NASDAQ Volume 1,892,790,000
NYSE Volume 3,799,865,000
Combined NYSE & NASDAQ Advance - Decline: 3535-2076
Combined NYSE & NASDAQ New highs - New lows: 182-60
WTI crude oil: 103.05, +0.78
Gold: 1,642.80, +1.40
Silver: 31.65, -0.13

Thursday, April 19, 2012

Early Earnings Euphoria Turns to Tears as Economic Data Disappoints

In the most classic of all classic bear market chart moves, the major indices took the ball that was handed to them by the like of Bank of America (BAC) and DuPont (DD), both of which reported 1st quarter earnings before the bell, opening to the upside, though without much conviction as the 380,000 initial unemployment claims hung over the markets like the Sword of Damocles.

Sporting gains by the 10:00 hour, the next set of economic data included the index of leading indicators from the shills at the Conference Board posting a gain of 0.3%, the Philadelphia Fed index showing a number of 8.3 when the expectations were for 12.0 and existing home sales - the real killer number - sporting a 2% decline from 4.60M in February to 48.8 in March.

Adding to the housing debacle is the fact that the numbers are woefully behind the times and generally a best-guess situation, indicating that April's figures, which will be released about this time in May, will be off the mark as well.

With those key economic data points in hand, the markets began to turn south and continued to do so until reaching the lows of the day before 3:00, though, of course, no Ponzi-scheme market would be complete without the requisite end-of-session tape painting that chopped off about 40% of the losses.

Still, it was an ugly chapter for a market struggling to find any kind of positive momentum. Those who based their hopes on bank earnings from BofA were sorely disappointed to find that the nation's most hated banking entity (though JP Morgan Chase and Citigroup are running close behind) produced a quarterly earnings report that more resembled a work of fiction rather than a well-reasoned, accurate accounting of their financial position.

Since 2008 - and probably even before then - all bank earning statements from the big five have been wholly fraudulent, based on assumptions like mark to model and other accounting gimmicks designed only to obfuscate the truth. Bank of America does't really make money any more than a dead person inhales oxygen, and the metaphor is appropriate, since BofA is technically a dead bank walking.

So, on a day in which the pundits and cheerleaders were looking for positives in corporate earnings, they got egg on their collective faces from the economy, which, after all, is the real harbinger of good or ill tidings. Continued high unemployment and a crippled housing market added to burgeoning government debt does not paint a very pretty picture, though Wall Street likes to view these things though rose-colored glasses.

Eventually, reality strikes home and the only option is to hit the sell button. Notably, today's volume was much higher than what has been the norm, not a good sign for any bulls still holding corporate shares.

Dow 12,964.10, -68.65 (0.53%)
NASDAQ 3,007.56, -23.89 (0.79%)
S&P 500 1,376.92, -8.22 (0.59%)
NYSE Composite 7,995.94, -34.43 (0.43%)
NASDAQ Volume 1,965,208,125
NYSE Volume 4,138,306,500
Combined NYSE & NASDAQ Advance - Decline: 2162-3363
Combined NYSE & NASDAQ New highs - New lows: 134-91
WTI crude oil: 102.27, -0.40
Gold: 1,641.40, +1.80
Silver: 31.78, +0.29

Wednesday, April 18, 2012

Volatility Returns; Oil Price Dips; Spanish Bond Auctions on Economic Radar

Yesterday's vapor rally was actually all about options expiration, it turns out, because as quickly as the control freak rats running Wall Street's biggest brokerages went piling in, they scrambled back out today, leaving the momentum stocks stuck in lifeless atrophy, hollowed out dead carcasses once the meat was taken from their bones.

Until such a time that the criminal element that brought us the financial collapse of 2008 is rounded up and summarily dismissed - which will likely never happen - expect more events such as the past two days to become more of the norm than the exception. Wall Street is a slimy, cheater's paradise where skimming a few decimal points worth of profit makes one a hero in a market that makes about as much sense - from a fundamental basis - as the dribbling rant of an imbecile.

The problem is that while imbeciles are generally disregarded and institutionalized, the leaders of the Wall Street horde are treated like rock stars in the financial realm, supposedly blessed with infinite knowledge of markets, economics and business, when in fact they are no better than underworld goons adept only at making the best of a rigged game.

There really is no sense investing in stocks, though some savvy players may be able - for a time - to make some money day-trading or playing the options game. The odds for the individual investor are stacked heavily against them and in favor of the controlling crowd that is the brutish Wall Street gang, who controls the direction of trades via futures manipulation, high frequency trading (HFT) and nearly unlimited amounts of money.

One might be inclined to take some pleasure in seeing the price of oil drop today in hopes that retail gas prices would soon follow, though it's likely only temporary and a hedged-out ploy at best, a cynical trade on the hopes and dreams of the average consumer that is just as likely to turn back up tomorrow as continue its decline.

Everything related to stocks, commodities and currencies is completely manipulated, if not by the bankers and brokerages, then by the central banks, and false. Still, we play along, hoping that some day, something will change the status quo and markets will once again be recognizable. It's a fruitless hope for most, as those in control will stay in control whether the markets go up, down or sideways.

The real shame is the fate of millions of Americans and citizens of other developed nations who have put their faith and money into such a sham of leadership, which shows almost daily its contempt for morality and principled investing and governance. A day of reckoning may come, but those worst affected will be the ill-informed general public which has dutifully played in the sandbox of the elitists.

Tomorrow's fiasco de jour will focus on long-dated Spanish bond auctions and the usual nonsense that is the weekly unemployment claims figure.

Dow 13,032.75 82.79 (0.63%)
NASDAQ 3,031.45 11.37 (0.37%)
S&P 500 1,385.14 5.64 (0.41%)
NYSE Compos... 8,030.39 33.69 (0.42%)
NASDAQ Volume... 1,573,320,125.00
NYSE Volume 3,436,646,250
Combined NYSE & NASDAQ Advance - Decline: 1759-3788
Combined NYSE & NASDAQ New highs - New lows: 105-92
WTI crude oil: 102.67, -1.53
Gold: 1,639.60, -11.50
Silver: 31.49, -0.19

Tuesday, April 17, 2012

On Tax Return Day, Wall Street Rocks Home a Winner

Apparently, the people (or machines) that trade on Wall Street have already done their taxes and owe nothing to the government, because a lot of cash went to work today, bidding up stocks closer to 3 1/2 year highs.

Although volume was light, that's become the new normal, so unless today's monster move was nothing more than bidding up prices in advance of options expiry, US businesses look to be in outstanding shape.

Earnings thus far for the first quarter have been better than expected for the most part, and, better yet, there haven't been any nasty developments or dissonant noise from Europe.

The questions surrounding recent moves in stocks are various and diverse. Are we extending the three-year-plus bull market or is this simply misplaced euphoria? Will fiscal policy of high deficits sink the economy or have the Fed's incessant money printing fostered a global boom? No matter which way one turns on those issues, one thing is clear: there's a magnificent absence of fear in the market right now.

The numbers speak for themselves:

Dow 13,115.54, +194.13 (1.50%)
NASDAQ 3,042.82, +54.42 (1.82%)
S&P 500 1,390.78, +21.21 (1.55%)
NYSE Composite 8,064.04, +114.47 (1.44%)
NASDAQ Volume 1,554,113,625
NYSE Volume 3,429,126,750
Combined NYSE & NASDAQ Advance - Decline: 4340-1306
Combined NYSE & NASDAQ New highs - New lows: 158-41
WTI crude oil: 104.20, +1.27
Gold: 1,651.10, +1.40
Silver: 31.68, +0.01

Monday, April 16, 2012

Apple Bifurcates Markets on Big Sell-off; Spain, Housing in Focus

Before getting to why the major indices were all over the map today, a couple of key economic data points:

The NAHB Housing Market Index fell for the first time in seven months, from 28 in March to 25 in April. A figure of 50 is considered "break even" wherein more builders are more confident. Obviously, this latest dip leasves new hoe builders nowhere close.

Regionally, the Northeast posted a four-point gain to 29 (its highest level since May of 2010), the West saw no change at 32, the South declined three poins to 24 and the Midwest was the weakest, posting an eight-point decline to 23.

With new home sales on tap for tomorrow, housing appears to be as weak as it ever has.

Retail sales for March posted an unexpected 0.8% gain on expectations of just a 0.3% rise, somewhat of a surprise considering high fuel costs and other issues facing consumers (no jobs, no homes, high debt, etc.).

On the downside, the Empire Manufacturing Index nose-dived from 20.21 in March to 6.56 in April. The collected wisdom of forecasters expected a decline - to 17.6. New orders and shipments were down, while the employment situation was mixed with more jobs, but for shorter durations.

Taken together, these data sets reveal a US economy that is crawling along and possibly sputtering to stall speed.

Investors in Apple (AAPL) took some long-overdue profits on Monday, sending the world's largest company by market cap down 25.10 points (4.15%), to close at 580.13, the worst decline for Apple in more than six months. Investors were buoyed by a 45% gain in the company stock since October, however.

The weight of Apple on the various indices was obvious, with the NASDAQ the most severely affected, the S&P less so. Meanwhile, the Dow registered a strong showing, with 24 of the 30 components sporting gains, led by Travelers (TRV), Proctor & Gamble (PG), Wal-Mart (WMT) and DuPont (DD).

Otherwise, it was a straightforward session, with much of the focus centered on Spain's 10-year note, which spiked back above 6% on the day and sent bond holders scrambling for the safety of the German Bund, which is nearing historic lows. The pressure on Spain's funding continues to fuel speculation that the country will need a Greek-style bailout soon.

Dow 12,921.41, +71.82 (0.56%)
NASDAQ 2,988.40, -22.93 (0.76%)
S&P 500 1,369.57, -0.69 (0.05%)
NYSE Composite 7,949.57, +18.47 (0.23%)
NASDAQ Volume 1,566,279,375
NYSE Volume 3,444,850,000
Combined NYSE & NASDAQ Advance - Decline: 3083-2500
Combined NYSE & NASDAQ New highs - New lows: 109-106
WTI crude oil: 102.93, +0.10
Gold: 1,649.70, -10.50
Silver: 31.37, -0.02

Saturday, April 14, 2012

Saturday Morning Financial Comedy

Three short takes to relieve the stress of fiat-induced financial instability:

Tim Hawkins:

Clarke and Dawe:

South Park:

Friday, April 13, 2012

China's Slowing GDP a Symptom of Faltering Global Economy

Yesterday's rumor that China would report first quarter GDP of upwards of 9% growth - which fueled the ramp-up in stocks on Thursday - turned into today's reality that China's economy is slowing, and quickly.

When the news that China's economy grew less than expected - by 8.1%, the slowest rate of growth in the world's most populous country in nearly three years - traders in Europe and the US could not sell shares of selected equities quickly enough. By the time US markets opened, futures had cratered to their lowest levels of the morning and the selling continued throughout the lackluster session.

By he close, Thursday's gains were all but eviscerated, leaving investors to wonder what comes next in terms of the global economic condition.

Also, prior to the open, two major banks, JP Morgan Chase (JPM) and Wells-Fargo (WFC) announced first quarter earnings. Both beat estimates, but the stocks sold off on the reports, many analysts citing bookkeeping chicanery for the better-than-expected returns.

By the end of the day, JPM dropped 3.64%, while WFC lost 3.47%. Both stocks are near 52-week highs and are currently looking like serious short-sell candidates.

The Chinese data should not have come as a surprise. Since most of China's recent growth has been tied to exports - mainly to the US and Europe - slack demand has crimped output and China's nascent middle class is not yet robost enough to fill in the growth gap. Concerns over the debt condition of the Eurozone have not abated, and, in fact, may be exacerbated as Spain's situation worsens.

Sooner or later, principals are going to have to come to terms with the global condition of faltering sovereign nations, an excessive overhang of debt and limited solutions from fiscal and monetary authorities. The search for yield has many investors scrambling again into dividend-paying stocks or the marginal returns of US treasuries, which rallied once more, the ten-year dipping to 1.99% at the close of trading.

In such an environment, there is no safe harbor except for hard assets, though even oil, gold and silver were pounded lower on the news.

The major averages finished the week with losses of around two percent. The idea that stocks sporting solid gains for the first quarter have been selling off nevertheless, portends more downside for equity investors.

Deflation is a cruel environment, for which most in the financial arena are ill-prepared. The global economy is close to stall speed, which, for most ordinary people, is bliss, though the highly-leveraged worldwide financial system is surely strained at present.

Dow 12,849.67, -136.91 (1.05%)
NASDAQ 3,011.33, -44.22 (1.45%)
S&P 500 1,370.27, -17.30 (1.25%)
NYSE Composite 7,937.65, -102.31 (1.27%)
NASDAQ Volume 1,437,334,625
NYSE Volume 3,433,928,000
Combined NYSE & NASDAQ Advance - Decline: 1332-4234
Combined NYSE & NASDAQ New highs - New lows: 95-69
WTI crude oil: 102.83, -0.81
Gold: 1,660.20, -20.40
Silver: 31.39, -1.14

Thursday, April 12, 2012

Stocks Continue Roller Coaster Ride; Google Pops on Earnings

In this space a couple of days ago, it was theorized that stocks were not offering directional signs to investors, and that was on a nearly 200-point drop on the Dow.

Since then, just two days hence, the major indices have erased those ugly losses and added to the upside, with gusto.

Despite the highest number of initial unemployment claims since January (380,000) being announced prior to the opening bell stocks started a slow progression to the upside which lasted all session long, no doubt spurred on by the whirring computer algos which, as machines, only do as they are programmed.

The paucity of trades didn't slow the market in the least, as volume was, as per usual, non-existent for the most part. Somewhere in between the flat PPI reading (no kidding, PPI was unchanged for March) and Google's first quarter earnings announcement, somebody let slip a rumor of more QE from the Fed, or something like that, at the computer-traders lapped it up like so much cheery data, even though none of the recent spate of speeches by Fed governors included any mention of further easing, except on an iffy basis, that being a severe downturn in the economy.

The markets being more akin to a roller coaster rather than the usual casino-like environment of late, the day-trading brokerages and hedge funds had a field day skewering shorts until they screamed for mercy.

As for the aforementioned Google (GOOG) earnings report, the company - which reported after the bell - blew away estimates by earning $10.08 per share, well beyond the expected $9.66 offered by analysts. The company also announced a 2-for-1 stock split, though the proposal will not be voted on until June, though it is widely considered that it will meet with shareholder approval.

The beat goes on, despite occasional dissonance along the way.

Wells Fargo (WFC) and JP Morgan Chase (JPM) are next up on the earnings parade, reporting well before the bell on Friday morning.

Dow 12,986.58, +181.19 (1.41%)
NASDAQ 3,055.55, +39.09 (1.30%)
S&P 500 1,387.57, +18.86 (1.38%)
NYSE Composite 8,039.95, +127.10 (1.61%)
NASDAQ Volume 1,491,138,875
NYSE Volume 3,543,994,000
Combined NYSE & NASDAQ Advance - Decline: 4410-1193
Combined NYSE & NASDAQ New highs - New lows: 103-39
WTI crude oil: 103.64, +0.94
Gold: 1,680.60, +20.30
Silver: 32.52, +1.00

Wednesday, April 11, 2012

US Stocks Bounce Back, But Close Flat on Weak Volume

Yesterday's deep decline was followed on Wednesday by the typical knee-jerk, snap-back, dead cat bounce rally, which occurred at the market open but quickly ran out of steam.

For the remainder of the session after 11:00 am EDT, stocks drifted about in a narrow range and volume was noticeably tepid, considering that Tuesday's volume was among the highest of the year. It was also confirmed that Monday's incredibly weak showing was the second lowest volume day of the year, yet another example of how, despite the best efforts of Wall Street hucksters and Federal Reserve pumping, individual investors and practically anybody who is not a fund manager or professional of some ilk simply does not want to be in this market for equities.

Today's lackluster showing was in spite of Alcoa's strong earnings report after the bell on Tuesday, a pleasant earnings kick-off surprise that was promptly disregarded.

For a day, at least, there was no imminent threat of currency or sovereign collapse coming from across the Atlantic where almost all European bourses registered modest gains.

There was little new with which to move markets, a condition which may change on Thursday, as initial unemployment claims and the March PPI figures are released prior to the opening bell. On Friday, JP Morgan Chase (JPM) and Wells-Fargo (WFC) announce first quarter earnings before the open.

In one of the more absurd wastes of taxpayer money, the nearly-invisible Attorney General, Eric Holder, unsheathed a his DOJ sword with a price- fixing antitrust lawsuit against Apple (AAPL) and five book publishers for colluding to fix prices of e-books sold on the iPad platform. Three of the named publishers have already agreed to a settlement, though several states are pursuing civil actions of their own. The suit seeks monetary damages. Apple had no comment.

Clearly, the Department of Justice is completely inept, pursuing nothing other than sure-win, low-hanging fruit variety lawsuits and the federal government is desperate for dough, though what they'll gain from this silly effort is akin to a teaspoon from a barrel of debt.

Dow 12,805.39, +89.46 (0.70%)
NASDAQ 3,016.46, +25.24 (0.84%)
S&P 500 1,368.71, +10.12 (0.74%)
NYSE Composite 7,905.74, +63.82 (0.81%)
NASDAQ Volume 1,504,835,625
NYSE Volume 3,724,551,250
Combined NYSE & NASDAQ Advance - Decline: 4435-1196
Combined NYSE & NASDAQ New highs - New lows: 58-59
WTI crude oil: 102.70, +1.68
Gold: 1,660.30, -0.40
Silver: 31.52, -0.16

Tuesday, April 10, 2012

Markets Offering Few Directional Clues Amidst Continuing Crises

Spain today, tomorrow jobs, next day China. Wholesale inventories are growing.

That's how the markets seem to be lurching from one crisis to the next, though overall performance in equity markets has - until the past five days - been outstanding.

Today's deep declines in Europe and the US notwithstanding, global economies have withstood more than three years of relentless pressure and are still standing.

This kind of vacillation leaves most analysts red-eyed and weary at the ends of most weeks and casual market observers in a state of dumbfounded blurriness.

Recapping the losses in US equity markets today need not lead one to conclude that the economy is falling over a cliff; indeed, stocks have been on a 30% tear since October, and the recent five-day decline has only clipped off a small percentage. And, it's just the start of earnings season for the first quarter, one which is predicted to be less-than-outstanding, withe the estimate for earnings growth to be less than one percent.

The Dow is on its worst five-day losing streak since August of 2011; meanwhile the S&P and NASDAQ have suffered their biggest drops since late November. The S&P broke through support at 1370 and continued down from there, slicing through its 50-day moving average, while the NASDAQ busted below 3000, a beachhead just recently breached.

Fear? Greed? Take your pick. Stocks finished close to their lows of the day, setting up just about anything for Wednesday, though the overhand from Spain's 10-year bond hovering around 6% is troubling to all.

On the bright side, Alcoa (AA) opened earnings season with a surprise, posting a nine-cent per share first quarter profit on expectations of a four-cent loss. On the other hand, last year's first quarter profit was 27 cents per share.

The 10-year US treasury closed below 2% (1.98%) for the first time in a month and WTI crude oil ended the day at roughly the same level it was at on December 30 of last year.

Most corporate economists are calling for 2-3% growth for 2012, though their track record is of misses so wide that one would be a fool to invite them onto the bar darts team.

A couple of clues to keep on the radar over the next few days, because they will be telling: the advance-decline line has been anemic for the past two weeks and the past two days have been decidedly bearish; the VIX has spiked 30% in the past eight sessions; Dow transports never confirmed the recent rally and have been taking a beating recently; new highs - new lows has rolled over in three of the past four sessions; and, crude oil has tanked.

All of these indicators are important, but it's still too early to call a trend, especially as we head into the heart of earnings season over the next two weeks. It will pay to keep a very close eye on developments. The recent downturn could easily be nothing more than profit-taking or the forerunner of a severe downturn.

So, take your pick. Up, down, left, right, forward, backwards. If you have a job, keep it. If you have some money, save it. If you need to eat, buy some food (it's still relatively cheap), if you don't have to drive, don't, and, if you think life is still pretty good, enjoy it, because, in this environment, one never knows how long the good times will last.

Keep an eye on sunrise and sunset times and any variance from published expectations.

Dow 12,715.93, -213.66 (1.65%)
NASDAQ 2,991.22, -55.86 (1.83%)
S&P 500 1,358.59, -23.61 (1.71%)
NYSE Composite 7,842.00, -150.32 (1.88%)
NASDAQ Volume 1,916,928,125
NYSE Volume 4,651,426,500
Combined NYSE & NASDAQ Advance - Decline: 924-4713
Combined NYSE & NASDAQ New highs - New lows: 45-157
WTI crude oil: 101.02, -1.44
Gold: 1,660.70, +16.80
Silver: 31.68, +0.16

Monday, April 9, 2012

Economic Dark Clouds Forming in Aftermath of Non-Farm Payroll Miss

Even though US markets were closed on Friday, the BLS did release the monthly non-farm payroll data for March at its regularly-scheduled time, and the results were not pleasant to those of the bullish, "recovery" persuasion.

Non-farm payrolls for March showed an increase of 120,000 net new jobs on expectations of 205,000, a horrific miss that sent shock waves around the globe.

Far eastern markets were the first to react on Monday morning, with the majority sporting hefty losses. European markets were closed for Easter Monday, so their reaction will be registered on the morrow.

US market participants waited patiently until Monday morning to move on the news, though market futures provided a clear guide even as early as Friday morning, when Dow futures were down 120 points, almost exactly where the market eventually opened following the weekend.

As anticipated, the move downward was swift, right at the open, and markets drifted along the lower range until midday, when a hint of a rally materialized, though it was not materially significant and faded badly into the close.

Technical damage was evident. The advance decline ratio was substantially impaired, with decliners outpacing advancers by a 4:1 ratio and the new highs to new lows measure completely flipped over, marking the lowest number of new highs and the highest number of new lows in at least six months.

Those technical indicators should not be dismissed out of hand, as they could be presaging a violent reversal from the immediate highs of just a week ago. Entering an earnings season which is widely considered to come in weaker than those of the recent past, the stage is set for a serious short-term market correction at exactly the wrong time, as traditionalists and day-traders alike will be taking caution and pulling profits off the table at the earliest opportunity.

Late Spring and Summer have established historical precedents which indicate a long, slow slog approaching the fall and the boorish election season.

The rhetoric out of Washington and the bullying bullishness from Wall Street will only resound louder as earnings are released through the month of April and into early May. While pundits and perma-bulls are already calling this a temporary bounce, those same voices are calling for another round of QE from the magnanimous Federal Reserve. With a FOMC meeting just two weeks hence, rumors will be circulated on both sides of that argument, though the bulls will be caught in an untenable position, because, if the economy is actually doing well, then no further easing is necessary.

The cards are on the table and the Fed, it appears, has drawn a dead hand, as has the general economy and the Wall Street crowd. The result may well be an empty pot with nobody willing to make an opening bid.

Interestingly, about the only instrument that rose on the day was gold. Equity market volume was at levels heretofore unseen, even in this era of non-participation.

Dow 12,929.59, -130.55 (1.00%)
NASDAQ 3,047.08, -33.42 (1.08%)
S&P 500 1,382.20, -15.88 (1.14%)
NYSE Composite 7,992.32, -89.03 (1.10%)
NASDAQ Volume 1,369,666,125
NYSE Volume 3,142,976,500
Combined NYSE & NASDAQ Advance - Decline: 1110-4539
Combined NYSE & NASDAQ New highs - New lows: 46-125
WTI crude oil: 102.46, -0.85
Gold: 1,643.90, +13.80
Silver: 31.52, -0.21

Friday, April 6, 2012

Holding Hard Assets a Growing Trend

With the economy still in crisis mode and the future value of the US dollar (and other fiat currencies) very much in doubt, more and more people have pulled money out of stocks and mutual funds and into hard assets, such as vintage automobiles, fine art, collectibles, and, of course, precious metals, such as silver, gold and platinum.

While most of these assets aren't easily traded for quick money, the current perception is that they'll appreciate faster than inflation and aren't subject to the wild swings and other vagueries of the equity and bond markets.

Hard assets are more of a safe investment and a store of value and are especially coveted by people who have already amassed a comfortable level of wealth and wish to keep what they have.

Even if one is not in perfect financial condition, certain hard assets can help one sleep better at night, safe in the knowledge that their assets are in their own possession and not held in some virtual online account which may or may not be secure from hackers, margin calls and market miscues.

What everyone holding hard assets needs more than ever these days is security. That's why gun sales have never been better and safe manufacturers have put on extra shifts in order to meet the overwhelming demand, but nothing beats a solid Home Security system for peace of mind, whether you're at home or away.

While a gun may be the ultimate defense, against intruders and safes are perfect for keeping prying eyes (and hands) away from your precious assets, there isn't a thief alive who will dare break into a home that has a good security system in place, usually with a sign that says the house is well-monitored.

Good systems come in all price ranges, from simple DIY installation of motion detectors with lights and sirens to advanced wired or wireless security apparatus that can signal a local or national security center or even the police when tripped.

Holding hard assets will likely continue to be a favored investment for all classes of people, and the companies who make things that keep them secure are almost certain to profit handsomely.

Thursday, April 5, 2012

Stocks End Shortened Week with Lackluster Session

Markets will be closed on Friday in observance of Good Friday, but some traders apparently left the floor early as trading on the major exchanges was sloppy and limited.

There was only one bit of data that may have contributed to the the overall lack of enthusiasm: initial unemployment claims came in 2,000 above of expectations, at 357K, a number that many believe to be a sign of strength in the economy, though an equal number likely believe it to be still too high to demonstrate any lasting recovery.

The sad truth about unemployment figures - as dodgy as they are - is that they're nowhere near levels indicative of full employment, which would be somewhere in the 280-315,000 range, and probably won't be for the foreseeable future because America is creating jobs, albeit of a lower-paying variety and not in any perceptible hurry.

While America slogs along, now 3 1/2 years since the financial crisis, Europe seems to be careening headlong into a protracted recession, with the southernmost countries bordering on depression (count Greece as already in depression). The more bad news that comes from the continent, the harder it will be for the US to retain any semblance of prosperity, notably a word that hasn't been used much since late 2007, though it occasionally pops up in political speeches full of promises that will never be kept.

Activity today on the markets was so sadly disjointed that the NASDAQ managed to be the only index posting a positive return, primarily due to the presence of Apple (AAPL) and other momentum stocks which routinely get an algo boost while the Dow Industrials flounder.

Traders were also likely to be anxious over Friday's non-farm payroll data, which, despite the markets being closed for trading, will still be released at the normal time of 8:30 am EDT. Estimates abound, but most are focused in an area from 150,000 to 200,000, the latter being upped by Goldman Sachs from a previous 175,000 guess.

That perhaps explains why there was so little interest in staking out or adding to positions on the day. Trading resumes Monday and will be highly correlated to the March jobs data.

Monday also marks the beginning of first quarter earnings season, though traditional first up Alcoa (AA) will report on Tuesday, after the close of trading.

Commodities rebounded slightly from the recent drubbing they've taken, but even with today's gains remain well below levels reached earlier in the year.

New highs outpaced new lows, though not decisively, a notable change from the domination of new highs seen over the past six months and a metric to keep an eye on in upcoming days and weeks.

Dow 13,060.14 14.61 (0.11%)
NASDAQ 3,080.50 12.41 (0.40%)
S&P 500 1,398.08 0.88 (0.06%)
NYSE Compos... 8,081.37 25.42 (0.31%)
NASDAQ Volume... 1,525,375,250.00
NYSE Volume 3,277,506,250
Combined NYSE & NASDAQ Advance - Decline: 2478-3073
Combined NYSE & NASDAQ New highs - New lows: 115-91
WTI crude oil: 103.31, +1.84
Gold: 1,630.10, +16.00
Silver: 31.73, +0.68

Wednesday, April 4, 2012

S&P Closes Under 1400; Precious Metals Whacked

The follow-on from yesterday's FOMC minutes release, combined with scary data from Australia and China (slowing economies) sent markets tumbling globally.

Asia and Europe each saw aggressive selling, and by the time US markets opened - despite ADP March employment data posting a modest beat of 209,000 jobs - the Dow was set up for a 100-point loss at the open.

The opening move was swiftly lower, taking the other major indices along for the ride. Dow Industrials remained below 13,100 all day, with the S&P 500 - despite a late day rally - eventually closing below 1400 for the first time in eight sessions.

To say that the markets have topped out temporarily would be putting it lightly; rather, stocks seem to be in a steady drift lower, as Winter turns to Spring and investors seek to lock in profits from one of the most rambunctious first quarters in stock market history.

Conditions in Europe once again made noise in the states, as a poor showing for a Spanish bond offering and rumors of another bailout for Portugal fanned the flames of global recession.

While some commentators continue to spout nonsense that the US is "decoupling" from Europe and the rest of the world's economies, such talk is nothing but hot air, mostly from the same people who rightly contended during the struggles in the US that a large portion of US earnings are derived from abroad.

One simply cannot have it both ways. We are either a part of the global economy or we are not and the facts are strongly in favor of the "globalized" economy model.

What concerns investors most during this transitional period are fears of a prolonged slump in Europe which would exacerbate tepid conditions in the US. Economic data has been fragile of late, but hope for a renewal to the rally on first quarter earnings data from US companies is keeping the markets somewhat range-bound and in a position of relative strength, though the thought of the Fed cutting off the easy money with the end of "operation twist" in June are tempering the bullish sentiments.

While stocks were damaged on the day, gold and silver were even harder hit, which makes little sense from an historical perspective. In times of economic distress, the precious metals usually hold up better, but, since they have been turned into trading vehicles by the Wall Street madmen, such assumptions may not hold up this time around. The mood is eerily similar to that of September 2008, when a fragile economy was overturned by a number of random events. The situation is vastly different today, however, but a major crisis anywhere in the world could rapidly spread.

In the face of some chaos, the strengthening dollar is at least bringing down oil prices, which should eventually lower the price of gas in the US. The high price of fuel is in itself a condition which could severely slow the already turbid US economy, though the good news for drivers may not be welcomed by equity investors.

The new high - new low indicator flipped to the negative today for the first time in a long while. Any continuation of that trend indicator could signal a prolonged correction, something the three-year-old bull market has not experienced since the flagging days of last summer.

Dow 13,074.75, -124.80 (0.95%)
NASDAQ 3,068.09, -45.48 (1.46%)
S&P 500 1,398.96, -14.42 (1.02%)
NYSE Composite 8,111.48, -105.06 (1.28%)
NASDAQ Volume 1,779,653,500
NYSE Volume 3,810,047,500
Combined NYSE & NASDAQ Advance - Decline: 1079-4563
Combined NYSE & NASDAQ New highs - New lows: 65-109
WTI crude oil: 101.47, -2.54
Gold: 1,614.10, -57.90
Silver: 31.04, -2.22

Tuesday, April 3, 2012

The Market's Cynical Response to a "Good" Economy

Just in case anybody (everybody) is having trouble understanding current market dynamics, today's response to the 2:00 pm EDT release of minutes from the last FOMC rate policy meeting in March should serve to middy matters even further.

Not to make too fine a point of it, but the Fed governors were fairly sanguine about the economy and hinted that if the economy continued to plod along at its current snail's pace there would probably be little to no need for further policy easing or, in the parlance of today's twisted environment, more quantitative easing (QE).

Upon hearing the news, the knee-jerk response would be optimistic and stocks would be expected to get a bit of a bounce, but, in this cynical environment, the exact opposite happened. The major indices had been meandering along the unchanged line, but sold off sharply when the Fed minutes were released.

Throw conventional thinking out the window. All that matters, apparently, to the wizards of Wall Street, is for the Fed to keep the printing presses well oiled and running, feeding more free cash to the banks and their brokerages, in order to keep this most unrealistic market rally ever witnessed rolling along.

The logic works thusly: if the Fed stops printing, Wall Street will no longer have the risk-free trading to which they've become so accustomed to over the past three years, so, any sign that the economy is actually improving, which would end the free money party, must be met with disdain.

It is the most cynical market response to good news that's been seen around these parts in many a year and yet another reason why most individuals have shunned stocks for so long. They simply do not make sense as sound investments when herd-like machinations can take them down in the face of good news.

Orwell would be proud, but only for a moment.

Dow 13,199.55, -64.94 (0.49%)
NASDAQ 3,113.57, -6.13 (0.20%)
S&P 500 1,413.38, -5.66 (0.40%)
NYSE Composite 8,216.54, -64.29 (0.78%)
NASDAQ Volume 1,791,503,250
NYSE Volume 3,790,125,000
Combined NYSE & NASDAQ Advance - Decline: 1841-3782
Combined NYSE & NASDAQ New highs - New lows: 250-61
WTI crude oil: 104.01, -1.22
Gold: 1,647.00, -32.70
Silver: 32.62, -0.48

Monday, April 2, 2012

Predictable Markets Sure Signs of Manipulation and False Hope

Money Daily does not make many predictions, but last week it was postulated that both Friday and Monday would show gains on the major indices, due to window dressing (Friday) and start of quarter allocation euphoria.

Both of these predictions were proven correct by a market that is now so transparently manipulated that investing has become nothing more than understanding the general mood. That is not a healthy market and surely not a sustainable model, but it is what we have, thanks to lax regulatory bodies and almost omnipotent control by the banking and financial services industry.

Friday and Monday's dual melt-up (on abysmally low volume, as usual) makes a case for the decrepit condition of US (and to a large degree, global) markets. They are old-boy networks and the only traders are strictly Wall Street insiders. These tendencies reveal much of what the general public does not perceive: that the markets have been broken since the financial collapse of 2008 and the ephemeral "gains" are nothing but the product of excessively loose economic policy and a disastrous fiscal policy being fostered at the top of the federal system.

Additionally, to say that the system is corrupt would be giving it a good name. It has gone well beyond corruption; what we now have is a false oligopoly that is baseless and doomed to eventual failure.

A couple of key points were made from data today, which, in more normal times, would have resulted in some caution and probably a general decline, but today's market is a monstosity of central planning which has nothing to do with the mundane facts of economic reality.

The ISM Index - a national barometer - checked in at 53.4 for March, after a reading of 52.4 in February. The metrics used in the calculation of of the index are distorted beyond recognition, as are most "official" economic readings. Even still, taken at face value, the index is registering just bare expansion, and will likely be revised lower in an upcoming debacle of data massage.

More importantly, the February construction spending number came in at a disappointing -1.0%, following a -0.8% reading in January. This, in the midst of one of the warmest winters on record is a serious issue, and, discounting the veracity of such a statistic, the real number is probably more like -3.0%.

The markets and the computers that do the trading were obviously adjusted to ignore these numbers; thus, the inordinate rise in stocks on the day.

It's a very sad state of affairs on Wall Street. The desperation in the brokerages is palpable and apparent to anyone who watches these things with both eyes open. The eventual crash will be horrifying to anyone with trust in these hopelessly deranged markets.

Dow 13,264.49, +52.45 (0.40%)
NASDAQ 3,119.70, +28.13 (0.91%)
S&P 500 1,419.04, +10.57 (0.75%)
NYSE Composite 8,280.83, +73.90 (0.90%)
NASDAQ Volume 1,778,994,250
NYSE Volume 3,579,872,500
Combined NYSE & NASDAQ Advance - Decline: 4092-1538
Combined NYSE & NASDAQ New highs - New lows: 273-43
WTI crude oil: 105.23, +2.21
Gold: 1,679.70, +7.70
Silver: 33.10, +0.61