Thursday, May 31, 2012

May Finishes Badly; PMI Weakest in Over Three Years

Considering the crush of bad data that the markets encountered this morning, today's marginal negative close was something of a marvel. In fact, had stocks not taken an abrupt U-turn in the final 20 minutes of trading, one could have said that markets were ignoring the headlines.

As a whole, the month of May was about as dismal as has been seen since the aftermath of the '08 collapse. Both the S&P 500 and the Dow were down roughly 6%, wiping out most of the gains of the year. Energy, financials and materials were the three hardest hit sectors. Crude oil took more than a 17% haircut during the month, putting it technically in a bear market.

The five positive days on the Dow for the month was the worst for May since 1969 and the 17 down days bettered a May mark dating back to 1956.

Among the data releases from the morning that set the overall tone for the US markets were the announced job cuts in May, that jumped 67% from a year ago according to Challenger, Gray & Christmas, the 133K private sector jobs created in the month - 24,000 lower than the estimate - according to ADT, 383K initial unemployment claims, and a drop in the second estimate of first quarter GDP to 1.9% from the 2.2% previously supplied.

All of those releases were prior to the opening bell, but at 10:00 am EDT the hammer hit the market hard, as the Chicago PMI dropped from 56.2 in April to a current reading of 52.7, the worst showing since September 2009.

With that announcement, stocks did a face-plant, with all of the major indices falling quickly to the lows of the day. There was no sign of capitulation, that likely being saved for Friday's non-farm payroll report, which has all investors walking on eggs this week.

Taking the bad economic news in usual shrugging-off fashion, stocks climbed back to positive territory - except for the NASDAQ which was down all day - nearing the close, but fell apart at the end, finishing May with one of the worst performances on record, the major indices clinging to smallish gains for the year and the major averages resting just above their 200-day moving averages.

With prospects for a robust reading on jobs from the BLS not encouraging, Friday appears to be shaping up as a make or break session, notwithstanding issues ranging from Europe to bank downgrades on the horizon.

The 10-year bond fell to another historic low, closing with a yield of 1.57%, indicative of a flight to safety as investors worry about recession in Europe and how a slowdown there will affect US firms, many of which derive a significant portion of their revenues from the crumbling continent. Also under consideration are how the continued crisis in Europe will affect US banks, some of which have significant exposure to various countries in the Eurozone.

Crude oil continued its relentless slide, hitting its lowest price level in seven months and down 17% in May alone. Oil futures have entered a bear market, more than 20% off their highs, a condition drivers can only celebrate, as the national average price of retail gas at the pump is down to $3.62 per gallon according to AAA's fuel gauge report.

With May out of the way, tomorrow's 8:30 am EDT announcement on payrolls could be a make-or-break event for markets teetering on the brink.

Dow 12,393.45, -26.41 (0.21%)
NASDAQ 2,827.34, -10.02 (0.35%)
S&P 500 1,310.33, -2.99 (0.23%)
NYSE Composite 7,464.45, -6.95 (0.09%)
NASDAQ Volume 2,090,245,500
NYSE Volume 4,434,600,000
Combined NYSE & NASDAQ Advance - Decline: 2760-2984
Combined NYSE & NASDAQ New highs - New lows: 73-213
WTI crude oil: 86.53, -1.29
Gold: 1,562.60, -0.80
Silver: 27.76, -0.23

Wednesday, May 30, 2012

Reality Bites: Stock Charts Hit with Deflation Ugly Stick

One look at any of today's major index charts - or European charts, for that matter - tells the real story of the world economy and the overall effects of globalization, fiat money and constant Keynesian-modeled tinkering.

Down at the open and no chance of a rally at any point was the order of the day. Markets were completely flattened following Tuesday's slap-happy, bogus insider ramp job. With any luck, the same traders and rich, brassy speculators who made a few ducats on the way up yesterday are upside-down today.

While US markets were royally screwed, European bourses were overwhelmingly slammed to earth, with the major indices whacked more than 1.75%, led downward by the CAC 40, smashed a whopping 2.24% as the EUR/USD sank below 1.24 on its inexorable path to parity and then, extinction.

All indications from not just today's trade, but the overall tenor of markets since the end of April, are that Europe's crisis is not going to be solved easily, if at all. There's no hiding from the big stick of deflation, no crying in a deflationary spiral, except by the weak and unprepared, who deserve nothing but woe, destitution and poverty. May they take all of the major banking interests with them.

The carnage was unavoidable. The US 10-year note fell to an historic low yield of 1.62%, which, along with the German Bund, is headed for negative returns.

Whether or not this is coordinated end-game by the world's central bankers and our own small-minded Ben Bernanke, the siren's cry of lower prices has been heard loud and clear. By the end of fall or sooner, the entire charade should be over, for all intents and purposes. Adam Smith's invisible hand has given globalists the undeniable back-slap one receives for overindulgence, malinvestment and outright economic stupidity.

The pseudo-rally from the depths of 2008-09 is officially defunct and all that's left is picking up the pieces when everything crashes to the floor before falling into the abyss. It's almost as if the ancient tradition of the jubilee - in which all debts are forgiven - has been secretly woven into the fabric of modern economics. The crush of unpaid obligations will affect rich and poor alike. Only those with investments in useful machinery, arable land, real estate and precious metals will be spared, though their lot will no doubt be a difficult one.

Ordinary working class folk should be cheering the downfall of the tyrannical central banking regime, though anyone relying on pensions for retirement cushion should have already begun reordering their priorities. The last three-and-a-half years have been nothing more than a chance to prepare for the ultimate collapse of the global banking and sovereign state cabal and their over-leveraged, inflationist, dangerous, deadly ideas.

Resistance is futile against the wicked spiral of deflation, as it carries the weight of the world down with it, as derivatives are unwound and the banking and finance system breaks down. The worry is that governments will impose iron-fisted regimes and police states to quell the disquiet populace once the rioting begins, and it will, sure as day follows night.

As stocks tumbled, precious metals strengthened today, a significant development not seen in recent months and a trend almost certain to continue. Oil's drop continues and a plunge below $90/barrel today was an event long overdue. The world is absolutely glutted with the stuff as demand continues to plunge. Everything will be - or should be - cheaper as 2012 unfolds further.

The chaos should only worsen in this shortened week as the culmination is Friday's sure to be horrific non-farm payroll report. Tomorrow will afford an early sneak preview as ADT releases their private payroll data for May and hour and a quarter prior to the ringing of the bell at the Wall Street loser's casino. Additionally, Thursday will be heavy with data, with Challenger job cuts, initial unemployment claims and the second GDP estimate all due prior to US market opening. It should almost surely worsen from there forward with Chicago PNI and crude inventories guiding early-day trading.

It would require nothing short of divine intervention or an alien landing for the remainder of the week to be nothing short of a bloodbath.

Free houses for everyone! At least for those who need shelter and have a creative mind and two good hands with which to rebuild, that is.

Dow 12,419.86, -160.83 (1.28%)
NASDAQ 2,837.36, -33.63 (1.17%)
S&P 500 1,313.32, -19.10 (1.43%)
NYSE Composite 7,476.36, -138.68 (1.82%)
NASDAQ Volume 1,629,529,250
NYSE Volume 3,441,592,750
Combined NYSE & NASDAQ Advance - Decline: 1011-4774
Combined NYSE & NASDAQ New highs - New lows: 42-134
WTI crude oil: 87.82, -2.94
Gold: 1,563.40, +14.70
Silver: 27.98, +0.19

Tuesday, May 29, 2012

Global Bounce-Back After Uneventful Weekend

Worldwide, market participants must have been conjuring up images of a rally over the long US holiday weekend, because stocks roared back with a vengeance on Tuesday, bringing hopes of a sensible solution to the Greek and pan-European miasma to a new level of unreality. Come June 17, Greek voters will once again go to the polls to elect some form of workable government, which can then form a majority and a consensus on whether to leave the Euro or stay with the abject horrors of austerity which bailout upon bailout imposes.

Status quo politicos are hoping that the Greek citizenry will come to see things as do the uber-governors of the European Union and opt to remain a part of the crumbling structure that has been in control for the past decade.

On the ground, not only in Greece, but in Italy and Spain as well, fear of rioting and widespread anarchy are swelling. Ordinary citizens are being berated with burdensome taxation, cuts to government programs and draconian measures implemented by overreaching, broken, debt riddled governments which will have to go back to the ECB and IMF for more money to keep the citizenry quieted.

The problem with the Euro system is that all countries are not created equal, as the currency masters would like to believe. Since the member states of the EU still have their own governments and constitutions, there are many vague differences that eventually will cause the euro currency experiment to fail, over and over again, until, as happens in Europe with great regularity, the agreements are scrapped, the currency debased and the counties continue to go about business as best suits themselves, as it should be.

After Greece votes on June 17, there will be a few days of disruption while the newly-elected parties sort out their differences and make a decision that will affect not only Greece, but all of the nations of the Eurozone. While staying a part of the EU may provide some short-term stability in Greece, we have already witnessed the effects of austerity that hasn't really worked, though a conclusion that separates Greece from the union will result in more widespread immediate pain and suffering for all of the EU nations, particularly Germany, which has actually benefitted from the weaker Euro and transfers of wealth from the south to the northern states.

In the meantime, stocks will bounce around on the news or rumors of the day, because, in reality, nobody is sure what a breakup of the Euro would entail, though the most knowledgeable people seem to agree that the immediate effects would be overwhelming to the entire global financial structure.

That's not to say that long-term it might just be better to scrap the Euro, go back to individual currencies with all of their own inefficiencies and idiosyncratic behaviors, send the banking system into a tailspin, pick up the chips where they fall and start over. At least then, the great and small countries of Europe will retain their own identities and sovereignties and another layer of useless politicians - those being the clueless EU ministers and all of their meaningless meetings, conferences and white papers - can be swept away in the process of history.

Dow 12,580.69, +125.86 (1.01%)
NASDAQ 2,870.99, +33.46 (1.18%)
S&P 500 1,332.42, +14.60 (1.11%)
NYSE Composite 7,614.78, +80.46 (1.07%)
NASDAQ Volume 1,562,855,750
NYSE Volume 3,314,985,000
Combined NYSE & NASDAQ Advance - Decline: 4187-1414
Combined NYSE & NASDAQ New highs - New lows: 88-75
WTI crude oil: 90.76, -0.10
Gold: 1,548.70, -20.20
Silver: 27.79, -0.60

Friday, May 25, 2012

Markets Close Lower in Advance of 3-Day Weekend

Even with Friday's losses, stocks finished the week marginally higher overall, despite the coninuing, nagging issues plaguing investors from Europe, the foibles of Facebook, and JP Morgan's continuing non-hedge losses, which could end up costing the firm a couple of quarter's worth of earnings.

The Industrials took the bulk of the pain today, as once again, the various indices did not automatically align. Thankfully, it's the start of a three-day weekend, so, to the three of you actually reading this and not out enjoying the Friday afternoon, what the heck is wrong with you?

We'll get back to dissecting the crumbling fiat currency regime on Tuesday, when markets are expected to open. A day may come when they don't, but for now, they still be to be the favored playgrounds of the rich, famous, infamous and criminally insane, and, frankly, they need the work.

Have a great weekend, try not to think about your investments too much (unless they're in gold, silver, real estate or guns and ammo) and enjoy life a bit. It's really not that long a stay each of us have here.

As always, Free Houses for Everyone!

Dow 12,454.83, -74.92 (0.60%)
Nasdaq 2,837.53, -1.85 (0.07%)
S&P 500 1,317.82, -2.86 (0.22%)
NYSE Composite 7534.33, -18.03 (0.24%)
Combined NYSE & NASDAQ Advance - Decline: 2819-2711
Combined NYSE & NASDAQ New highs - New lows: 53-69
WTI crude oil: 90.86, +0.20
Gold: 1,568.90, +11.40
Silver: 28.39, +0.23

Thursday, May 24, 2012

Bifurcated Markets a Sure Sign of Trouble In Fantasy Finance Land

It should be pain as the day that there are many issues and headwinds facing financial markets in the current crisis situation. Today's trading, taking bounces up and down in a directionless trading session is yet another indictment of the power players' control - or lack thereof - during a turbulent period.

When markets react in odd ways, as similar ones diverge, correlations break down and generally things zig when they are expected to zag, one index is up while another is down, it's a sign of malaise and weariness, signifying not only trouble in the current time frame, but of more problems to come.

After Wednesday's hockey stick save off the lows on a temporary reversal of sentiment regarding Europe - which was wholly manufactured and false, by the way - in which all the major indices moved in the same direction at the same time, today's sloppiness could be attributed to speculative bets in different sectors, though the possibility that there are diverging opinions driving indices in different directions is palpable.

Even though the day's range - 120 points on the Dow; 32 points on the NASDAQ, the two did not move in anything even remotely resembling synchronicity. The Dow finished to the positive, the NASDAQ ended in the red.

Some may posit that these moves are by design, though that's a bit of a stretch even in this space, in which all conspiracy theories are given ample credit at least for the fact that somebody's paying attention.

In what was one of the least-inspiring trading days of the past two weeks, the best that can be said of today's performance was that it was at least back to the norm of low volume and moves without conviction. Europe has been quieted for the time being (don't worry, that will change), the Facebook IPO malaise is fading from the news cycle and JP Morgan is still losing money on the "London Whale" non-hedge hedge.

Eventually, all of these items and more either get swept under the Wall Street rug of fraud and collusion or explode in the faces of the criminal cartel that traverses the canyons of lower Manhattan as glad-handing gentlemen.

One would suppose that a break in the action might be a good thing, though if one is circumspect enough to check the recent charts of the major indices, one would have to be blind not to notice that the Dow, S&P and NASDAQ are all trading well below their 50-day moving averages and hovering just above their 200-DMA, a dangerous position. They're also taken off about 50% of the move higher from mid-December to the end of April, a retracement that adherents of Fibonacci will note as an area of support. In that regard, the indices have moved in synchronous fashion, though with their own idiosyncratic tendencies.

Two telling signs from market internals suggest there easily could be more downside in days and weeks to come. The advance-decline line has been negative 12 of the last 17 sessions, while there have been more new lows than new highs for 10 consecutive sessions and on 14 of the last 15 trading days.

This is an interesting time for markets, stuck in no-man's land without the support of earnings, driven by news, events and data flow.

Dow 12,529.75, +33.60 (0.27%)
NASDAQ 2,839.38, -10.74 (0.38%)
S&P 500 1,320.68, -1.82 (0.14%)
NYSE Composite 7,552.35, -11.45 (0.15%)
NASDAQ Volume 1,737,819,375
NYSE Volume 3,776,796,750
Combined NYSE & NASDAQ Advance - Decline: 3082-2527
Combined NYSE & NASDAQ New highs - New lows: 55-111
WTI crude oil: 90.66, +0.76
Gold: 1,557.50, +9.10
Silver: 28.16, +0.64

Wednesday, May 23, 2012

Greece - and Italy, Portugal, Ireland and Spain - Will Exit the Euro Despite Double-Talk from Political Leaders

Despite the dramatic midday turnaround based on a fully orchestrated recantation of yesterday's statement by Lucas Papademos that preparations were being made in Greece for an exit from the Euro, there were few winners besides the informed insiders who knew the former prime minister was going to reverse himself today.

In Europe, the markets reacted as though a catastrophe could not be avoided, with all of the major stock exchanges down sharply, having already closed before the corrective statement by Papademos was released.

Leading the carnage on the continent were Italy and Greece, though the German DAX and French CAC-40 both fell by more than two percent.

Today, in a brief (staged) interview with CNBC's Senior International Correspondent (what a joke) Michelle Caruso-Cabrera, Papademoms said there were indeed no preparations underway in Greece for possibly exiting the Euro, in complete contradiction of what he said on Tuesday. Perhaps the man has either a short attention span, difficulty parsing his own words, or a combination of both. In any case, it appears that politicians can speak out of both sides of their mouths, but not exactly at the same moment in time.

This is, of course, what the general public will swallow whole, as the technocratic propaganda machine revved into high gear, staving off - for a time - the inevitable. Anybody with a brian larger than the average goldfish knows that Greece will surely leave the Euro, setting off a chain of events that will likely disintegrate the entire supra-governmental apparatus of the EU, the ECB and the global financial system.

However, for the politicians in charge of maintaining the status quo, events have overtaken them and they are in an all-out panic to keep things under control. Greece's (and to a large degree, Spain, Italy, Portugal and Ireland) continued living on borrowed time and borrowed money is only making conditions within the Eurozone more difficult, especially for the northern states, especially Germany, which is largely footing the bill for the entire escapade into fantasy finance.

The southern states of Europe are already broken, as is the EU, but the control freaks running the show have a schedule to keep, so events and farces such as this will likely occur with more frequency as the entire situation spins out of control. Everything points toward a dissolution of the EU, timed for maximum impact upon the US elections, which are still six months away. The plan is apparently to crater the entire financial system within six weeks of the US presidential elections, just in time to jettison the hopes of the puppet-in-chief, Barack Obama, and prance out the new marionette, Adolph, er, Mitt Romney, who will usher in the end of the American experiment with harsher control over the populace, who are, after all, only bit players.

With leaders who will stop at nothing in their efforts to maintain and wield power over vast populations, one can expect the rising police state that has already manifested itself throughout much of Europe and England to arise fully-formed in the United States.

Events such as those of the last two days, in which a somewhat respected, reliable politician goes off script and promptly reverses himself - and to which the markets respond - are just another stunning example of the kind of control the banks and politicians have over regular people.

There is no longer any trust of elected officials in most of the developed world and it's because they have taken the people's trust, and their rights, and burned them in flames of self-importance and pitiful glory.

Dow 12,496.15, -6.66 (0.05%)
NASDAQ 2,850.12, +11.04 (0.39%)
S&P 500 1,318.86, +2.23 (0.17%)
NYSE Composite 7,540.89, -1.68 (0.02%)
NASDAQ Volume 1,928,258,875
NYSE Volume 4,079,574,500
Combined NYSE & NASDAQ Advance - Decline: 3226-2370
Combined NYSE & NASDAQ New highs - New lows: 34-243
WTI crude oil: 89.90, -1.95
Gold: 1,548.40, -28.80
Silver: 27.52, -0.66

Tuesday, May 22, 2012

Stocks Slide Late After More Evidence of Greek Exit from Euro Spooks Markets

The headline really says it all on today's turnaround Tuesday.

With the major averages putting in a nice follow-up to Monday's lift-off, the major indices were set to put in their second winning day in a row. The Dow was sporting a 50-point advance just after 3:00 p EDT when word came out of Greece by former Prime Minister Lucas Papademos, saying that preparations for an exit of Greece from the Euro zone are being considered, and said the scope to renegotiate the ongoing EU and IMF loan program would be "very limited."

That's when a 50-point gain became a 50-point loss in a matter of minutes, though all of the major indices recovered to end the session nearly unchanged.

Overnight, this news will likely sink in a little further and it would be expected that Asian and European market would open tomorrow lower. As word of Papademos' statement spread, the worst victim was the Euro, which fell below 1.27 to the dollar on foreign exchanges.

It is fascinating to watch how this entire Greek drama is being played out, especially in reference to market response. As event have unfolded over the past year to 18 months, market reaction has become one of initial knee-jerking, followed by bouts of disbelief and buying into the dips, though as the situation has turned from bad to worse in Greece, stocks seem more inclined to shrug off any bad news, whereas, earlier, like in September of last year, markets took violent, hefty swings on dispatches from the continent.

What will occur in global markets when the Hellenic state is finally on its own again and officially dismissed from the Eurozone - now a 90% chance according to most euro experts - is anybody's guess, though most investors are girding for the worst case, reminiscent of the Lehman breakdown back in '08, though this time around, there's been plenty of time to prepare.

The other major story of the day concerned Facebook, as the NASDAQ continues attempts at cleaning up the mess that they created. Due to technical issues in their electronic trading system, as of Tuesday morning, some investors still had not received confirmation of their trades and the NASDAQ was talking about raising its own loss provision for bad trades from $3 million to $13 million, as trading desks and market makers toll their losses.

It was also revealed today that Morgan Stanley's analysis arm had downgraded the stock just prior to the IPO, another odd and damaging situation, given that Morgan Stanley (MS) was the lead underwriter on the deal. The firm, by law, is supposed to have a "Chinese wall" between analysts and underwriters, but one has to wonder if the firm was shorting the IPO a la Goldman Sachs. The situation will be investigated, though it's highly doubtful that anything will come of it, in as much as the trades were such a convoluted mess one wonders if officials will ever be able to untangle the mess.

Facebook closed the day at 31.00, a full seven points below Friday's IPO price, with a loss of 3.03 (8.90%). Founder and CEO, Mark Zuckerberg, who was supposed to have bankrolled $18 in paper profits on the public opening of the company, may have to just suffer through life with a measly $15 billion.

Yep, life sure is tough.

Dow 12,502.81, -1.67 (0.01%)
NASDAQ 2,839.08, -8.13 (0.29%)
S&P 500 1,316.63, +0.64 (0.05%)
NYSE Composite 7,532.32, -10.66 (0.14%)
NASDAQ Volume 1,755,814,375.00
NYSE Volume 4,056,273,750
Combined NYSE & NASDAQ Advance - Decline: 2522-3114
Combined NYSE & NASDAQ New highs - New lows: 45-113
WTI crude oil: 91.66, 0.91
Gold: 1,576.60, -12.10
Silver: 28.18, -0.14

Monday, May 21, 2012

TEOTWAWKI Delayed, No Thanks to G8 Memo

After nearly three weeks of relentless declines, US markets perked up to open the week of trading, posting one of the top five gainers of the year.

Catalyst for the day-long progression higher was nothing other than naked speculation on a "buy the dip" fantasy, as the major indices had been beaten down by roughly 7-8% and many stocks hammered down 10-15& since May 1. Traders saw the opportunity for a bounce and they got what they bargained for, due almost entirely to valuation and little else.

The situation in Europe, especially regarding Greece, remains far from resolution, and the G8 meeting, held over the weekend at Camp David, outside Washington, DC, offered a statement that was long on identifying issues but short on solutions. In fact, the statement released for public consumption carried forty paragraphs, mostly gilded in terminology like the commitment to "take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses," and similar non-committal phrases.

One wonders why such meetings of world leaders are even held except to fete the participants on pate de foie gras and roast pheasant. Ostensibly, such confabs do nothing but solidify ties between the various bankrupt, free-spending governments and boost the general propaganda about the world's financial and political condition. Ostensibly, these G8, G10, G20 and Gee, I don't know soirees probably are optically better than the same participants getting together for a round of golf or an afternoon of croquet, tea and biscuits.

Other than the magnificent ramp-job by the re-programmed computer traders, the story of the moment continues to be the Facebook (FB) IPO fiasco, in which computer problems were finally revealed by NASDAQ which caused order and confirmation delays and cost some investors hundreds of thousands and had market makers like Knight and others trading positions the opposite from what they had originally intended.

At the end of the day, it was nothing other than the irresponsibility of the NASDAQ to proceed with the highly-anticipated IPO, when they knew problems were arising from a multitude of HFT participants who were variously long and short within milliseconds of the stock's opening.

The untenable situation worsened at the pre-open and into the opening of regular trading as the stock fell below the original offer price of 38.00, defended vigorously by the underwriters at the close of trading on Friday, but capitulation ensued Monday, with share prices falling under the IPO price at the open without recovering, closing the day at 34.03, down 4.20, an 11% loss.

In any case, today saw TEOTWAWKI (the end of the world as we know it) delayed, no thanks to world leaders, who seem to have less grasp on economic issues than they do their own futures.

Free houses for everyone!

Dow 12,504.48, -135.10 (1.09%)
NASDAQ 2,847.21, -68.42 (2.46%)
S&P 500 1,315.99, -20.77 (1.60%)
NYSE Composite 7,542.88, -115.14 (1.55%)
NASDAQ Volume 1,788,066,375
NYSE Volume 3,738,396,750
Combined NYSE & NASDAQ Advance - Decline: 4602-1024
Combined NYSE & NASDAQ New highs - New lows: 35-180
WTI crude oil: 92.57, +1.09
Gold: 1,588.70, -3.20
Silver: 28.32, -0.39

Friday, May 18, 2012

Stocks Smashed Again; Facebook Flops on IPO

For three weeks running, it's been the same story: stocks down, and today's malaise was particularly embarrassing to the NASDAQ and to the underwriters of the Facebook (FB - which should stand for Fail Badly) on a Friday that most traders would likely rather forget.

The Dow Jones industrials closed down for the 12th time in the last 13 sessions, while the S&P and NASDAQ recorded their 10th down day in the last 12. All of the major averages finished in the red every day this week an occurrence so unique that barely a broker or trader can recall the last time it happened. Even on major declines, there's usually a day or two of snap-back rallies, but the current condition is such that all confidence is being shattered as events unfold without a whimper of defiance from the usual monied or political oligarchs.

For the week, the Dow lost a cumulative 451 points, easily the worst performance of the year; ditto for the S&P and NASDAQ, which lost, respectively, 52 and 155 points, while the NYSE Composite shed 388, the broadest measure taking the worst percentage loss.

As for the Facebook IPO, which priced Thursday night at a robust $38 per share, finished the day ahead a measly 23 cents, one of the poorest showings ever for a major tech stock right out of the box. The trading, which was supposed to have begun at 11:00 am EDT, didn't open until after 11:30, the culprit being the usual "system glitches." Traders reported throughout the day that they were not receiving confirmations of their orders, the earliest of which had bought in at levels of 41 and 42 dollars per share, and were, thus, stuck at whatever price they placed their orders. It was a complete embarrassment for all parties - the company, the underwriters and the NASDAQ - though it's almost certain that newly-minted billionaire Mark Zuckerberg will lose little sleep over today's fiasco.

All told, the week, and especially the last two days, have been particularly painful for all involved, though gold and silver investors have enjoyed two consecutive days of gains after prolonged weakness. With precious metals beginning to show strength again, the dynamics of a failing global economy based on fiat dollars are showing their true colors.

Over the weekend, members of the G8 will be meeting at Camp David, purportedly to issue some kind of proclamation that all is well, or, ostensibly, to hammer out some new paradigm for global economic salvation. With any luck, they'll all agree to go home and do nothing, something for which they're all well trained.

In European news, the woes for the Southern states continued as Moody's downgraded 16 of the nation's banks and Fitch cut Greece's banks to CCC (big surprise there).

The weekend at hand, two words known well to hoarders of gold and silver: keep stacking.

Dow 12,369.38, -73.11 (0.59%)
NASDAQ 2,778.79, -34.90 (1.24%)
S&P 500 1,295.22, -9.64 (0.74%)
NYSE Composite 7,413.01, -67.42 (0.90%)
NASDAQ Volume 2,571,980,000
NYSE Volume 4,450,551,500
Combined NYSE & NASDAQ Advance - Decline: 1470-4143
Combined NYSE & NASDAQ New highs - New lows: 22-345 (worst since March of '09)
WTI crude oil: 91.48, -1.08
Gold: 1,591.90, +17.00
Silver: 28.72, +0.70

Thursday, May 17, 2012

Dark Day for Wall Street as Financial System Stressed to Limit

Compared to the preceding twelve days of market meltdown, today's finish qualified as the worst on a number of different levels.

The paucity of buyers produced something of a free-fall right from the opening bell, which accelerated in the final hour of trading. There were a couple of attempts at rallies - at 10:00 am and again just after noon - but both failed horribly as there was no support and traders, many of whom have been in the "buy the dip" camp until recently, sold into the brief upticks.

Volume was also noticeably higher, an indication that the selling has more room to run over the next days and weeks. The causes of today's particular collapsing equity valuations were the same that have dominated the markets over the past three weeks and are no nearer resolution than they were at the beginning of the month.

Greece continues to slide into anarchy and chaos, taking the rest of the EU - and the world - along for the careening ride to oblivion, unemployment fears in the US remain high, global growth may be nearing stall-out speed and an inactive congress and Federal Reserve - both eerily quiet - are doing nothing to alleviate any of the political, tax and regulatory issues.

The 156-point loss on the Dow was the second worst since the slide began on May 2nd, beaten only by the 168-pont decline of Friday, May 4th, the day the BLS disappointed everybody with poor April jobs numbers. That such a massive decline would come nearly two weeks later, without a respite rally in between, displays clearly how weak and uncertain markets are at the present juncture.

Through today's close, the Dow has lost a stunning 837 points since the May 1 close; the NADSAQ, with a loss of more than two percent today alone, has been beaten back 246 points since May 2nd, while the S&P 500 has given back just over 100 points since May 1st, finishing just above the technically-insignificant 1300 mark, though emotionally, the number carries great sentiment weight.

Adding to the existing problems were a couple of key economic data points released today. Initial unemployment claims came in flat for the most recent reporting week at 370,000, still stubbornly high. The Philadelphia Fed manufacturing index, which was supposed to ring up a slightly higher reading, to 8.8, from 8.5 in April, was a sorry disappointment when it printed at a devastating -5.8. And the index of leading indicators, which was expected to post a gain of 0.2%, actually fell by 0.1%, all of this adding up to excessive worry and a rush to get out of equities for the safety of bonds.

The 10-year benchmark bond closed at an historic low of 1.702, which is probably a solid number considering the level of deflation that is expected over the coming months. A yield approaching 2% against an environment of low to no growth - or even a recession or worse - is likely to be a pretty good hedging instrument.

JP Morgan Chase's (JPM) continuing drama with its $2 billion portfolio loss has expanded by another billion according to the NY Times, while the FBI and SEC have both opened inquiries into the trade and CEO Jaime Dimon has been called to testify before the Senate Banking Committee on the matter.

Mr. Dimon, whose firm also faces a number of shareholder lawsuits stemming from the trade, continues to maintain the position in the trade, attempting to slowly unwind the derivative bet from hell while counter-parties turn the screws tighter. It would not be a surprise to see eventual losses from this blunderbust approach the $5 or $6 billion figure, wiping out the entire quarter's profit for the bank with the supposed "fortress balance sheet."

Dimon will have to do some fancy tap-dancing when he appears before the Senate inquiry, because the trade, widely known as the "London Whale" was the furthest it could have been from an outright hedge, being a pure speculation trade, exacerbated by piling in deeper as the losses worsened.

On brighter notes, gold and silver did an abrupt about-face, despite the dollar index continuing to rise and the Euro settling nearly flat on Forex markets, while oil slid again, along with wholesale gasoline prices, which will eventually result in further price declines at the pump.

The widely-anticipated Facebook IPO, slated to hit the street Friday morning, priced at $38 per share, at the upper end of the expected range. While Mark Zuckerberg and others will become instant billionaires tomorrow, the timing for such a lucrative cash-out day could not have come at a worst time. Facebook will almost certainly reward early investors, but the story of one good stock will do little to alleviate long-term, long-standing economic issues that have plagued the markets for weeks.

Greek banks are seeing devastating outflows of capital, as are those in Spain. Europe's descent into economic hell has accelerated and the EU ministers and ECB economists have found now way out.

Widespread defaults, from sovereign nations, to banks, to businesses will be at the top of the news for at least the next six to 12 months.

It's been 41 years since then-president Richard M. Nixon closed the gold window and nations have been trading on pure fiat - backed only by promises - ever since. The promises now broken, the era of debt-money is quickly drawing to an unseemly and devastating end.

Real estate, precious metals and cash are all that stand between personal devastation for not millions, but billions of people worldwide. All paper assets, including stocks, bonds, letters of credit and contracts will be blown away by winds of economic chaos and change.

Dow 12,442.49, -156.06 (1.24%)
NASDAQ 2,813.69, -60.35 (2.10%)
S&P 500 1,304.86, -19.94 (1.51%)
NYSE Composite 7,480.75, -112.07 (1.48%)
NASDAQ Volume 1,915,098,500
NYSE Volume 4,597,205,500
Combined NYSE & NASDAQ Advance - Decline: 915-4734
Combined NYSE & NASDAQ New highs - New lows: 31-310 (1-10 on the wrong side; never good)
WTI crude oil: 92.56, -0.25
Gold: 1,574.90, +38.30
Silver: 28.02, +0.82

Wednesday, May 16, 2012

Volume Up, Stocks Down As Malaise in May Exhibits the Results of Bad Karma

With higher and higher volumes showing up on individual stocks as well as the major averages virtually every passing day, the idea that there's something basically wrong with the markets and the global economy is beginning to build into a self-defeating, repeating, cyclical tailspin.

The major indices did another midday about-face, in classic bear market fashion, even though economic data in the US was relatively positive.

Housing starts were up - at an annualized rate of 717K on expectations of 675K, though building permits were lower than anticipated. That stocks, especially those of home builders, would rally on such news was not unexpected, though just because somebody puts a shovel in the ground does not necessarily imply that these newly-constructed homes will eventually be bought, much less completed.

However, two more broad measures of the economy were also positive. Industrial production grew at a rate of 1.1% in April, while capacity utilization for the month printed at 79.2%, a very strong and encouraging number.

Investors simply cannot shake the co-mingled issues of Europe, especially Greece, the falling Euro and rising dollar, all of which contributes to what could be a tough state of affairs for many of the US markets' global entities, which ship and sell around the world. Exports from the US will be especially damaged as the weaker foreign currencies and stronger US dollar make for pricier goods in faraway markets where demand has been slowing.

Following along the same logic, commodity prices are trending lower as well, which would help companies' bottom line cost structures and help keep them competitive, though traders are not confident there will be strong enough demand to produce meaningful pricing power and sustainable profit margins.

Underlying all these concerns are three major issues: Greece and the Euro, the upcoming presidential and congressional elections, and, political implications of US policy: the expiration of tax cuts at the end of 2012 along with uncertainty regarding President Obama's health care bill (now in the hands of the US Supreme Court) and a closetful of unwritten regulations, many of them centered on the financial industry through the Dodd-Frank legislation.

Further below the surface lies the uncertainty regarding the Fed's next move, as Operation Twist, aka QE3, expires at the end of June. Thus far, Fed chair Ben Bernanke nor any of the Fed's governors have hinted whether further easing would be forthcoming, and, at the end of the day, that is simply a nightmare scenario for the general economy and the banks, because without easy money, the fears are that global commerce will grind to a halt.

Markets hate uncertainty, and there's an abundance of that commodity in the flow right now, so there's no reason to believe that stocks will do anything but decline as profits are taken and few new positions are being staked out until there is resolution on some of these issues.

In the meantime, consumers are enjoying a bit of relief at the pump, as oil has fallen in just the past two weeks to its lowest level since December of last year and show no signs of bottoming. At the same time, housing prices keep declining and therein lies the conundrum of deflation. Everything costs less, but nobody is willing to pay now, because prices will likely be lower in a few days, weeks or months.

Obviously, there's no quick fix to any of this and behind closed doors, the leaders of the world's great nations and their central bankers are scared stiff.

The bad karma that's been spread worldwide by the political and monetary leaders is coming full circle it seems.

Dow 12,598.55, -33.45 (0.26%)
NASDAQ 2,874.04, -19.72 (0.68%)
S&P 500 1,324.80, -5.86 (0.44%)
NYSE Composite 7,592.80, -43.01 (0.56%)
NASDAQ Volume 1,842,974,250
NYSE Volume 4,254,574,000
Combined NYSE & NASDAQ Advance - Decline: 1843-3756
Combined NYSE & NASDAQ New highs - New lows: 76-255
WTI crude oil: 92.81, -1.17
Gold: 1,536.60, -20.50
Silver: 27.20, -0.88

Tuesday, May 15, 2012

Commodities, Stocks Continue to Slide in Deflationary Downturn

It's time to look at some numbers in a broad macro view to get a handle of where the global economy is heading over the next six to twelve months.

In less than six months, Americans will head to the polls to either elect a new president or give Barack Obama the benefit of the doubt and return him for a second term. There are also key Senate races and all members of the House of Representatives are up for re-election. The implications of who becomes president and which party controls congress will have profound implications for the US economy going forward.

However, the presidency is the most important piece of the puzzle. In a nutshell, if Obama wins, we will have a continuation of the descent into a welfare state. If Romney takes it, bet on police state, with brutal, militarized police forces mobilized to quell citizen uprisings throughout the country.

Either way, the USA is in a tough spot, because neither the Republicans or Democrats will do anything remotely positive to improve conditions for millions of Americans.

Let's look at the numbers:

America's current deficit is $1.3 trillion for 2012.

The total US debt is beyond $15 trillion, and, if you add in unfunded liabilities - pensions, Social Security and Medicare - that number grows to somewhere between $125 and $150 trillion. That's a number that cannot be paid out or paid back easily.

In just the past 15 days, reality seems to have struck all the way from Washington to Wall Street. The economy is just barely limping along; in some areas of the country, local economies are dead or nearing a fatal state. More than half the US states face budget shortfalls for fiscal 2013 (starting July 1), the worst being California, Massachusetts (thank you, Mitt!), Illinois and Louisiana. The total gap for the states is estimated at $49 billion and that may be low.

Since the states have to balance their budgets, there will be layoffs and cuts in services. These will be anything but bullish for the general economy.

Retail sales have slowed for four straight months. In related news, JC Penny's (JCP) just today reported second quarter (non) earnings. They lost 0.25 cents per share on estimates of an 11-cent loss. Top-line revenue also missed the projected target of $3.41 billion, coming in at a squeamish $3.15 billion.

CEO Ron Johnson, who took over the reigns of the struggling merchandiser recently and had been widely praised as the master planner of Apple's signature stores, has a difficult road ahead. His Apple experience cannot be rightly compared to what he is dealing with at JC Penny's . Apple's stores were designed to sell only Apple products, which are unique and the envy of the retail world. Penny's deals with thousands of products from a multitude of vendors. It's not the same, and, even though Mr. Johnson is a bright fellow, he's in over his head in an environment that is not favorable to retailers.

Penny's also announced they were discontinuing their dividend of 80 cents per share. The stock was trading down more than 10% in the after-hours.

There are more than 44 million Americans - nearly one in six - receiving food stamps.

New home sales in 2011 had their worst year since 1961.

Stocks on the major averages are down between 4.5 and 5% in just the last 10 trading days. The Dow lost ground on nine of the last ten days; the S&P and NASDAQ have finished in the red eight of the last 10 sessions.

Meanwhile, the dollar index has soared, from 78.71 on April 27, to 81.26 at the close today. Meanwhile the Euro has collapsed to under 1.28 against the US dollar, finishing at 1.2729 at today's close. The move up in the value of the dollar has sent commodities screaming lower, with gold, oil and silver all suffering steep losses in the month of May. That's actually good news for Americans, particularly because lower oil prices eventually will translate into lower gas prices at the pump.

So, what is all of this data telling us? Surprisingly, despite tens of trillions of dollars pumped into the economy since 2008 by the Fed and the federal government, the wailing tone of deflation is unmistakable. Prices are falling rapidly, though incomes are stagnant or declining. There simply are not enough people working and making sufficient money to keep price levels high.

Anecdotally, food prices are coming down. Real estate remains in a moribund, deep slump and home foreclosures are once again rising. Everything will get cheaper as the economy continues down the inescapable path of deflation because the Federal Reserve's money spigot has directed all the flows to the banks, and they are not lending, mainly because they're still repairing their badly damaged balance sheets, and, even when they do cough up some dough, the borrower has to have absolutely pristine credit, a circumstance which is becoming something of a rarity.

Some say the US economy will be destroyed because its unpayable debts will undermine the value of the dollar and cause hyper-inflation. That may be so, though it's difficult to see inflation in anything when 15-20% of Americans are living in what's essentially a day-to-day fight for survival.

If hyper-inflation does one day come about and the dollar is smashed to a fraction of its former value, a deflationary depression will occur first. The government needs low interest rates to continue paying off the massive debt it has created, and will do everything it can to keep rates low.

But, because the Federal reserve has failed so miserably on the second part of its mandate - employment - all the money in the world (and the Fed has most of it now) cannot make people spend when they have no jobs, no prospects, and are worried about having enough food to eat tomorrow. Food prices are likely to stabilize, but, for the most part, the rest of the economy is toast, though it is still marginally better than that of Europe, of which half the countries are already in recession.

The money that was furnished to the banks by the American taxpayer, courtesy of the Fed and Treasury, went straight to financial institutions, and we know that they are profligate gamblers and thieves who will only enrich themselves, leaving Main Street, small business and the American public to fend for themselves in a mostly cash system which is quietly, albeit quickly, turning into a massive black market, underground economy.

Eventually, the government will fail horribly, and many will suffer. Those with wits, skills, cunning and a propensity to see the future and break rules, will prosper. Europe will fall first, but you can bet your bottom dollar (if you still have any) that their problems will come to roost on the shimmering shores of America.

Dow 12,632.00, -63.35 (0.50%)
NASDAQ 2,893.76, -8.82 (0.30%)
S&P 500 1,330.66, -7.69 (0.57%)
NYSE Composite 7,635.81, -69.64 (0.90%)
NASDAQ Volume 1,835,801,375
NYSE Volume 4,114,145,250
Combined NYSE & NASDAQ Advance - Decline: 2214-3408
Combined NYSE & NASDAQ New highs - New lows: 77-236 (gap widening)
WTI crude oil: 93.98, -0.80
Gold: 1,557.10, -3.90
Silver: 28.08, -0.27

Monday, May 14, 2012

Correction, Crash, Deflation, Depression: the Superfecta of Fraud

I'm writing in the first person singular today because I think today was very important. Stocks just don't go down as consistently as they have over the past few weeks unless there's a problem, and there are lots of them.

I'm not going to link to anything, but I am going to shoot my mouth off a bit about where we all are in the larger scheme of things, because, while small things matter, the big picture matters more.

The global economy is in its death throes. We've had zero interest rate policy (ZIRP) from the Fed for three-and-a-half years, and it's simply not working. The federal government is a chain around the necks of the citizenry and the media is largely complicit in shading the truth.

The US taxpayer has bailed out the TBTF banks and, culminating with JPM CEO Jaime Dimon's mea culpa last Thursday night, we find that these same banks are even bigger than before and still making risky bets with other people's money. For its part, the federal government can't collect enough taxes and still borrows 40% of every dollar it spends. Social Security and Medicare are bankrupt already, and, with millions of baby boomers retiring, the money will not be there for anybody under the ago of say, 60, right now.

Americans are awakening to the nightmare that is a leaderless, stagnating economy, brought about by the biggest fraud ever perpetrated on any nation, that of the sub-prime mortgage and consequent banking crisis of 2008. It took years for the criminals on Wall Street to skewer the American public and not a one has been prosecuted. Getting back to Mr Dimon, the most perverse, sociopathic criminal there is - who smiles at you while slowly jutting a knife between your ribs - while some of his subordinates have taken the axe for the $2 billion "London Whale" blunder, he's still CEO and in charge. Seriously, in another, saner place and time, he'd already have met his maker.

In the visage of Mr. Dimon lies much of the problem. The aristocratic, oligarchical mindset shared by the Wall Steet masters of the universe and their lackeys in the capitol, provides them with an aura of invincibility, inevitability and smug self-assuredness, while the truth is that most of them have never worked an honest day's work, steal and murder with impunity by their various market actions and bear no responsibility, guilt or shame.

Meanwhile, the bulk of the world's population lives day-to-day, wondering what miracles of stupidity these monsters will bring down upon them. Income disparity has never been higher in America; it gets worse by the day and the oligarchs, from their thrones of power on Wall Street and in Washington could give a damn. All they care about is their money and their power. The power to tax, to control, to cheat, to set prices, to ruin smaller competitors, to lie bold-faced to the American public and to have either the unmitigated gall to retain their positions or, worse yet, to run for election or re-election.

Nearly four years into this global crisis (that's what the IMF is now calling it), conditions are not getting any better. The empirical data says it is getting worse and will get even more dire as the year progresses. Unskilled and low-skilled workers cannot find reliable jobs. The self-employed must fight every day just to keep the doors open or the wheels spinning. Never has just getting by been so difficult for so many in the private sector.

I've said for years that the only things keeping this economy going are the government transfers: welfare checks, food stamps, disability payments, retirement checks, medicare payments and the like. There is no growth in the general economy, while in the public sector, despite some layoffs, employees are receiving their annual pay increases without a hitch as the government casually takes a portion of their pay and says it's going into their retirement funds, when, in fact, these funds are underfunded and will fail like the rest of the programmed, social-based government economy. Many of these public sector employees who expect benefits will get less than they paid in. Eventually, all will get nothing.

Europe is a complete basket case. The Euro is dead as a currency, an idea the supra-governmental EU magistrates are only now beginning to comprehend. When Greece departs, Spain, Italy, Portugal, Ireland, and probably Belgiu will depart in short order. The world's economy will be smashed to pieces, governments have fallen and will continue to fall, eventually reaching the United States, the final battleground for fairness, decency, honesty and civil rights. It will come sooner than most expect, and the majority of people will be unprepared, just as they were unprepared for the current setbacks delivered by the centrally-planned failure machine in Washington and on Wall Street.

Realistically, there's little hope for the immediate future except complete destruction of the economy and a reset of priorities from the bottom up. In time, people will no longer look to government, to Washington, to solve their problems. Matters must and will be taken into one's own hands and out of those of the corrupt conspiracy of criminality that extends from Beijing to London to Washington and to Berlin.

The end is not here. Not yet. But it certainly is coming and it's going to be brutal for many. Prices have begun to fall on all manner of commodities. Deflation, the one, true, unstoppable market force, will prove to be the end of the Federal Reserve and the all banking nightmares and false facades. The American public, and the general public of the rest of the world, cannot afford to have its wealth stolen by feudalistic lords disguised as nice guys like Barack Obama or Mitt Romney, just to name a few.

Today's headlines were rife with departures of top executives, scandals and defections. The icons are beginning to tumble at a more rapid pace. The rats are jumping off the ship, not one by one, but in bunches now, as collapse - in the inner power circles - is seen as inevitable.

The emperors of the power and political structures have no clothes and nowhere to hide.

When the history books are written, they will note that the second Great Depression began in 2008, and, through various means of both government intervention and inaction, worsened in 2012.

There is now no doubt.

Dow 12,695.35, -125.25 (0.98%)
NASDAQ 2,902.58, -31.24 (1.06%)
S&P 500 1,338.35, -15.04 (1.11%)
NYSE Composite 7,705.45, -110.44 (1.41%)
NASDAQ Volume 1,691,608,250
NYSE Volume 3,688,124,000
Combined NYSE & NASDAQ Advance - Decline: 1105-4571
Combined NYSE & NASDAQ New highs - New lows: 65-204 (WOW! Screaming red!)
WTI crude oil: 94.78, -1.35
Gold: 1,561.00, -23.00
Silver: 28.35, -0.54

Bad News For Small Business: The New 1099K Tax Form

Here's what your federal government is doing to help small business in America, burdening it with an overbearing, egregious, complicated new tax form. Infographic courtesy of

big news for small business owners 1099 K Infographic
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Friday, May 11, 2012

Wall street's Week of Worry Ends With JP Morgan Mea Culpa

In a week that will be remembered as one in which the Euro crisis came front and center, Wall Street turned its eyes upon an unlikely victim Friday, that being JP Morgan Chase.

The bank known for its "fortress" balance sheet (pure baloney) confessed to have had made a terribly wrong bet on a risk hedge - a la MF Global? - and poof went $2 billion. CEO Jamie Dimon explained how badly the bank had mistaken the markets in a conference call with journalists Thursday night after the close.

Details were sketchy, though it was widely assumed that there would be other victims in the trade involving a British trader known quaintly as "the Whale." The issue points up that even the brightest of the bright can make mistakes - and big ones at that.

While JPM's misplaced risk hedge sent futures into the tank pre-open (as if they needed any help with that), stocks initially sank, then rallied sharply into positive ground in the morning session, though all gains were ephemeral and summarily whisked away by the close, ending Wall Street's worst week in more than seven months.

Even though losses were tiny - and the NASDAQ managed to close positive by 0.18 points - signs of calamity were everywhere, from German citizens daring Greece to default and leave the Euro, to massive misapprehension over the proposed "Volker Rule" in light of the Morgan fiasco, to spiking Spanish bonds, slowing growth in China and a deflating PPI, which came in under expectations at -0.2% for April.

As the session ended with everybody closing positions in case some new, terrifying developments took place over the weekend, the once mighty, banker-run trading casino closed out the week with players seeking solace and probably more than a few strong drinks to soothe their jangled nerves.

Nobody can tell how events will play out exactly during the coming weeks, though, from the tenor of the trade this week, it seems pretty likely that conditions are not going to materially improve any time soon.

TGIF, indeed.

Of note, the Dollar Index advanced for the tenth straight day, explaining why precious metals have been pounded down so roughly over the past two weeks; and, new lows bettered new highs for the fifth day in the past six.

Dow 12,820.60, -34.44 (0.27%)
NASDAQ 2,933.82, +0.18 (0.01%)
S&P 500 1,353.39, -4.60 (0.34%)
NYSE Composite 7,816.48, -36.27 (0.46%)
NASDAQ Volume 1,692,045,125
NYSE Volume 3,727,488,000
Combined NYSE & NASDAQ Advance - Decline: 2225-3322
Combined NYSE & NASDAQ New highs - New lows: 107-131
WTI crude oil: 96.13, -0.95
Gold: 1,584.00, -11.50
Silver: 28.89, -0.29

Thursday, May 10, 2012

Relief Rally Provides Little Comfort as Europe's Woes Weigh

Rick Santelli, one of the very few talking heads on CNBC who delivers honesty more often than not, said this morning that ignoring Europe is usually a big mistake.

Apparently, some of the computers and traders were taking notes, because today's highly-anticipated relief rally delivered less relief than angst to a market that seemingly wants to go nowhere but lower.

Stocks traded higher through most of the session, but, in classic bear market fashion, gave up their gains late in the day. While there was little more than whispers from across the Atlantic, the tone was dire, with Greece and now, Spain, topping the list of countries seeking to escape the clutches of an intractable currency clutch.

The general gist of the the thinking is that when - no longer "if" - Greece departs from the 17 nations who use the Euro as a common currency, Spain will likely follow, and then the others fall like dominoes: Italy, Portugal, Belgium, Ireland, in a disordered departure from a failed fiat folly.

It is testament to the frailty of centralized government planning that the Euro experiment will have lasted less than 20 years before the nations of Europe finally bite the nationalist bullet and return to their various sovereign currencies, like the lira, drachma, peseta, and various forms of francs, et. al. Current analysis has Greece departing within a year, followed in quick order by at least five other nations.

There will be opposition, and the usual courses of anxiety and cries of imminent depression, but, as it has in the past, Europe will return to nationalism, as quaint as that may be, and independence from an additional layer of government it never needed in the first place. Time will tell how it all turns out, though the final result is probably going to be a better condition for everyone from where things stand today.

Dow 12,855.04, +19.98 (0.16%)
NASDAQ 2,933.64, -1.07 (0.04%)
S&P 500 1,357.99, +3.41 (0.25%)
NYSE Composite 7,852.72, +32.46 (0.42%)
NASDAQ Volume 1,915,262,500
NYSE Volume 3,598,696,000
Combined NYSE & NASDAQ Advance - Decline: 3398-2161
Combined NYSE & NASDAQ New highs - New lows: 139-73
WTI crude oil: 97.08. +0.27
Gold: 1,595.50, +1.30
Silver: 29.18, -0.06

Wednesday, May 9, 2012

Stocks Exhibiting Serious Weakness as Correction Completes Day Six

For the fourth straight day, US markets exhibited the same trading pattern on the major indices: A plunge at the open and the rest of the day spent trundling back higher. This is the effect of an overabundance of trading algos all programmed to begin buying at certain levels. Fully 85% or more of all trades are handled by machines, drwing into question the overall wisdom of a market built on lies, false assumptions, sketchy models and the overwhelming directive that stocks MUST go higher, all the time, no matter the news or events in the real world.

In any case, it's made it easier for real, human investors to get the heck out of dodge, and it's likely that a good portion of the really smart money has already exited. This is apparent from the price of bonds, which have been in rally mode all week, pushing yields near historic lows.

The cause for all of the latest market turmoil is no big surprise; it is Europe, specifically Greece, but peripherally Spain and France, which seem the two most likely targets for increased political volatility, and thus, stock declines.

The Greeks have the world by the proverbial short hairs at the moment. At any given time, the EU, ECB, IMF or any of the nearly nations could tell the the government of Greece that it's game over, or that they'll loan them money anyway, which is exactly what happened today.

It was reported that the Greek government, even if it received the latest round of bailout money, could not meet it's obligations, so, one has to wonder, why bother? That's the line of the hard left parties in Greece at the moment. They don't want any more IMF or ECB bailout funds, preferring to go it alone, presumably to leave the Euro as a currency behind and take back up the drachma as its national money.

Of course, all of this uncertainty has a negative effect on stocks, though US markets have suffered much less than their European counterparts, some of which have already fallen into bear market territories, along with China, which has been in the grip of the bear for the past two years, but that's another story, and something that is also worrying the gloablists and their plans to control world commerce.

There is a problem with the US markets and their repeating pattern of falls and rises. The intra-day plunges keep getting deeper and deeper, setting new support levels which will, over time, be proven to have about all the holding power of a paper towel in a hurricane. Eventually, the computers will either be turned off or reprogrammed and the flush of stocks down the drain will be swift and complete. Even as it stands, stocks are off sharply over the past six sessions, with the Dow down all six, and the S&P and NASDAQ down five of six, the only positive returns for the duo being extremely marginal gains on Monday - a point on the NASDAQ, less than that (0.48) on the S&P.

Tomorrow, the drama continues, with the US throwing in with initial unemployment claims, a number that may be secondary to the uneasiness in Europe, but should provide a secondary betting point for the open. Stay tuned. It's just beginning to get interesting, as the same pattern as 2011 is playing out again, almost to to day, when stocks peaked at the end of April.

Volume was elevated once again and new lows beat new highs for the fourth consecutive session.

Dow 12,835.06, -97.03 (0.75%)
NASDAQ 2,934.71, -11.56 (0.39%)
S&P 500 1,354.58, -9.14 (0.67%)
NYSE Composite 7,827.75, -59.51 (0.75%)
NASDAQ Volume 1,959,315,250
NYSE Volume 3,949,908,500
Combined NYSE & NASDAQ Advance - Decline: 1865-3709
Combined NYSE & NASDAQ New highs - New lows: 106-161
WTI crude oil: 96.81, -0.20
Gold: 1,594.20, -10.30
Silver: 29.24, -0.22

Tuesday, May 8, 2012

Equities Continue Retreat on Greece, Euro Breakup Fears

Sooner or later, the deniers will realize that the global economy is coming apart at the seams and that holding any kind of asset that isn't tangible, liquid or immediately tradable may not be worth the risk.

Almost daily, there are signs that the euro experiment is imploding, with Greece and France now at the forefront, but Italy, Spain and Portugal not far behind in terms of insolvency, anarchy and chaos.

The issues are the same: governments promised too much, spent too much and now don't have the funds to continue operating as they were during boom times. The specific trouble for nations using the Euro as currency is that they cannot print their way out of their messes, a la the United States, and must rely on the continued support of their neighboring nations and the ECB and IMF to fund their operations.

In Greece, the leader of Greece's Left Coalition party, Alexis Tsipras, began to start forming a coalition government, calling for repudiation of the bailout measures forced upon the nation and an investigation into whether the bailouts were even legal.

As Greece moved closer and closer to anarchy, chaos, and the eventual default upon its debts, it is becoming more clear that Greece will not long remain a member of the Eurozone, it's fate sealed by decades of underfunding pensions, loose tax policies and general corruption at high levels of the government.

France's new president, Francois Hollande, has promised voters to curtail the austerity measures that have cut jobs and pensions and has crippled the nation's economy.

European stocks were, by and large, down on the day, while in the US, the major indices suffered heavy losses early on, but rallied in the afternoon on nothing but vapors and in defiance of the reality offered by a collapsing European Union and general sluggishness in the global economy.

The Dow was down as many as 198 points before the afternoon rally cut those losses in half. The same was true on the NASDAQ and S&P, the latter down 22 points before shaving them to a marginal decline.

Despite the completely bogus and likely foolhardy buying into the dip mentality that is pervasive in these day-traded, momentum markets, the smartest of the smart money has probably already headed for the hills, seeking safe havens in treasuries or other hard assets, though one could not tell that from the action in gold, which, along with silver, was battered down and did not experience relief.

Central banks have been buying gold with both hands recently, all the better for them is their ability to dictate price to the market, swooping in to buy at bargain prices. However, today's activity was reminiscent of early 2008, before the great collapse that took all assets lower, though gold and silver began rebounding months before equities. Today's trade was more than likely the result of margin calls on stocks, being paid off by selling gold and silver, another foolhardy strategy.

While the utter collapse of the Euro and the global economy is by no means a certainty, signs of slowing and antecedent deflation are emerging, the real question being how far the US Federal Reserve, the ECB and other central banks will go with more policy easing and money printing before the game engulfs them completely.

The late-day rally on wall Street may have eased some nerves and cooled some of the fear, but the trend is surely in place, as stocks have fallen in four of the past five sessions (five for five for the Dow).

Also notable was the heavy volume, another sign that investors who want out are getting out, albeit not at the prices they may have wanted. Additionally, new highs - new lows has been negative for three consecutive sessions.

Dow 12,932.09, -76.44 (0.59%)
NASDAQ 2,946.27, -11.49 (0.39%)
S&P 500 1,363.72, -5.86 (0.43%)
NYSE Composite 7,887.26, -61.50 (0.77%)
NASDAQ Volume 2,169,278,000
NYSE Volume 4,215,958,500
Combined NYSE & NASDAQ Advance - Decline: 2403-3181
Combined NYSE & NASDAQ New highs - New lows: 110-178
WTI crude oil: 97.01, -0.93
Gold: 1,604.50, -34.60
Silver: 29.46, -0.66

Monday, May 7, 2012

US and European Subdued Reaction to French, Greek Voting

The tide has turned in Europe... against austerity, whatever that means, and towards more socialistic societies in both France and Greece, as Francois Hollande defeated right wing president Nicolas Sarkozy on Sunday, and the Greek Parliamentary elections produced a government with no clear majority for any party and difficult coalitions to be formed ahead.

While the French election results represent a complete shift in sentiment, the issues for Greece will almost surely come to the forefront of Europe's continuing debt crisis as minority parties will almost surely attempt to block the wholesale gutting of the country by the ECB and IMF. Recent agreements over debt restructuring and repayment are already suffering serious difficulty; the opportunity for a disorderly default by the Hellenic nation certainly back on the table.

Reaction in Asia was negative, with all markets suffering losses, probably the eventual result for markets globally, once the "all is well" phony, manipulated response in Europe and America is worked through. european markets were mixed, as were those in the US, the result of more central planning and full-spectrum control, which will eventually fail.

There was no other economic news worth noting, though, as is usually the case in controlled, bogus markets, the day's results were muted and in plain opposition to facts.

There will almost certainly be a period of adjustment in the Western markets before the full brunt of a sea change in politics is accepted. Until then, expect markets in the US and Europe to behave as they have been, adrift on piles of freshly-printed worthless money, in denial of the truth and more than likely sideways before heading into the awaiting maw of the abyss into which they must fall.

Almost imperceptibly, the decline in equity prices has already begun. New lows bettered new highs for the second straight session, an indicator that should not be ignored during a period of rapid change.

Dow 13,008.53, -29.74 (0.23%)
NASDAQ 2,957.76, +1.42 (0.05%)
S&P 500 1,369.58, +0.48 (0.04%)
NYSE Composite 7,948.77, +15.47 (0.19%)
NASDAQ Volume 1,738,947,625
NYSE Volume 3,535,832,750
Combined NYSE & NASDAQ Advance - Decline: 3054-2523
Combined NYSE & NASDAQ New highs - New lows: 112-134
WTI crude oil: 97.94, -0.55
Gold: 1,639.10, -6.10
Silver: 30.12, -0.31

Friday, May 4, 2012

Payroll Number Slams Stocks to the Deck

Yesterday in this space, it was suggested that the immediate future for stocks was all tied to today's non-farm payroll number from the BLS, and, as the ADP figure from Wednesday foretold, the results were lower than expectations and on the whole, put a serious dent in the "road to recovery" theory.

The Bureau of Labor Statistics said 115,000 net new jobs were created in April, and the unemployment rate dipped to 8.1%, though the reason for the decline in unemployment were that more people ran to the end of their unemployment benefits and others left the workforce entirely. The US workforce participation rate shrank to 63.6% of the adult population, the lowest since 1981.

While the 115,000 new jobs are barely enough to keep pace with a growing workforce in normal times, in the abnormality of today, people are not entering the labor force, but leaving it, putting a very large question mark at the end of any discussion regarding jobs in the United State. It is obvious from this report and others before it that the country's businesses are simply not creating enough jobs to get back to anything even close to full employment. The reasons behind the non-hiring conditions are manifold, but are centered on lack of demand in a sluggish economy wracked by over-regulation and conflicting visions of the near future by legislators who have sat upon their hands and watched the economy deteriorate.

Stocks took a beating right at the start and continued their downward trajectory throughout the morning, finally bottoming out around the lunch hour. The remainder of the session was spent wringing hands, with no noticeable movement in either direction, as the major averages settled into a support range.

A variety of analysts took differing views on the NFP number, most making he point that this April number was a kind of "payback" for the strong numbers in January and February. However, those gains were - in a large part - due to accounting tinkering at the BLS with seasonal adjustments heading the suspect list of fudge-makers.

Governments shed 15,000 jobs, so the private sector growth was 130,000, which, after all, is still a gain, but the underlying trends of many marginally-employed people and those dropping out of the workforce remain problematic over the long haul. The 115,000 was well below consensus estimates for 162,000. whatever ways one wishes to spin it or slice it, a miss is still a miss and investors took note along with short term profits.

The results speak for themselves and put the country's economic future more or less on hold until the May numbers are released. That's a long time for uncertainty to fester and other events to take the situation to even worse levels. While a good portion of the labor condition is being led by political considerations, most of it is the pure stuff of economics textbooks. Slack demand and stagnancy, even in an era of absurdly low interest rates, makes hiring decisions problematic and possibly shelved for a future date. The decay of confidence at all levels of the business community continues to feed upon itself in a very non-virtuous loop, the most egregious effects being felt in the small and start-up areas, where most new jobs are created.

Analysts and pundits can make up all the excuses and white lies they like, but the numbers speak for themselves and they are not pretty.

Notably, new lows exceeded new highs for the first time in over a month, losing stocks were widespread, outnumbering winners by a 7:2 ratio. Oil took a severe downturn for the second straight day, closing below $99 per barrel for the first time since February. The $4.05 decline was the largest of 2012. Gas at the retail pump remains stubbornly high, despite recent pull-backs.

Gold and silver rebounded from recent declines, more in sympathy with unstable global economic conditions than any other factor.

Dow 13,038.27, -168.32 (1.27%)
NASDAQ 2,956.34, -67.96 (2.25%)
S&P 500 1,369.10, -22.47 (1.61%)
NYSE Composite 7,933.29, -116.59 (1.45%)
NASDAQ Volume 1,937,374,375
NYSE Volume 3,924,361,250
Combined NYSE & NASDAQ Advance - Decline: 1268-4345
Combined NYSE & NASDAQ New highs - New lows: 88-140
WTI crude oil: 98.49, -4.05
Gold: 1,645.20, 10.40
Silver: 30.43, +0.42

Thursday, May 3, 2012

Stocks Retreat on Employment Fears

Is it possible? Could the programmed trading bots actually be learning? What happens when the computers become self-aware?

Stocks stumbled out of the gate (deft Kentucky Derby reference) at the opening bell and today there was no turning back, as the major indices suffered telling losses, hitting resistance near 3 1/2 - 4-year highs.

More sluggish data and trepidation over Friday's non-farm payroll number had investors (and machines) taking profits and looking for places to hide.

First quarter productivity was lower by 0.5%, though expectations were for a larger decline of -0.8%. The missing and/or exceeding of poor expectations has become something of a sport on Wall Street, with the bullish head-cases believing that anything better than even lousy expectations is a good thing. It's not. Even the burliest New Jersey fixed income book trader should be aware of that.

Unit labor costs rose 2% in the quarter, a stick in the eye of the 1-percenters.

ISM Services was where the big miss occurred, however, breaking down to 53.5 for April on expectations of 55.5 after booking 56.0 in March. After the Poor PMI data earlier in the week and the anomalous ISM manufacturing number that showed modest positive spin, a breakdown in the services sector would be a death knell for the "recovery at all costs" addicts, since service has become mainstream to the US economy.

Meanwhile, it's been eerily quiet on the continent, as Europe slinks into recession. Some economist with a sense of sick humor actually penned an article pointing out how conditions were improving in Greece, of all places, where 80% of businesses in the Athens business district have closed their doors in the past two years and tax receipts are easily outweighed by bribes. The article was so obtuse and fundamentally flawed, it may have been scrubbed from the internet.

The best news of the day was crude oil dropping by $2.68 a barrel, it's biggest one-day decline in over a month, and long overdue, though all commodities were lower, especially gold and silver, a sign of redemption amidst what may be the beginning of a scramble for cash.

Everything hinges on Friday's job number: Obama's re-election bid, general confidence in the economy, and more. Many sleazy banker types around Wall Street are silently praying for a poor number, so that the Fed will continue it Zero Interest Rate policy and maybe drop another round of QE on their best buddies.

My, oh, my, these bankers are a sly lot. Not.

Dow 13,206.59, -61.98 (0.47%)
NASDAQ 3,024.30, -35.55 (1.16%)
S&P 500 1,391.57, -10.74 (0.77%)
NYSE Composite 8,049.74, -74.59 (0.92%)
NASDAQ Volume 1,824,468,000
NYSE Volume 3,966,676,500
Combined NYSE & NASDAQ Advance - Decline: 1566-4050
Combined NYSE & NASDAQ New highs - New lows: 202-104
WTI crude oil: 102.54, -2.68
Gold: 1,634.80, -19.20
Silver: 30.01, -0.64

Wednesday, May 2, 2012

Bad Data Continues to Be Ignored by Equity Investors

In the continuing saga of the "recovery which refuses to jibe with reality," some data points delivered this morning shook things up for a while, though the declines were hardly notable.

Well before the opening bell, the monthly ADP Employment Report, which measure the change in private payrolls, came in well below expectations of 170,000, printing at a mediocre 119,000 for April. The survey, which serves as a precursor to the monthly BLS non-farm payroll report (due Friday) is forecasting a poor showing from the government's "official" report. As it is, the forecast for 162,000 net new jobs is just barely enough to keep pace with new entrants to the labor force (roughly 125,000), so any number below that on Friday will be a major blow to the proponents of sustained recovery.

Whether investors (or the machines actually doing 84% of the trades these days) will pay any heed is doubtful, though after April's sub-par showing, stocks put in their worst month in the past seven, so maybe somebody is paying attention to facts instead of relying on instinct and animal spirits.

At 10:00 am, March factory orders were announced at -1.5%, though expectations were for worse data, -1.8%, so this actually could have been seen as a win for equity participants (or their muppet clients).

Adding to the absurdity of economic data, another official figure showed oil stockpiles increasing by 2.840 million barrels, after last week's rise of 3.978 million. That data took oil prices lower by a mere 94 cents, though the price of a barrel of light, sweet crude continues to hover near 12-month highs, despite continuing slack demand. Chalk it up to corporate greed, excessive speculation and a Washington crowd that simply cannot afford to upset one of its main donor groups by actually clamping down on absurdly high prices at the pump.

In effect, the lower and middle classes of Americans now pay an additional tax in the form of these higher fuel prices, all the while oil drilling and recovery continues to be robust in North America. Perhaps the biggest insult to the American people is that oil currently being drilled in North Dakota and elsewhere in the states will more than likely be shipped abroad, where the oil cartel can fetch even higher prices.

So much for all the talk of energy independence and security. The empty suits in the nation's capitol don't deserve even a single vote in this November's elections, though a large number of Americans, stuck in their narrow world of cognitive dissonance with a healthy dose of normalcy bias, still believe in the two-party lie and will cast their votes for the lesser evil this fall, as if their individual votes actually counted (Hint: since 2000 they haven't.).

Days like today are tough on financial reporters, especially those who toe the official media line that all is well and things are getting better, when the evidence - and most public opinion polls - clearly displays the opposite. For those of us who like our facts served cold without garnishments, the temptation to break things or convulse in a spasm of disbelief is hardly bearable.

Come Friday, when the April non-farm reveals a bit more of the truth (though one can count on the BLS and their various fudging mechanisms to completely distort any data they can), perhaps the markets will begin to reflect what's really going in America: the complete and utter annihilation of the middle class and the remaining civil rights that haven't already been denied or abused by an oligarch government that's been off the rails for more than a decade.

Maybe, some day, when fewer than half the registered voters show up in the fall, the ruling class will get a hint that their reigns of power are not derived from the electorate, though it's doubtful they will even care.

Dow 13,268.57, -10.75 (0.08%)
NASDAQ 3,059.85, +9.41 (0.31%)
S&P 500 1,402.31, -3.51 (0.25%)
NYSE Composite 8,124.32, -39.71 (0.49%)
NASDAQ Volume 1,832,346,375
NYSE Volume 3,784,334,250
Combined NYSE & NASDAQ Advance - Decline: 2707-2890
Combined NYSE & NASDAQ New highs - New lows: 187-66
WTI crude oil: 105.22, -0.94
Gold: 1,654.00, -8.40
Silver: 30.64, -0.29

Tuesday, May 1, 2012

May Day Mayday: Stocks Retreat into Close

All is not well on Wall Street.

Even though stocks continue climbing - the Dow made a four-year intra-day high in today's session - there's an underlying theme that profits and revenue aren't as good as they should be.

But, hey, the vast majority of those companies trading publicly on the exchanges - Groupon excluded - are making money, after all, so why the worry?

In a word, revenue. While second quarter profits were solid on an EPS basis, revenue beats were less frequent and minor, meaning companies have little room for error and even less inclination to hire new employees. Most public companies are running on fumes; in the private sector of small to medium businesses, those fumes have died out. Small business, the lifeblood of the economy, and, to some extent, to the larger public companies, are struggling just to hang on. Excessive regulation and taxation have small businesses on their knees, so to speak, begging for relief.

There's simply too much uncertainty for entrepreneurs to feel confident about starting new ventures or expanding existing ones. If growth is a bottom-up strategy, the federal government, with help from pencil-necked bureaucrats at the state and local levels, hasn't done a thing to assist small business or business creation. It could be assumed that they are impeding progress instead of promoting it.

This being a presidential election year, congress is not expected to make any dramatic legislative decisions, which will only exacerbate the current condition of loathsomeness, uncertainty and apathy, and that's the good news. What's troubling are the massive deficits being piled up second by second at the federal level and the coming debt ceiling debate (yes, you read that right; we're going to exceed our borrowing limit just a year after the debacle which cost the US its AAA credit rating last August.

At the current run-rate, the debt ceiling will be breached just in time for excessive and long-winded campaign speeches touting frugality, responsibility and discretion, all qualities the current occupants of our highest public offices have failed to achieve or even comprehend.

Thus it is that Wall Street is becoming a little nervous about the inability of government to do just about anything positive in a negatively-charged, partisan environment. Big business has gotten all the perks it needs, but still comes asking, with suitcases of campaign contributions, for more, and they're afraid they won't get enough to tide them over until a new regime takes hold in the nation's capitol. That's why stocks continue to make moves of trepidation, advancing slightly before taking back. Small business and individuals, meanwhile, have taken matters a step further: into black markets and a flourishing underground economy based entirely in cash, with disdain for taxes, laws and regulations.

A recent Bloomberg/BusinessWeek article pegged the US underground economy at a laughable nine percent, while quoting the black markets of other countries at levels as high as 47%. All of this erodes the government's ability to collect revenue, but not to spend, making their position all the more untenable and indefensible. The mega-corporations may survive under such conditions, but even the most honest of small businesspersons cannot long resist stiffing Uncle Sam to feed daughter Sally.

Wall Street, as much as it has become a mirage of the economic condition, is actually more resplendent as an amusement park, twisted mirror image reflection of the society underpinning its shattered facade.

Dow 13,279.32, +65.69 (0.50%)
NASDAQ 3,050.44, +4.08 (0.13%)
S&P 500 1,405.82, +7.91 (0.57%)
NYSE Composite 8,164.04, +44.97 (0.55%)
NASDAQ Volume 1,855,537,125
NYSE Volume 3,789,438,750
Combined NYSE & NASDAQ Advance - Decline: 3183-2336
Combined NYSE & NASDAQ New highs - New lows: 340-31
WTI crude oil: 106.16, +1.29
Gold: 1,662.40, -1.80
Silver: 30.93, -0.09