Monday, June 3, 2013

Good News Is OK, but, Bad News is Awesome, Baby!

When the ISM Index posted a May reading of 49 today - showing contraction - there wasn't much reaction in the markets.

That release came at the same time - 10:00 am EDT - as the Construction Spending data, up 0.4%, though on expectations of a gain of 1.1%. For the general economy, neither data point would, could or should be considered good signs.

It took a while for investors speculators to figure it out, but, essentially, bad news for the general economy is really great news for stocks, because it suggests that the Federal Reserve, under the guidance of the spectacularly inept Ben Bernanke, will continue to goose stocks by supplying enormous amounts of stimulus via their bond-buying program without pausing, tapering or even considering slowing down at all.

When San Francisco Fed President John Williams said that tapering of the bond buying program could occur as early as this summer, he was shortly thereafter countered by Atlanta President James Lockhart who said the FOMC backs the stimulative measures.

After 2:00 pm EDT, the computers had it all figured out and sent stocks to the highs of the day into the close.

As long as the cheap (nearly free) money keeps flowing, the banks love it and will keep bidding up stocks to the sky and maybe beyond. One would tend to believe that in the event of a nuclear holocaust or the earth being hit by a giant-sized meteor, wiping out 90% of the global population, stocks would stage a rally that would make 16,000 on the Dow look like a spec in the rear-view mirror.

That's the twisted view that permeates the granite canyons of Wall Street, with no end in sight. For the bankers and their stock-trading units, the computer algos and the big bonuses, the Fed is the gift that just keeps on giving, depriving savers of any reasonable options and the worse the economy goes, the more money will be pumped into the global stock market Ponzi.

Too bad that gold and silver out-performed all of the major indices today, by a bunch. Besides that, the number of advancing issues just barely beat the decliners, and the new highs-new lows reading finally succumbed to the pressure and went negative for the first time in quite a while, a signal that should spook investors (how it affects computers is not well-known).

Whatever the case, it's all good, or bad, or, um, oh, forget it.

Dow 15,254.03, +138.46 (0.92%)
NASDAQ 3,465.37, +9.46 (0.27%)
S&P 500 1,640.42, +9.68 (0.59%)
NYSE Composite 9,356.14, +53.87 (0.58%)
NASDAQ Volume 1,965,356,375
NYSE Volume 4,495,515,000
Combined NYSE & NASDAQ Advance - Decline: 3409-3093
Combined NYSE & NASDAQ New highs - New lows: 189-262
WTI crude oil: 93.45, +1.48
Gold: 1,411.90, +18.90
Silver: 22.72, +0.478

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