Showing posts with label wealth inequality. Show all posts
Showing posts with label wealth inequality. Show all posts

Friday, November 16, 2018

Dip-Buyers Send Stocks Off Fresh Lows; Cory Booker, Poster Boy For Peak Stupidity

As stocks touched down on some key support levels, investors took the initiative to load up on what they perceived as undervalued shares, sending stocks off morning lows to afternoon highs, with NASDAQ dumb money leading the charge higher.

The major indices were under pressure early in the session, dropping to levels at which the year began, wiping out nearly all of the gains since last December. Call it coincidence or a propensity for chart-watching dip-buying, but there was no other catalyst to Thursday's mini-rally other than valuations.

On the downside, Britain seems to be completely flummoxed by ongoing Brexit negotiations, with resignations in Prime Minister Theresa May's cabinet over the compromise deal presented to the House of Commons this week. Rumors of a no confidence vote are circulating as the Brexit issue continues to derail any progress England can make in extricating itself from the European Union. The referendum, passed in early 2016, called for an exit by March of 2019, though that date now appears less certain. The issues are complex and threaten to tear the country apart.

In a completely unrelated note, America has finally achieved PEAK STUPIDITY, and its poster boy is the senator from New Jersey, Cory Booker.

Booker's proposal for "Baby Bonds" as a way to shrink the wealth gap is about as far left an approach as could be considered... without laughing.

Booker's idea is to give every newborn $1000 at birth and up to another $2000 every year thereafter - based on the parents' income, of course - until that child reaches the age of 18, or, in other words, just in time to take out a government-funded student loan, or, pay for maybe a few years of college themselves.

It's just this kind of insanity that American citizens have to endure from its government that causes angst, apathy, or confrontation between liberals and conservatives. The US has had a massive welfare program in place - that rewards having more children with higher benefits - for more than 50 years, and it's done nothing to reduce poverty or improve living conditions for chronically poor people.

With people like Booker being elected and re-elected to high government positions of power, is there any wonder why the United States are so disunited?

Despite the higher close on Thursday, investors should not be enthusiastic about an extension to the short-term rally which was likely the result more of short-covering and corporate buybacks than the actual taking of new positions in stocks. Sentiment remains murky with a bias to the downside.

Dow Jones Industrial Average November Scorecard:

Date Close Gain/Loss Cum. G/L
11/1/18 25,380.74 +264.98 +264.98
11/2/18 25,270.83 -109.91 +155.07
11/5/18 25,461.70 +190.87 +345.94
11/6/18 25,635.01 +173.31 +519.25
11/7/18 26,180.30 +545.29 +1064.54
11/8/18 26,191.22 +10.92 +1075.46
11/9/18 25,989.30 -201.92 +873.54
11/12/18 25,387.18 -602.12 +271.42
11/13/18 25,286.49 -100.69 +170.27
11/14/18 25,080.50 -205.99 -35.72
11/15/18 25,289.27 +208.77 +173.05

At the Close, Thursday, November 15, 2018:
Dow Jones Industrial Average: 25,289.27, +208.77 (+0.83%)
NASDAQ: 7,259.03, +122.64 (+1.72%)
S&P 500: 2,730.20, +28.62 (+1.06%)
NYSE Composite: 12,361.52, +86.03 (+0.70%)

Monday, March 16, 2015

Stcks soar on No News; Michael Hudson's Scathing Remarks on Wealth Inequality

On a day in which there was an absolute vacuum of substantial news concerning the economy or stocks in general, markets did what they have become used to doing on such days in the era of ZIRP and QE. Stocks went straight up at the open and added to gains throughout the day.

It is specifically on days like today that the banks and brokerages make their best money, capturing the gains right at the opening bell, without interference from retail riff-raff, and holding them up with small trades during the session. Anybody even thinking about shorting or playing puts against the small tide of buyers gets what's come to be known as having one's face ripped off.

As gruesome as it sounds, the reality of losing money because one is not a member of the 1% tribe and does not believe stocks should be trading at astronomical levels, is painful to the pocket and a cause for many small-time investors and traders to throw in the towel completely.

Such is the nature of markets completely under the control of the biggest and most well-heeled players, complete with front-running HTF computer algos that are able to nab 20% or more of any gains simply by being there a millisecond ahead of any order. while that fact may not be disturbing to some, it should be a concern to anybody who feels that wealth inequality is consistently changing the nature of society, markets and money, and not in any good way.

To that effect, professor Michael Hudson recently provided a glimpse into the new world of finance - unregulated, unbalanced and utterly destructive - in an article published at Counterpunch called Quantitative Easing for Whom?

Hudson, a distinguished research professor of economics at the University of Missouri-Kansas City, was interviewed by SHARMINI PERIES, and his commentary spells out in detail how zero interest rates and quantitative easing has helped the elite to the detriment of the rest of society.

It's quite a read and elegant in its straightforward honesty and truthful simplicity. Perhaps the most poignant phrase is the following:
Banks lend money mainly to transfer ownership of real estate. They also lend money to corporate raiders. They lend money to buy assets. But they don’t lend money for companies to invest in equipment and hire more workers. Just the opposite. When they lend money to corporate raiders to take over companies, the new buyers outsource labor, downsize the work force, and try to squeeze out more work. They also try to grab the pensions.

or this:
...when hedge funds and the big banks – Goldman Sachs, Citibank – see a pension fund manager coming through the door, they think, “How can I take what’s in his pocket and put it in mine?” So they rip them off. That is why there are so many big lawsuits against Wall Street for mismanaging pension fund money.

It's a very good read for such a short article, and points up just how enslaved the middle class (what's left of it) has become and how government and the Fed have completely distorted the economy to the exclusive benefit of a small handful of very, very wealthy families.

The condition of the world is sad and true.

Dow 17,977.42, +228.11 (1.29%)
S&P 500, 2,081.19, +27.79 (1.35%)
NASDAQ 4,929.51, +57.75 (1.19%)