Turning the screws slowly

Every day, the US equity markets get one day closer to implosion. Repeated interventions - overt and covert - by members of the Fed and the PPT (President's Working Group on Financial Markets) merely delay the inevitable bust. US stocks are still, by almost any measure, horribly overvalued, puffed up by mountains of debt, and ripe for collapse.

When the "reckoning day" does finally come, it may be spectacular. On the other hand, the Fed's management of the market may result in a long, slow, painful, tortuous decline over time, such as what we've been seeing lately. Monday, the market was down; Tuesday, down even more; Wednesday we witnessed a remarkable one-day rally the came from out of the blue, Thursday, down again. Friday's direction, nobody knows, but the general path is toward the bottom - of that, most of us who entertain to study such events are sure.

Thursday was pretty much a non-event as far as movement was concerned. The main US indices were down throughout most of the session and ended that way, except for the NASDAQ, which made a remarkable 45-point move early in the day and remained in positive territory through the close. PPT fingerprints were all over that particular market oddity.

Dow 13,238.73 -50.56; NASDAQ 2,565.30 +2.14; S&P 500 1,457.64 -6.12; NYSE Composite 9,456.64 -52.28

Volume was pathetic once more, as traders attempt to wring a last bit of sunshine out of the summer. Internally, the numbers revealed more of the same. Declining issues beat out advancers by a 4-3 margin. New lows beat out new highs, 166-84.

Oil futures took a moderate decline of 15 cents on the day to close at the absurd figure of $73.36. Gold and silver also were down on the day by marginal amounts. Silver lost a nickel to fall to $11.98. Gold was off $1.50 to $673.20.

Two pieces of news were noteworthy. As expected, Q2 GDP was revised higher. The preliminary read came in at 4.0% versus the advance estimate of 3.1%. Investors barely noticed, especially when news appeared that Sears Holding Co., which operates Sears and K-Mart stores, saw 2Q profit fall by 40%.

Much of Sears' problems are internal, though no doubt their results were partially colored by declining consumer interest in spending every last dollar. The retreat of the consumer is a vexing issue which will only exacerbate the ongoing credit and cash squeeze.

Tomorrow, Fed Chairman is scheduled to speak at the annual shindig of financial big-wigs at Jackson Hole, Wyoming. The event is usually a watershed for bluster and Fed policy mouthings, though why anyone will be even marginally interested is a good question. Bernanke's not about to tip his hand regarding internal Fed policy. Most of what he says will be gloss and devoid of substance.

Ho-hum. Friday's likely to be a really slow day in advance of the Labor Day holiday. Take a break, have a barbecue and some cold beer and get back to the depressing stock market on Tuesday. It will surely be more interesting then.