Wednesday, March 5, 2008

Stocks on Roller Skates

US equities were buffeted around on Wednesday amid another flurry of generally disheartening news, finishing the day with modest gains.

According to the ADP National Employment Report (a privately-run survey of more than 500,000 businesses), private sector employment declined by 23,000 in February, with the majority of the losses occurring in businesses with more than 500 employees.

The report detailed that small businesses with less than 50 employees added 15,000 jobs in February, while those with over 500 employees lost 34,000. The difference was made up by medium-sized businesses which lost 4,000 jobs during the month.

According to Joel Prakken, Chairman of Macroeconomic Advisers, LLC, "employment among small-size businesses, defined as those with fewer than 50 workers, advanced just 15,000 during the month. While this employment growth contrasts with employment declines among medium- and large-size businesses, it is the smallest gain in employment among small-size businesses since November 2002."

An average of 3,960 bankruptcy petitions were filed per day nationally in February, up 18% from January and up 28% from the same period in 2007, according to Automated Access to Court Electronic Records, a bankruptcy data and management company.

At noon, shares of Ambac Financial were halted on reports that a deal to salvage the failing monoline insurer were imminent. An hour later, AP reported: "A group of banks was close to sewing together a rescue plan to keep Ambac from faltering under a weight of bad debt. However, an official announcement might be postponed as to not disrupt the markets, according to a person close to the talks who spoke on the condition of anonymity because the deal wasn't final." [emphasis mine]

So much for that idea. At 1:45, the AP reported that Ambac would issue up to $1 billion in new stock to raise funds to cover losses associated with their subprime mortgage exposure. Stocks tanked immediately on the news, turning all indices from positive to negative in a matter of minutes.

Ambac, which was trading around 11.30 when it was halted at noon, reopened at 9.54 around 1:35 pm.

Stocks wavered around the break-even line until just before 4:00 pm, when a late buying surge boosted all indices at the close.

Dow 12,254.99 +41.19; NASDAQ 2,272.81 +12.53; S&P 500 1,333.70 +6.95; NYSE Composite 8,962.42 +70.97

Advancing issues actually chalked up a win over losers, 3535-2699. New lows prevailed once again over new highs, however, 335-92.

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Meanwhile, the dollar sank to new lows against the Euro.

Oil took another great leap forward, gaining a full $5.00 to close at yet another record high of $104.52. Gold blasted ahead $21.40 to $988.50 (record) and silver set another record at $20.79, gaining 95 cents (5%) on the day.

Wall Street and whomever is pulling the very long strings in the markets seem content to remain in denial about the state of the US economy, inflation and the wisdom of investing in stocks while all the evidence points to a crumbling, systemic failure.

Of course, like everything else the government has its fingers in, the markets are completely corrupted and have lost the confidence of many serious investors. Too bad, because the party in charge used to stand for free, open and trustworthy markets.

Friday's "official" non-farms payroll report from the Labor Dept. is likely to be fudged and massaged to show something positive, as opposed to the "unofficial" private ADP figures released today. Since the experts are only looking for gains of 25-35,000 jobs, anything better than that can be hailed as victory by the malignant financial press and prevent stocks from falling into a black hole.

Remember, keeping the economy on an even keel or at least presenting the case in a positive manner despite the facts is paramount to the designs of the fascist power regime in this election year. A new president will be elected and it must be either Hillary Clinton or John McCain, either of whom will keep the country "safe."

That's the plan and the world is being royally screwed by the process.

NYSE Volume 3,808,456,750
NASDAQ Volume 2,208,738,000

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