On the final day of trading for the second quarter - the midpoint of the year - traders and investors took a look back on what has gone before and peered into an uncertain future.
By the end of the day, their assessment was clear: this is no time to be heavily invested in equities. Thus, in the final hour of trading, all of the major US indices took a severe turn to the downside finishing the day - and the quarter - with what turned from a trickle into a complete rout.
Stocks had held their own through most of the session, trading slightly above the unchanged mark for the most part, but, when it came down to concrete buying or selling decisions, everybody hit the sell button nearly simultaneously. A delay of a few moments could cost thousands, or even millions, of dollars, so once the trend was in place after 3:15 pm, the volume increased and near panic ensued. Only a serious effort in the final fifteen minutes - most likely by the PPT and some delighted short-sellers covering positions for the day - kept the markets from melting down completely.
Even as rescuers came to aid at the close, the Dow finished with a new closing low for the year, finally coming to rest on a number it hasn't seen since November 3, 2009, nearly 8 months ago.
The consensus opinion for the first half of 2010: Not so good. Prospects for the second half: Disturbingly downbeat. It's as though both the soprano and tenor each caught a cold nearing intermission of an opera.
Dow 9,774.02, -96.28 (0.98%)
NASDAQ 2,109.24, -25.94 (1.21%)
S&P 500 1,030.71, -10.53 (1.01%)
NYSE Composite 6,469.66, -50.43 (0.77%)
By day's end decliners buried advancers under the avalanche of late selling, 4127-2385. New lows smashed new highs by a margin nearly equal to yesterday's, 295-103. Volume, which had been on the light side most of the day, was so concentrated in the final hour that it ended up being just about normal, evan a bit on the heavy side.
NASDAQ Volume 2,212,934,750
NYSE Volume 5,968,454,500
For the second straight session, oil was down while gold was up, this time joined by silver prices, which increased eight cents, to $18.67. Gold managed a gain of $3.50, to close at $1,245.50, while oil slipped back another 61 cents, to $75.63, the lowest level in two weeks.
Weighing on the market - in addition to the world of woes already known - was the ADP Private Employment report for June, which showed a gain of just 13,000 jobs in the month, a number so tiny and so vile as to engender groans of pain from the trading floors.
The report comes two days prior to the highly-anticipated "official" government non-farm payroll report, which had already been expected to be less-than-cheery, but now, with the ADP report in hand, is likely to come in as a complete stinker, just what the markets and the American public don't need.
As for the first half of the year, stocks saw and end to the bear market rally that began in March of '09 and the beginnings of a second leg down, the bottom of which is anybody's guess. Some are calling for markets to sink even further than they did through Fall of 2008 and Winter of 2009, while the more optimistic believe this is only a correction.
The numbers bear neither side any witness, as they are stuck between correction (10%) and primary trend (20%). That stocks would be lower here and for the year as a whole would fall in line with the January barometer, which accurately presages direction about 80% of the time.
Since the end of 2009, the Dow is down 652 points. From it's high of 11,205 (April 26), the drop is a spectacular 1431 points, or -12.75%. The NASDAQ is down 160 points for the year and, from its high of 2530 (April 23) , the decline is 421 points (-16.64%). Everybody's favorite index, the S&P 500, is down a seemingly tame 85 points since the start of the year, but has given up 187 points from the April 23 high of 1217 (-15.37%).
The broadest measure of all, the NYSE Composite, is on the record for being down 414 points on the year, with a drop of 1260 from its high of 7729 on April 14, or a near-bear-market downturn of 16.30%.
With the two broadest gauges - the NASDAQ and NYSE Comp. - taking the biggest percentage hits over a span of a little more than two months, it's no stretch to say that the decline has been both broad and swift. The past two weeks have been particularly brutal. Since June 17, the indices have registered just one gain and eight losing sessions.
The worst of it is that the week isn't yet over, and the economic which carries the most weight, the June non-farm payroll report, won't make an appearance until Friday, though the expectation of a poor showing may already be factored into many trades.
Wednesday, June 30, 2010
Tuesday, June 29, 2010
Markets Plunge on Data, Fear; False Bottom in Place
There are so many negative issues plaguing equity investments at this juncture one can only hope to keep abreast of daily developments. Investors and traders should simply assume that all prior data was poor and that future data will continue in the same poor fashion for the foreseeable future - and maybe beyond.
As the global deflationary death (and debt) spiral persists, there's little any single entity can do to prevent major dislocations and value deterioration. The stock market is only a proxy for the general US economy, though it serves as a very solid guide to global conditions. What seems to be a major stumbling block for the overall health or decay of a global economic system is that it is made up of many smaller, moving parts - equity markets, bond markets, governments, nations, derivatives, commodities, etc. - and without coordination (virtually impossible) from these moving parts, stemming the deflationary tide is next to impossible.
Tuesday's decline was not confined to, nor was it a result of, US interests. It was global, begun with a revision to China's April Leading Economic Indicators (LEI) by the Conference Board, from a gain of 1.7% to a much smaller - and much more significant - 0.3% gain. The pain felt in bourses around the globe was exacerbated by the same Conference Board's US Consumer Confidence reading for June, which tumbled to 52.9 from May's 62.7 mark.
Other than the China revision and one sentiment gauge, overall data and news flow has been nothing but sad. There hasn't been a positive economic data release since the June non-farms payroll data, itself a complete flop. Plaguing markets are a myriad of touchy, intertwined forces, including unemployment, residential housing, commercial real estate, slumping bond yields, government debt, household debt, shrinking money supply, tight credit conditions and currency fluctuations.
It's almost too much to expect from any market individually, so all markets are collectively sharing the pain. Oversimplifying the matter to the extreme, an oversupply of assets on a base of faulty investments funded with massive amounts of unsecured debt (in the Trillions of dollars) is collapsing at a rapid rate. That's why gold and silver have risen, or, at least lately held up much better than most assets - there's a finite, limited supply of them.
The selling began early and accelerated through the afternoon, with indices closing very near their lows of the day. The final, closing price of the S&P 500 was the lowest since October 30, 2009, an 8-month low, breaking through previous double-bottom support.
Dow 9,870.30, -268.22 (2.65%)
NASDAQ 2,135.18, -85.47 (3.85%)
S&P 500 1,041.24, -33.33 (3.10%)
NYSE Composite 6,520.09, -216.51 (3.21%)
Decliners decimated advancers, 5837-752 (nearly 8:1); new lows bounded past new highs, 324-93, finally confirming the roll-over of that indicator and sending the strongest sell signal possible. The daily high-low ratio has been mixed for the past four weeks and has now finally founded direction. Additionally, volume, which was non-existent on Monday, absolutely exploded to near-panic levels today.
NYSE Volume 7,193,685,000
NASDAQ Volume 2,783,303,750
Crude oil tumbled on demand concerns, losing $2.31, to $75.94. Gold saw a little bit of a bid, up $3.80, to $1,242.00, though silver fell 8 cents, to $18.59.
It was one of Wall Street's worst days of this or any year and the general consensus is that it's far from over. With three days remaining to the week and more sensitive data due out, there's no hope for the bullish case.
There is a small amount of support around Dow 9800, though it is very tentative, and likely to be broken without much fuss. The next leg down in the still-unfolding global de-leveraging process is likely to be the steepest from peak to trough and we are only at the beginning of it.
As the global deflationary death (and debt) spiral persists, there's little any single entity can do to prevent major dislocations and value deterioration. The stock market is only a proxy for the general US economy, though it serves as a very solid guide to global conditions. What seems to be a major stumbling block for the overall health or decay of a global economic system is that it is made up of many smaller, moving parts - equity markets, bond markets, governments, nations, derivatives, commodities, etc. - and without coordination (virtually impossible) from these moving parts, stemming the deflationary tide is next to impossible.
Tuesday's decline was not confined to, nor was it a result of, US interests. It was global, begun with a revision to China's April Leading Economic Indicators (LEI) by the Conference Board, from a gain of 1.7% to a much smaller - and much more significant - 0.3% gain. The pain felt in bourses around the globe was exacerbated by the same Conference Board's US Consumer Confidence reading for June, which tumbled to 52.9 from May's 62.7 mark.
Other than the China revision and one sentiment gauge, overall data and news flow has been nothing but sad. There hasn't been a positive economic data release since the June non-farms payroll data, itself a complete flop. Plaguing markets are a myriad of touchy, intertwined forces, including unemployment, residential housing, commercial real estate, slumping bond yields, government debt, household debt, shrinking money supply, tight credit conditions and currency fluctuations.
It's almost too much to expect from any market individually, so all markets are collectively sharing the pain. Oversimplifying the matter to the extreme, an oversupply of assets on a base of faulty investments funded with massive amounts of unsecured debt (in the Trillions of dollars) is collapsing at a rapid rate. That's why gold and silver have risen, or, at least lately held up much better than most assets - there's a finite, limited supply of them.
The selling began early and accelerated through the afternoon, with indices closing very near their lows of the day. The final, closing price of the S&P 500 was the lowest since October 30, 2009, an 8-month low, breaking through previous double-bottom support.
Dow 9,870.30, -268.22 (2.65%)
NASDAQ 2,135.18, -85.47 (3.85%)
S&P 500 1,041.24, -33.33 (3.10%)
NYSE Composite 6,520.09, -216.51 (3.21%)
Decliners decimated advancers, 5837-752 (nearly 8:1); new lows bounded past new highs, 324-93, finally confirming the roll-over of that indicator and sending the strongest sell signal possible. The daily high-low ratio has been mixed for the past four weeks and has now finally founded direction. Additionally, volume, which was non-existent on Monday, absolutely exploded to near-panic levels today.
NYSE Volume 7,193,685,000
NASDAQ Volume 2,783,303,750
Crude oil tumbled on demand concerns, losing $2.31, to $75.94. Gold saw a little bit of a bid, up $3.80, to $1,242.00, though silver fell 8 cents, to $18.59.
It was one of Wall Street's worst days of this or any year and the general consensus is that it's far from over. With three days remaining to the week and more sensitive data due out, there's no hope for the bullish case.
There is a small amount of support around Dow 9800, though it is very tentative, and likely to be broken without much fuss. The next leg down in the still-unfolding global de-leveraging process is likely to be the steepest from peak to trough and we are only at the beginning of it.
Monday, June 28, 2010
Shaky Start to Big Data Week
This week will witness the final three days of the second quarter and the first two of the third as a precursor to what purports to be a very interesting 2Q earnings season.
The week kicked off with a very stubborn market, one which refused to push either to the upside or down, trading in a tight range throughout the session. Prior to the open, the first two data points for the week were released, showing personal income rising by 0.4% and personal spending up by 0.2%, both for the month of May.
Generally, the takeaway was unenthusiastic, as the numbers taken together imply tightening by households and individuals, unsurprising to most.
As the week progresses, however, economic data releases will become more and more essential to traders, culminating in the June non-farm payroll report on Friday. Tuesday's releases include the Case-Shiller 20-city Index and Consumer Confidence reading. On Wednesday, the ADP Employment Change, a precursor to the non-farm payrolls, and Chicago PMI will be well-anticipated. Thursday is chock-full of data on the economy, with Continuing and Initial Unemployment Claims kicking things off at 8:30 am. At 10:00 am, Construction Spending for May, the ISM Index for June and Pending Home Sales for May will be closely monitored along with Auto at Trusk sales for June at 1:00 pm.
That's a load of data for the market to digest, and recent indications are that by Friday, most of the nation will be at or near a state of melancholy, just in time for a long weekend, with markets closed in observance of Independence Day on Monday, July 5.
Dow 10,138.52, -5.29 (0.05%)
NASDAQ 2,220.65, -2.83 (0.13%)
S&P 500 1,074.57, -2.19 (0.20%)
NYSE Composite 6,736.60, -27.33 (0.40%)
Unlike the headline numbers, declining issues beat out advancers by a relatively strong margin, 3617-2858, indicating some position lightening. New highs managed to better new lows, 144-124. Volume was astonishingly light, it being a Monday, usually reserved for fund manager forays. While the light volume could be attributed to seasonality, it's more likely a function of fear. Nobody wants to get in front of data which may demonstrate weakness across the board.
NYSE Volume 4,504,852,000
NASDAQ Volume 1,767,528,125
Even commodities were selling off. Crude oil for August delivery dropped 61 cents, to $78.25, on the NYMEX. Gold plunged $17.60, to $1,238.20; silver fell in kind, off 34 cents, to $18.67.
There's absolutely no good reason to take a position in any stock at this juncture, long or short, though the shorts may beg to differ. With earnings due to kick off in a week's time, and, with the mountain of economic data this week, traders will have a difficult time making an argument for any type of equity.
Market sentiment remains clouded and slightly bearish, however, especially since there's still no resolution to the issues in the Gulf of Mexico, BP and their massive oil spill. Other conditions notwithstanding, the images of soiled beached and dead sea fowl continue to haunt the minds of just about anybody with a pulse and a conscience. It's a huge overhang on a market which already has much too much to be worried about.
Notably absent from the discussion were the weekend's G20 summit in Toronto, which produced little, if any, tangible prospects for the future. European nations banded together to promote austerity, with the larger nations - France and Germany - vowing to begin cutting deficits, while the US stuck to its easy-credit, spendthrift ways for the near term.
The death of West Virginia Senator Robert Byrd late Sunday evening threw a wrench into the passage of the recently-hammered-out financial regulation bill. It was unclear whether Democrats could muster enough votes to survive a possible Republican filibuster, even though the bill was so watered-down by completion that few saw it as meaningful reform in any way.
The week kicked off with a very stubborn market, one which refused to push either to the upside or down, trading in a tight range throughout the session. Prior to the open, the first two data points for the week were released, showing personal income rising by 0.4% and personal spending up by 0.2%, both for the month of May.
Generally, the takeaway was unenthusiastic, as the numbers taken together imply tightening by households and individuals, unsurprising to most.
As the week progresses, however, economic data releases will become more and more essential to traders, culminating in the June non-farm payroll report on Friday. Tuesday's releases include the Case-Shiller 20-city Index and Consumer Confidence reading. On Wednesday, the ADP Employment Change, a precursor to the non-farm payrolls, and Chicago PMI will be well-anticipated. Thursday is chock-full of data on the economy, with Continuing and Initial Unemployment Claims kicking things off at 8:30 am. At 10:00 am, Construction Spending for May, the ISM Index for June and Pending Home Sales for May will be closely monitored along with Auto at Trusk sales for June at 1:00 pm.
That's a load of data for the market to digest, and recent indications are that by Friday, most of the nation will be at or near a state of melancholy, just in time for a long weekend, with markets closed in observance of Independence Day on Monday, July 5.
Dow 10,138.52, -5.29 (0.05%)
NASDAQ 2,220.65, -2.83 (0.13%)
S&P 500 1,074.57, -2.19 (0.20%)
NYSE Composite 6,736.60, -27.33 (0.40%)
Unlike the headline numbers, declining issues beat out advancers by a relatively strong margin, 3617-2858, indicating some position lightening. New highs managed to better new lows, 144-124. Volume was astonishingly light, it being a Monday, usually reserved for fund manager forays. While the light volume could be attributed to seasonality, it's more likely a function of fear. Nobody wants to get in front of data which may demonstrate weakness across the board.
NYSE Volume 4,504,852,000
NASDAQ Volume 1,767,528,125
Even commodities were selling off. Crude oil for August delivery dropped 61 cents, to $78.25, on the NYMEX. Gold plunged $17.60, to $1,238.20; silver fell in kind, off 34 cents, to $18.67.
There's absolutely no good reason to take a position in any stock at this juncture, long or short, though the shorts may beg to differ. With earnings due to kick off in a week's time, and, with the mountain of economic data this week, traders will have a difficult time making an argument for any type of equity.
Market sentiment remains clouded and slightly bearish, however, especially since there's still no resolution to the issues in the Gulf of Mexico, BP and their massive oil spill. Other conditions notwithstanding, the images of soiled beached and dead sea fowl continue to haunt the minds of just about anybody with a pulse and a conscience. It's a huge overhang on a market which already has much too much to be worried about.
Notably absent from the discussion were the weekend's G20 summit in Toronto, which produced little, if any, tangible prospects for the future. European nations banded together to promote austerity, with the larger nations - France and Germany - vowing to begin cutting deficits, while the US stuck to its easy-credit, spendthrift ways for the near term.
The death of West Virginia Senator Robert Byrd late Sunday evening threw a wrench into the passage of the recently-hammered-out financial regulation bill. It was unclear whether Democrats could muster enough votes to survive a possible Republican filibuster, even though the bill was so watered-down by completion that few saw it as meaningful reform in any way.
Friday, June 25, 2010
Stocks Flat to End Rough Week; BP Crushed
US stocks could not rebound well from a week of fairly persistent selling pressure, finishing with a mixed session on Friday. Only the Dow closed lower on the day, but the other major indices were barely changed.
For the week, the Dow Jones Industrials lost 301 points, or about 3%. The NASDAQ shed 86 points and the S&P 500 was the worst hit, giving back 40 points, close to a 4% decline.
Persistent worries about the heath of the general economy, credit conditions and the overall global economy pushed all three indices, plus the NYSE Composite, back under their respective 200-day moving averages.
Dow 10,143.81, -8.99 (0.09%)
NASDAQ 2,223.48, +6.06 (0.27%)
S&P 500 1,076.76, +3.07 (0.29%)
NYSE Composite 6,763.93, +33.69 (0.50%)
Like stocks, internals were also mixed. Winners beat losers by a tally of 4593-1870, but new lows maintained their edge over new highs, 170-119. Volume was extraordinarily high, due to annual rebalancing of the Russell 2000.
NYSE Volume 7,031,487,500
NASDAQ Volume 3,283,513,000
Continuing to feel pressure, British Petroleum (BP) lost more value, closing at 27.02, a price not seen in the stock since 1993. Claims continue to mount, and there are concerns that the company will be forced to pay dearly for financing going forward, with credit default swaps inverted - costs to insure BPs financing for one year now costs more than insuring five years' debt on an annualized basis.
Commodities were worthwhile investments once more, with oil leading the way, thanks to fears of a tropical storm reaching the Gulf of Mexico within the next three to five days. Crude for August delivery rose $2.35, to $78.86.
Gold continued its ascent, gaining $10.30, to $1,255.80. Silver added 37 cents, to close the week at $19.10.
Stocks remained under pressure as the government third and final estimate of GDP growth came in lower than expected, at 2.7% (down from 3.0%), fueling renewed fears of either weak economic conditions going forward or the threat of a double dip, back into recession in 2011.
With the July 4th holiday beginning at the end of next week, traders will be focused on Friday's June non-farm payroll report, which is expected to show gains of 100,000 jobs, though just where those jobs might have been created remains a mystery. It's more likely that job growth will remain anemic through the summer and that stock market losses will accelerate.
For the week, the Dow Jones Industrials lost 301 points, or about 3%. The NASDAQ shed 86 points and the S&P 500 was the worst hit, giving back 40 points, close to a 4% decline.
Persistent worries about the heath of the general economy, credit conditions and the overall global economy pushed all three indices, plus the NYSE Composite, back under their respective 200-day moving averages.
Dow 10,143.81, -8.99 (0.09%)
NASDAQ 2,223.48, +6.06 (0.27%)
S&P 500 1,076.76, +3.07 (0.29%)
NYSE Composite 6,763.93, +33.69 (0.50%)
Like stocks, internals were also mixed. Winners beat losers by a tally of 4593-1870, but new lows maintained their edge over new highs, 170-119. Volume was extraordinarily high, due to annual rebalancing of the Russell 2000.
NYSE Volume 7,031,487,500
NASDAQ Volume 3,283,513,000
Continuing to feel pressure, British Petroleum (BP) lost more value, closing at 27.02, a price not seen in the stock since 1993. Claims continue to mount, and there are concerns that the company will be forced to pay dearly for financing going forward, with credit default swaps inverted - costs to insure BPs financing for one year now costs more than insuring five years' debt on an annualized basis.
Commodities were worthwhile investments once more, with oil leading the way, thanks to fears of a tropical storm reaching the Gulf of Mexico within the next three to five days. Crude for August delivery rose $2.35, to $78.86.
Gold continued its ascent, gaining $10.30, to $1,255.80. Silver added 37 cents, to close the week at $19.10.
Stocks remained under pressure as the government third and final estimate of GDP growth came in lower than expected, at 2.7% (down from 3.0%), fueling renewed fears of either weak economic conditions going forward or the threat of a double dip, back into recession in 2011.
With the July 4th holiday beginning at the end of next week, traders will be focused on Friday's June non-farm payroll report, which is expected to show gains of 100,000 jobs, though just where those jobs might have been created remains a mystery. It's more likely that job growth will remain anemic through the summer and that stock market losses will accelerate.
Thursday, June 24, 2010
One More Ugly Day for Stocks Following Fed Statement
On the heels of the FOMC rate policy announcement - one which possibly reached new levels of double-talk and misleading innuendo - stocks sold off rapidly at the open and again into the close.
The simple fact of the matter is that heavy trading is normally done in two specific time periods - in the first half hour and in the final hour of trading. On Thursday, the Dow lost roughly 100 points by 10:00 am, and another 45 from 3:00 to 4:00 pm. That pretty much summed up how investors were feeling a day after the Fed threw itself on it own sword of interest rate policy and effectively left US markets to fend for themselves.
While the losses today were substantial, it is worth noting that volume wasn't particularly strong; however, that should be put into the perspective of an overall weak market - the case since the financial implosion of 2008. Trading volume may never recover to the glory days of the great bull run from 2003-2007 as many individuals and a spate of investment firms have permanently soured on US stocks.
Wild gyrations, uncertain times and volatile conditions do not a stable market make, and these times could hardly be described as stable. Government intervention into all areas of public and private finances also have made many shy away from investing in equities. Nonetheless, there are still those who will try to quantify risk - such as the friend who told me that he made a considerable investment in BP on Tuesday (I do not know what he deems "considerable," but in any case I felt impelled to tell him I thought it was a mistake, and he is already on the wrong side of the trade.) - in search of ever-elusive gains.
There are also pension funds, mutual funds, hedge funds and any manner of investment vehicles which are chartered to invest in stocks, like it or not, so there will likely always be ample supply of buyers and sellers no matter the level of greed, fear and risk tolerance.
Considering the current climate, stocks are not favorable investments for anybody except those with excess cash on hand (wealthy), and even then, investing today may be more akin to gambling or just plain flushing money down the nearest toilet.
Let's take a look:
Dow 10,152.80, -145.64 (1.41%)
NASDAQ 2,217.42, -36.81 (1.63%)
S&P 500 1,073.69, -18.35 (1.68%)
NYSE Composite 6,730.24, -119.81 (1.75%)
Not a very pretty picture, there. Declining issues beat down advancers once more, today by a wide margin, 4914-1535 (3:1). New lows screamed past new highs, 159-92. Volume was light, but not exceedingly so. There was some serious dumping of losers going on and the number of bulls in attendance were not nearly sufficient to scare off the short-siders.
NYSE Volume 5,595,221,000
NASDAQ Volume 2,049,015,500
About the only place to make money was in the precious metals, though it wasn't much. Gold finished at $1,245.50, a gain of $11.40. Silver pushed ahead 28 cents, to $18.73. Crude oil fared less well, with futures for August delivery up a scrawny 16 cents, to $76.51.
The only economic news of any importance was prior to the open. Durable goods orders for May declined 1.1%. The weekly initial jobless claims stayed at about the same level they've been at for months, with 457,000 new unemployment applications.
With poor data setting the tone, stocks slumped. On Friday, the government releases its third and final estimate of 1st quarter GDP, expected to remain stable at 3%. With the release at 8:30 am, that should have little impact on the week's last day of trading.
The simple fact of the matter is that heavy trading is normally done in two specific time periods - in the first half hour and in the final hour of trading. On Thursday, the Dow lost roughly 100 points by 10:00 am, and another 45 from 3:00 to 4:00 pm. That pretty much summed up how investors were feeling a day after the Fed threw itself on it own sword of interest rate policy and effectively left US markets to fend for themselves.
While the losses today were substantial, it is worth noting that volume wasn't particularly strong; however, that should be put into the perspective of an overall weak market - the case since the financial implosion of 2008. Trading volume may never recover to the glory days of the great bull run from 2003-2007 as many individuals and a spate of investment firms have permanently soured on US stocks.
Wild gyrations, uncertain times and volatile conditions do not a stable market make, and these times could hardly be described as stable. Government intervention into all areas of public and private finances also have made many shy away from investing in equities. Nonetheless, there are still those who will try to quantify risk - such as the friend who told me that he made a considerable investment in BP on Tuesday (I do not know what he deems "considerable," but in any case I felt impelled to tell him I thought it was a mistake, and he is already on the wrong side of the trade.) - in search of ever-elusive gains.
There are also pension funds, mutual funds, hedge funds and any manner of investment vehicles which are chartered to invest in stocks, like it or not, so there will likely always be ample supply of buyers and sellers no matter the level of greed, fear and risk tolerance.
Considering the current climate, stocks are not favorable investments for anybody except those with excess cash on hand (wealthy), and even then, investing today may be more akin to gambling or just plain flushing money down the nearest toilet.
Let's take a look:
Dow 10,152.80, -145.64 (1.41%)
NASDAQ 2,217.42, -36.81 (1.63%)
S&P 500 1,073.69, -18.35 (1.68%)
NYSE Composite 6,730.24, -119.81 (1.75%)
Not a very pretty picture, there. Declining issues beat down advancers once more, today by a wide margin, 4914-1535 (3:1). New lows screamed past new highs, 159-92. Volume was light, but not exceedingly so. There was some serious dumping of losers going on and the number of bulls in attendance were not nearly sufficient to scare off the short-siders.
NYSE Volume 5,595,221,000
NASDAQ Volume 2,049,015,500
About the only place to make money was in the precious metals, though it wasn't much. Gold finished at $1,245.50, a gain of $11.40. Silver pushed ahead 28 cents, to $18.73. Crude oil fared less well, with futures for August delivery up a scrawny 16 cents, to $76.51.
The only economic news of any importance was prior to the open. Durable goods orders for May declined 1.1%. The weekly initial jobless claims stayed at about the same level they've been at for months, with 457,000 new unemployment applications.
With poor data setting the tone, stocks slumped. On Friday, the government releases its third and final estimate of 1st quarter GDP, expected to remain stable at 3%. With the release at 8:30 am, that should have little impact on the week's last day of trading.
Wednesday, June 23, 2010
Federal Reserve Throws Up White Flag, Surrenders Authority
Stocks ended mixed after the Federal Open Market Committee of the Federal Reserve issued the following statement at 2:15 pm EDT. I have decided to republish the entire release, interspersed with my notes in italics. It is also quite noteworthy that this is by far the most terse statement the Fed has released in many years. My feelings, essentially, are, that since they have little to do to stem the continuation of dour economic conditions within an essentially deflationary environment, they have little to say. For that, they deserve some small credit. For the rest, they deserve what currency manipulators always earn: ire and scorn.
Release Date: June 23, 2010
For immediate release
Information received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually.
This opening statement is an absolute lie. If anybody should know a thing or two about economic conditions and the labor market, it would be the Fed. Even as a casual observer, it is quite easy to refute the foregoing statement. Labor conditions continue to worsen and the economy is embarking upon another retraction.
Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.
I won't even bother to check. Maybe "official" government statistics show household spending increasing, but anyone who's worked for a living in the private sector knows that wages have been stagnant for at least the last 20 years. Any excess spending is likely coming from people who are not paying their mortgage or from government subsidies. So, the statement may be true, but look at their qualifiers, then, add mine.
Business spending on equipment and software has risen significantly; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls.
Business spending on infrastructure is probably increasing, but most businesses are also hoarding cash. The telling statement is "investment in nonresidential structures continues to be weak." Commercial real estate is in free-fall. Note that they mention unemployment again as an impediment to growth.
Housing starts remain at a depressed level.
Obviously.
Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad.
Read the first part of the sentence. The second part desires to shift blame to Europe. It's BS. We have enough of our own problems. Europe's only make them worse.
Bank lending has continued to contract in recent months.
Actually, I am somewhat surprised they would say this, as bank lending has been depressed since 2008.
Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moderate for a time.
This statement is just a wish. There is no evidence that the economy will grow substantially in the near term. Watch what happens to the term, "resource utilization" in the remainder of the statement. Also, make note of their mention of price stability and inflation, never using the term, "deflation." The "D-word" scares them to death, because they, and all other Keynesian economists have no answers for the bottomless pit of deflation.
Prices of energy and other commodities have declined somewhat in recent months, and underlying inflation has trended lower.
Deflation.
With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.
Deflation.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
In other words, they've thrown up the white flag of surrender here. They admit that they have no solutions except to keep lending money at ZERO percent. THEY cannot make money. They have failed. The US economy, from which, over the past nearly 100 years, the Federal Reserve has stolen almost all wealth from the nation, is bankrupt. There needs to be no more evidence than this statement to make the case that the Federal Reserve should be dissolved. Their policies, over the course of the past 96 years, has destroyed the capacity for the US economy to produce and grow. Ben Bernanke should step down and the governors of the Fed should declare bankruptcy and turn their assets over to the United States government for proper disposal.
Make particular note that they mention "low rates of resource utilization" when in the previous paragraph they said, "the Committee anticipates a gradual return to higher levels of resource utilization..." They are wishing. They are clueless. They have nothing. "Gradual" could mean six months just as easily as six years.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.
They have no more policy tools to employ. They have no more gimmicks to steal more money from the Treasury. They have nothing. They are worthless and defunct. Ordinary Americans have more power to promote economic prosperity - by hiring a kid to mow a lawn - than the Federal Reserve and they openly admit it.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer-run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly.
This final piece was probably entered upon the insistence of Mr. Hoenig, who, for whatever purpose (maybe to avoid hanging) wishes to separate himself from the lying majority. His effort to save himself should be applauded, though the addition of this statement is more than likely the most damaging blow to the unity of the Federal Reserve board of governors since its inception.
------------------------- End of FOMC Statement ---------------------------------
OK, readers can agree with my assessment in whole or in part or disagree as they please. In a nutshell, I'd say that we, as a nation, are in for a world of hurt. As I've been saying for the better part of the last three years, maybe four, our current economic path is unsustainable, and here is a stab to the heart of the US economy. The Federal Reserve today serves our nation no useful purpose except to delay the inevitable, while their cronies and friends steal as much more wealth as possible before they flee the country.
As for our friendly criminal enterprise known as Wall Street, well, they couldn't just sell everything all at once, could they? Their response was measured and cynical. They realize that the Fed has failed and that the underground economy - the part of the nation that avoids taxes, regulations and government intervention - will flourish far beyond the prospects of the "measured" economy.
Expect unreported income to far outstrip the GDP over the next 3-5 years. Expect small businesses to alternately fail and prosper, depending on how well they are able to skirt the laws and taxation. Expect a renaissance of personal responsibility and resourcefulness and the utter destruction of governance.
Greed, corruption, theft and incompetence have their consequences. This is the second phase of the post-government era, in which individuals will take matters even more into their own hands. Millionaires will mysteriously appear from the dust of destroyed cities. The stock market will crash or be held afloat by the criminals who operate under the now-discredited idea that big business is at the heart of American prosperity.
Economic and social dislocation will occur on a daily, even momentary basis, as individuals seize monetary power from the dethroned "masters of the universe" embodied in the money center banks and publicly-owned firms in general.
Today's market data is meaningful only in the internals.
Dow 10,298.44, +4.92 (0.05%)
NASDAQ 2,254.23, -7.57 (0.33%)
S&P 500 1,092.04, -3.27 (0.30%)
NYSE Composite 6,850.05, -8.90 (0.13%)
NOTABLE: declining issues led advancers, 3441-2978. NOTABLE: new lows surpassed new highs, 116-73. NOTABLE: Volume was anemic. Fear has fully gripped the trading community.
NYSE Volume 5,294,169,500
NASDAQ Volume 1,895,673,875
One would have expected gold and silver to rise off the back of the Fed announcement. Since they are serially controlled and manipulated by central banks and money center banks, they did not. Gold dipped $5.40, to $1,234.10. Silver fell 44 cents, to $18.45. These price levels will not maintain. Either there will be massive liquidation shortly, due to another financial crisis, or the dye has already been cast, that fiat money is dead and a new gold standard is about to emerge, the eventuality of which is now without doubt. It may not be advisable to buy gold or silver at these prices, but by no means should anybody be selling any until the prevailing economic conditions are resolved and the global economies are at healthy status.
Prices may decline for some time, but they will surely rise, most likely well beyond these levels. Cash or land are now useful converters into gold. If you find somebody willing to exchange equities or bonds for gold or silver, by all means take their hard assets at whatever discount comforts you. Gold and silver will endure. Paper money and certificates will not.
Oil dropped $1.50, to $76.35. Expect this price to settle at its true level of $35/barrel within the next three years. Outside of absolute manipulation, oil will not see $80/barrel for at least another 15 years.
Had enough?
I'll be back tomorrow, and the next day and many more after that. The party is just getting interesting.
Release Date: June 23, 2010
For immediate release
Information received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually.
This opening statement is an absolute lie. If anybody should know a thing or two about economic conditions and the labor market, it would be the Fed. Even as a casual observer, it is quite easy to refute the foregoing statement. Labor conditions continue to worsen and the economy is embarking upon another retraction.
Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.
I won't even bother to check. Maybe "official" government statistics show household spending increasing, but anyone who's worked for a living in the private sector knows that wages have been stagnant for at least the last 20 years. Any excess spending is likely coming from people who are not paying their mortgage or from government subsidies. So, the statement may be true, but look at their qualifiers, then, add mine.
Business spending on equipment and software has risen significantly; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls.
Business spending on infrastructure is probably increasing, but most businesses are also hoarding cash. The telling statement is "investment in nonresidential structures continues to be weak." Commercial real estate is in free-fall. Note that they mention unemployment again as an impediment to growth.
Housing starts remain at a depressed level.
Obviously.
Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad.
Read the first part of the sentence. The second part desires to shift blame to Europe. It's BS. We have enough of our own problems. Europe's only make them worse.
Bank lending has continued to contract in recent months.
Actually, I am somewhat surprised they would say this, as bank lending has been depressed since 2008.
Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moderate for a time.
This statement is just a wish. There is no evidence that the economy will grow substantially in the near term. Watch what happens to the term, "resource utilization" in the remainder of the statement. Also, make note of their mention of price stability and inflation, never using the term, "deflation." The "D-word" scares them to death, because they, and all other Keynesian economists have no answers for the bottomless pit of deflation.
Prices of energy and other commodities have declined somewhat in recent months, and underlying inflation has trended lower.
Deflation.
With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.
Deflation.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
In other words, they've thrown up the white flag of surrender here. They admit that they have no solutions except to keep lending money at ZERO percent. THEY cannot make money. They have failed. The US economy, from which, over the past nearly 100 years, the Federal Reserve has stolen almost all wealth from the nation, is bankrupt. There needs to be no more evidence than this statement to make the case that the Federal Reserve should be dissolved. Their policies, over the course of the past 96 years, has destroyed the capacity for the US economy to produce and grow. Ben Bernanke should step down and the governors of the Fed should declare bankruptcy and turn their assets over to the United States government for proper disposal.
Make particular note that they mention "low rates of resource utilization" when in the previous paragraph they said, "the Committee anticipates a gradual return to higher levels of resource utilization..." They are wishing. They are clueless. They have nothing. "Gradual" could mean six months just as easily as six years.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.
They have no more policy tools to employ. They have no more gimmicks to steal more money from the Treasury. They have nothing. They are worthless and defunct. Ordinary Americans have more power to promote economic prosperity - by hiring a kid to mow a lawn - than the Federal Reserve and they openly admit it.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer-run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly.
This final piece was probably entered upon the insistence of Mr. Hoenig, who, for whatever purpose (maybe to avoid hanging) wishes to separate himself from the lying majority. His effort to save himself should be applauded, though the addition of this statement is more than likely the most damaging blow to the unity of the Federal Reserve board of governors since its inception.
------------------------- End of FOMC Statement ---------------------------------
OK, readers can agree with my assessment in whole or in part or disagree as they please. In a nutshell, I'd say that we, as a nation, are in for a world of hurt. As I've been saying for the better part of the last three years, maybe four, our current economic path is unsustainable, and here is a stab to the heart of the US economy. The Federal Reserve today serves our nation no useful purpose except to delay the inevitable, while their cronies and friends steal as much more wealth as possible before they flee the country.
As for our friendly criminal enterprise known as Wall Street, well, they couldn't just sell everything all at once, could they? Their response was measured and cynical. They realize that the Fed has failed and that the underground economy - the part of the nation that avoids taxes, regulations and government intervention - will flourish far beyond the prospects of the "measured" economy.
Expect unreported income to far outstrip the GDP over the next 3-5 years. Expect small businesses to alternately fail and prosper, depending on how well they are able to skirt the laws and taxation. Expect a renaissance of personal responsibility and resourcefulness and the utter destruction of governance.
Greed, corruption, theft and incompetence have their consequences. This is the second phase of the post-government era, in which individuals will take matters even more into their own hands. Millionaires will mysteriously appear from the dust of destroyed cities. The stock market will crash or be held afloat by the criminals who operate under the now-discredited idea that big business is at the heart of American prosperity.
Economic and social dislocation will occur on a daily, even momentary basis, as individuals seize monetary power from the dethroned "masters of the universe" embodied in the money center banks and publicly-owned firms in general.
Today's market data is meaningful only in the internals.
Dow 10,298.44, +4.92 (0.05%)
NASDAQ 2,254.23, -7.57 (0.33%)
S&P 500 1,092.04, -3.27 (0.30%)
NYSE Composite 6,850.05, -8.90 (0.13%)
NOTABLE: declining issues led advancers, 3441-2978. NOTABLE: new lows surpassed new highs, 116-73. NOTABLE: Volume was anemic. Fear has fully gripped the trading community.
NYSE Volume 5,294,169,500
NASDAQ Volume 1,895,673,875
One would have expected gold and silver to rise off the back of the Fed announcement. Since they are serially controlled and manipulated by central banks and money center banks, they did not. Gold dipped $5.40, to $1,234.10. Silver fell 44 cents, to $18.45. These price levels will not maintain. Either there will be massive liquidation shortly, due to another financial crisis, or the dye has already been cast, that fiat money is dead and a new gold standard is about to emerge, the eventuality of which is now without doubt. It may not be advisable to buy gold or silver at these prices, but by no means should anybody be selling any until the prevailing economic conditions are resolved and the global economies are at healthy status.
Prices may decline for some time, but they will surely rise, most likely well beyond these levels. Cash or land are now useful converters into gold. If you find somebody willing to exchange equities or bonds for gold or silver, by all means take their hard assets at whatever discount comforts you. Gold and silver will endure. Paper money and certificates will not.
Oil dropped $1.50, to $76.35. Expect this price to settle at its true level of $35/barrel within the next three years. Outside of absolute manipulation, oil will not see $80/barrel for at least another 15 years.
Had enough?
I'll be back tomorrow, and the next day and many more after that. The party is just getting interesting.
New Home Sales Bomb; Market Reaction: Numb
If there was any more proof needed that the US residential housing market was about to take another turn for the worse, May data on new homes sales may have not only provided that, but threaten to push the entire economy into another recession.
Dogged by relentlessly-high unemployment, tight financing issues and coming the first month after expiration of the government's new home buyer tax credit, May new home sales fell to a record low of 300,000 units (seasonally adjusted), the worst sales figure since data was recorded, back in 1963.
Not only was the number 32.7% below April's downwardly-revised figure of 446,000, but the decline was also 18.6% lower year-over-year. The news, which was released at 10:00 am EDT, was met with little more than a yawn on Wall Street, where stocks were marginally lower in anticipation of the Fed's rate policy decision later in the day (2:00 pm EDT).
Traders may be disappointed by whatever it is the Fed will do as they already have the fed funds rate at ZERO, so they have no loosening mechanism left in place to staunch another economic downturn except a couple of bad choices, those being, reinstitution of quantitative easing (printing money to buy more Treasury debt), or, expansion of the already-bloated balance sheet with the purchase of more mortgage debt, most of it toxic sludge which nobody wants to touch.
What the Fed does today will be important only in the minds of those who actually believe that they and the federal government can rescue the economy from the worst economic nightmare since the Great Depression, possibly the worst economic slowdown of all time. While most lame media pundits still put some degree of faith in the exigencies of Keynesian economics, more stable-minded Austrian thinkers feel that nothing can be done to stem the deflationary decline except writing off bad investments, involving a great deal of pain and suffering, much more than is currently being felt in the grandest global economies.
The FMOC rate decision will be released shortly after 2:00 pm ET. A full report, with closing numbers, will be reported in a subsequent post after the close of trading today.
Dogged by relentlessly-high unemployment, tight financing issues and coming the first month after expiration of the government's new home buyer tax credit, May new home sales fell to a record low of 300,000 units (seasonally adjusted), the worst sales figure since data was recorded, back in 1963.
Not only was the number 32.7% below April's downwardly-revised figure of 446,000, but the decline was also 18.6% lower year-over-year. The news, which was released at 10:00 am EDT, was met with little more than a yawn on Wall Street, where stocks were marginally lower in anticipation of the Fed's rate policy decision later in the day (2:00 pm EDT).
Traders may be disappointed by whatever it is the Fed will do as they already have the fed funds rate at ZERO, so they have no loosening mechanism left in place to staunch another economic downturn except a couple of bad choices, those being, reinstitution of quantitative easing (printing money to buy more Treasury debt), or, expansion of the already-bloated balance sheet with the purchase of more mortgage debt, most of it toxic sludge which nobody wants to touch.
What the Fed does today will be important only in the minds of those who actually believe that they and the federal government can rescue the economy from the worst economic nightmare since the Great Depression, possibly the worst economic slowdown of all time. While most lame media pundits still put some degree of faith in the exigencies of Keynesian economics, more stable-minded Austrian thinkers feel that nothing can be done to stem the deflationary decline except writing off bad investments, involving a great deal of pain and suffering, much more than is currently being felt in the grandest global economies.
The FMOC rate decision will be released shortly after 2:00 pm ET. A full report, with closing numbers, will be reported in a subsequent post after the close of trading today.
Tuesday, June 22, 2010
All Global Markets Feeling the Pinch; Jobs, Housing Apply Pressure
Maybe I was a bit too harsh in recent postings, calling US stock exchanges things like, "the laughing stock of the world," and "overtly manipulated."
This was the conclusion I came to after seeing this headline: Europe shares fall, ending 9-day rally; BP slides, as I had no idea that the European bourses had embarked upon such a ridiculous rally. Knowing they had been advancing in recent days, along with the Euro itself, seemed commonplace, until the headline shook me out of the doldrums and back to reality.
It makes a great deal of sense, realistically, that the Euro-zone nations would ply the same heavy-handed collusion that makes US markets zig, zag, sway to and fro on a moments notice, with or without news or even rumors, until after the fact. All of the European economies and those in North America are under the same gun: they must print money or die, as their currencies become more and more worthless pieces of paper. Accordingly, officials at the various central banks must look dutiful, despite knowing their vain efforts will eventually come to naught.
A nine-day rally across the continent is thus no surprise, merely an extension of the supra-market powers held by the major banks and financial institutions, blessed by the central banking cartel. Their only option is to inflate assets, create money and pray that they may liquidate their own assets and run to a developing nation before the populace comes for them with pitchforks in hand and torches ablaze.
This makes even more sense in light of Monday's faux rally, based entirely on hopes that China's revaluation of the Yuan might stimulate some economic activity for their beleaguered economies. Apparently, most of the insider financiers forgot that China is primarily an importer of raw materials and an exporter of finished goods, and that condition doesn't necessarily stack up to much of anything positive for the Euro-Anglo-American alliance, which has gone from Empire to empty over the past 60 years.
China continues on a powerful growth pathway, along with India, Brazil, Russia and many other previously-underdeveloped countries which now benefit from globalization without the excessive burden of decades worth of unfunded liabilities in health care and pensions. One can also throw Japan into the failing-developed world mix, since they began an accelerated path of destruction nearly twenty years ago and haven't been able to shake off persistent deflation in their internal economy.
Once it was clear that European markets were heading South, it didn't take long for the US to follow the lead on Tuesday. With the S&P and Dow crossing over the flat line throughout the morning and early afternoon, the NASDAQ finally succumbed and headed permanently into the red zone after 2:00 pm as stocks closed at or near session lows for the second straight day. Losses in all the major US indices accelerated through the closing hour of trade. The Dow and S&P closed below their respective 200-day moving averages, while the NASDAQ finished precariously hovering over its own 200-day MA.
Adding to the nightmarish scenario was more data suggesting another round of price declines in the US housing market, though much different in quality from the subprime bust of 2008-2009. The new paradigm is closely related to jobs, which still are not being created in the private sector and likely won't. No jobs means no mortgage payment and further defaults and foreclosures for the major banks.
The vicious deflationary cycle is gaining momentum on the back of deplorable employment and housing environments. Today's release of existing home sales for May by the NAR evidenced a 2.2% decline month-over-month. The weak housing market is being exacerbated by continued weakness in the jobs market and resetting of millions of adjustable rate mortgages sold from 2005-2006, most of which carry a balloon second loan set to expire - and need to be refinanced - this year and next.
With employment conditions as poor as they are, many homeowners in this condition will not be able to secure bridge financing and will fall into default and foreclosure, adding more of a glut to an already-over-saturated residential market. The result will be another breakdown in price by anywhere from 10-25%, depending on the market.
Dow 10,293.52, -148.89 (1.43%)
NASDAQ 2,261.80, -27.29 (1.19%)
S&P 500 1,095.31, -17.89 (1.61%)
NYSE Composite 6,858.95, -119.91 (1.72%)
Declining issues continued to dominate advancers, just as they had on Monday, 5054-1483, but the bearish camp had additional ammunition for their argument Tuesday as new lows nearly surpassed new highs, losing out narrowly, 105-93. Volume was decidedly thin, though velocity may not be an issue during what seems to be setting up as a long, hot summer of decline.
NYSE Volume 5,205,686,000
NASDAQ Volume 1,801,127,500
Commodities did little better than equities on the day. Oil lost 61 cents, to $77.21, while gold added a marginal gain of 20 cents to finish at $1,239.90. Silver added 9 cents in price, to $18.90.
Stocks continue to be highly speculative, volatile and risky in this environment and no place for retirement savings, which is, unfortunately, where most of Americans are invested, either through their own 401K plans or state-funded pensions. Another severe downturn in stocks could easily spark a panic similar to the one in 2008, though this time the consequences may be even more severe.
The doomsday scenario may take as long as another five to seven years in which to be played out, so many investors and hard-working middle class Americans may still have time to fortify their financial defenses.
Reiterating the advice of the past year and a half: Cash and equivalents, arable land and tools of trade are suitable long-term investments for financial survival.
A double dip in virtually all important measures of economic activity seems almost a certainty at this point. Stocks could tumble as much as 30% by year's end, if not more.
This was the conclusion I came to after seeing this headline: Europe shares fall, ending 9-day rally; BP slides, as I had no idea that the European bourses had embarked upon such a ridiculous rally. Knowing they had been advancing in recent days, along with the Euro itself, seemed commonplace, until the headline shook me out of the doldrums and back to reality.
It makes a great deal of sense, realistically, that the Euro-zone nations would ply the same heavy-handed collusion that makes US markets zig, zag, sway to and fro on a moments notice, with or without news or even rumors, until after the fact. All of the European economies and those in North America are under the same gun: they must print money or die, as their currencies become more and more worthless pieces of paper. Accordingly, officials at the various central banks must look dutiful, despite knowing their vain efforts will eventually come to naught.
A nine-day rally across the continent is thus no surprise, merely an extension of the supra-market powers held by the major banks and financial institutions, blessed by the central banking cartel. Their only option is to inflate assets, create money and pray that they may liquidate their own assets and run to a developing nation before the populace comes for them with pitchforks in hand and torches ablaze.
This makes even more sense in light of Monday's faux rally, based entirely on hopes that China's revaluation of the Yuan might stimulate some economic activity for their beleaguered economies. Apparently, most of the insider financiers forgot that China is primarily an importer of raw materials and an exporter of finished goods, and that condition doesn't necessarily stack up to much of anything positive for the Euro-Anglo-American alliance, which has gone from Empire to empty over the past 60 years.
China continues on a powerful growth pathway, along with India, Brazil, Russia and many other previously-underdeveloped countries which now benefit from globalization without the excessive burden of decades worth of unfunded liabilities in health care and pensions. One can also throw Japan into the failing-developed world mix, since they began an accelerated path of destruction nearly twenty years ago and haven't been able to shake off persistent deflation in their internal economy.
Once it was clear that European markets were heading South, it didn't take long for the US to follow the lead on Tuesday. With the S&P and Dow crossing over the flat line throughout the morning and early afternoon, the NASDAQ finally succumbed and headed permanently into the red zone after 2:00 pm as stocks closed at or near session lows for the second straight day. Losses in all the major US indices accelerated through the closing hour of trade. The Dow and S&P closed below their respective 200-day moving averages, while the NASDAQ finished precariously hovering over its own 200-day MA.
Adding to the nightmarish scenario was more data suggesting another round of price declines in the US housing market, though much different in quality from the subprime bust of 2008-2009. The new paradigm is closely related to jobs, which still are not being created in the private sector and likely won't. No jobs means no mortgage payment and further defaults and foreclosures for the major banks.
The vicious deflationary cycle is gaining momentum on the back of deplorable employment and housing environments. Today's release of existing home sales for May by the NAR evidenced a 2.2% decline month-over-month. The weak housing market is being exacerbated by continued weakness in the jobs market and resetting of millions of adjustable rate mortgages sold from 2005-2006, most of which carry a balloon second loan set to expire - and need to be refinanced - this year and next.
With employment conditions as poor as they are, many homeowners in this condition will not be able to secure bridge financing and will fall into default and foreclosure, adding more of a glut to an already-over-saturated residential market. The result will be another breakdown in price by anywhere from 10-25%, depending on the market.
Dow 10,293.52, -148.89 (1.43%)
NASDAQ 2,261.80, -27.29 (1.19%)
S&P 500 1,095.31, -17.89 (1.61%)
NYSE Composite 6,858.95, -119.91 (1.72%)
Declining issues continued to dominate advancers, just as they had on Monday, 5054-1483, but the bearish camp had additional ammunition for their argument Tuesday as new lows nearly surpassed new highs, losing out narrowly, 105-93. Volume was decidedly thin, though velocity may not be an issue during what seems to be setting up as a long, hot summer of decline.
NYSE Volume 5,205,686,000
NASDAQ Volume 1,801,127,500
Commodities did little better than equities on the day. Oil lost 61 cents, to $77.21, while gold added a marginal gain of 20 cents to finish at $1,239.90. Silver added 9 cents in price, to $18.90.
Stocks continue to be highly speculative, volatile and risky in this environment and no place for retirement savings, which is, unfortunately, where most of Americans are invested, either through their own 401K plans or state-funded pensions. Another severe downturn in stocks could easily spark a panic similar to the one in 2008, though this time the consequences may be even more severe.
The doomsday scenario may take as long as another five to seven years in which to be played out, so many investors and hard-working middle class Americans may still have time to fortify their financial defenses.
Reiterating the advice of the past year and a half: Cash and equivalents, arable land and tools of trade are suitable long-term investments for financial survival.
A double dip in virtually all important measures of economic activity seems almost a certainty at this point. Stocks could tumble as much as 30% by year's end, if not more.
Global Economy Set to Implode
Once again the supposed "Masters of the Universe," sitting high inside their glassy offices in lower Manhattan, managed to persuade stocks to gap higher at the open. These geniuses then managed to sell managed positions all day long at a profit as the faux rally fizzled before the collective public eyes.
The Dow Jones Industrials were up nearly 150 points by 10:00 am, but stocks finished close to their lows of the day, actually rallying 50 points in the final minutes of trading to produce an artificial, moderately-lower close.
This is what the US stock markets have become, the paradise of insider traders and the laughing stock of the world. The "Masters of the Universe" are about to go down in flames lit with worthless paper currencies, backed by nothing more than the good word of scoundrels, cheats, liars and thieves.
Inexorably, stocks will lose value over time during any secular bear market, current company - which began in late summer, 2007 - included. daily fluctuations with accompanying conflicting internal data, such as today's, are trademarks of primary trend bear markets.
Dow 10,442.41, -8.23 (0.08%)
NASDAQ 2,289.09, -20.71 (0.90%)
S&P 500 1,113.20, 0.00 (0.00%)
NYSE Composite 6,978.86, -9.38 (0.13%)
Volume was moderate to low, but decliners far outnumbered advancing issues, 3986-2577, though the number of new highs, goosed by the mammoth opening head-fake, outweighed the new lows, 229-77. It is just this kind on non-confirmation and divergence that spells bear market in simple terms. The session was also an engulfing event, with the highs and lows exceeding those of the previous day, a sure set-up for an immediate market turn.
NYSE Volume 5,192,862,000.00
NASDAQ Volume 1,916,218,625.00
By deceiving most of the US market into believing that n upward revaluation of the Yuan was a positive for the Americas, the Wall Street insider swine managed to create a perfect selling opportunity for already-overpriced stocks they desperately sought to unload. It is why market-opening gaps - higher or lower - are never of any benefit to small investors, who all-too-often buy into these fake rallies and are subsequently left holding positions of lesser value by the end of the day.
Today's result was garden-variety manipulation, nothing that hasn't been seen countless times over the past three years, though it surely is a signal to get out of stocks with all due urgency.
Crude oil continued it's range-bound run higher, up 64 cents, to $77.82. Meanwhile, precious metals fell precipitously, with gold off by $17.50, to $1,239.70, and silver losing 73 cents, backing down to $18.80 per ounce.
In a rational world, with stocks down, the metals would likely rise, but there is nothing even remotely-resembling rationality in global markets. Nations, central banks and money center banks continue to pile more debt upon existing debt, as truly an unsustainable condition as that which preceded and touched off the crisis of 2008-09.
Paper currency is upon the deathbed, but gold and silver - viable alternatives - are being maintained (controlled, manipulated) at prices anywhere from 30-150% lower than true market value.
Like a stick of dynamite in an untended mine, all it is going to take is somebody or something to light the fuse for the entire global financial system to tumble into a nightmarish decline.
The Dow Jones Industrials were up nearly 150 points by 10:00 am, but stocks finished close to their lows of the day, actually rallying 50 points in the final minutes of trading to produce an artificial, moderately-lower close.
This is what the US stock markets have become, the paradise of insider traders and the laughing stock of the world. The "Masters of the Universe" are about to go down in flames lit with worthless paper currencies, backed by nothing more than the good word of scoundrels, cheats, liars and thieves.
Inexorably, stocks will lose value over time during any secular bear market, current company - which began in late summer, 2007 - included. daily fluctuations with accompanying conflicting internal data, such as today's, are trademarks of primary trend bear markets.
Dow 10,442.41, -8.23 (0.08%)
NASDAQ 2,289.09, -20.71 (0.90%)
S&P 500 1,113.20, 0.00 (0.00%)
NYSE Composite 6,978.86, -9.38 (0.13%)
Volume was moderate to low, but decliners far outnumbered advancing issues, 3986-2577, though the number of new highs, goosed by the mammoth opening head-fake, outweighed the new lows, 229-77. It is just this kind on non-confirmation and divergence that spells bear market in simple terms. The session was also an engulfing event, with the highs and lows exceeding those of the previous day, a sure set-up for an immediate market turn.
NYSE Volume 5,192,862,000.00
NASDAQ Volume 1,916,218,625.00
By deceiving most of the US market into believing that n upward revaluation of the Yuan was a positive for the Americas, the Wall Street insider swine managed to create a perfect selling opportunity for already-overpriced stocks they desperately sought to unload. It is why market-opening gaps - higher or lower - are never of any benefit to small investors, who all-too-often buy into these fake rallies and are subsequently left holding positions of lesser value by the end of the day.
Today's result was garden-variety manipulation, nothing that hasn't been seen countless times over the past three years, though it surely is a signal to get out of stocks with all due urgency.
Crude oil continued it's range-bound run higher, up 64 cents, to $77.82. Meanwhile, precious metals fell precipitously, with gold off by $17.50, to $1,239.70, and silver losing 73 cents, backing down to $18.80 per ounce.
In a rational world, with stocks down, the metals would likely rise, but there is nothing even remotely-resembling rationality in global markets. Nations, central banks and money center banks continue to pile more debt upon existing debt, as truly an unsustainable condition as that which preceded and touched off the crisis of 2008-09.
Paper currency is upon the deathbed, but gold and silver - viable alternatives - are being maintained (controlled, manipulated) at prices anywhere from 30-150% lower than true market value.
Like a stick of dynamite in an untended mine, all it is going to take is somebody or something to light the fuse for the entire global financial system to tumble into a nightmarish decline.
Friday, June 18, 2010
Quad-Witching Became a Quad-Whimper
Quietly ending one of the more unusual weeks on Wall Street, Friday's normally highly-anticipating quadruple witching (market index futures, market index options, stock options and stock futures expiring) ended with abnormally light volume over the final two trading days.
This is a disconcerting episode for traders, as volatile activity is the norm on these days, and the lack of volume suggests that the market is experiencing a severe lack of confidence, even among high-risk types who usually deal in these issues. Also to be considered is the quality of Tuesday's exceptional rally (the Dow gained 214 points), in that much of the options trading which normally could have held until later in the week, was actually conducted on this one, seminal session, making more than just a few traders wonder exactly why stocks were so sought-after on just that one day, as the rest of the week was flat and devoid of velocity.
The consensus being positive on that one day, and then nothing, brings up some interesting propositions, none of them particularly positive going forward. Were insiders moving early to avoid what they might consider an imminent turn? Was the rally thus concocted wholly on the backs of options and futures trades, rendering any gains as temporary flights of fancy? Could this just be a sign of the times, with Summer fast approaching, traders simply lost interest?
Supposing the latter of those preceding questions to be the best of a bad lot, good reasons for owning stocks generally have not appeared. Thus, with everyone cautious, the potential for a panic run on the sell side could occur out of thin air, just like much of the funds used to purchase stocks in the first place.
This kind of sentiment also bears the deflationary trademark, in which buyers will defer purchases, thinking prices will be lower tomorrow, the next day, the day after that, and so on, and, in that regard, we are in complete harmony with the instinct of the herd. Deflation manifests itself in many ways, but one clearly recognizable feature is sluggish trade, and if this week's action can't be described as sluggish, then nothing can.
As I've said previously, the market has three to four more weeks of waiting for 2nd quarter earnings reports, and the void may be filled with sell orders or simply a lack of meaningful movement. Whether this analysis is correct or mere whistling in the wind will be fairly known by the end of trading on Tuesday of next week. The market is seeking direction and the initial two days after witching days of any variety are generally reserved for reloading, shoring up strong positions and shedding weaker ones.
Dow 10,450.64, +16.47 (0.16%)
NASDAQ 2,309.80, +2.64 (0.11%)
S&P 500 1,117.51, +1.47 (0.13%)
NYSE Composite 6,988.24, +6.20 (0.09%)
Advancing issues slipped past decliners again, 3615-2861. New highs beat back new lows, 160-77.
NYSE Volume 5,356,428,000
NASDAQ Volume 2,044,128,250
Crude oil for July delivery gained 39 cents, to $77.18. Gold made a new high, gaining $9.70, to $1,257.20, while silver was also impressive, adding 41 cents, to $19.18.
This is a disconcerting episode for traders, as volatile activity is the norm on these days, and the lack of volume suggests that the market is experiencing a severe lack of confidence, even among high-risk types who usually deal in these issues. Also to be considered is the quality of Tuesday's exceptional rally (the Dow gained 214 points), in that much of the options trading which normally could have held until later in the week, was actually conducted on this one, seminal session, making more than just a few traders wonder exactly why stocks were so sought-after on just that one day, as the rest of the week was flat and devoid of velocity.
The consensus being positive on that one day, and then nothing, brings up some interesting propositions, none of them particularly positive going forward. Were insiders moving early to avoid what they might consider an imminent turn? Was the rally thus concocted wholly on the backs of options and futures trades, rendering any gains as temporary flights of fancy? Could this just be a sign of the times, with Summer fast approaching, traders simply lost interest?
Supposing the latter of those preceding questions to be the best of a bad lot, good reasons for owning stocks generally have not appeared. Thus, with everyone cautious, the potential for a panic run on the sell side could occur out of thin air, just like much of the funds used to purchase stocks in the first place.
This kind of sentiment also bears the deflationary trademark, in which buyers will defer purchases, thinking prices will be lower tomorrow, the next day, the day after that, and so on, and, in that regard, we are in complete harmony with the instinct of the herd. Deflation manifests itself in many ways, but one clearly recognizable feature is sluggish trade, and if this week's action can't be described as sluggish, then nothing can.
As I've said previously, the market has three to four more weeks of waiting for 2nd quarter earnings reports, and the void may be filled with sell orders or simply a lack of meaningful movement. Whether this analysis is correct or mere whistling in the wind will be fairly known by the end of trading on Tuesday of next week. The market is seeking direction and the initial two days after witching days of any variety are generally reserved for reloading, shoring up strong positions and shedding weaker ones.
Dow 10,450.64, +16.47 (0.16%)
NASDAQ 2,309.80, +2.64 (0.11%)
S&P 500 1,117.51, +1.47 (0.13%)
NYSE Composite 6,988.24, +6.20 (0.09%)
Advancing issues slipped past decliners again, 3615-2861. New highs beat back new lows, 160-77.
NYSE Volume 5,356,428,000
NASDAQ Volume 2,044,128,250
Crude oil for July delivery gained 39 cents, to $77.18. Gold made a new high, gaining $9.70, to $1,257.20, while silver was also impressive, adding 41 cents, to $19.18.
Thursday, June 17, 2010
Late Rally Lifts Stocks; Volume Pathetic
There were any number of good reasons for stocks to take a breather on Thursday, but, a vicious late-day rally sent all of the indices into positive territory, a place none of them had been since the opening minutes of trading. The Dow itself gained 84 points in the final 35 minutes, after having been down all day. The major indices closed right at their highs of the day.
While the markets have been buoyant of late, pressures continue to build as measures of the strength of the US economy increasingly show that any recovery is going to a slow, bumpy and uneven process. More and more economists are lowering forecasts for the remainder of 2010 and trimming projections for 2011 in the face of increased taxation and regulation on a wide swath of industries.
New unemployment claims totaled 472,000, well above consensus estimates of 450,000 and an increase of 12,000 from the prior week, confirming that labor markets remain soft.
Another deflationary signal was flashed by the May Consumer Price Index (CPI), which declined 0.2% month-over-month while core prices improved 0.1% month-over-month.
There's also a very basic measurement known as valuation, something most stocks are now testing the upper ranges of. With earnings season still three to four weeks in the distance, the Wall Street insider swindlers are making as much of a quick buck before reports begin to flow from the board rooms to the street.
One can be relatively assured that stocks will begin another leg to the downside no later than Tuesday of next week, barring any unforeseen, spectacularly-positive events.
Stock investing is quickly becoming more a process of timing and luck than fundamental analysis. Traders are in and out of stocks with blinding speed as compared to the old buy-and-hold days, which now seem just a quaint memory of a time when financial markets were heavily regulated, and wealth accumulation was a slow and relatively safe process.
Today's traders face more challenges than at any time in memory. Between insider knowledge, pre-and-post-market maneuvers and the advent of push-button trading via computer or cell phone, investors have to be quick on their feet and use tight stops just to stay even.
Thinking along these lines, it may be time for pension fund managers to reassess their strategies and convert more assets out of stocks - at least US and European ones - and into more stable investments as these traders are unable to move the huge blocks they hold with any kind of price assurances.
Dow 10,434.17, +24.71 (0.24%)
NASDAQ 2,307.16, +1.23 (0.05%)
S&P 500 1,116.03, +1.42 (0.13%)
NYSE Composite 6,982.02, +5.94 (0.09%)
Advancing issues narrowly beat back decliners, 3220-3183; new highs continued their recent string of wins over new lows, 141-60, but volume on the day was absolutely pathetic - the lowest in well over a month's time - especially considering that Friday is an options expiration quadruple-witching day. Normally, volume is very high leading into these events, so something is not right about this entire set-up.
NYSE Volume 4,973,262,000.00
NASDAQ Volume 1,654,591,250.00
Oil slipped 88 cents, to $76.79, but the precious metals showed strength, which only amplifies the discordance in equities. Gold gained $18.20, to $1,247.50. Silver added 34 cents, to $18.77.
Gold and stocks have generally been trading in opposite directions, though in recent months, that relationship has faded. Eventually, the two will collide, though, with the value of the Dow equal to anywhere from one to four ounces of gold. Currently, the ratio stands at 8.36 ounces to one unit of the Dow. Within 18 months, expect two things to occur: Gold will reach $1.500 per ounce and the Dow will smash through to the downside of 6000. It's almost an inevitability. Here's a little story about how to trade the gold and the Dow over the very long term, by Gary North, a guy who knows a thing or two about stocks and gold.
Tony Hayward, BP CEO, was grilled and pilloried on Capitol Hill this afternoon, as he should be. The remains of the Deepwater Horizon continue to spew thousands of barrels of crude into the Gulf of Mexico, the situation growing worse every day. Correcting our story from yesterday, it's being reported that BP will not pay dividends for the remainder of the year, not just the upcoming quarter. That's three quarters of British pensioners going without their dividend checks, but, as is the case with stocks, that risk was always there. While some may call the BP situation a "Black Swan" event, they've literally created any number of black pelicans and other specie of the region and should not survive as a going concern.
While the markets have been buoyant of late, pressures continue to build as measures of the strength of the US economy increasingly show that any recovery is going to a slow, bumpy and uneven process. More and more economists are lowering forecasts for the remainder of 2010 and trimming projections for 2011 in the face of increased taxation and regulation on a wide swath of industries.
New unemployment claims totaled 472,000, well above consensus estimates of 450,000 and an increase of 12,000 from the prior week, confirming that labor markets remain soft.
Another deflationary signal was flashed by the May Consumer Price Index (CPI), which declined 0.2% month-over-month while core prices improved 0.1% month-over-month.
There's also a very basic measurement known as valuation, something most stocks are now testing the upper ranges of. With earnings season still three to four weeks in the distance, the Wall Street insider swindlers are making as much of a quick buck before reports begin to flow from the board rooms to the street.
One can be relatively assured that stocks will begin another leg to the downside no later than Tuesday of next week, barring any unforeseen, spectacularly-positive events.
Stock investing is quickly becoming more a process of timing and luck than fundamental analysis. Traders are in and out of stocks with blinding speed as compared to the old buy-and-hold days, which now seem just a quaint memory of a time when financial markets were heavily regulated, and wealth accumulation was a slow and relatively safe process.
Today's traders face more challenges than at any time in memory. Between insider knowledge, pre-and-post-market maneuvers and the advent of push-button trading via computer or cell phone, investors have to be quick on their feet and use tight stops just to stay even.
Thinking along these lines, it may be time for pension fund managers to reassess their strategies and convert more assets out of stocks - at least US and European ones - and into more stable investments as these traders are unable to move the huge blocks they hold with any kind of price assurances.
Dow 10,434.17, +24.71 (0.24%)
NASDAQ 2,307.16, +1.23 (0.05%)
S&P 500 1,116.03, +1.42 (0.13%)
NYSE Composite 6,982.02, +5.94 (0.09%)
Advancing issues narrowly beat back decliners, 3220-3183; new highs continued their recent string of wins over new lows, 141-60, but volume on the day was absolutely pathetic - the lowest in well over a month's time - especially considering that Friday is an options expiration quadruple-witching day. Normally, volume is very high leading into these events, so something is not right about this entire set-up.
NYSE Volume 4,973,262,000.00
NASDAQ Volume 1,654,591,250.00
Oil slipped 88 cents, to $76.79, but the precious metals showed strength, which only amplifies the discordance in equities. Gold gained $18.20, to $1,247.50. Silver added 34 cents, to $18.77.
Gold and stocks have generally been trading in opposite directions, though in recent months, that relationship has faded. Eventually, the two will collide, though, with the value of the Dow equal to anywhere from one to four ounces of gold. Currently, the ratio stands at 8.36 ounces to one unit of the Dow. Within 18 months, expect two things to occur: Gold will reach $1.500 per ounce and the Dow will smash through to the downside of 6000. It's almost an inevitability. Here's a little story about how to trade the gold and the Dow over the very long term, by Gary North, a guy who knows a thing or two about stocks and gold.
Tony Hayward, BP CEO, was grilled and pilloried on Capitol Hill this afternoon, as he should be. The remains of the Deepwater Horizon continue to spew thousands of barrels of crude into the Gulf of Mexico, the situation growing worse every day. Correcting our story from yesterday, it's being reported that BP will not pay dividends for the remainder of the year, not just the upcoming quarter. That's three quarters of British pensioners going without their dividend checks, but, as is the case with stocks, that risk was always there. While some may call the BP situation a "Black Swan" event, they've literally created any number of black pelicans and other specie of the region and should not survive as a going concern.
Wednesday, June 16, 2010
Nothing Much
As one can plainly see from the headline numbers below, not much happened on stock markets today. Thin trade in a fairly tight range was the order of the day as BP agreed to set aside $20 billion in a separate escrow fund to pay for costs associated with the Gulf of Mexico spill. The company also announced it would not pay out the upcoming quarterly dividend.
Dow 10,409.46, +4.69 (0.05%)
NASDAQ 2,305.93, +0.05 (0.00%)
S&P 500 1,114.61, -0.62 (0.06%)
NYSE Composite 6,976.08, -13.80 (0.20%)
Decliners finished ahead of advancers, 3756-2723. New highs bettered new lows, 154-72. Volume was light.
NYSE Volume 5,653,750,500
NASDAQ Volume 1,946,411,125
Crude oil futures gained 73 cents, to $77.67. Gold lost $3.90, finishing at $1,229.30. Silver shed 14 cents, to $18.43.
I found out how to legally force banks to walk away from your mortgage. It's called "right of recision." Interesting stuff.
Dow 10,409.46, +4.69 (0.05%)
NASDAQ 2,305.93, +0.05 (0.00%)
S&P 500 1,114.61, -0.62 (0.06%)
NYSE Composite 6,976.08, -13.80 (0.20%)
Decliners finished ahead of advancers, 3756-2723. New highs bettered new lows, 154-72. Volume was light.
NYSE Volume 5,653,750,500
NASDAQ Volume 1,946,411,125
Crude oil futures gained 73 cents, to $77.67. Gold lost $3.90, finishing at $1,229.30. Silver shed 14 cents, to $18.43.
I found out how to legally force banks to walk away from your mortgage. It's called "right of recision." Interesting stuff.
Tuesday, June 15, 2010
Nice Gains on No News is Not Good?
Today's spectacular run by US equities will be viewed by most as a positive, though there are probably many who believe it's a chimera, that like most rallies, it is only temporary.
Problems and imbalances persist throughout the global financial space, but that does not preclude traders and brokers from doing their jobs, one of which apparently was to push the S&P through it's 200-day moving average. Mission accomplished.
What will be more interesting to watch is whether the averages continue to rally and stay above the magic 200-day MA level. It surely will be tested for support in the near future. Not much to read into one day's data, as normal, though the case for a counter-trend has developed.
Dow 10,404.77, +213.88 (2.10%)
NASDAQ 2,305.88, +61.92 (2.76%)
S&P 500 1,115.23, +25.60 (2.35%)
NYSE Composite 6,989.88, +171.91 (2.52%)
Advancers led decliners, 5413-1177. New highs overarched new lows, 149-55. Volume was in the high end of moderate.
NYSE Volume 5,299,700,500
NASDAQ Volume 2,257,801,750
Oil was up $1.82, to $76.94. As much as I hate to admit it, the view is for oil to remain in this range throughout the summer months. $85 should prove a high side of the range, though gas prices over $3.00 are a drag on productivity, a tax on the middle class. Gold rebounded $9.90, to $1,233.20. Silver galloped ahead, up another 17 cents, to $18.57.
The mid-week void in news was helpful to equity markets, especially considering that nothing new occurred to shake things to the downside. With the news cycle so contrived and difficult to believe at times, there's little doubt that more issues will emerge to drive confidence into the ground. Economic numbers, such as tomorrow's housing starts and PPI, both due out at 8:30 am, may have a chilling effect. Producer prices should be flat to down, a real bummer for the inflationist camp, and for stocks.
Deflation does, on the other hand, offer some benefit for US consumers, most of whom haven't had a rise in income over the past decade or longer. Purchasing power is firmly in the grips of the consumer, but they're actually using it prudently, another cog in the deflation wheel.
Problems and imbalances persist throughout the global financial space, but that does not preclude traders and brokers from doing their jobs, one of which apparently was to push the S&P through it's 200-day moving average. Mission accomplished.
What will be more interesting to watch is whether the averages continue to rally and stay above the magic 200-day MA level. It surely will be tested for support in the near future. Not much to read into one day's data, as normal, though the case for a counter-trend has developed.
Dow 10,404.77, +213.88 (2.10%)
NASDAQ 2,305.88, +61.92 (2.76%)
S&P 500 1,115.23, +25.60 (2.35%)
NYSE Composite 6,989.88, +171.91 (2.52%)
Advancers led decliners, 5413-1177. New highs overarched new lows, 149-55. Volume was in the high end of moderate.
NYSE Volume 5,299,700,500
NASDAQ Volume 2,257,801,750
Oil was up $1.82, to $76.94. As much as I hate to admit it, the view is for oil to remain in this range throughout the summer months. $85 should prove a high side of the range, though gas prices over $3.00 are a drag on productivity, a tax on the middle class. Gold rebounded $9.90, to $1,233.20. Silver galloped ahead, up another 17 cents, to $18.57.
The mid-week void in news was helpful to equity markets, especially considering that nothing new occurred to shake things to the downside. With the news cycle so contrived and difficult to believe at times, there's little doubt that more issues will emerge to drive confidence into the ground. Economic numbers, such as tomorrow's housing starts and PPI, both due out at 8:30 am, may have a chilling effect. Producer prices should be flat to down, a real bummer for the inflationist camp, and for stocks.
Deflation does, on the other hand, offer some benefit for US consumers, most of whom haven't had a rise in income over the past decade or longer. Purchasing power is firmly in the grips of the consumer, but they're actually using it prudently, another cog in the deflation wheel.
Monday, June 14, 2010
GET OUT AND STAY OUT OF THE STOCK MARKET
OK, so what was the excuse for today's failed rally? Technical? Fundamentals? Fear? Greed?
Whatever was the case, functional real markets do not act in this manner. Rigged, useless, casino-style markets in heavy secular bull trends do.
The stock market used to be a place where an INVESTOR could safely place his or her money and expect a reasonable return. Nowadays, it's just crap shoot. The dotcom bubble proved that. If you needed more proof, how about the 52-month bull market during the Bush administration's failed war in Iraq? Or maybe you'd be more convinced by the absurdity of the 2008 crash, complete with bank bailouts and exorbitant executive pay while average Americans' wages stalled or declined and corporate America shed six million jobs.
If you haven't been convinced that these markets are for professional gamblers only, and not for individuals or pension funds, maybe the sharp rally off the March '09 lows brought you some measure of faith.
If so, YOU ARE A MORON. MORON. STUPID, IGNORANT, IDIOT.
Toady's market was a perfect example of a trader's market, a casino, though the odds are stacked more favorably toward big players and insiders, so an unfair casino, a controlled crap game with loaded dice and blackjack tables with magic drawers which produce mystery cards for the dealers.
Anybody with a red cent invested in the stock market is simply throwing away their money. You may think you have an edge at some point. You will have profitable trades, but you cannot buy stock in a company based on fundamentals and hold it, collect dividend checks and still make a gain. Not in this market. Stocks with strong dividends are temporary. Their dividend yields improve as the price of shares decline, eroding your capital. It's a sucker's market, but the insiders are running out of suckers. Soon they will be eating off each other's own flesh.
Why was the Dow up 116 points early in the day? The talking heads on CNBC tell you that it was because fund managers buy on Monday. Well, if that's the case, they just had their asses handed to them, because whatever they bought early in the day is now lower in value because the insiders sold them off. Yes, since there are fewer suckers on which to feed, and since the bankers have had their way with taxpayer money via the government and need more, they are actively going after pension fund holdings through organized short selling and other tactics at which they are expert.
So, now you know why the market went up, and also why it went down.
Therefore, if you are a person with a pension fund which you think is going to provide for you during your "retirement" years, the crooks on Wall Street just took a little of that away today. Tomorrow, they will take a little more, and when the market crashes for good, later this year or early next year, or maybe in 2012 or 2013, you'll be told that your pension fund has no money and your retirement is going to SUCK OUT LOUD. You'll probably have to keep working until you're 80.
Deal with it. This is the new reality caused by decades of Americans trusting politicians and bankers with their life savings. They will steal all of it and leave you with nothing. The best advice I can offer - which I offered first in 2007 - is, if you have a 401k or other personal retirement account, to take it all out in cash, pay whatever penalty they're going to throw on you and put it in gold, silver. arable land, or tools of trade. Otherwise, like the government employees who are being led down a primrose path to absolute desolation, you will end up with nothing.
Dow 10,190.89, -20.18 (0.20%)
NASDAQ 2,243.96, +0.36 (0.02%)
S&P 500 1,089.63, -1.97 (0.18%)
NYSE Composite 6,817.97, +3.21 (0.05%)
Naturally, there were more advancing stocks than decliners and more new highs than new lows. That's how the ultimate financial con works. The volume was so absurdly low as to be laughable, but that's also how these expert crooks operate. They don't steal all of your money all at once. That would be too obvious. They take a little at a time. Some day's they even give you some of it back, so you'll stay in the game. That way, they get to take all of it, little by little, day by day, stock by stock.
NYSE Volume 5,173,854,000.00
NASDAQ Volume 1,902,072,875.00
Commodities were just as absurdly priced as stocks. Oil was up $1.34, to $75.12, but gold was down $5.60, to $1,223.30 and silver was ahead by 18 cents, to $18.40. Why? simple. The oil futures market is the most controlled, contrived, manipulated market ever invented, thinly traded and controlled by six or seven major interest groups. Gold is constantly being hammered down by Wall Street banks, particularly the House of Morgan criminal enterprise, and silver, well, who the hell knows? Id' say silver is probably one of the safest investments on the planet, especially if you're buying old US coins at melt value, though even that can prove risky. At least the coins will be worth something, like gold, forever, but without the constant interference from unscrupulous traders, central banks and the IMF.
I've been following stocks and studying economics for many years, and I can safely say that I've never seen stock markets so blatantly manipulated as I am seeing right now. Most stocks, even if they aren't already wickedly overvalued - which means nothing - are eventually only profit vehicles for Wall Street insiders. They'll crush a good stock for short term gain just as easily as they'll boost worthless shares. It's all about making a profit on a trade, not investing, these days.
I also heard today that the federal government wanted BP to open an escrow account to pay for the cleanup and associated costs in the Gulf of Mexico. I won't even bother to link to any story, but the number being throw around was $1 billion, which is so agonizingly low as to be considered off the table. Louisiana governor Booby Jindal (more than likely a phony name) said that any such fund should start at $5 billion.
Both figures are completely wrong. The costs of cleaning up the Gulf and paying the wages of the hundreds of thousands of people and businesses who have suffered economic hardship are going to top $100 billion, easily. BP - that's BRITISH PETROLEUM - should be out of business within six months, but it seems that our federal government is going to do everything within its power to save the company and screw over the taxpayers, AGAIN.
How much more will Americans take before they have had enough?
Sadly, more than anyone wishes to believe. The Americans of today are going to watch the utter destruction of the best democracy that ever existed on the planet, and, for the majority of them, they won't even raise an arm in anger.
Whatever was the case, functional real markets do not act in this manner. Rigged, useless, casino-style markets in heavy secular bull trends do.
The stock market used to be a place where an INVESTOR could safely place his or her money and expect a reasonable return. Nowadays, it's just crap shoot. The dotcom bubble proved that. If you needed more proof, how about the 52-month bull market during the Bush administration's failed war in Iraq? Or maybe you'd be more convinced by the absurdity of the 2008 crash, complete with bank bailouts and exorbitant executive pay while average Americans' wages stalled or declined and corporate America shed six million jobs.
If you haven't been convinced that these markets are for professional gamblers only, and not for individuals or pension funds, maybe the sharp rally off the March '09 lows brought you some measure of faith.
If so, YOU ARE A MORON. MORON. STUPID, IGNORANT, IDIOT.
Toady's market was a perfect example of a trader's market, a casino, though the odds are stacked more favorably toward big players and insiders, so an unfair casino, a controlled crap game with loaded dice and blackjack tables with magic drawers which produce mystery cards for the dealers.
Anybody with a red cent invested in the stock market is simply throwing away their money. You may think you have an edge at some point. You will have profitable trades, but you cannot buy stock in a company based on fundamentals and hold it, collect dividend checks and still make a gain. Not in this market. Stocks with strong dividends are temporary. Their dividend yields improve as the price of shares decline, eroding your capital. It's a sucker's market, but the insiders are running out of suckers. Soon they will be eating off each other's own flesh.
Why was the Dow up 116 points early in the day? The talking heads on CNBC tell you that it was because fund managers buy on Monday. Well, if that's the case, they just had their asses handed to them, because whatever they bought early in the day is now lower in value because the insiders sold them off. Yes, since there are fewer suckers on which to feed, and since the bankers have had their way with taxpayer money via the government and need more, they are actively going after pension fund holdings through organized short selling and other tactics at which they are expert.
So, now you know why the market went up, and also why it went down.
Therefore, if you are a person with a pension fund which you think is going to provide for you during your "retirement" years, the crooks on Wall Street just took a little of that away today. Tomorrow, they will take a little more, and when the market crashes for good, later this year or early next year, or maybe in 2012 or 2013, you'll be told that your pension fund has no money and your retirement is going to SUCK OUT LOUD. You'll probably have to keep working until you're 80.
Deal with it. This is the new reality caused by decades of Americans trusting politicians and bankers with their life savings. They will steal all of it and leave you with nothing. The best advice I can offer - which I offered first in 2007 - is, if you have a 401k or other personal retirement account, to take it all out in cash, pay whatever penalty they're going to throw on you and put it in gold, silver. arable land, or tools of trade. Otherwise, like the government employees who are being led down a primrose path to absolute desolation, you will end up with nothing.
Dow 10,190.89, -20.18 (0.20%)
NASDAQ 2,243.96, +0.36 (0.02%)
S&P 500 1,089.63, -1.97 (0.18%)
NYSE Composite 6,817.97, +3.21 (0.05%)
Naturally, there were more advancing stocks than decliners and more new highs than new lows. That's how the ultimate financial con works. The volume was so absurdly low as to be laughable, but that's also how these expert crooks operate. They don't steal all of your money all at once. That would be too obvious. They take a little at a time. Some day's they even give you some of it back, so you'll stay in the game. That way, they get to take all of it, little by little, day by day, stock by stock.
NYSE Volume 5,173,854,000.00
NASDAQ Volume 1,902,072,875.00
Commodities were just as absurdly priced as stocks. Oil was up $1.34, to $75.12, but gold was down $5.60, to $1,223.30 and silver was ahead by 18 cents, to $18.40. Why? simple. The oil futures market is the most controlled, contrived, manipulated market ever invented, thinly traded and controlled by six or seven major interest groups. Gold is constantly being hammered down by Wall Street banks, particularly the House of Morgan criminal enterprise, and silver, well, who the hell knows? Id' say silver is probably one of the safest investments on the planet, especially if you're buying old US coins at melt value, though even that can prove risky. At least the coins will be worth something, like gold, forever, but without the constant interference from unscrupulous traders, central banks and the IMF.
I've been following stocks and studying economics for many years, and I can safely say that I've never seen stock markets so blatantly manipulated as I am seeing right now. Most stocks, even if they aren't already wickedly overvalued - which means nothing - are eventually only profit vehicles for Wall Street insiders. They'll crush a good stock for short term gain just as easily as they'll boost worthless shares. It's all about making a profit on a trade, not investing, these days.
I also heard today that the federal government wanted BP to open an escrow account to pay for the cleanup and associated costs in the Gulf of Mexico. I won't even bother to link to any story, but the number being throw around was $1 billion, which is so agonizingly low as to be considered off the table. Louisiana governor Booby Jindal (more than likely a phony name) said that any such fund should start at $5 billion.
Both figures are completely wrong. The costs of cleaning up the Gulf and paying the wages of the hundreds of thousands of people and businesses who have suffered economic hardship are going to top $100 billion, easily. BP - that's BRITISH PETROLEUM - should be out of business within six months, but it seems that our federal government is going to do everything within its power to save the company and screw over the taxpayers, AGAIN.
How much more will Americans take before they have had enough?
Sadly, more than anyone wishes to believe. The Americans of today are going to watch the utter destruction of the best democracy that ever existed on the planet, and, for the majority of them, they won't even raise an arm in anger.
Friday, June 11, 2010
Stocks Finish First Positive Week in Last Four
Thanks to the rally from nowhere, based upon nothing, that materialized on Thursday, all of the major equity indices will finish with their first weekly gain in the past four weeks.
Investors were stunned prior to the opening bell on Friday with a report on May retail sales that showed Americans spending at a rate 1.2% lower than in April. The news was another disconcerting data point for the bulls, coming just a week after the unnerving non farm payroll report which quite graphically demonstrated that the "recovery" had ceased creating jobs in the private sector, if it was even creating any at all prior to May.
The little piece of news wasn't at all expected by the expert economists who track - or, apparently guess at - these kinds of things, who were looking for a gain in retail sales in the neighborhood of 0.2%. The stark difference between expectations and reality points up just how juiced the media has been with all the phony recovery talk over the past six months.
Anybody who simply lives in an average American community can see for themselves that business conditions are not optimal. Stores in retail strip malls and spaces in enclosed malls go begging for tenants, jobs are hard to come by and state and local governments are dealing with budget deficits brought on by lower tax receipts and shrinking tax revenues, all effects of the recession and the lack of a powerful recovery.
Wall Street is about the only place in the country which seems to be of the opinion that all's well in the USA and the economy, though the recent declines in the market make clear that not everyone is euphoric over future prospects. The headwinds of future taxation, continued high unemployment and a critically ill housing market are beginning to take their tolls on even the most ardent bulls.
Strains in the European Union banking complex and the continuous flow of oil from deep beneath the Gulf of Mexico - putting thousands of shrimpers, clammers and fishermen out of work - certainly aren't helping matters.
As inexplicable as Thursday's rally was, today's late-day trade was equally out-of-the-blue. The Dow, which had, along with the S&P, spent nearly the entire session in negative territory, tacked on 75 points in the final three-quarters of the hour, helping push all the indices into plus territory. Once again, organized trading by a consortium of insiders or perhaps machine-driven, stocks ran counter-trend late in the day.
Dow 10,211.07, +38.54 (0.38%)
NASDAQ 2,243.60, +24.89 (1.12%)
S&P 500 1,091.60, +4.76 (0.44%)
NYSE Composite 6,814.76, +31.25 (0.46%)
In spite of the late-session tape-painting, advancing issues finished well ahead of decliners, 4619-1830. New highs broke through above new lows, 125-76, in a temporary reversal of the trend. Volume, however, was absolutely pathetic, the lowest in months.
NYSE Volume 4,672,237,500.00
NASDAQ Volume 1,731,446,375.00
Crude oil sold off, losing $1.49, to $73.99, which made sense in light of the sour retail figures. Precious metals were split, with gold gaining $5.70, to $1,228.10, while silver dipped 12 cents, to $18.24.
Looking ahead to next week, trading decisions will be led largely by out-of-market forces, those being the situation the in Gulf, the debt contagion in Europe and the advancement of the Financial Reform bill in congress, though mid-week economic data, including PPI, CPI, industrial production, capacity utilization and housing starts may provide some surprises.
Investors were stunned prior to the opening bell on Friday with a report on May retail sales that showed Americans spending at a rate 1.2% lower than in April. The news was another disconcerting data point for the bulls, coming just a week after the unnerving non farm payroll report which quite graphically demonstrated that the "recovery" had ceased creating jobs in the private sector, if it was even creating any at all prior to May.
The little piece of news wasn't at all expected by the expert economists who track - or, apparently guess at - these kinds of things, who were looking for a gain in retail sales in the neighborhood of 0.2%. The stark difference between expectations and reality points up just how juiced the media has been with all the phony recovery talk over the past six months.
Anybody who simply lives in an average American community can see for themselves that business conditions are not optimal. Stores in retail strip malls and spaces in enclosed malls go begging for tenants, jobs are hard to come by and state and local governments are dealing with budget deficits brought on by lower tax receipts and shrinking tax revenues, all effects of the recession and the lack of a powerful recovery.
Wall Street is about the only place in the country which seems to be of the opinion that all's well in the USA and the economy, though the recent declines in the market make clear that not everyone is euphoric over future prospects. The headwinds of future taxation, continued high unemployment and a critically ill housing market are beginning to take their tolls on even the most ardent bulls.
Strains in the European Union banking complex and the continuous flow of oil from deep beneath the Gulf of Mexico - putting thousands of shrimpers, clammers and fishermen out of work - certainly aren't helping matters.
As inexplicable as Thursday's rally was, today's late-day trade was equally out-of-the-blue. The Dow, which had, along with the S&P, spent nearly the entire session in negative territory, tacked on 75 points in the final three-quarters of the hour, helping push all the indices into plus territory. Once again, organized trading by a consortium of insiders or perhaps machine-driven, stocks ran counter-trend late in the day.
Dow 10,211.07, +38.54 (0.38%)
NASDAQ 2,243.60, +24.89 (1.12%)
S&P 500 1,091.60, +4.76 (0.44%)
NYSE Composite 6,814.76, +31.25 (0.46%)
In spite of the late-session tape-painting, advancing issues finished well ahead of decliners, 4619-1830. New highs broke through above new lows, 125-76, in a temporary reversal of the trend. Volume, however, was absolutely pathetic, the lowest in months.
NYSE Volume 4,672,237,500.00
NASDAQ Volume 1,731,446,375.00
Crude oil sold off, losing $1.49, to $73.99, which made sense in light of the sour retail figures. Precious metals were split, with gold gaining $5.70, to $1,228.10, while silver dipped 12 cents, to $18.24.
Looking ahead to next week, trading decisions will be led largely by out-of-market forces, those being the situation the in Gulf, the debt contagion in Europe and the advancement of the Financial Reform bill in congress, though mid-week economic data, including PPI, CPI, industrial production, capacity utilization and housing starts may provide some surprises.
Thursday, June 10, 2010
Sucker Rally, Part Two: Rally 'Round BP
Whatever yesterday's steep sell-off was about, today's gap-up rally was about making up lost ground, in a hurry.
The Dow Jones Industrials gapped up at the open - once again shutting out all but the insider firms - 150 points, and by 10:00 am, it was up nearly 250. This kind of quick-start rally doesn't occur in a vacuum, so most of the clueless analysts attributed the rise to explosive numbers coming out of China, saying that exports increased at a rate of 48.5% year-over-year.
Suffice it to say that nobody wanted to mention that a year ago, exports were at an absolute nadir, Chinese officials were doing their best to control riotous laid-off workers and that global trading conditions were abysmal. Some comparisons, especially those which favor the bullish case, are almost always kept out of view, as was the case today.
Concerns over the sudden revitalization of stock-buying fervor were put on the back burner for the day, allowing investors to bask in the glow of at least some temporary relief to what has been a relentless decline since the beginning of May, and that's why bear market rallies are never useful barometers of market health. This one, like all others, will be soon forgotten, for it is only speculative and quite possibly just a trading phenomenon, likely linked to options expiration only a week away.
Besides the obvious rallying around poor, misunderstood British Petroleum (BP), financial stocks also rallies, perhaps on suspicion that congressional debate on financial regulation seems to be going the way the bankers would like, toward a watered-down bill that is nothing more than cosmetic, allowing the political class to find some cover heading into the fall election cycle.
The pols have their hands in the banks' pockets and vice versa, so don't expect anything hard-hitting to come of "FinReg," despite the inclusion of Senator Blanche Lincoln's controversial derivatives proposal, which threatens to drive as much as 30% of large bank profits overseas. The bill is in the hands of the conference committee, chaired by Barney Frank, which will reconcile differences between the Senate and House versions.
So, was this the mother of all sucker rallies, or does this mark the end of the month-long decline in equities and the beginning of a new bull run?
The jury's still out, but consider, if you will, the key numbers that will tell the story in coming days. On Friday, June 4, after the non farms payroll report showed little progress in private sector employment, stocks sank to a closing low of 9931.97 on the Dow and 1064.88 on the S&P. The follow-on sell-off Monday, June 7, saw the Dow close below the previous interim low (February 8), finishing at 9816.49. The S&P likewise closed below its previous low, ending the day at 1050.47.
Bottom pierced, any chartist with rudimentary skills would have promoted the idea that further downside risk was being telegraphed. Then came Tuesday's sharp rally, Wednesday's failed rally and today's super rally, on low volume, and on suspect news from - of all places - China. To believe that strength in Chinese markets somehow translates to good news for US firms requires a requisite leap of faith, when the obvious truth was that this rally was really all about saving the prospects of BP, the incomes of one out of seven British pensioners, and keeping the world awash in crude oil (both figuratively and, in the Gulf, literally).
For the bulls, their new targets are 11,205.03 on the Dow and 1217.28 on the S&P, somewhat of a stretch from where stocks have currently settled. Even from today's lofty closing values, a rally of 11% would be needed to return to the previous highs, whereas a decline of just 3.5% would send the two main indices back below their recently-achieved bottoms.
Sideways trading leaves us in a state of suspended animation, though investors will be mulling the news from the BP oil gusher and Europe's deteriorating debt condition over the next four weeks prior to earnings season, which could be a bellwether or a Waterloo, depending on results. Chances still seem to favor the bearish case, with much of this week's trading being perceived as mere "noise."
Dow 10,172.53, +273.28 (2.76%)
NASDAQ 2,218.71, +59.86 (2.77%)
S&P 500 1,086.84, +31.15 (2.95%)
NYSE Composite 6,783.53, +223.82 (3.41%)
As expected on such a huge upside move, advancers dominated decliners, 5550-1011, though new lows maintained their edge over new highs, 120-104. That, and low volume, are very telling signals to where the market is intended.
NYSE Volume 5,718,455,000.00
NASDAQ Volume 2,023,046,625.00
Oil gained again today, picking up $1.07, to $75.45. Gold fell for the second straight day, down $7.70, to $1,220.80, with silver up 18 cents, to $18.34. Confusing variations in the commodity space lends credence to the directionless market theory and to a resumption of the bearish case in short order.
Goldman Sachs (GS) was under pressure again today as the SEC began examining another mortgage investment for potential fraud - Hudson Mezzanine - and was hit with a $1 billion lawsuit from Basis Capital, an Australian hedge fund that invested in Timberwolf, an MBS that Goldman sold in 2007. The troubles just keep mounting on the investment bank everyone loves to hate.
The Dow Jones Industrials gapped up at the open - once again shutting out all but the insider firms - 150 points, and by 10:00 am, it was up nearly 250. This kind of quick-start rally doesn't occur in a vacuum, so most of the clueless analysts attributed the rise to explosive numbers coming out of China, saying that exports increased at a rate of 48.5% year-over-year.
Suffice it to say that nobody wanted to mention that a year ago, exports were at an absolute nadir, Chinese officials were doing their best to control riotous laid-off workers and that global trading conditions were abysmal. Some comparisons, especially those which favor the bullish case, are almost always kept out of view, as was the case today.
Concerns over the sudden revitalization of stock-buying fervor were put on the back burner for the day, allowing investors to bask in the glow of at least some temporary relief to what has been a relentless decline since the beginning of May, and that's why bear market rallies are never useful barometers of market health. This one, like all others, will be soon forgotten, for it is only speculative and quite possibly just a trading phenomenon, likely linked to options expiration only a week away.
Besides the obvious rallying around poor, misunderstood British Petroleum (BP), financial stocks also rallies, perhaps on suspicion that congressional debate on financial regulation seems to be going the way the bankers would like, toward a watered-down bill that is nothing more than cosmetic, allowing the political class to find some cover heading into the fall election cycle.
The pols have their hands in the banks' pockets and vice versa, so don't expect anything hard-hitting to come of "FinReg," despite the inclusion of Senator Blanche Lincoln's controversial derivatives proposal, which threatens to drive as much as 30% of large bank profits overseas. The bill is in the hands of the conference committee, chaired by Barney Frank, which will reconcile differences between the Senate and House versions.
So, was this the mother of all sucker rallies, or does this mark the end of the month-long decline in equities and the beginning of a new bull run?
The jury's still out, but consider, if you will, the key numbers that will tell the story in coming days. On Friday, June 4, after the non farms payroll report showed little progress in private sector employment, stocks sank to a closing low of 9931.97 on the Dow and 1064.88 on the S&P. The follow-on sell-off Monday, June 7, saw the Dow close below the previous interim low (February 8), finishing at 9816.49. The S&P likewise closed below its previous low, ending the day at 1050.47.
Bottom pierced, any chartist with rudimentary skills would have promoted the idea that further downside risk was being telegraphed. Then came Tuesday's sharp rally, Wednesday's failed rally and today's super rally, on low volume, and on suspect news from - of all places - China. To believe that strength in Chinese markets somehow translates to good news for US firms requires a requisite leap of faith, when the obvious truth was that this rally was really all about saving the prospects of BP, the incomes of one out of seven British pensioners, and keeping the world awash in crude oil (both figuratively and, in the Gulf, literally).
For the bulls, their new targets are 11,205.03 on the Dow and 1217.28 on the S&P, somewhat of a stretch from where stocks have currently settled. Even from today's lofty closing values, a rally of 11% would be needed to return to the previous highs, whereas a decline of just 3.5% would send the two main indices back below their recently-achieved bottoms.
Sideways trading leaves us in a state of suspended animation, though investors will be mulling the news from the BP oil gusher and Europe's deteriorating debt condition over the next four weeks prior to earnings season, which could be a bellwether or a Waterloo, depending on results. Chances still seem to favor the bearish case, with much of this week's trading being perceived as mere "noise."
Dow 10,172.53, +273.28 (2.76%)
NASDAQ 2,218.71, +59.86 (2.77%)
S&P 500 1,086.84, +31.15 (2.95%)
NYSE Composite 6,783.53, +223.82 (3.41%)
As expected on such a huge upside move, advancers dominated decliners, 5550-1011, though new lows maintained their edge over new highs, 120-104. That, and low volume, are very telling signals to where the market is intended.
NYSE Volume 5,718,455,000.00
NASDAQ Volume 2,023,046,625.00
Oil gained again today, picking up $1.07, to $75.45. Gold fell for the second straight day, down $7.70, to $1,220.80, with silver up 18 cents, to $18.34. Confusing variations in the commodity space lends credence to the directionless market theory and to a resumption of the bearish case in short order.
Goldman Sachs (GS) was under pressure again today as the SEC began examining another mortgage investment for potential fraud - Hudson Mezzanine - and was hit with a $1 billion lawsuit from Basis Capital, an Australian hedge fund that invested in Timberwolf, an MBS that Goldman sold in 2007. The troubles just keep mounting on the investment bank everyone loves to hate.
Wednesday, June 9, 2010
The Sucker Rally that Was; Bernanke Spins Congress; BP Might Mean Bankruptcy Proceedings
The sharp rally which comprised much of the past two sessions ended abruptly at 11:30 am ET today. The Dow Jones was up by 125 points on the day, and including Tuesday's sharp, 123-point gain, had added 248 points in less than one and a half sessions, typical of short-run, bear market rallies, of which this was the garden variety.
News flow had little to do with Wall Street's dithering and eventual compromise to drift prices of stocks lower. Pricing power being non-existent in almost all asset classes, going down is becoming something of a fad across all parts of the spending spectrum. From meat prices to fuel to interest rates to stocks and even what brokerages charge to buy and sell them, everything is going down - not exactly in flames, but in spurts and fits - in the essential unwinding that has been underway from the piercing of the banking and mortgage bubble in 2007.
Chairman Ben Bernanke had some nondescript comments on the economy before the House Budget Committee, saying things like, the economy is not growing "as fast as we would like," and that the Fed was prepared to counter an ill effects of the current debt and liquidity crisis overhanging the entire European continent. Berhanke's little speech and answering of various questions from house members didn't really supply much reassurance; rather, the Chairman's tone was measured and a bit downbeat. He, like many in the financial industry and government regulatory bodies, seems to have been worn down by more than two years of continuous strain. The Fed has managed itself into a box, as has congress, Wall Street and much of the macro players in the global economy.
While growth is the desired result, policy decisions have not made any noticeable dent in either the residential housing market nor the unemployment condition. Economies worldwide seem to be running in place, turning dials and lifting levers here and there, all seemingly without much effect. Such is the nature of a long, slowly-developing deflation. Monied types don't like seeing asset values decline, and resist at all levels while consumers reap the benefits of lower costs across a range of products and services.
All the trillions spent trying to maintain the status quo in the banking and political circles has come to naught. It has begun to dawn upon even people as supposedly smart as CEOs, investment bankers and even Fed chairmen that there is no quick fix - if there's even a fix at all - to a global debt blowout. The solution eventually involves winding down bad assets, notes, investments and businesses, moving to a cash basis instead of reliance on debt and generally finding a base from which to restart.
Unfortunately for Wall Street and most governments, those bottoms have not yet been plumbed. Main Street, on the other hand, has used its usual combination of savvy, street smarts and determination to make do with whatever is available, a condition largely seen among the smallest of small businesses, which are flourishing amid sour conditions.
Former employees of large corporations are striking out on their own, homeowners are weighing the relative advantages of owning a home (and paying their mortgage) or letting it go and renting at more reasonable rates. In terms of the housing market, the situation is fluid. As more homeowners default - by choice or out of necessity - the value of homes overall falls. As the value of housing declines, so do rents, though this process is somewhat artificially slowed by taxes and government subsidized rents, keeping home prices and rents anywhere from six months to two years behind the curve.
As with every economic convulsion, there are winners and losers, heroes and villains, survivors and victims. Until now, the banks, bailed out by the federal government's use of taxpayer money, seemed to have been the winners, though the tide has now turned. From here on, until this economic calamity runs its course over the next three to five years, small business, individuals and entrepreneurs with guts and courage will carry the day.
Since banks are going to do what it is they always do when they fear the worst, that being the unbridled stupidity of tightening lending standards beyond reasonable terms, and governments will do what they always do at similarly-critical times: cut payrolls and raise taxes, those who understand local markets and can initiate business without the need of bank financing will prosper.
In the long run, it is the people who will survive, not banks, nor governments, nor unscrupulous intermediaries. Everybody needs a place to live and a means of support. The failings of globalization, banking and semi-regulated markets are being exposed for all to see. Individuals will manage as best they can without paying heed to any edicts of authority, be they from government, financial institutions or media.
What the general market, guided by GDP forecasts, can most reasonably hope for, is growth in the range of one to two percent over the next four to six quarters, though the fear that another downturn (double dip) could occur has morphed from mere speculation to generalized apprehension. One percent growth should be considered a positive development; of course, wall Street will see that in an entirely different light.
Dow 9,899.25, -40.73 (0.41%)
NASDAQ 2,158.85, -11.72 (0.54%)
S&P 500 1,055.69, -6.31 (0.59%)
NYSE Composite 6,559.71, -36.41 (0.55%)
Advancing issues beat decliners by the slimmest of margins, 3244-3210, though new lows exceeded new highs once again, 187-94, a trend which should continue for some time, as year-ago comparisons off the March, 2009 bottom are not favorable to breakouts in the upper range. Volume was flat as downside risk re-emerged.
NYSE Volume 7,101,356,500
NASDAQ Volume 2,146,749,250
Crude oil was just about the only winner on the day, gaining 2.39, to $74.38. Gold slipped $15.70 on profit-taking, to 1,229.90, while silver was not as badly damaged, losing 19 cents, to $18.19.
British Petroleum (BP) was under pressure once again, amid speculation the the company may seek bankruptcy protection and/or suspend its dividend payable in late July. The stock lost another 15% in value, dropping to a 14-year low.
News flow had little to do with Wall Street's dithering and eventual compromise to drift prices of stocks lower. Pricing power being non-existent in almost all asset classes, going down is becoming something of a fad across all parts of the spending spectrum. From meat prices to fuel to interest rates to stocks and even what brokerages charge to buy and sell them, everything is going down - not exactly in flames, but in spurts and fits - in the essential unwinding that has been underway from the piercing of the banking and mortgage bubble in 2007.
Chairman Ben Bernanke had some nondescript comments on the economy before the House Budget Committee, saying things like, the economy is not growing "as fast as we would like," and that the Fed was prepared to counter an ill effects of the current debt and liquidity crisis overhanging the entire European continent. Berhanke's little speech and answering of various questions from house members didn't really supply much reassurance; rather, the Chairman's tone was measured and a bit downbeat. He, like many in the financial industry and government regulatory bodies, seems to have been worn down by more than two years of continuous strain. The Fed has managed itself into a box, as has congress, Wall Street and much of the macro players in the global economy.
While growth is the desired result, policy decisions have not made any noticeable dent in either the residential housing market nor the unemployment condition. Economies worldwide seem to be running in place, turning dials and lifting levers here and there, all seemingly without much effect. Such is the nature of a long, slowly-developing deflation. Monied types don't like seeing asset values decline, and resist at all levels while consumers reap the benefits of lower costs across a range of products and services.
All the trillions spent trying to maintain the status quo in the banking and political circles has come to naught. It has begun to dawn upon even people as supposedly smart as CEOs, investment bankers and even Fed chairmen that there is no quick fix - if there's even a fix at all - to a global debt blowout. The solution eventually involves winding down bad assets, notes, investments and businesses, moving to a cash basis instead of reliance on debt and generally finding a base from which to restart.
Unfortunately for Wall Street and most governments, those bottoms have not yet been plumbed. Main Street, on the other hand, has used its usual combination of savvy, street smarts and determination to make do with whatever is available, a condition largely seen among the smallest of small businesses, which are flourishing amid sour conditions.
Former employees of large corporations are striking out on their own, homeowners are weighing the relative advantages of owning a home (and paying their mortgage) or letting it go and renting at more reasonable rates. In terms of the housing market, the situation is fluid. As more homeowners default - by choice or out of necessity - the value of homes overall falls. As the value of housing declines, so do rents, though this process is somewhat artificially slowed by taxes and government subsidized rents, keeping home prices and rents anywhere from six months to two years behind the curve.
As with every economic convulsion, there are winners and losers, heroes and villains, survivors and victims. Until now, the banks, bailed out by the federal government's use of taxpayer money, seemed to have been the winners, though the tide has now turned. From here on, until this economic calamity runs its course over the next three to five years, small business, individuals and entrepreneurs with guts and courage will carry the day.
Since banks are going to do what it is they always do when they fear the worst, that being the unbridled stupidity of tightening lending standards beyond reasonable terms, and governments will do what they always do at similarly-critical times: cut payrolls and raise taxes, those who understand local markets and can initiate business without the need of bank financing will prosper.
In the long run, it is the people who will survive, not banks, nor governments, nor unscrupulous intermediaries. Everybody needs a place to live and a means of support. The failings of globalization, banking and semi-regulated markets are being exposed for all to see. Individuals will manage as best they can without paying heed to any edicts of authority, be they from government, financial institutions or media.
What the general market, guided by GDP forecasts, can most reasonably hope for, is growth in the range of one to two percent over the next four to six quarters, though the fear that another downturn (double dip) could occur has morphed from mere speculation to generalized apprehension. One percent growth should be considered a positive development; of course, wall Street will see that in an entirely different light.
Dow 9,899.25, -40.73 (0.41%)
NASDAQ 2,158.85, -11.72 (0.54%)
S&P 500 1,055.69, -6.31 (0.59%)
NYSE Composite 6,559.71, -36.41 (0.55%)
Advancing issues beat decliners by the slimmest of margins, 3244-3210, though new lows exceeded new highs once again, 187-94, a trend which should continue for some time, as year-ago comparisons off the March, 2009 bottom are not favorable to breakouts in the upper range. Volume was flat as downside risk re-emerged.
NYSE Volume 7,101,356,500
NASDAQ Volume 2,146,749,250
Crude oil was just about the only winner on the day, gaining 2.39, to $74.38. Gold slipped $15.70 on profit-taking, to 1,229.90, while silver was not as badly damaged, losing 19 cents, to $18.19.
British Petroleum (BP) was under pressure once again, amid speculation the the company may seek bankruptcy protection and/or suspend its dividend payable in late July. The stock lost another 15% in value, dropping to a 14-year low.
Tuesday, June 8, 2010
Stocks Gain in Late Day Trade on Technical Bounce
After taking the deepest extended dive in over a year, there's little surprise that a few days like today would eventually emerge. After all, nothing moves in straight lines, as much as we'd like them to, so the orderly evaporation of wealth requires the occasional speculative upside trade and the covering of shorts.
There was no good news upon which the market could hang a hat today; indeed, there was little to no news whatsoever. Thus, the strong gains of Tuesday cna be seen clearly for what they are: a purely technical response to very short-term oversold conditions. In layman's terms, today was the bounce that failed to materialize on Monday.
Dow 9,939.98, +123.49 (1.26%)
NASDAQ 2,170.57, -3.33 (0.15%)
S&P 500 1,062.00, +11.53 (1.10%)
NYSE Composite 6,596.12, +83.70 (1.29%)
Advancing issues took back the advantage over decliners, though narrowly, 3389-3114. More important to the direction going forward was the revealing win for new lows over new highs, 345-81. Both the A/D line and Low-high figures tell us in no uncertain terms that bias is still strongly negative and that short term bearish condition remain intact. Volume was strong, that being the only indicator to somewhat counter the general trend against the headline.
NYSE Volume 7,335,040,500.00
NASDAQ Volume 2,660,945,000.00
Crude oil posted a reasonable gain of 55 cents, closing at $71.99, still stuck in a range between $67 and $76, where it has generally been found for the past ten months. There's little to suggest movement of oil in either direction, unless widespread economic slowdown dramatically reduced demand, and thus, price.
Gold reached all-time intra-day and closing highs, finishing at $1,244.00, up $4.70. Silver gained as well, adding 32 cents, to $18.47, though that is still well below the 2008 all-time high. Silver continues to lag gold, as the latter is in a more favorable position as an alternative to fiat money.
Some of the most interesting action is currently in bonds and currencies, both markets the province of specialists and professionals, hardly the place for individuals, despite what aggressive ad campaigns may be touting. US Treasuries and German Bunds have become safe-havens for those fearful of the future of equity markets, while denominations in anything but Euros seems to have become the most-favored trade in the currency community.
With Euro contagion spreading like wildfire from Greece to Spain to Turkey to Ireland, many question the overall validity of the 12-year-old currency experiment which aimed to become a unified force to counteract the willful US Dollar. The value of the Euro vis-a-vis the US Dollar is now roughly where it began back in 1998, right around the $1.18 mark. Highlighting the situation in Europe was a Sunday Telegraph article over the weekend that saw a majority of British economists express an opinion that the Euro would cease to exist within the next five years, quite a dire prediction and one that just months ago would have been considered lunacy.
Joining the lunacy-to-reality progression is British Petroleum (BP), now on the hook for billions of dollars in damages stemming from the continuous leakage of oil into the Gulf of Mexico. BP was added to our Death Spiral Watch List last week.
The latest salvo in the reality check department comes from oil expert Matthew Simmons, who appeared on CNBC's Fast Money Tuesday afternoon, saying that he'd be surprised if BP lasted the summer as a going concern.
Simmons also appeared on MSNBC's Dylan Ratigan Show. Here is the segment of video in which he outlines various doomsday-like outcomes.
BP closed down 2.08 today, at 34.68.
Joining BP on the Death Spiral Watch List from last week was eBay, an unlikely choice to some, though obvious to those in the know. Prior to full implementation of the latest of CEO John Donahoe's "disruptive innovations", eBay closed the trading session of March 25 at 27.56. Despite a small gain on the day, eBay ended today at 21.69, representing a 21% haircut in about 2 1/2 months' time.
Price targets on both companies are actually ZERO, though for the sake of argument, we put an expected price of $4 on ebay and $6 on BP. We expect both to go under within 6-18 months.
There was no good news upon which the market could hang a hat today; indeed, there was little to no news whatsoever. Thus, the strong gains of Tuesday cna be seen clearly for what they are: a purely technical response to very short-term oversold conditions. In layman's terms, today was the bounce that failed to materialize on Monday.
Dow 9,939.98, +123.49 (1.26%)
NASDAQ 2,170.57, -3.33 (0.15%)
S&P 500 1,062.00, +11.53 (1.10%)
NYSE Composite 6,596.12, +83.70 (1.29%)
Advancing issues took back the advantage over decliners, though narrowly, 3389-3114. More important to the direction going forward was the revealing win for new lows over new highs, 345-81. Both the A/D line and Low-high figures tell us in no uncertain terms that bias is still strongly negative and that short term bearish condition remain intact. Volume was strong, that being the only indicator to somewhat counter the general trend against the headline.
NYSE Volume 7,335,040,500.00
NASDAQ Volume 2,660,945,000.00
Crude oil posted a reasonable gain of 55 cents, closing at $71.99, still stuck in a range between $67 and $76, where it has generally been found for the past ten months. There's little to suggest movement of oil in either direction, unless widespread economic slowdown dramatically reduced demand, and thus, price.
Gold reached all-time intra-day and closing highs, finishing at $1,244.00, up $4.70. Silver gained as well, adding 32 cents, to $18.47, though that is still well below the 2008 all-time high. Silver continues to lag gold, as the latter is in a more favorable position as an alternative to fiat money.
Some of the most interesting action is currently in bonds and currencies, both markets the province of specialists and professionals, hardly the place for individuals, despite what aggressive ad campaigns may be touting. US Treasuries and German Bunds have become safe-havens for those fearful of the future of equity markets, while denominations in anything but Euros seems to have become the most-favored trade in the currency community.
With Euro contagion spreading like wildfire from Greece to Spain to Turkey to Ireland, many question the overall validity of the 12-year-old currency experiment which aimed to become a unified force to counteract the willful US Dollar. The value of the Euro vis-a-vis the US Dollar is now roughly where it began back in 1998, right around the $1.18 mark. Highlighting the situation in Europe was a Sunday Telegraph article over the weekend that saw a majority of British economists express an opinion that the Euro would cease to exist within the next five years, quite a dire prediction and one that just months ago would have been considered lunacy.
Joining the lunacy-to-reality progression is British Petroleum (BP), now on the hook for billions of dollars in damages stemming from the continuous leakage of oil into the Gulf of Mexico. BP was added to our Death Spiral Watch List last week.
The latest salvo in the reality check department comes from oil expert Matthew Simmons, who appeared on CNBC's Fast Money Tuesday afternoon, saying that he'd be surprised if BP lasted the summer as a going concern.
Simmons also appeared on MSNBC's Dylan Ratigan Show. Here is the segment of video in which he outlines various doomsday-like outcomes.
BP closed down 2.08 today, at 34.68.
Joining BP on the Death Spiral Watch List from last week was eBay, an unlikely choice to some, though obvious to those in the know. Prior to full implementation of the latest of CEO John Donahoe's "disruptive innovations", eBay closed the trading session of March 25 at 27.56. Despite a small gain on the day, eBay ended today at 21.69, representing a 21% haircut in about 2 1/2 months' time.
Price targets on both companies are actually ZERO, though for the sake of argument, we put an expected price of $4 on ebay and $6 on BP. We expect both to go under within 6-18 months.
Monday, June 7, 2010
This Cat Can't Bounce
Editor's Note: It's just a few minutes before 2:00 pm on the East Coast, and with markets little changed from their opening levels, I'm confident in my title for this post. After Friday's jobs report post-mortem, this market is due to fall at least another 10% from here, though it's unlikely to do so today. Owing to commitments (Monday golf league), Monday's edition of Money Daily will be delayed until about 9:00 pm EDT from today until mid-October.
Dow 9,816.49 115.48 (1.16%)
NASDAQ 2,173.90 45.27 (2.04%)
S&P 500 1,050.47 14.41 (1.35%)
NYSE Compos 6,512.42 87.85 (1.33%)
Declining issues overwhelmed advancers, 5032-1552. New lows trounced new highs, 268-76. Volume was higher than most of the last two weeks, though hardly overdone. The clear signal is that selling continues, or, the next wave of selling has begun.
NYSE Volume 6,385,006,500
NASDAQ Volume 2,222,428,000
Oil dipped an ever-so-slight four cents, to $71.44. Gold rocketed higher by $23.10, to $1,239.30, approaching all-time highs. Silver exploded higher by 5%, to $18.15, a gain of 86 cents.
Without a doubt, investors are nervous and unwilling to hold anything but gilded assets, though few are available. The major averages are at their lows of the year, having pierced support levels long ago and again today in grand fashion. A full resumption of the bear market is upon us. Equities should be disposed of as quickly as possible, if you're actually stuid enough to be holding any. Valuations are out the window as risk has resurfaced in every conceivable manner.
Cash, land, and tools of trades are all that should comprise a proper portfolio.
My golf game is poor (55 for 9 holes, bordering on embarrassing), but it shines in comparison to every technical and fundamental measure of global equity markets. Stocks today are generally overvalued or mispriced.
Dow 9,816.49 115.48 (1.16%)
NASDAQ 2,173.90 45.27 (2.04%)
S&P 500 1,050.47 14.41 (1.35%)
NYSE Compos 6,512.42 87.85 (1.33%)
Declining issues overwhelmed advancers, 5032-1552. New lows trounced new highs, 268-76. Volume was higher than most of the last two weeks, though hardly overdone. The clear signal is that selling continues, or, the next wave of selling has begun.
NYSE Volume 6,385,006,500
NASDAQ Volume 2,222,428,000
Oil dipped an ever-so-slight four cents, to $71.44. Gold rocketed higher by $23.10, to $1,239.30, approaching all-time highs. Silver exploded higher by 5%, to $18.15, a gain of 86 cents.
Without a doubt, investors are nervous and unwilling to hold anything but gilded assets, though few are available. The major averages are at their lows of the year, having pierced support levels long ago and again today in grand fashion. A full resumption of the bear market is upon us. Equities should be disposed of as quickly as possible, if you're actually stuid enough to be holding any. Valuations are out the window as risk has resurfaced in every conceivable manner.
Cash, land, and tools of trades are all that should comprise a proper portfolio.
My golf game is poor (55 for 9 holes, bordering on embarrassing), but it shines in comparison to every technical and fundamental measure of global equity markets. Stocks today are generally overvalued or mispriced.
Friday, June 4, 2010
Disappointing Jobs Data Destroys Stocks
While one hates to gloat over predictable bad news, that's the condition in which I find myself at the close of the Friday session.
Not only have I been lambasting politicians and stock jockeys for months that the "recovery" was nothing more than an illusion created by lazy media and a crooked, manipulated, insider-trading Wall Street machine, but I also pointed out yesterday - and the month before, and for many months before that - that the ADP private sector employment numbers were more realistic than those released by the government.
When the BLS put out its monthly non farm payroll report at 8:30 am, it was as though somebody had shot a cannonball through the front of the NY Stock exchange building. Traders went scurrying for cover as quickly as they could, primarily because what they were led to believe was going to be a positive report, showing robust job creation in America during the month of May, turned out to be such a big-time stinker that all bets on economic recovery were put onto back burners or otherwise discarded.
The government showed a gain of 431,000 jobs for the month of May, but 411,000 of those were temporary hires related to completing the 2010 census, and even those jobs fell under considerable scrutiny later in the day as analysts began scouring around for a supposed army of nearly 1/2 million census workers. These workers were ostensibly hired to piece together missing data in the simple census form which was mailed to millions of homes back in February and March.
Simple math alone tells us that these 411,000 "workers" would have to individually count a total of about 750 people each to get around to the number of people in America, a job that should take maybe a week. We're told that many of these temporary census workers will be on the job until sometime in the fall, meaning that, like most government work, they'll just have to do little more than show up in order to get paid. Maybe I'm old-fashioned, but hiring 400,000 people for three months to do head-counting seems a little extreme, especially given that most (something on the order of 60%) Americans sent their census forms in through the mail, as required.
Besides the absurdity of the census, misleading statements by both the president and vice president earlier this week, and by once-again discredited Goldman Sachs' analyst Jan Hatzius, who predicted on Thursday that the May figure would come in at 600,000, there are some questions of impropriety which likely will never be addressed, including why the two top officials in this administration and an analyst working for a Wall Street firm under investigation for fraud, would so willingly lead people to believe that the jobs figure would be a solid one?
Not to jump on the conspiracy bandwagon wearing a tin-foil hat, but after government has shown an unseemly willingness to do whatever the lords of Wall Street seem to want, the old qui bono? (who benefits?) must be on the mind of more Americans than just little old me.
Whatever the case, the horrible jobs report, even though it was the most jobs created in one month since March 2003, was so pathetically bad that investors, traders and fund managers got very busy, dumping stocks all day long.
Dow 9,931.97, -323.31 (3.15%)
NASDAQ 2,219.17, -83.86 (3.64%)
S&P 500 1,064.88, -37.95 (3.44%)
NYSE Composite 6,600.28, -260.11 (3.79%)
Declining issues swallowed up advancers in a sea of red, 5786-796, or a better than 6:1 ratio, and new lows took back the advantage from new highs, 173-93. Volume was elevated to levels not seen in over a week, but nothing extreme, leading one to believe that a lot of smart sellers were already out of the way before the jobs data was released.
NYSE Volume 7,241,763,000
NASDAQ Volume 2,338,401,500
Oil was slammed, losing $3.10, to $71.51. Gold gained $7.90, to $1,216.20, but silver a a major loser, down 63 cents (3 1/2%) to $17.29.
Damage inflicted on holders of equities was severe. The Dow suffered its fifth weekly loss in the last six, and finished at its lowest point since February 8, 2010, though markets now appear poised to take out even lower levels. With so many investors sucked into the recovery mantra, economic data over the next four to five weeks will be crucial, leading up to an even more critical 2nd quarter earnings season.
More troubling news came from Europe, with Hungary now suggesting it is close to sovereign default, putting more pressure on the Euro, which fell below 1.20 to the dollar, a level not seen since 2006. The global debt crisis still not anywhere near resolution, expectations from honest economists are for significant slowing of global growth, especially among developed nations.
Rosy projections for 3.5 to 4% growth in US GDP for the year are being reassessed due to evidence that the recovery - if one eve exists at all - will be sluggish at best.
Holders of gold, cash and tools of trades should pat themselves on their collective backs on days like today, but not too vigorously, as more of them are likely to occur during the next 18 to 36 months.
Sorry to sound so negative on a lovely Friday afternoon, but facts are facts, and the US government has dug us a hole of debt so deep as to undermine the very existence of what would be considered a normal, functioning economy. Other developed nations, particularly those in the Euro-zone, have done similar harm to their own economies, We continue to wade through the throes of an enormously deflationary event, caused by 25 years of profligate spending by governments, businesses and households alike.
Two types of belts are encouraged. One for tightening, and another, of your favorite pain-relieving decoction.
Not only have I been lambasting politicians and stock jockeys for months that the "recovery" was nothing more than an illusion created by lazy media and a crooked, manipulated, insider-trading Wall Street machine, but I also pointed out yesterday - and the month before, and for many months before that - that the ADP private sector employment numbers were more realistic than those released by the government.
When the BLS put out its monthly non farm payroll report at 8:30 am, it was as though somebody had shot a cannonball through the front of the NY Stock exchange building. Traders went scurrying for cover as quickly as they could, primarily because what they were led to believe was going to be a positive report, showing robust job creation in America during the month of May, turned out to be such a big-time stinker that all bets on economic recovery were put onto back burners or otherwise discarded.
The government showed a gain of 431,000 jobs for the month of May, but 411,000 of those were temporary hires related to completing the 2010 census, and even those jobs fell under considerable scrutiny later in the day as analysts began scouring around for a supposed army of nearly 1/2 million census workers. These workers were ostensibly hired to piece together missing data in the simple census form which was mailed to millions of homes back in February and March.
Simple math alone tells us that these 411,000 "workers" would have to individually count a total of about 750 people each to get around to the number of people in America, a job that should take maybe a week. We're told that many of these temporary census workers will be on the job until sometime in the fall, meaning that, like most government work, they'll just have to do little more than show up in order to get paid. Maybe I'm old-fashioned, but hiring 400,000 people for three months to do head-counting seems a little extreme, especially given that most (something on the order of 60%) Americans sent their census forms in through the mail, as required.
Besides the absurdity of the census, misleading statements by both the president and vice president earlier this week, and by once-again discredited Goldman Sachs' analyst Jan Hatzius, who predicted on Thursday that the May figure would come in at 600,000, there are some questions of impropriety which likely will never be addressed, including why the two top officials in this administration and an analyst working for a Wall Street firm under investigation for fraud, would so willingly lead people to believe that the jobs figure would be a solid one?
Not to jump on the conspiracy bandwagon wearing a tin-foil hat, but after government has shown an unseemly willingness to do whatever the lords of Wall Street seem to want, the old qui bono? (who benefits?) must be on the mind of more Americans than just little old me.
Whatever the case, the horrible jobs report, even though it was the most jobs created in one month since March 2003, was so pathetically bad that investors, traders and fund managers got very busy, dumping stocks all day long.
Dow 9,931.97, -323.31 (3.15%)
NASDAQ 2,219.17, -83.86 (3.64%)
S&P 500 1,064.88, -37.95 (3.44%)
NYSE Composite 6,600.28, -260.11 (3.79%)
Declining issues swallowed up advancers in a sea of red, 5786-796, or a better than 6:1 ratio, and new lows took back the advantage from new highs, 173-93. Volume was elevated to levels not seen in over a week, but nothing extreme, leading one to believe that a lot of smart sellers were already out of the way before the jobs data was released.
NYSE Volume 7,241,763,000
NASDAQ Volume 2,338,401,500
Oil was slammed, losing $3.10, to $71.51. Gold gained $7.90, to $1,216.20, but silver a a major loser, down 63 cents (3 1/2%) to $17.29.
Damage inflicted on holders of equities was severe. The Dow suffered its fifth weekly loss in the last six, and finished at its lowest point since February 8, 2010, though markets now appear poised to take out even lower levels. With so many investors sucked into the recovery mantra, economic data over the next four to five weeks will be crucial, leading up to an even more critical 2nd quarter earnings season.
More troubling news came from Europe, with Hungary now suggesting it is close to sovereign default, putting more pressure on the Euro, which fell below 1.20 to the dollar, a level not seen since 2006. The global debt crisis still not anywhere near resolution, expectations from honest economists are for significant slowing of global growth, especially among developed nations.
Rosy projections for 3.5 to 4% growth in US GDP for the year are being reassessed due to evidence that the recovery - if one eve exists at all - will be sluggish at best.
Holders of gold, cash and tools of trades should pat themselves on their collective backs on days like today, but not too vigorously, as more of them are likely to occur during the next 18 to 36 months.
Sorry to sound so negative on a lovely Friday afternoon, but facts are facts, and the US government has dug us a hole of debt so deep as to undermine the very existence of what would be considered a normal, functioning economy. Other developed nations, particularly those in the Euro-zone, have done similar harm to their own economies, We continue to wade through the throes of an enormously deflationary event, caused by 25 years of profligate spending by governments, businesses and households alike.
Two types of belts are encouraged. One for tightening, and another, of your favorite pain-relieving decoction.
Thursday, June 3, 2010
Amidst Confusion, NASDAQ Gains; Jobs Data Looms
There are more than just a few trades riding on the release of tomorrow's BLS non farm payroll report for May. Estimates for the number of jobs created in the US economy during the month run the gamut from 250,000 to 600,000, the latter number suggested as a best guess by the intrepid mind of Jan Hatzius at Goldman Sachs, who has a history of being generally close, often far off, but almost always too optimistic.
The Hatzius estimate is anecdotally cute, in that he calls for private sector job growth of just 150,000, with the rest of the number comprised of temporary census hires.
A couple of hints as to how strong the job growth was during the month came from a few sources. On Wednesday, both President Obama and Vice President Biden hinted strongly in separate speeches that the figures would be substantial, but on Thursday, two real pieces of economic data, the ADP private sector report [PDF] and the weekly report of new and continuing unemployment claims, suggested something of the opposite.
The ADP report, which is generally reliable to be as accurate or even moreso than the overly-massaged government figures, pegged private sector job growth for May at a fairly tepid 55,000. Initial unemployment claims came in at 453,000, still stubbornly high, with continuing claims at 4.67 million, a staggering figure and suggestive that job creation simply isn't occurring in the private sector, or at least that permanent jobs are not being created.
Meanwhile, pesky problems such as the European debt crisis, the Gulf of Mexico oil slick, and China canceling a planned trip to the country by US Secretary of Defense Robert Gates, dogged investors throughout the session.
Stocks zig-zagged all over the map, with internals reflecting the rocky trading. The Dow was up 65 points early, down 75 points by midday, and rallied off the lows into the close for a fairly flat trade. The NASDAQ demonstrated leadership in energy and tech shares, the index positive throughout the session.
The NASDAQ is also the only one of the majors to show positive returns for the year.
Dow 10,255.28, +5.74 (0.06%)
NASDAQ 2,303.03, +21.96 (0.96%)
S&P 500 1,102.83, +4.45 (0.41%)
NYSE Composite 6,860.43, +20.82 (0.30%)
By the end of the session, advancers held a solid advantage over declining issues, 5015-2447, and new highs took back the edge over new lows, 154-70. Volume was light once again, as many traders have stepped away in advance of the non farm payroll report.
NYSE Volume 5,404,948,000.00
NASDAQ Volume 2,063,167,375.00
Commodities were mixed. Crude oil for July delivery gained $1.75, to $74.61, on a government report that showed a decrease in supply. The oddity of the oil market is its apparent one-way bias. During the winter, when the same weekly report as today's continually showed excess supply, the price advanced regardless. With supply down, it's logical for prices to rise, though the opposite should be true on oversupply, but it isn't.
Gold fell sharply, down one percent, or $12.30, to $1,208.30. Silver also lost ground, giving up 38 cents, to settle at $17.92.
As is usually the case the first week of any month, too much emphasis is being placed on the jobs data, especially considering that the numbers coming from government are often wildly off-the-mark and subject to massive revisions in future months.
After Wednesday's huge run-up and the flatness of Thursday's trade, it appears that a robust number has already been priced in, and traders could be in for a rout. The alternative, under consideration that the jobs numbers come in solid or surprisingly better than expected, is for investors and momentum players to swing sentiment to wildly optimistic and end the week with another mammoth gain.
Either scenario could emerge, though this may prove to be the economy's last stand before more realistic data confirms or denies the existence of any kind of recovery. From what's been shown thus far, the billions and trillions of dollars thrown into stimulus and for the sake of saving numerous financial institutions has produced at best a weak rebound.
The Hatzius estimate is anecdotally cute, in that he calls for private sector job growth of just 150,000, with the rest of the number comprised of temporary census hires.
A couple of hints as to how strong the job growth was during the month came from a few sources. On Wednesday, both President Obama and Vice President Biden hinted strongly in separate speeches that the figures would be substantial, but on Thursday, two real pieces of economic data, the ADP private sector report [PDF] and the weekly report of new and continuing unemployment claims, suggested something of the opposite.
The ADP report, which is generally reliable to be as accurate or even moreso than the overly-massaged government figures, pegged private sector job growth for May at a fairly tepid 55,000. Initial unemployment claims came in at 453,000, still stubbornly high, with continuing claims at 4.67 million, a staggering figure and suggestive that job creation simply isn't occurring in the private sector, or at least that permanent jobs are not being created.
Meanwhile, pesky problems such as the European debt crisis, the Gulf of Mexico oil slick, and China canceling a planned trip to the country by US Secretary of Defense Robert Gates, dogged investors throughout the session.
Stocks zig-zagged all over the map, with internals reflecting the rocky trading. The Dow was up 65 points early, down 75 points by midday, and rallied off the lows into the close for a fairly flat trade. The NASDAQ demonstrated leadership in energy and tech shares, the index positive throughout the session.
The NASDAQ is also the only one of the majors to show positive returns for the year.
Dow 10,255.28, +5.74 (0.06%)
NASDAQ 2,303.03, +21.96 (0.96%)
S&P 500 1,102.83, +4.45 (0.41%)
NYSE Composite 6,860.43, +20.82 (0.30%)
By the end of the session, advancers held a solid advantage over declining issues, 5015-2447, and new highs took back the edge over new lows, 154-70. Volume was light once again, as many traders have stepped away in advance of the non farm payroll report.
NYSE Volume 5,404,948,000.00
NASDAQ Volume 2,063,167,375.00
Commodities were mixed. Crude oil for July delivery gained $1.75, to $74.61, on a government report that showed a decrease in supply. The oddity of the oil market is its apparent one-way bias. During the winter, when the same weekly report as today's continually showed excess supply, the price advanced regardless. With supply down, it's logical for prices to rise, though the opposite should be true on oversupply, but it isn't.
Gold fell sharply, down one percent, or $12.30, to $1,208.30. Silver also lost ground, giving up 38 cents, to settle at $17.92.
As is usually the case the first week of any month, too much emphasis is being placed on the jobs data, especially considering that the numbers coming from government are often wildly off-the-mark and subject to massive revisions in future months.
After Wednesday's huge run-up and the flatness of Thursday's trade, it appears that a robust number has already been priced in, and traders could be in for a rout. The alternative, under consideration that the jobs numbers come in solid or surprisingly better than expected, is for investors and momentum players to swing sentiment to wildly optimistic and end the week with another mammoth gain.
Either scenario could emerge, though this may prove to be the economy's last stand before more realistic data confirms or denies the existence of any kind of recovery. From what's been shown thus far, the billions and trillions of dollars thrown into stimulus and for the sake of saving numerous financial institutions has produced at best a weak rebound.
Wednesday, June 2, 2010
Stocks Surging in Advance of Jobs, Retail Data
Apparently, market participants are of a mind that upcoming jobs reports, in the form of the May ADP private sector report, Thursday's usual unemployment claims and Friday's BLS non farm payroll report, will outweigh most of the other issues that have been dragging stocks lower recently.
Of course, it could all be a one-day burp in advance of Thursday's retail figures - expected to disappoint - for suckers, or be really nothing at all.
Stocks have been trading in a range, and the only key figure to keep a close eye upon is Dow 11,205.03. That's the most recent closing high, hit back on April 26. If the Dow cannot climb up to and surpass that mark, expect trading to become either range-bound or negative for an extended period. With earnings reports still 5-6 weeks in the future, there needs to be some kind of catalyst, and the gut feeling around here is that the negativity spewing out from the floor of the Gulf of Mexico - in addition to ongoing, overhanging debt fears globally - will be sufficient enough to keep investor optimism constrained.
Today's quick-hit rally, mostly occurring after 2:00 pm, has little meaning in the overall context, especially considering the oversold condition of the market. Another 300-400 points higher on the Dow would not be out of the question over the next two to three weeks, just as a continuation of the downdraft would surprise nobody.
Generally speaking, it's never a good idea to base very much on one day's trading. The remaining days of the week should provide more clarity.
Dow 10,249.54, +225.52 (2.25%)
NASDAQ 2,281.07, +58.74 (2.64%)
S&P 500 1,098.38, +27.67 (2.58%)
NYSE Composite 6,839.54, +178.44 (2.68%)
Advancers climbed all over decliners, 5353-1220, a 9:2 margin, though our tried and true indicator showed that new highs could not overwhelm new lows, which carried the day, 127-105. Though that margin is narrow, the trend of more new lows than new highs indicates that the market is meeting overhead resistance, and that the market is at least fully priced. Volume, low for the session for the fourth day in a row, indicates the lack of conviction, even in spite of today's outsized headline numbers.
NYSE Volume 5,837,430,000
NASDAQ Volume 2,171,016,000
Oil grabbed a negligible bid of 28 cents, gaining to $72.86. Gold sold off by $4.20, finishing in New York at $1,220.60. Silver was lower as well, losing 24 cents, to $18.30.
While today's gains were overall outstanding, they may be nothing more than an overreaction to a paucity of news, much of which has been bad of late. Bulls being what they are, the momentum could last until something comes along to derail it or send prices even higher, mostly a countertrend move inside overall bear market conditions.
There's also some divergence within the various indices. While the Dow and S&P still trade below their 200-day moving averages, the NASDAQ is poised above its 200 day MA. These conditions usually end up favoring the bearish camp in the long run, but the market being as unpredictable an animal as ever walked out of the jungle, anything is possible.
Of course, it could all be a one-day burp in advance of Thursday's retail figures - expected to disappoint - for suckers, or be really nothing at all.
Stocks have been trading in a range, and the only key figure to keep a close eye upon is Dow 11,205.03. That's the most recent closing high, hit back on April 26. If the Dow cannot climb up to and surpass that mark, expect trading to become either range-bound or negative for an extended period. With earnings reports still 5-6 weeks in the future, there needs to be some kind of catalyst, and the gut feeling around here is that the negativity spewing out from the floor of the Gulf of Mexico - in addition to ongoing, overhanging debt fears globally - will be sufficient enough to keep investor optimism constrained.
Today's quick-hit rally, mostly occurring after 2:00 pm, has little meaning in the overall context, especially considering the oversold condition of the market. Another 300-400 points higher on the Dow would not be out of the question over the next two to three weeks, just as a continuation of the downdraft would surprise nobody.
Generally speaking, it's never a good idea to base very much on one day's trading. The remaining days of the week should provide more clarity.
Dow 10,249.54, +225.52 (2.25%)
NASDAQ 2,281.07, +58.74 (2.64%)
S&P 500 1,098.38, +27.67 (2.58%)
NYSE Composite 6,839.54, +178.44 (2.68%)
Advancers climbed all over decliners, 5353-1220, a 9:2 margin, though our tried and true indicator showed that new highs could not overwhelm new lows, which carried the day, 127-105. Though that margin is narrow, the trend of more new lows than new highs indicates that the market is meeting overhead resistance, and that the market is at least fully priced. Volume, low for the session for the fourth day in a row, indicates the lack of conviction, even in spite of today's outsized headline numbers.
NYSE Volume 5,837,430,000
NASDAQ Volume 2,171,016,000
Oil grabbed a negligible bid of 28 cents, gaining to $72.86. Gold sold off by $4.20, finishing in New York at $1,220.60. Silver was lower as well, losing 24 cents, to $18.30.
While today's gains were overall outstanding, they may be nothing more than an overreaction to a paucity of news, much of which has been bad of late. Bulls being what they are, the momentum could last until something comes along to derail it or send prices even higher, mostly a countertrend move inside overall bear market conditions.
There's also some divergence within the various indices. While the Dow and S&P still trade below their 200-day moving averages, the NASDAQ is poised above its 200 day MA. These conditions usually end up favoring the bearish camp in the long run, but the market being as unpredictable an animal as ever walked out of the jungle, anything is possible.
Subscribe to:
Posts (Atom)
Posts
