Thursday, June 30, 2011

QE2 Ends in No-Resistance Window Dressing Rally

Stocks made outsize gains for the fourth consecutive session; with the end of QE2 marking the end to more than $600 billion in monetary stimulus, traders, fittingly, went on a buying spree on the final day of the second quarter, whipping up stocks to sell to anybody willing to buy somewhere down the road.

The finality to the Fed's second attempt to re-invigorate the US economy has had some dubious effects, such as pushing crude oil and other commodities - with the notable exception of the precious metals - to nose-bleed levels, spiking interest rates (the 10-year is up more than 40 basis points in just the past three days) and generally applying relief to the banks, who have parked excess reserves at the Fed, without having done a thing to improve the horrific states of the housing and jobs markets. The US dollar is also down substantially against other currencies.

When the history books are written, QE1 and QE2 will be seen from the prism of a new present, and the look back will reveal whether or not the stimulus help or hastened the end of the fiat money era. For now, it continues to be an exercise in futility to bet against the Fed. Shorts have been burned repeatedly, as the flavor of fresh, daily money proved too difficult to resist for speculators.

With it over, the markets will have to go it alone, without the assistance or accommodation of the Federal Reserve, though it should be noted that the Fed stands ready to print more dollars and pump the banks further with liquidity at extraordinarily low rates. On top of that, the federal fund rate remains at 0.25-0.00%, an historical low, both of level and time. The rates have been down at those levels for nearly three years.

With half a year in the books, the major indices sport marginal gains for the year, bolstered by the past four days of hope and reckless buying. The markets even ignored another in a series of poor reports from the BLS on initial unemployment claims, which again came in higher than the rosy expectations, at 428,000, a drop of one thousand from the previous week, which supposedly was reason enough to cheer.

With one trading session remaining before the 4th of July holiday, not much is expected on Friday, as most of the big players will already be at their beach homes in the Hamptons or aboard their yachts. Yes, it is good to be rich.

Dow 12,414.34, +152.92 (1.25%)
NASDAQ 2,773.52, +33.03 (1.21%)
S&P 500 1,320.64, +13.23 (1.01%)
NYSE Composite 8,319.10, +90.60 (1.10%)

Advancers led decliners, 4774-1827. NASDAQ new highs: 103; new lows: 35. NYSE new highs: 112; new lows: 12. Combined, 215 new highs, 47 new lows. Volume was consistent with Wednesday's flow rate, nothing surprising there.

NASDAQ Volume 1,837,387,750.00
NYSE Volume 4,199,619,000

Crude continued to rise, gaining 65 cents, to $95.42. Expect to be gouged for gas no matter where you live in America this weekend. Though the price of oil has fallen over the past month, it has surged in the past week.

Gold dropped $11.90, to 1499.90, while silver also took it on the chin, losing 20 cents, to $34.68.

It should be clear to everyone by now that fighting the Fed is a losing proposition, and, with the markets front-loaded for the primary dealers, there's no margin for error for the individual investor. For the present, it's up, up and away for stocks. Let's see how long it lasts.

Wednesday, June 29, 2011

Greece Passes Austerity; Next Up: US Debt Limit

While there was little doubt that the Greek parliament would "do the right thing" and pass the 5-year austerity package in order to secure another $17 billion in their continuing slavish relationship with the IMF, ECB and EU, the results on the streets of Athens suggest that the plan may not be to the liking of the average Greek, if there is such a creature.

Imagine this happening in the United States. A consortium of banks hold the US government hostage, saying, in effect, "do this, or we cut off your allowance." The this being the layoff of thousands of government employees, wage cuts for others, a 10% tax increase and the selling off (privatization) of state assets, one wonders how the Greek populace will like living in abject poverty for the remainder of their lives. In America, one need not wonder. It would most likely pass, but the popular fury and anger would be ferocious.

So it is in Greece, where protesters hailed rocks and stocks at police throughout the day and police returned with salvos of tear gas. There was a great deal of looting and confrontation with the police, but few arrests. It seems the Greek police, some of whom will be paid less in a few weeks than they are now, or may not have jobs at all, have a bit of a heart for their countrymen and women.

Essentially, along with the 10% tax increase, services will be cut by about 25%, along with available government positions and wages. $50 in Greek assets will be privatized, begging the question of just what the Parthenon may be worth to some European oligarch-trash who wish to add it to their art collection.

The measure passed with a vote of 155-138, with some abstentions, since the Greek parliament is comprised of 300 members. But one has to wonder just how long it will last before the money-starved Greeks begin to turn on the government again and again, seeing the bailout as nothing more than another stalling tactic for a bankrupt nation and largesse for the elitist bankers.

Stocks and commodities both were buoyed by the passage, as the globalists averted another crisis in the flawed and corrupt fiat money system. So, the result, higher prices for everything, except, of course, wages.

The next chink in the armor to be fixed would be the US insolvency issue, that of raising the debt debt ceiling so the world's largest net creditor can continue to borrow and spend until the elections of 2012, at least. The deadline of August 2nd approaches with all due haste, though both houses of congress will not be convened at the same time, if they keep to their schedules.

The House was already in recess this week and will be until July 5th, though the senate recess - scheduled for July 4-10, is in doubt, with Democrats seeking to cancel it, and Republicans all too willing to stay in Pro Forma session, fearing recess appointments by the President.

With any luck, the tow houses of financial horror could actually do some deal-making between the 10t of July and the August 2 deadline, and that would be almost a surety, as both houses will recess on August 8 and not return until September 5, after Labor Day and well beyond the statutory constraints of passing a new debt ceiling.

Just like in Greece, however, it's expected that the senate and the president will approve some kind of deal at the last moment, ensuring maximum discomfort and anxiety for the good people of America. Of course, any talk of a balanced budget amendment, currently being espoused by various Republicans, should be recognized immediately as a complete sham, though there is some hope that some semblance of spending restraint may be written into any new bill. The long money is on the government beating the deadline by days and getting back to doing what they do best, spending money they don't have.

Dow 12,261.42, +72.73 (0.60%)
NASDAQ 2,740.49, +11.18 (0.41%)
S&P 500 1,307.41, +10.74 (0.83%)
NYSE Composite 8,228.50, +92.52 (1.14%)

Gainers beat losers by a solid margin, 4185-2361. On the NASDAQ, new highs were better than new lows by a 100-29 margin, while on the NYSE, the new highs outnumbered new lows, 81-14. The combined total of 181 new highs to 43 new lows suggests that we're back to "risk on" for the foreseeable future, though, being summer, a sideways trend always has great potential. Volume was light, but not actually awful.

NASDAQ Volume 1,816,885,000
NYSE Volume 4,316,723,500

WTI crude futures rose remarkably again, up $1.88, to $94.77, along with gasoline, which has been rocketing of late. The most recent price gouges have not shown up at the punp yet, though they surely will by the weekend. AAA reports that the average price of a gallon of unleaded regular is $3.54, with higher price in the more populous states of the Northeast and West coast.

Gold got a little nibble of a bid, rising $9.10, to $1511.20. Silver spiked 92 cents, to $34.86.

Tomorrow morning initial unemployment claims numbers may do damage to the current three-day rally in stocks, though a positive report could produce more cries of "soft patch" and a continuation of the "risk on" trade.

Tuesday, June 28, 2011

Last Gasp or Last Hurrah?

As another day-long rally appeared out of the blue for the second consecutive day on virtually no news, one must question the tendency of the market to gain so vigorously without the benefit of positive reinforcement.

With stocks being nearly the only place to find yield these days, there has to be adequate risk appetite, and that's where the low volume standard comes into play. On these monstrous upside days, the volume has remained quiet, signaling to the astute investor that such rallies are nothing more than algorithm-inspired events and have little to nothing to do with news flow, fundamentals or general sentiment.

As such, there's little to report on today's ramp-job than to mention that the Greek parliament will vote on the austerity plan by which they will get the next portion of their bailout money on Wednesday morning, 5:00 am EDT, so as goes the vote, so will stocks. A failure for the parliament to pass the measure would result - mostly likely - in a massive default by the Greek government or some other form of restructuring, because, as we all know, bankers cannot lose money, even if they lend to the worst, non-performing, severe-credit-risk entities, like sovereign nations such as Greece, Portugal and Ireland.

If the vote passes, the people will riot and burn most of Athens back to it's root of civilization foundations. Thus, nobody wins, except the banks, though it could be a hollow, short-lived victory as not only Greece, but other EU nations, have debt well beyond their ability to repay, no matter how much they tax the populace.

We have reached a tipping point in the global economy and the sooner politicians and bankers realize that their Ponzi scheme has hit a wall, the quicker the world can get back on track to some normalized kind of functioning reality. Until then, though, it's risk on, rally on!

Dow 12,188.61, +145.05 (1.20%)
NASDAQ 2,729.31, +41.03 (1.53%)
S&P 500 1,296.67, +16.57 (1.29%)
NYSE Composite 8,135.98, +104.90 (1.31%)

Advancers finished well ahead of declining issues, 5045-1528. NASDAQ new highs: 100, new lows: 22. On the NYSE, 75 new highs, 23 new lows, bringing the combined total to 175 new highs and 45 new lows on the day. As decisive as those results may be, skepticism abounds due to the aforementioned thoughts and the incredibly low volume.

NASDAQ Volume 1,660,870,000.00
NYSE Volume 3,650,911,750

Oil rose $2.28, to $92.89, defying all manner of logic. Someday soon, hopefully the assholes (that's what they are and that's what I'm calling them) trading oil futures are going to be hit with a bolt of lightning and the realization that absurdly high oil prices are a detriment to global growth. It could not happen soon enough.

Gold was up 4.10, to $1501.00, while silver rose 36 cents, to $33.94, both breaking a three-day losing streak.

Keeping your budget in order is easier on the web

With so much focus on money, finances and personal accountability, individuals need sphisticated ways to manage both their money and their time. From online brokerage accounts to credit cards and bank accounts, retirement accounts, 401Ks and the like, keeping track of where your is coming from and going to is a necessity.

The old fashioned paper budget and ledger has gone the way of the pocket calculator and slide rule. More and more people are turning to tools on the web to track and quantify their cash and investments.

One such web tool is a site called Mint, which is a free online service which allows you to add all of your important financial information into your own secure, customizable platform.

Users enter their bank account information, plus information on loans, credit cards, home equity lines, and other regularly-used accounts, such as a stock account.

Then, once it's all set up, the software pulls all the information together and keeps it updated, employing bank-level security so your information doesn't fall into the wrong hands.

The site offers a high level of reliability and a one-click experience to see where and how your money is being employed. There are additional tools, such as auto-generated charts of where your money is being spent, and a budget app that can be adjusted to suit a personal preference.

Spending too much on gas, or clothes? Set up the budget to limit those expenses and put more money into other areas.

Mint is a great free solution designed to assist everyone in managing their finances.

Monday, June 27, 2011

No News, So Stocks Must Go Higher

The saying, "no news is good news" accurately described the tenor of trade today on Wall Street.

Without any catalyzing headlines to spook the market - as has been the case so often in the past two months or so - investors (or rather, the algorithms that make the trades) bought stocks like they were the next best thing to sliced bread.

Amazingly, among the leading sectors was financials, which have been battered for the better part of the last six months. Others doing better than the financials included conglomerates, technology and energy.

But the real telling number came from the dollar index, as the Euro rallied on hopes that the Greek parliament would vote in favor of accepting the austerity plan from the IMF and keep the depreciating Euros flowing into the system. On that, the dollar was considerably weaker, which no doubt helped stocks. The dollar index was down 0.24 to 75.34, a level at which it could stabilize, just below 76, which it cannot break out above from, and just off the nominal lows at 71-72.

If the Fed wants a weak dollar, but not any weaker, that's likely what they're going to get, for now, though how that translates into a triple-digit move on the Dow is known only to those insde the minds of the machines.

Today's move is still rather curious, considering that Greece will vote on the austerity measures in less than two days and the margin of passage is down to about one vote, as four members of Papandreou's 155-seat majority have already expressed a reluctance to vote in favor of the measure. The Greek parliament has 300 members, so the situation is dicey, especially with nationwide strikes planeed for Tuesday and Wednesday.

But, since nothing happened today to unravel the fiat currency regime a bit further, stocks finished widely positive, though well off their intraday highs.

Dow 12,043.56, +108.98 (0.91%)
NASDAQ 2,688.28, +35.39 (1.33%)
S&P 500 1,280.10, +11.65 (0.92%)
NYSE Composite 8,031.08, +56.36 (0.71%)

As expected, advancers clobbered decliners, 4366-2198. On the NASDAQ, 64 new highs, but a startling 51 new lows, a bit odd for such a healthy positive day. The NYSE saw a similar circumstance, with 52 new highs, but 39 new lows. The combined figure, therefore comes to 116 new highs and 90 new lows, close to flat. Volume was back to its usual pedestrian levels, another indication that the rally has short legs, if any at all.

NASDAQ Volume 1,693,123,125.00
NYSE Volume 3,583,716,000

Oil fell again, briefly trading below $90/barrel, before rallying back to close at $90.61, down 55 cents on the day. Gold was battered down for a third consecutive session, losing $6.10, to $1496.20. Silver is apparently being made a whipping boy once again by the likes of JP Morgan, dropping 81 cents, to $33.51. That's the lowest close for silver since May 12, when the London daily fix was $32.50 the ounce.

Friday, June 24, 2011

Another Tough Week for Stocks, Gold, Silver

Even though the prior week was the first winner in seven weeks for the Dow, persistent problems with the basic functioning of the global economic system pushed stocks to another down week as Thursday and Friday wiped out gains from the previous three days.

For the record, the Dow has closed lower in seven of the last eight weeks, this week ending 70 points lower than where it ended last Friday.

To the untrained eye, this is nothing more than a pull-back from some lofty highs set in early May that have been taken out by sell-side speculators. To anyone even remotely astute on economic matters, these past eight weeks have reeked of desperation from political bodies, central banks and equity pushers who know, deep in their heart of hearts, that the reign of fiat money - based on nothing but debt, promises and more debt - is nearing an end and a return to some kind of rational standard (like gold or silver or both) is the only alternative.

The overt proponents of the fiat system such as the IMF, World Bank and central banks in countries around the world simply continue doling out bailouts, first to banks, now to sovereign nations, such as Greece and Ireland in recent months.

As amusing as it may sound, these bailouts do nothing but more harm on the populations of the nations in question, but the most egregious abuses of money come from the global leader, the United States of America, which has broken all rules in attempting to paper over the abject defaults of the nations' largest banks, which collapsed in the fall of 2008.

After spending tens of trillions of dollars bailing out not only US financial institutions, but also those of other countries, the Federal Reserve has become the worst-managed, most indolent bank on the planet. They've directed funds from all manner of mysterious sources to overseas banks and nations, and have done so without the benefit of any oversight or audit. Eventually, they will come to ruin, and with it, the entire planet will suffer though one of the worst and longest depressions in history, possibly the worst ever.

It's gotten well past the point of thinking that politicians or Fed officials actually have any kind of solution; they just keep trying the same tired polices in hope that some confidence will be put back into the system, at a time when confidence has all but run out.

The only question that remains is how long before the entire fiasco is blown up via either war, outright default or some unknown source of paper money destruction. The situation is surely not helped one bit by the Republicans in the House walking out on budget negotiations - which they did yesterday - directly before a scheduled US default looms in the first week of August.

It was previously thought that raising the debt ceiling would be a slam dunk, though now even that looks dicey, and there are some who are hoping the US does default on its debt, though the consequences will be severe for most people, including those very politicians who refuse to take seriously the jobs they were elected to do.

As such, we, as a nation, slog along though the summer, hoping against hope that we will be saved, though the situation becomes more grim, more unsettled, more agitated with every passing day. The government is already "borrowing" from retirement funds of federal employees. In the case of a default (which may be all part of the master plan), those funds would be irretrievable, lost forever, crushing the hopes and dreams of millions. The cascading effect would be even more severe.

We are doomed thanks to the elite bankers and politicians in Washington.

Dow 11,934.58, -115.42 (0.96%)
NASDAQ 2,652.89, -33.86 (1.26%)
S&P 500 1,268.45, -15.05 (1.17%)
NYSE Composite 7,974.72, -79.36 (0.99%)

Declining issues toppled advancers once again, 4033-2507. There were 61 new highs and 52 new lows on the NASDAQ, while the NYSE recorded 49 new highs and 38 new lows. The combined figure was again in favor of the new highs, 110-90, a narrow win, but somewhat befuddling, considering the depth of the losses on the various indices. Volume was literally off the charts, more than double the norm on the NASDAQ and the highest of the year on the NYSE. There was obvious manipulation being done behind the curtains. That is the only explanation for such high volume, yet more new highs than new lows. The level of deceit by Wall Street and their friends in Washington is spectacular and actually quite frightening. We have entered an era of outright lies when it comes to all matters financial, and probably everything else, as well.

NASDAQ Volume 4,036,700,250
NYSE Volume 5,339,107,000

Oil was relatively stable, gaining only 14 cents, to close out the week at $91.16, the lowest close in three months. The usual raids were done on the precious metals, however, with gold being abused, down another $18.40, to $1502.30 and silver down 99 cents, to $34.32. As usual, in the minds of the political and banking elite, high oil and gas prices are just fine, but gold and silver must be destroyed at all costs.

It's simply insanity. Have a great weekend.

Thursday, June 23, 2011

The Old Dump and Pump

Stock traders - not investors - love action like today's on the US stock markets.

At the open the major indices plunged on news that the IEA and the United States would jointly release 60 million barrels of strategic reserves - 30 by the US, 30 by the IEA - to make up for supply shortages from the Lybian conflict. Furthering the desperate mood was the usual horrific chorus from Initial Unemployment Claims which came in much higher than anticipated (by idiots) at 429,000, plus, the prior week's claims were adjusted upward from 414K to 420K.

The revision should come without explanation. The BLS, who mangles the numbers, has revised claims upward just about every week for the past year-and-a-half, but those seeking an end to the jobs problems in America are surely going to have to wait longer.

Now, with all that bad news baked in, stocks were down precipitously, with the Dow off by more than 200 points for much of the session. But, lo and behold, just before 3:00 pm, word came from Europe that everything between Greece, the IMF and the ECB was just hunky-dorey. Greece would get their loans, the people would riot (a two-day general strike is already planned for next week), but all the bankers would be paid in full.

With that, the markets shaved a good 2/3rds off their losses, with the NASDAQ actually finishing in positive territory. Is this a stable economy, a stable market?

We will leave that question unanswered, hoping that bigger, brighter minds might offer some clues.

In any case, a lot of people got slaughtered, but you can bet your bottom dollar (if you still have one) that the bankster types at Goldman Sachs, JP MOrgan and Morgan Stanley had field days.

It's all good. Until it's not.

Dow 12,050.00, -59.67 (0.49%)
NASDAQ 2,686.75, +17.56 (0.66%)
S&P 500 1,283.50, -3.64 (0.28%)
NYSE Composite 8,054.08, -47.76 (0.59%)

Declining issues still led advancers, 3611-2936. On the NASDAQ, there were 42 new highs and 71 new lows. The NYSE had just 28 new highs and 49 new lows. Uh-oh, our key indicator has flipped bearish again, so maybe the Greece bailout isn't all that important to the US. Or maybe it is? The combined total of 70 new highs and 120 new lows puts things back into perspective, despite the obviously-rigged nature of the equity markets. Volume was actually a little spunky for a change. After all, it takes a lot of trading to move stocks around so much.

NASDAQ Volume 2,070,676,500
NYSE Volume 4,946,733,500

With the news of new supply coming on the market (at a rate of 2 million barrels a day), WTI crude futures fell $4.39, to $91.02, and traded under $90 briefly in the morning. One might think this was all about oil, but maybe it was really about gold, the enemy of central bankers worldwide, which made a new record close yesterday and appeared ready to vault towards $1600 per ounce. It didn't happen, as the morning downdraft took apart all long trades. Gold was decimated, losing $26.90, to $1521.10, wiping out a month's worth of gains. Silver was not spared, losing $1.07, to $35.27. It was a pretty ugly day for everyone, but particularly for commodities traders.

Hot fun in the Summertime. Rigged markets are so much fun!

Wednesday, June 22, 2011

Ben Bernanke: World's Worst Cheerleader

We have witnessed some terrible ideas from the Federal Reserve over the past few years - decades - but their idea to have the Fed Chairman hold a news conference after the periodic FOMC rate policy announcement has to rank right up there among the worst.

Today's media-fest new conference, the second Ben Bernanke has held, was an absolute snoozer, with the Chairman reiterating what was already known from the rate announcement - no change in policy, keeping rates at ZERO to 1/4 per cent for an extended period, weak economy, frustratingly slow job growth, blah, blah, blah - and then giving highly nuanced responses to soft-ball questions from selected media.

The Chairman, being stuck in a policy environment that is absolutely untenable long-term, dead-panned throughout, looking at times stupid and at other times, less-than-honest. Wile the Fed did lower their forecasts for GDP in the second half of the year, they remained steadfast in the longer term outlook, saying that improvement in the economy would happen late in 2012 and into 2013, where they see lower inflation, a pick-up in job creation and GDP between 3.5 and 4.2 per cent.

Put simply, Ben Bernanke and his overpaid monkey economists are full of crap. Up to their ears in it, they are. Fed policy since the apocryphal events of 2008 has been nothing other than non-stop printing of dollars and feeding the beast that is the cartel of large banks which ruined and continue to run the economy into the ground. So, by doing more of the same the Fed is going to "work things out" just how?

Simple answer, they're not.

While the Chairman was speaking, stocks stumbled and then cratered once he was through, finishing at the lows of the day. Great performance, Mr. Bernanke. Just what do you have in store for an encore? We should expect nothing less than the complete and total disintegration of the dollar, and, by inference, the annihilation these United States. Thanks for the nap time, but between the Fed and congress and the presidency, America is royally screwed, kaput. It's over. Keep cashing those checks for as long as you can, because sooner or later they're going to bounce sky high. But Americans, being the slovenly sloths they are when it comes to understanding money and economics, will just keep going on, changing nothing and expecting different results, which is, by the way, the definition of insanity.

Our economy is practically dead and there will be no winners in the end.

After a brief respite, it appears that stocks are back to the losing ways of the past seven weeks. And the longer the congress takes to figure out that they must raise the debt ceiling, the steeper the decline. Even if they do pass a resolution to raise the debt ceiling - they will - with a deal on the table that is palatable to the phony "fiscal conservative" Republicans, it will offer no immediate assistance but rather a convenient platform from which to launch their campaigns for 2012.

Pretty sad, when all congress can think about is re-election. If nobody showed up to vote, it wouldn't matter. They'd just fix the results to be what they want them to be. Americans are the dumbest people on the planet. I went to another party this weekend where talking politics was barred, a policy that's becoming more and more prevalent. Apparently, people's normalcy bias is so great that they cannot stomach the truth.

Looks like I'll be partying by myself more often. At least the company is rational.

Dow 12,109.67, -80.34 (0.66%)
NASDAQ 2,669.19, -18.07 (0.67%)
S&P 500 1,287.14, -8.38 (0.65%)
NYSE Composite 8,101.84, -54.43 (0.67%)

Declining issues took the bull by the horns and flipped it on its back, leading advancers, 3983-2549. On the NASDAQ, 58 new highs and 41 new lows. There were 66 new highs and 23 new lows on the NYSE, putting the combined total for the day at 124 new highs and 64 new lows, an oddly-skewed metric, though considering the moves of the past few days, not really out of bounds.

Volume was minimally marginal, to say the least, as expected.

NASDAQ Volume 1,603,598,250
NYSE Volume 3,691,012,000

Crude futures rose on supply draw-down, gaining $1.24, to $95.41. Gold continued to break to new record highs, up $3.30, to $1550.50, with silver ahead a mere four cents, at $36.44. The bears and shorts have complete control over the paper silver market and will not allow it out of the $33-38 range, where it's been stuck for two months, making it one of the less desirable assets to hold currently, though that is bound to change.

Remember, don't talk politics or economics at any parties or barbeques unless you don't want to be invited back. Hmmm... now there's a plan.

Small Investment, High Risk, Big Potential

Searching around for alternative investments to the usual fare of stocks and mutual funds, some investors may find their way to penny stocks, which are commonly shares of companies in the early stages of development, mostly unprofitable, but enticing for both initial cost and potential upside.

Anybody can purchase penny stocks, but finding winners is a tough act, so it pays to do diligent research and possibly get some advice, and there are plenty of sources on the internet.

Here are three that may turn a few dollars into a gold mine. offers updated top penny stock picks sent out by newsletters, and offer tools to browse the stock picks they select. The site is updated frequently and provides straightforward research without a sales pitch.

Timothy Sykes, an acclaimed penny stock investor who has been seen on CNBC, ABC, CNN and in the NY Times has a fabulous site offering free and premium content, highlighting the best penny stocks to his readers and followers.

The Penny Stocks Guide is a comprehensive and impartial resource for investors interested in penny stocks. The website provides basic principles of penny stock investing and advice on how to do it intelligently and safely.

Many online brokers allow investors to engage in the penny stock markets or the "pink sheets" as they are known. A lot of well-known companies began as penny stocks, with few investors and limited capital, until hitting the big time with an IPO. Gains of 500-1000% are not unusual for big winners, though many of these penny stock companies never make it to that stage.

All said, penny stocks are not for everyone, but if you have some money you can use with discretion and not worry about losing, the penny stock market could be a reasonable investment of time and money.

Tuesday, June 21, 2011

Greek Parliament Gives Papandreou Vote, Austerity, Riots to Follow

According to sources, the Greek parliament gave Prime Minister George Papandreou a needed vote of confidence, allowing for an infusion of $17 billion in fresh loans from the IMF/EU.

With the public now facing even harsher austerity measures, rioting and demonstrations are expected.

No actual tally has come through, but the decision seems clear: Bail out the banks and keep the people under thumb.

Markets Up on Greek Deal Hopes

Well, that headline is not a joke. Surely, nobody on Wall Street has ever heard the phrase, "beware Greeks bearing gifts," though by tomorrow, everyone will know whether the second bailout of Greece - with a third coming by the end of August, almost certainly - will be a bonus or a canard.

The issues facing the Greek government are the roll-over of some $10 billion in maturing debt, plus another $40 billion in August. Right now, the deal is on, if Greek prime minister, George Papandreou, receives a vote of confidence from the Greek parliament, in a vote scheduled at the stroke of midnight in Greece (5:00 pm EDT).

Papandreou looked to have enough votes to win the crucial vote of confidence in parliament which would pave the way to passage of the latest austerity measures next week, ensuring a $12 billion advance from the ECB and the IMF.

With time winding down on the vote, crowds were beginning to form in Syntagma Square, directly across from the Parliament building. A vote of no confidence would be seen as a victory for the Greek populace, and if Papandreou does get the needed votes, rioting and confrontation are a near-certainty, as much of the population would like to detach Greece from the EU, return to the drachma and move on. (We will post an update of the vote as soon as it is confirmed.)

Elsewhere, investors looked past more horrifying housing numbers, as existing home sales in May fell by 3.8% from April and are down 15.3% from the same time last year, according to the report released by the National Association of Realtors (NAR).

So, once again, Wall Street demonstrated just how far detached from Main Street it really is, a chasm that only seems to keep widening.

Dow 12,190.01, +109.63 (0.91%)
NASDAQ 2,687.26, +57.60 (2.19%)
S&P 500 1,295.52, +17.16 (1.34%)
NYSE Composite 8,156.27, +124.05 (1.54%)

Advancing issues defeated decliners, 5430-1205. On the NASDAQ, there were 55 new highs and 32 new lows. The NYSE registered 68 new highs and 25 new lows, effectively ending the 12-day stretch in which the lows held the advantage with the combined numbers at 123 new highs and 57 new lows. What a difference a Greek makes!

Volume on the day was marginally better than on Monday, which is saying very little.

NASDAQ Volume 1,825,893,375
NYSE Volume 3,913,965,750

WTI crude futures edged up 14 cents, to $93.40. Gold added $6.30, to $1546.80 and silver was up 37 cents to $36.43. The moves in precious metals reflected the uncertainty of global economic conditions.

Tomorrow the Federal Reverse Open Market Committee will issue another one of the periodic edicts, keeping interest rates at near ZERO, and, presumably, will include the words, "extended period" for how long they believe it will be before they actually raise rates one iota.

The Fed is stuck in no-man's land, with a stumbling, structurally-impaired domestic economy and the threat of inflation due to a falling dollar. Thus far, the Fed has taken the easy route of monetary stimulation, throwing trillions into a stagnant economy, and that's likely to be their choice for many months, if not years, to come.

In reality, Greece is a side-show.

Monday, June 20, 2011

Seriously, a Rebound? No Volume, and Slim Gains

It's almost summer, so stocks and the people who trade them aren't going to take much of anything too seriously. It's a good thing that the American culture is as laid-back as it is, because if people watched their money, markets and politicians with reasoned discipline, we'd all be in the soup - or soup lines.

Being that the weather's more suited for surfing than high finance, Wall Street put on its best summery smile today and boosted stocks for no particular reason other than there wasn't any disturbing economic news from Greece, or Washington, or anywhere else for that matter.

It's these kinds of days that Wall Street could use a steady diet of to produce what will be called a "summer rally" despite the Fed cutting off funds via the end of QE2, and Greece more likely than not to default. Whatever Greece decides to do about their fiscal and monetary condition, it will have far-reaching effects, mostly on European banks, but surely some spill-over will do damage on American shores. Everyone's in for a piece of the action, and haircuts for the bond-holders seems to be the likely outcome, though the EU and IMF ministers would much rather lay it all on the backs of the Greek people, through austerity, budget cuts and a wrecked economy.

However, since nobody took any decisive action today, it was safe to make a few bets in the cavernous casino that is Wall Street. Besides, after six losing weeks, the markets were set up for a technical bounce, in other words, more suckers got taken today.

Dow 12,080.38, +76.02 (0.63%)
NASDAQ 2,629.66, +13.18 (0.50%)
S&P 500 1,278.36, +6.86 (0.54%)
NYSE Composite 8,032.22, +32.11 (0.40%)

While the gains weren't much to speak of, neither was the breadth. Winners beat losers, 3991-2443, roughly a 5:3 margin. NASDAQ showed that there was still a good deal of selling going on as only 29 stocks made new highs, but 104 hit new lows. ON the NYSE, 32 new highs and 53 new lows, so the combined total was another winner for the new lows, the 12th straight of that variety, with 61 new highs and 157 new lows.

Since volume was non-existent, one would be correct in believing that the correction was just taking a breather. Nothing goes in straight lines, so count this as one of the few good days in a continuum of downers.

NASDAQ Volume 1,612,915,750
NYSE Volume 3,371,598,000

Crude oil continues to demonstrate weakness, up only 25 cents on the day, to $93.26. Some of the crude decline is beginning to show up at the pump. AAA reports the national average at $3.65 for a gallon of unleaded regular, with the lowest to be found in Tennessee, at $3.45/gallon.

Gold gained $1.40, to $1541.40, while silver was up 14 cents, to $36.04.

All in all, it was a dull session, which is probably the way it should be. Wild swings are for gamblers and home run hitters. A dose of slowness - like the way markets were back in the 50s and 60s - might not be such a bad thing.

Ah, summer. Ya gotta love it. Almost makes one fell like taking the car out for a spin. Well, maybe.

Friday, June 17, 2011

Desperate Late Rally Bumps Dow to First Gain in Seven Weeks

What an absolute mockery the US stock markets are.

With stocks deteriorating late in the day, synchronized buying in the final 4 minutes brought the Dow Jones Industrial average back over 12,000, and to the first positive close in seven weeks.

The S&P move, similar in time frame, was even sillier, getting the widely-watched average to close exactly 0.52 higher than it ended last week. The Dow was up 52 points for the week, while the NASDAQ finished up the week a loser, down 27 points. Apparently, the genius brain trust on Wall Street missed that one.

In a few words, stocks are still very weak and the issues causing the weakness have yet to be resolved.

Dow 12,004.36, +42.84 (0.36%)
NASDAQ 2,616.48, -7.22 (0.28%)
S&P 500 1,271.50, +3.86 (0.30%)
NYSE Composite 8,000.11, +36.51 (0.46%)

For the first time in a while, advancers carried the day, unconvincingly beating declining issues, 3857-2774. On the NASDAQ, there were only 28 new highs and 113 new lows. The NYSE saw 25 new highs, but 48 new lows, making the combined totals favor the new lows for the 11th straight session, 161-76. Volume was healthy, having much to do, as did the general gains, with quadruple witching on options expiration. Beginning next week, with the options play out of the way, stocks can get right back to falling off the table again.

NASDAQ Volume 2,491,541,250
NYSE Volume 4,925,850,000

Crude oil was hammered down again, losing another $1.94, to close out the week at $93.01. Gold finished up $10.80, at $1540.00, while silver added 31 cents, to $35.90.

Economic data was muted, with the Conference Board's Index of leading Indicators up 0.8% for May, while the University of Michigan's consumer sentiment index backtracked from 74.3 in May to 71.8 in June.

It was a wild week for everyone, even those of us who only report on the madness.

Thursday, June 16, 2011

From Greece to Philadelphia, It Is All Bad

Whether it's indecision by the IMF, the EU, the Greek government or any other body that has an interest in the continued operation of the nation formerly known as Greece, markets have been roiled by the chain of events, delays, misconceptions and outright fabrications that have come to light over the past two weeks in the continuing collapse of Greece, and, by proxy, the European Union.

The situation has been in flux and flummoxed for a fortnight, with no apparent end in sight. Various people whose names all sound like Pompondreaus and will soon be forgotten pledge to make austerity nation of the Greeks, resign their office or do some other dastardly deed, hoping to end the crisis, though, in reality, everybody knows that Greece must be set free to return to the Drachma as their official currency and be done with the eleven-year-old experiment that is the Euro.

Ditto that for Portugal, Ireland, Belgium and sooner or later, Italy and Spain. Within a few years time, if not much sooner, the European Union will cease to exist.

Between now and whenever the bankers and politicians can decide on how best to divide the spoils of their failed experiment in a unified currency, we are likely to see more riots, food lines, general strikes, paramilitary actions, riots, shortages, lies, changes of governments, riots and as much discontent as a continent can have without actually being at war. Of course, war is always an option, one which may be used as an interim resort, by which to save the fannies and faces of the corrupt and wholly bankrupt European banking system.

The effect on the US is felt in myriad ways. For one, our sovereign dollar becomes better looking as a "safe" currency, our bonds become more expensive and yield less and US global stocks go for a merry-go ride, such as today's.

Also affecting the price of stocks - discounting the usual front-running, insider scams and outright HFT manipulation - was the report from the Philadelphia Fed on business activity within that district, which sank from an already-abysmal reading of 3.9 in May to -7.7 in June, the worst number since July of 2009. This followed Wednesday's stunner from the NY region, which had the Empire Index at -7.8 in June after a 11.9 number in May. Both indices measure general manufacturing and business conditions for their respective regions and show a general malaise reappearing when we're supposed to be in the midst of a recovery.

It's simply not happening, as continuing unemployment claims showed, dropping a bit to 414,000 in the most recent week, though still far too high a number to indicate anything other than continued pain and a lack of available jobs for the shrinking American workforce.

Stocks responded with a zig-zag effect, up in the morning, down in the afternoon, with a half-hearted rally at the end. Apparently there is some stomach for the larger, established, global industrial stocks contained in the Dow 30.

Dow 11,961.52, +64.25 (0.54%)
NASDAQ 2,623.70, -7.76 (0.29%)
S&P 500 1,267.64, +2.22 (0.18%)
NYSE Composite 7,963.60, -4.21 (0.05%)

Internals were not bifurcated in the least, offsetting any calming effect the headline numbers might suggest. Declining issues led advancers once more, 3562-3022. The NASDAQ saw a mere 13 stocks make new highs, while 112 recorded new lows. New lows led new highs on the NYSE as well, 82-16, giving the edge to new lows for the 10th straight session, 194-29. Eventually, most likely on a free-fall day in which the Dow is down 300 or more points, this measure will read off the charts, with over 1000 stocks hitting new lows. It is a moment to watch for, because it will signal the second phase of the bear market, the one which usually lasts the longest and is the most painful, in which stocks trade sideways to down for an extended period of time. Watch for it in a few weeks or months, though it could come at any time, depending on the particular catalyst.

Volume was along the same range as yesterday's, not much help to anyone doing technical analysis, though probably favoring the bearish case more than anything else.

NASDAQ Volume 1,985,734,500.00
NYSE Volume 4,642,697,500

Unfortunately, WTI crude oil futures were up 14 cents, to $94.95, instead of continuing the precipitous decline. It's an odd paradox for the American consumer. While most would like to see oil around $60 a barrel, which would drive gasoline prices down to around $3.00 per gallon, the correlated rise in the dollar would also serve to drive stocks lower, such is the pair-trade these days. However, the resulting stronger dollar would do more than just keep fuel prices down. It would keep more money in the hands of consumers while lowering the cost of just about everything, because everything needs to be shipped from one place to another. Additional discretionary money in the consumer's hands would lead, most likely, to paying down more debt, which is needed, and giving a general boost to the economy, also sorely needed.

Why it will not happen is because it is inherently deflationary, something by which the Federal Reserve and the US Treasury cannot abide, simply because lower prices for consumer end-products, outright deflation and improving conditions would also push interest rates higher, making the debt more expensive to repay. Thanks to the wizardry of the Federal Reserve, Americans are barred from lower prices, saving, and actually living in a world in which every last penny is not spent on either food, energy or taxes.

It is completely untenable and eventually one side will have to give in. A few million starving Americans might just force the Fed's hand and allow natural market forces to take hold. (I am dreaming of course, but do not wake me.)

Precious metals were essentially flat, with gold up 10 cents, to $1529.30 and silver down six cents, at $35.53.

Friday will be interesting if only to see whether the current losing streak for stocks continues for a nearly unprecedented seventh straight week. With it being a quadruple-witching day, we should certainly have our doubts. The markets are temporarily oversold, so any impetus at all should result in at least a small rally, which will save the day, though the war is far from being over.

Wednesday, June 15, 2011

Greece in Tatters, US Still in Denial

As Greece burns, global stock markets reel in terror.

It's really about time that the oligarchs running the show down on Wall Street come to the realization the most of the rest of the world isn't buying their load of bull hockey any more and investors are making their displeasure known by their feet, fleeing overpriced, overhyped, intangible assets as quickly as they can.

If the shakeout of small investors wasn't complete in the Fall of 2008 and the Winter of 2009, then this is to be expected. There are a myriad of reasons stocks should be sold off. Here's a small ticking off of the major bullet points:

  • Incomes haven't risen in years, though the price of everything from food to rent to heating fuel has doubled in some cases.
  • Maybe Americans are a little bit tired of killing themselves at low-wage jobs just to buy gas at upwards of $3.50 a gallon.
  • Speaking of jobs, there aren't any.
  • Americans are sick of bailouts of the banks which caused this crisis.
  • Americans are sick of bankers getting enormous bonuses for abject failure.
  • Americans are sick of a federal government that keeps putting us deeper and deeper in debt.
  • Americans are sick and tired of the Fed devaluing the currency and causing global inflation.
  • Americans are sick and tired of the casino-like atmosphere on Wall Street, controlled by a very few insiders with guarantees of non-failure, not to mention the insider trading, HFTs, front-running, bond-flipping and all the rest of the improper accounting tricks and bogus schemes.
  • Americans would like to see Jamie Dimon, Lloyd Blankfien, Angelo Mozillo and many others prosecuted for their crimes, but the US Justice Department has been bought off.
  • Iceland defaulted, Ireland is a basket case, Greece is going to default and then Portugal and Spain and Italy should, if only to express outrage at the corrupt Berlusconi government.
  • The US government is horribly corrupt as well and default is headed for our shores as well, since all the Treasury Secretary and Federal Reserve Chairman know how to do is further impoverish the people of the United States, and, to a lesser degree, the rest of the population of the world.
  • Americans are sick of rules, taxes, regulations, heavy-handedness at all levels of government, the continued deprecation of civil liberties, the lies, obfuscation and treachery at the highest levels of government and finance. Americans want the truth, but the politicians and bankers know that they would all be behind bars, or worse, should the truth be known.
  • Americans want the government out of their lives, decent jobs, no more wars, no more lying, nothing more.

Is that enough? Because there is more.

Granted the oligarchs of Wall Street and Washington will not listen. They will pose and posture and make statements about what America wants and needs and do nothing of the kind. And the media will bombard us with non-stop presidential politics for the next 18 months, even though half of the population could care less.

While Greece has surely lost the control of the public and all confidence, just as has Ireland and Iceland, and Egypt and Syria and many other countries, the American "establishment" has lost the confidence of its people. It's really that simple. Nobody approves of what goes in on Washington, and thus, nobody abides by them. The US political structure is such a laughing stock that serious people simply ignore it. Add on to that the massive numbers of people who have seen the political and economic systems for what they are and are opting out, dropping out, refusing to comply and bend to the will of the small, wealthy minority who wants to make all the rules, and you have a perfect condition for collapse, the collapse that should have happened three years and $20 trillion of wasted stimulus ago.

The desperation of the elitists is evident from the sour expressions of the paid monkeys on CNBC, who keep insisting that this downturn is temporary or transitory or a "soft patch" in the "recovery." It's hilarious to watch, especially if one is invested in hard goods, precious metals and/or commodities. To put it simply, stocks are for suckers, and the number of suckers still at the table is dwindling, fast.

Dow 11,897.27, -178.84 (1.48%)
NASDAQ 2,631.46, -47.26 (1.76%)
S&P 500 1,265.42, -22.45 (1.74%)
NYSE Composite 7,967.81, -164.96 (2.03%)

The internals told the true story of the devastation. Declining issues outpaced advancers by the largest margin in almost than a year, 5379-1270. NASDAQ recorded 11 new highs and 114 new lows, while the NYSE saw 23 new highs and 79 new lows. The combined total has the new lows ahead for the ninth consecutive session, at just 34 new highs and 193 new lows, with surely more to come.

Volume was actually a little bit perky, especially tantalizing for short sellers and bears.

NASDAQ Volume 1,993,706,125
NYSE Volume 4,653,039,000

As the Greek situation broke down and out, into street protests and young men attacking riot police with sticks, bats and rocks, the dollar became the safe haven currency, smashing crude oil down by $4.68, to $94.81. Oil still has a long way to come down before any kind of supply-demand equilibrium can be maintained. $70 or $60 or even less per barrel are no longer outside targets.

Gold rose modestly as as store of value, up $6.70, to $1530.80. Silver tagged along, gaining 41 cents, to $35.80, though, if stocks continue to slide, they may take other asset classes along with them in a deflationary episode, despite the ongoing efforts by the central banks and the Fed to inflate.

Today's declines took out all of yesterday's gains. Stocks are on track to record their first seven-week losing streak since early 2001, predating 9/11.

Just for fun, tomorrow's traders will have to deal with this week's initial unemployment claims, which will be released an hour prior to the opening bell. It ought to be a doozy.

Tuesday, June 14, 2011

Theatre of the Absurd in DC as Bernanke Threatens US

A grand assemblage of the masterminds responsible for the demise of the global economy met in Washington, DC, today, for what was called the Committee For A Responsible Federal Budget - somewhat of a misnomer or mutually exclusive mistake with "responsible" and "federal budget" in the same sentence.

Headlining the event was none other than the master thief, Fed Chairman Ben Bernanke, who spoke for about ten minutes to open the affair. In a somewhat petulant and, at the same time, preachily pedantic statement, Bernanke made an open threat to the citizens of the United States. As he outlined the possibilities of congress not raising the debt ceiling he said,

"Some have suggested that payments by the Treasury could be prioritized to meet principal and interest payments on debt outstanding, thus avoiding a technical default on federal debt. However, even if that were the case, given the current size of the deficit and the uneven time pattern of government receipts and payments, the Treasury would soon find it necessary to prioritize among and withhold critical disbursements, such as Social Security and Medicare payments and funds for the military." [emphasis mine]

There you have it folks. The Chairman of the Federal Reserve - a private bank in every sense of the word "private" - telling the world that failure to raise the debt ceiling would result in the US government defaulting on its obligations to its people. Not that the US government could send home millions of worthless government paper-shufflers or stop payments to oil companies or foreign countries, no, the government would stiff the elderly, the sick and infirm and those who fight our wars for global US dollar hegemony in the military.

Nice, huh?

Sickening is what it is. Absurd. Bizarre. Mere words cannot adequately describe the mendacity of the elite banker/politician class, their abject scorn for the public nor their ability to destroy in the last ten-and-a-half years what took 200 years to build. The American public, and, to some degree, the populations of the rest of the world are now and have been at the point of the spear wielded by the elitists of the world.

Just in case anybody is wondering, the chance of congress NOT raising the debt ceiling are about the same as the federal funds rate: approaching ZERO.

Today's well-orchestrated market response was a mammoth rally on - big surprise - the lowest volume in three weeks. Now we will be told by the mainstream mouthpieces in the media that the US economy is just in a soft patch on the road to recovery. All is well. Go out and spend.

These are free markets? Really? Go back to sleep if you believe that.

Dow 12,076.11, +123.14 (1.03%)
NASDAQ 2,678.72, +39.03 (1.48%)
S&P 500 1,287.87, +16.04 (1.26%)
NYSE Composite 8,132.77, +115.71 (1.44%)

Now, this is where it gets even weirder. Market internals show advancing issues beating decliners by a whopping 5268-1383. On the NASDAQ, there were 30 new highs and 68 new lows. The NYSE showed 30 new highs and 28 new lows, so the indicator is still negative with the combined 60 new highs bettered by 96 new lows. Give them a few days, though, and the market manipulators will turn these numbers around, even after eight straight days of the lows leading the highs.

Did somebody mention that volume was non-existent, and, normally, low volume on a huge upside day is a sure sign that the rally was a fake? Note that options expiration is Friday, and some rather large bets were likely cashed today.

NASDAQ Volume 1,725,560,250.00
NYSE Volume 3,972,814,250

Another sure sign that the planet is in the death grip of the banking cartel is that oil spiked by $2.07 today, to $99.37 per barrel. Flows into precious metals were strong, however, with gold up $8.80, to $1524.10 and silver ahead by 63 cents, to $35.39.

The hubris from the Fed Chairman today was breathtakingly simple and completely without precedent. We are owned.

Monday, June 13, 2011

Stocks Up? Not Really.

The desperation, both on Wall Street and in the hallowed halls of Congress and at the white House, is becoming palpable and, if the whole sordid state of affairs of our economy were not so profoundly sad, laughable.

Today, the wizards controlling the High Frequency Trading (HFT) computers, which account for about 75% (some say it's more than that) of all stock trades, managed to send the broad indices up in the morning, down a bit in the afternoon and close nearly unchanged. This is a very neat trick, devised to scalp money from day-traders, hedge funds, momentum players and anyone else foolish enough to venture into the caverns of Wall Street.

What it is not, is indicative of a stable condition in the markets. The current environment is about as unstable as it has been since the fall of 2008, when the entire global financial system nearly fell off the rails. There is the condition of the Greek debt, which sorely needs restructuring and plans have come, gone, come back, been revised, altered, accepted, rejected, sliced, diced, proposed, failed, and eventually found to be lacking. Greece will default; it is only a matter of time, as will Ireland, Spain, Portugal and maybe even Italy, Hungary and other small countries, like Balarus, which already has revalued its currency. Ouch.

It's interesting to note that Belarus took the extreme measure of revaluing its currency in light of a current account deficit that was 16% of GDP. In the US, congress is toying with raising the debt ceiling, and if it does so, will likely result in a current account deficit that's at least 10-12% of GDP. We're getting closer, and we can do it, for sure. USA - USA - USA!

Today's flat line finish was a sham. Take a look at the shattered internals.

Dow 11,952.97, +1.06 (0.01%)
NASDAQ 2,639.69, -4.04 (0.15%)
S&P 500 1,271.83, +0.85 (0.07%)
NYSE Composite 8,017.06, +0.67 (0.01%)

Losing stocks led winners by a wide margin, 3918-2699. NASDAQ new highs: 32; new lows: 139. NYSE new highs 21; new lows: 90. The combined total of 52 new highs and 229 new lows marks the seventh straight day in which new lows have exceeded new highs and indicates, more strongly than ever, that this downturn is going to be deeper and longer than anyone on Wall Street of in Washington is willing to disclose. A few numbers have been bandied about, like 1000 on the S&P and 10,000 on the Dow as possible bottoms, though die-hard deflationists are looking for much lower figures, rivaling or even exceeding the lows of March, 2009.

Volume was, as usual, depressed and depressing.

NASDAQ Volume 1,854,694,875.00
NYSE Volume 4,102,367,000

In deflationist terms, there was good news. WTI crude oil fell by $1.99, to $97.30, the lowest price in month. Now, if drivers can just hang on a while longer, some of the price declines may begin showing up at the pump.

Precious metals were also lower, with gold coming down $16.80, to $1515.30, and silver once again breaking below $35/ounce, down $1.44, to $34.76.

The handwriting is on scrawled across the economic wall: No growth, no wages inflation, no commodity inflation, all assets are due for another round of devaluation. Hold, wait, then buy gold, silver, tools, arable land and other desirable assets.

Friday, June 10, 2011

Stocks Down for Sixth Straight Week; Worst Since 2002

Whatever happened to the recovery? All of a sudden, nobody on Wall Street or in Washington is talking about "green shoots", improvement, growth or any of the associated nonsense that went along with the previous two years' worth of stimulus, easy Fed policy, bailouts and handouts.

But who's counting, anyway? Stocks fell for the sixth straight week, and, due to a sudden turnaround at 2:00 pm in the financial sector, the day's losses could have - and should have - been a whole lot worse. By now, the only people who don't know that we're in the throes of pure economic upheaval in its most base form - that of currency destruction - are the President (who took off early today, heading for a weekend at Camp David) and Larry Kudlow, who said last night on his CNBC show, The Kudlow Report, that he thought the "correction had run its course."

Naturally, both Larry and Mr. Obama are clueless, or hiding behind the facade of officialdom, because what's weighing most on stocks these days is the total distaste and/or disregard for all manner of equities by the general public. It should be apparent that most Americans either don't have the money to invest in stocks or have, and not liking the results, are completely out of the paper market and turning to cash, gold, silver, art, collectibles, or other commodities.

Nobody likes Wall Street's paper except Wall Street, and that's a fact well-known to anybody who's been following these things for more than the past couple of months. Wall Street paper is made up by Wall Street, distributed among themselves, and bought, sold, sliced and diced as many ways as humanly (or by computer) possible... until... there's nobody else to take the paper, and that's the condition we have today.

What other reason could there be for such a massive sell-off on such paltry, absolutely slush-fund-looking volume? The churn upwards has reversed course and the majors are now going to eat each other in a massive orgy of short-selling all the way to the bottom, wherever that might be.

In months ahead, look for blown up hedge funds, even more absurdly-underfunded pension funds and the near complete collapse of Wall Street's most-favored institutions. Some contend that the great unwind has already commenced, begun in earnest in 2007, completed in 2008 and the Spring of 2009. All that's occurred since has been a perverse show with no underlying value.

Whatever the case, stocks are no place to park money right now, and probably won't be for another few years, as the masters of the universe scramble to hold onto what little is left of the markets and the US economy.

A couple of side notes to benefit those who didn't see the carnage:

From Barron's Blog: "Financial stocks were falling in early trading, but shot up around 2 p.m. after CNBC reported that capital requirements for big banks will likely be less onerous than the market had been expecting."

That's just what we need, more leverage and easier capital requirements for the world's biggest banks. My, oh, my, what great leverage you have. Might as well make it 1000-1 and blow everything up.

Zero Hedge reports: Fed releases final POMO schedule of $60 billion.

Well, let's see how stocks fare without free money. Anybody not dreading July - the end of the Fed's slimy handouts to the banks - is living in a dream world, which would include 90% of the global population.

So, down we go. BTW: there have been other declines of six straight weeks, but the last one was in 2002. See you on the other side, if there is another side to this horrible story.

Dow 11,951.91, -172.45 (1.42%)
NASDAQ 2,643.73, -41.14 (1.53%)
S&P 500 1,270.98, -18.02 (1.40%)
NYSE Composite 8,016.39, -133.26 (1.64%)

As expected, declining issues buried advancing ones, 4462-1202. Our favorite indicator showed even more trouble ahead. New highs on the NASDAQ were subsumed by new lows, 24-163. On the NYSE, there were only 20 new highs and 95 new lows, which makes the combined total the worst since the lows overtook the highs, six sessions ago, 44-258. If history is any guide - and it's usually a good one - this indicator will not turn over for at least six months, probably longer. Once either the new highs or new lows take an edge, it's generally for an extended period. For instance, new highs held sway over new lows on a daily basis for nearly two years before this most recent change.

Volume was again pathetic. Calling it light would be quite the understatement.

NASDAQ Volume 1,978,513,625
NYSE Volume 3,972,811,750

In today's great downdraft, commodities didn't fare any better, WTI crude futures on the NYMEX tumbled $2.64, to $99.29. Gold was taken down $12.20, to $1532.10, if only because of fund managers scrambling to meet margin calls. Silver took the worst of the action, falling $1.37, to $36.20 per ounce.

Putting the recent slide into perspective, since April 29, the Dow Jones Industrial Average has fallen by 858 points, still closing in on official correction territory, soon to become bear market territory. The Dow is less than 400 points from falling into negative territory for the year. The NASDAQ is already sporting a decline for all of 2011, closing today about nine points lower than where it ended 2010. It's lost 200 points since the market top, April 29.

As for the S&P, it's 93 points down over the past six weeks and is up a mere 13 points for the entire year. Time wasted, indeed. Does anyone now think that bailing out the too-big-to-fail banks was a good idea? Had the government done what was proper - that being nothing - and allowed the banks to go under and reorganize in other mysterious forms, the global economy would most likely be booming right now. Instead, we have a global catastrophe completely of their own making which is falling down upon their heads.

A pox on all their houses. Kick a banker to the curb today. They've been doing it to us since 1913.

Thursday, June 9, 2011

Well, We All Knew This Was Coming

Nothing, in the world of the financial markets, moves in a straight line, so it was only a matter of time that the stock indices would cease falling and post a day of positive, "green shoots" results, and today was that day.

Call it whatever you like - PPT manipulation, dead cat bounce, oversold conditions, snap-back rally - it's nothing out of the norm for markets to do these kinds of things, and, taking a word from Fed Chaiman Ben Bernanke, it is likely a "transitory" event, like the wind, which passes on and blows in another time and place.

Even with today's sudden upsurge reversal of fortune, volume was horrid and stocks finished well off their highs, with widespread selling occurring in the final hour. That's likely because today's move was highly orchestrated by the usual suspects, with aid from the Fed (remember, QE2 isn't over yet). Bonds were flipped and turned into stock purchases, mostly in the very same names that control 80% of the trading on the exchanges. You know the names; no need to repeat them here.

Getting right down to it, after sustaining six straight days of losses, this was nothing about which to get excited, that's for sure. For instance, even factoring in today's gains, the Dow is still off a whopping 445 points since May 31, and 686 points since the top on April 29 (12,810).

Anyone suggesting that it is anything other than a one-day event should be barred from ever commenting on stocks or financial issues, in perpetuity. Selling stocks will resume sooner, rather than later.

Dow 12,124.43, +75.49 (0.63%)
NASDAQ 2,684.87, +9.49 (0.35%)
S&P 500 1,289.00, +9.44 (0.74%)
NYSE Composite 8,149.65, +68.30 (0.85%)

Internals were slightly improved, with advancing issues topping decliners, 3538-2116. The NASDAQ was good for 26 new highs and 119 new lows; the NYSE saw 31 new highs and 70 new lows, making our combined reading 57 new highs and 189 new lows, a fifth straight session with the lows leading the way.

Volume? Come on, now.

NASDAQ Volume 1,686,693,375
NYSE Volume 3,489,525,750

Over in the commodity space, the aberration known as crude oil futures gained $1.19, to $101.93. There is no good reason for the price of oil to be this high. A stable price of around 470-80 per barrel would be sufficient to satisfy all parties without putting unnecessary pressure on end-product consumers. If there's any one thing that will keep a slow economy from improving, it is high fuel or food prices and we have them both. Of course, the government, usually quick to impose its will wherever it pleases, does nothing about this. To put it simply, our elected officials at all levels have ceased representing the people of America long ago. In a few words, THEY SUCK.

Oddly enough, gold bugs saw right through the rise in equities and bought more, bringing the price up by $6.60, to $1544.40. Gold is still up 25% on the year. Difficult to argue with those kinds of returns. Silver was also bid higher, up 75 cents, to $37.55.

Tomorrow, the weekend. Thank goodness.

Wednesday, June 8, 2011

Stocks Continue Slide through Sixth Straight Session

Another day, another decline on US stock markets.

One should not be at all surprised by the development that stocks have found the path of least resistance to be lower. After all, they were goosed the past two years by almost $2 tillion in Federal Reserve subsidies and slippery dealings by the major banks.

Once again, stocks started out near their highs of the day, and, through a choppy session, ended in a massive sell-off into the close. The NASDAQ took the brunt of the beating, never making it out of negative territory the entire day. Again, this is unsurprising, as most of the momentum stocks which drove the two-year rally are indexed on the NASDAQ.

The bigger picture involves risk of all sorts, much of which is unquantifiable, such as the level of interest in, or general terms of, the bailout of Greece and whether or not the congressional clowns can come to some agreement on lifting the debt ceiling or not. Absent reliable information on either of those issues, and adding to the fact that there's scant economic data upon which to trade, stocks took another leg down in what is fast becoming a summer of discontent.

Perhaps the government agents and Wall Street wizards should be just happy to take their lumps in money, lest the American public come after them hammer and tong. They have destroyed not only the general economy of the nation, but have misused the public trust to a point at which there no longer is any.

The path to Dow 10,000 or S&P 1000 is likely going to be paved with the corpses of the major banks, still insolvent in many regards, especially Bank of America (BAC), which hit another tw-year low today, losing 0.11 to 10.54. Wells-Fargo (WFC), JP Morgan Chase (JPM), Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS) all took on water, though these stocks and the averages were all aided by a futile, though furious, late rally in the final fifteen minutes of trading.

Dow 12,048.48, -21.87 (0.18%)
NASDAQ 2,675.38, -26.18 (0.97%)
S&P 500 1,279.56, -5.38 (0.42%)
NYSE Composite 8,081.33, -50.34 (0.62%)

Despite the seemingly paltry losses, internals were crushed once again, and therein lies the problem with the markets. Almost everything is still overvalued and the reversal, by fear, extends to all equities. Declining issues hammered advancers, 4824-1767. On the NASDAQ, there were 22 new highs and 140 new lows, Over on the Big Board, 23 new highs, and 97 new lows, putting our totals at 45 new highs and 237 new lows, the fifth straight win for the lows, an expanding margin of difference and a sure sign the correction has further leg-stretching to do.

Volume perked up a bit from the previous two sessions, another indication that the selling pressure is intense and not about to abate.

NASDAQ Volume 2,038,875,125
NYSE Volume 4,442,987,500

Defying all logic, crude oil futures rose $1.65, to $100.74, as OPEC nations meet in Vienna, but came to no agreement on raising production quotas. It was another rough day from precious metals speculators, with gold down $6.90, to 1537.80, and silver off 17 cents, to $36.97.

Markets may get some relief from initial unemployment claims due out prior to the market open tomorrow, but counting on that is akin to betting the Cubs will make the playoffs. Not a sound bet.

Tuesday, June 7, 2011

Classic Bear Market Session Ends with Disappointment from the Chairman

There's nothing that makes a bear market more palatable than a recognizable chart pattern, and today's charts were the perfect examples.

To wit: up in the early going and down into the close, and that's exactly what the markets offered up today. There is no doubt that the bear market which began in August-October 2007 is alive and well and ready to take more money prisoner. Albeit the long interruption from March 2009 to May 2011, the long rally was nothing more than a cyclical upturn aided by trillions of dollars in free cash flow, courtesy the Federal Reserve.

Now that QE2 is coming to an abrupt end, the bears once again have their claws sharpened and are gnashing their teeth in anticipation of a tasty fete of equity fare.

Fittingly, the day ended with Fed Chairman Ben Bernanke droning on in his monotone about world economic conditions and how the Fed is powerless to do anything about the weather. Yes, he did mention the weather. In essence, his speech before the International Monetary Conference in Atlanta offered nothing to the market; there was no new policy, no mention of further stimulus. In show biz parlance, he bombed, mightily.

Stocks were up early but began selling off around 2:00 pm, wiping out all gains by the close, except in the broad NYSE composite.

It was the fifth straight decline for the Dow, S&P and NASDAQ and a sure sign of more trouble for the embattled US economy ahead.

Dow 12,070.81, -19.15 (0.16%)
NASDAQ 2,701.56, -1.00 (0.04%)
S&P 500 1,284.94, -1.23 (0.10%)
NYSE Composite 8,131.69, +15.82 (0.19%)

Advancers finished slightly ahead of losers, 3174-2454, but new highs succumbed to the downdraft of new lows. On the NASDAQ, 21 new highs, 112 new lows. The NYSE was witness to 37 new highs and 60 new lows, making to combined total 58 new highs and 172 new lows, the forth straight session in which the new lows have outnumbered new highs, and a sure sign that the market is in a correction, soon to become known as the resumption of the bear market.

Volume was scant, though that in and of itself is nothing of a surprise. It exemplifies the general weakness in equities.

NASDAQ Volume 1,861,762,125
NYSE Volume 3,681,650,000

NYMEX crude oil futures for WTI gained 8 cents, closing at $99.09. Gold lost 30 cents, to $1543.60, while silver picked up 39 cents on the bid, at $37.19.

It's a slow week, though it is only the beginning of what appears to be shaping up as one slow, hot summer of declines. There is no catalyst for buying stocks. It is, however, a great time to stock up on gold, silver and other necessary household items one might need in case of emergency, like banks closing or a false flag terror scare or the end of the Euro, which is almost a certainty. The only thing uncertain about the demise of the Euro as a currency is the timing, but rest assured, when it does happen, it will send the global economy into a tailspin.

Monday, June 6, 2011

Stocks Pounded Again as No Catalyst Exists; BofA Gets a Taste of Own Medicine

After last week's carnage, traders lined up on Monday for what looks to be one of the duller trading weeks of the year, though the Greek bailout crisis in Euroland might change the scenario a bit.

There is scant economic news and the quarter doesn't end until June 30, so there are no corporate quarterly earnings reports on which to trade, which leaves markets in a situation nearly resembling "every man for himself."

Inasmuch as traders are a courageous lot, there was some horse-swapping in the session, though most of it was in the form of shedding assets because the US economy looks to be falling back upon itself and could be headed for another recession. QE2 ends abruptly just after options expiration on the 17th, so one could expect an even more severe downturn at that time.

Banks are once again in the cross-hairs. They led today's decline and are possibly among the worst risk assets to be holding at present, especially in the case of the big ones: JP Morgan, BofA, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo.

While many have taken to calling this a "soft patch" - which is just another term for "I have no idea because I only can make money when stocks go up" - more hardened economists see the current condition as analogous to the Fall of '08, as Greece (and maybe Spain, Portugal and Italy) takes the place of Lehman Brothers and another solvency crisis comes to bear.

However, it could be even deeper than that, with one of the major US banks finally throwing in the towel. In that case, it's likely to be Bank of America (BAC), which was highlighted in Fortune magazine on Friday.

In the article linked above, contributor Abigail Field - who has penned a number of solidly-researched pieces on the mortgage crisis - claims that the extent of sloppiness, incompleteness and outright fraud contained in mortgages originated and securitized by Countrywide (taken over by Bank of America in 2008) is likely much more severe and perverse than anyone had imagined and BofA wasn't letting on about it.

Bank of America is easily the one most crippled by the mortgage and foreclosure crisis and the extent of their losses may have been (probably is) grossly understated, both by the bank and by regulators. The sheer volume of bad loans, fraudulent documents and outright chaos in the mortgage servicing department of Bank of America would have taken down a smaller institution years ago, but BofA is the nation's largest bank and they've been aided continuously by the Federal Reserve, at taxpayer expense.

The severity of the crisis continues to dog the mega-bank at every turn and they may have to make the decision of off-board the entire Countrywide unit in order to salvage what remains of their institution. Of course, this is speculation, but the regulations still being written for the Dodd-Frank bill may be complete enough to call for an orderly winding down of the bank should it pose systemic risk, and surely it does.

To a lesser extent, Wells-Fargo (WFC) faces the same situation, as they managed to snatch up Wachovia - and all their no-doc, low-doc loans - during the turmoil of the financial crisis.

On the day, both stocks finished well into the red, with BAC falling to its lowest closing level since May 15, 2009, breaking below the close of 10.92 on November 30, 2010, losing 45 cents, to 10.83. Wells-Fargo (WFC) lost 0.60 to 26.26 and is close to making a double-bottom.

Today was a truly ugly day on Wall Street, as stocks simply lost value steadily, albeit slowly, throughout the session. The lows of the day were reached shortly after 3:00 pm and an abrupt rally fizzled in the final minutes. Nothing but reluctance to sell is keeping this market from an outright crash.

Dow 12,090.11, -61.15 (0.50%)
NASDAQ 2,702.56, -30.22 (1.11%)
S&P 500 1,286.17, -13.99 (1.08%)
NYSE Composite 8,115.87, -106.28 (1.29%)

Despite the modest declines, internals were shattered. Losers dominated winners, 5175-1436. The NASDAQ posted just 31 new highs, overwhelmed by 131 new lows. On the NYSE, there were just 27 new highs, but 65 new lows, putting the combined number at 58 new highs to 196 new lows. This is the third straight day of the lows beating the highs. On Thursday of last week, it was 115 to 76 and Friday saw 130-68, both in favor of new lows.

This is a very telling sign that we are about to enter a serious correction which should last months, at least through September. A ton of money has already fled stocks and more will follow. Volume was moderate, but only because there are fewer and fewer players every day.

NASDAQ Volume 1,826,802,125.00
NYSE Volume 4,034,310,000

Crude oil futures fell $1.21 to $99.01. Gold advanced $2.40, to $1544.80. Silver finished up 51 cents, at $36.80

Finally, in the video below, some justice was served in Florida, where Bank of America got their just deserts.

Friday, June 3, 2011

At the End of the Day, Everyone Knew This Was Coming

With the 8:30 am release of the May Non-farm Payroll date from the Bureau of labor Statistics, the bad news - for which everyone in the world had been pre-conditioned by NBC, CNBC and any other reliable propagandist sources - was finally revealed.

Only 54,000 new jobs had been created by the great ponzi scheme, the unimaginative artificial stimulus and $600 trillion in fresh buckeroos since last September from Fed Chairman Ben Bernanke.

The Keynesian experiment can now be exposed as the colossal failure that it is, though already the talking heads, left-wing politicians and idiotic economists from the Ivy League's ivory towers are already suggesting that the slowness in job creation is merely a "soft patch" in the recovery.

It is nothing of the sort. The US economy is closer to a complete shutdown and recession than at any time since the grand collapse in the fall of 2008. Not only were the NFP numbers off by grotesque magnitudes of scale, any suggestion that conditions will improve over the summer - while the worst congress in the history of our nation idly postures over the debt ceiling and enormous deficits - is nothing short of hot, gaseous, noxious air, the kind most prevalent inside Washington DC's beltway.

Rather than belabor the obvious: that the economy is stuck in first gear, if not simply idling, it is time for Americans to come to grip with what we have. And that is an aging population living on borrowed time, borrowed money, false hope and remembrances of things past, without an industrial base, energy policy, sound money, honest markets nor anyone even remotely willing or able to fix them.

We are a hollow shell of a formerly great nation, put on its collective knees by a cabal of bankers and politicians whose only purpose has been personal gain and control, a control which they are rapidly losing. 17% of the country receives food stamps. More than half the country depends on some form of government check for their basic needs. The middle class has been relegated to numb consumers of foreign goods, many without jobs and those that have them living in abject fear of losing them.

Nobody except bankers get raises, educational standards have been lowers persistently over the past forty years, though that's hardly a problem since there is no steady employment for engineers, chemists, biologists, and a raft of other high-skilled fields of endeavor.

All of the economic numbers for the past month have been dismal, despite the government's best efforts to fudge, obfuscate or otherwise obscure the truth that we, as a nation, are smack dab in the middle of the worst depression in the country's history.

People are living in houses without paying mortgages for two, three and four years because the banks can't produce clear titles, the courts are overwhelmed even when they dispense justice properly, which is seldom, and the number of weeks spent on unemployment is now at an all-time high.

Housing values have plummeted to levels worst than during the Great Depression, gas is more than ten times as expensive as it was 40 years ago, new car sales, retail sales, industrial production, capacity utilization, factory orders and durable orders are beginning to fall off a cliff. Municipalities everywhere are struggling to close budget deficits, while pensions are underfunded and tax receipts are falling. About the only thing that isn't falling apart the amount of outright lying and deception delivered daily from the various mainstream news outlets, politicians and business leaders, some of whom have already jumped ship and are oopenly saying that another recession is on its way (considering the first one ever ended).

And that's the good news.

It's good news that all of this is finally getting to see the light of day, so that Americans can outrightly reject any and all new proposals, taxes, regulations, elections and instead stand for change.


because the jobs data and all the other bad data from the past three weeks show that central planning doesn't work. Bailouts of insolvent banks don't work. Giving taxpayer money to the richest people and foreign financial institutions doesn't work. Mark this day down because it is the date upon which Wall Street, the Fed and the federal government (throw in the mainstream media for good measure) are shown to be complete frauds, liars and cheats, absolutely unfit to serve the good people of America in any capacity.

America can and will survive. Watch for more of the following, strictly from the private sector:



rent parties

barn raisings

barter clubs

independent contractors

tax evasion

home business

cottage industry

buy American!

back yard garden

handymen (and women)

underground economy

black markets

and forget the following:

mortgage payment

property tax increase (or any tax increase for that matter)

bank loans

TBTF (at least two of the big four BAC, JPM, WFC, C) will fail within a year

minimum wage

health insurance

The restructuring of America can begin apace! Get the insurance companies out of health care and let doctors earn their livings like they should, treating their patients individually.

National banks will become much smaller.

The Fed has to go.

Back to the gold standard or some semblance of sound money.

We can also repeal the minimum wage, along with severely limiting all the other employment regulations, like unemployment benefits, worker's comp, Social Security and medicare deductions, etc.

Start putting up WE WIN! signs and people will first think you're nuts, until they start seeing you living better than them by rejecting the status quo.

It's time to put away the idea that government can fix problems, because they simply create more of them, along with wars, fear, famine and homelessness and time for Americans to do what they have always done in times of crisis: stand up individually and take control of your lives.

Stocks tumbled again, on low volume, but it could have been worse. Since the poor jobs number was telegraphed by the ADP report, much of the selling was already well underway on Wednesday. Today's figures were mostly priced in, though since there's almost no participation by individual investors at this point, the big, controlling interests can hold a while longer and take stocks down as they please. Wall Street has been and now is completely irrelevant. One could do better stuffing dollars into mattresses than taking a flyer on the various stock offerings being kicked about.

Th Dow Jones Industrial Average fell for the fifth consecutive week, the largest expanse of time for continuous losses since 2004, and it doesn't look like it's going to end any time soon. Stocks are probably 30-40% overvalued at this juncture, and a crash is dead ahead.

Dow 12,151.26, -97.29 (0.79%)
NASDAQ 2,732.78, -40.53 (1.46%)
S&P 500 1,300.16, -12.78 (0.97%)
NYSE Composite 8,222.15, -55.61 (0.67%)

Declining issues buried advancers, 4809-1792. NASDAQ new highs totaled 31, while there were 82 new lows. ON the NYSE, 37 new highs did not measure up to 48 new lows. Combined, there were 68 new highs and 130 new lows. The most reliable leading long-term trend indicator - highs-lows - has been flashing signs of reversal for months. This should be the tipping point after which the direction will be identified undeniably as straight down. As long as new lows outweigh new highs for a period of more than about six to eight trading days, there is virtually no way to reverse the trend. It also will be telling if the gap between the highs and lows continues to widen. Even as such, the Dow has already shed 657 points from its nominal high, reached exactly one month ago today. The turnover in the highs-lows is just now confirming the trend despite desperate pumping, dumping and priming by manipulative stock insiders.

NASDAQ Volume 1,908,014,125
NYSE Volume 4,028,291,000

The commodities markets were a tragi-comedy of denial that global deflation has ensued. All manner of commodities fell sharply in the morning, only to be ramped back up in the afternoon. Crude oil fell by a laughable eleven cents! to close at an abysmally-overpriced and speculatively-inflated $100.22.

Gold could not be held back, gaining $9.20, to $1543.00. Silver, despite being pushed down to near $35 early on, ended up 17 cents, at $36.32.

At least the weather is better. This is by no means over. Rather, a collapse worse than 2008 is already in the cards, though not represented in prices. The sum of all fears is on its way and it will be deflationary, desperate and lasting for more than a generation.

Thursday, June 2, 2011

Interest Rate Math and the Gathering Collapse of GDP

Taking a break from the usual, tired explanations of why the economy is imploding or why stocks went up or down on a particular day, today we will endeavor to discovre how much money is being lost to the US economy via the Federal Reserve's Zero Interest Rate Policy, that drives all other rates towards ZERO.

The idea for this enterprise came from an article n the September, 2010, edition of Reader's Digest, titled "Bonus Question" by Michael Crowley, abot how Wall Street profits at the expense of the middle class, especially through low interest rates. There's a podcast of the article available here.

The premise is simple. A long time ago, somebody, probably one or both of our parents, told us that saving was a good idea. And it was, especially when you could get 5% interest in a savings account.

Well, times have changed. One per cent is now the norm for CDs, savings accounts, money markets and other similar investments. So, the question emerges: how much has the Fed's Zero Interest Rate Policy (ZIRP) cost the middle class and the overall GDP?

Let's take an example of a person or couple having put away $300,000 for retirement, their plan, to retire on that money (they'll probably need more) and use the interest to pay for much of their daily living expenses. At 5% interest, they'd be looking at $15,000 a year, which is a very good start and would cover at least food, fuel and probably most of the rent.

But, let's suppose they've still retired, but they are only earning 1% today. That's only $3000, or, in other words, $12,000 that now has to come out of the principal, so every year that the Fed keeps ZIRP in place, they'll have to spend more and their net worth declines, impoverishing themselves and their heirs, someday in the future.

Editor's Note: I would like to point out that I'm using $300,000 in savings as an example here, figuring it is probably around the median savings of the already retired. Surely, many have saved less, but quite a few have saved even more. Actually, prior to 2000, the number was probably quite a bit higher.

OK, so now we can clearly see that the ZIRP has benefitted banks and Wall Street, as they borrow at nearly zero and lend at higher rates while investing in riskier assets like stocks and commodities. Retired individuals have no doubt tried to do the same with their savings, but the results have been poor over the past decade.

Getting back to our original premise, we have an average of $12,000 being lost to ZIRP, the money coming from the principal rather than interest. But suppose we say that this money is not being spent - and in some very real ways it isn't - because these retired folks are spending less on discretionary items since they have poor prospects for the future. Any way you look at it, ZIRP is causing a reduction in spending by seniors.

How much? Good question. We took a look and found that in April, 2011, there were 36,378,000 people collecting Social Security aged 65 or over.

So, simple math tells us that because of the Fed's ZIRP, there's roughly (36,378,000 X $12,000) $436,536,000,000 being lost in general spending to the economy. That's close to half a trillion dollars, and since we're two-and-a-half years into the Fed's ZIRP experiment, we lost that much in 2009, again in 2010 and are well on our way to doing it again this year.

Also, it's worth pointing out that Fed Chairman Greenspan, Ben Bernanke's predecessor, cut the federal funds rate to one per cent in the aftermath of the dot-com bust in 2001. Through the decade of the 2000s, the federal funds rate never got higher than 5 1/2%, and for much of the time it was well below that level, so the savings destruction has been going on for some time. We have been slowly eroding the wealth of seniors and future generations for over a decade and the effects are beginning to become quite a strain on the US economy.

So, how much damage is being done. If we can trust that number of $436,536,000,000 as the difference between 5% interest on savings versus 1%, it comes to about 3% of annual GDP, about the same amount the government would like the economy to grow annually. With the Fed's ZIRP in place, though, GDP will actually have to grow 6% just to make up the slack. And it isn't. It's not even close.

Charles Hugh Smith penned a very poignant essay on the topic of GDP on his Of Two Minds blog, in which he suggests that the economy isn't growing at all, thus reinforcing our point.

Since economics is mostly guesswork, extrapolation and statistics, please take this back-of-the-envelope with appropriate grains of salt, but the upshot is still the same: the Fed is actively destroying the savings and spending potential of seniors and anyone else who might be prudent enough to want to put something away for "a rainy day." Add in the implications of inflation, and it becomes clear why we're stuck in a no-growth economy and why deflation is not only desirable, but the best path out of our current morass.

Now, for our usual market recap:

Stocks went almost nowhere today, bothered by Wednesday's wicked sell-off and cognizant of Friday morning's May Non-farm Payroll release. Nobody seemed willing to put much "risk on", as they say, in advance of what could be a game-changing number. Most of the residual pain from Wednesday was felt in the Dow and in commodities, with the notable exception of crude oil (go figure).

Two pieces of economic data should have moved markets further to the downside, but the stubborn "recovery" crowd still refuses to buckle.

Initial jobless claims came in again above expectations (400,000) at 424,000, and factory orders fell 1.2% in April. This news, though bad, is about as good as anything seen in the past month. The Dow Jones Industrials were down nearly 100 points close to midday, but, as usual, recovered during the afternoon.

Dow 12,248.55, -41.59 (0.34%)
NASDAQ 2,773.31, +4.12 (0.15%)
S&P 500 1,312.94, -1.61 (0.12%)
NYSE Composite 8,277.76, -3.83 (0.05%)

Declining issues topped advancers, 3411-3119. On the NASDAQ, there were 30 new highs and uh, oh, 68 new lows. The NYSE saw 48 new highs and 47 new lows. Taken together, we have the expected flip, with 78 new highs being exceeded by 115 new lows. Unless the BLS pulls a rabbit out of its hat tomorrow morning and announces 150,000 or more new jobs created in May, it could mark a very important market turn that has taken many months to set up.

Volume on the day was back to pedestrian, depressed levels.

NASDAQ Volume 1,886,108,625
NYSE Volume 4,256,270,500

Crude oil was lower for much of the session, but finished the day up 11 cents, at $100.40, even though the government reported an inventory build of 2,878,000 barrels for the week ending 5/28.

Gold was punished again for being an alternative to paper money, losing $4.80, to $1534.30, though still very near all-time highs. Silver took more lumps, down 64 cents, to $36.18.

Just for fun, here's a chart which helps explain where the US economy is really heading via the Debt-to-GDP ratio:

And if that doesn't whet your technical appetite, try this long term chart of the S&P 500 measured in gold.