Friday, June 29, 2012

Another Euro Deal, Another Knock Your Socks Off Rally

Being Friday, European leaders ended their two-day summit on a positive note - to wit: European leaders agreed to create a single supervisory body to oversee the eurozone's banks which could use the single currency area's rescue funds, the European Financial Stability Facility or European Stability Mechanism, to aid banks directly without adding to governments' debt.

Well, that nugget, around which the narrative goes something like, "this is a step closer to a fiscal union," but which in essence only makes it easier to shift money from one bailout fund to another and to respective countries' broken banking systems and still solves nothing in terms of the real debt crisis faced by the EU, was enough to send markets higher around the globe.

Beginning in the Far East, where stock indices rose in unison by 1.11% to 2.59% (except Malaysia, which was up only 0.31%), equity markets had one of their cheeriest sessions in weeks.

Once trading began in Europe, the noise was amplified, with stock indices up hugely. At the low end was the Swiss market, which gained 1.33% on the day, though Germany's DAX and France's CAC 40 were ahead by 4.33% and 4.75%, respectively, at the close. All of the markets were topped by Greece, which saw the Athex Composite bubble up by 5.88%.

By the time US markets were gearing up for their open, index futures were nearly limit up, with Dow futures pointing to a 200-point gain at the outset. Following Thursday's late day ramp-up, a systems pointed to a serious end-of-month short squeeze combined with the usual end-of-quarter window dressing, and the markets surely did not disappoint.

Stocks roared out of the gate and held their strong gains throughout the session, one of the best of 2012, ending a week of turmoil and apprehension with a powerful rally to take investors into the third quarter with a full head of steam.

The "new deal" in Europe, coming in the 19th summit since the financial crisis began, is set to be ratified by the participating countries and ready for implementation by July 9, which should come as welcome relief to Spain and its banking sector, which is in need of between 62 and 100 billion Euros in order to continue functioning and funding government debt.

While the suckers in stock markets around the world had themselves a field day, many know that this is only a day-trading profit environment and that within weeks, there will be more turmoil to roil markets, be it from US shores or the favored European flavor, which has become expert at sending markets lower on fear before propping them up with a summit, statement that all is well and a swift kick further down the road to the economic fiat money ponzi can.

Austerity being too much to handle for most Europeans, and growth a figment of supply-side thinkers' collective imaginations, the only solutiona the Euro-genii have come up with are more bailout funds lending to and from another within a framework of constantly-changing rules and procedures. Naturally, the effect of piling more debt upon already unpayable debt will eventually end in tears and currencies in tatters, but that result is seemingly being pushed as far out into the future as possible, all the while suspending the tenets of traditional economic thinking.

Well, at least the leaders in Europe are looking out for the "little people" by giving them a morale boost on a Friday afternoon... before taxing them into servitude by which to pay off the gigantic debt bubble being created. The people, primarily taxpayers - except in Greece, where tax avoidance is a national pastime - seem to be content with having more time to enjoy their little lives or prepare for the ultimate end of the fiat money regime, which must come, sooner, if not later.

One of the downsides of all this "feel good" economics being parlayed from the Fed to the Europeans and back again is that it is all inherently inflationary, and commodities didn't miss a step in joining into the all-asset-classes-ramp-up-free-for-all. Oil had one of the biggest one day jumps in history, and even the precious metals could not be contained in the short-squeezing euphoria.

But for now, it's all good. As the 1969 Peggy Lee hit, Is That All There Is, penned by the songwriting duo of Jerry Leiber and Mike Stoller, so solemnly intoned, "...let's keep dancing, let's break out the booze and have a ball, if that's all there is..."

Here's Peggy:

Free houses for everybody, eventually.

Dow 12,880.09, +277.83 (2.20%)
NASDAQ 2,935.05, +85.56 (3.00%)
S&P 500 1,362.16, +33.12 (2.49%)
NYSE Composite 7,792.53, +195.02 (2.57%)
NASDAQ Volume 1,780,693,750
NYSE Volume 4,426,005,000
Combined NYSE & NASDAQ Advance - Decline: 4898-809
Combined NYSE & NASDAQ New highs - New lows: 378-35 (WOW!)
WTI crude oil: 84.96, +7.27
Gold: 1,604.20, +53.80
Silver: 27.58, +1.33

Thursday, June 28, 2012

Supreme Court Affirms Health Care Mandate; Stocks Erase Losses on European Rumors

Kiss the US constitution goodbye... or, rather, what's left of it.

When the Chief Justice of the Supreme Court breaks ranks with his fellow conservative justices to affirm that all Americans must purchase health care insurance or be fined, siding with four liberal justices - who, by the way, should be stripped of their robes - in a matter of such great economic and political importance, then there's no hope left for the system left by our founding fathers.

Count Chief Justice John Roberts as just another Washington politician either bought and sold by special interests, playing presidential politics serving a master other than the people of the United States. Whatever the case, the law be damned with this horrendous decision, which accomplishes nothing other than to feed more fodder into the cannons of the upcoming political debate.

Republican presidential candidate Mitt Romney immediately went on the offensive, while the White House checked off a mark in the victory column. Choosing to evade the issue of whether the mandate violated the commerce clause, by calling the "penalty" a tax, the five affirming justices simply kicked the can down the road a pace, a maneuver that's well-learned in the halls of power these days.

Next, they'll be telling Americans to quit smoking or be fined, stop eating fatty foods or go to jail or by whatever "legal" means strip common citizens of even more rights while emptying their pockets of any available cash.

It's a sham, much like most of what comes out of Washington, DC, these days. The best solution, on an individual basis, is to ignore the law and resist any and all attempts to circumvent the constitution with passive opposition, or, failing that, take to the streets and fight (the author is dreaming).

After the initial shock and awe over the Supreme Court shocker, stocks continued to trend lower, as they had all day, until, with less than an hour left in the session, news from Europe that Angela Merkel had cancelled a conference call scheduled for tonight had stocks moving well off their lows, finishing with comfortable losses rather than worrisome ones.

The official story of the Dow erasing most of a 177-point decline is, of course, bunk. This was an orchestrated move to get stocks back into a more tenable range of trading as the second quarter comes to an end with Friday's closing bell and make today's closing numbers look more appealing to the herd of sheeple that populate the nation.

Not a thing is going to be resolved in Europe at the latest in a series of meaningless summits, so, for whatever reason, the HFT mechanisms which control 85% of the trading on Wall Street simply went into overdrive on a "risk-on" scenario late in the day.

The move, like most of what passes for economy and trading these days, was another pathetic example of why most individual investors have pulled their money out of stocks altogether and will remain on the sidelines until some semblance of balance and fair play is returned to the equity markets (more wishful thinking).

Meanwhile, commodities were lambasted, with oil down sharply, silver closing at its lowest level of 2012 and gold dropping close to its lower support.

For whatever it's worth, a growing number of Americans and professionals in the fields of finance and economics think the Wall Street casino is a complete and total farce.

Those embracing that line of reasoning are surely on to something.

Dow 12,602.26, -24.75 (0.20%)
NASDAQ 2,849.49, -25.83 (0.90%)
S&P 500 1,329.04, -2.81 (0.21%)
NYSE Composite 7,597.50, -0.55 (0.01%)
NASDAQ Volume 1,753,433,750
NYSE Volume 3,867,150,000
Combined NYSE & NASDAQ Advance - Decline: 2697-2879
Combined NYSE & NASDAQ New highs - New lows: 122-99
WTI crude oil: 77.69, -2.62
Gold: 1,550.40, -28.00
Silver: 26.25, -0.70

Wednesday, June 27, 2012

Stocks Gain on No News; Barclay's Fined, Phil Falcone Nabbed by SEC

As this market has shown consistently over the past few years, no headlines, no problem, and it's off to the races we go.

With the EU summit still a day away and some nearly-positive news in the form of a May durable goods number that came in plus 1.1%, above expectations of 1.0%. There is also a buoyant attitude surrounding the housing market these days. After new home sales showed a boost on Monday and the Case-Shiller 20-City Index was up on a monthly basis, a 5.9% gain in pending home sales from April to May added momentum to home builder stocks.

For the second straight day, there was near silence from Europe, which served to keep stocks rolling right along throughout the session.

It was also a day for regulators to catch up with a couple of the crooks, and what better reason to bid up stocks, as the ROI on financial crime is stupendous.

Billionaire hedge fund operator, Phil Falcone, who made a ton of money in 2007 betting against sub-prime mortgage securities, was charged by the SEC with securities fraud along with the firm he founded, Harbinger Capital Partners. Sadly, the charge, among others, is civil, no criminal, and centers around Falcone's receipt of a $114 million loan from his fund to pay his taxes and other schemes, such as short selling and short squeezing.

Also, Barclay's has agreed to pay British and US authorities $453 million in a settlement over allegations the firm manipulated key overnight bank lending rates know as Libor. Being the first to be nailed in association with the probe, the door is now open for regulators to go after other financial firms who may have colluded to rig the Libor.

Laughably, the US Department of Justice said that its criminal investigation is ongoing and focused on a wide swath of banking interests which may have taken part in a conspiracy to manipulate the Libor. If any charges are ever brought, expect them to coincide with President Obama's re-election bid. Like local police who round up prostitutes just before a sheriff's election, the feds operate in much the same manner.

Stocks galloped out of the opening gate and closed near the highs reached in the middle of the day.

Dow 12,627.01, +92.34 (0.74%)
NASDAQ 2,875.32, +21.26 (0.74%)
S&P 500 1,331.85, +11.86 (0.90%)
NYSE Composite 7,597.99, +70.90 (0.94%)
NASDAQ Volume 1,550,569,000
NYSE Volume 3,249,099,500
Combined NYSE & NASDAQ Advance - Decline: 4207-1385
Combined NYSE & NASDAQ New highs - New lows: 180-76
WTI crude oil: 80.21, +0.85
Gold: 1,578.40, +3.50
Silver: 26.94, -0.10

Tuesday, June 26, 2012

Markets Barely Budge on Quiet News Day

In the headline-driven market that has evolved into what passes today for what used to be among the finest equity discounting exchanges in the world, there was very little upon which investors could base a trade.

Europe was relatively calm, even though Moody's downgraded all Spanish banks after the close on Monday and Crete has become the latest nation to be seeking assistance from the European Union.

There was the badly out-dated Case-Shiller 20-City Index, which was up 1.3% in April from May, but fell 1.9% from a year earlier. The 10:00 am EDT June consumer confidence reading of 62.0 - down from 64.4 in May - did nothing to bolster sentiment.

Thus, US markets fell and rose over the course of the session, ending the session with marginal, almost worthless gains. Volume was poor, as usual, the advance-decline line improved over Monday's performance, but new lows outnumbered new highs for the second straight day.

All of this inactivity in a dull session gives rise to feelings - as opposed to yesterday's gloomy assessment - that this market may wish to move in a sideways pattern for the summer's duration. Most indicators are such that any good news is followed by bad, even though the usual chorus of "stocks are cheap" can be heard from the perma-bull crowd.

Such a market gives rise to feelings of anxiety over the future, but an urge to take a flier here and there, so, while wild swings in either direction are possible, the overall trend may be to drift, and quite possibly to edge lower.

It's a real guessing game at this point, with so many balls in the air, so to speak.

Any movement may be caused by Thursday's initial unemployment claims or what new nonsense comes out of the EU summit this Thursday and Friday.

Dow 12,534.67, +32.01 (0.26%)
NASDAQ 2,854.06, +17.90 (0.63%)
S&P 500 1,319.99, +6.27 (0.48%)
NYSE Composite 7,527.08, +35.21 (0.47%)
NASDAQ Volume 1,592,364,125
NYSE Volume 3,366,000,500
Combined NYSE & NASDAQ Advance - Decline: 3352-2202
Combined NYSE & NASDAQ New highs - New lows: 132-136
WTI crude oil: 79.36, +0.15
Gold: 1,574.90, -13.50
Silver: 27.04, -0.48

Monday, June 25, 2012

Europe's Pain Keeps World Markets in Red as Week Begins Badly

Back in the headlines again, Europe's continuing woes took front and center position in Monday's investment landscape.

Spain kicked off the festivities with a formal request for aid of up to 100 billion euros for their busted banking sector as they await a ratings cut from Moody's on all Spanish banks, expected to be delivered after the close of US equity markets.

The reality of another bank bailout by the EU and the rumors of the Moody's downgrade was enough to send all European indices lower, lead by the Athens Index Composite, which fell 6.84%. The Swiss Market was harmed the least, down on 0.75%, while the French and German bourses fell by more than two percent.

Greece added to the downside momentum as newly-appointed Finance Minister Vassilis Rapanos resigned his post due to ill health. The tiny island nation of Cyprus became the latest victim, telling the EU that it needs a bailout for its banks - heavily exposed to Greece - and its public sector economy. Estimates call for immediate funds of between 5-10 billion Euros to keep the nation banks and government operating.

US markets fell out of bed like a drunk with a bad hangover, down right from the opening bell through to the close, with the NASDAQ leading the way lower, followed closely by the S&P 500.

Stocks staged a small, uninspired rally near the end of the day, but there was little support to the buying. The evidence that the world is on the brink of a catastrophic global depression are simply too obvious to mask further. Investors are running scared money into the meat-grinder that is otherwise known as the capital markets in hopes that the European leaders will offer some kind of plan to end the crisis, one which has already spread across the nations on the southern periphery.

Internals suggested that today's moves could be a turing point for US markets as losers led gainers by a more than 3:1 margin and new lows outnumbered new highs by nearly 2:1.

The new highs to new lows reading, which has been consistent over the years as an early indicator of bullish and bearish trends has recently vacillated between positive and negative, so a sustained period in which new lows exceed new highs would point toward a more severe downturn and a return to bear market conditions.

As of today's close, the Dow is resting at 6% below the May 1 highs, so a move below 11,000 would have to be reached before true bear market conditions (-20%) would prevail. With the situation in Europe continuing to unravel and conditions in the US not gathering any momentum and actually, according to the latest data, already showing signs of stress and weakness, a downturn of that severity cannot be ruled out through the summer months, which are traditionally a slow period for stocks.

Whether the pain comes in the form of a sudden event or as a slow, painful, prolonged ordeal depends greatly upon how panicked investors become. With news and events so highly unpredictable, but bordering on crisis levels, a major happenstance could come from any quarter, be it Syria's upheavals, Germany contentious position or the collapse of Greece or Spain or even the unthinkable, Italy or France.

Once again, it cannot be stressed too much that events may be politically manipulated to coincide with the US presidential election in November, so great caution is urged, especially into the latter stages of the election cycle, late September into October.

Of course, media control being practically omnipresent, the outbreak of war or economic apocalypse could be spun into a positive, though that kind of propagandizing would only satisfy the controllers wishing to make a quick killing as it would likely be unsustainable in light of the true picture.

Following Friday's phony fermentation to the upside on global banks' repudiation of Moody's massive, across-the-board downgrades, it's a very good possibility that the manufactured rally was nothing more than another scam on the public to the profit of the banking cartel, who went long and then short, winning on both sides of the trade.

With that kind of perfidious behavior prevailing in nearly all capital markets, day-to-day movements should be greatly discounted and longer term trends the focus of greater scrutiny.

Dow 12,502.66, -138.12 (1.09%)
Nasdaq 2,836.16, -56.26 (1.95%)
S&P 500 1,313.72, -21.30 (1.60%)
NYSE Composite 7,491.90, -124.69 (1.64%)
NYSE Volume 3,433,923,250
Nasdaq Volume 1,432,183,125
Combined NYSE & NASDAQ Advance - Decline: 1362-4261
Combined NYSE & NASDAQ New highs - New lows: 87-163
WTI crude oil: 79.21, -0.55
Gold: 1,588.40, +21.50
Silver: 27.52, +0.86

Friday, June 22, 2012

15 Global Banks Downgraded by Moody's; Stocks Rally (Really!)

Wrapping up the week that was, it can truly be said that the level of fraud and deceit by the banks and brokerages is matched only by the complacency of the general public.

Fifteen major global banks were downgraded by Moody's late Thursday afternoon - after markets had closed, though news of the downgrades had been leaking out all say - setting up denial central, in which the very banks' downgraded criticized Moody's for being, among other things, "unwarranted," "arbitrary," and "backward-looking." Too bad these scammers can't take honest medicine, even from a firm that is purportedly "one of their own."

Readers should recall that during the sub-prime scams of 2005-09, Moody's was one of the select ratings firms that deemed the obtuse and overtly fraudulent residential MBS as AAA-rated.

In an outlandish market reaction, financials led Friday's early advance. So much for fundamental analysis. Ratings, upgrades and downgrades now count for about as much as Jamie Dimon's hat size, which we have heard is rather enormous.

The list of downgrades (which took more than a half hour's time to locate) includes Bank of America, Barclays, Citigroup, JP Morgan Chase, Credit Suisse Group AG, HSBC Holdings, Morgan Stanley, Goldman Sachs, Deutsche Bank, Royal Bank of Scotland Group, BNP Paribas, Credit Agricole, Royal Bank of Canada, Societe Generale and UBS AG. That's all 15, though Moody's website features a grand runaround to find the list including the actual levels of downgrades (we gave up because apparently, this information is not conducive to the free flow of information and markets).

In a fitting riposte, Max Keiser channels Friedrich Neitzsche in this interview, intoning, in the finest guttural indignation, "Banks are Dead!"

Stocks registered broad gains during the session, especially on the NASDAQ, which outpaced the other indices handily. Volume was heavy.

In closing, our steadfastness in calling banking and financial institutions criminal enterprises is often chided, but sometimes brought to light as truth. In a fascinating story by Matt Taibbi of Rolling Stone, the details of how Wall Street gangsters (dressed like bankers) skimmed millions of dollars from states, cities, towns and villages all across America is revealed.

OK, just one more: Our friends at Zero Hedge report that the ECB Officially Announces Easing Of Collateral Rules, essentially confirming that Europe has run out of assets.

Go easy on the champagne, kids, and have a great weekend!

Dow 12,640.78, +67.21 (0.53%)
NASDAQ 2,892.42, +33.33 (1.17%)
S&P 500 1,335.02, +9.51 (0.72%)
NYSE Composite 7,616.59, +50.48 (0.67%)
NASDAQ Volume 2,801,777,000
NYSE Volume 4,210,423,500
Combined NYSE & NASDAQ Advance - Decline: 3892-1703
Combined NYSE & NASDAQ New highs - New lows: 117-81
WTI crude oil: 79.76, +1.56
Gold: 1,566.90, +1.40
Silver: 26.66, -0.18

Thursday, June 21, 2012

Uh, Oh, Here We Go Again? German Economy Cracking

Just a day after the Federal Reserve's announcement of an extension of operation twist, reports from Europe, especially one showing a drastic slowdown in German manufacturing (Flash PMI), at its lowest level in three years, sent first, European stocks lower, and then, US stocks to even steeper losses by percentages.

Apparently, European investors had already sensed the slowdown, because the losses were not that severe as in the US. However, many of the European nations are already in or on the verge of recession, and their stock indices already in bear market territory.

For US investors, the Dow took its second-worst one-day plunge of the year, as did the NASDAQ and &P 500, exacerbated by a sharp decline in the Philadelhia Fed Index. The June reading came in at -16.2, on expectations of -0.2 (not sure just who was expecting the somewhat rosy, small negative number).

Oil also took another dip, recording the worst two-day decline in nine months.

The key numbers for stocks and commodities are below. There's little more to say except that this one-day event is just another in a long, continuous stream of deflationary, depressing economic data sets that seemingly has no end in sight.

The collapse of the global economy is like watching a slow-moving hurricane heading for a vulnerable coastal city, a la Katrina wiping out New Orleans a number of years ago. Nobody wants to believe it is going to be horrifying and devastating, but it continues apace and the closer it gets, the more people begin running for cover... or their lives.

There is almost no doubt that the world is heading for a major economic event, one which will not only devastate some of the more notorious crooks on the planet, i.e., bankers, but will also change the players and nature of national and global politics.

Just in time for a presidential election. The timing is just so delicious and sickening.

Read 'em and... don't weep. There's no crying in high finance.

Dow 12,573.57, -250.82 (1.96%)
NASDAQ 2,859.09, -71.36 (2.44%)
S&P 500 1,325.51, -30.18 (2.23%)
NYSE Composite 7,562.51, -195.40 (2.52%)
NASDAQ Volume 1,697,187,750
NYSE Volume 3,915,656,000
Combined NYSE & NASDAQ Advance - Decline: 1105-4507
Combined NYSE & NASDAQ New highs - New lows: 104-83
WTI crude oil: 78.20, -3.25
Gold: 1,565.50, -50.40
Silver: 26.84, -1.55

Wednesday, June 20, 2012

Market Response to Fed Moves More Worrisome Than Reassuring

It's funny how everything seems to work out just as planned, but markets respond in their own unusual ways.

Such was the case today, as the FOMC announced no substantive changes to their ZIRP program and extended "operation twist," designed to spur the economy by having the Fed buy up the long end of the yield curve.

Memo to Bernanke: It ain't working.

All the tricks and ploys the central bankers have up their collective sleeves have now been tried and proven to have failed. Massive injections of liquidity may have temporarily bolstered the balance sheets of some of the world's largest insolvent banks - both here in the US and in Europe - but the one proven method of clearing out bad debt that hasn't been tried - default, repudiation, bankruptcy and restructuring - is the only way the world economy is ever going to get a solid kick-start.

The Fed and its counterparts in Europe, Japan and China seem to believe they can somehow suspend rules of economics and mathematical certainty. They are wrong, and continue to be proven so every day the global economy continues to carouse through its now nearly four-year-old funk.

The action on the stock market today can best be described in horse racing terms: it was what handicappers like to call a "Z." It's when a horse starts slow, rallies in the middle of the race and then fades down the stretch to the wire. Sometimes, it's a sign that the horse may do well in a subsequent race; usually, it means little, other than the horse was ridden badly or suffers from a lack of stamina.

That analogy could easily be applied to the stock market. It has been "ridden badly" by all the desperate attempts to justify prices and it sure looks like it has been running on empty for some time now.

Today's response to the policy decision to keep rates at or near zero and the Fed's tepid reliance on the "twist" program that only produces marginal support for the economy if any at all, is another shining example of the futility of central baking, government overspending and general malaise. Now, even the cheaters, swindlers and fraudsters on Wall Street aren't happy.

Serves them all right, since most of them should have been serving long prison terms by now. Well, maybe there's hope. After all, the price of gas at the pump keeps going down nearly every day. If nothing else, at least it will be cheaper to take the car out when it's time to head for the hills.

Dow 12,824.09, -13.24 (0.10%)
NASDAQ 2,930.45, +0.69 (0.02%)
S&P 500 1,355.70, -2.28 (0.17%)
NYSE Composite 7,747.91, -18.35 (0.24%)
NASDAQ Volume 1,477,882,125
NYSE Volume 3,637,796,250
Combined NYSE & NASDAQ Advance - Decline: 2639-2903
Combined NYSE & NASDAQ New highs - New lows: 156-27
WTI crude oil: 81.80, -2.23
Gold: 1,615.80, -7.40
Silver: 28.39, +0.02

Tuesday, June 19, 2012

Positive Rumors Drive Speculative Bets Higher

While world leaders at the G20 conference in Los Cabos, Mexico, dithered over Syria and mostly glad-handed each other over a draft outline for a closer European Union (isn't it already a "union?" How much closer can these failing countries and their failing economies get?), both European and US stock markets looked to the rumor mills for reasons to buy more stocks.

They found them in the usual places: various reports suggesting that the Federal Reserve would commence another round of QE with their announcement of ZIRP - for the umpteenth time - Wednesday, just after noon; ideas being floated around that Greece is close to forming a government that would agree to austere terms dictated by Germany and stay in the Eurozone; and, more elitist propaganda that Spain's banks would somehow be saved, thus keeping the Spanish government in power and that Germany would find a way to soften its stance on that awful austerity in Greece.

Some of the nonsense being thrown around world financial news desks may actually come to fruition, most likely among them the Fed's unwillingness to stop printing worthless US dollars non-stop and the European impulse to keep Spain's insolvent banking system from imploding - at least for a few more weeks or months.

With rumors running rampant on a day that was largely devoid of real news, speculators took the signals (make that, "the HFT algos were tuned up to high volume risk on frequencies") and bid up stocks to a five-week high on the Dow, with the other major indices following along for the ride, before fading late in the session and into the close.

It appears that the markets and their insider specialists are trading on some faint hope that the global financial system will not be melting down over the long, hot summer, and the first signs should be available as early as non-ish on Wdnesday, when the Fed makes a policy statement.

We shall stay tuned.

Dow 12,837.33, +95.51 (0.75%)
NASDAQ 2,929.76, +34.43 (1.19%)
S&P 500 1,357.98, +13.20 (0.98%)
NYSE Composite 7,766.25, +103.97 (1.36%)
NASDAQ Volume 1,828,591,375
NYSE Volume 3,784,083,500
Combined NYSE & NASDAQ Advance - Decline: 4529-1105
Combined NYSE & NASDAQ New highs - New lows: 250-29
WTI crude oil: 84.03, +0.76
Gold: 1,623.20, -3.80
Silver: 28.37, -0.30

Monday, June 18, 2012

Grexit or Spanplosion, Markets in Flux; Dan Dorfman Dead at 80

This post is dedicated to Dan Dorfman, one of the pioneers and true legends of financial journalism, who passed away Saturday in New York.

The world of journalism should deeply mourn his departure, because Dan was one of the very best and brightest of all time. From his early work at the Wall Street Journal and USA Today through a TV career with CNN and CNBC to his final days with the New York Sun and Huffington Post, Dan Dorfman was always keen to break a story first, never skimping on relevance and factuality.

Throughout his carer, Dan Dorfman was as engaged as he was engaging and entertaining, no small feat, considering the dryness of his main subjects, business and finance.

By comparison, what passes for financial reporting today falls incredibly short of his standards, which he not only set, but owned, in as complete a manner as any writer or reporter could ever be expected. Words cannot fully express the magnitude of this humble man in the craft of journalism, though this brief insight by Joan E. Lappin, CFA, of Gramercy Capital Mgt. is a nice touch.

Godspeed, Dan Dorfman. Rest in peace.

As for US financial markets following the highly-anticipated elections in Greece over the weekend, which solved nothing, they are a shambles. Stocks traded in a dull, narrow range and defied the gravity of the situation in Europe to no small degree.

Bank stocks in Euopean bourses - where it's getting very real - did a seven percent turnabout to the downside, as those on the continent have perception correct: the condition of the Eurozone and the finances of its member states and their banks are in a truly horrific place. Whether Greece departs the Euro (Grexit) or Spain comes completely unglued (Spanplosion), the endgame is mostly at hand, and it's likely too late to save from complete annihilation, which, of course, would constitute a repudiation of trillions of dollars, euros and yen of personal, bank and sovereign debt. A complete reset is in the cards, only a matter of time before the world is thrust into utter chaos, which some say is pre-planned.

Whether the world's central bankers continue to print at full speed around the clock or allow deflation to take full control, the result will be the same, though most people will be barely affected, since everything is relative. $100,000 today could be worth only $15,000 tomorrow, but a new car would cost $3000 instead of $30000.

The world will survive, though the financial system of fiat money, digitized out of thin air, will eventually end, as have all such regimes, schemes and plots.

Until then, we wait and watch as little makes sense and debt piles up higher and higher around the world. There's really nothing to it all, other than to be a good Boy Scout, always prepared.

Dow 12,741.82, -25.35 (0.20%)
NASDAQ 2,895.33, +22.53 (0.78%)
S&P 500 1,344.78, +1.94 (0.14%)
NYSE Composite 7,662.29, -1.98 (0.03%)
NASDAQ Volume 1,583,473,625
NYSE Volume 3,204,991,000
Combined NYSE & NASDAQ Advance - Decline: 3083-2534
Combined NYSE & NASDAQ New highs - New lows: 176-84
WTI crude oil: 83.27, -0.76
Gold: 1,627.00, -1.10
Silver: 28.67, -0.07

Friday, June 15, 2012



Dow 12,767.17, +115.26 (0.91%)
Nasdaq 2,872.80, +36.47 (1.29%)
S&P 500 1,342.84, +13.74 (1.03%)
NYSE Composite 7,664.27 +81.44 (1.07%)
NYSE Volume 4,401,564,500.00
Nasdaq Volume... 2,085,309,250
Combined NYSE & NASDAQ Advance - Decline: 3919-1685
Combined NYSE & NASDAQ New highs - New lows: 91-47
WTI crude oil: 84.03, +0.12
Gold: 1,628.10, +8.50
Silver: 28.74, +0.33

Thursday, June 14, 2012

Stocks Gain in Yo-Yo Market

In keeping with the theme of this week's manipulation, er, trading, in the complete insider-protected day-trading megalomaical world of Wall Street, markets ticked higher again as only a smattering of news from across the Atlantic reached America's shores.

One might expect that should developments in Europe continue on their sliding downard trajectory, that America's media elite might impose some kind of blackout to prevent US markets from taking an equally-deserving dive.

Stocks got off to a slow start, but were quickly ramped higher by HFTs, hedgies and bank-owned brokerages, which took no heed of this week's higher initial unemployment claims: 386K, on expectations of 375K, after last week's mandatory revision (every week) from 377K to 380K.

CPI slipped 0.3%, a deflationary number, though the all-important (that's sarcasm, folks) Core CPI, excluding food and energy (which nobody really needs - more sarcasm) ticked up 0.3%.

The government's current account balance showed a deficit for the first quarter of $137.3B, which is something of a surprise, as the real numbers are likely much larger.

Stocks have kept to the meme of the week: down, up, down, up, and if Friday comes in with a red number, Money Daily will have correctly predicted the market move four straight days, having made no prediction for Monday. Magic!

Dow 12,651.91, +155.53 (1.24%)
Nasdaq 2,836.33, +17.72 (0.63%)
S&P 500 1,329.10, +14.22 (1.08%)
NYSE Composite 7,582.83, +76.41 (1.02%)
NYSE Volume 3,687,722,500
Nasdaq Volume 1,641,362,250
Combined NYSE & NASDAQ Advance - Decline: 3941-1661
Combined NYSE & NASDAQ New highs - New lows: 62-57
WTI crude oil: 83.91, +1.29
Gold: 1,619.60, +0.20
Silver: 28.41. -0.53

Wednesday, June 13, 2012

Stocks on Roller Coaster Ride with Greek Vote Looming; Greenspan Calls Euro a Failure

As mentioned in this space yesterday, the day-trading hedge funds and bank-owned brokerages (please, bring back Glass-Steagall) booked profits early in the day and went net short, their nifty algos doing the heavy lifting, as stocks drifted early and sank in the afternoon, making the market pulse for the week, down, up, down.

Today's action had all the earmarks of a seminal decline, with no oomph in the morning and a swift, brutal selloff which developed some serious downside momentum after 2:00 pm EDT.

While there was little to no news out of Europe to affect US stocks besides the downgrade of Spain from B to CCC+ by ratings firm Egan Jones, there was plenty right here on the home front.

JP Morgan Chase (JPM) CEO Jamie Dimon testified before the Senate Banking committee concerning his firm's $2 billion trading loss, though that made-for-TV event was little more than a dog-and-pony show, as most - if not all - of the committee members were recipients of sizable campaign contributions from the financial interests represented by the TBTF Wall Street banks, JPM a prominent donor to campaign slush funds of both parties.

Former Federal Reserve Chairman, Alan Greenspan, made some noise about the crisis in Euroland, saying that while the Euro was a "noble experiment" it is being proven ultimately a failure.

The consummate financial criminal enabler, Greenspan was an ardent advocate for repeal of Glass-Steagal beck in 1987, according to this flashback article by American Banker.

While market participants digested the day's disturbing headlines and news stories, stocks exhibited the kind of behavior befitting a system on the verge of breaking down, though outright panic still appears to be just a glimmer on the horizon.

Breadth was on the negative side for the day and new lows outpaced new highs for the second session consecutively. Oil continued its descent, continuing in bear territory following the absurd February run-up, while the fear trade in gold pressed higher, though silver continues to be suppressed, mostly by Blythe Masters, a protege of JPM's Dimon.

As the week progresses, however, a rebalancing of the S&P 500 and quadruple-witching of options and futures on Friday should determine the tenor of trading for the balance.

Dow 12,496.38, -77.42 (0.62%)
NASDAQ 2,818.61, -24.46 (0.86%)
S&P 500 1,314.88, -9.30 (0.70%)
NYSE Composite 7,506.29, -51.52 (0.68%)
NASDAQ Volume 1,528,772,500
NYSE Volume 3,363,560,750
Combined NYSE & NASDAQ Advance - Decline: 1747-3744
Combined NYSE & NASDAQ New highs - New lows: 75-112
WTI crude oil: 82.62, -0.70
Gold: 1,619.40, +5.60
Silver: 28.94, -0.01

Tuesday, June 12, 2012

Welcome Back, Volatility: Miracle Market Melt-up

Noting that the markets in the US were markedly higher this (turnaround) Tuesday, one would generally assume that some of the conditions that caused Monday's share collapse had been addressed and causing markets and investors to return to a more benign trading regimen.

Such an assumption would be, of course, dead wrong, because nothing really changed overnight. In fact, one could even go so far as to suggest that issues regarding the bailout of Spain's insolvent banks - which loan money to the insolvent Spanish government - had actually worsened, in Europe, at least.

First, there's the widespread assumption that the 100 billion euro bailout was already a done deal. It's not; not by any means. The German parliament still has to pass legislation to approve whatever funding is made available, and by which facility.

Second, the deal was supposed to have no strings attached, i.e., Spain would not have to agree to any austerity measures or fiscal controls. After all the deal was for the banks, not the government. Not so fast, my friends. Germany wants some guarantees of fiscal control and Finland has also made overtures about the need for substantial collateral.

And, if those two points are not enough, Spain will have to finance some of the bank debt itself, which is the epitome of the twisted pretzel that is the Eurozone. The Spanish government will borrow money to loan to the banks, which in turn fund the government. It's like borrowing money to loan to a friend who loans you money to pay off your debt, and we all know how those kinds of schemes turn out.

Additionally, in the utmost of ironies, Italy, the next nation in line for a likely bailout, will be borrowing money at 6% to loan to Spain at 3%. Lovely. Apparently, the Italians have been taking in a bit too much vino and forgot their 4th grade math.

So, what really changed to reverse the one-day trend lower and turn it up a few notches? Algos, naturally, the computer software that takes care of more than 85% off all trades on a daily basis, were re-programmed for a risk-on event, even though none actually took place. Around about 10:30 am EDT, with the major averages stumbling into the red, the correct knobs were turned and presto! all was well again at the Wall Street Zombie Casino.

From that time-stamp until the close, it was nothing but champagne and roses. Whoopie! Of course, the underlying theme of day-trading in both stocks and options by the hedgies and brokerages in advance of Friday's quadruple-witching event may have had a little to do with today's wicked upside.

Therein we have the week's trading strategy: Short Monday, long Tuesday, short Wednesday, long Thursday, and Friday, you're on your own, because over the weekend, Greece will once again go to the polls to see if they can elect a government in a country that neither has one nor - in the rare event that it will - heeds its dictates.

Greece could go belly up and back to the drachma, go pro-Euro and stick with the asset-stripping austerity, or alternately devolve into complete anarchy or continue to function on a day-to-day basis, essentially going sideways and solving nothing. Whatever happens in Greece, one thing is for certain: it's not going to be the final solution.

There was something of a "tell" to today's trading that belied the effectiveness of the rally. New lows beat new highs nearly 2-1.

Party on!

Dow 12,573.80, +162.57 (1.31%)
NASDAQ 2,843.07, +33.34 (1.19%)
S&P 500 1,324.18, +15.25 (1.17%)
NYSE Composite 7,557.82, +98.55 (1.32%)
NASDAQ Volume 1,589,679,500
NYSE Volume 3,400,954,250
Combined NYSE & NASDAQ Advance - Decline: 4156-1436
Combined NYSE & NASDAQ New highs - New lows: 64-113
WTI crude oil: 83.32, +0.62
Gold: 1,613.80, +17.00
Silver: 28.95, +0.33

Monday, June 11, 2012

Spanish Bank Bailout Has Bad Odor; Week Ahead Looks Fascinating

Following last week's magnificent vapor rally on the lightest volume of the year, the new week started off gangbusters with news of a $125 billion (100 billion euros) bailout of insolvent Spanish banks sending US equity futures up on a sugar high prior to the opening bell.

Asia rallied strongly on the same news, followed by significant upside on the European exchanges. However, once Wall Street got a whiff of the real stench coming from Europe (Spain's bailout is hardly anything to cheer about; the loans from either the ESM or EFSF are uncertain and have not been approved by the German parliament, which is a must; Greece's elections loom on Saturday), it didn't take long for the best minds, algos and short sellers on Wall Street to sell the rally and start taking profits from last week's big run.

The Dow was up 96 points in a flash, but by 10:00 am EDT was already under the unchanged line, dragging down the other major indices with it. Stocks took a breather during the middle of the session, but, after 2:00 pm, it was pretty much all downhill, as investors went scurrying for cover in defensive stocks and treasuries.

Fear of the impending and eventual full retard global financial collapse were once again front and center, and, with good reason.

Whatever the euphoria over endless money printing out of thin air, be it by the US Federal Reserve, the ECB, China or any other nation, it appears that most people with sense have come to ignore it, at least, and abhor it, at worst. This same story has been playing since the fall of 2008 - throwing more debt at bad debt - and, since the Spanish banks were about the only suckers buying the debt of the Spanish government, recapitalizing them was just another in a long, futile line of can-kicking efforts, far from a real solution to the global crisis caused by long-term issuance of excessive debt.

The centrally-planned, central bank model of piling more bad debt upon already bad debt is coming to a furious conclusion and there seems to be nothing to prevent a complete reset of the world's capital structure. Hard line Keynesians continue to pretend that there's a way to avoid a catastrophic global meltdown, but the reality is that very little has been done thus far, and it's probably now too late to change tactics.

What has passed muster in the past now seems old hat, the results already known, that more bailouts and printing of money will not suffice; old, tried and true methods such as default, bankruptcy, selling off of remaining assets and new management of failed institutions - be they financial or governmental in nature - are the only prescriptions that will cure the ailing patient that is the global financial system.

There is already a great deal of talk circulating about subordination, of soured notes and bonds taking a back seat to newer issues. Spain's stock market, up nearly 6% early on, ended the day in the red and in tatters, the Spanish benchmark 10-year note yielding above 6.5%, a danger area. Greece's 10-year has already achieved escape velocity, with a yield of more than 28%, probably not even ample considering the risk. The Euro finished below 1.25 to the dollar, which is still 20-30% too high, crude was pounded down to eight-month lows, and a quadruple-witching day awaits markets on Friday.

It's either ironic or appropriate that rich and poor dads alike will have one more day in the sun on Father's Day, June 17, upon which day Greeks vote once again to try to form a government in an ungovernable situation. By this time next Monday, there may well have been a 500-point decline on the Dow, with Europe slitting apart at the seams, US and other developed nations exhibiting no growth and Italy waiting in the wings to be the next major casualty.

This week promises to be one of the most interesting - from a macro perspective - though, with more than $800 billion being pulled out of equities in the two years following the May 2010 "flash crash," there may not be anyone left around the trading floor to turn off the lights.

The entire mess has been the product of government gone fiscally wild and banks more than willing to take on excessive, often foolish risk over the years and into today. There comes a reckoning, and that day will arrive eventually, without fanfare or pretense. Then the planet will tremble as great swaths of wealth are obliterated by the same system that made the unrealistic promise of endless growth on a finite planet.

Volume was once again horrifyingly absent, breadth was extremely negative and new lows crept up on new highs after a brief reversal last week.

Dow 12,411.23, -142.97 (1.14%)
NASDAQ 2,809.73, -48.69 (1.70%)
S&P 500 1,308.93, -16.73 (1.26%)
NYSE Composite 7,459.29, -94.49 (1.25%)
NASDAQ Volume 1,477,944,250
NYSE Volume 3,383,333,500
Combined NYSE & NASDAQ Advance - Decline: 1206-4401
Combined NYSE & NASDAQ New highs - New lows: 144-94
WTI crude oil: 82.70, -1.40
Gold: 1,596.80, +5.40
Silver: 28.62, +0.15

Friday, June 8, 2012

Week's Events Point to Global Collapse; Max Keiser Speaks Out on Germany Bank Downgrade, Global Economy

Editor's Note: This was a particularly trying and nervous week for the markets, as political and economic tensions seemed to escalate on daily basis. From China's interest rate easing to the downgrade of Germany's banks to the rising wave of racism and bias, the swirl of history seemed to take on an unusually pungent aroma, one which permeated all levels of discussion and event horizons.

I am horrified at my own - and that of Max Keiser and many other non-mainstream journalists - prognosis for the future of the global financial system, which is being rendered apart by self-created forces which have taken on unforeseen lives of their own. A complete crash could occur almost at any time without warning, with a ferocity that would make 2008-09 look like a leisurely stroll. With all my heart, I wish my predictions turn out to be 100% incorrect, though continuing and recent developments point in the opposite direction.

Of course, the elitist coalition of bankers and sovereign leaders will continue to apply bandages and tourniquets as needed, even though they must know that a mortal wound cannot be patched, that wound being the complete insolvency of the world's largest banks, begun in 2008 and proceeding this week to completely engulf all of Spain's mightiest financial institutions.

As the week drew to a close, US markets garnered further gains on what had to be the lowest trading volume day of the year. (Money Daily does not keep complete records of much, but the daily volume reports at the end of each daily post provide that statistic - though scrolling through five-plus months of posts is a bit of an arduous task late on a Friday afternoon. Trust in the fact that if today was not indeed the lowest volume of the year, it was in the lowest three.)

Zero Hedge ( reports that volume for the week was the slightest of the year, in a week which produced the year's best gains. This kind of rigged result is exactly what's wrong with markets and the economy in general: they aren't functioning. Today's plaster to the upside, accompanied by abysmal volume is manifestation of the banker Ponzi in full bloom, trading amongst each other in a rigged game to the detriment of formerly-free markets.

At some point, the manipulation will come to an end, and likely an abrupt one, fully engineered by Rothchilds and fellow Illuminati types.

A point of reference is the upcoming November US presidential election, which incumbent president, Barack Obama, is purposely throwing, having done his job for his bankster allocators. The first hint that Obama was not fully engaged or committed to winning a second term came in the form of his absurd opposition to the Keystone XL Pipeline. His stance to block the project - which would bring oil from Canada's oil sands to America, but, as of last notice may be headed to China instead - until after the election, baffled all but the mainstream press, who haven't the collective mind power or journalistic will to delve into matters that involve anything more than rehashing the contents of official news releases.

Today's statement that the private sector in America is doing "OK" is the second nail in the defeat of Obama at the polls. Such obvious policy blunders and plainly unfounded statements point to nothing less than self-imposed defeat to the weakest Republican candidacy since Bill Clinton's second term re-election. Mr. Obama is an eloquent, intelligent speaker, but he has failed to ignite any fire of passion in either Democrats or independents. It's a very good bet that handing the presidency to the biggest shill for the 1%, in the person of Mitt Romney, is a reality.

For the week - again, the best of the year on the lightest volume - the Dow gained an ungodly 456 points, this on the heels of the month of May in which the blue chips gave back more than 800 points. Bear in mind that this gain comes as global conditions worsen, with little to no positive data or news.

The same kind of ride-up occurred on the NASDAQ, up 110 points, and the S&P, which registered a gain of 45 points. The whole affair is nothing more than a dog-and-pony show, and one which is not particularly well-staged. The sheeple of the world take it all in without question, that being one of the keys to the problem.

Along with the low volume, the session was characterized by slender breadth and a slight edge for new highs over new lows. Commodities, which began with oil down by more than $2.00 on the current futures price, were relatively flat by day's end.

In line with developments of the past few weeks - and years, for more perspective - the contagion from banking to sovereigns to currencies is accelerating, nearing an extremely dangerous global condition of collapse.

If implosion happens within weeks, it would be no surprise to the growing number of people who view the past four years of currency manipulation and incessant printing with disdain and skepticism. Global elites are desperately clinging to largely Keynesian ideas and potential solutions which have little to nothing to do with solving the epic calamity unfolding in real time.

There's no telling how much longer the global condition can be restrained as events in areas around the world are spiraling out of control at a rate of speed that is nearly impossible to track.
The Nicholas Brothers

Forget about the press reports and news conferences with governmental/political leaders like Obama, Merkel, Draghi, et. al. Issues on the ground are overtaking the ability of the political process to deal with the expanding crisis. The powerful are becoming less so, and eventually will be held responsible, and thus, powerless as populations erupt in wave upon wave of tension, uprising, catastrophe. Greece is just the most visible example, while Syria is already a lost cause due to the inaction or inability of bodies such as NATO or the loosely-aligned Euro-American force majure to act properly - and promptly - to quell the spreading genocide. Spain, Italy and France continue their joint descent into anarchy which will eventually pull all of Europe down with it.

Must see TV: Host of the Keiser Report, Max Keiser, brilliantly lays out the present and near-future in this six-minute segment courtesy of Russia Today.

In keeping with our new-found hobby of digging up rich pieces of joyful Americana from bygone eras, the following clip from the 1942 film, Orchestra Wives, featuring the Glenn Miller band with Tex Beneke performing "I've Got a Gal in Kalamazoo" along with the fast-talking, high-stepping dancing duo, the Nicholas Brothers, the elder Fayard, and Harold.

It's a real piperoo! Enjoy.

On a strictly personal note: Many thanks to the two saints on earth who appeared today as needed. Whatever one's personal beliefs, there is a power in faith that is beyond our small level of comprehension.

Dow 12,554.20, +93.24 (0.75%)
NASDAQ 2,858.42, +27.40 (0.97%)
S&P 500 1,325.66, +10.67 (0.81%)
NYSE Composite 7,553.77, +33.94 (0.45%)
NASDAQ Volume 1,396,691,125
NYSE Volume 3,497,203,500
Combined NYSE & NASDAQ Advance - Decline: 3810-1757
Combined NYSE & NASDAQ New highs - New lows: 111-78
WTI crude oil: 84.10, -0.72
Gold: 1,591.40, +3.40
Silver: 28.47, -0.06

Thursday, June 7, 2012

Tumultuous Thursday: Bernanke Comments Spark Selloff

(Editor's note: running quite late again today, which seems to be happening with more frequency here at Downtown Magazine HQ. It could be a sign that at least this little corner of the economy is experiencing a pickup in activity. Today's comments will be somewhat abbreviated, but a full recap of the week's economic events will follow on Friday at markets' close.)

Things were sailing along rather smoothly in the morning session, with all of the major indices up sharply and European bourses closing modestly higher at 11:30 am EDT.

Federal Reserve Chairman Ben Bernanke's non-committal stance on additional stimulus measures, which he delivered to a joint congressional committee, and a downgrade of Spain's credit rating by Fitch collided with China cutting key lending rates by 1/4 percent, sending US markets into a tailspin.

It was hoped by many on Wall Street that the Fed Chairman would offer a glimpse of fresh stimuli, though his testimony merely served to cloud the picture and was not what equity traders had hoped to hear. The Dow Jones Industrials, which peaked just prior to 10:00 am with a 140-point gain, dithered most of the rest of the session, and, along with the other indices, was traded off in the final hour, losing roughly two-thirds of the advance.

The NASDAQ, which had posted a gain of nearly 30 points in the early going, gave all of that back and then some, ending in the red for the day, along with the S&P, which wasted a 14-point gain and ended fractionally lower.

In reality, China's lowering of interest rates, while stimulative on the surface, actually should have - and could have - been interpreted as a negative, since the country is the world's leading exporter and a slowdown there, prompting interest rate easing, is nothing but a manifestation of the problems in Europe, which include slowing demand for what China produces.

Bernanke's wait-and-see attitude was not well-received, obviously, though the potential for the US sinking back into a recession without additional stimulus was murmured and whispered around trading desks during the day. For perhaps the first time in years, the Fed may be sending a signal that the free lunch for financial firms hasn't produced many positive results and it's time to try something other than plain vanilla monetization of Treasury debt and back-door policy easing. It would be a watershed event, should the Fed not engage the markets with more easy money, which has been the case since early 2009.

In other economic news, initial unemployment claims eased back by 12,000, to 377K in the current week, from an upwardly-revised 389K last week. Also, according to CNBC, Art Cashin reported that sources told him yesterday's huge upside advance was largely aided by the largest amount of short-covering in 2 1/2 years. Viola! Rally! Though, really, it was all just fun and games for Wall Street heavy hitters and insiders.

The rich get richer. The rest of us are supposed to just grin and bear it. Doesn't sound like much of a plan.

Gold and silver were smashed lower, for no apparent good reason, other than coordinated action by central banks who are worried that people may actually see precious metals as a safe and sound alternative to floating, devaluing, fiat paper.

Dow 12,460.96, +46.17 (0.37%)
NASDAQ 2,831.02, -13.70 (0.48%)
S&P 500 1,314.99, -0.14 (0.01%)
NYSE Composite 7,519.82, +2.36 (0.03%)
NASDAQ Volume 1,652,958,125
NYSE Volume 3,939,869,000
Combined NYSE & NASDAQ Advance - Decline: 2427-3168
Combined NYSE & NASDAQ New highs - New lows: 122-52
WTI crude oil: 84.82, -0.20
Gold: 1,588.00, -46.20
Silver: 28.53, -0.96

Wednesday, June 6, 2012

Short-covering, Algo Push, Promises of Free Money Boost Stocks

Stocks were boosted globally on a combination of an HFT algo push, technical bounce, short covering and something of an unveiled promise by the ECB's Mario Draghi, Germany's Queen Angela Merkel and US print primer-in-chief, president 0-blah-blah to create more money out of thin air until all the bad stuff goes away.

Good luck with that.

The sheeple will continue to follow their leaders, nothing will really be fixed, but the sugar high will be nice... until it's not.

If anyone is entertaining the impulse to buy into this rally, be reminded that the bankrupt US banks led the way back above the 200-day moving averages on the S&P, Dow and NYSE. There are more distortions and false tops in the current market than usual, and that's saying quite a lot.

Gold got a bit of a boost, but the day's real winner was silver, closing in fast on $30/ounce.

Nothing has really changed, except the big money on Wall Street placed some short term bets on what appear to be (they're not) cheap stocks. Moves such as today's usually result in tears and pain within a small time frame. However, if every central bank in the world is going to print until they run out of ink, there could be a bit of a lift. Events may change that.

Caution is strongly advised as the correction may or may not be over. Probably the worst time to buy stocks is during a snap-back rally, especially one like this, on no news, data or earnings.

Some of the biggest gains happen within bear markets, so, be advised that we are still in a cyclical bull market ensconced by a secular bear. Profit-taking should commence within the next three trading days. After that, anybody's guess is best, dependent largely upon what Chairman Ben says to the joint committee of congress tomorrow, though our hunch is that he's already let the cat out of the bag to his henchmen on the street.

Dow 12,414.79, +286.84 (2.37%)
NASDAQ 2,844.72, +66.61 (2.40%)
S&P 500 1,315.13, +29.63 (2.30%)
NYSE Composite 7,502.04, +163.41 (2.23%)
NASDAQ Volume 1,671,509,125
NYSE Volume 4,113,058,500
Combined NYSE & NASDAQ Advance - Decline: 4818-849
Combined NYSE & NASDAQ New highs - New lows: 93-33
WTI crude oil: 85.02, +0.73
Gold: 1,634.20, +17.30
Silver: 29.49, +1.08

Tuesday, June 5, 2012

No News Good News to Wall Street; Music for a Depression: Benny Goodman's Sing, Sing, Sing

Running a bit late today and writing in the first person singular, not because this is a critical day or anything like that, but because I'm just happy as a lark to see that financial stocks led today's absolutely nothing advance.

From years of personal experience (especially over the past four) any time our broken down banks lead the market, one can rest assured the move is nothing more than self-aggrandizement by the former "masters of the universe," thus completely meaningless in a macro sense.

The afternoon insider ramp job was notoriously devoid of volume, making the major event of the day nothing more momentous than the May reading on ISM services which leapt an entire 0.2, from 53.5 in April to 53.7 in May. Big whoopie, and not much of a reaction from the street, so hold off, for now, on the champagne. Europe's issues and the big fiat debt fiasco that pervades everything these days still lurks, waiting to pounce upon a suspect market.

Major events in this little corner of the world were the two rabbits frolicking in my back yard. From the looks of things, the planet may soon be blessed with a few more little cottontails soon. Ah, Spring...

The sun is shining again
and birds are singing in the trees,
My heart is open wide my friends,
I've just caught a summer breeze.
-- from the soon-to-be-released Flowers in Your Garden, a love song by Fearless Rick

There was an "urgent" conference call by leaders of the G7, bemoaning the fact that Europe's crisis might just be spinning out of control, unlike the Earth itself, which, last we checked, was still orbiting the sun and rotating smoothly without any help from the Fed, central bankers or any over-indebted sovereign nation.

When the global financial system finally falls completely apart, those of us with good minds, bodies and hearts will know what to do: Make sure our gold and/or silver is safe, our guns well oiled and our crops bathing in sunshine, pour another drink and watch the crooks being harnessed by their own hangman's noose.

It's really just that simple.

Since we're already well into the Greater Depression, I thought it appropriate to post a couple of Youtube videos - actually they're more music than anything else, in hopes that we might all come to understand better how things were during the Great Depression of the 1930s.

My father, who was born in 1924 and passed away in 2009, was a spry lad of five years old when the markets crashed in 1929. He used to tell me that they didn't know they were poor, as just about everybody was in a similar situation. It's somewhat the same today, except that the many of the truly poor and unemployed now receive all kinds of benefits such as food stamps, free rent and free health care, which makes them much better off than many of the working stiffs who grind out a living on wages that have been stagnant or declining since the year 2000.

At the end of this post there are two videos posted. The first (to which you are encouraged to stand up and dance to) is of Benny Goodman's original recording of Louis Prima's (my dad's favorite) Sing, Sing Sing.

The year was 1937, the depth of the Great Depression, but Goodman's big band orchestra really let it rip in this rendition, which helped Goodman earn the reputation as the "King of Swing." The band leader and on clarinet, Goodman was aided by Gene Krupa on drums (amazing, by any standard) and Harry James on trumpet, among others. The piece is an absolute classic, a treasure of Americana, showing that even as hard as times were for millions, the spirit of the day was one of joy, a never-say-die attitude and unbridled musical genius.

While Prima's original version carried lyrics, Goodman's arrangement was purely instrumental. With Krupa's driving beat and Goodman's flawless orchestration and leadership, the tune became an instant hit crossing generations of music fans. The title is a bit misleading; it could easily be re-named "Dance, Dance, Dance."

If you can't get up and dance to this tune, you either have no sense, no rhythm or no business being alive. All you oldies out there, be careful. Don't bust a disk or pull a muscle. This one's a mover. Enjoy.

The second video (again, it's all for the music) is of the same tune at the fabled 1938 concert by Goodman's band at Carnegie Hall in New York. The piece is longer, lasting 12 minutes, and includes some introspective solos by Goodman and notably, pianist Jess Stacy's solo work, which the Wikipedia entry calls, "exceptional, a four-chorus, chromatic impressionistic masterpiece distinct from everything that preceded it." The entire track is marvelous. Turn your speakers up for this one.

As the global depression expands and envelops more and more of the world, music like this may be the best antidote to the craven antics of thieving bankers and incompetent politicians.

Dow 12,127.95, +26.49 (0.22%)
NASDAQ 2,778.11, +18.10 (0.66%)
S&P 500 1,285.50, +7.32 (0.57%)
NYSE Composite 7,338.65, +53.10 (0.73%)
NASDAQ Volume 1,627,906,750
NYSE Volume 3,403,227,500
Combined NYSE & NASDAQ Advance - Decline: 3882-1641
Combined NYSE & NASDAQ New highs - New lows: 54-117
WTI crude oil: 84.29, +0.31
Gold: 1,616.90, +3.00
Silver: 28.40, +0.40

Monday, June 4, 2012

Markets Take a Breather, But Issues Remain Unresolved

US markets took a bit of a breather on Monday as news flow from Europe was more a trickle rather than a deluge and the only data that moved US indices was factory orders for April, which came in below forecast at -0.6% on expectations of a move lower of -0.3%. March was revised lower - from -1.9% to -2.1% - which made the current numbers look better by comparison.

After opening briefly to the upside, stocks quickly turned red, even before the first half hour of trading, a signal that the more experienced traders were still trimming their risk exposure, but stocks stabilized, traded in a narrow range, bottomed between noon and 2:00 pm before rallying fairly strongly into the close.

If today was something resembling a dead cat bounce, the kitty remained room temperature, and the bounce was more of a flopping over on one side, that being the upside on the NASDAQ. Essentially, following the worst decline of the year this past Friday, traders might actually be encouraged with a session in which the Dow fell by less than 20 points and the NASDAQ actually ended slightly higher with the S&P unchanged. In the current environment, that kind of performance is about the best one could hope to see.

The somnabulent tone of trading did not prevent another negative read on the advance-decline line nor a persistent gap between new highs and new lows, both of which continue to indicate worsening conditions.

It was a lackluster session on average volume in a wait-and-see scenario. Elections in Greece are the main focus of global markets, with the nation going to the polls on June 17 to try and elect a new government after the previous round could not produce a ruling coalition.

Hope is that the Greek people will do the right thing, which, to the technocratic base of european politics, would be to form a government that favors remaining in the Eurozone and swallowing the bitter pill of austerity, though even the most ardent supporters of the unified currency will concede that the continent faces further problems and keeping the union intact is only a first step.

While Greek voters may indeed vote for a continuation of the current ruinous policies, there is a heightened awareness that the tide of populism in Athens could produce a more radical government that eventually rejects the euro and favors a return to the drachma as the nation's official currency. Such an outcome would likely produce massive dislocations of capital not only in Europe, but worldwide.

Another topic of discussion on the street is one of whether or not the Federal Reserve will signal or engage in another round of QE, which would provide temporary relief to markets, though, as has been seen with the previous two rounds, it would probably amount to nothing more than a sugar coating over economic conditions that are unstable at best and deflationary and point to recession at worst.

The FOMC is set to meet again on June 19 and 20 with a press conference with FED chairman Ben Bernanke and a summary of Economic Projections following the policy decision, Prior to that, Bernanke is set to testify before the Congressional Joint Economic Committee on Thursday of this week and the calendar is full of other Fed speakers who might give a clue to the next move by the nation's central bankers.

Speculation is rising that the Fed will be forced into a position favoring more easing, since without it, stocks and the general economy don't appear to have enough momentum to continue growing on their own. The same logic applies to Europe, where the message is to bail out, loan and print as much as is needed to keep the titanic economy from listing and sinking.

The main problem is that the issues that contributed to the crisis - now nearly four years old - have still not been resolved, the main point being the necessary deflation of the global credit bubble, which has not occurred. Instead policy has pointed to even more credit creation, prompting the need for more and more of the same policies that will not provide a long term solution. The entire vicious cycle is spelled out in some detail by Charles Hughes Smith on his Of Two Minds blog, an essential read for those not quite equipped to handle the myriad details of credit, collateral and derivatives.

Basically, Smith opines that the problems of the crisis have remained unfixed and continuation of current policies only are buying time before an ultimate collapse. Along similar lines, investor George Soros recently quipped that Europe has only three months in which to get its act together, a time frame that coincides almost neatly with the upcoming US elections in November. Should Europe stumble, fall, crash and burn within the near term, the tide will almost certainly turn against president Obama and toward Republican candidate Mitt (Adolph) Romney.

That seems to be the preferred strategy of the clandestine rulers of US politics, as any further slippage into the abyss of global depression could then be blamed on Mr. Romney's predecessor, just has Obama, even three-and-a-half years into his term of office, continues to lay blame on former president Bush.

The truth is that each president has had his own set of blunders and misfortune, and not all of the economic distress can be placed upon their shoulders. Congressional dithering and inaction and the global banking cartel are responsible for at least two thirds of the malaise, if not all of it.

The coming two weeks will be ones of nail-biting and indecision, with a fairly light schedule of news and data flow, all of which seems to in the range from bad to horrifying of late. The Greeks, Bernanke, and to some extent, the parliamentary elections in France on June 10 and 17 should be the major catalysts for market in the near term.

Much of what's already occurred and what will happen is still murky, and, since markets hate uncertainty, the chances for a rally in the near term are quite slim. A continued correction and possible bear market conditions (down 20% or more from recent highs) have become distinct possibilities.

Dow 12,101.46, -17.11 (0.14%)
NASDAQ 2,760.01, +12.53 (0.46%)
S&P 500 1,278.18, +0.14 (0.01%)
NYSE Composite 7,286.74, -5.49 (0.08%)
NASDAQ Volume 1,661,424,125
NYSE Volume 3,922,442,750
Combined NYSE & NASDAQ Advance - Decline: 2564-3054
Combined NYSE & NASDAQ New highs - New lows: 36-293
WTI crude oil: 83.98, +0.75
Gold: 1,613.90, -8.20
Silver: 28.01, -0.51

Friday, June 1, 2012

Dow Erases All 2012 Gains; Global Depression Dead Ahead

T.G.I.F., or, more succinctly, thank God this Friday is over.

After the release of some really poor employment numbers in May's non-farm payroll report from the BLS, stocks fell off a cliff right from the open and continued to slide all day in the single worst trading session since last November.

With only 69,000 net new jobs created in May - well below the average estimate of 150,000 - the false "recovery" meme from just a few months ago was completely eviscerated as a rash of poor data which had been flowing to the market all week culminated in the worst employment figures in a year.

In addition to the unemployment rate rising to 8.2% - the first rise in over a year - March and April data were revised lower. March job growth total was reduced from 154,000 to 143,000 and the April number slashed from 115,000 to just 77,000.

While the US had its own woes, the deepening recession in Europe only made matters worse as Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) dropped to 45.1 in May from 45.9 in April, its lowest level since June 2009. The index's latest reading was all the more frightening as data showed manufacturing in France and Germany - supposedly the two strongest members of the EU - slowing at its fastest rate in nearly three years.

Even in developing nations like China, India and Brazil, growth has been slowing and the pace of decline continues to gather momentum. Since the economies of these and other developing nations depend greatly on exports to Europe and the US, the slowdown of the developed economies produces a knock-on effect to the exporters.

The only bright spot of the day came from automakers, which saw double-digit sales gains when compared to a year ago, though all of the US figures were below expectations. GM posted a gain of 11% from May of last year, Ford sales were up 13%, Chrysler, 30%, while Toyota, rebounding from the tsunami and Fukushima nuclear disaster of a year ago, saw a sales increase of 87%.

The Dow Jones Industrials and NYSE Composite index each saw all of 2012 advances wiped out as of the close today. The S&P 500 is just 20 points better than the close on December 30, 2011, while the NASDAQ still sports a gain for the year of better than 100 points. All but the NASDAQ closed today below their 200 day moving average, a sure sign that there is more downside to come.

Along with stocks hitting the skids hard on the day, the US 10-year note hit yet another historic low, ending the week at 1.45%. Its counterpart in Germany, the 10-year Bund, has also been chasing yield lower, with a reading of 1.12% seen today.

Gold had a rapid rise on the news, regaining its status as a safe-haven currency, along with silver, which also posted a healthy increase. Precious metals investors should not be fooled, however, by today's moves alone. During the crash of 2008, all asset classes were decimated, though the metals improved earlier and with more ferocity than equities.

All around, even though it was a shortened trading week, it was the worst of 2012 on the major indices. Internals are screaming correction in equities, while the price of oil continues to signal a cold, deflationary environment in the face of a rising dollar, which seems to be a silver lining to a worsening economy. Gas prices will be lower, though many will be unable to afford to go anywhere.

After governments and central banks have thrown trillions in quantitative easing and stimulus for bailouts and bank balance sheet bolstering, the global financial system seems on the verge of another major breakdown, one that may make 2008 look like a picnic by comparison. As all fiat money systems in the history of civilization have eventually failed, our current regime of "money from nothing" appears to be coming to a cataclysmic demise, and it is gaining momentum at a terrifying pace.

Eventually, all the bad debts run up by governments and financial institutions are going to result in ruination of the global system, to be replaced by some forms of gold and/or silver-backed currencies. Only then will the world's economies become honorable and stable once again.

Welcome back to the Greater Depression.

Dow 12,118.57, -274.88 (2.22%)
NASDAQ 2,747.48, -79.86 (2.82%)
S&P 500 1,278.04, -32.29 (2.46%)
NYSE Composite 7,292.25, -171.71 (2.30%)
NASDAQ Volume 1,875,578,750
NYSE Volume 4,605,786,000
Combined NYSE & NASDAQ Advance - Decline: 853-4802
Combined NYSE & NASDAQ New highs - New lows: 34-307
WTI crude oil: 83.23, -3:30
Gold: 1,622.10, +57.90
Silver: 28.51, +0.76