Tuesday, July 31, 2012

Stocks Stumble As Fed Action Seems Less Likely; Markets Resembling Aging Divorcees

Thanks to a number of relatively positive economic reports, the possibility that the Fed will announce a new round of QE at the conclusion of its FOMC policy meeting on Wednesday was seen as a bit less definite.

As convoluted as the machinations of Wall Street have become, good news is now seen as bad, given that the Fed is less likely to move if the economy appears, at least, stable and not about to fall over a cliff.

In a raft of data releases this morning, it was seen that personal spending was flat, though personal income rose 0.5% in June.

The two-month-old Case-Shiller 20-city index, a widely-disregarded metric due to its flawed methodology, fell less than expected in May, dipping 0.7% on expectations of a drop of 1.8%. Though the message remains that the bottom has not been plumbed in housing, the upshot was that the number beat expectations.

More importantly, Chicago PMI posted a gain to 53.7, after printing at 52.9 in May and consumer confidence rose to 65.9, a healthy gain and a multi-month high after checking in at 62.7 in June.

All tolled, the numbers offer a murky picture of the US economy, though certainly not one that could be lauded as either expansionary nor receding. Thus, the valiant traders hoping for another QE round seemed less certain, selling stocks in advance of what they assume will be another ho-hum, no change announcement from the Fed.

Stocks traded in a narrow range, as they did on Monday, with the S&P and NASDAQ hovering around the unchanged mark while the Dow and Composite Index spent the entire day in the red. Volume was minimalist and declining issues outpaced advancers slightly.

Conditions in the US and Europe appear to be unchanged since last week, which is more than likely an overall negative looking ahead, but, without some drama, market participants appeared reluctant to make any bold moves ahead of the FOMC announcement, EBC meeting on Thursday or the non-farm payroll data Friday, which could, in fact, be the most important number of the week.

Being the last calendar and trading day of July, there was little "window dressing" to note as stocks tailed off badly in the final half hour, closing at or near their lows of the day.

If anything, traders (because there are so few real investors) have embraced an attitude of couched pessimism and flagging hope. Since there will be no resolution to any major issues in the US until after the elections in November and the EU and ECB seem so deft at using the microphone to their advantage while proposing no concrete solutions (mostly because the actual fixes involve massive write-downs, pain and suffering to the wealthiest), the general tone is sleepy and non-committal, a condition not unlike many divorced women in their 50s.

Plenty of rest and an uninspiring, dull lifestyle of muddling along seems to be the preferable treatment for whatever perceived and imagined ailments with which they are afflicted.

The go-slow approach is one step removed from the all-inclusive silent treatment, a silly game that the media appears ready to play unless there is a catalyst to prompt attentiveness and a modicum of pleasure.

Even then, periods of exhilaration are bogged down by a general state of disabuse and misplaced emotions. As such, the capital markets have become technological zombies and drug-addled followers of incorrect assumptions.

Men and women get old, as do markets. The remedy is a fresh attitude or new regimen, which, as in the case of aging biddies, is virtually impossible in the current political and economic climate, the comfort of the status quo providing an easy escape from actually dealing with issues at hand.

Please send all hate mail for the above metaphorical escapade above to dontcare@whogivesadamn.com

Dow 13,008.75, -64.26 (0.49%)
NASDAQ 2,939.52, -6.32 (0.21%)
S&P 500 1,379.33, -5.97 (0.43%)
NYSE Composite 7,870.56, -40.49 (0.51%)
NASDAQ Volume 1,730,655,000
NYSE Volume 3,413,254,000
Combined NYSE & NASDAQ Advance - Decline: 2276-3269
Combined NYSE & NASDAQ New highs - New lows: 219-70
WTI crude oil: 88.06, -1.72
Gold: 1,610.50, -9.20
Silver: 27.91, -0.12

Monday, July 30, 2012

Markets Flat Ahead of Fed, ECB, Jobs Data

Following the two-day, euro-induced-free-money rally that closed out last week, stocks to a breather on low volume Monday, ahead of three key events later in the week.

On Wednesday, following the Fed's FOMC policy meeting, it is widely expected that Bernanke and friends will have found sufficient weakness in the US economy to promote another round of QE, which will probably take the form of a furtherance of Operation Twist, plus continued handouts of low interest rate money to the major banks to keep the carry trade going.

While the anticipated Fed action has already been widely lauded and traded upon on Wall Street, their efforts up to this point have done nothing to repair the damaged economy. Rather, it's created a kind of non-virtuous cycle wherein banks get money, don't lend it and the main street economy continues to suffer.

Evidence was seen in Friday's announcement that the economy grew at a rate of just 1.5% in the second quarter and continued weakness in the jobs and real estate markets.

Meanwhile over in Euro-land, the finance crowd awaits some kind of firm action by the ECB when the leaders meet on Thursday. At issue is setting up a credit facility large enough to recapitalize Spain's ailing banking sector, most of which is already insolvent and nearing an illiquid state.

As in the US, central bank debt schemes have been largely insufficient to boost the economies of Europe; all these can-kicking efforts seem to be doing is forestalling the inevitable collapse of the Euro, which fell to $1.2258, retreating from a three-week high of $1.2390 made on Friday against the US dollar on Monday.

News out today suggests that Thursday's meeting will be more style than substance and that any bold action may be as many as five weeks away. A formal request for a bailout by Spain, in addition to the already-proposed bailout of their insolvent banks, and approval on technical issues by a German high court are still issues that will not have been resolved by the end of this week.

On Friday, the BLS reports non-farm payroll data for July, which also could throw sand on the perma-bullish fire of the central bankers.

Considering last week's big run-up, there may be a bit of "sell the news" sentiment afoot, regardless of what decisions and announcements are made by the Fed and the ECB.

Dow 13,073.01, -2.65 (0.02%)
NASDAQ 2,945.84, -12.25 (0.41%)
S&P 500 1,385.30, -0.67 (0.05%)
NYSE Composite 7,911.04, -1.13 (0.01%)
NASDAQ Volume 1,482,648,250
NYSE Volume 3,197,376,750
Combined NYSE & NASDAQ Advance - Decline: 2384-3161
Combined NYSE & NASDAQ New highs - New lows: 262-65
WTI crude oil: 89.78, -0.35
Gold: 1,619.70, +1.70
Silver: 28.03, +0.54

Friday, July 27, 2012

Why Nothing Matters Any More

We've all heard the phrase, "this is going to end badly," before, and, like a failed love affair, so too the centrally-planned economies masquerading as free markets will also surely end in tears, tatters, remorse and recrimination.

Following in the footsteps (or, as the case may be, the mouthpiece) of ECB president Mario Draghi, today, German Chancellor Angela Merkel and French President Francois Hollande issued a joint statement after a teleconference, saying they their government would "do everything to protect" the Euro.

And, with that, the markets were once again off to the races, continuing a rally that is based upon nothing more than promises to pile more debt upon the mountainous pile of unpayable sovereign obligations already in existence, create more deteriorating fiat money, continue bailing out failed financial institutions and keeping interest rates at artificially low yields.

Nothing good has come from any of these efforts thus far, except to perpetuate the status quo of financial fraud run amok without penalties for wrongdoers and the funding of political campaigns by the very same transgressors and beneficiaries of central bank largesse.

Today, the US government announced first quarter GDP grew at a rate of 1.5%, which, in normal times, would be fairly disturbing news, but, couched in the belief that the slowing economy will encourage the Federal Reserve to engender another round of quantitative easing (QE) at its meeting next week of the FOMC, the market soared like an eagle catching a thermal updraft.

The effects of all this money printing and free flow of capital into and out of banks and into government coffers to spend freely beyond their means has been effectively maintained by ultra-low interest rates offered to the world's biggest banks, the ones that were bailed out in 2008, and continue to go to the discount window for Federal Funds at 10 to 16 basis points, invest in longer-term notes and pocket the difference, known as the carry trade. It's easy street for the TBTF banks, which continue to borrow and no loan money, except, of course, to the worst creditors of them all, governments, which haven't balanced their books in decades.

Were the banks and foreign central banks to suspend lending to the US and European entities - an occurrence which has a 100% likelihood to happen at some point - the economic calamity would be unthinkable, thus, the game continues. At certain points, casualties occur, but they are patched over by bailouts or simply shoved aside, as in cases such as Madoff, MG Global and previously, Lehman Bros., Countrywide Financial, Bear Stearns or Merrill Lynch.

The losses are socialized, or, passed onto the taxpayer as it were, though if taxes were at rates commensurate to meet all government obligations and pay off the burgeoning debt load, the average paycheck would be 80-90% taxes and 10-20% take home. It would be likely that most people would stop working for companies, go into a side business of their own and not pay taxes, while larger businesses would suffer from a lack of qualified, willing labor and the whole super-structure of the global economy would grind quickly to a complete halt.

In some sense, that is already happening, and it will continue to worsen, everywhere there are unpayable debt burdens placed upon the citizenry. In Europe, the German people are already braying at the notion of higher and higher tax rates to pay for bailing out the southern states of Greece, Portugal and soon, Spain and Italy.

While the Germans have profited and prospered from fiscal and monetary discipline, the regime of Angela Merkel is rapidly fostering a growing debt burden that will force taxes higher and eventually cripple their own economy. While most of southern Europe is already in a recession and Greece, at least, a depression, Germany, being the lender of last resort, so to speak, is nearing a political breaking point, where the populace is about ready to take a stand against the free-spending policies of their government.

Merkel is tip-toeing on a high wire (a horrifying mental image), balancing her own political future against the success or failure of the Euro. Germany benefits from the declining euro because of its huge export base, so abandoning it and returning to the Deutschemark is out of the question, as the new currency would be among the strongest in the world, making German products prohibitively expense in other countries.

France, which behind Germany is the second largest economy in Europe, seems content to tax and spend to promote their socialist agenda of government handouts to everyone, shorter working hours and large, public pensions. The French people are notorious protesters, who will take to the street at even the slightest hint that any kind of public benefit will be cut, and, as they showed former president Sarkozy the door this past Spring, they will vote against any mention of austerity, a dirty word in the Gallic nation.

In America, it's the culling of the middle class that proceeds apace. Wages have been stagnant, new job creation sparse and sporadic, but price increases in food and energy, along with threats of higher taxes have all but eliminated discretionary spending and saving for growing numbers. The middle class has become a huge class of debt slaves, content to keep paying and playing along until the pensions and social security and health care monies are exhausted.

The rest of the world has other problems, though even growth countries like China, India, Brazil (together with Russia, making up the BRICs nations) are slowing down as the speculative economies strip out all wealth to the top one percent of earners and actual productive growth falters.

There is a tipping point somewhere down the road, and it's a wonder that the whole global mess hasn't completely fallen apart by now, but it does appear that those in charge of "managing" the economy can keep the plates spinning for a while longer, maybe as much as three to five years. By then, these central planners hope that entrepreneurs will have bolstered the fragile, stagnant economy back to life and that a more normalized functioning will have emerged.

It's a pipe dream built on the faulty assumption that expanded liquidity can supplant insolvency. It never has, and it won't. The end game comes from a deflationary spiral in which too little money is chasing too many goods, even in an era of expansionary monetary supply (inflation). The problem is that the money is going into the wrong hands, to those of the bankers, who hoard their cash for liquidity and speculation, as seen repeatedly in the stock market, while the middle and lower classes go begging for credit (at usurious rates), jobs, and eventually, food.

In every instance in which a reserve currency such as the US dollar was not backed by gold, silver or both, or other tangible assets as collateral for debt creation, that currency has failed and been replaced. Every time.

And this time is not different. It's just taking longer than expected.

Dow 13,075.66, +187.73 (1.46%)
NASDAQ 2,958.09, +64.84 (2.24%)
S&P 500 1,385.97, +25.95 (1.91%)
NYSE Composite 7,912.16, +157.65 (2.03%)
NASDAQ Volume 2,085,560,250
NYSE Volume 4,290,734,500
Combined NYSE & NASDAQ Advance - Decline: 4511-1073
Combined NYSE & NASDAQ New highs - New lows: 343-86
WTI crude oil: 90.13, +0.74
Gold: 1,618.00, +2.90
Silver: 27.50, +0.05

Thursday, July 26, 2012

Stocks Scream Higher on Euro Hopium from ECB's Mario Draghi

Might as well call him Super Mario the way ECB President Mario Draghi is capable of moving markets by moving his lips.

Speaking at an investment conference in London, Draghi was light on specifics but strong on rhetoric, saying:
"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."

"To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate."

Easy enough. Make some bold-sounding statements, signal to everyone that everything is under control and viola! the Euro climbs above 123 to the US Dollar, major European indices jump 1-2%, Spanish and Italian bond yields drop and the Dow is good for a 200-point rise. Ponzi-nomic, centrally-planned financing at its uninspiring best.

Everybody goes long, and tomorrow or Monday, everybody can get short. Wash, rinse, repeat.

That is how Ben Bernanke and Mario Draghi roll. And, you and I get rolled, again.

Nothing changes.

Here in the states, the small sampling of economic data was mixed to negative. Initial unemployment claims fell to 353,000, from an upwardly-revised 388,000 in the prior week. Durable orders gained by 1.6% in June, but, ex-transportation, were down 1.1%. Pending home sales fell 1.4% in June, a distress signal for housing, as June is traditionally one of the strongest months for real estate.

Volume was actually a notch or two higher than usual, another telling sign that more and more people are learning the game and jumping in whenever futures ramp up at the open.

Dow 12,887.93, +211.88 (1.67%)
NASDAQ 2,893.25, +39.01 (1.37%)
S&P 500 1,360.02, +22.13 (1.65%)
NYSE Composite 7,754.41, +146.85 (1.93%)
NASDAQ Volume 1,912,905,750
NYSE Volume 4,401,349,500
Combined NYSE & NASDAQ Advance - Decline: 3897-1671
Combined NYSE & NASDAQ New highs - New lows: 214-146
WTI crude oil: 89.39, +0.42
Gold: 1,615.10, +7.00
Silver: 27.45, -0.02

Wednesday, July 25, 2012

Sandy Weill, Hypocrite Bankster; Apple Sends S&P, NASDAQ Lower, Housing Bottom, NOT!

Like mountains that are climbed, we watch CNBC because it's there, not because they offer something other than the capitalist-claptrap-company-line of "buy stocks and keep buying stocks." They don't, usually, unless Rick Santelli is ranting or somebody like Sandy Weill says something so hypocritical that it cannot go unchallenged.

Weill, the former CEO of Citigroup, was the man most responsible for the repeal of the Glass-Steagall act during the Clinton administration years, which set in motion the deregulation of banks, ungodly high leverage, the sub-prime circus and eventually the global catastrophe of international finance through which we are all currently suffering, was polluting this morning's air with calls to break up the big banks.

Weill was on this morning's "Squawk Box," the normally tiresome pre-market news show, opining that the big banks need to be broken up. This is quite the turnabout from the man who, back in the 1990s, engineered the business model of the banking/financial supermarket, where customers could purchase not only CDs and checking accounts, but stocks, bonds, and all manner of derivative products, and where the bank would securitize obligations, repackaging and reselling to willing investors.

One should note that Weill profited greatly from the deregulation of the banking industry and that he is still very rich, though now, more than 15 years hence, his PR team has probably advised him that calling for the breakup of the too-big-to-fail (TBTF) banks would be a marvelous boost for his personal profile. No doubt, Weill has a profit motive behind his pronouncement, or is keying in a on lucrative, influential government position, which is all America needs right now, is another hypocritical bankster who puts self-interest far above public service running the Treasury Department, or maybe the Office of Thrift Supervision.

There really is no end or outer limit to the hubris of the banker class, but Weill's sudden change of heart, no doubt politically expedient, is the worst form of hypocritical doublespeak imaginable. Even Orwell would be amazed, abused, or, amused.

After Tuesday's post-market-close earnings miss by Apple (AAPL), the markets did as obedient markets will, as the S&P and NASDAQ, of which Apple is a huge component of both, sold off viciously right out of the gate.

The NASDAQ was down a quick 22 points, the S&P shedding seven points in the early going, but, with Ben Bernanke and the Fed providing cover, ostensibly standing ready with their bazooka loaded with QE stimulus, stocks gained ground and eventually turned positive (the Dow was in the green all day), before fading into the close. The Dow gave up more than half its gains, even though Apple is not a Dow component.

The current idea - floated around yesterday afternoon by the Fed's chief propagandist, Wall Street Journal writer John Hilsenrath - was that the Fed may act as soon as their very next FOMC meeting, which occurs next week, July 31 - August 1. About all the Fed can do, besides buying up more worthless MBS or some vague extension of Operation Twist, or more simple jawboning, all ideas which have been tried and proven failures.

But, the market being as rigged as it is, (according to Paul Criag Roberts, all markets are now rigged), the Federal Reserve must come off not looking like the powerless goon it really is, but rather as an engaged participant ready to swing into action to save the American people.

Tripe. The Fed has been without bullets or a gun for the better part of the past two years, and now, like the boy who cried "wolf," nobody is bothering to listen. QE1 and QE2 didn't fix anything and likely made matters worse, so QE3 isn't going to matter one iota.

For those who think the housing market has hit bottom, again! today's data must have been a chilling reminder of not only where we've been, but where the millions of underwater homes are headed: deeper into the blue, after new home sales for June plunged to an annualized rate of 350,000, well below the expected 373,000. The drop was made worse by the upward revision of the May data, from 369,000 to 382,000, but it was still a mighty miss by any standards.

The real estate market being diverse, there are some areas of strength, but, overall, the heartland of America is still suffering from the worst housing bust since the Great Depression, and it's not over with yet.

So, some big numbers and events are coming soon. Friday will witness the initial estimate of second quarter GDP, expected to be anywhere from 1.5% to 2.2% to the good, then there's the FOMC meeting Tuesday and Wednesday of next week, followed by next Friday's July non-farm payroll data.

Among all the usual market noise, new lows exceeded new highs for a third straight session, but, as we know, it won't last, because the Fed is coming to the rescue.

This is really beginning to get interesting.

Dow 12,676.05, +58.73 (0.47%)
NASDAQ 2,854.24, -8.75 (0.31%)
S&P 500 1,337.89, -0.42 (0.03%)
NYSE Composite 7,604.56, +13.94 (0.18%)
NASDAQ Volume 1,725,712,125
NYSE Volume 3,391,726,000
Combined NYSE & NASDAQ Advance - Decline: 3085-2522
Combined NYSE & NASDAQ New highs - New lows: 119-165
WTI crude oil: 88.97, +0.47
Gold: 1,608.10, +31.90
Silver: 27.47, +0.66

Tuesday, July 24, 2012

More Losses For European, US Markets; Apple Misses Big on Earnings, Revenue

As per the usual, US stocks pared much of their losses in the final fourty minutes of trading, the Dow shaving its decline in half, with the other major indices following suit.

The trend has been lower for three straight sessions, with the Dow losing somewhere in the vicinity of 100 points a day. Catalysts for the declines are various and diverse, from poor US data - the Richmond Fed manufacturing index came in at -17 on expectations of -1, the lowest level since April 2009 - concerns over the Spanish government needing a bailout, or Moody's lowering the outlooks for Germany, the Netherlands and Luxembourg to negative late Monday.

Even China got some play as their flash PMI number rose to the best level in five months, though at 49.5, still showed contraction. The blip from the Far East was seen as a positive, though more than likely, a minor one, as one month's data surely does not make a trend and data from China is widely regarded as highly unreliable.

In Europe, most of the stock indices took losses, though not as heavily as on Monday. The mood on the continent is extremely guarded, as yields on benchmark 10-year notes in Spain and Italy have hovered around or exceeded the 7% mark.

Here in the states, the 10-year yield continues to fall, as predicted by Paul Craig Roberts and other astute economists (see yesterday's post), to a record low yield of 1.39, while the 30-year bond closed at 2.46, also a record low.

Market conditions and sentiment appear to be quickly worsening, with the advance-decline line negative for three straight days and the new highs - new lows metric having reversed to negative on Monday and continuing to worsen with Tuesday's session.

Commodities were mostly lower, with the notable exception of oil, which continues to be boosted by ongoing uncertainty over Iran, though the corn and soybean futures markets were notably nixed, as slack demand seems to be trumping even the effect of the worst drought since the 1950s.

All of the data and market moves seem to be pointing toward Friday's initial reading of second quarter GDP, slated for release at 8:30 am EDT on Friday. Forecasts range from 0.3% to 1.7% growth, though estimates have been coming down from a variety of sources in recent days and third quarter and second half GDP outlooks have been routinely revised lower.

As it turns out, however, the biggest news of the day came may have come after the markets had already closed, when Apple (APPL) reported a fiscal third quarter earnings miss that sent the stock markedly lower.

From the LA Times:
The technology giant said profit rose 21% to $8.8 billion, or $9.32 per share, on revenue of $35 billion, up 22% from a year earlier. The results were less than what analysts had expected. Shares plummeted in after-hours trading, falling $34, or nearly 6%, to $566.78.

Analysts surveyed by Thomson Reuters had estimated that Apple would post earnings per share of $10.36 on revenue of $37.2 billion. A year earlier, the Cupertino, Calif., technology behemoth reported record quarterly revenue of $28.6 billion and record profit of $7.3 billion, or $7.79 a share. That was a 121% increase over its third-quarter 2010 earnings per share.

If Apple, the bellwether for all tech stocks and a major component of the S&P 500 and NASDAQ 100, cannot beat lowered expectations, then perhaps the idea that a global deflationary slowdown is well underway might finally dawn on not ony the wizards of Wall Street but the average Joe and Jane Sixpacks, who likely already have gotten the memo, having not enough income to afford an iPad or iPhone, essentially spending whatever income they have on survival items like food and fuel.

Good grief! Can it get any worse?

We already know the answer to that.

Dow 12,617.32, -104.14 (0.82%)
NASDAQ 2,862.99, -27.16 (0.94%)
S&P 500 1,338.31, -12.21 (0.90%)
NYSE Composite 7,590.61, -79.92 (1.04%)
NASDAQ Volume 1,735,519,125.00
NYSE Volume 3,853,596,750
Combined NYSE & NASDAQ Advance - Decline: 1484-4064
Combined NYSE & NASDAQ New highs - New lows: 118-210
WTI crude oil: 88.50, +0.36
Gold: 1,576.20, -1.20
Silver: 26.81, -0.23

Monday, July 23, 2012

Why There Probably Won't Be a Stock Market Crash

With US stocks suffering back-to-back losses of more than 100 points Friday and Monday on the Dow, conventional thinking might be assuming that the market has hit a short term top and they may well be correct.

Others continue to ponder the overall fate of the entire fiat-money global financial system and wondering when it's going to implode, if ever. Many have been waiting since 2008 for a full reset, but policy changes, bailouts, stimulus and interest rate manipulation have managed to keep the carnage contained, at least in the US.

Today in Europe, it was something of a different story, as many national equity exchanges were victims of among the worst losses of the year. Most indices were down more than two percent, with the Greek Athex Composite Share Price Index falling more than seven percent on pronouncement by the IMF in Der Spiegel magazine that the world's fail-safe lender of last resort may not help Greece in any further restructuring or servicing of debt.

Naturally, after the Dow was down 239 points in early trading, IMF officials reversed their opinion, saying that they would indeed be there for the Greeks, just as they have all along. This is now the accepted method of moving markets - by word of mouth, rumor and denial - and part of the reason why the economic collapse has more resembled a train wreck in slow motion.

Along those lines, a couple of columns by the estimablePaul Craig Roberts and Nomi Prins have received a great deal of attention as they examine the libor-rigging scandal and how that effectively kept banks and governments in collusion from complete collapse.

In the first article, from July 14,
The Real Libor Scandal, Roberts and Prins assert that the banks which "fixed" the libor rate were the main beneficiaries in something of a quid pro quo for the assistance they received from various governments and central banks:
Indicative of greater deceit and a larger scandal than simply borrowing from one another at lower rates, banks gained far more from the rise in the prices, or higher evaluations of floating rate financial instruments (such as CDOs), that resulted from lower Libor rates. As prices of debt instruments all tend to move in the same direction, and in the opposite direction from interest rates (low interest rates mean high bond prices, and vice versa), the effect of lower Libor rates is to prop up the prices of bonds, asset-backed financial instruments, and other “securities.” The end result is that the banks’ balance sheets look healthier than they really are.

Governments were also beneficiaries of a lower libor, as they could sell their bonds at rates below inflation while still maintaining enormous budget deficits:
In other words, we would argue that the bailed-out banks in the US and UK are returning the favor that they received from the bailouts and from the Fed and Bank of England’s low rate policy by rigging government bond prices, thus propping up a government bond market that would otherwise, one would think, be driven down by the abundance of new debt and monetization of this debt, or some part of it.

In a follow up to the first article, The Libor Scandal In Full Perspective Roberts expands upon the concept of ever-lower interest rates on government bonds into a full-blown indictment of government in collusion with the libor-fixing insolvent banks on charges of fraud:
As the Federal Reserve and the Bank of England are themselves fixing interest rates at historic lows in order to mask the insolvency of their respective banking systems, they naturally do not object that the banks themselves contribute to the success of this policy by fixing the LIbor rate and by selling massive amounts of interest rate swaps, a way of shorting interest rates and driving them down or preventing them from rising.

Roberts goes even further, demonizing Robert Rubin, whose actions to dismantle regulations in the US such as the Glass-Steagle Act put into motion over-leverage by the banks which resulted in the 2008 crisis and continue to this day:
As villainous as they might be, Barclays bank chief executive Bob Diamond, Jamie Dimon of JP Morgan, and Lloyd Blankfein of Goldman Sachs are not the main villains. The main villains are former Treasury Secretary and Goldman Sachs chairman Robert Rubin, who pushed Congress for the repeal of the Glass-Steagall Act, and the sponsors of the Gramm-Leach-Bliley bill, which repealed the Glass-Steagall Act. Glass-Steagall was put in place in 1933 in order to prevent the kind of financial excesses that produced the current ongoing financial crisis.

The articles are both "must read" material which outline the persistent fraud necessary to keep the fiat money crisis from imploding completely, with scenarios for its eventual collapse, not from within, but from outside.

As the stock markets are kept afloat at higher-than-usual levels by manipulators within the around the system, so too, the bond markets are manipulated, often by the very same people.

With powerful institutions plotting and defrauding the public on both sides of all trades, there's little wonder that every time there's an event which causes even a hint of panic, the authorities rush in to save the day, and with it, the global economic system from the carnage which eventually will engulf it all.

Dow 12,721.46, -101.11 (0.79%)
NASDAQ 2,890.15, -35.15 (1.20%)
S&P 500 1,350.52, -12.14 (0.89%)
NYSE Composite 7,670.54, -89.05 (1.15%)
NASDAQ Volume 1,586,828,750
NYSE Volume 3,576,762,250
Combined NYSE & NASDAQ Advance - Decline: 1242-4363
Combined NYSE & NASDAQ New highs - New lows: 113-202 (reversal)
WTI crude oil: 88.14, -3.69
Gold: 1,577.40, -5.40
Silver: 27.04, -0.26

Saturday, July 21, 2012

Stocks Lower on Gloomy European Outlook

Stocks opened Friday's session in the red and added to their losses throughout the day as the major indices all ended with sizable losses on continuing concerns over European debt issues.

The main culprit was once again Spain, where the benchmark 10-year bond surpassed 7% once again amid renewed concerns that the EU bailout of their dead banking system would hit significant snags in execution.

The session ended four straight days of gains for US stocks.

Dow 12,822.57, -120.79 (0.93%)
NASDAQ 2,925.30, -40.60 (1.37%)
S&P 500 1,362.66, -13.85 (1.01%)
NYSE Compos... 7,759.59, -90.16 (1.15%
NASDAQ Volume 1,817,595, 880
NYSE Volume 3,925,898, 500
Combined NYSE & NASDAQ Advance - Decline: 1679-3870
Combined NYSE & NASDAQ New highs - New lows: 179-91
WTI crude oil: 91.83, -1.14
Gold: 1,582.80, +2.40
Silver: 27.30, +0.09

Thursday, July 19, 2012

On Wall Street, Ignorance is Bliss

Take a look at the figures that came out this morning and somebody, please, anybody, explain why stocks are higher today:

Initial unemployment claims came in at 386,000, well above the consensus estimate of 365,000. There is no significant jobs creation in the United States, period.

Existing home sales were 4.37 million (annualized) in June, down from 4.62 million in May and below the estimate of 4.65 million. The housing market has not bottomed, will not bottom this year and probably won't bottom next year.

The Philadelphia Fed manufacturing index read an abysmal -12.9 in July, which is marginally better than the -16.6 posted in June, but still horrible, by any standards.

The Conference Board's Index of Leading Indicators fell by 0.3 for June, again, below consensus.

This data all came on top of what's been a pretty pessimistic prior two weeks of data, yet the major indices all opened positive and floated above the unchanged line all day. The Dow Jones Industrials are up 842 points since July 4th, on essentially nothing but rumors and vapors.

Wall Street continues to disregard basic economic data that shows the economy is stalling out. They may be able to do that for a time, but they will not escape the eventual outcome.

Dow 12,943.36, -34.66 (0.27%)
NASDAQ 2,965.90, -23.30 (0.79%)
S&P 500 1,376.51, -3.73 (0.27%)
NYSE Composite 7,849.84, -18.75 (0.24%)
NASDAQ Volume 1,687,888,625
NYSE Volume 4,002,177,750
Combined NYSE & NASDAQ Advance - Decline: 2704-2843
Combined NYSE & NASDAQ New highs - New lows:
WTI crude oil: 92.66, +2.79
Gold: 1,580.40, +9.60
Silver: 27.22, +0.12

Wednesday, July 18, 2012

The No-Reason Rally; Debt Ceiling Fight Again?

Cause and effect doesn't always work for markets, at least not in any recognizable fashion when it comes to the intricacies of the US stock exchanges.

There was little news to move markets on Wednesday, but, after a slow start, the speculators moved stocks up substantially on little else but positive momentum, caused by an absence of any overtly bad news, especially from Europe.

It's a little bit like whistling past the grave, these bouncy, out-of-the-blue rallies, because the US economy is pretty much stalled out, and corporate profits are slowing, as evidenced by lowered expectations this quarter.

Even though most companies are still beating their estimates, many have experienced quarter-to-quarter or year-over-year weakness and a slowing of their growth, which is not any good way to be investing for the long-term, but, most of the money being circulated through the markets is very, very short term.

Since money has to go somewhere and there's still plenty of it sloshing around, stocks still are the preferred vehicle of choice for the control crowd that moves markets and individual stocks. Bond yields are abysmally low, precious metals have stalled and commodities aren't for everyone, thus, stocks get bid up, especially two days before monthly options expiration.

Once this earnings season winds down - in another two weeks or so - the markets will be looking for a catalyst for their next move, though it's hard to see from where any positive one might emerge. Conditions in Europe are dire, China is slowing, and the US is pretty much running in place.

August could be pretty scary, though probably not as bad as last year, when the US bumped up against the debt ceiling and had its credit rating lowered. On the other hand, the rhetoric is already heating up in congress over raising the debt ceiling again. The IMF suggested the US raise the debt limit "soon" and House Minority Whip Steny Hoyer told Republicans he would like a vote in the House in the "very near term" on the debt ceiling, though Majority Leader John Boehner has suggested that the limit not be raised without offsetting budget cuts.

So, perhaps the coming months may be deja vu all over again.

Dow 12,908.70, +103.16 (0.81%)
NASDAQ 2,942.60, +32.56 (1.12%)
S&P 500 1,372.78, +9.11 (0.67%)
NYSE Composite 7,831.09, +36.32 (0.47%)
NASDAQ Volume 1,793,354,500.00
NYSE Volume 3,613,047,500
Combined NYSE & NASDAQ Advance - Decline: 3393-2128
Combined NYSE & NASDAQ New highs - New lows: 346-62
WTI crude oil: 89.87, +0.65
Gold: 1,570.80, -18.70
Silver: 27.10, -0.22

Tuesday, July 17, 2012

Bernanke Frightens, Then Appeases Bankers; Markets Rip

Talk about the tail wagging the dog.

Today, in semi-annual testimony before congress, Ben Bernanke, Chairman of the Federal Reserve, did not give any hints to his banker/bankster friends that the Fed was planning any more easy money, i.e. quantitative easing (QE) events in the near future.

No hints of free money? Blasphemy! said the markets, as the indices fell from early strong gains to steep losses in a matter of minutes.

The Dow, which was up 40 points before Bernanke's written remarks were made available, fell to a loss of 82 points, with the other indices showing similar patterns.

But, during the question and answer period, the chairman began to make it clear that the Fed was indeed considering QE, albeit not quite as soon as the banking masters were expecting it, like in September, the timing nearly perfectly political for the election. Stocks reversed their losses, went positive and posted strong gains for the session.

Other than the words coming out of Bernanke's mouth, nothing else mattered today.

In the immortal words of the Mobambo Guru, "This investing stuff is easy. Wheeeeee!"

Dow 12,805.54, +78.33 (0.62%)
NASDAQ 2,910.04, +13.10 (0.45%)
S&P 500 1,363.67, +10.03 (0.74%)
NYSE Composite 7,792.15, +49.14 (0.63%)
NASDAQ Volume 1,722,949,375
NYSE Volume 3,239,712,000
Combined NYSE & NASDAQ Advance - Decline: 3436-2129
Combined NYSE & NASDAQ New highs - New lows: 325-113
WTI crude oil: 89.22, +0.79
Gold: 1,589.50, -2.10
Silver: 27.32, -0.01

Monday, July 16, 2012

Markets Lower for Seventh Straight Monday in Sideways Trading

Get ready for a real roller coaster ride this week.

With Monday's declines marking the seventh straight Monday in which the market has sustained losses - an event which hasn't occurred since 2002 - the stage is set for more fun and games brought to you by the criminal syndicate that runs Wall Street, and, to some extent, your lives.

Citigroup (C) delivered a second quarter earnings beat prior to the open which failed to move futures off their declining dime, sending stocks straight downhill at the open, a not-unforeseen event, given Friday's massive melt-up.

And therein lies the crux of the market-is-rigged argument. If stocks are headed lower on Mondays, there isn't much analysis to do if you're running a big fund, or even a little one. Same might be true for Tuesday and Wednesday; you'll nibble a little maybe, but make your big move on Thursday, because Friday, as we all know all too well, is payday, and, thanks to concoctions like weekly options expiry and the usual third Friday of the month expiry (which happens to be this Friday), you can make money without break a sweat.

That seems to be the current game plan, since, after all, the world is heading to hell in a handbasket, so, savvy players will make the most of uncertainty, to say nothing of inside information and shared strategies.

Topping the news wires today were retail sales - down for the third straight month - and the IMF lowering its wildly optimistic global growth estimate for 2013 from 4.1% to 3.9%, though neither of those indicators seemed to touch off much sentiment other than bolstering the already overtly pessimistic.

Ben Bernanke appears before congress Tuesday and Wednesday, which might be newsworthy if he actually had any power over the markets (he doesn't), though many a hopeful banker will be listening in for any hints that the Fed may try more easing, a strategy which has worked well for speculators but come up snake eyes for the US and global economies.

A few weeks back, it was suggested here that stocks could be headed for a nighty downturn or a sideways/lower trade at best. So far, the sideways has been playing out, though the lower part of the formula seems to be headed off just about every Friday.

This week could be more of the same, with the aforementioned options expiration ending the week on a note the bankers love most, the sound of ringing cash registers.

Of course, this being the middle of summer, volume was nothing to speak of, though that's become somewhat the norm since the only players left are flesh-eating zombie bankers, flush with the Fed's newly-minted cash and nothing better to do with it than gamble it all away.

Dow 12,727.21, -49.88 (0.39%)
NASDAQ 2,896.94, -11.53 (0.40%)
S&P 500 1,353.64, -3.14 (0.23%)
NYSE Composite 7,743.06, -15.62 (0.20%)
NASDAQ Volume 1,438,632,500
NYSE Volume 2,883,821,000
Combined NYSE & NASDAQ Advance - Decline: 2271-3292
Combined NYSE & NASDAQ New highs - New lows: 277-71
WTI crude oil: 88.43, +1.33
Gold: 1,591.60, -0.40
Silver: 27.32, -0.05

Friday, July 13, 2012

Financial Fraud Wins Again: JP Morgan Posts 2Q Gain; Markets Rocket Higher

Details? Why, Jamie Dimon gave you his own set of details of how the $4.4 billion lost on the "London Whale" CIO trade was easily balanced out with gains from other areas of the business.

Take a look (straight from their filing):
$4.4 billion pretax loss ($0.69 per share after-tax reduction in earnings) from CIO trading losses and...

$1.0 billion pretax benefit ($0.16 per share after-tax increase in earnings) from securities gains in CIO's investment securities portfolio in Corporate.

$2.1 billion pretax benefit ($0.33 per share after-tax increase in earnings) from reduced loan loss reserves, mostly mortgage and credit card.

$0.8 billion pretax gain ($0.12 per share after-tax increase in earnings) from debit valuation adjustments ("DVA") in the Investment Bank.

$0.5 billion pretax gain ($0.09 per share after-tax increase in earnings) reflecting expected full recovery on a Bear Stearns-related first-loss note in Corporate.

Add the gains up and they come to $4.4 billion. Ta-da! And that six-day losing streak? Fixed it for ya' all in one day.

Simple, really, when you can just lower your loan lass reserves and call that profit, to the tune of $2.1 billion.

Never mind that JP Morgan is restating its first quarter results due to mis-marking of CDS (a crime) and that much of the mis-marking was in the CIO office where the London Whale was busy exploding the balance sheet. But, but, but, during the conference call, CEO Jamie Dimon said it will have no impact on the bottom line. Magic!

JPMorgan's overall net income was $4.96 billion, or $1.21 a share, compared with $5.43 billion, or $1.27 a share, a year earlier. Results for both periods included special items (Why are you not surprised?). Analysts expected 76 cents per share, so, from a purely blind-eye to the past purview, it's a beat, and stock-pickers love that. Shares of JPM soared nearly six percent, up 2.03, to 36.07 per share.

Naturally, just as in the sub-prime, robo-sgning, Libor and other scandals, nobody will see the inside of a prison cell.

You can't make this stuff up unless you're a banker, in which case, you do it on a daily basis, or, more succinctly, a quarterly basis.

JP Morgan's books are so cooked, asbestos gloves are needed to open them. But, hey, wall Street and the rest of the investment crowd criminals loved it, boosting stocks for the first time in six days, effectively squeezing shorts to the tune of another 200+ point gain on the Dow.

Sound familiar? Friday is payday for the banking cartel; seemingly, they're on the two-week model, as today's fiasco comes exactly two weeks after the "Europe's fixed" sugar high rally.

And, just in case anybody's keeping track, volume today was absolutely anemic. So much for support for this, yet another, phony rally.

Everything is manipulated, from the price of oil to what you pay for green beans and everything else, from CDS to, yes, interest rates, from the 0.5% the banks pay to borrow from the Fed, to the 18% they charge you for your credit card. Nice business, isn't it. It's all fixed and you can't win. Only bankers win.

But it's all good, people. A raging stock market makes everybody happy, especially the members of the banking cartel, who live by other laws than ordinary citizens. They cannot go to jail, for anything, ever, and that's the truth.

Live with it.

Dow 12,777.09, +203.82 (1.62%)
NASDAQ 2,908.47, +42.28 (1.48%)
S&P 500 1,356.78, +22.02 (1.65%)
NYSE Composite 7,758.67, +120.02 (1.57%)
NASDAQ Volume 1,356,260,750
NYSE Volume 3,190,493,000
Combined NYSE & NASDAQ Advance - Decline: 3436-1185
Combined NYSE & NASDAQ New highs - New lows: 341-52
WTI crude oil: 87.10, +1.02
Gold: 1,592.00, +26.70
Silver: 27.37, +0.21

Thursday, July 12, 2012

Dow, S&P Fall for Sixth Straight Session

As opposed to Wednesday's heavy news flow, there was almost nothing - other than company-specific earnings reports - by which to move markets on Thursday.

Inexplicably, even after initial unemployment claims came in at a nice, round, 350,000, a number that was the lowest in four years (as dubiously reported - but confirmed - by CNBC), stocks started the day at their lows, but proceeded to gain in fits and starts throughout the session, but ended dead in the water, the Dow and S&P posting their sixth consecutive days of losses.

What sufficed as information today was sparse, though yesterday's barrage of news was likely analyzed, scrutinized, digested, regurgitated and eventually ignored by the day-trading animaal spirits normally at the forefront of speculation.

It was a true buy the dip day, with plungers taking their best shots at stocks in the heart of what appears to be a rocky earnings season.

Expectations have been lowered to a point at which most companies can make their numbers for the second quarter, even though they'll be looking at sequential declines in many cases, so, that portends ill going through the next two to three weeks.

In the odd circumstance that one would be so carefree and risk-insensitive to take a dive into Wall Street's waters at this juncture, tight stops on the downside of any trade would be advisable as companies and analysts are set to unleash a rash of downgrades to individual companies and the general economy, covering the next six months.

With the presidential election less than four months ahead, congress will be even more dead-handed than usual, with no meaningful legislation - though lots and lots of posturing and posing - on the calendar. With crises and scandals popping up seemingly every other day, this is not an environment for the feint of heart, even though a good percentage of Americans have their retirements wound into the fabric of this unruly market through pensions or 401k plans.

The close of the week should prove challenging, as the day will be led off by none other than JP Morgan Chase (JPM), which releases its second quarter earnings report prior to the opening bell. At issue is not only the size of the loss from the "London Whale" trade, but whether or not golden boy, Jamie Dimon will have some of his ludicrous bonus clawed back. It should make for interesting theater, if nothing else.

Of particular note to technicians are the continuing beat by declining issues in the A-D line, and the slow but sure rise of new 52-week lows, which neared parity today and actually favored the new lows on the NASDAQ, 68-50. If the market is trending, it is surely making a case for heading south.

Dow 12,573.27, -31.26 (0.25%)
NASDAQ 2,866.19, -21.79 (0.75%)
S&P 500 1,334.76, -6.69 (0.50%)
NYSE Composite 7,638.72, -46.65 (0.61%)
NASDAQ Volume 1,689,227,375
NYSE Volume 3,636,806,750
Combined NYSE & NASDAQ Advance - Decline: 2139-3403
Combined NYSE & NASDAQ New highs - New lows: 153-130
WTI crude oil: 86.08, +0.27
Gold: 1,565.30, -10.40
Silver: 27.16, +0.14

Wednesday, July 11, 2012

Fed Minutes Leave Kleptocrats with Less Hope of QE3

There was so much in the news today affecting markets, just headlines (with links) seemed appropriate:

Against the backdrop of a constant stream of news that goes against the "all's well" narrative so enjoyed by the media elite and sheeple of the world, when the Fed's FOMC minutes from the June meeting appeared at 2:00 pm EDT, what was a sleepy, little decline became a bit more pronounced, with all of the major averages taking on losses.

Traders, zealots, cheaters and stock manipulators of all stripes were shocked and horrified that the super-secretive FOMC minutes did not offer any more insight into more easing by the Fed, despite the near-unanimous conclusion that the US economy was beginning to deteriorate in the prior months.

In other words, even though current economic conditions in the US stink, Wall Street wants things to get even uglier, so that they can continue to feed at the trough of the Federal Reserve's unlimited free money supply and speculate even greater amounts, with more leverage on overpriced equities.

At the lows, the Dow was down 119 points, the NASDAQ off 35, but, as is often the case in the Ponzi-schemed markets, the indices erased most of the declines in the final half hour of trading, actually pushing the S&P briefly back into positive territory and hiking the NYSE Composite to a small gain.

Volume was rather tame, but the Dow and S&P have traded lower for five straight sessions, the Dow having now given up all but two points of the massive June 29 gain spurred by the false "everything is fixed in Europe" summit statement.

Despite the continuing losses, the new highs-new lows indicator is still leaning heavily toward the bullish case, though the number of new highs is falling, while the new lows continue to build.

Markets continue to be uneasy, but the correct catalyst could produce a significant move in either direction, even though one would have to be deaf and blind to not see the inordinate pressures building around the world.

Dow 12,604.53, -48.59 (0.38%)
NASDAQ 2,887.98, -14.35 (0.49%)
S&P 500 1,341.45, -0.02 (0.00%)
NYSE Composite 7,685.32, +17.75 (0.23%)
NASDAQ Volume 1,543,879,125
NYSE Volume 3,391,219,750
Combined NYSE & NASDAQ Advance - Decline: 2869-2673
Combined NYSE & NASDAQ New highs - New lows: 171-80
WTI crude oil: 85.81, +1.90
Gold: 1,575.70, -4.10
Silver: 27.02, -0.14

Tuesday, July 10, 2012

Cacaphony of News Events Sends Stocks Lower

Tuesday was full of news items - most of them bad - which cumulatively took US stock markets down a few notches.

In classic bear market fashion, stocks opened higher, but quickly gave up their gains - the Dow managed to tack on 103 points at the high of the day, just before 10:00 am EDT - and turned negative, where they stayed the remainder of the session, the losses accelerating into the close.

Early in the day, Italy's Prime Minister, Mario Monti, expressed an interest for his country to tap into Eurozone bailout funds, for "bond support," an option previously not mentioned as Monti tries to turn around his country's flagging economy, but prescient, as Italy's banking system is one of the weakest of European nations.

Monti's suggestive remarks blunted a broad rally on European bourses, though most managed to finish with sizable gains, his comments coming late in the trading day.

Not so fortunate were US markets, which received the dispatch around 11:00 am EDT. The first news of the week from Europe that was not all roses and Perrier sent shivers through the exchanges as investors took heed and began selling in earnest.

Italy's woes were lumped on top of news that Patriot Coal, suffering from the lowest coal prices in 24 years, due to mild winters and increased use of natural gas, filed for bankruptcy protection in Manhattan, NY. The company's bonds are under severe pressure, selling for 26-34 cents on the dollar, depending on maturity. The stock (PCX) price ended Thursday at 0.61 cents and did not trade today, though some after hours quotes have it at 0.37 cents.

Adding to the day's malaise, the city of Scranton, PA, under severe financial pressure, cut municipal employees' pay to minimum wage, $7.25 per hour, citing a need to keep costs down and raise capital.

The woes of Scranton, mythical home to the hit series, "The Office," are notable, following the bankruptcy of Pennsylvania's state capitol, Harrisburg, and other municipal bankruptcies in Stockton, California and Jackson, Mississippi.

Just adding fuel to the raft of bad news was J.C. Penny, which announced 350 job cuts at their headquarters in Plano, Texas. The retailer is attempting a turnaround after years of sluggish sales and sputtering growth, though the economic climate hasn't been very cooperative. JCP finished down 1.27, at 20.76, a share price less than half what it was just five months ago.

All of these news items, which seem to be billowing up daily, sent stocks into a tailspin, though short-covering and the PPT managed to keep the major indices from closing at their lows.

There is little doubt that the US and global economies are facing stiff headwinds from an overabundance of debt, fraud and malfeasance, which won't be easily fixed.

The trend continues to be one of losing bets on stocks while legislators sit upon their collective hands - because it's an election year - and the global, criminal banking cartel continues to skim and chip away at the edges of everybody's wealth.

How long the crisis mentality will prevail is unknown, though one has to believe that all hell is about to break loose, both in the US and Europe - to say nothing about the hard landing in China - surely to fracture before the November elections.

It's a mess, and, if you're one of the sheeple who can't see the forest for the trees, it's time to start weeding and cutting some brush. The situation worsens by the day and financial authorities have nothing to offer but more debt, piled upon heaps and loads of the stuff.

On a personal note, it is with great regret that I note the passing of Helen Mittermeyer, mother of one of my two best friends, Paul Mittermeyer.

Helen left this earth on Monday afternoon, succumbing to complications from cancer after a short illness. She leaves behind her husband, Whitey, and four children, Paul, Ann, Daniel and Cris.

Helen was a noted writer of romance novels who wrote 30 books from 1983 through 1998. In her latter years, health issues prevented her from keeping to her craft. She also penned novels under the names Ann Cristy, Hayton Monteith, and Danielle Paul.

A warm, caring, generous, outgoing person with a permanent smile and a zest for life, Helen will be missed by all.

-- Rick Gagliano

Dow 12,653.12, -83.17 (0.65%)
NASDAQ 2,902.33, -29.44 (1.00%)
S&P 500 1,341.47, -10.99 (0.81%)
NYSE Composite, 7,667.56, -68.78 (0.89%)
NASDAQ Volume 1,697,232,250.00
NYSE Volume 3,439,462,750
Combined NYSE & NASDAQ Advance - Decline: 1859-3706
Combined NYSE & NASDAQ New highs - New lows: 299-74
WTI crude oil: 83.91, -2.08
Gold: 1,579.80, -9.30
Silver: 26.88, -0.56

Monday, July 9, 2012

Stocks Are Boring; Alcoa Shows Why; Europe Punts

On a midsummer's day upon which the biggest news was awaiting the second quarter earnings report from ALCOA, after he closing bell, stocks simply drifted below the break-even line in a tight range throughout the session.

With earnings season at hand, one would normally expect more excitement, but, alas, all is not well with what used to be known as the perfect discounting mechanism, i.e., the Wall Street stock exchanges.

Like it or not, continued central bank intervention on the grandest of scales ever witnessed has done nothing to revitalize global industry. The world has been in a funk for at least the past four years - since the epochal events of fall, 2008 - banks are all insolvent zombies and a global slowdown is coming at a time when monetary authorities are at their weakest, with zero to near-zero base interest rates the norm, bloated central bank balance sheets, full of faulty debt instruments nobody else wants to own, and sovereign debt exploding everywhere.

The world is full of debt and overcapacity, yet those in charge, scared to death as they may be, relent whenever an adult solution - like actually writing down bad debts - is needed and instead pass the hat to neighboring countries, the next central banker or the IMF, which, incidentally, is funded by the same over-indebted nations that borrow from it.

In the corporate sector, the slowdown can be seen everywhere, but especially tantalizing was Alcoa's (AA) second quarter, in which the company posted a loss.

Of all the goofy headlines designed to make people think everything is OK, the only one to get it right was the AP, which blared, Alcoa Inc. posts 2Q net loss in slowing economy.
Aluminum manufacturer Alcoa Inc. says it lost $2 million in the second-quarter as revenue dropped due to weaker prices and pockets of declining demand in the slowing global economy.

Alcoa on Monday posted break-even earnings per share for the April-through-June quarter. That compares with net income of $322 million, or 28 cents a share, a year ago.

Revenue fell 9 percent to $5.96 billion.

The world's largest producer of aluminum has been squeezed into a condition in which it can no longer shed employees to save money, command a profitable price for its products due largely to over-supply, and thus, limps into the second half of the year off a loss with prospects for growth jaded, at best.

If Alcoa is any kind of bellwether, and, as a standing member of the Dow 30, it should be, the prospects for a robust earnings season have just been significantly reduced, maybe obliterated.

Companies can only do so much in stagnant or imploding economies, which is what the global condition is today, and just breaking even (or, taking a small loss) is probably considerably better than some of the companies to follow will do.

It's a very tough environment - one in which large firms have limited pricing power and smaller firms can't find financing. That's oversimplifying matters to a large degree, but there will be fire sales, clear misses and break evens on lowered expectations this quarter and going forward, unless and until central banks take their foot off the accelerator of the money-printing press.

Early signs of total collapse came from Europe today, where the ESM (European Stability Mechanism) - a permanent funding source of 500 billion Euros - was to be established, but was delayed amid growing discontent among participants, and the nagging need for the fund to not only bail out nations, but also the banks of those nations, without any preconditions.

The delay, just 10 days after a euphoric european summit ended with apparent agreement, sent Spanish bonds soaring over seven percent and confusion reigning supreme in the Eurozone.

This clip from CNBC, featuring two of the most vocal critics of centralized economic planning, central bank intervention and bailouts, Rick Santelli and Nigel Farage tells the story of the growing discontent perfectly well.

Dow 12,736.29, -36.18 (0.28%) NASDAQ 2,931.77, -5.56 (0.19%) S&P 500 1,352.46, -2.22 (0.16%) NYSE Composite 7,736.22, -20.40 (0.26%) NASDAQ Volume 1,358,825,380 NYSE Volume 2,810,960,750 Combined NYSE & NASDAQ Advance - Decline: 2427-3155 Combined NYSE & NASDAQ New highs - New lows: 293-51 WTI crude oil: 85.99, +1.54 Gold: 1,589.10, +10.20 Silver: 27.44, +0.52

Friday, July 6, 2012

Poor Jobs Report Sends Stocks Reeling

The recovery that wasn't continues to glide along on a path to... somewhere, but probably, for most Americans, nowhere.

It's not like conditions are horrifying for most people, but standards of living are slipping overall, there are still 20 million of so Americans unemployed or underemployed, but the food stamps and welfare checks keep coming like clockwork, so what's the worry?

After this morning's dismal non-farm payroll report showed a net gain of 80,000 jobs - not enough to keep up with the growing labor force (which, recently, according to government statistics - lies, mostly - is shrinking) - stocks set out on a course to the serious downside, where they belong, but, after some thought, investors, or suckers, if you will, dove back in and brought the major indices back to more respectable levels.

The Dow had been down as much as 193 points, the S&P off by 19 and the NASDAQ down 55 before the afternoon crowd came in and hoisted the averages upwards, beginning just after 2:00 pm EDT in a very thinly-traded market.

Bankers and hedgies must be a lot like most people - or sheeple - in that they are so shallow and superficial as to believe that today's sharp decline and manufactured rally will convince anyone with a brain that the miasma of the debt clutch, high unemployment and Europe's special set of problems are not deeper, more profound and long-lasting than the suck-up media would have us believe.

Following last Friday's melt-up on Europe's latest "solution" stocks have clambered about a bit, and, as of today have given back only about a third of those ill-gotten gains. There's a growing apprehension that the lofty levels of equities and insistence by central bankers to keep printing more worthless fiat is going to cause a bust bigger than anyone wants to imagine. However, given that the current scheme of low to even negative interest rates - as Denmark posted just yesterday - has thus far kept the wolf from the door for nearly four years, central bank and government can-kicking may just be able to sustain itself for another two, three or four years.

Of course, there's always the possibility that something could go horribly wrong, like having most of the major global banking firms under investigation for rigging key rates, as is the current case concerning the libor, or that Italians might just give up on the technocratic form of governance that strips away wealth a little bit at a time and decide to go back to an agrarian lifestyle, an epochal event that would surely shatter the Euro for good, but, until such an event or "black swan," the global ponzi of the central bankers and their lieutenants within the banking cartel should continue without much interruption.

One has only to look around a bit, at places like Stockton, California, which recently filed for bankruptcy, or the new Section 8 neighbors in your formerly pristine, peaceful suburb or the dependency of old-timers, poor people and previously middle class folks on government programs to get a feeling that all is not well.

It's a depressing thought to think that our elected leaders and captains of industry have colluded against the best interests of the citizenry, but, that's what seems to have taken place over the past decade or so, or, at least it's become more out in the open during that time.

There aren't many good solutions to global economic crises, and he central bankers of the world have thrown everything, including the kitchen sink, at this one, to little avail. The day is approaching when all of the economists, bankers, politicians and CEOs are proven to be charlatans, their proposals and ideas completely wrong. That day will come; the trick is to know the exact date.

Until then, free houses for everyone!

Dow 12,772.47, -124.20 (0.96%)
NASDAQ 2,937.33, -38.79 (1.30%)
S&P 500 1,354.68, -12.90 (0.94%)
NYSE Composite 7,756.61, -81.17 (1.04)
NASDAQ Volume 1,419,548,625
NYSE Volume 2,650,810,250
Combined NYSE & NASDAQ Advance - Decline: 1708-3841
Combined NYSE & NASDAQ New highs - New lows: 225-36
WTI crude oil: 84.45, -2.77
Gold: 1,578.90, -30.50
Silver: 26.92, -0.75

Thursday, July 5, 2012

Trepidacious Trading in Uncertain market Environment

On a day in which most of the economic news was positive - or, could have been considered in that regard - the palpable fear that engulfed Wall Street was nothing short of astonishing.

Even though the People's Bank of China (PBOC) cut interest rates, along with the ECB, and the Bank of England announced a boost in their own version of quantitative easing, adding 50 billion pounds to their asset purchase program, stocks could not get out of their own way throughout a tense, thinly-traded, anxious session.

US data was mixed. The ADP private employment index registered a gain of 179,000 jobs in June, blowing away estimates of a gain of 105,000, but ISM Services declined from 53.7 in May to 52.1 in June, the lowest reading since January of 2010.

Must of the angst appears focused on Friday's non-farm payroll report from the BLS, which is expected to show job growth in June for the US of 100,000 net new jobs. Following May's poor showing of a mere 69,000 new jobs, investors were rightly skeptical of the ADP number, which last month showed a gain of 136,000 jobs, so the consensus is that ADP's figures are skewed to the upside by 50,000, at a minimum.

With the major indices trading at, or close to, their highest levels since the end of May, investors exercised caution ahead of tomorrow's potentially-volatile non-farm payroll number.

The odd occurrence of stocks actually slumping when central banks cut interest rates or offer looser standards is confounding and possibly a signal that the current short-term rally is close to completion. Stocks are trading at levels closer to the highs seen at the beginning of May than the lows experienced at the end of May.

Also adding to the general state of confusion is the advent of second quarter earnings, which will begin to come to market next week. There may be some thinking that this earnings season will not be as robust as prior ones, even though estimates have been lowered for many firms.

There's also the nagging feeling that nothing is really solved in Europe and in America, no meaningful legislative action will be taken with the presidential and congressional elections taking place within four months.

The market is very uneasy at present, and yesterday's - and today's - extreme reading of new highs to new lows may have signaled to some an interim market top.

Of course, everything hinges on tomorrow's jobs' data, which will be released prior to the opening bell, at 8:30 am EDT.

Dow 12,896.67, -47.15 (0.36%)
NASDAQ 2,976.12, +0.04 (0.00%)
S&P 500 1,367.58, -6.44 (0.47%)
NYSE Composite 7,838.39, -63.27 (0.80%)
NASDAQ Volume 1,326,294,125
NYSE Volume 2,925,787,750
Combined NYSE & NASDAQ Advance - Decline: 2494-3070
Combined NYSE & NASDAQ New highs - New lows: 385-22
WTI crude oil: 87.22, -0.44
Gold: 1,609.40, -12.40
Silver: 27.67, -0.61

Tuesday, July 3, 2012

Short Session, Big Gains

In Tuesday's shortened session, since there was no negative news coming out of Europe and no US data upon which to trade, stocks took the path of least resistance and bolted to the upside, scoring unusually large gains in the 3 1/2 hour session.

Topping the news was the resignation of Barclay's chief executive, Bob Diamond, who has been embroiled for the past week in a scandal involving rigging of the Libor during the financial crisis in 2008.

Diamond, who previously said he would not step down, is at the center of a growing maelstrom which could reportedly involve 12 major banking firms also involved in the rate-rigging scheme.

Also revealed today was news that the Bank of England might have been encouraging Barclay's and others to maneuver the Libor to keep financial firms and the global economy from disintegrating at the height of the crisis.

The British parliament plans to open an inquiry into the matter, which will convene tomorrow, July 4.

One piece of economic data that was released was Factory Orders, which recorded a rise of 0.7% in May.

Auto sales for June were also announced by a number of car makers. Chrysler reported a 20% increase in sales from a year ago. Ford had a 7% increase, while sales of General Motors' vehicles rose 16%.

While down from the pace of May, June's numbers were enough to bolster confidence in stocks overall.

Dow 12,943.82, +72.43 (0.56%)
NASDAQ 2,976.08, +24.85 (0.84%)
S&P 500 1,374.02, +8.51 (0.62%)
NYSE Composite 7,901.59, +69.36 (0.89%)
NASDAQ Volume 976,336,625
NYSE Volume 2,067,057,875
Combined NYSE & NASDAQ Advance - Decline: 4176-1290
Combined NYSE & NASDAQ New highs - New lows: 482-22 (extreme)
WTI crude oil: 87.16, +3.41
Gold: 1,621.80, +24.10
Silver: 28.28, +0.78

Monday, July 2, 2012

Limited Follow-Through After Friday's Euro-fed Bazooka Gains

Like night follows day, Monday's trading followed on the heels of Friday's great Eurozone "we fixed it, again" ramp-job; the pseudo-rally on vapors of Germany "backing down" from imposing terms and conditions on bailout money was an enormous sham, a dickering of the markets which, without doubt will be eaten alive by the short-sellers, profit-takers and high frequency traders in due time.

The retrenchment did not begin at the first possible moment, with the start of trading for the week at Monday morning's opening bell, but, with the 10:00 am EDT release of the latest ISM Index showing a massive decline, from 53.3 in May to 49.7 in June, signifying slight, but actual, contraction, stocks quickly tumbled to what turned out to be the lows of the day.

With extremely light volume, all of the major indices kept to within a very narrow range, with the NYSE Composite and NASDAQ turning positive for much of the session, eventually being joined by the S&P 500 late in the day.

Of course, the markets being what they are, no bad news - such as the ISM report - is taken without swift contrary action via the HFTs, plus this week is shortened by the odd Wednesday holiday, the 4th of July being Independence Day, and the big nugget out there comes Friday, with June's non-farm payroll report, expected to show US job gains of 90,000.

By the end of the day, the only major index not showing a gain was the Dow, though its losses were marginal. Volume was excepted to be low, and it was probably less than expected. All in all, the day was very uneventful trading-wise, though those with a keen eye for data surely did not miss the fact that the ISM numbe was under 50 - signaling contraction - for the first time in three years, and that is, in itself, notable.

However, in what can be called the most perverse trade of the day, the ISM news was so bad that the most cynical traders see it as impetus for more easing by the Federal Reserve, and we all know what that means: No, not free houses for everybody, free money for BANKERS! and, if that's not just the best news of the day, what is?

On a note unrelated to to the day's trading action and other miscellaneous items of high finance, Henry Blodget at The Daily Ticker has a neat summary of what the Obamacare tax is going to cost Americans.

Dow 12,871.39, -8.70 (0.07%)
NASDAQ 2,951.23, +16.18 (0.55%)
S&P 500 1,365.51, +3.35 (0.25%)
NYSE Composite 7,825.02, +23.18 (0.30%)
NASDAQ Volume 1,708,509,750
NYSE Volume 3,267,654,000
Combined NYSE & NASDAQ Advance - Decline: 3768-1838
Combined NYSE & NASDAQ New highs - New lows: 414-32
WTI crude oil: 83.75, -1.21
Gold: 1,597.70, -6.50
Silver: 27.50, -0.11