Showing posts with label Angela Merkel. Show all posts
Showing posts with label Angela Merkel. Show all posts

Monday, November 20, 2017

Stocks Ignore Political Risks, China Regulations; Glint App Takes Gold Digital

Early morning in Europe and the Western Hemisphere were looking downright dreary to open the week's financial escapades, until buyers (central banks) emerged from the shadows (crypts), quickly erasing concerns over China's new rules to crimp the burgeoning shadow banking uprising and the failure of German Chancellor Angela Merkel to form a coalition government.

While futures were down sharply - especially on the European news - they were quickly corrected. China's markets quickly went from negative, staging a day-long rally, while European bourses were mostly positive and US stocks rallied sharply from the opening bell.

However, the euphoria flagged in the US as the session wore on, with stocks finishing off their highs of the day. Still, the results were much more cheerful than what might have happened if markets and investors were left alone, barring the blatant interventionism that seems to pervade trading in all markets.

The new paradigm is such that stocks cannot fail, but only go higher, valuations be damned, while gold and silver are routinely taken out to the woodshed for a weekly beating, such as occurred this morning, prior to the opening bell on Wall Street and throughout the day.

The setup isn't all so new at all. Since 2012, gold and silver have been mercilessly suppressed, to the point at which some staunch supporters are rethinking their love for shiny metals. This is exactly what central bankers wish, that wealth protectors give up and resign themselves to the fiat money regimen, but it is also precisely the time - if one is guided by sound investment stratagems - to begin loading up on what most would be shunning.

In that regard, London-based Glint launched a mobile app today that sets gold sailing into the digital age, offering Glintpay as a means by which to hold gold in a Swiss-based vault with the ability to spend one's holdings via a complementary MasterCard.

The app, which is available for download through the Apple App Store, works on iPhones and iPads using Apple's iOS operating system and is promising to provide quick and easy debit access to gold and a host of other currencies, with millions of locations worldwide accepting MasterCard.

How well the start-up will fare is an open question, but it does raise an interesting alternative to Bitcoin and other cryptocurrencies, which have witnessed monumental growth over the past six months and continue to raise eyebrows in the conventional banking universe.

The world is at a crossroads in terms of currencies. Trust in the debt-slavery central bank system continues to wane in various places as the rise of cryptos offers a glimpse of a possible future and precious metal devotees cling to long-held beliefs in money that is backed by physical assets.

Currency events are historically long-winded affairs, taking years or decades in which to sort themselves out. The ongoing forays between fiat, crypto, and physical seems to have gained some momentum today.

Investors with an eye on the global financial landscape would be wise to hold some of each, allocating more toward the digital and physical as events warrant as old systems are dying and may have been dealt an unrecoverable blow during the Great Financial Crisis of 2007-09.

At the Close, Monday, November 20, 2017:
Dow: 23,430.33, +72.09 (+0.31%)
NASDAQ: 6,790.71, +7.92 (+0.12%)
S&P 500: 2,582.14, +3.29 (+0.13%)
NYSE Composite: 12,320.77, +17.88 (+0.15%)

Thursday, February 14, 2013

St. Valentine's Day Mascara

No, that's not a misprint in the headline. The word is "mascara" - the stuff women apply to darken, thicken, lengthen, and/or define their eyelashes. It's a cosmetic, as in rouge, or lipstick, as in lipstick on a pig, which is exactly what the algos and buy-siders did to today's undeniably weak, directionless market.

Face it, Europe is a bona-fide basket case, Japan is devaluing its currency so fast that George Soros made nearly a billion dollars on the trade in just over three months.

The news coming out of Euro-fantasy-land was less than encouraging. Eurozone fourth quarter 2012 GDP fell by 0.6%.

Making matters a little more interesting - and more frightening - were the figures for the zone's three largest economies - Germany, France and Italy - whose own GDP fell by 0.6%, 0.3% and 0.9%, respectively.

The Eurozone, even after all the bank and sovereign bailouts, pledges of doing everything possible to promote growth by the likes of Germany's Angela Merkel and EU President Mario Draghi, has resulted in three consecutive quarters of negative GDP. Europe is already in the throes of an economic collapse, thanks largely to protectionism for banks and excessive liquidity from European central bankers (most of whom are Goldman Sachs alum, BTW).

While the GDP numbers may be bad enough, consider youth unemployment (ages 15-25) in the Eurozone to be spreading like the bubonic plague. Greece reported youth unemployment over 60%; Spain over 50% and Portugal just topped 40%. Thirteen of the 27 EU member states are reporting youth unemployment over 25%. Austerity: it's what's for dinner.

Europe is solid proof that the elite class is making up the rules as they go along, and the general public is viewed as collateral damage only. Here in the good old USA, we have our own concerns with the sequestration schedule to commence March 1, which will result in massive federal budget cuts. The president and congress haven't even begun to discuss how they'll handle that, though they uniformly say that sequestration (it doesn't rhyme with castration for no reason) is something they'd prefer to avoid.

Have they acted? No. Will they? Probably, but, like the fiscal cliff deal this past December, it will be a stop-gap measure and cost taxpayers more. Nobody ever cuts anything in Washington, only the rate of growth of programs, because what's important to them is keeping lobbyists and voters (government employees and beneficiaries of government largesse) dumb and happy.

So, on what does this algo-concocted market focus? Berkshire Hathaway's buyout of Heinz. Poor suckers that Americans are, they put ketchup on their chicken and pork hot dogs on day old buns while Uncle Warren reaps the profits. If ever there was a crony capitalist, Warren Buffet's picture belongs next to the definition.

Sure, unemployment claims were down - from 368K to 341K - but aren't those figures still too high? The new normal means just doing better than expectations, even if those expectations are sub-par. It's akin to taking your kid out for ice cream because he got a C in math instead of a D. As a nation, we've lowered our standards in everything from our political leaders to what passes for entertainment.

Along with everything else, we've lowered our standards for rational markets. Today's split decision is just another shining example of the truth hiding in plain sight. Sooner or later, even the talking heads on CNBC are going to come to the realization that making new all-time highs with a -0.1% GDP and unemployment at eight percent doesn't really pass the smell test. Someday. Maybe. Note the video below with Rick Santelli, everyone's favorite financial ranter, extrapolating out on what we've been saying nearly every day on this blog: that being a trader is nearly impossible under current conditions.

And, just as a side note, New York Mayor Bloomberg, who first banned drink containers larger than 16 ounces, has proposed a ban on styrofoam containers, and... it's likely to pass his rubber stamp city council.

Let's see, smokes are $10-12 a pack in NY, you can't smoke in any of the bars, night clubs or public buildings; you must drink from small containers and those soon cannot be made of styrofoam. All this makes one pine for the good old days of the seventies. Ed Koch was mayor. Son of Sam was shooting kids in parking lots. Reggie Jackson was blasting balls out of the original Yankee Stadium and you could buy just about any kind of drug - from weed to cocaine - on just about any street corner. Bloomberg. He's just not a fun guy.

Dow 13,973.39, -9.52 (0.07%)
NASDAQ 3,198.66, +1.78 (0.06%)
S&P 500 1,521.38, +1.05 (0.07%)
NYSE Composite 8,951.33, -4.27 (0.05%)
NASDAQ Volume 1,884,832,750
NYSE Volume 3,867,864,500
Combined NYSE & NASDAQ Advance - Decline: 3259-3130
Combined NYSE & NASDAQ New highs - New lows: 505-39
WTI crude oil: 97.31, +0.30
Gold: 1,635.50, -9.60
Silver: 30.35, -0.516

Tuesday, October 9, 2012

Germany's Merkel Jeered in Athens; Liars, Cheaters, Swindlers and Psychopaths

Markets around the globe took a bit of a beating on Tuesday, just as earnings season is about to get underway in the United States.

The catalyst for today's decline is unknown, though the first major drop in US markets coincided neatly with German Chancellor Angela Merkel's visit to Athens, Greece, where she was jeered by thousands, including some dressed in Nazi uniforms, brandishing swastika flags, and gave the Heil, Hitler straight-armed salute that signified the reign of terror that Germany inflicted upon Europe some 70 years ago.

Greeks, their children, and others who fell under Nazi influence have not forgotten. There are still many unhealed wounds in Europe stemming from Nazi occupation of most of the continent and the lives lost during the deadliest of wars.

The demonstration by the Greeks was isolated, but still calls to mind the devastation that befell Europe under Adolf Hitler and his hordes of merciless killers. Of course, America's entry into the World War II signaled the beginning of the end of Hitler's reign of terror. Like all psychopaths, he was exposed and defeated, freeing the continent from the grip of fascism.

Seeing the sarcastic rendering of neo-Naziism could prove a heartening reminder that nearly all liars, cheaters, swindlers and psychopaths are eventually brought to some form of justice, either exposing themselves by their own foolish deeds or brought out from the shadows by those who choose to confront them, deny them and defeat them.

It would be refreshing to think that all the liars and cheaters of the world would be found out and demonstrably punished, though reality teaches that that is not the case. From the scandalous likes of mega-bankers to the small-minded, petty fools who concoct flimsy excuses by which to break deals, or the equally stupid types who hear only what they want to hear and make up stories, put words in other people's mouths and are general abusers, these all should be found out and made to pay dearly for their transgressions.

Failing the exposure of frauds and liars, the best the righteous can hold in their hearts is the thought that the prevaricators, manipulators and others of their ilk have to live with themselves, unforgivable and not forgiven. Their puny lives consist of their own little hell, an isolated, brutal existence that stains the soul and darkens the mind. The psychopaths among us cannot love, cannot feel the pain of others but can only inflict it, fool themselves with false pride, believing that they are somehow better, privileged, never at fault and unapologetic. They are sick, depraved and truly despicable human beings.

To these pariahs, the upstanding, the honest, the happy people of the world say, good riddance. Your personal torment is payback enough for your evil transgressions.

As for the markets, some interesting developments in the A-D line, which was 7-2 in favor of the losers and the new highs - new lows indicator, which flipped over to negative, 49-39 on the NASDAQ, though remained in favor of new highs on the NYSE, 97-26, a much narrower gap than in recent days. Paying close attention to both of these indicators may be investing 101, but they are among the most reliable metrics when change is in the wind, and a correction has been and still is, long overdue.

As earnings season heats up, we'll find out whether the market can sustain itself on the wings of Bernanke's put, unlimited MBS bond purchases, ZIRP and other Keynesian-like manipulations.

Dow 13,473.53, -110.12 (0.81%)
NASDAQ 3,065.02, -47.33 (1.52%)
S&P 500 1,441.48, -14.40 (0.99%)
NYSE Composite 8,279.11, -80.02 (0.96%)
NASDAQ Volume 1,646,239,125
NYSE Volume 3,187,523,500
Combined NYSE & NASDAQ Advance - Decline: 1244-4293
Combined NYSE & NASDAQ New highs - New lows: 146-65
WTI crude oil: 92.39, +3.06
Gold: 1,765.00, -10.70
Silver: 33.98, -0.032

Thursday, August 16, 2012

Speculators Step Up to End Dull Trade with a Bang

Think zero interest rate policy and money for virtually free doesn't have its upside?

Ask fund and managed account managers what they think of this trading environment and they'll likely respond in unanimity that it's never been better. After eight straight days of lackluster, low-volume trading, the wheeler-dealers went to work in concerted fashion, driving all risk assets higher on Thursday.

When the biggest banks and their trading arms can borrow money at 25 basis points or less overnight, what happens is trading like today, shutting off the noise about a sputtering, topped out market with a quick, one-day ramp up on strong volume for a nice turn of profit for the week.

The particular catalyst could be anything, from Angela Merkel's comments today about floating more bailout money to save the Euro, to benign initial claims figures (op a mere 2,000 from the prior week, to 366,000), to July housing starts dropping to 746,000 annualized from 754,000 or the Philadephia Fed's manufacturing index gaining to -7.1 in August from July's horrific -12.1. Well, forget those last two as they don't quite fit the hopium narrative.

Indeed, if conditions on Wall Street get any better, the feds may just cancel the November election and proclaim President Obama the winner by default. After all, the campaign money flows from Wall Street and other major investors, multi-millionaires and billionaires to the candidates or their PACs, and Wall Street has been having a rousing good time the past three-and-a-half years. Why end the party now?

At some point, analysts are going to poke around the numbers a bit and find that stocks are extremely overvalued, priced for perfection, at levels unsustainable for the long run unless corporations severely fudge their books to show better-than-expected results (oh, that's never been done before, not in America).

It doesn't matter what analysts or the best chartists in the business conclude, however. Stocks will continue to go up as long as markets continue to be manipulated by the central planners scattered around the globe in investment houses, central banks and government ivory towers.

What's that? You don't believe the US markets are not manipulated? Maybe you need a little convincing from experts in the field.

Take J.S. Kim, for example, who posits that potential gold and silver investors are continually fed disinformation about a market manipulated by contrived futures and trading patterns in a false, paper market

Perhaps one could take advice from Chris Martenson's commentary, headlined "What to Do When Every Market Is Manipulated?"

For a more general understanding, one could comb through the 29,800,000 results for the search term "market manipulation," and see what kind of gems are unearthed.

The control, rigging or manipulation of markets in the United States has been going on in a large manner ever since Ronald Reagan created, by executive order, the President's Working Group on Financial Markets (otherwise known as the PPT, or Plunge Protection Team) after the massive market crash in the wake of "Black Monday," when the Dow Jones Industrials plummeted 508 points Oct. 19, 1987 and was called into action again when Long Term Capital Management (LTCM) nearly brought down the house of cards in 1998.

After 9/11/2001, the PPT, as it became known, has been on keen alert to any signs of a meltdown in markets, but not even the heft and might of the underhanded, underground operatives of the government could deflect the market forces pushing against them in the fall of 2008.

Since then, the manipulation in equity markets has become almost overt, with the Fed guiding the way by the light of quantitative easing (QE) and ZIRP.

While here at Money Daily we deride the pimping and pumping of markets by insider forces, there comes a time when one must admit that investing in risk assets such as stocks and commodities over the past three years has never been easier. All one needs to do is hold a basket of stocks or index contracts long enough and they're sure to rise. It's become a permanent feature of US markets that they cannot fall for long and there is no end in sight to the manipulation.

It's just that easy for the rich to get richer and the rest of us to remain in a stupefied trance-like state of amazement and contentment.

Dow 13,250.11, +85.33 (0.65%)
NASDAQ 3,062.39, +31.46 (1.04%)
S&P 500 1,415.51, +9.98 (0.71%)
NYSE Composite 8,089.82, +60.81 (0.76%)
NASDAQ Volume 1,901,789,500
NYSE Volume 2,898,041,250
Combined NYSE & NASDAQ Advance - Decline: 3862-1572
Combined NYSE & NASDAQ New highs - New lows: 230-30
WTI crude oil: 95.60, +1.27
Gold: 1,619.20, +12.60
Silver: 28.21, +0.40

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, 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 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, February 7, 2012

Light Volume, Low Volatility: Signs of Stagnation?

Since the dramatic rise to fresh multi-year highs this past Friday, the first tow days of this week have been nothing more than a major snooze-fest. Whatever the issue, stocks seemed stalled at these lofty levels, perhaps in anticipation of some new developments in the ongoing struggle to keep Greece functioning or possibly due to angst over the conditions in Iran, Syria, Egypt or some other place that seems ripe to explode.

The pattern for the last two days has been oddly similar, with stocks lower at the open, then a spike higher around 10:00 am ET, and a flattening out for the remainder of the session. The difference between yesterday and today is that yesterday's action kept the major indices in the red, while today's trade was mostly on the positive side of the ledger.

Tuesday was a little bit like Groundhog Day in that regard, and also due to Fed chairman Ben Bernanke delivering pretty much the same canned remarks to the Senate as he gave to the House last week.

A 24-hour general strike cripple Greece's already-impaired infrastructure so that negotiations on three fronts - dealing with private bondholders, dealing with funds from the troika, and acceptance of harsh austerity measures - were held mostly without much fanfare or publicity.

Greece's unity government (an oxymoron if ever there was one) needs to work out arrangements with each of their two parties of creditors, and with its own people, to secure another round of financing of 130 billion euro ($172 billion) before a scheduled March 20 payment on 14.5 billion euro of maturing debt.

Since it's obvious to everyone that Greece can't manage its own money, much less the bailout funds pumped into it just last Summer, the threat of default and expulsion from the Eurozone continues to weigh on Europe and the rest of the world.

It's a cruel game of chicken and Europe, in particular, is the worst for it.

One proposal that was floated by German Chancellor Angela Merkel is to force the Greek government to allocate interest payments into an escrow account, so their profligate ways won't threaten future debt payments, much like a teenager with a co-signer on an installment loan. If it wasn't so sadly true, such an attempt to reign in Greece's spendthrift ways might qualify as humor. Unfortunately, the tragedy that is 21st century Greece does not look like it's going to have a happy ending.

Dow 12,878.20, +33.07 (0.26%)
NASDAQ 2,904.08, +2.09 (0.07%)
S&P 500 1,347.05, +2.72 (0.20%)
NYSE Composite 8,069.70, +21.67 (0.27%)
NASDAQ Volume 1,784,894,750
NYSE Volume 3,727,102,750
Combined NYSE & NASDAQ Advance - Decline: 2959-2649
Combined NYSE & NASDAQ New highs - New lows: 249-7 (wow)
WTI crude oil: 98.41, +1.50
Gold: 1,748.40, +23.50
Silver: 34.19, +0.44

Monday, January 9, 2012

Euro a Bit Higher; Stocks Barely Respond as Sinking Feeling Persists

After the first week of trading turned out to be one big cork pop on January 3rd - when the Dow soared 180 points, mostly at the open - and a slow melt lower, the first Monday of the new year was more evidence of just how sick, tired and moribund global markets have become. It's as though everybody is just waiting for the other shoe to drop, that some seismic implosion - most likely in Europe - is about to send stocks into a prolonged tailspin that ends in repudiation of sovereign debt and another huge blow to the fiat-based banking system.

Evidence exists that all is not well in Euroland, while pundits here in America point to the only positive metric they can see, higher corporate profits, though even there, signs are beginning to emerge that the record profits from 2011 are as fleeting as the passage of a few moments in time.

Estimates for 4th quarter corporate earnings have been slashed, and the number of pre-announcements from companies is at a three-year high, harkening back to the dismal days of early 2009, when there was nothing anybody or any company could do to halt the continuing downturn.

Even today's rather slow-moving market was full of tepid trading, highlighted by fractional moves in the averages, suggesting that nothing short of a complete overhaul of Europe's finances - and maybe even our own - can provide the kind of stimulus needed to restore investor confidence, which has waned severely since the middle of last year.

Even the bold joint pronouncement today by France's Nicolas Sarkozy and Germany's Angela Merkel failed to inspire any confidence. The two leaders set a timetable of March 1 for Euro-zone leaders to detail a plan of stricter budgetary restraint among member nations. Of course, critics and skeptics claim to have heard that song before. In the original agreement, a nation's current deficit was not supposed to exceed 3%. Any claims that sovereign states will clean up their balance sheets and act responsibly is met with jeers and, soon, tears.

America met a seminal moment in its own history today, as the nation's debt equalled its GDP, putting the world's powerhouse economy on a level approaching that of Italy, Greece or Portugal.

For its part, the White House appears ready to jettison all the bad residential loans held at Fannie Mae and Freddie Mac by turning them over to investors in bulk, with an eye toward turning over two million foreclosed and now-delinquent homes into rental properties, overseen by a hand-picked, large, well-capitalized property management firms.

The plan was first introduced by the Federal Reserve last week, though our friend Jim Willie, aka, the Golden Jackass, has been predicting such a move for the past two years, with deleterious effects abundant. The problems, from even a casual point of view, range from traditional homeowners being shut out of owning affordable housing and being forced to rent at increasingly-expensive rates, to the potential of default on property taxes should one of these "well-financed" firms going bust. It's almost the sub-prime crisis in reverse and is a radical departure from the American dream of home-ownership.

The property managers will likely receive sweet-heart deals from the government, slashing the prices to be paid on the homes instead of offering principal write-downs to strapped homeowners or new, qualified applicants because banks have been steadfastly denying mortgages and credit to even the most risk averse individuals and families.

We are quickly heading into a bleak, black hole of socialism, wherein the next shoe to drop won't be a ballet slipper but rather the boot of the storm trooper landing squarely on the necks of millions of tax-and-debt slaves, while the rich get bailouts and the poor get handouts.

Fairness is a word that seems to have permanently departed the American scene. Economic ugliness and despair approaches at breakneck speed all in the name of keeping up appearances.

After the closing bell, Alcoa (AA) kicked off earnings season with a disappointing, yet fitting, loss of three cents per share.

Dow 12,392.69, +32.77 (0.27%)
NASDAQ 2,676.56, +2.34 (0.09%)
S&P 500 1,280.70, +2.89 (0.23%)
NYSE Composite 7,583.76, +26.08 (0.35%)
NASDAQ Volume 1,777,449,250
NYSE Volume 3,248,196,250
Combined NYSE & NASDAQ Advance - Decline: 3385-2189
Combined NYSE & NASDAQ New highs - New lows: 170-62
WTI crude oil: 101.31, -0.25
Gold: 1,608.10, -8.70
Silver: 28.78, +0.10

Wednesday, November 2, 2011

Markets Rebound as Fed Stands Pat; Greece in a Bind over Bailout

Dow 11,836.04, +178.08 (1.53%)
NASDAQ 2,639.98, +33.02 (1.27%)
S&P 500 1,237.90, +19.62 (1.61%)
NYSE Compos 7,461.10, +123.96 (1.69%)
NASDAQ Volume 1,942,050,875
NYSE Volume 4,062,845,250
Combined NYSE & NASDAQ Advance - Decline: 4528-1072
Combined NYSE & NASDAQ New highs - New lows: 47-45
WTI crude oil: 92.51, +0.32
Gold: 1,729.60, +17.80
Silver: 33.94, +1.21

Recapping the days events in no-frills fashion:

German Chancellor Angela Merkel and French President Nicolas Sarkozy met with the IMF and Greece's Prime Minister George Papandreou to discuss the Greek leader's abrupt call for a national referendum on whether or not to accept the Euro bailout and associated austerity measures. According to early, unconfirmed reports, Papandreou would not budge on a plebesite early next year, pushing the EU leaders to issue a freeze on Greece's $8 billion in bailout funds, a move which could send the whole European debt crisis into a new, more dangerous phase as the Greek government will surely run out of cash prior to the proposed referendum.

The Federal Reserve chose to take no policy action on the federal funds rate, keeping the effective rate between 0.25% and zero. The Fed added some language to its statement, highlighting more positive tones as the US economy gathered steam in the 3rd quarter.

The ADP private payroll survey estimated that US employers added 110,000 private sector jobs in the month of October, after a revised 116,000 job gains in September.

Stocks ended a two-day losing streak, though the Fed's announcement and subsequent news conference didn't move markets much in either direction.

Volatility remains quite high, with the S&P Volatility Index (^VIX) ending the day at 32.74.

All interest will turn to employment over the next two days, as unemployment claims are announced Thursday morning and the BLS' non-farm payroll data come out on Friday, both releases timed for prior to the markets' opening bell. Continuing news from Europe is also likely to be at the top of investor interest.

Tuesday, November 1, 2011

Greece, Italy Send Stocks Overboard Again

Doings on the Continent have been keeping traders on their toes for months, but today's antics bordered on the bizarre.

First Greek Prime Minister George Papandreou called for a public referendum on the latest bailout plan, just approved days ago in late-night negotiations by European leaders. Making matters even more confused, Papandreaou scheduled the referendum for some time early next year, which would hold global markets hostage for months while the Greeks decide their own fate.

A "NO" vote on the austerity plans tied to Greece receiving more funds from the EU and IMF, would scuttle months of planning and negotiations and would likely result in Greece being tossed from the European Union. Such an outcome would surely roil markets terribly, though the mere thought of waiting two to three months for what almost certainly would be a negative result sent shock waves through European bourses and US exchanges today.

Reacting to the news, German Chancellor Angela Merkel and French President Nicolas Sarkozy planned emergency talks with leaders of the EU and the IMF, though it was not clear whether Mr. Papandreou would be invited.

And, if Greece's gambit wasn't enough to turn investors away, there's a confidence vote set for Friday, in which Papandreou's Socialist Party could lose control of the government, which it holds by only two seats in the parliament. The situation in the Mediterranean nation have moved from bad to worse to bizarre over the past few months.

In Italy, despite the agreements worked out last week, bond yields continued to spike higher, with the 10-year Italian bond reaching upwards of 6.22%, a more than 400-basis point difference over the stable German Bund. The bond spread blowout added to fears that Italy might be in more danger than previously thought - which, in itself was already severe - as the Italian government has to roll over nearly $2 trillion in bonds over the next year, a hefty sum.

Under the leadership - if one can call it such - of Prime Minister Silvio Berlusconi, Italy has failed to act on measures set down by the EU in August and leaders of two main banking and business associations have called on the prime minister to act swiftly or step aside. For his part, Berlusconi has made promises to act quickly, though many doubt he has the emotional or political will to implement the harsh austerity measures called for by other European leaders. As can-kicking goes, Berlusconi is world class, a foot-dragger with a penchant for putting off the obvious, though most of the other leaders in the EU have displayed similar inability to act courageously or quickly.

Also nagging US markets was the early-in-the-day report on ISM Manufacturing Index, which showed a marked decline, from 51.6 in September to 50.8 in October, another sign that the US economy was in danger of falling into another recession.

Stocks were pounded right from the opening bell, though a late day rally was attempted and then scuttled as news from Greece suggested more of a guessing game than any kind of deliberate policy action.

Speaking of policy, the Federal Reserve is locked in meetings on rate policy, which will be announced at 12:30 pm Wednesday, a deviation from the usual 2:15 pm time. The policy decision will be followed by a press conference with Fed Chairman Ben Bernanke. While it is virtually assured that the Fed will not change the federal funds rate from levels approaching zero, some are betting that another round of QE will be announced in some form, though the effectiveness of such an undertaking - already tried twice since the 2008 financial crisis, without effect - is very much in doubt.

Prior to that, ADP will release its private payroll data for October, which serves as a proxy for the "official" non-farm payroll data release by the Labor Dept. on Friday.

Not surprisingly, some of the biggest losers on the day were the large banks, such as Wells-Fargo (WFC), Bank of America (BAC), JP Morgan Chase (JPM), Citigroup (C) and Goldman Sachs (GS), the usual culprits now caught between a sagging economy, exposure to Europe and the unwinding of MF Global, which filed for bankruptcy protection on Monday.

The silver lining for consumers came from a two-day rally in the dollar - mainly against the Yen and Euro - sending commodity prices lower across the entire complex.

Dow 11,657.96, -297.05 (2.48%)
NASDAQ 2,606.96, -77.45 (2.89%)
S&P 500 1,218.28, -35.02 (2.79%)
NYSE Composite 7,338.48, -226.55 (2.99%)
NASDAQ Volume 2,314,571,500
NYSE Volume 5,656,978,000
Combined NYSE & NASDAQ Advance - Decline: 859-4813
Combined NYSE & NASDAQ New highs - New lows: 24-89 (flipped)
WTI crude oil: 92.19, -1.00
Gold: 1,711.80, -13.40
Silver: 32.73, -1.62

Monday, October 17, 2011

G20, Merkel, Wells Fargo, Citigroup, NY ManuafacturingSink Stocks

Well, those last two weeks were certainly fun if you were long equities, so get ready for two weeks of pain, as that seems to be the general pattern of our over-hyped, over-controlled and manipulated crony capitalism markets.

Stocks have run up and down in a range on the S&P 500 from a low of 1099 to a high of 1224 since August 4th, after stocks took a tumble from their late-July highs. Volatility has been unusually high during the period, as uncertainty over US debt, European solvency and the continued threat of global recession weight on investors and speculators.

Starting on Saturday with the ludicrous demands of the G20 central bankers and finance ministers that Europe fix its debt problems by October 23, news flow has once again turned decidedly negative. Upon hearing the dictates from the G20 that leaders attending the European Union summit, "decisively address the current challenges through a comprehensive plan," Germany's chancellor, Angela Merkel, quickly tamped down expectations through spokesman Steffan Seibert, stating that "the dreams that are emerging again, that on Monday everything will be resolved and everything will be over will again not be fulfilled."

Those were the news items facing stocks in New York as the opening bell approached, but, prior to the regular casino-esque ring-a-ling at 9:30 am EDT, a couple of banks released third quarter earnings that sent futures lower. First up was Citigroup (C), which announced earnings of $1.23 per share on analyst expectations of 88 cents. At first glance, the quarter seemed positive, but accounting gimmicks provided most of the (mostly) phantom revenue.

The results included a pretax gain of $1.9 billion, or 39 cents per share after taxes, due to the bank's widening credit spreads during the quarter. When a bank's debt weakens relative to U.S. Treasuries, it can record an accounting gain because it could theoretically profit from buying back its own debt. Along with the idea that the bank was making money on its own worsening credit risk, Citi also lowered loan-loss reserves, further fluffing the quarterly profit picture.

Initially, investors bought into the grand scheme, sending the stock higher in early trading, but by the end of the day, the ruse had been found out and Citigroup stock sold off by 0.47, ending the session close to its lows, at 27.93.

Wells Fargo (WFC) came out with its earnings right after Citigroup, and though the numbers were more straightforward, the overall picture was dim. The bank said it earned 72 cents per share in the quarter, a penny below consensus estimates. Even though it was an improvement of 21%, revenue was down and the company lowered loan-loss reserved by $800 million, boosting the numbers. Traders sold off the company stock to the tune of a nearly 8.5% loss, ending the day down 2.25, at 24.42.

As if the bad reports from two of the nation's largest banks wasn't enough, New York state's empire manufacturing index continued to scrape along the bottom, posting -8.48 for October after a reading of -8.82 in September. Readings on national capacity utilization and industrial production returned basically flat.

Stocks sold off right at the open and continued a slow, painful decline throughout the remainder of the session. If the whole idea of the rally from the past two weeks was to sell off into options expiration on Friday, the downbeat news arrived right on time.

Even IBM, which reported after the close, could not garner any support. Big Blue was off almost 4% in after-hours trading, following their reported narrow beats on earnings and revenue.

Two more big banks report tomorrow and their 3rd quarters ought to be real doozies. Goldman sachs is expected to post a loss for the quarter, while Bank of America can float out whatever numbers it chooses. Nobody will believe any of them.

Dow 11,397.00 247.49 (2.13%)
NASDAQ 2,614.92 52.93 (1.98%)
S&P 500 1,200.86 23.72 (1.94%)
NYSE Compos 7,188.66 161.80 (2.20%)
NASDAQ Volume 1,711,161,000.00
NYSE Volume 4,203,815,500
Combined NYSE & NASDAQ Advance - Decline: 1322-5177
Combined NYSE & NASDAQ New highs - New lows: 38-47
WTI crude oil: 86.32, -0.48
Gold: 1,676.60, -6.40
Silver: 31.82, -0.35

Thursday, October 13, 2011

Harrisburg, PA Bankrupt, Max Keiser, Angela Merkel, Nicolas Zarkozy, Switzerland WIR, Google Earnings

Stocks vacillated today somewhat like they're supposed to in normal times, though these are no normal times in which we are living. Tape-watching in the age of high frequency trading and intellectual dispiritedness has an intoxicating allure and can become addictive.

Sparing the details, stocks were lower in the morning and staged a half-hearted rally on low volume in the afternoon. Sound familiar? Yes, computers. Kind of just going with the flow, or lack thereof. These last two days of trading could also be interpreted as outward manifestations of the liquidity, solvency and currency confidence crises as various macro sectors of the global economy grind inexorably toward a perceived halt, the term "perceived" included to indicate that markets are not entirely frozen, that there is always some urchin of trade lurching about, no matter how unwieldy the underlying system.

A few news items:
From Wednesday: City of Harrisburg, PA, capitol of Pennsylvania, declares bankruptcy. This is a sad, though poignant story of our times. A city of 46,000 with about $500 million worth of bad debt, or, debt that won't be repaid. Will there be a follow-on effect? Actually, there has to be and the situation is fluid, with the state trying to tell the Harrisburg City Council that they cannot declare bankruptcy. But they did, anyway...

Google Earnings (after the bell, today) - nice, 26% profit increase and other nice metrics. They're rocking, but for search, Bing is better.

Also after the bell, Fitch puts Barclays Bank plc, BNP Paribas, Credit Suisse AG, Deutsche Bank AG, The Goldman Sachs Group, Inc., Morgan Stanley and Societe Generale on Rating Watch Negative. At the same time, Fitch has placed the short-term IDRs of four of the banks on Rating Watch Negative.

Dow 11,478.13, -40.72 (0.35%)
NASDAQ 2,620.24, +15.51 (0.60%)
S&P 500 1,203.66, -3.59 (0.30%)
NYSE Composite 7,229.08, -34.61 (0.48%)
NASDAQ Volume 1,683,142,125
NYSE Volume 4,397,526,500
Combined NYSE & NASDAQ Advance - Decline: 2755-3644
Combined NYSE & NASDAQ New highs - New lows: 20-35 (reversal signal)
WTI crude oil: 84.23, -1.34
Gold: 1,668.50, -14.10
Silver: 31.67, -1.12

I love it when a plan comes together and the clip of the Kaiser Report below fits like a favorite pair of jeans. Plenty from which to watch, enjoy and learn.

Thursday, October 6, 2011

Last Hour Rally Boost Stocks for Third Straight Session; Occupy Wall Street Legions Growing; Steve Jobs Dead at 56

OK, this is getting a bit ridiculous.

For the third day in a row, stocks staged a final hour ramp-up, this one good for only 100 points on the Dow, but that came after stocks had been given an initial lift-off around 10:00 am, resulting in a nearly 200-point rise on the Dow.

News from the Eurozone was once again scant, as EU ministers and leaders of the nations comprising the EU proved they will not take a back seat to the US President and congress when it comes to foot-dragging and kicking the proverbial economic can down the road.

There was some discussion of "re-capitalization" of the major banks, meaning nothing more than egregious money printing and bailouts for those with the most capital who have not yet learned how to manage it wisely.

Considering the penchant for late-day moves, perhaps the directors of the various exchanges might consider opening the market later in the day, say, 3:00 pm, locking out sellers as the computer algorithms simply ramp up the stocks they like. Being that "banker's hours" are legendarily short as it is, this would give said elite bankers more time to count their profits and have their nails manicured.

It's worth pointing out that the past three day's worth of last hour rallies began off fresh lows, set in place on Tuesday's ripped decline. On that day, the Dow bottomed at 10362.26, a low point not seen since September 9, 2010. The S&P and NASDAQ made similar moves, setting new, 12-month lows before the "Merkel miracle" when German Chancellor Angela Merkel first uttered the word, "re-capitalize." The S&P had already entered official bear market territory, obviously something the power-mad bankers simply could not tolerate.

The legacy of the current short-run rally will depend greatly upon the figures released Friday morning when the BLS issues its monthly non-farm payroll data. Anything over 50,000 new jobs created is certain to be seen as a win for equity holders, though there are no hard and fast estimates that can be trusted after last month's zero reading.

While in the short term, propping up markets - as has been occurring since late 2008 - may seem a noble and prudent activity, the longer-term consequences of unbalancing markets are not well known, although the examples available (Weimar, Zimbabwe, Dutch Tulip Bubble) all seem to have ended very, very badly.

On that note, here's a couple of Wall Street Whiz Guys who think the "new" level to watch is 1070 on the S&P. Listen carefully and you'll hear them advise to buy low and sell lower. Obviously, these guys are fresh escapees from the zoo for unfit hedge fund manglers.

Legendary gold bull, Peter Schiff of Euro Pacific Capital, doesn't think we're headed for a double-dip recession, he believes we're headed straight into "a complete economic collapse." Schiff's entertaining and caustic video can be seen here.

Not to put too fine a point on the doom and gloom aspect, Aftershock author, Robert Wiedemer, opines that we'll see "another meltdown within 2 to 4 years."

Well, Bob, thanks for the warning, though two to four years seems a long time to be waiting for the Apocalypse.

Meanwhile, outside the granite, steel and glass elitist enclaves of the big Wall Street firms, the Occupy Wall Street (OWS) movement continues to aggravate the paymasters and grow in depth and volume, spreading to over 500 cities and even getting the attention of President Obama during a news conference on Thursday. The corner of Broadway and Wall Street is beginning to resemble Cairo's Tahir Square in many ways.

Dow 11,123.33, +183.38 (1.68%)
NASDAQ 2,506.82, +46.31 (1.88%)
S&P 500 1,164.97, +20.94 (1.83%)
NYSE Composite 6,997.64, +153.48 (2.24%)
NASDAQ Volume 2,263,897,750
NYSE Volume 5,586,015,500
Combined NYSE & NASDAQ Advance - Decline: 5253-1294
Combined NYSE & NASDAQ New highs - New lows: 15-69
WTI crude oil: 82.59, +2.91 (WTF?)
Gold: 1,653.20, +11.60
Silver: 32.00, +1.65

Finally, it is with great regret to report that Apple co-founder Steve Jobs has died at the tender age of 56. In a tribute to Jobs' brilliance, we present the Super Bowl "1984" ad which aired on Super Bowl Sunday, January 22, 1984, during the third quarter of Super Bowl XVIII, heralding the launch of the Macintosh computer that revolutionized computing and our lives in general. Jobs was a thinker and inventor along the lines of Benjamin Franklin and Thomas Edison, a man of such greatness that we will likely not see another like him for decades. It would be remiss not to point out that this blog, and many other online ventures, is run off a seven or eight year old e-Mac, purchased used for $50 more than three years ago and that the Mac PowerBook G3 that was purchased in 1998, is still running strong on system 8.9, and has been operational, without the need for upgrades or any repairs for thirteen years.

People who invent and produce products of such lasting and functional value don't come along too often. Jobs, and his unique understanding of technology and its interaction with people, will be sorely missed.

Wednesday, September 28, 2011

Stocks End Three-Day Win Streak; Shopping the Dollar Stores

The Markets

Another day passed by without Europe imploding from excessive debt and they're still drinking plenty of Ouzo over in Greece, even as the country dives into desperation and poverty.

The economic climate hasn't much bothered the titans of industry and banking who populate the environs of Wall Street, but maybe the lingering doubt and uncertainty over economic issues is starting to get to them a little bit. Days like today show the strain a long, drawn out economic slide can have on markets. Stocks and indices don't just do straight down in a day or two; bear markets, like all good things, take time and patience to play out and this current one, which started just a few short months ago, looks to have a lot of downside over many months ahead.

There was little in the way of news concerning the global powers and their attempts to deal with the continuing crisis. No mutterings of sentiment from the ECB or Angela Merkel or French president Sarcozy. Even our own President Obama was pretty hushed up, and for him, that's saying something.

It was like the Harry Potter movie when they speak about "he who shall not be named"; nobody was interested in talking about the economy any more, but it surely was on the minds of traders, who sold off everything as the market entered the home stretch, making all the talk about a bounce, or end of quarter window dressing sound a little foolish.

Perhaps it was just more old-fashioned profit taking, by those who know that it's best to get out of the way of oncoming trains, like the one coming when third quarter earnings reports begin to hit the Street.

Whatever it was, stocks took a pretty solid body blow and after enough of these, with conditions still uncertain or deteriorating, volatility high and the leaders of the civilized world unable to get themselves and their banker buddies out of the mess they created, stocks and indices will stay down, move lower and not recover for a long time.

The happy part is that there will then be bargains galore amid a stock pickers paradise. Good companies will fall alongside bad ones, and prices will be so cheap and the competition so slim, that bargains stocks will appear all over the market.

All that has to happen is for the political leaders and global banking interests to make a few more policy mistakes and WHAM! stocks will be hit with the same ton of bricks that have already shuttered hundreds of thousands of small businesses around the world. Money will be scarce, people scared and unsure and institutions and governments will tumble.

Start making plans now, because this great drama of economics is playing out in the present and conditions for it getting really ugly are already in place.

Have faith in the bankers and politicians. They've screwed up before, and they're certain to do so again.

Dow 11,010.90, -179.79 (1.61%)
NASDAQ 2,491.58, -55.25 (2.17%)
S&P 500 1,151.06, -24.32 (2.07%)
NYSE Composite 6,876.94, -166.18 (2.36%)
NASDAQ Volume 1,912,622,750.00
NYSE Volume 4,787,752,000
Combined NYSE & NASDAQ Advance - Decline: 1179-5322
Combined NYSE & NASDAQ New highs - New lows: 16-231
WTI crude oil: 81.21, -3.24
Gold: 1612.00, -37.70
Silver: 29.96, -1.92

Idea: Shop Dollar Stores for Big Savings

We all know people who refuse to shop at, say, Wal-Mart, in the belief that they are somehow superior to the rest of the inhabitants of the planet and the low-cost experience is "beneath them."

When the economic tsunami blows through their part of the world, they'll likely be unprepared to make do with less or reconfigure their lifestyle to accommodate the new financial realities. For the uninhibited types and those without pretensions, there is life after Sak's, the GAP and JC Penny's and it can be found at strip malls and shopping centers around the country. They are known as dollar stores, where everyday items are sold at a discount, every day.

In case you missed it, Wal-Mart doesn't really promote their "lowest price" guarantee much any more, and that's because they're often not the lowest. The dollar stores - particularly Dollar Tree, Dollar General and Family Dollar - crush Wal-Mart and all other competitors on general merchandise all the time.

Whether it's laundry detergent (you do wash your own clothes, occasionally, no?), tomato juice (who doesn't love a good Bloody Mary?) or sunglasses, you can find good deals ($1 is good no matter what it is.) at these bustling retail establishments, plus hundreds of everyday items from cookware to spices to party and gift ideas to personal grooming products and much more.

Now, you can go to Home Depot and spend $2 to $3 for a roll of duct tape or buy two or three rolls of comparable quality for the same price. You can buy your snacks and chips at the local supermarket chain for $1.79 and up, or find the same selection for less at any of the dollar stores. These places are popping up all over the place.

In fact, Family Dollar plans to open 450-500 new stores in the coming twelve months. The others are expanding at a steady clip, even in this down economy. These companies have found a niche market that will only get bigger as the economy deteriorates and will hold their own in any economic environment, because there are always going to be people who will seek out bargains.

Tuesday, September 6, 2011

Swiss Shock Starts Stock Slide

The Markets

While most Americans were munching on burgers, hots and potato salads Monday, the rest of the world was working, and stocks took a major beating in exchanges across the globe. Both Asian and European markets suffered 3-6% declines, capped by a huge fall in the German DAX, as financial woes continue to spread globally, but are hitting the Eurozone especially hard.

On Monday, Asian markets were mixed, but all except the UK and Swiss markets finished in the red.

The workweek in the US began with news that the Swiss National Bank (SNB) decided to peg its "safe haven" currency at 1.20 Euros to stave off a recession and halt the strengthening of its currency that has proceeded at a swift pace since the collapse of Lehman Bros. in 2008.

"The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development," the SNB said in a brief statement. "The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities."

"Unlimited quantities" indeed. The Swiss are prepared to match the Euro and US dollar print for print as the debasement of fiat currencies has now reached a new level of madness/stupidity/desperation (take your pick).

The Swiss move sent the US dollar soaring to two month highs (75.92), and dropped the 10-year note to an historic low yield of 1.91%. The 10-year ended the day at 1.98%.

The trading day began with steep declines, with the Dow off by 308 points at its lows and the NASDAQ shedding 66 points just prior to 11:00 am EDT. After that, it was an uphill climb with a huge ramp job in the final 30 minutes of the session, on either short covering or blithe spirits, though the former seems more appropriate.

With trading on the light side, cutting the losses on the major indices was probably easy work for the criminal Wall Street cartel. Shares will likely be dumped by Thursday when a troika of events - one by Ben Bernanke, one by President Obama and one in Europe by German Chancellor Angel Merkel when she must quell a threatened revolt in her own parliamentary bloc when the Bundestag begins debating the controversial expansion of the European rescue fund, which increases Germany's share of guarantees to up to €211bn (£184bn) from a previous €123bn – about two-thirds of the annual federal budget. Merkel will be first, prior to the open of US markets, followed by Bernanke in Minnesota, with President Obama's highly-anticipated, nationally-televised speech to introduce his jobs program to joint session of congress slated for 7:00 pm, hoping to avoid a conflict with the opening of the NFL season. The Green Bay Packers play the New Orleans Saints at 8:30 pm.

One sector that did not participate in the afternoon rally off the lows was financial, with bank stocks being hit hard once again. Bank of America pared some of its earlier losses, closing at 6.99, down 26 cents, but below the 7.14 price of 700,000 warrants recently offered to billionaire Warren Buffett as a sweetener to his $5 billion investment in the flailing bank. Message to Warren: Don't be in a hurry to own a big chunk of another bank.

Dow 11,139.30, -100.96 (0.90%)
NASDAQ 2,473.83, -6.50 (0.26%)
S&P 500 1,165.24, -8.73 (0.74%)
NYSE Composite 7,148.13, -102.60 (1.42%)
NASDAQ Volume 1,740,810,000
NYSE Volume 5,077,949,500
Combined NYSE, NASDAQ Advance - Decline: 1942-4640
Combined NYSE, NASDAQ New highs - New lows: 32-451
WTI crude oil futures: 86.02, -0.43
Gold: 1873.70, -26.60
Silver: 41.96, -0.91

Idea: Ready to get really scared?

How about a report by UBS, which outlines the frightening aspects of Euro dissolution, i.e., the end of the EMU (European Monetary Union) and the resulting chaos, civil strife and even civil wars. Full text below.


Then there's this post on a little-known blog called Nathan's Economic Edge, from March 20, 2010, which concludes, via the U.S. Treasury Z1 Flow of Funds report that the diminishing marginal productivity of debt (a well-understood, but not widely-circulated concept) reached debt saturation sometime in 2009, thus adding new debt, as the Fed and the federal government are always so eager to do, but the Tea Party wants stopped ASAP, produces negative results, as in lower GDP.

What that means is that the era of fiat currencies, without backing of any kind, is backfiring in a big way. The more money the Fed or the government throws at the problem only makes it worse and hastens the eventual implosion of the currency. However, these things take a long time to work themselves out, but we may be only years away from financial Armageddon.

Tuesday, August 16, 2011

Euro Fears Still Making Markets Shaky

As today's post title suggests, trading continues to focus on events - or the relative lack thereof - in Europe, where today French President Nicolas Zarkozy met with German Chancellor Angela Merkel, announcing some coordination of efforts, but fell short of endorsing the concept of Eurobonds to shore up shaky finances on the Continent.

"We want to express our absolute will to defend the euro and assume Germany and France's particular responsibilities in Europe," said Sarkozy.

In what has to be the most humorous statement to date concerning sovereign fiscal policies, the two leaders said they would push for balanced budget amendments for all 17 nations which use the Euro as their primary currency. The irony is that, excepting possibly Germany, none of the member nations have had a balanced budget in at least five years, most of them running continuous deficits since the Euro became the continental currency in 2000.

The specific proposals coming from the leaders of the two most powerful members of the Europen Union were slim. They said their finance ministers would meet four times a year and proposed that the member nations coordinate income tax policy and begin taxing financial transactions by 2013, kicking the proverbial can a bit further down the road to perdition.

By the time the two leaders met with the press, European markets had already closed, so the brunt of the effect from their statements was felt primarily in the US.

Stocks took a nose dive after the press conference, and fell to their lowest levels of the day just after 1:00 pm EDT. The Dow was off by 190 points at its bottom.

But, as usual, the mechanics of controlled markets took over, as all the major indices rallied for the final three hours, still closing down for the day, but with reasonable losses.

Stocks had gotten off to a shaky start, after economic data was mixed prior to the opening bell. July housing starts fell off to 604,000 on an annualized rate, after posting a figure of 613,000 in June. Building permits dropped by 20,000 from the annualized rate of 617,000 in June.

However, industrial production came in with a better-than-expected gain of 0.9% and capacity utilization also showed a bit of strength, with a reading of 77.5%, following a 76.9 figure in June. Of course, these are estimates prepared by an inept and failing government and should not be trusted as any true guide to financial conditions in the United States, even though they remain mired in the minds of traders and fund managers as the most reliable gauges.

Without any determinant structure of reform or policy coming from Europe, expect this see-saw battle of bulls and bears to rage on for weeks until something concrete cracks across the pond. There seems to be about the same level of political will over there as there is in the US to entertain policies that actually address structural issues in the economy - none - as the leaders on both sides of the Atlantic are easily more enthusiastic about getting re-elected than they are at doing their jobs well.

With the majority of the politicians on vacation this month (the NY Times reports that 80 members of the house of representatives have or will be visiting Israel this month) our political class appears quite cavalier when called on to solve pressing problems.

Until there is real political leadership (in other words, we better hope we make it to November, 2012 and then elect Ron Paul as our next president) markets will continue to stumble along and economies will continue to run up debt and deteriorate.

That's how it goes. Prepare.

Dow 11,405.93, -76.97 (0.67%)
NASDAQ 2,523.45, -31.75 (1.24%)
S&P 500 1,192.76, -11.73 (0.97%)
NYSE Composite 7,394.49, -88.22 (1.18%)

Declining issues got the better of advancers on the day, 4939-1664. On the NASDAQ, there were six (6) new highs, but 51 new lows. The NYSE showed 10 new highs and 15 new lows, keeping the bias to the downside, with the combined figure of 16 new highs and 66 new lows. Expect the gap between the few new highs and increasing new lows to expand as the crisis nobody wants to handle grows even deeper.

Volume was moderate, which, after the events of last week, shows a general lack of interest overall in staking out any new, long term positions.

NASDAQ Volume 2,085,979,250
NYSE Volume 5,009,345,000

Oil closed down $1.23, to $86.65, though gas prices at filling stations across the country have seen hardly any price decline at all.

The continued unease over macro-economic issues produced a renewed push into gold, which traded higher by $27.00, to $1,785.00, a new closing record, while silver also gained, finishing up 51 cents, at $39.82, though it traded above $40/ounce both earlier in the day and after equity markets had closed.

Tomorrow brings PPI numbers for July, the Mortgage Bankers Association Mortgage Index and a reading on crude oil inventories. Other than that, bonds look very good, as they continue to hold near low levels, but remain one of the primary safety plays.