March Market Madness: BofA's Own to Rent Plan; Apple Flash Crash, BATS batty IPO

College basketball's 68-team NCAA national championship tournament (AKA March Madness) has nothing on US stock markets in terms of sheer insanity and hair-raising antics.

Just when you think it can't get any weirder in our manipulated, over-hyped markets, along comes a day like today to convince you that the absurd is now the new normal.

To start things off, Bank of America announced a plan to "invite" roughly 1000 homeowners in default on their mortgages the chance to rent the home they formerly owned.

Think of it. BofA can now use the catchy, "Rent a Piece of the American Dream" as the tag line for what they're calling, subtly, the Mortgage to Lease Program. No lie. The bank that bought Countrywide Financial and all their horrible sub-prime, Alt-A, no-doc and NINJA loans, now wants to slither out from under the rock of the robo-signing scandal, fraudulent mortgage documentation and a host of other evils, by forgiving the original loan and renting the house back to the (former) mortgagor.

The absurdity of this plan, whereby people who can't afford their mortgage payments, are somehow supposed to be able to afford rent, or even want to, in the very same home they've been living in for free for two or three years or longer, is so over the top, some people might even buy into it. The Bank of America plan is to take title to the homes, tear up the old documents (supposedly before said homeowners rush to the nearest federal courthouse, documents in hand, and file fraud charges), pay the property taxes, rent the property back to the homeowners (or squatters, if you like), at - get this - rent that's less than the original monthly mortgage payment, then flip the house, along with the paying (below market rates) tenants to some investment gang. Are there real estate investors that dumb out there?

There are so many flaws to this abhorrent plan that it is hardly worth discussing, though actual landlords - real people who own and manage rental properties - have been laughing about it all day long. And, of course, the bank won't sully its pristine reputation by dirtying its hands with the mundane tasks of landlording, like maintaining the lawns, fixing leaks and making modest improvements. No, for that, they'll hire professional property managers, adding even more cost.

The plan is supposed to roll out shortly in the states of Nevada, Arizona and New York as a pilot program. Pilot, indeed. This plan is going to crash and burn on the runway. All of this sound and fury is designed for only one purpose: to save face and costly lawsuits, now that people have awakened to the criminality and fraud that Countrywide started and Bank of America openly perpetuated. They'd be much better off and propbably millions of dollars ahead if they'd just give the properties to the people living in them and simply walk away.

With that as a background, the housing market made more ugly noises on Friday when the Commerce Department reported that new home sales fell for the second straight month, dropping 1.6% in February, despite unusually warm weather, great for home-hunting and generational low mortgage rates.

Then there was Apple's flash crash, blamed on a fat-finger trade for 100 shares well below the market price on a trading platform known as BATS, which, incidentally, went public today, but after all of one trade, shut itself down due to technical difficulties, canceling its IPO indefinitely, which, if today's performance was any indication of the quality and integrity of its service, will likely be forever.

As if that wasn't enough, today marked the absolute thinnest volume in the last ten years. It was completely dreadful, yet stocks still finished with meagre gains, though down for the week. Ouch!

Dow 13,080.73, +34.59 (0.27%)
NASDAQ 3,067.92, +4.60 (0.15%)
S&P 500 1,397.11, +4.33 (0.31%)
NYSE Composite 8,180.05, +38.72 (0.48%)
NASDAQ Volume 1,400,164,125
NYSE Volume 3,395,163,250
Combined NYSE & NASDAQ Advance - Decline: 3848-1709 (that's WACK!)
Combined NYSE & NASDAQ New highs - New lows: 133-28
WTI crude oil: 106.87, +1.52
Gold: 1,662.40, +19.90
Silver: 32.27, +0.93

Bankster Kleptocrats At It Again: Bank Stocks Up, Gold, Silver Down

One of the more tried and true methods of tape-watching is what's known in the business as "follow-through" - the tell-tale next day move in a stock or an index following a bold rally.

A lack of follow-through or extension of the rally usually means that the initial move was either false, poorly-constructed, had less-than-optimal participation or a combination of all of those.

If the tape is correct the day after the biggest one-day upside move in stocks this year, then today's trading certainly did little to confirm the veracity of the rally. With the Dow and NASDAQ up marginally at best, the slight decline in the S&P and the pretty healthy drop on the NYSE Composite reveal the tell-tale signs of a market rally surred on entirely by insiders, those of the Wall Street bankster crowd commonly known as the kleptocracy.

Their aim, obviously, was to instill a desire for individual investors to jump into those juicy big bank stocks like Bank of America (BAC), JP Morgan Chase (JPM), Goldman Sach (GS) and everybody's favorite, Citigroup (C), which incidentally was one of the four which failed the Fed's marginally-constructive stress tests on Tuesday.

The other fairly obvious feature of the Tuesday rally was the often overlooked calendar, which shows clearly that Friday is the third Friday of the month, meaning, yes, siree!, Tuesday's move was decidedly correlated to making oodles of cash on front-end, expiring call options.

Want proof? Take a look at the imbalance of open interest puts to calls on the 40 and 41 strikes of Friday's expiring options in JP Morgan. There were nearly 69,000 calls at those two strike prices, compared to about 25,000 puts. Since we all know there's no free lunch in America - unless you're a school-kid with cheap parents or a bankster will plenty of one-percenter street cred - the imbalance should be a tip as to what happened late yesterday afternoon, when Jamie Dimon jumped the shark and released his firm's (JPM) dividend upgrade before the Fed could expel the stress tests of the other banks. Talk about front-running! Jaime wrote the book with that move.

And for more proof, look below at the Advance-Decline line for today. The rally was definitely sold into by money smarter than that of most people. Volume was at its usual dismal level again today as well.

Just in case anyone thinks the Fed's stress tests were anything more than a call to action from the Fed to individual investors who don't believe a word that comes from ben Bernanke's mouth, one should definitely take a read of Chris Whalen's excellent article at Zero Hedge, Bank Stress Tests and Other Acts of Faith

One needn't be a bank examiner or financial wizard to understand what Whalen means when he says things like,

So when I look at the Fed stress tests, which seem to be the result of a mountain of subjective inputs and assumptions, the overwhelming conclusion is that these tests are meant to justify past Fed policy.

or

But as we have written over the past several weeks in The Institutional Risk Analyst, the Fed does not want to believe that there is a problem with real estate.

Face it, the Fed's stress tests of 19 of the nation's largest banks were nothing more than a pimp act for their favorite bailout buddies, designed to boost their share prices so insiders could profit at the expense of smaller, less-savvy investors and traders.

If that wasn't enough - and you know it wasn't - the raid on gold and silver today speaks volumes about the un-American policies the Fed pursues. According to the Fed, holding near-worthless scraps of paper like stock certificates of shares in illiquid banks or constantly-devaluing Federal Reserve Notes is far more prudent for us "little people" (or as Goldman Sachs executives like to call their clients, "muppets") than holding onto those relics of the past, gold and silver.

The gloves are off, folks. The Fed, the banksters, the kleptocracy of corporate America has had them off for a long time, bare-knuckling the American middle class like a punch-drunk patsy. It's time Americans with brains (maybe 30% or so of the population) rip off the Everlasts and land a roundhouse on the chops of these wealth thieves.

Close out the 401k, pension plan or whatever vehicle they're "managing" your money in and go buy some silver coins or bars, gold, or land, raise some chickens or pigs, grow some corn or tomatoes or broccoli, but at least stop putting your money into the wall Street Ponzi scheme.

That's going to be easier said than done for a lot of people who have their futures tied into their government sponsored pension plans, which, by the way, will pay out a lot less than expected when the s--- hits the fan, but, if the outflows from mutual funds over the past four years is any indication, you don't want to be one of the last players in the market (otherwise known as bagholders) when the rugs gets pulled out and the bottom drops out of the bottomless pit the financial "industry" has created.

It could be two years, two months or two weeks before the next market "event" but you don't want to be around when it happens and you definitely don't want it all to fall on your pretty little head, now do you?

Tomorrow, we'll take a look at the moves in bonds, and why what they're telling us is very, very bad.

Dow 13,194.33, +16.65 (0.13%)
NASDAQ 3,040.73, +0.85 (0.03%)
S&P 500 1,394.28, -1.67 (0.12%)
NYSE Composite 8,180.17 54.30 (0.66%)
NASDAQ Volume 1,627,102,500
NYSE Volume 4,446,792,500
Combined NYSE & NASDAQ Advance - Decline: 1631-4036
Combined NYSE & NASDAQ New highs - New lows: 318-38
WTI crude oil: 105.43, -1.28
Gold: 1,642.90, -51.30
Silver: 32.18, -1.40

Amazing Stock Market Rally Rolls Along

One of the oldest adages of stock market investing is the time-honored, "the markets can remain irrational longer than you can remain solvent," or something to that effect.

This is particularly poignant in the midst of the current Wall Street "melt-up" which has been ongoing since the middle of December and shows little sign of letting up.

While corporate earnings continue to flow, the latest being from two big banks, Morgan Stanley (MS) and Bank of America (BAC), both of which met or exceeded expectations, though the accounting tricks and tactics employed by the mega-banks leave much to the imagination.

As far as Bank of America is concerned, their beat of expectations of 13 cents per share with a reported 15 cents included a bunch of one-time items and useful reserve and loan loss calculations, embedded deep within their monstrous 110-page quarterly report. Despite the discrepancies in the quarterly, Bank of America bounced higher again today, closing at 6.95, a 15 cent gain, after popping above $7 per share for the first time since Warren Buffett invested $5 billion in the bank in early 2011.

Morgan Stanley actually lost money for the quarter, but lost quite a bit less than expected. The firm’s net loss was $250 million, or 15 cents a share, compared with profit of $836 million, or 41 cents, a year earlier. The consensus expectation was for a loss of 57 cents per share. Traders took the data in stride, boosting the stock to its highest level since October. In this case, even P.T. Barnum would be proud, noting that "there's a sucker born every minute." All the better for momentum chasers in this beat-up financial.

There was a dose of economic data that surprised some and annoyed others, notably bearish investors. Initial unemployment claims came in at a sparkling 352,000 - the lowest number in months - after last week's upwardly revised 402,000. The unemployment figures continue to be a topic of some debate, in that the "seasonally-adjusted" model used by the BLS seems to have forgotten that December was holiday season, chock full of part time and temporary hires. Whatever the case, traders seemed less-than-satisfied with the numbers, as the markets began slowly but ground slowly higher through the session.

December CPI came in flat, after yesterday's -0.1% drop in the PPI, sparking fears of "disinflation" (a Federal reserve governor term) or deflation, the bogey man that haunts Fed chairman Ben Benanke.

Housing starts and building permits were flat to lower, though new home builders have been leading this rally, up more than 10% as a group since the first of the year.

How much longer can the rally last? Tomorrow being options expiration, one would think a major sell-off is in the cards for either Friday afternoon or Monday, though, as stated at the top of this piece, rationality is generally not a hallmark of recent rallies.

If you've not already taken part in this wild market ride, it may be a little late. Stocks are getting extremely overbought, as the advance-decline and new highs vs. new lows figures have been telegraphing lately.

Adding to the upside has been the unusually quiet tones coming out of Europe, as opposed to the rather hysterical daily dispatches that typified the latter half of 2011. Nothing's really changed over there, except perception, perhaps. Europe is mostly headed for a recession, which will hit the middle classes, though Greece, in particular, in already in the throes of a fiscal straightjacket which some might say is emulating a full-blown depression. To the Greeks, most of europe is saying "pay up," to which the Greeks respond with "shut up" or some other suitable and more demonstrable phraseology.

The long and short of it, if one is of the camp that believes a strong stock market is a proxy for a strong general economy, 2012 is shaping up to be a banner year or at least a good effort at kicking the can of economic woes down the road until after the elections in November.

Throwing a bit of cold water on the rally parade, as expected, Eastman Kodak (EK) filed for bankruptcy protection today, and Republican presidential nominee hopeful Mitt Romney has been found to have a number of accounts and holdings in off-shore banks, notably in the Cayman Islands, setting the stage - if he's the nominee - for a battle of ideologies between him as the ultimate one percenter and President Obama as the champion of the 99%.

While that may make for great TV, it's hardly honest, as President O'banker is about as 1% elitist as one can get without actually admitting to it.

Dow 12,625.19, +46.24 (0.37%)
NASDAQ 2,788.33, +18.62 (0.67%)
S&P 500 1,314.50, +6.46 (0.49%)
NYSE Composite 7,819.36, +52.41 (0.67%)
NASDAQ Volume 1,974,862,250
NYSE Volume 4,442,754,500
Combined NYSE & NASDAQ Advance - Decline: 3454-2119
Combined NYSE & NASDAQ New highs - New lows: 261-26 (yes, 10-1 is a bit extreme)
WTI crude oil: 100.39, -0.20
Gold: 1,654.50, -5.40
Silver: 30.51, -0.03

European Banks Borrow $639 Billion From ECB; Oracle Tanks Techs

Santa Claus came and went. Apparently, his next stop was in Europe, where today, 523 struggling banks on the continent grabbed for $639 billion (489 billion euros) from the ECB's newest lending facility, which offered a sweetheart of a deal: 1% interest over three years. We should all be so lucky.

The huge amount of borrowing was frowned upon in the US. As the news hit America's shores, futures went into the tank on the perception that the amount borrowed was much higher than originally forecast and the sneaking suspicion that although the European banking system was obviously weak, it actually was in much worse shape than originally thought.

Stocks sent almost the entire day underwater, as poor results from Oracle last night after the close sent shock waves through the tech sector. Though the Dow, which was down as many as 104 points, and the S&P finished marginally positive, the NASDAQ ended the day with a serious loss, though it too cut its losses roughly in half by day's end.

In Washington, there was still no progress on the bill which would keep the current social security payroll deduction at current levels and also extend unemployment benefits to about two million people, as the House of Representatives announced their work for the week completed.

The bill was soundly passed in the Senate, and rejected by the House, mostly along party lines.

Also in Washington today, the Justice Department announced a $335 million settlement with Bank of America (BAC), stemming from a DofJ claim that Countrywide - since acquired by Bank of America - discriminated against over 200,000 black and Hispanic mortgage borrowers by charging them higher rates and fees than white homeowners.

While the settlement was the largest of its kind ever, the amount is a mere pittance in comparison to the economic damage wrought by Countrywide and other lenders during the mortgage and housing bust. BofA will pay the money directly to the government and the DofJ will supposedly dole out the proceeds to individuals and families affected by the discriminatory practices.

Attorney General Eric Holder, who seems to only show up after his department settles a case, said, "With today’s settlement, the federal government will ensure that the more than 200,000 African-American and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation.”

It should be amusing to track exactly where that money goes.

There are just two more trading sessions before Christmas, three shopping days and a total of seven trading sessions remaining in 2011. Most investors can't wait for the year to end, as stocks have flat-lined for the most part and actually are well off the highs set in late April.

Dow 12,107.74, +4.16 (0.03%)
NASDAQ 2,577.97, -25.76 (0.99%)
S&P 500 1,243.72, +2.42 (0.19%)
NYSE Composite 7,388.52, +27.55 (0.37%)
NASDAQ Volume 1,866,553,125
NYSE Volume 3,574,281,500
Combined NYSE & NASDAQ Advance - Decline: 3153-2488
Combined NYSE & NASDAQ New highs - New lows: 194-95
WTI crude oil: 98.67, +1.43
Gold: 1,613.60, -4.00
Silver: 29.25, -0.29

Fitch Report on US Bank Exposure to Europe Crushes Stocks

Stocks were just trundling along on low volume Wednesday, until about 2:30 pm ET, when things took a turn for the worse. Nothing overly dramatic, but stocks began to slide from break-even into the red and accelerated at 3:30 - just 1/2 hour from the closing bell, when Fitch Ratings put out a report that focused attention on US bank exposure to Europe, saying that, though hedged, the top five US banks - Bank of America, JP Morgan Chase, Citi, Goldman Sach and Morgan Stanley (supposedly, those are the big five) - could suffer severely if the European debt crisis spirals out of control.

While there was nothing really new in the report, traders took it quite seriously, sending the Dow - already down about 75 points when the report surfaced - another 100 points lower into the close.

Gross exposures to large European countries was at the heart of the report, with US banks exposed to more than $400 billion of loans to France, the UK and banks in those countries. Despite steadfastly denying any outsized exposure to Europe, a half trillion dollars, as expressed by the Fitch report, isn't just chicken feed.

As to the sudden shift prior to the report going public, there was probably some degree of front-running by those with advance knowledge, generally the very same banks named in the report.

Earlier in the day, CPI was reported to be down 0.1% in October, industrial production improved by 0.7% and capacity utilization stood at 77.8%, up 0.5% from September.

By the end of the session, all sectors were lower, led by financials, especially Bank of America (BAC), which closed down 23 cents, to 5.90, its lowest close since October 7. Citigroup (C) was off 1.16, to 26.86, and Goldman Sachs (GS) fell 4.15, to 95.60.

Trade in crude oil was higher, though unusually focused on a plan to change the direction of crude oil flows on the Seaway pipeline, to enable it to transport oil from Cushing, Oklahoma to the U.S. Gulf Coast. The dense argument, which would, if oil were traded in a truly free and not-manipulated market, cause oil prices to fall, produced the opposite effect, with WTI crude rocketing above the $100 mark, as the gap between WTI and Brent crude continued to contract.

What seems to be in play is an overt effort to square the prices of the two grades worldwide. US oil has been creap for decades, but the price of crude in the US seems destined to rival that of Europe even though supplies in Canada, which has direct access to US markets, are high and could easily outstrip oil imports from the Middle East and elsewhere.

After President Obama shut down the proposed Keystone pipeline - which would have taken oil from the Alberta oil sands directly to Gulf Coast refineries - on regulatory and environmental grounds until at least after his supposed re-election, the only conclusion to be drawn is that it's not only the banks, the AMA and big pharma that have their tentacles around US politicians, but big oil as well, though that is hardly a revelation.

The news flow, from Europe and the US, continues to suggest that politicians and financial concerns know an economic downturn is just ahead, the only question being whether it's from natural economic forces or planned by the elitist elements in government, business and finance. Skeptics will call that "conspiracy theory" but since the politicians in the US (and probably in Europe) haven't done a thing to benefit the general population in two decades, why would they change their stripes now?

Dow 11,905.59 190.57 (1.58%)
NASDAQ 2,639.61 46.59 (1.73%)
S&P 500 1,236.91 20.90 (1.66%)
NYSE Compos 7,392.03 117.02 (1.56%)
NASDAQ Volume 1,940,961,000.00
NYSE Volume 4,034,991,750
Combined NYSE & NASDAQ Advance - Decline: 1427-4226
Combined NYSE & NASDAQ New highs - New lows: 74-105
WTI crude oil: 102.59, 3.22
Gold: 1,774.30, -7.90
Silver: 33.82, -0.63

Wall Street Starts Week on Down Note, Sluggish Volume

There was no follow-up to last week's furious upside rallies on Monday, as traders sought catalysts for profit but found few. Oddly, given that the news over the weekend indicated something of a simmering in the ongoing European debt crisis, volume was at mid-summer levels or lower, marking one of the lowest trading volume days of the year.

Just as everything was up on Friday, just about all asset classes showed losses on Monday, including stocks of all flavors, led lower by shares of financial companies, including the world's favorites, Goldman Sachs (GS -2.37, 99.29), Citigroup (C -0.95, 28.38) and Bank of America (BAC -0.16, 6.05), which just can't seem to get out of the six-dollar range, to the chagrin of Warren Buffett and countless speculators who believe that bank stocks are a bargain (like uber-bank-bull, Dick Bove).

All sectors finished in the red, with consumer cyclicals showing the smallest loss (-0.31%).

Still, the most pronounced factor of the session was the sheer lack of velocity, as though some of the big brokerages had turned off the HFT computers and handed the trading back to humans. The trading marked the third-lowest volume of the year.

It would be nice if that actually happened, but one can hope and dream. Meanwhile, there just doesn't seem to be much interest in buying or selling much of anything, at least for today.

Dow 12,079.44, -74.24 (0.61%)
NASDAQ 2,657.22, -21.53 (0.80%)
S&P 500 1,251.88, -11.97 (0.95%)
NYSE Composite 7,496.71, -79.47 (1.05%)
NASDAQ Volume 1,401,417,000
NYSE Volume 3,075,054,250
Combined NYSE & NASDAQ Advance - Decline: 1384-4266
Combined NYSE & NASDAQ New highs - New lows: 81-82
WTI crude oil: 98.14, -0.85
Gold: 1,778.40, -9.70
Silver: 34.02, -0.66

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

Market Pops on Bogus ESFS Euro Report; Apple Misses, Tanks

You've got to love this market.

Any little statement or rumor that European Union leaders might throw significant money at their pan-continental debt crisis sends stocks soaring into the stratosphere, and today was one for the record books.

An unusually quiet day, stocks had regained a foothold after Monday's sudden reversal. But, shortly after 3:00 pm EDT, the UK's Guardian reported that France and Germany had agreed to boost the Euro bailout fund - the ESFS - to EURO 2 Trillion, a significant rise, and one that might just help kick the debt can down the road a few months, or even years.

Shortly after the story broke, however, Dow Jones reported that the 2 Trillion Euro figure was actually "still under debate," so, who really knows? At least the market machines and mechanics got what they wanted, a nice 100-point spike in the Dow in about ten minutes time and an S&P close over 1224. Mission accomplished. Now, move along, folks, nothing to see here.

In a day (week, month, year) full of bogus reports, before the open, Bank of America (BAC) reported 3Q earnings of 57 cents per share, but, because of the new math, which includes such exotic flavors as fair value adjustments on structured liabilities and trading Debit Valuation Adjustments (DVA), according to our friends at Zero Hedge, who usually have the best and most-believable dirt, BofA actually had earnings of 0.00, otherwise known as ZERO, Zilch, Nada, Nothing.

Of course, when CNBC and the rest of the supine financial media report, bare-faced, that the nation's largest bank by deposits more than doubled the analyst estimates (0.21) for the quarter, it was off to the races, with somebody shocking BAC shares up 10% by day's end, a stunning 0.61 gain, to the imposing figure of 6.62. While it's technically a 10% gain, it's still rather silly, considering the accounting nonsense being roundly applauded by the criminal bankster elite, and hardly any comfort to those who bought BAC when it was 7, or 8 or even 12. Make no mistake, we've entered the Twilight Zone of financial accounting and there's no turning back.

Along those lines, the Giant Squid otherwise known as Goldman Sachs (GS), also reported before the bell, but it's results were almost believable, showing a loss of 84 cents per share, with losses spread across the company's proprietary trading division, to the tune of $2.5 billion. Ouch. The market's response to the trending data of a company heading decidedly south: a gain of 5.25 (5%) to 102.25 and the financials led all other sectors in the faux rally du jour.

Also before the bell, PPI was reported to be up 0.8% in September on expectations of a rise of only 0.2%, which just happened to be how much the core PPI was up for the month. Somebody obviously missed the memo from the Fed that inflation was transitory, or something along those lines. Inflation in the US is running at an annual rate well over 6%, something the mainstream media hopes you don't notice.

One company which may be adversely affected by the loss of its CEO - the truly brilliant Steve Jobs - is Apple, which announced today after the bell that the company had an outstanding quarter as usual, but, uh, oh, they missed the estimates of 7.39 per share by a bit, reporting earnings for the quarter of 7.05 per share and also came up about a billion dollars short on the revenue end.

As of this writing, Apple shares were trading at 394.13, -28.11 (-6.66%). Not a very pretty picture there.

So, to recap, Goldman Sachs reports a massive loss, Bank of America releases what amounts to a fraudulent earnings report, inflation is about ready for lift-off into hyper-inflation and the market gets a jolly from a questionable report on the size of the European bailout fund. All good fun, no?

With Apple's miss in the after-hours and another couple of big banks - Morgan Stanley (MS) and PNC Financial Services (PNC) - due to report tomorrow, somebody might want to take a closer look at the number of companies that have missed or merely met estimates this earnings season, and maybe add in those who just plain fudged the numbers. But, not to worry, Cheesecake Factory (CAKE) and Buffalo Wild Wings (BWLD) are also reporting tomorrow and should provide sufficient caloric excess to fuel another rally in the markets.

Wow! You cannot make this stuff up.

Dow 11,577.05, +180.05 (1.58%)
NASDAQ 2,657.43, +42.51 (1.63%)
S&P 500 1,225.38, +24.52 (2.04%)
NYSE Composite 7,341.73, +153.07 (2.13%)
NASDAQ Volume 1,988,896,750
NYSE Volume 5,669,232,500
Combined NYSE & NASDAQ Advance - Decline: 5211
Combined NYSE & NASDAQ New highs - New lows: 52-65 (Really? No kidding. extremely bearish)
WTI crude oil: 88.34, +1.96
Gold: 1,652.80, -23.80
Silver: 31.83, +0.01

Stocks in Panic Mode; Bankruptcy Lines Forming: High-Low Indicator at Extreme; Social Fabric Shredding

The Markets

Stocks began the fourth quarter the same way they ended the third, with waves of selling on fears of a Greek default and recession in the US and Europe.

After an initial lift from fair economic data, especially the ISM index posting a 51.6 number after a 50.6 reading in August and August construction spending showing a 1.4% gain, US stocks drifted lower throughout the day, with the final onslaught taking the S&P 500 to a close of 1099.21, the first time the widely-watched index closed below 1100 since September 8, 2010 (1098.87) and well below the recent low of 1120.76 (August 10). The S&P now stands (or slouches, as the case may be) less than nine points from official bear market territory, which would commence at 1090.89. The S&P is down 12.6% for the year.

The other major indices are also closing in on bear market territory. Another day like today would send the NASDAQ down more than 20% from its April 29 highs. The Dow Jones Industrials are faring best of the bad lot, though still just 375 points from marking a bear market.

Losses began overnight in Asian markets and cascaded through Europe and into the Americas. Most European bourses have been in bear markets for more than a few months.

News flows from Europe were not encouraging as the 17 countries which are backing Greek bailout funds met again on Monday but failed to come to an agreement on the second tranche of aid to the failing EU member.

That sent stocks into negative territory for the remainder of the session, closing at the lows of the day on very heavy volume in a broad decline. All 12 sectors were lower on the day, led by capital goods, financials and energy. WTI crude oil closed at its lowest price in over a year, fueling speculation that lower gas prices are on the way as weather cools and demand falls.

Dow 10,655.30, -258.08 (2.36%)
NASDAQ 2,335.83, -79.57 (3.29%)
S&P 500 1,099.23, -32.19 (2.85%)
NYSE Compos 6,571.45, -220.20 (3.24%)
NASDAQ Volume 2,523,549,250
NYSE Volume 6,714,723,500
Combined NYSE & NASDAQ Advance - Decline: 772-5877
Combined NYSE & NASDAQ New highs - New lows: 19-1405
WTI crude oil: 77.61, -1.59
Gold: 1654.40, +29.60
Silver: 30.33, +0.36


After the bankruptcy filing of Swedish automaker Saab last month signaled the coming onrush of large corporate bankruptcies, three companies have been making news on that front.

Eastman Kodak (EK), which has hired the law firm of Jones Day to explore "reorganization" possibilities, rallied back strongly after Friday's stock collapse. The company's shares are at a bargain-basement level of 1.34, a 77% gain on the day. Reports that creditors and investors are speaking to advisors have surfaced as the company continues to burn through $600-700 million annually off their broken business model, negatively impacted by the advent of digital photography.

Shares of American Airlines (AMR) were halted today amid rumors of bankruptcy filing. The oldest US legacy carrier lost 33% today, closing at 1.98.

The banking sector continues to be rocked by the continuing mortgage morass, new regulations and now, computer glitches. Bank of America's website and online banking functions were unavailable to millions of customers for a long time over the past few days, frustrating and infuriating its customer base just days after announcing that debit card users would face a five-dollar-per-month fee beginning in January for the privilege of spending their own money. Shares of the nation's largest bank closed down 59 cents, at 5.53, the lowest price since the depths of the financial crisis, when the stock closed at 3.12 on March 6, 2009.

Along with the S&P 500 breaking below 1100, the number of new lows today was a screaming signal to "get out of Dodge" as quickly as possible. Those 1405 new lows are at a level not seen since autumn of 2008, when the entire financial system was on its knees and needed a $700 billion "fiX" courtesy of a deal ripped from US taxpayers by then-Treasury Secretary (thief) Hank Paulson and Fed Chairman Ben Bernanke. No other indicator has been as reliable or accurate in picking crashes than the New high - New low indicator. According to the indication that has been flashing for weeks, a major down-leg is about to commence, especially with the NYSE, Dow, NASDAQ and S&P 500 all closing below support levels during the recent two-month slide.

This is a potentially world-shattering situation that has been developing for not just the past two months, but over the past three years. Stocks could free-fall as financial institutions in Europe, Asia and in the US face severe liquidity and solvency issues and sovereigns are unable to save them this time, concerned, rightfully so, with their own continued existence. The level of public distrust has risen to unprecedented levels. Over 700 people were arrested in New York, trapped on the Brooklyn Bridge (see video below) by New York City police funded by JP Morgan Chase.

This is only the tip of the news iceberg the mainstream media doesn't want the US public to see, hear or read. Peaceful protests in Boston, New York, St. Louis and Kansas City have taken on new life, resulted in mass arrests and are a threat to the ruling elite.

The entire human population of the planet is teetering on the brink of mass rioting and localized anarchy.

Third Quarter a Stinker for Stocks; NASDAQ, SP Down 14%

The Markets

The third quarter officially ended today on September 30, and, unlike the usual quarter-ending, window-dressing ramp job, stocks suffered through their worst day of the week, in a month and quarter that was one of the worst of recent memory - and there have been some bad ones, recently.

The Dow Jones Industrials ended the quarter off more than 12%. The S&P and NASDAQ were rocked lower by 14%.

In simple terms, anybody in an index fund with $100,000 at the end of June, now has somewhere between $86,000 and $88,000. That may not sound like much, but $12-14,000 is roughly equivalent to the wages for a minimum-wage worker for a year. That's not a good sign for the bottom income earners in American society, because it means that the "wealth creators" so often cited by Republican office-seekers, have one minimum wage job less than they can create, should they now choose to part with some of that hard-earned (and easily lost) cash.

On the day, stocks started lower, stabilized, but fell off a veritable cliff into the close. There was no window dressing, no PPT push, no ETF re-balancing or anything to keep stocks afloat into the close. Nobody seemed willing to take significant positions in stocks, even though the 4th quarter is historically the best for stocks. The levels of gloom and doom rival those of the disastrous 4th quarter of 2008, when the global financial crisis was first realized and stocks gyrated lower and lower and lower.

Not only were stocks affected negatively during the month and quarter, but most commodities also fell by extraordinary percentages, especially gold and silver, which were whacked roughly 16 and 25% respectively. There was no place to hide for even the most conservative investors. Yields on Treasuries fell like rocks off a precipice. Bond yields for the 2-year, 5-year and 10-year note fell 40-45% in the quarter. The benchmark 10-year note closed out the quarter at a yield of 1.90%. The 30-year bond was the best performer of an ugly bunch, with yields falling only 35% since the end of June.

Crude oil was down 17% in the quarter, though gas prices at the pump have barely matched the decline. With gas prices nearly $4.00 a gallon at the beginning of summer, the average price - if 17% is the expected decline - should be around $3.35, though the AAA Fuel Gauge Report has the national average at $3.44. For perspective on how high real gasoline prices are, the price at the same time last year was a celebratory $2.69.

In company news, Eastman Kodak (EK), once a proud member of the Dow 30, fell 54% on the day amid reports that the company had hired the law firm Jones Day to discuss reorganization plans or a bankruptcy filing. Shares of Eastman Kodak dropped 91 cents to close at 0.78, an historic low.

Bank of America (BAC) plans to begin charging debit card users a $5 monthly fee in January, 2012, due to changes in the amounts banks can charge merchants per debit card use. BAC finished the day 23 cents lower, at 6.12.

Big corporate bankruptcies are dead ahead, likely to commence in the fourth quarter and accelerate through the first three quarters of 2012. Third quarter earnings reports kick off on October 11, when Alcoa (AA) reports after the bell.

Thank goodness for the baseball playoffs and football. Yeesh!

Dow 10,913.38 240.60 (2.16%)
NASDAQ 2,415.40 65.36 (2.63%)
S&P 500 1,131.42 28.98 (2.50%)
NYSE Compos 6,791.65 183.26 (2.63%)
NASDAQ Volume 2,081,539,875.00
NYSE Volume 5,323,945,500
Combined NYSE & NASDAQ Advance - Decline: 1442-5118
Combined NYSE & NASDAQ New highs - New lows: 31-515 (look out below!)
WTI crude oil: 78.65, -3.47
Gold: 1623.80, +7.90
Silver: 29.94, -0.73

Government Sues 17 Banks Over Faulty Mortgage Backed Securities

This news broke early on Friday, but details were just coming in as the markets were closing.

The Federal Housing Finance Agency is the conservator for failed federal GSEs, Fannie Mae and Freddie Mack. The agency seeks a total of $196 billion in damages in state and federal courts from the named defendants, including some $24.853 billion from Merrill Lynch and First Franklin Financial (owned by Bank of America). All of the charges are made in connection with false or misleading representations and warranties made to Fannie and Freddie by the banks.

The list is pretty much a who's who of the sub-prime and general mortgage crisis which pushed the global economy to the brink of disaster back in 2008, including such notables as Goldman Sachs, Bank of America, JP Morgan Chase, Citigroup, Countrywide Financial (now part of Bank of America), Deutsche Bank and others.

American Banker points out that the largest exposure - $57 billion - belongs to Bank of America (BAC) because the bank not only sold $6 billion of MBS to Fannie and Freddie, but the figure grows larger when factoring in the damages charged against Merrill Lynch and Countrywide, both acquired by BofA during the financial crisis. JP Morgan Chase has to deal with $33 billion in claims, including those of Bear Stearns and Washington Mutual, both of which were taken over by JP Morgan Chase.

Below is the press release in which the agency lays out the charges. Here is a link to the individual cases.

FHFA

While most of the American public must be cheering this news, it's about the worst that could happen to the TBTF banks, being that their reputations and balance sheets are both on shaky footing. The hardest hit will surely be Bank of America, which is being sued by virtually the whole planet, including AIG and USBancorp.

The litigation involved in these cases will likely take many months, if not years, to settle and will cost the banks dearly in legal costs, which are already taking their tolls on profits.

In addition to the banks, a multitude of individuals are charged with various violations of securities laws, though none of the CEOs - such as Jaime Dimon, Dick Fuld or Lloyd Blankfein - are among the defendants. Obviously, the government is going after the lowest-hanging fruit in an attempt to garner public support by going after "bad guys."

This is a developing story with far-reaching implications for the global economy. MoneyDaily will stay abreast of events as they develop.

With any luck, we may witness actual "perp walks" as the lower-level employees implicate the top rung of the banking elite. The thought of seeing Jaime Dimon or Lloyd Blankfein in leg irons and handcuffs is almost too delicious to consider.

Stocks Slide on NFP ZERO JOB GROWTH; FHFA Sues Big Banks

The Markets

Once the August Non-Farm Payroll report was out, US equities were as good as done. The BLS reported - for the first time since February, 1945 - that no new jobs were created in the month. That's right. Zero. None. Squat.

Adding to the general jobs plight and blight in the US, July and June gains were revised lower. July was down to 85,000 from 117,000 previously reported and June figures showed that employers added just 20,000 jobs in June, not 46,000, for a net loss of 58,000 jobs from previously-believed figures.

Off of that kind of defining news on the economy, stocks dove at the open and stayed down all day long, finishing near their lows.

The other major market mover was news that the Federal Home Finance Agency (FHFA) - the agency tasked with overseeing the conservatorship of Fannie Mae and Freddie Mac - was in the process of suing as many as 17 major banks over faulty underwriting on - you guessed it, didn't you? - soured mortgage backed securities (MBS). This news was breaking all day, though details were trickling in at the market's closing bell.

The banks being sued were Bank of America, Merrill Lynch (a subsidiary of BofA) for $22.4 Billion, Citigroup, Barklays, Nomura, among others.

Dow 11,240.26, -253.31 (2.20%)
NASDAQ 2,480.33, -65.71 (2.58%)
S&P 500 1,173.97, -30.45 (2.53%)
NYSE Composite 7,250.73, -192.73 (2.59%)
NASDAQ Volume 1,582,149,000
NYSE Volume 4,363,518,500
Combined NYSE & NASDAQ advance-decline: 1075-5448
Combined NYSE & NASDAQ New highs - New lows: 20-147
NYMEX WTI crude oil futures: 86.45, -2.48
Gold: 1882.50, +57.10
Silver: 43.25, +1.75

The big winners on the day were the prudent and astute conservative investors holding gold and silver, both of which were boosted significantly as the fear of a looming recession rises and problems in Europe escalate over the second Greek bailout.

Basically, anybody who doesn't believe either a) we're already in a recession; b) the first recession never actually ended; or c) we're about to go into a recession, simply has not been paying attention, or, is paying attention to the globalist media's consistent pleadings that the economy is doing just fine.

With the nitwits in Washington more intent on getting re-elected than fixing real problems, the United States, and by inference, the rest of the world is sinking deeper and deeper into a global depression which likely won't be resolved without drastic measures (war, currency debasement, bank failures on a grandiose scale).

With that in mind, let's party the three-day weekend away with the following:

IDEA: Don't Google it, Bing it!

Most of us use Google for searches, but Bing is better. Not only does Bing offer more options, better video and image coverage, but they have a rewards program by which users can accumulate points and eventually redeem them for some nice items (it takes a while, but if you search a lot, they add up).

What does Google offer besides a lot of ads next to search results? Nothing.

Try Bing. It's better.

Huge Gains on Oversold Conditions for Stocks; BofA Near-Death Experience?

Like overeager rookies who ignore the third base coach's stop sign and instead bowl headlong towrd home plate only to be thrown out, traders today simply looked past negative economic data and piled into stocks on the grounds that the market was oversold.

Sure, stocks have hit the skids of late, but for good reasons, like the debt contagion in Europe, the weak and stinking banking system in the US, continuing unemployment woes and the threat of a double-dip recession, but the old "oversold" mindset was front and center on this day, despite new home sales checking in for July at 298,000 units on a consensus of 310,000 and last month's figures revised lower, from 312K to 300K.

According to the logic of traders, housing doesn't really matter, and neither did that rare Northeast earthquake just after 2:00 pm, or the Richmond Fed's Factory Index, which fell from a reading of -1 in July to -10 in August.

Nope. Market's oversold, despite all recent data and expert opinion pointing at a weak second half at best and a full-blown deflationary depression at worst. Maybe somebody tipped then all off that the chairman, Ben Bernanke, will simply announce, in his Jackson Hole speech on Friday, that he will print more greenbacks if the economy continues to slide towards insolvency and desperation.

Then again, the primary players in this little financial drama are mostly momentum-chasers and day-traders, so maybe it all makes perfect sense. After all, the Wall Street of 2011 is not for investing, it is for immediate profit and self-gratification. Kum-bye-yah! It's a new age phenomenon.

While stocks were quickly eviscerating last week's losses, not all of them were going skyward, especially Bank of America, which touched down at a new 2 1/2 year low of 6.01 before mid-day. The mighty BofA is beset on all sides by questions over the veracity of its own numbers, the grinding legal costs associated with faulty mortgage dealings and a surprising shortage of capital - after being bailed out and getting preferential, secret treatment from the Fed during the financial crisis of 2008-09 - which may force the lender to sell off whatever good assets it has remaining and/or still need to make a secondary offering in the market in order to satisfy new, more stringent capital requirements a few months down the road. Bank of America (BAC) closed down 12 cents at 6.30, a new, 2 1/2-year, closing low.

Let's face it. Bank of America looks more like a shabby slumlord than a quality mortgage lender and it's only a matter of time before they go belly up or are taken over by the government and broken up in pieces to rivals like JP Morgan, Wells Fargo and Goldman Sachs.

Not that those banks are any more secure or trustworthy. In fact, Goldman Sachs (GS) has troubles of its own, despite following the market and posting a measly 0.35 gain today, closing at 106.86. The stock peaked in January at 175. Simple math says that's a nasty loss since then.

Whatever. The market is oversold, people. Buy more.

Dow 11,176.76, +322.11 (2.97%)
NASDAQ 2,446.06, +100.68 (4.29%)
S&P 500 1,162.35, +38.53 (3.43%)
NYSE Composite 7,209.59, +228.97 (3.28%)

Advancers smacked down declining issues, 5440-1239. The NASDAQ finished the day with seven (7) new highs and 146 new lows, while the NYSE posted 13 new highs and 169 new bottoms. The combined, 317-20 edge for new highs over new lows reiterates the strong sell signal the market has been blaring for three weeks. Yes, it may be oversold, but a today's gains were more the knee-jerk, dead cat bounce variety rather than a solid gain on fundamentals, which would be sustainable, should such fundamentals ever appear.

The trouble with investors and this market in particular is that nobody wants to face the undeniable fact that although most companies are lean, mean and posting solid profits, new quarter and next year's numbers will be up against some strong results, those provided by artificial stimulus and excessive monetary easing. Additionally, the bear market rally that began in March of 2009 is getting a bit long in the tooth. At 30 months, it may be time for a long term change of direction and sentiment.

Volume, on such a big run as today's, would have been much more robust if there was deep, underlying commitment by traders and investors. Maybe the traders have commitment or should be committed. Real investors are in cash, gold, silver and hard assets these days. What substitutes for a real equity market is all hype and subterfuge, devoid of substance.

NASDAQ Volume 2,129,302,500
NYSE Volume 5,913,402,500

Today was also a banner day for "gold is in a bubble, but we're running out of oil" preachers. WTI crude was up $1.02, to $85.44, and if you don't think gas has come down with the price of oil, you're right, though CBS news offered some blatant propaganda (likely prepared right from a press release by the American Petroleum Institute) as to why that is the case. It was pure bunk, delivered with the straight-faced lie that gas could drop another 40 cents by Christmas. Geez, Louise, thanks, we'll keep that in mind as we all go broke well before December.

As for gold, no "silver-slap-down" margin hikes were required (correction: the Shanghai Gold Exchange lifted gold margins for forward contracts the second time this month to 12% beginning on Friday - tip of hat to Tyler Durden at Zerohedge.com) to send the yellow stuff down $68.70, to $1829.40, after it had breached the $1900 level (hitting a peak of $1917.90) in Asian trading. Silver was also trampled by the fiat-leverage folks, losing $1.83, to $41.89. So much for the safety of hard assets, eh?

Don't be dissuaded by one-off moves prompted by the evil fornicators of the global banking cartel. Hard assets will outshine, out-gain and outperform all paper assets in the long run, and already have for the past 11 years running. Paper money, backed by nothing but ungodly, unpayable levels of indebtedness are going to die an awful death and the grim reaper is already sharpening his scythe. Either that, or all the paper money in the world buys less than it did yesterday, for eternity.

Finally, for those with a morbid fascination or those who know the meaning of the apocryphal acronym TEOTWAWKI (look it up), here's our old pal Henry Blodget expounding on why Bank of America's real capital needs may be more in the $100-200 billion range than the controlled-media's claims of $20-30 billion and Bank of America's response that he is making "exaggerated and unwarranted claims."

US Banking Sector Flattened as Secret Fed Loans Are Revealed

If you're fond of following foreign markets (and who isn't in today's meltdown environment?), the oddest of patterns emerged as planet Earth spun East to West.

Most Asian markets opened with gains, though ended up sporting losses by the end of their trading sessions. As the focus turned to Europe, gains were seen across the board early, though those faded late in the day, with the German DAX finishing slightly in the red.

When it was America's turn, the futures pointed to a bright open following a dismal end to the prior week and the Dow burst to an early 200-point gain. After that initial boost of enthusiasm, with the major indices hitting their highs of the day in the opening minutes, it was mostly downhill as investors sold the rally and the markets ended essentially flat for the week's opening session.

To the surprise of almost nobody, financial stocks were hard hit again, led downward by old, reliable Bank of America (BAC), which is facing a serious liquidity/solvency/honesty/continuity crisis after announcing on Friday that it intended to cut 3,500 jobs in the third quarter, with perhaps as many as 10,000 job cuts by the second quarter of 2012. Bank of America closed down 55 cents, at 6.42. The funeral dirges should begin any moment for the nation's largest bank by deposits.

While that news was certainly a disheartening blow to the non-productive paper-shufflers in the financial cesspool sector, a story that has gone largely unreported by the mainstream media was quite possibly the underlying cause for much of the weakness in the banking business.

Bloomberg reports that the Federal Reserve secretly doled out as much as $1.2 trillion to US banks, foreign banks and other financial and non-financial firms - including McDonald's and Caterpillar - from 2007 to 2010. Not of word of the story was spoken on CNBC, though the news spread rapidly through the blogosphere and the web's alternative media.

Reactions ranged from disgust to contempt, with a healthy dose of outrage from most astute followers of the Fed's financial foibles. It is unprecedented that the Fed would stoop to such lows as to attempt to conceal transactions from the prying eyes of the press and the American public, though it is hardly unexpected.

What may be worse than the contemptible actions by the Fed is the depth of the subterfuge within the halls of congress and the White House. The bulk of these secret loans were being made while the public was languishing over the absurdity of TARP and the Obama stimulus in early 2009. How many congressional members and presidents - Bush and Obama - knew of the skullduggery while it was being undertaken are questions to which the American people deserve answers, though judging by how many firms received loans over such a long period of time and with a Justice department that is loathe to issue subpoenas to anyone connected in any way with the financial services industry, the wait for such answers may be a long time in coming, if ever.

The information was obtained by Bloomberg through a Freedom of Information Act request that was continually blocked, challenged and evaded by the Fed. Now that it is out, it's evident that most of the popular media wants no part of the story, focusing instead on the fall of Tripoli and the end of the reign of Colonel Gaddafi in Lybia. The implications of tis story are breathtaking in scope and what it means for democracy and freedom, not only in America, but in the rest of the world, against an increasingly desperate global banking oligarchy.

Of course, with the media hitting the ignore button on the story and most Americans less-than-concerned with the fate of their own country, it's likely that the thievery and secrecy will continue unabated without even a hint of impropriety at the highest levels of the government.

One more story caught the attention of traders late in the day, that being reported first by Reuters with about 20 minutes remaining in the session. Apparently, Goldman Sachs CEO Lloyd Blankfein - yes, the very one who equated the business of Goldman Sach's with "doing God's work" - has hired, along with other executives at the firm, attorney Reid H. Weingarten, a partner with Steptoe & Johnson in Washington D.C. amid accusations that his firm acted fraudulently leading up to and during the 2008 financial crisis.

Goldman Sachs (GS) ended the day off 5.25 points (nearly 5%) on the day, with all of the losses occurring in the final fifteen minutes of the session.

Speculation will almost certainly run rampant with this news, but it could be yet more evidence that the global banking system has run completely afoul of the totally-corrupt political system and the long knives are about to be unsheathed. Should Blankfein and others from his firm be criminally charged, the end of fiat money could be at hand in short order with many undetected and unknowable circumstances to follow.

Corruption at the highest levels of government has been a feature in America for many years. The only remaining question is when Americans will finally have had enough of it.

Dow 10,854.65, +37.00 (0.34%)
NASDAQ 2,345.38, +3.54 (0.15%)
S&P 500 1,123.82, +0.29 (0.03%)
NYSE Composite 6,980.62, +10.52 (0.15%)

On a day in which volume was repulsively weak, declining issues led advancers, 3562-3027. New highs on the NASDAQ numbered just nine (9), with 244 stocks reaching new 52-week lows. On the NYSE, a similar story, with just 13 new highs and 247 new lows. The combined tally of 22 new highs and 491 new lows is a screaming sell signal.

NASDAQ Volume 1,983,095,500
NYSE Volume 5,436,260,000

While it was expected that oil prices would decline upon the fall of Lybia, since that nation's supply would soon go back online again, Brent crude fell, though the other oligarchy - that of the oil barons - managed to tighten its grip on the American consumer a bit, raising WTI crude futures $1.86, to $84.12 per barrel.

The largely unguided public is fighting back against the perception of fraud and debauchery and the failure of the global economy by buying precious metals with gusto. Gold set yet another record, rising $39.70 on the COMEX, to $1,891.90, though being reported at kitco.com at $1907.20. Silver gained 89 cents, to $43.32, but, as of this writing, was quoted at $43.85.

Events are moving a breakneck speed, despite Wall Street attempting to cool off prior to Fed Chairman Ben Bernanke's Jackson Hole speech on Friday. While many pundits await the all-clear signal from the chairman for another round of quantitative easing (money printing), the evidence is clear that the first two rounds - QE1 and QE2 - did more harm than good in the overall scheme of things, plus, in light of the breaking news by Bloomberg, the chairman and his cronies in the banking business and politics will do as they please, the public be damned.

This is the environment in which we must now tread. It is one of complete disregard for laws, principles of economics or even the most simple forms of common decency, honesty and principle.

Debt Downgrade Fallout: Stocks Shattered, Gold Soars, Europe a Wasteland

At 9:00 pm Eastern time on Friday night, August 5, S&P officially released their downgrade of US debt from AAA to AA+, prompting widespread panic and sharp rebukes from the White House, who claimed, in effect, that S&P had made what amounted to "math errors."

Over the weekend, much was made of the downgrade, as the Obama hit the airwaves with gusto, rebuking the call from the ratings agency. Fitch and Moody's had previously reaffirmed the US debt as AAA, the highest possible sovereign bond rating, but S&P would not back down, and the downgrade remained in effect.

What S&P reasoned was that the US government did not take the necessary steps - in its theatrical production of waiting until the last possible moment to pass a debt ceiling increase - to address the structural problems facing it. S&P rightly concluded that US debt levels were and continue to rise and discretionary spending levels have not been controlled. Therefore, they downgraded the nation's debt and threaten to do it a second time, sometime around November, if the 12-member congressional committee charged with dealing with long term debt does not come up with actionable, concrete, debt reduction proposals.

As markets opened on Monday, the effects of a global panic were evident, especially on the heels of a 10% decline in US indices over the past two weeks and Thursday's dramatic sell-off of over four per cent on major markets.

First, it was the Asian markets which tanked at their various openings and continued through the day to sell off anywhere from 1.5 to 4.0%. Next up was Europe, where the crisis over bailing out Italy and Spain have reached a point of no return. EU officials stressed that they would be in the market with the ECB, buying up italian and Spanish debt, but that did little to change the outlook of investors, which had turned sour over the past fortnight.

Appetite for risk was at a low, as European markets suffered steep losses. England's FTSE was the best of the lot, down only 2.62%. France's CAC-40 took a 4.68% loss and Germany's DAX shed 5.02%. Other Euro-zone markets fell between 3.76 and 6.11%.

By the time US markets were to open, index futures had been hammered down to presage an inauspicious opening. Within minutes of the bell, the Dow was down more than 200 points, the S&P had taken a 25-point hit and the NASDAQ fell more than 70 points, though those declines were nothing compared to the carnage that lay ahead.

By the end of the day, after a minor rally in the first 15 minutes of the final hour, stocks were trading at or near their lows, with the Dow Jones Industrials surrendering the 6th-worst performance in its history. While the Dow suffered a 5.5% decline on the day, the other indices were actually much worse, with the NYSE Composite topping them all, coming home with a 7.05% loss.

It wasn't just the debt downgrade that spurred the sell-off. Conditions in Europe have worsened significantly over the past few months, to the point that European Union officials are without reasonable solutions to the debt contagion spreading across the region. While the ECB has managed to prop up smaller countries like Greece, Portugal and Ireland, Italy especially poses a much larger concern.

All the European leaders could muster on Monday was a terse statement which offered no concrete proposals but plenty of assurances, which was be roundly written off by markets. To wit:

We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growth

That was the extent of the communique from the magnificent seven of the United States, Canada, Great Britain, France, Germany, Italy and Japan.

The irony is that one of them, Italy, has been the source of the most recent anguish.

Essentially, the funds available to the ECB fall short of meeting the debt purchases needed to save Italy and Spain. Europe will have to engage in quantitative easing, as was the case in the United States over the past two years, to stave off defaults and the threat of a cascading crisis which would envelop all of Europe and likely doom the 11-year-old Euro currency.

If the EU decides upon cheapening the currency - which it almost certainly will do - theknock-on effect will be to sink the Euro, probably close to parity with the US Dollar. As the dollar would grow in strength, commodities, particularly oil and gas for auto use, would plummet, a boon to US drivers and to the general economy. Costs of imports would also decline, on a relative basis, giving American consumers more purchasing power.

Within the same scenario, however, are pitfalls for the global manufacturers and companies that populate the S&P 500, NASDAQ and the Dow. A stronger US Dollar would make them less competitive in foreign markets, shrinking margins and thus, profits. Thus, the great selling rush today was more of a statement on the global condition rather than that of the debt downgrade, which, when all is said and done, won't amount to a hill of beans. In fact, treasuries were up sharply today, as yields fell to their lowest levels in over a year.

The benchmark 10-year note fell 25 basis points in just one day, from 2.56% on Friday to 2.31% on Monday. The 30-year bond fell 19 basis points, to 3.65% as the yield curve continues to flatten. Money is going out of stocks and into bonds, and whether they're AAA or AA+ doesn't matter to those seeking a safe haven. The ridiculously low yields offered are a moot point. As one trader put it, "Investors aren't looking at making money; they're more concerned with getting their money back."

And, therein, the next crisis, in bonds, especially if the US government doesn't get its house in order soon. Higher rates and another downgrade could trigger a default of impossible proportions as the US would be unable to roll over its debt and fund itself without incurring higher borrowing costs. Ditto for Europe. Rising interest rates signals the end game for fiat currencies globally and back to some form of honest money, most likely on a gold standard.

The market events of the past few days, in which the major indices lost more than 10% are not the end of the crisis, but rather the beginning of the end of a great generational bear market that began in 2007 and will eviscerate all risk assets until nobody wants to hold anything any more.

Markets have entered the final stages of the third leg down. QE 1 and 2 staved off the collapse, but there will be no bailouts this time around. It's every man, woman, child and company for itself. There will be some winners, but mostly there will be losers, anguish, agony and the disappearance of great hordes of wealth.

Dow 10,809.85, -634.76 (5.55%)
NASDAQ 2,357.69, -174.72 (6.90%)
S&P 500 1,119.46, -79.92 (6.66%)
NYSE Composite 6,895.97, -523.10 (7.05%)

The internals were equally as stunning as the headline numbers. Declining issues decimated advancers, 6553-375, a ratio of 17.5:1. It was truly one of the deepest, broadest declines in stock market history. On the NASDAQ, there were four (4) new highs next to 725 new lows. The NYSE had just three (3) new highs, but 1292 stocks making new 52-week lows. The combined total of seven (7) new highs and 2017 new lows rivals or exceeds the figures presented during the fallout of 2008-2009.

Volume was at the highest levels of the year, exceeding that of last Thursday, which was then the high volume day of the year. Investors aren't just scared, they are trampling each other running through the exits at breakneck speed.

NASDAQ Volume 4,002,857,250
NYSE Volume 11,046,384,000

Crude oil futures were pounded again, as the front-month contract on WTI crude fell $5.57, to $81.31. Gas prices will soon fall below $3.50 - and possibly below $3.00 - a gallon as current supplies are depleted and replaced by less expensive distillates. According to AAA, the average price of gas in the US is now $3.66 per gallon, but the deep declines have not yet been factored into the equation. That will happen over the next two to three weeks.

Gold was the big winner of the day, soaring $61.30, to $1,713.20, another all-time record price as investors, companies, nations, central banks and housewives scrambled to find reliable assets. Silver, still constrained by high margin requirements, gained $1.17, to $39.38. Silver is almost certainly the most under-appreciated asset in the world, though that will soon change. As the crisis escalates and governments make more and more bad moves, the precious metals will skyrocket to unforeseen heights.

The banking sector took it on the chin, but none more than Bank of America (BAC) which is on the verge of a well-deserved bankruptcy. shares of the nation's largest banks fell 20% on the day, losing 1.66, to close at 6.51. Just a few weeks ago, BofA was trading at a price nearly double that. The unfolding mortgage crisis, brought about by Bank of America's 2008 purchase of Countrywide, has become a fatal blow to the once proud institution.

David Tepper's Appaloosa Management Fund has reportedly sold its stake in Bank of America (BAC) and Wells Fargo (WFC), while significantly trimming Citigroup (C) from the portfolio.

Adding to the irony, AIG has sued Bank of America for $10 billion, citing "massive fraud" in its representations of mortgage-backed securities (MBS).

However, Citigroup analyst Keith Horowitz takes the booby prize for reiterating a "buy" rating on Bank of America shares this morning. Timing is not one of Mr. Horowitz's strong points, it would appear.

On top of all this, the FOMC of the Federal Reserve will issue a policy statement Tuesday at 2:00 pm EDT, followed by a news conference from Chairman Ben Bernanke. That alone should equate to another 300-point decline in the Dow.

For those with a morbid curiosity, check out the slideshow of the 10 worst days on the Dow, already outdated, as August 8, 2011, will go down in the history books as the 6th worst day for the blue chip index of all time.

Henry Blodgett and Aaron Task have a nice summation of the situation in the video below:

Markets Soar on New Gang of Six Debt Ceiling Proposal

Supposedly, the government will fix everything by changing the way the CPI is measured, which means that Social Security recipients are about to get whacked by way of inflation.

If ever there was an inept government being led around by its nose by financial masters, this one is it. Whatever Wall Street wants, Wall Street gets. As for the general population - the ones who pay all the bills and pay for bailouts and frauds - they receive the shaft.

The current legislation under proposal, offered by the Senate's Gang of Six, promises %3.7 Trillion in savings, some of it - about $1 Trillion - supposedly to come from increased revenues. House Republicans have already started making noise about it, since the plan calls for some tax increases. While President Obama seemed to be thrilled about the plan at a 1:30 press conference, party leaders Harry Reid and Mitch McConnell seem to have been cut off at the knees after working on an alternative plan to both save face and raise the debt ceiling.

Nonetheless, Wall Street acted as though manna was being dropped from the heavens, boosting stocks an additional 100 points on top of the bogus 100-point, low-volume, morning melt-up.

Forget TV dramas and soap operas. The best one is being played out right on CNBC every day with the fraudulent bankers running the politicians in a light-hearted farce known as the US economy.

Dow 12,587.42, +202.26 (1.63%)
NASDAQ 2,826.52, +61.41 (2.22%)
S&P 500 1,326.73, +21.29 (1.63%)
NYSE Composite 8,254.38, +118.85 (1.46%)

Advancing issues led decliners by an unhealthy margin, 5167-1418. On the NASDAQ, there were 68 new highs and 34 new lows. The NYSE showed 79 new highs and 32 new lows. The combined total of 147 new highs and 66 new lows completely reversed yesterday's dour numbers. Volume was as pathetic as it gets, especially on a 200-point Dow move.

NASDAQ Volume 1,842,038,625.00
NYSE Volume 4,228,335,000

Commodities changed direction on the day as well, which is not surprising for WTI crude oil, which continued it's up-and-down daily fluctuation, rising by $1.57, to $97.50. The lowered prices for gold (-$1.30, to $1,601.10) and silver (-0.12, to $40.22) are also in line with the corrupt rigging in those markets.

The best news of the day came from the financial sector, which was offering its own version of "recovery summer." Bank of America (BAC) posted a loss of 90 cents per share in the second quarter, mostly attributed to mortgage put-backs and side deals with note-holders. The stock traded as low as 9.40 following the pre-market release of second quarter results, ending the day down 0.15, at 9.57, another new 2-year low in a recent string of them.

Goldman Sachs (GS) also released fiscal first quarter results before the bell and came in with numbers in-line with analyst expectations, .

From the article linked above:

Revenue in Goldman's core fixed-income trading division fell 63% sequentially and 53% year-over-year due to reduced trading activity and economic uncertainty. That, along with weakness in its lending-and-investing division, led to an 18% year-on-year decline in overall firm revenue.

Doing "God's work," huh, guys? God must be angry.

Stocks Drop, Metals Pop, BofA a Major Flop

As the debt crisis in Europe evolves, worries over the US debt ceiling non-negotiations continue to complicate matters for traders. Fear is pervasive on the Street and the pace of progress (what little there is) seems to suggest that congressional Republicans and President Obama are on a collision course in which the August 2 deadline for raising the debt ceiling might come to pass without a resolution, or, at least one with any real teeth.

The stalemate over raising the debt limit has been pushed by the Tea Party faction in the House of Representatives, and it's done nothing but squander time and any understanding between the opposing factions. Talks have broken down twice in the past two weeks and lawmakers seem to be no closer to a deal than they were a month ago.

What's at stake should the deadline pass without a resolution to raise the debt limit would be the credit rating of the US, which has been threatened by ratings agencies Moody's and Standard and Poor's. Even if a deal is somehow worked out, the wrangling over the issue has sent the wrong message: America looks more like a third world country than the leader of the free world.

The arguing and posturing has helped to stall the economy because businesses don't want to make major moves - like hiring or opening new facilities - with so much uncertainty in the air, and that has taken its toll on stocks.

The week started off the same way last week ended, on the wrong foot, with stocks down sharply at the open and plummeting to the lows of the day by noon. The Dow was down 180 points at that point and the NASDAQ had shed some 46 points before bargain hunters (read: morons or the PPT) stepped in to shore up the losses. None of the major indices saw even a glint of the positive side. In fact, closing levels were near the high points of the day.

Dow 12,385.16, -94.57 (0.76%)
NASDAQ 2,765.11, -24.69 (0.89%)
S&P 500 1,305.44, -10.70 (0.81%)
NYSE Composite 8,135.53, -91.51 (1.11%)

Decliners led advancers by a wide margin, 5363-1213. The NASDAQ recorded 36 new highs and 71 new lows, while the NYSE had 37 new highs and 93 new lows. The combined total favored new lows, 164-73. With that indicator flipping over again and no progress on any economic front, the recently-resumed slide in stocks should lengthen and deepen. Volume was sluggish, and that's being generous.

NASDAQ Volume 1,726,375,125
NYSE Volume 4,103,216,500

Commodities were led by gold, which broke through the $1600 mark, finishing at $1,602.40, up $12.30 on the day. Silver was up more than 3%, rising $1.27, to $40.34. The ascent of the metals over the past two to three weeks has been a resounding note of no confidence in the fiat money system and general financial malaise caused and exacerbated by central bank intervention.

Crude oil continued doing its odd two-step, as WTI finished down $1.31, to $95.93. Of course, this one-off loss will likely be offset by gains tomorrow. Such is the way rigged markets function. In the end, there will be no summer relief for drivers who are paying close to $4 per gallon. The nationwide average for a gallon of unleaded regular remains high, at $3.68, with ten states over $3.77.

Bank of America continues to be the least-loved stock or bank in the nation. Shares of the beleaguered financial institution fell to yet another 2-year low, closing at 9.72 as reports emerge that the company needs to raise $50 billion in order to become a healthy, functioning bank again. One can only imagine how the bank's books would look had they not been bailed out in 2008 by the federal government (taxpayers). Some - this writer included - still believe it would have been better to allow BofA to go into default and bankruptcy and have the huge bank broken up into smaller parts.

The jury is still out on that one, though it still appears that those favoring bankruptcy for the biggest banks may have been on the right track all along. BofA still may not make it through to 2012 and beyond. They are broke, busted and insolvent and are a primary reason for the suffering of millions of Americans who have lost homes and jobs because so much effort was spent by the government to help the bank, rather than actual citizens.

After the close, IBM reported second quarter earnings with an EPS of $3.09, ahead of analysts' estimates of $3.03. The company raised guidance for the full year to “at least $13.25″ per share, up from a prior estimate of “at least $13.15″ per share.

Well, We All Knew This Was Coming

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

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

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

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

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

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

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

Volume? Come on, now.

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

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

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

Tomorrow, the weekend. Thank goodness.

Stocks Continue Slide through Sixth Straight Session

Another day, another decline on US stock markets.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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