Beneath the superficial aspects of the coronavirus - the hospitals, the deaths, media deflection, Presidential dithering, lockdowns, social distancing, and the state-by-state re-openings - there exists a subculture of cash, credit, debt, default, and the eventuality of a global depression.
The question is not whether there's going to be a recession - there will be, without a doubt - it's how long the depression will last and how deeply affected will be various segments of the economies of nations and those nations themselves.
This is an extremely complex scenario that will not be evenly distributed. Some people will prosper while others decline. Some will go broke. Others will simply give up and die. It's an absolute certainty that there will be more losers than winners, many many more. Knowing that, the federal government, in conjunction with the Federal Reserve, has set about the process of bailing out everybody, or, nearly everybody. The problem is, they've not gone about the process with much foresight, they have no comprehensive plan, and the result has been a sloppy patchwork of band-aids, unkept promises, imbalances, and knee-jerk, short-term remedies.
Wall Street got their money right away, small business got shafted, twice, wage-earners, especially those in low-wage jobs, got a bonanza to the extent that the $600 extra unemployment benefit doled out by the Fed has in some cases doubled the take home pay of a huge chunk of the workforce. Anybody making minimum wage or anything less than $15 per hour has experienced a tangible benefit. The unfortunate part of this is that the additional unemployment benefit vanishes in about four months, or, for most people, sometime during August. Whether the federal government will step in again at that point to provide more relief is, at this juncture, a speculation.
Meanwhile, most seniors receiving Social Security or Railroad Retirement benefits, haven't seen a dime, despite the late March pledge from Treasury Secretary Steven Mnuchin that they would have their money ($1200 per person plus $500 for each qualifying dependent) within two weeks. It's going on six weeks and the money still hasn't arrived. The latest promise is that direct deposits would be made this week. Don't count on it. Mnuchin has proven that his priorities lie mainly with big business and Wall Street banks, not with the people who matter, the citizens, the taxpayers, the consumers. He's effectively relayed the message to seniors that they don't matter at all.
All the time, but especially during times of crisis, people should be judged by their actions, not their words. If there's a judgement to be made on Steven Mnuchin, he would be deemed an awesome character by the one-percenters and upper crust, and a outright liar and scoundrel by just about everybody over the age of 62.
The problems with the quick-fixes that have come out of the Fed and the federal government are multiple. They're temporary. They solve nothing. They're largely unfair. They won't work long term. Not for the stock market, not for the banks, not for states and cities, not for pension plans, and especially for the backbone of society, small businesses and the people they employ, or, rather, employed, because most small businesses in the United States are dead men walking. If they haven't already closed their doors forever, never to return, they're on the verge of collapse, as is the rest of the country, despite nobody in government or the media actually leveling with the people.
Next up on the list of bailouts are cities, counties and states, which have experienced massive losses to their revenue base and will see those losses multiply over time. They are coming to the federal government with outstretched arms, awaiting their turn at the feeding trough of unlimited capital. A business owner who doesn't pay property taxes because his business has been shut down for a month or six weeks or longer is one thing. The loss of sales tax revenue is another, and one that will continue long into the future. Again, the feds can only do so much. It's up to the local and state managers of their various governmental units to take action, and sooner rather than later.
Cutting back on services and employment should have been happening in March and April, but it hasn't. Teachers get paid. Cops and firemen get paid. Sanitation workers get paid. Clerks and paper shufflers get paid. All the while the cities and counties are bleeding revenue. Their collapse is imminent and they have only themselves to blame for decades of living high on the hog that is the taxpayer, without regard to emergencies, without planning for even a slowdown from the stock buyback, free money largesse of the past decade. Their demise, along with the platinum health care plans and pension, are at extremely high risk of being insolvent and overdue for a significant haircut. They're counting on the federal government to bail them out, but at issue is which ones get bailed out first and for how much? Will red states get more than blue states? Will big cities get a better piece of the pie than rural communities?
It's likely, actually, it's not only probable, but a near-certainty that any government bailout of cities, counties, and states will be as uneven as the handling of the first few rounds of government aid to private business and citizens. It's going to be a disaster of magnificent proportion because not only will the federal government take too long to deliver, they'll almost certainly deliver less than is necessary, and the help will be only temporary. There is no good way out. Like the companies who are being propped up by the Fed via purchasing of their commercial paper, the Fed can't stop at buying up muni bonds; it has to come in with actual cash to keep the lights on in every city, town, and village across America.
In the end, everything goes dark. While trying desperately to not sound like a broken record, Wall Street firms will fail, banks will fail, governments will fail, companies will die, people will die, but not until there's a massive outbreak of civil unrest, the first springs of that having already been seen in the "reopen" protests that have flourished at state capitols and elsewhere around the country.
As the coronavirus has proven to be less of a threat to human existence than previously thought, the feds and state governments continue to respond as though it is a return of the Bubonic Plague or Spanish Flu. It's not, and the response has been a massive overreach that has destroyed the economy and people's already wavering confidence in leadership and government. It has only just begun and the levels of protest, unruliness, incivility, lawlessness, and violence will only increase over time. When the extra unemployment insurance runs out in August and there are still 12-15 million people out of work, the cat will have come out of the bag, and it will be not a tame household kitty, but a hungry, untamed lion, set out to ravage the nearest prey, and that prey will be neighborhoods, local governments, and the unprotected. The resultant destruction to the social fabric will be devastatingly real and not just close to home, at your home or your neighbor's home or in it.
Not to put too fine a point on it, but it isn't COVID-19 that is screwing the country and the world, but the government reaction to it. As has already been made evident, government is not only not the solution, it is the problem itself.
Presently, the Fed has managed to keep the stock markets from imploding and possibly from shutting down altogether. They've actually managed to boost prices for many companies that should be heading to the bankruptcy courts rather than to the Fed's liquidity spigot. Since April 8, all the major indices have traded in a well-defined range, an overt signal that the Fed is in charge, keeping the markets stable while the VIX remains elevated. It's a manipulation and a thorough destruction of capital markets. Stocks and bonds are effectively controlled by government now, and thus, are DOA.
While stocks were reaching for yet another giddy day in their make-believe land of rich and plenty, General Motors (GM), at one time a bastion of industry and a beacon of capitalism, a company the taxpayers bailed out a decade ago, announced on Monday that it was suspending its 38 cents quarterly dividend, halting the buyback of its own stock and bolstering its lines of credit. Gee, thanks, GM. Please turn the lights out before you close the door. GM should have been allowed to fail in 2008. Now they will just burn more cash, screw their investors and permanently dis-employ hundreds of thousands of workers in the auto business and its suppliers.
GM has about 164,000 full time employees including Chairwoman of the Board and CEO Mary Barra, whose pay last year was $7.36 million, not including stock options and other bonuses and benefits. Not only has she managed to completely decimate the company's balance sheet, but she's managed to raid the company coffers to her benefit. The company is likely to survive for a few more years, but, after bankruptcy proceedings, within four or five years, the number of full time employees will be zero, and Ms. Barra and all her hourly and salaried workers can compliment her on the bang-up job she'd done throughout the coronavirus crisis, culminating in the wholesale looting and destruction of the company.
With that news as a backdrop, GM tacked on half a point Monday, closing at 22.45 a share. The company publicly disclosed assets of 228 billion and liabilities of 182 billion. With the expectation that the assets are overvalued and liabilities on the rise, it won't be long until GM is permanently upside down. Give it six months before all hell breaks loose.
GM is not alone. Most companies are going to slash dividends, workers, expenses and tap into their lines of credit as the quarterly reports flow this month and next, but Wall Street seems to like the idea, rallying on Monday with futures ramping higher into Tuesday's opening.
This is what a dysfunctional market looks like.
On the day, treasuries acted as though the recovery had already begun, with the 30-year upping its yield from 1.17 to 1.25%, the 10-year note up seven basis points to 0.67% and the curve steepening to 114 basis points. When the curve falls to below 100 basis points (one percent), that will be the signal that the crisis is deepening.
Oil got whacked again on Monday, WTI crude dropping from its Friday close of $16.94 per barrel to $10.76. Gold and silver were up early down late on futures trading, but that doesn't matter since physical is still elusive and premiums are through the roof, up to $135 on an ounce of gold, as much as $7.00 or more on silver.
Dominoes are falling. Get out of the way. Within six months, there will be more zombie companies, zombie banks, zombie governments and zombie people, all kept alive by the Federal Reserve. Unlike vampires, which can be killed with silver bullets or stakes to the heart, the only way to kill zombies is to blow off their heads.
Ready, aim...
At the Close, Monday, April 27, 2020:
Dow: 24,133.78, +358.51 (+1.51%)
NASDAQ: 8,730.16, +95.64 (+1.11%)
S&P 500: 2,878.48, +41.74 (+1.47%)
NYSE: 11,264.84, +246.94 (+2.24%)
Showing posts with label Bailout. Show all posts
Showing posts with label Bailout. Show all posts
Tuesday, April 28, 2020
Tuesday, March 19, 2013
Cypriot Parliament Rejects Savings Levy; EU, ECB, IMF Relent
Congrats to the Cyprus parliament for calling the bluff on the EU, ECB and the IMF.
Shortly after noon EDT, the Cypriot parliament voted unanimously - in a rare show of anti-Euro solidarity - to reject the bailout plan proposed by the "troika" (EU, ECB, IMF) that would have imposed a tax on savers, a stark violation of the rule of law.
The plan called for a 9.9% tax on savings accounts in banks with holdings of more than 100,000 Euros, and a 6.5% levy on those under the 100,000 Euro threshold.
The vote had been delayed for two days, but, in the end, the parliament stood up for the welfare of the people and the sanctity of personal property rights, or, could it have been a reaction to a very real threat from retaliation from Russian oligarchs and mobsters (recognized as one and the same, in some circles)?
Much of the billions of Euros on deposit in Cypriot banks belong to Russians, a fact not lost on those who had the fate of their country and countrymen in their hands.
Whatever the case, the troika's gambit to impose a tax on savings accounts went up in flames, fabulously, though one has to fear that this was more of a test run for a future raid on the money held by individuals and companies in banks across Europe. So deep was the opposition that the parliament rejected the plan in toto, sending the ECB and IMF back to the drawing board.
The EU quickly issued a statement to the effect that it would use existing means to bailout the banks in Cyprus, and with them, the bankrupt government. Though nothing material was offered right away, all in Europe know that whatever solution the troika devises will be austere toward the general populace and kind to banks.
In the end, it will be the people who suffer most, as it has been in Greece, Portugal, Ireland and, to a lesser extent, Spain and Italy.
At one point during the back-and-forth of memos and media bites, one of the EU finance ministers quipped that Europe was two-thirds of the way through the crisis. Skeptics of the overall viability of the European Union will note that using 2008 as a baseline, the year 2014 would serve as an end to the crisis, otherwise meaning the collapse of the EU and the end of the Euro as a multi-national currency.
It doesn't get any stranger than in Europe, the dystopian nightmare conceived as a method to compete on a global scale which has devolved rapidly into an Orwellian series of meetings, dictums, bailouts, trial runs and sovereign failures.
America took the drama in stride, the markets stumbling through the early part of the session only to rally in the afternoon, though the crisis in Cyprus is still far from over. This was only act one of what will certainly be a three-to-five piece performance.
While it may be back to normal (whatever that means) for US and global markets for the next few days, the FOMC meeting of the Fed wraps up tomorrow at 2:00 pm EDT and the budget battle in the US congress continues to gain pace, with the Senate and House bills far from resolution.
As usual, congress will be out of session beginning March 25, though it must pass a continuing resolution by the 27th in order to forestall a government shutdown due to lack of funding. As in Europe, the nefarious machinations of government are never without a dramatic deadline. Thus, the remainder of the week will shift focus from the tiny island nation of Cyprus to the secluded denizens within the halls of congress.
For now...
Dow 14,455.82, +3.76 (0.03%)
NASDAQ 3,229.10, -8.49 (0.26%)
S&P 500 1,548.34, -3.76 (0.24%)
NYSE Composite 9,018.73, -26.71 (0.30%)
NASDAQ Volume 1,648,331,375
NYSE Volume 3,809,744,750
Combined NYSE & NASDAQ Advance - Decline: 2643-3781
Combined NYSE & NASDAQ New highs - New lows: 313-42 (shrinkage)
WTI crude oil: 92.16, -1.58
Gold: 1,611.30, +6.70
Silver: 28.84, -0.031
Shortly after noon EDT, the Cypriot parliament voted unanimously - in a rare show of anti-Euro solidarity - to reject the bailout plan proposed by the "troika" (EU, ECB, IMF) that would have imposed a tax on savers, a stark violation of the rule of law.
The plan called for a 9.9% tax on savings accounts in banks with holdings of more than 100,000 Euros, and a 6.5% levy on those under the 100,000 Euro threshold.
The vote had been delayed for two days, but, in the end, the parliament stood up for the welfare of the people and the sanctity of personal property rights, or, could it have been a reaction to a very real threat from retaliation from Russian oligarchs and mobsters (recognized as one and the same, in some circles)?
Much of the billions of Euros on deposit in Cypriot banks belong to Russians, a fact not lost on those who had the fate of their country and countrymen in their hands.
Whatever the case, the troika's gambit to impose a tax on savings accounts went up in flames, fabulously, though one has to fear that this was more of a test run for a future raid on the money held by individuals and companies in banks across Europe. So deep was the opposition that the parliament rejected the plan in toto, sending the ECB and IMF back to the drawing board.
The EU quickly issued a statement to the effect that it would use existing means to bailout the banks in Cyprus, and with them, the bankrupt government. Though nothing material was offered right away, all in Europe know that whatever solution the troika devises will be austere toward the general populace and kind to banks.
In the end, it will be the people who suffer most, as it has been in Greece, Portugal, Ireland and, to a lesser extent, Spain and Italy.
At one point during the back-and-forth of memos and media bites, one of the EU finance ministers quipped that Europe was two-thirds of the way through the crisis. Skeptics of the overall viability of the European Union will note that using 2008 as a baseline, the year 2014 would serve as an end to the crisis, otherwise meaning the collapse of the EU and the end of the Euro as a multi-national currency.
It doesn't get any stranger than in Europe, the dystopian nightmare conceived as a method to compete on a global scale which has devolved rapidly into an Orwellian series of meetings, dictums, bailouts, trial runs and sovereign failures.
America took the drama in stride, the markets stumbling through the early part of the session only to rally in the afternoon, though the crisis in Cyprus is still far from over. This was only act one of what will certainly be a three-to-five piece performance.
While it may be back to normal (whatever that means) for US and global markets for the next few days, the FOMC meeting of the Fed wraps up tomorrow at 2:00 pm EDT and the budget battle in the US congress continues to gain pace, with the Senate and House bills far from resolution.
As usual, congress will be out of session beginning March 25, though it must pass a continuing resolution by the 27th in order to forestall a government shutdown due to lack of funding. As in Europe, the nefarious machinations of government are never without a dramatic deadline. Thus, the remainder of the week will shift focus from the tiny island nation of Cyprus to the secluded denizens within the halls of congress.
For now...
Dow 14,455.82, +3.76 (0.03%)
NASDAQ 3,229.10, -8.49 (0.26%)
S&P 500 1,548.34, -3.76 (0.24%)
NYSE Composite 9,018.73, -26.71 (0.30%)
NASDAQ Volume 1,648,331,375
NYSE Volume 3,809,744,750
Combined NYSE & NASDAQ Advance - Decline: 2643-3781
Combined NYSE & NASDAQ New highs - New lows: 313-42 (shrinkage)
WTI crude oil: 92.16, -1.58
Gold: 1,611.30, +6.70
Silver: 28.84, -0.031
Monday, December 3, 2012
"Cliff" Negotiations Going Nowhere; Wall Street Begins to Get the Message
Anybody who took the time to watch any of the Sunday morning comedy shows, otherwise known as "Meet the Press", "This Week" or "face the Nation could come to no other conclusion than the Democrats and Republicans were still miles apart on solutions to fixing issues pertaining to the "fiscal cliff" that has become the cause celebre in Washington, on Wall Street and just about everywhere else in America.
Alternating between Treasury Secretary Timothy Geithner, House majority leader, John Boehner and a parade of politicians, pundits and philosophers (notably, Grover Norquist), there was widespread agreement on one thing: that there was no middle ground upon which anybody was seen standing. The Democrats and Republicans are so far apart that the idea that there might not be a deal in time for all the Bush tax cuts to expire, sequestration of mandatory budget cuts would take place and the US economy - and with it the world - would fall into recession early in 2013.
It took Wall Street most of the day to figure out that a deal might not be forthcoming by the clowns they purchased in the last election cycle, a thought so pregnant with dire consequences that many in the (cough, cough) investment community might just be in denial on the topic.
By late afternoon, President Obama took his case to the Twitter-world, answering questions from his point of view. A little later, there was a counter-offer from Boehner's office, though it was much like the president's original proposal: having no chance of acceptance and merely a bargaining salvo, testing the waters, so to speak.
By the end of the day, there was some damage done, though it was nothing like what may occur should Wall Street types begin embracing the idea of actually plunging over the "cliff."
Incidentally, the Dow pooped out right at its 200-day moving average, especially in light of the somewhat stunning November ISM index, which drooped into contraction territory with a 49.5 reading, on expectations of 51.2. Naturally, hurricane Sandy was blamed for the bad read, though a number of analysts did not agree with that assessment, believing that Sandy might be responsible for 0.3 to 0.5 of the shortfall, which would still render a reading of 50, at best.
Spain requested a 39.5 billion euro bailout for its ailing banks, but fell short of making an official request for a sovereign bailout. In the best counterintuitive fashion, European stocks rallied and bond yields fell. Talk about denial! The Euros have that market cornered.
As the cliff diving enters a critical phase this week - because the politicians plan on making their escape from DC on the 14th of December, naturally, taking an extra week off on the taxpayer's dime - expect markets to get ever more jittery. Adding to the unusual noise, Friday's non-farm payroll report for November might rattle a few cages as well.
Dow 12,965.60, -59.98 (0.46%)
NASDAQ 3,002.20, -8.04 (0.27%)
S&P 500 1,409.46, -6.72 (0.47%)
NYSE Composite 8,223.54, -36.90 (0.45%)
NASDAQ Volume 1,666,248,500
NYSE Volume 3,060,504,000
Combined NYSE & NASDAQ Advance - Decline: 2307-3205
Combined NYSE & NASDAQ New highs - New lows: 213-44
WTI crude oil: 89.09, +0.18
Gold: 1,721.10, +8.40
Silver: 33.76, +0.48
Alternating between Treasury Secretary Timothy Geithner, House majority leader, John Boehner and a parade of politicians, pundits and philosophers (notably, Grover Norquist), there was widespread agreement on one thing: that there was no middle ground upon which anybody was seen standing. The Democrats and Republicans are so far apart that the idea that there might not be a deal in time for all the Bush tax cuts to expire, sequestration of mandatory budget cuts would take place and the US economy - and with it the world - would fall into recession early in 2013.
It took Wall Street most of the day to figure out that a deal might not be forthcoming by the clowns they purchased in the last election cycle, a thought so pregnant with dire consequences that many in the (cough, cough) investment community might just be in denial on the topic.
By late afternoon, President Obama took his case to the Twitter-world, answering questions from his point of view. A little later, there was a counter-offer from Boehner's office, though it was much like the president's original proposal: having no chance of acceptance and merely a bargaining salvo, testing the waters, so to speak.
By the end of the day, there was some damage done, though it was nothing like what may occur should Wall Street types begin embracing the idea of actually plunging over the "cliff."
Incidentally, the Dow pooped out right at its 200-day moving average, especially in light of the somewhat stunning November ISM index, which drooped into contraction territory with a 49.5 reading, on expectations of 51.2. Naturally, hurricane Sandy was blamed for the bad read, though a number of analysts did not agree with that assessment, believing that Sandy might be responsible for 0.3 to 0.5 of the shortfall, which would still render a reading of 50, at best.
Spain requested a 39.5 billion euro bailout for its ailing banks, but fell short of making an official request for a sovereign bailout. In the best counterintuitive fashion, European stocks rallied and bond yields fell. Talk about denial! The Euros have that market cornered.
As the cliff diving enters a critical phase this week - because the politicians plan on making their escape from DC on the 14th of December, naturally, taking an extra week off on the taxpayer's dime - expect markets to get ever more jittery. Adding to the unusual noise, Friday's non-farm payroll report for November might rattle a few cages as well.
Dow 12,965.60, -59.98 (0.46%)
NASDAQ 3,002.20, -8.04 (0.27%)
S&P 500 1,409.46, -6.72 (0.47%)
NYSE Composite 8,223.54, -36.90 (0.45%)
NASDAQ Volume 1,666,248,500
NYSE Volume 3,060,504,000
Combined NYSE & NASDAQ Advance - Decline: 2307-3205
Combined NYSE & NASDAQ New highs - New lows: 213-44
WTI crude oil: 89.09, +0.18
Gold: 1,721.10, +8.40
Silver: 33.76, +0.48
Tuesday, June 12, 2012
Welcome Back, Volatility: Miracle Market Melt-up
Noting that the markets in the US were markedly higher this (turnaround) Tuesday, one would generally assume that some of the conditions that caused Monday's share collapse had been addressed and causing markets and investors to return to a more benign trading regimen.
Such an assumption would be, of course, dead wrong, because nothing really changed overnight. In fact, one could even go so far as to suggest that issues regarding the bailout of Spain's insolvent banks - which loan money to the insolvent Spanish government - had actually worsened, in Europe, at least.
First, there's the widespread assumption that the 100 billion euro bailout was already a done deal. It's not; not by any means. The German parliament still has to pass legislation to approve whatever funding is made available, and by which facility.
Second, the deal was supposed to have no strings attached, i.e., Spain would not have to agree to any austerity measures or fiscal controls. After all the deal was for the banks, not the government. Not so fast, my friends. Germany wants some guarantees of fiscal control and Finland has also made overtures about the need for substantial collateral.
And, if those two points are not enough, Spain will have to finance some of the bank debt itself, which is the epitome of the twisted pretzel that is the Eurozone. The Spanish government will borrow money to loan to the banks, which in turn fund the government. It's like borrowing money to loan to a friend who loans you money to pay off your debt, and we all know how those kinds of schemes turn out.
Additionally, in the utmost of ironies, Italy, the next nation in line for a likely bailout, will be borrowing money at 6% to loan to Spain at 3%. Lovely. Apparently, the Italians have been taking in a bit too much vino and forgot their 4th grade math.
So, what really changed to reverse the one-day trend lower and turn it up a few notches? Algos, naturally, the computer software that takes care of more than 85% off all trades on a daily basis, were re-programmed for a risk-on event, even though none actually took place. Around about 10:30 am EDT, with the major averages stumbling into the red, the correct knobs were turned and presto! all was well again at the Wall Street Zombie Casino.
From that time-stamp until the close, it was nothing but champagne and roses. Whoopie! Of course, the underlying theme of day-trading in both stocks and options by the hedgies and brokerages in advance of Friday's quadruple-witching event may have had a little to do with today's wicked upside.
Therein we have the week's trading strategy: Short Monday, long Tuesday, short Wednesday, long Thursday, and Friday, you're on your own, because over the weekend, Greece will once again go to the polls to see if they can elect a government in a country that neither has one nor - in the rare event that it will - heeds its dictates.
Greece could go belly up and back to the drachma, go pro-Euro and stick with the asset-stripping austerity, or alternately devolve into complete anarchy or continue to function on a day-to-day basis, essentially going sideways and solving nothing. Whatever happens in Greece, one thing is for certain: it's not going to be the final solution.
There was something of a "tell" to today's trading that belied the effectiveness of the rally. New lows beat new highs nearly 2-1.
Party on!
Dow 12,573.80, +162.57 (1.31%)
NASDAQ 2,843.07, +33.34 (1.19%)
S&P 500 1,324.18, +15.25 (1.17%)
NYSE Composite 7,557.82, +98.55 (1.32%)
NASDAQ Volume 1,589,679,500
NYSE Volume 3,400,954,250
Combined NYSE & NASDAQ Advance - Decline: 4156-1436
Combined NYSE & NASDAQ New highs - New lows: 64-113
WTI crude oil: 83.32, +0.62
Gold: 1,613.80, +17.00
Silver: 28.95, +0.33
Such an assumption would be, of course, dead wrong, because nothing really changed overnight. In fact, one could even go so far as to suggest that issues regarding the bailout of Spain's insolvent banks - which loan money to the insolvent Spanish government - had actually worsened, in Europe, at least.
First, there's the widespread assumption that the 100 billion euro bailout was already a done deal. It's not; not by any means. The German parliament still has to pass legislation to approve whatever funding is made available, and by which facility.
Second, the deal was supposed to have no strings attached, i.e., Spain would not have to agree to any austerity measures or fiscal controls. After all the deal was for the banks, not the government. Not so fast, my friends. Germany wants some guarantees of fiscal control and Finland has also made overtures about the need for substantial collateral.
And, if those two points are not enough, Spain will have to finance some of the bank debt itself, which is the epitome of the twisted pretzel that is the Eurozone. The Spanish government will borrow money to loan to the banks, which in turn fund the government. It's like borrowing money to loan to a friend who loans you money to pay off your debt, and we all know how those kinds of schemes turn out.
Additionally, in the utmost of ironies, Italy, the next nation in line for a likely bailout, will be borrowing money at 6% to loan to Spain at 3%. Lovely. Apparently, the Italians have been taking in a bit too much vino and forgot their 4th grade math.
So, what really changed to reverse the one-day trend lower and turn it up a few notches? Algos, naturally, the computer software that takes care of more than 85% off all trades on a daily basis, were re-programmed for a risk-on event, even though none actually took place. Around about 10:30 am EDT, with the major averages stumbling into the red, the correct knobs were turned and presto! all was well again at the Wall Street Zombie Casino.
From that time-stamp until the close, it was nothing but champagne and roses. Whoopie! Of course, the underlying theme of day-trading in both stocks and options by the hedgies and brokerages in advance of Friday's quadruple-witching event may have had a little to do with today's wicked upside.
Therein we have the week's trading strategy: Short Monday, long Tuesday, short Wednesday, long Thursday, and Friday, you're on your own, because over the weekend, Greece will once again go to the polls to see if they can elect a government in a country that neither has one nor - in the rare event that it will - heeds its dictates.
Greece could go belly up and back to the drachma, go pro-Euro and stick with the asset-stripping austerity, or alternately devolve into complete anarchy or continue to function on a day-to-day basis, essentially going sideways and solving nothing. Whatever happens in Greece, one thing is for certain: it's not going to be the final solution.
There was something of a "tell" to today's trading that belied the effectiveness of the rally. New lows beat new highs nearly 2-1.
Party on!
Dow 12,573.80, +162.57 (1.31%)
NASDAQ 2,843.07, +33.34 (1.19%)
S&P 500 1,324.18, +15.25 (1.17%)
NYSE Composite 7,557.82, +98.55 (1.32%)
NASDAQ Volume 1,589,679,500
NYSE Volume 3,400,954,250
Combined NYSE & NASDAQ Advance - Decline: 4156-1436
Combined NYSE & NASDAQ New highs - New lows: 64-113
WTI crude oil: 83.32, +0.62
Gold: 1,613.80, +17.00
Silver: 28.95, +0.33
Monday, June 11, 2012
Spanish Bank Bailout Has Bad Odor; Week Ahead Looks Fascinating
Following last week's magnificent vapor rally on the lightest volume of the year, the new week started off gangbusters with news of a $125 billion (100 billion euros) bailout of insolvent Spanish banks sending US equity futures up on a sugar high prior to the opening bell.
Asia rallied strongly on the same news, followed by significant upside on the European exchanges. However, once Wall Street got a whiff of the real stench coming from Europe (Spain's bailout is hardly anything to cheer about; the loans from either the ESM or EFSF are uncertain and have not been approved by the German parliament, which is a must; Greece's elections loom on Saturday), it didn't take long for the best minds, algos and short sellers on Wall Street to sell the rally and start taking profits from last week's big run.
The Dow was up 96 points in a flash, but by 10:00 am EDT was already under the unchanged line, dragging down the other major indices with it. Stocks took a breather during the middle of the session, but, after 2:00 pm, it was pretty much all downhill, as investors went scurrying for cover in defensive stocks and treasuries.
Fear of the impending and eventual full retard global financial collapse were once again front and center, and, with good reason.
Whatever the euphoria over endless money printing out of thin air, be it by the US Federal Reserve, the ECB, China or any other nation, it appears that most people with sense have come to ignore it, at least, and abhor it, at worst. This same story has been playing since the fall of 2008 - throwing more debt at bad debt - and, since the Spanish banks were about the only suckers buying the debt of the Spanish government, recapitalizing them was just another in a long, futile line of can-kicking efforts, far from a real solution to the global crisis caused by long-term issuance of excessive debt.
The centrally-planned, central bank model of piling more bad debt upon already bad debt is coming to a furious conclusion and there seems to be nothing to prevent a complete reset of the world's capital structure. Hard line Keynesians continue to pretend that there's a way to avoid a catastrophic global meltdown, but the reality is that very little has been done thus far, and it's probably now too late to change tactics.
What has passed muster in the past now seems old hat, the results already known, that more bailouts and printing of money will not suffice; old, tried and true methods such as default, bankruptcy, selling off of remaining assets and new management of failed institutions - be they financial or governmental in nature - are the only prescriptions that will cure the ailing patient that is the global financial system.
There is already a great deal of talk circulating about subordination, of soured notes and bonds taking a back seat to newer issues. Spain's stock market, up nearly 6% early on, ended the day in the red and in tatters, the Spanish benchmark 10-year note yielding above 6.5%, a danger area. Greece's 10-year has already achieved escape velocity, with a yield of more than 28%, probably not even ample considering the risk. The Euro finished below 1.25 to the dollar, which is still 20-30% too high, crude was pounded down to eight-month lows, and a quadruple-witching day awaits markets on Friday.
It's either ironic or appropriate that rich and poor dads alike will have one more day in the sun on Father's Day, June 17, upon which day Greeks vote once again to try to form a government in an ungovernable situation. By this time next Monday, there may well have been a 500-point decline on the Dow, with Europe slitting apart at the seams, US and other developed nations exhibiting no growth and Italy waiting in the wings to be the next major casualty.
This week promises to be one of the most interesting - from a macro perspective - though, with more than $800 billion being pulled out of equities in the two years following the May 2010 "flash crash," there may not be anyone left around the trading floor to turn off the lights.
The entire mess has been the product of government gone fiscally wild and banks more than willing to take on excessive, often foolish risk over the years and into today. There comes a reckoning, and that day will arrive eventually, without fanfare or pretense. Then the planet will tremble as great swaths of wealth are obliterated by the same system that made the unrealistic promise of endless growth on a finite planet.
Volume was once again horrifyingly absent, breadth was extremely negative and new lows crept up on new highs after a brief reversal last week.
Dow 12,411.23, -142.97 (1.14%)
NASDAQ 2,809.73, -48.69 (1.70%)
S&P 500 1,308.93, -16.73 (1.26%)
NYSE Composite 7,459.29, -94.49 (1.25%)
NASDAQ Volume 1,477,944,250
NYSE Volume 3,383,333,500
Combined NYSE & NASDAQ Advance - Decline: 1206-4401
Combined NYSE & NASDAQ New highs - New lows: 144-94
WTI crude oil: 82.70, -1.40
Gold: 1,596.80, +5.40
Silver: 28.62, +0.15
Asia rallied strongly on the same news, followed by significant upside on the European exchanges. However, once Wall Street got a whiff of the real stench coming from Europe (Spain's bailout is hardly anything to cheer about; the loans from either the ESM or EFSF are uncertain and have not been approved by the German parliament, which is a must; Greece's elections loom on Saturday), it didn't take long for the best minds, algos and short sellers on Wall Street to sell the rally and start taking profits from last week's big run.
The Dow was up 96 points in a flash, but by 10:00 am EDT was already under the unchanged line, dragging down the other major indices with it. Stocks took a breather during the middle of the session, but, after 2:00 pm, it was pretty much all downhill, as investors went scurrying for cover in defensive stocks and treasuries.
Fear of the impending and eventual full retard global financial collapse were once again front and center, and, with good reason.
Whatever the euphoria over endless money printing out of thin air, be it by the US Federal Reserve, the ECB, China or any other nation, it appears that most people with sense have come to ignore it, at least, and abhor it, at worst. This same story has been playing since the fall of 2008 - throwing more debt at bad debt - and, since the Spanish banks were about the only suckers buying the debt of the Spanish government, recapitalizing them was just another in a long, futile line of can-kicking efforts, far from a real solution to the global crisis caused by long-term issuance of excessive debt.
The centrally-planned, central bank model of piling more bad debt upon already bad debt is coming to a furious conclusion and there seems to be nothing to prevent a complete reset of the world's capital structure. Hard line Keynesians continue to pretend that there's a way to avoid a catastrophic global meltdown, but the reality is that very little has been done thus far, and it's probably now too late to change tactics.
What has passed muster in the past now seems old hat, the results already known, that more bailouts and printing of money will not suffice; old, tried and true methods such as default, bankruptcy, selling off of remaining assets and new management of failed institutions - be they financial or governmental in nature - are the only prescriptions that will cure the ailing patient that is the global financial system.
There is already a great deal of talk circulating about subordination, of soured notes and bonds taking a back seat to newer issues. Spain's stock market, up nearly 6% early on, ended the day in the red and in tatters, the Spanish benchmark 10-year note yielding above 6.5%, a danger area. Greece's 10-year has already achieved escape velocity, with a yield of more than 28%, probably not even ample considering the risk. The Euro finished below 1.25 to the dollar, which is still 20-30% too high, crude was pounded down to eight-month lows, and a quadruple-witching day awaits markets on Friday.
It's either ironic or appropriate that rich and poor dads alike will have one more day in the sun on Father's Day, June 17, upon which day Greeks vote once again to try to form a government in an ungovernable situation. By this time next Monday, there may well have been a 500-point decline on the Dow, with Europe slitting apart at the seams, US and other developed nations exhibiting no growth and Italy waiting in the wings to be the next major casualty.
This week promises to be one of the most interesting - from a macro perspective - though, with more than $800 billion being pulled out of equities in the two years following the May 2010 "flash crash," there may not be anyone left around the trading floor to turn off the lights.
The entire mess has been the product of government gone fiscally wild and banks more than willing to take on excessive, often foolish risk over the years and into today. There comes a reckoning, and that day will arrive eventually, without fanfare or pretense. Then the planet will tremble as great swaths of wealth are obliterated by the same system that made the unrealistic promise of endless growth on a finite planet.
Volume was once again horrifyingly absent, breadth was extremely negative and new lows crept up on new highs after a brief reversal last week.
Dow 12,411.23, -142.97 (1.14%)
NASDAQ 2,809.73, -48.69 (1.70%)
S&P 500 1,308.93, -16.73 (1.26%)
NYSE Composite 7,459.29, -94.49 (1.25%)
NASDAQ Volume 1,477,944,250
NYSE Volume 3,383,333,500
Combined NYSE & NASDAQ Advance - Decline: 1206-4401
Combined NYSE & NASDAQ New highs - New lows: 144-94
WTI crude oil: 82.70, -1.40
Gold: 1,596.80, +5.40
Silver: 28.62, +0.15
Wednesday, October 12, 2011
Market Melt-up Continues for US Stocks
News from Europe that the Slovakian government would re-vote on extending additional bailout funds to banks via the ESFS was like a sugar-coated treat to the childish cretins of the Wall Street investment community.
Shortly after the close of markets in the US yesterday, the Slovakian parliament became the only one of 17 countries to turn down the additional relief package proposal, sending shock waves throughout the EU and the rest of the financial universe. The package needed the approval of all members. Within minutes, however, there was talk of a deal on a re-vote, paving the way for a steady flow of funds to repair badly-damaged and close to insolvent European banks which have bourn the brunt of rolling bailouts to Greece, Ireland, Portugal and soon, Spain and Italy.
There was widespread optimism that the Slovak parliament would rework the proposal to fit their agenda and save Europe from imminent collapse. As has been the case for so long with all things Euro-related, the overseeing body of the European Union (EU) and the European Central Bank (ECB), a slight shift or change in the rules always seems to be the tonic whereby the Euro remains a "viable" currency and staves off the collapse, first, of Greece, and eventually the entire structure upon which the Euro currency is based.
With such confidence that European leaders would tread along the same path upon which the US staved off financial armageddon in 2008 after the Lehman Bros. bankruptcy, stocks were sent higher throughout the session, assured that the classic Ponzi scheme of international finance has finally gone global.
Along that line of thinking, John Embry, Chief Investment Strategist of Sprott Asset Management, said, in an interview with King World News, that stocks could decline by 40% if the European crisis turns into a repeat of 2008, and added, "I think investors have to be aware of the degree of manipulation in all of the markets here and not make the mistake of being momentum players. They shouldn’t just try to go with what is working and jump on board because a lot of this is manufactured for the sake of appearances."
Exactly. Global leaders don't want to see another major disruption like that of 2008, because their main concern is holding onto the reins of power they have secured, even if it means lying about where money is coming from, going to, bank balance sheets, stress tests and just about everything else if it means they get to keep their high posts.
While banks and the people who run them are most responsible for economic calamities over the past few years, politicians share much of the blame, enabling the ill-conceived schemes of the financial class with endless bailouts, ruses and guarantees while much of the global economy is reduced to a pile of worthless, paper rubble.
There was some late-day selling - a chink in the globalist armor and yet another indication of manipulated markets as there was no move to quiet the rally - and stocks finished with only about half of the gains racked up over the session. For instance, the Dow Jones Industrials were up by 209 points at about 2:30 pm, but closed with a gain of just 102. It pays to be a tape watcher these days, as waves of both buying and selling can occur at any time on any given day, no matter the news.
Only on major company reported earnings after Alcoa kicked off 3Q earnings season with a substantial miss on income Tuesday. PepsiCo (PEP) reported before the open that it had earned 1.31 per share after some one-time items, beating the Street estimates by a penny. The gains were largely attributed to Pepsi's aggressive pricing policy in which the company boosted prices around the world on its popular soft drink and snack brands.
Therein lies the conceit and thinly-veiled deceit of Wall Street. PepsiCo saw margin compression in the quarter, as operating margin narrowed to 16.5 percent from 18 percent a year earlier. Earnings for the giant company - with revenue approaching $18 billion in the quarter - have been mostly flat for the past year. Price increases, workforce reductions, cost-cutting and balance sheet shenanigans are what drives this company these days. Growth is largely the result of internal manipulations, not market share increases. Over the past five years, growth has slowed to a mediocre 5.87% per year, though making even that low level over the past few years has been difficult.
Dow 11,518.85, +102.55 (0.90%)
NASDAQ 2,604.73, +21.70 (0.84%)
S&P 500 1,207.25, +11.71 (0.98%)
NYSE Composite 7,263.69, +102.43 (1.43%)
NASDAQ Volume 1,998,280,250
NYSE Volume 5,355,361,000
Combined NYSE & NASDAQ Advance - Decline: 5250-1511
Combined NYSE & NASDAQ New highs - New lows: 41-35 (a reversal, which should not last)
WTI crude oil: 85.57, -0.24
Gold: 1,682.60, +21.60
Silver: 32.79, +0.79
Shortly after the close of markets in the US yesterday, the Slovakian parliament became the only one of 17 countries to turn down the additional relief package proposal, sending shock waves throughout the EU and the rest of the financial universe. The package needed the approval of all members. Within minutes, however, there was talk of a deal on a re-vote, paving the way for a steady flow of funds to repair badly-damaged and close to insolvent European banks which have bourn the brunt of rolling bailouts to Greece, Ireland, Portugal and soon, Spain and Italy.
There was widespread optimism that the Slovak parliament would rework the proposal to fit their agenda and save Europe from imminent collapse. As has been the case for so long with all things Euro-related, the overseeing body of the European Union (EU) and the European Central Bank (ECB), a slight shift or change in the rules always seems to be the tonic whereby the Euro remains a "viable" currency and staves off the collapse, first, of Greece, and eventually the entire structure upon which the Euro currency is based.
With such confidence that European leaders would tread along the same path upon which the US staved off financial armageddon in 2008 after the Lehman Bros. bankruptcy, stocks were sent higher throughout the session, assured that the classic Ponzi scheme of international finance has finally gone global.
Along that line of thinking, John Embry, Chief Investment Strategist of Sprott Asset Management, said, in an interview with King World News, that stocks could decline by 40% if the European crisis turns into a repeat of 2008, and added, "I think investors have to be aware of the degree of manipulation in all of the markets here and not make the mistake of being momentum players. They shouldn’t just try to go with what is working and jump on board because a lot of this is manufactured for the sake of appearances."
Exactly. Global leaders don't want to see another major disruption like that of 2008, because their main concern is holding onto the reins of power they have secured, even if it means lying about where money is coming from, going to, bank balance sheets, stress tests and just about everything else if it means they get to keep their high posts.
While banks and the people who run them are most responsible for economic calamities over the past few years, politicians share much of the blame, enabling the ill-conceived schemes of the financial class with endless bailouts, ruses and guarantees while much of the global economy is reduced to a pile of worthless, paper rubble.
There was some late-day selling - a chink in the globalist armor and yet another indication of manipulated markets as there was no move to quiet the rally - and stocks finished with only about half of the gains racked up over the session. For instance, the Dow Jones Industrials were up by 209 points at about 2:30 pm, but closed with a gain of just 102. It pays to be a tape watcher these days, as waves of both buying and selling can occur at any time on any given day, no matter the news.
Only on major company reported earnings after Alcoa kicked off 3Q earnings season with a substantial miss on income Tuesday. PepsiCo (PEP) reported before the open that it had earned 1.31 per share after some one-time items, beating the Street estimates by a penny. The gains were largely attributed to Pepsi's aggressive pricing policy in which the company boosted prices around the world on its popular soft drink and snack brands.
Therein lies the conceit and thinly-veiled deceit of Wall Street. PepsiCo saw margin compression in the quarter, as operating margin narrowed to 16.5 percent from 18 percent a year earlier. Earnings for the giant company - with revenue approaching $18 billion in the quarter - have been mostly flat for the past year. Price increases, workforce reductions, cost-cutting and balance sheet shenanigans are what drives this company these days. Growth is largely the result of internal manipulations, not market share increases. Over the past five years, growth has slowed to a mediocre 5.87% per year, though making even that low level over the past few years has been difficult.
Dow 11,518.85, +102.55 (0.90%)
NASDAQ 2,604.73, +21.70 (0.84%)
S&P 500 1,207.25, +11.71 (0.98%)
NYSE Composite 7,263.69, +102.43 (1.43%)
NASDAQ Volume 1,998,280,250
NYSE Volume 5,355,361,000
Combined NYSE & NASDAQ Advance - Decline: 5250-1511
Combined NYSE & NASDAQ New highs - New lows: 41-35 (a reversal, which should not last)
WTI crude oil: 85.57, -0.24
Gold: 1,682.60, +21.60
Silver: 32.79, +0.79
Friday, June 3, 2011
At the End of the Day, Everyone Knew This Was Coming
With the 8:30 am release of the May Non-farm Payroll date from the Bureau of labor Statistics, the bad news - for which everyone in the world had been pre-conditioned by NBC, CNBC and any other reliable propagandist sources - was finally revealed.
Only 54,000 new jobs had been created by the great ponzi scheme, the unimaginative artificial stimulus and $600 trillion in fresh buckeroos since last September from Fed Chairman Ben Bernanke.
The Keynesian experiment can now be exposed as the colossal failure that it is, though already the talking heads, left-wing politicians and idiotic economists from the Ivy League's ivory towers are already suggesting that the slowness in job creation is merely a "soft patch" in the recovery.
It is nothing of the sort. The US economy is closer to a complete shutdown and recession than at any time since the grand collapse in the fall of 2008. Not only were the NFP numbers off by grotesque magnitudes of scale, any suggestion that conditions will improve over the summer - while the worst congress in the history of our nation idly postures over the debt ceiling and enormous deficits - is nothing short of hot, gaseous, noxious air, the kind most prevalent inside Washington DC's beltway.
Rather than belabor the obvious: that the economy is stuck in first gear, if not simply idling, it is time for Americans to come to grip with what we have. And that is an aging population living on borrowed time, borrowed money, false hope and remembrances of things past, without an industrial base, energy policy, sound money, honest markets nor anyone even remotely willing or able to fix them.
We are a hollow shell of a formerly great nation, put on its collective knees by a cabal of bankers and politicians whose only purpose has been personal gain and control, a control which they are rapidly losing. 17% of the country receives food stamps. More than half the country depends on some form of government check for their basic needs. The middle class has been relegated to numb consumers of foreign goods, many without jobs and those that have them living in abject fear of losing them.
Nobody except bankers get raises, educational standards have been lowers persistently over the past forty years, though that's hardly a problem since there is no steady employment for engineers, chemists, biologists, and a raft of other high-skilled fields of endeavor.
All of the economic numbers for the past month have been dismal, despite the government's best efforts to fudge, obfuscate or otherwise obscure the truth that we, as a nation, are smack dab in the middle of the worst depression in the country's history.
People are living in houses without paying mortgages for two, three and four years because the banks can't produce clear titles, the courts are overwhelmed even when they dispense justice properly, which is seldom, and the number of weeks spent on unemployment is now at an all-time high.
Housing values have plummeted to levels worst than during the Great Depression, gas is more than ten times as expensive as it was 40 years ago, new car sales, retail sales, industrial production, capacity utilization, factory orders and durable orders are beginning to fall off a cliff. Municipalities everywhere are struggling to close budget deficits, while pensions are underfunded and tax receipts are falling. About the only thing that isn't falling apart the amount of outright lying and deception delivered daily from the various mainstream news outlets, politicians and business leaders, some of whom have already jumped ship and are oopenly saying that another recession is on its way (considering the first one ever ended).
And that's the good news.
It's good news that all of this is finally getting to see the light of day, so that Americans can outrightly reject any and all new proposals, taxes, regulations, elections and instead stand for change.
This is A TRULY GREAT DAY FOR AMERICA AND FREE MARKET CAPITALISM...
because the jobs data and all the other bad data from the past three weeks show that central planning doesn't work. Bailouts of insolvent banks don't work. Giving taxpayer money to the richest people and foreign financial institutions doesn't work. Mark this day down because it is the date upon which Wall Street, the Fed and the federal government (throw in the mainstream media for good measure) are shown to be complete frauds, liars and cheats, absolutely unfit to serve the good people of America in any capacity.
America can and will survive. Watch for more of the following, strictly from the private sector:
Innovation
entrepreneurship
rent parties
barn raisings
barter clubs
independent contractors
tax evasion
home business
cottage industry
buy American!
back yard garden
handymen (and women)
underground economy
black markets
and forget the following:
mortgage payment
property tax increase (or any tax increase for that matter)
bank loans
TBTF (at least two of the big four BAC, JPM, WFC, C) will fail within a year
minimum wage
health insurance
The restructuring of America can begin apace! Get the insurance companies out of health care and let doctors earn their livings like they should, treating their patients individually.
National banks will become much smaller.
The Fed has to go.
Back to the gold standard or some semblance of sound money.
We can also repeal the minimum wage, along with severely limiting all the other employment regulations, like unemployment benefits, worker's comp, Social Security and medicare deductions, etc.
Start putting up WE WIN! signs and people will first think you're nuts, until they start seeing you living better than them by rejecting the status quo.
It's time to put away the idea that government can fix problems, because they simply create more of them, along with wars, fear, famine and homelessness and time for Americans to do what they have always done in times of crisis: stand up individually and take control of your lives.
Stocks tumbled again, on low volume, but it could have been worse. Since the poor jobs number was telegraphed by the ADP report, much of the selling was already well underway on Wednesday. Today's figures were mostly priced in, though since there's almost no participation by individual investors at this point, the big, controlling interests can hold a while longer and take stocks down as they please. Wall Street has been and now is completely irrelevant. One could do better stuffing dollars into mattresses than taking a flyer on the various stock offerings being kicked about.
Th Dow Jones Industrial Average fell for the fifth consecutive week, the largest expanse of time for continuous losses since 2004, and it doesn't look like it's going to end any time soon. Stocks are probably 30-40% overvalued at this juncture, and a crash is dead ahead.
Dow 12,151.26, -97.29 (0.79%)
NASDAQ 2,732.78, -40.53 (1.46%)
S&P 500 1,300.16, -12.78 (0.97%)
NYSE Composite 8,222.15, -55.61 (0.67%)
Declining issues buried advancers, 4809-1792. NASDAQ new highs totaled 31, while there were 82 new lows. ON the NYSE, 37 new highs did not measure up to 48 new lows. Combined, there were 68 new highs and 130 new lows. The most reliable leading long-term trend indicator - highs-lows - has been flashing signs of reversal for months. This should be the tipping point after which the direction will be identified undeniably as straight down. As long as new lows outweigh new highs for a period of more than about six to eight trading days, there is virtually no way to reverse the trend. It also will be telling if the gap between the highs and lows continues to widen. Even as such, the Dow has already shed 657 points from its nominal high, reached exactly one month ago today. The turnover in the highs-lows is just now confirming the trend despite desperate pumping, dumping and priming by manipulative stock insiders.
NASDAQ Volume 1,908,014,125
NYSE Volume 4,028,291,000
The commodities markets were a tragi-comedy of denial that global deflation has ensued. All manner of commodities fell sharply in the morning, only to be ramped back up in the afternoon. Crude oil fell by a laughable eleven cents! to close at an abysmally-overpriced and speculatively-inflated $100.22.
Gold could not be held back, gaining $9.20, to $1543.00. Silver, despite being pushed down to near $35 early on, ended up 17 cents, at $36.32.
At least the weather is better. This is by no means over. Rather, a collapse worse than 2008 is already in the cards, though not represented in prices. The sum of all fears is on its way and it will be deflationary, desperate and lasting for more than a generation.
Only 54,000 new jobs had been created by the great ponzi scheme, the unimaginative artificial stimulus and $600 trillion in fresh buckeroos since last September from Fed Chairman Ben Bernanke.
The Keynesian experiment can now be exposed as the colossal failure that it is, though already the talking heads, left-wing politicians and idiotic economists from the Ivy League's ivory towers are already suggesting that the slowness in job creation is merely a "soft patch" in the recovery.
It is nothing of the sort. The US economy is closer to a complete shutdown and recession than at any time since the grand collapse in the fall of 2008. Not only were the NFP numbers off by grotesque magnitudes of scale, any suggestion that conditions will improve over the summer - while the worst congress in the history of our nation idly postures over the debt ceiling and enormous deficits - is nothing short of hot, gaseous, noxious air, the kind most prevalent inside Washington DC's beltway.
Rather than belabor the obvious: that the economy is stuck in first gear, if not simply idling, it is time for Americans to come to grip with what we have. And that is an aging population living on borrowed time, borrowed money, false hope and remembrances of things past, without an industrial base, energy policy, sound money, honest markets nor anyone even remotely willing or able to fix them.
We are a hollow shell of a formerly great nation, put on its collective knees by a cabal of bankers and politicians whose only purpose has been personal gain and control, a control which they are rapidly losing. 17% of the country receives food stamps. More than half the country depends on some form of government check for their basic needs. The middle class has been relegated to numb consumers of foreign goods, many without jobs and those that have them living in abject fear of losing them.
Nobody except bankers get raises, educational standards have been lowers persistently over the past forty years, though that's hardly a problem since there is no steady employment for engineers, chemists, biologists, and a raft of other high-skilled fields of endeavor.
All of the economic numbers for the past month have been dismal, despite the government's best efforts to fudge, obfuscate or otherwise obscure the truth that we, as a nation, are smack dab in the middle of the worst depression in the country's history.
People are living in houses without paying mortgages for two, three and four years because the banks can't produce clear titles, the courts are overwhelmed even when they dispense justice properly, which is seldom, and the number of weeks spent on unemployment is now at an all-time high.
Housing values have plummeted to levels worst than during the Great Depression, gas is more than ten times as expensive as it was 40 years ago, new car sales, retail sales, industrial production, capacity utilization, factory orders and durable orders are beginning to fall off a cliff. Municipalities everywhere are struggling to close budget deficits, while pensions are underfunded and tax receipts are falling. About the only thing that isn't falling apart the amount of outright lying and deception delivered daily from the various mainstream news outlets, politicians and business leaders, some of whom have already jumped ship and are oopenly saying that another recession is on its way (considering the first one ever ended).
And that's the good news.
It's good news that all of this is finally getting to see the light of day, so that Americans can outrightly reject any and all new proposals, taxes, regulations, elections and instead stand for change.
This is A TRULY GREAT DAY FOR AMERICA AND FREE MARKET CAPITALISM...
because the jobs data and all the other bad data from the past three weeks show that central planning doesn't work. Bailouts of insolvent banks don't work. Giving taxpayer money to the richest people and foreign financial institutions doesn't work. Mark this day down because it is the date upon which Wall Street, the Fed and the federal government (throw in the mainstream media for good measure) are shown to be complete frauds, liars and cheats, absolutely unfit to serve the good people of America in any capacity.
America can and will survive. Watch for more of the following, strictly from the private sector:
Innovation
entrepreneurship
rent parties
barn raisings
barter clubs
independent contractors
tax evasion
home business
cottage industry
buy American!
back yard garden
handymen (and women)
underground economy
black markets
and forget the following:
mortgage payment
property tax increase (or any tax increase for that matter)
bank loans
TBTF (at least two of the big four BAC, JPM, WFC, C) will fail within a year
minimum wage
health insurance
The restructuring of America can begin apace! Get the insurance companies out of health care and let doctors earn their livings like they should, treating their patients individually.
National banks will become much smaller.
The Fed has to go.
Back to the gold standard or some semblance of sound money.
We can also repeal the minimum wage, along with severely limiting all the other employment regulations, like unemployment benefits, worker's comp, Social Security and medicare deductions, etc.
Start putting up WE WIN! signs and people will first think you're nuts, until they start seeing you living better than them by rejecting the status quo.
It's time to put away the idea that government can fix problems, because they simply create more of them, along with wars, fear, famine and homelessness and time for Americans to do what they have always done in times of crisis: stand up individually and take control of your lives.
Stocks tumbled again, on low volume, but it could have been worse. Since the poor jobs number was telegraphed by the ADP report, much of the selling was already well underway on Wednesday. Today's figures were mostly priced in, though since there's almost no participation by individual investors at this point, the big, controlling interests can hold a while longer and take stocks down as they please. Wall Street has been and now is completely irrelevant. One could do better stuffing dollars into mattresses than taking a flyer on the various stock offerings being kicked about.
Th Dow Jones Industrial Average fell for the fifth consecutive week, the largest expanse of time for continuous losses since 2004, and it doesn't look like it's going to end any time soon. Stocks are probably 30-40% overvalued at this juncture, and a crash is dead ahead.
Dow 12,151.26, -97.29 (0.79%)
NASDAQ 2,732.78, -40.53 (1.46%)
S&P 500 1,300.16, -12.78 (0.97%)
NYSE Composite 8,222.15, -55.61 (0.67%)
Declining issues buried advancers, 4809-1792. NASDAQ new highs totaled 31, while there were 82 new lows. ON the NYSE, 37 new highs did not measure up to 48 new lows. Combined, there were 68 new highs and 130 new lows. The most reliable leading long-term trend indicator - highs-lows - has been flashing signs of reversal for months. This should be the tipping point after which the direction will be identified undeniably as straight down. As long as new lows outweigh new highs for a period of more than about six to eight trading days, there is virtually no way to reverse the trend. It also will be telling if the gap between the highs and lows continues to widen. Even as such, the Dow has already shed 657 points from its nominal high, reached exactly one month ago today. The turnover in the highs-lows is just now confirming the trend despite desperate pumping, dumping and priming by manipulative stock insiders.
NASDAQ Volume 1,908,014,125
NYSE Volume 4,028,291,000
The commodities markets were a tragi-comedy of denial that global deflation has ensued. All manner of commodities fell sharply in the morning, only to be ramped back up in the afternoon. Crude oil fell by a laughable eleven cents! to close at an abysmally-overpriced and speculatively-inflated $100.22.
Gold could not be held back, gaining $9.20, to $1543.00. Silver, despite being pushed down to near $35 early on, ended up 17 cents, at $36.32.
At least the weather is better. This is by no means over. Rather, a collapse worse than 2008 is already in the cards, though not represented in prices. The sum of all fears is on its way and it will be deflationary, desperate and lasting for more than a generation.
Wednesday, October 6, 2010
QE2, TARP2 Signal Beginning of End for Global Currencies
The mortgage/foreclosure mess created and exacerbated by the banks is still news, big news, but in the long run it is only a symptom of what is really crushing the global economy, and the US in particular.
That would be the failure of unwinding the toxic debt created by the nation's largest banks in the most magnificent swindle in the history of the world that not only allowed the banks and financial institutions to not only profit from their spendthrift, shifty, illegal ways, but to profit from it and then to prop it up when the house of cards began to crumble.
A report from the IMF released yesterday, calls for more quantitative easing by central banks and another round of bailouts for impaired, decrepit banks amounting to another $4 Trillion wasted on the very entities that started the entire mess, calling the banks the "Achilles Heel" of global recovery.
With apologies to the great Achilles, the banks aren't only the heel (though one could maintain that the bankers are "heels"), but the head, neck, shoulders, chest, torso, arms, legs, hands and feet of the financial crisis. They are all of it and they need to be forced to own up to their liabilities, stop the mockery of accounting known as mark to model and head directly into receivership or, more appropriately, to bankruptcy courts.
Not that it isn't where they're headed anyway, but this evil, crooked gang of thieves populating the banks and the halls of congress must not be allowed to rape and pillage the global economy one more day. If there's any time that the US public should be taking to the streets in protest, it is now, or, whenever they try to sneak the next bailout by us, for they truly cannot announce it very publicly or loudly.
There should be a minimum one year moratorium on all foreclosures, evictions and repossessions. Naturally, that will crush the real estate industry, but, at some point, there has to be a mechanism for price discovery. All the mortgages sold during the years 2003-2007 should be examined, documented and written down or forgiven, mostly to alleviate the strain on the courts and the public, but more realistically because the vast majority of these loans were originated under false pretenses or have been or are being foreclosed upon fraudulently, or both.
The banks and the note-holders will take significant hits to their bottom lines, but none could be more deserving. It's certainly a better solution than what's gone on for the past three years, a la foreclosure gone wild. Keeping people in homes, in communities, whether they're paying rent or mortgages or whether they have jobs or don't is the first step toward restoring the nation to some semblance of wholeness, though admittedly, it may already be too late, the pain and suffering inflicted on people and the economy are severely deep wounds which will not heal overnight.
We must, as a people and a nation, take positive steps toward recovery and that begins with thre truth finally being told about the banks, and the crimes they've committed. Most of the hot-shots running the major banks should already be behind bars, but we must start now before the statutes of limitations begin to expire.
No more bailouts, no more quantitative easing and maybe no more Federal Reserve. The time has come that desperate solutions are the only answers to the desperate situation into which the banks and the government have put the nation.
Stocks were basically flat, despite a pumping of $5.5 billion this morning by the Fed in yet another POMO. This amounts to nothing less than QE on the cheap, funding the banks with fresh cash every few days because they simply cannot roll enough notes to keep them going.
Dow 10,967.65, +22.93 (0.21%)
NASDAQ 2,380.66, -19.17 (0.80%)
S&P 500 1,159.97, -0.78 (0.07%)
NYSE Composite 7,448.33, +14.15 (0.19%)
The markets remain chaotic, bifurcated, as is the case today. Decliners took out advancers, 3157-2552. There were 454 new highs to 33 new lows. Volume remained at depressed levels.
NASDAQ Volume 2,127,381,000
NYSE Volume 4,205,435,500
Crude oil lifted 41 cents, to $83.23, but the real story was in the precious metals, which continued to rise in explosive fashion. The latest print for gold was $1348.50, up $7.90, while silver added 30 cents to $23.17. Precious metals prices are moving in direct inverse action to the crumbling currencies of the major industrialized nations, as the race to the bottom ramps up to include the US, all of Europe, Japan and other major nations.
More will be posted about developments in the mortgage foreclosure miasma, since today's news is more than enough upon which to chew for one day. The threat of another round of bank bailouts - which didn't work the first time around - is simply incomprehensible. The global economy will not sustain it.
That would be the failure of unwinding the toxic debt created by the nation's largest banks in the most magnificent swindle in the history of the world that not only allowed the banks and financial institutions to not only profit from their spendthrift, shifty, illegal ways, but to profit from it and then to prop it up when the house of cards began to crumble.
A report from the IMF released yesterday, calls for more quantitative easing by central banks and another round of bailouts for impaired, decrepit banks amounting to another $4 Trillion wasted on the very entities that started the entire mess, calling the banks the "Achilles Heel" of global recovery.
With apologies to the great Achilles, the banks aren't only the heel (though one could maintain that the bankers are "heels"), but the head, neck, shoulders, chest, torso, arms, legs, hands and feet of the financial crisis. They are all of it and they need to be forced to own up to their liabilities, stop the mockery of accounting known as mark to model and head directly into receivership or, more appropriately, to bankruptcy courts.
Not that it isn't where they're headed anyway, but this evil, crooked gang of thieves populating the banks and the halls of congress must not be allowed to rape and pillage the global economy one more day. If there's any time that the US public should be taking to the streets in protest, it is now, or, whenever they try to sneak the next bailout by us, for they truly cannot announce it very publicly or loudly.
There should be a minimum one year moratorium on all foreclosures, evictions and repossessions. Naturally, that will crush the real estate industry, but, at some point, there has to be a mechanism for price discovery. All the mortgages sold during the years 2003-2007 should be examined, documented and written down or forgiven, mostly to alleviate the strain on the courts and the public, but more realistically because the vast majority of these loans were originated under false pretenses or have been or are being foreclosed upon fraudulently, or both.
The banks and the note-holders will take significant hits to their bottom lines, but none could be more deserving. It's certainly a better solution than what's gone on for the past three years, a la foreclosure gone wild. Keeping people in homes, in communities, whether they're paying rent or mortgages or whether they have jobs or don't is the first step toward restoring the nation to some semblance of wholeness, though admittedly, it may already be too late, the pain and suffering inflicted on people and the economy are severely deep wounds which will not heal overnight.
We must, as a people and a nation, take positive steps toward recovery and that begins with thre truth finally being told about the banks, and the crimes they've committed. Most of the hot-shots running the major banks should already be behind bars, but we must start now before the statutes of limitations begin to expire.
No more bailouts, no more quantitative easing and maybe no more Federal Reserve. The time has come that desperate solutions are the only answers to the desperate situation into which the banks and the government have put the nation.
Stocks were basically flat, despite a pumping of $5.5 billion this morning by the Fed in yet another POMO. This amounts to nothing less than QE on the cheap, funding the banks with fresh cash every few days because they simply cannot roll enough notes to keep them going.
Dow 10,967.65, +22.93 (0.21%)
NASDAQ 2,380.66, -19.17 (0.80%)
S&P 500 1,159.97, -0.78 (0.07%)
NYSE Composite 7,448.33, +14.15 (0.19%)
The markets remain chaotic, bifurcated, as is the case today. Decliners took out advancers, 3157-2552. There were 454 new highs to 33 new lows. Volume remained at depressed levels.
NASDAQ Volume 2,127,381,000
NYSE Volume 4,205,435,500
Crude oil lifted 41 cents, to $83.23, but the real story was in the precious metals, which continued to rise in explosive fashion. The latest print for gold was $1348.50, up $7.90, while silver added 30 cents to $23.17. Precious metals prices are moving in direct inverse action to the crumbling currencies of the major industrialized nations, as the race to the bottom ramps up to include the US, all of Europe, Japan and other major nations.
More will be posted about developments in the mortgage foreclosure miasma, since today's news is more than enough upon which to chew for one day. The threat of another round of bank bailouts - which didn't work the first time around - is simply incomprehensible. The global economy will not sustain it.
Thursday, March 26, 2009
Unchecked Greed Reigns Free
If you thought the 2 1/2-week-long rally had run out of gas - like yours truly - you were proven wrong on Thursday. The Masters of the Universe were at their level best once again, goosing stock positions throughout the day, but particularly in the final hour (just like yesterday, and many days before), when stocks added mightily to their already solid gains.
The Dow jumped nearly 100 points in the last hour, while the NASDAQ, which outperformed all other indices by a huge margin, added 28 additional points as the session drew to a close. It is apparent to any outside observer that greed has trumped fear over the short term. The Dow Jones Industrials have now climbed 1377 points since March 9, a span of 13 sessions.
The economic news of the day was pretty much in line with expectations. Unemployment roles hit a new record high, with another 652,000 Americans adding their names to the roles of the jobless. Final GDP figures for the 4th quarter of 2008 came in at -6.3%, better than the -6.6% some had expected. A number of companies reported better-than-expected earnings, Best Buy and Texas Instruments among them, though investors were snatching up shares of just abut anything that had a price attached to it, in a mad scramble to jump on the equity bandwagon.
If ever there was a textbook case for an overbought bear market rally, this surely is it, and while there may be no perceptible end in sight, the 8000 level, at which there is substantial resistance, is already within shouting distance. It should be pointed out, however, that this market knows nothing of support and resistance, commonly disregarding any resistance on the way up. The path back down ought to be particularly brutal, now that 90% of the public is convinced the worst is behind us, since there are there have been numerous gap-ups at various opens, and, as any chartist well knows, gaps always get filled.
But that's a lesson for another day. For now, any hint of the financial crisis, liquidity squeeze, deflationary spiral or housing crunch has given way to chants of "go, baby, go."
Dow 7,924.56, +174.75 (2.25%)
NASDAQ 1,587.00, +58.05 (3.80%)
S&P 500 832.86, +18.98 (2.33%)
NYSE Composite 5,230.53, +103.53 (2.02%)
Market internals were as unsurprising as the headline numbers. Advancing issues outnumbered decliners, 5180-1675, though new lows continued ahead of new highs, 117-36, though the numbers are closing ranks. Volume was very high once more, especially on the NASDAQ, which recorded one of the highest volume days of the year.
NYSE Volume 1,792,579,000
NASDAQ Volume 2,594,485,000
Crude oil continued to rise, up $1.57, to $54.34. Gold gained $4.20, to $942.20, while silver tagged along with a gain of 18 cents, to $13.62.
Noting the gains in stocks, as well as most commodities, it seems that throwing trillions of dollars at the markets in all manner of bailout, breakout, cram-down and stimuli, seems to be working. The economy is reflating at an incredible rate, so much so that the Fed should consider raising interest rates off their absurdly low emergency levels. Of course, they won't, until the American landscape is littered with currency.
The precious metals now appear to be even better investments than ever. With all asset classes rising in price, rather than an orderly deflation which would have occurred naturally, we will now have even more mal-valued investments in equities especially, backed by a currency that is losing value faster than a prostitute sheds her chastity.
People's 401k's ought to look much better by the end of the month. The S&P 500 has gained nearly 25% in the past 2 1/2 weeks, though all that extra loot in one's pension is surely going to be eaten up by the ravishes of taxation and inflation. Welcome to the new normal. You earn, you pay, you remain under the thumb. Enjoy it while you can.
The Dow jumped nearly 100 points in the last hour, while the NASDAQ, which outperformed all other indices by a huge margin, added 28 additional points as the session drew to a close. It is apparent to any outside observer that greed has trumped fear over the short term. The Dow Jones Industrials have now climbed 1377 points since March 9, a span of 13 sessions.
The economic news of the day was pretty much in line with expectations. Unemployment roles hit a new record high, with another 652,000 Americans adding their names to the roles of the jobless. Final GDP figures for the 4th quarter of 2008 came in at -6.3%, better than the -6.6% some had expected. A number of companies reported better-than-expected earnings, Best Buy and Texas Instruments among them, though investors were snatching up shares of just abut anything that had a price attached to it, in a mad scramble to jump on the equity bandwagon.
If ever there was a textbook case for an overbought bear market rally, this surely is it, and while there may be no perceptible end in sight, the 8000 level, at which there is substantial resistance, is already within shouting distance. It should be pointed out, however, that this market knows nothing of support and resistance, commonly disregarding any resistance on the way up. The path back down ought to be particularly brutal, now that 90% of the public is convinced the worst is behind us, since there are there have been numerous gap-ups at various opens, and, as any chartist well knows, gaps always get filled.
But that's a lesson for another day. For now, any hint of the financial crisis, liquidity squeeze, deflationary spiral or housing crunch has given way to chants of "go, baby, go."
Dow 7,924.56, +174.75 (2.25%)
NASDAQ 1,587.00, +58.05 (3.80%)
S&P 500 832.86, +18.98 (2.33%)
NYSE Composite 5,230.53, +103.53 (2.02%)
Market internals were as unsurprising as the headline numbers. Advancing issues outnumbered decliners, 5180-1675, though new lows continued ahead of new highs, 117-36, though the numbers are closing ranks. Volume was very high once more, especially on the NASDAQ, which recorded one of the highest volume days of the year.
NYSE Volume 1,792,579,000
NASDAQ Volume 2,594,485,000
Crude oil continued to rise, up $1.57, to $54.34. Gold gained $4.20, to $942.20, while silver tagged along with a gain of 18 cents, to $13.62.
Noting the gains in stocks, as well as most commodities, it seems that throwing trillions of dollars at the markets in all manner of bailout, breakout, cram-down and stimuli, seems to be working. The economy is reflating at an incredible rate, so much so that the Fed should consider raising interest rates off their absurdly low emergency levels. Of course, they won't, until the American landscape is littered with currency.
The precious metals now appear to be even better investments than ever. With all asset classes rising in price, rather than an orderly deflation which would have occurred naturally, we will now have even more mal-valued investments in equities especially, backed by a currency that is losing value faster than a prostitute sheds her chastity.
People's 401k's ought to look much better by the end of the month. The S&P 500 has gained nearly 25% in the past 2 1/2 weeks, though all that extra loot in one's pension is surely going to be eaten up by the ravishes of taxation and inflation. Welcome to the new normal. You earn, you pay, you remain under the thumb. Enjoy it while you can.
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