February Flush: Stocks Pounded As Worst Month Since January 2016 Ends

The Dow Industrials lost a total of just more than 1000 points for the month of February, which, on the surface, may sound like a big deal, but, in reality, it amounts to merely a four percent loss.

In other words, if one had $100,000 at the start of the month, it would be only $96,000 at the end. Not much to worry about, right?

Maybe so, but this month-long fall, rise, and fall had a number of interesting characteristics, and the supporting (or non-supporting) data is suggesting that whatever has shaken markets is not yet over, especially when the losses on the final day of the month were the fourth largest of the month and the biggest since the 1000+ point washout on February 8.

The entire month was marked by voracious levels of volatility. Out of 19 trading days, 15 featured closes more than 150 points higher or lower than in the previous session. Breadth continues to erode; Wednesday's advance-decline line showed losers outpacing gainers by a 5:2 margin. New 52-week lows are beginning to pile up while new highs are on the wane.

Economic data hasn't been very encouraging. Today's second revision of 4th quarter 2017 GDP came in at 2.5%, slightly lower than the 2.6% reported in January. New and existing home sales have slumped for two consecutive months, and today's Chicago's PMI reading of 61.9, was a six-month low, down from 65.7 in January.

Inflation appears to be picking up steam in some areas, slipping in others, and bond yields remain elevated in the near term. With the Fed set to raise the federal funds rate in March, there's little to make the case for a sustained continuation of the aging bull market, now approaching nine years since the Great Financial Crisis.

Wednesday's losses left the Dow down 4.6% from it's January all-time highs. It's not exactly a huge obstacle to overcome, but it's beginning to look more like a mountain than a molehill.

Dow Jones Industrial Average February Scorecard:

Date	Close	Gain/Loss	Cum. G/L
2/1/18	26,186.71	+37.32	+37.32
2/2/18	25,520.96	-665.75	-628.43
2/5/18	24,345.75	-1,175.21	-1,803.64
2/6/18	24,912.77	+567.02	-1,236.62
2/7/18	24,893.35	-19.42	-1,256.04
2/8/18	23,860.46	-1,032.89	-2288.93
2/9/18	24,190.90	+330.44	-1958.49
2/12/18	24,601.27	+410.37	-1548.12
2/13/18	24,640.45	+39.18	-1508.94
2/14/18	24,893.49	+253.04	-1255.90
2/15/18	25,200.37	+306.88	-949.02
2/16/18	25,219.38	+19.01	-930.01
2/20/18	24,964.75	-254.63	-1184.64
2/21/18	24,797.78	-166.97	-1351.61
2/22/18	24,962.48	+164.70	-1186.91
2/23/18	25,309.99	+347.51	-839.40
2/26/18	25,709.27	+399.28	-440.12
2/27/18	25,410.03	-299.24	-739.36
2/28/18	25,029.20	-380.83	-1120.19

At the Close, Wednesday, February 28, 2018:
Dow Jones Industrial Average: 25,029.20, -380.83 (-1.50%)
NASDAQ: 7,273.01, -57.35 (-0.78%)
S&P 500: 2,713.83, -30.45 (-1.11%)
NYSE Composite: 12,657.31, -161.91 (-1.26%)

End Of 3rd Quarter Comes With Window Dressing

Believe it or not, we're 3/4 through the year and with that Wall Street staged a rally Friday just to keep with the notion that the economy is at least strong enough (and well enough supported by the Federal Reserve) to warrant the buying of stocks with which to dress up tha many portfolios managed by multi-billion dollar funds.

Friday's economic data included numbers on personal income (up 0.2%), personal spending (flat... oops), core PCE prices (up 0.2%), Chicago PMI (54.2, ahead of forecasts) and the University of Michigan survey on consumer sentiment (91.2).

All right, then, everybody's content, including the Fed, which did not raise rates and won't until Decemebr at the earliest, if at all.

In this sweet spot economy, it's a numbers game and a day-trader's paradise. There's really no serious investment going on, just reshuffling of the deck of S&P 500 stocks to own.

The week was essentially flat, marginally to the upside, as the major averages just bounced between winning and losing all week long.

As Country Joe and the Fish might have said, "Whoopie! We're all gonna die."

Friday's Flash:
Dow Jones Industrial Average
18,308.15, +164.70 (0.91%)

NASDAQ
5,312.00, +42.85 (0.81%)

S&P 500
2,168.27, +17.14 (0.80%)

NYSE Composite
10,721.74, +78.22 (0.73%)

For the Week ended September 30:
Dow: +46.70 (+0.26%)
NASDAQ: +6.25 (+0.12%)
S&P 500: +3.58 (+0.17%)
NYSE Composite: +3.75 (+0.03%)

The End? Stocks Slammed Again; Economic Prospects for 2016 Appear Grim

What should have happened in 2008-09 may be beginning to happen now, in 2016. Investors should take losses, companies should go broke, and government apologists should have a "come to Jesus" moment and admit that they've been lying about the recovery for years.

There is and there has been no recovery. GDP has been stuck between one-and-a-half and two-and-a-half percent since the financial crisis (and that's if you believe government accounting). 2015 will be fortunate to register at two percent growth.

Meanwhile, wages are stagnant and falling, 95 million able-bodied Americans are not officially counted as part of the workforce. The middle class has been hollowed out by Wall Street greed, government over-taxation, and unrealistic government salaries and pensions that suck the life out of local and state budgets.

The jobs that made America great have long gone, shipped overseas to China and elsewhere, and now we are exacerbating our pitiful condition by allowing in more immigrants - legal and illegal - taking away the few jobs left for natural-born citizens.

Baby boomers are retiring, replaced by their dumbed-down progeny. Our national debt of nearly $19 trillion - and growing - is a universal disgrace. Meanwhile the Federal Reserve, in cahoots with the shiftless Treasury Department, debases our currency by print a full 40% of government expenditures.

The federal government wants to grab our guns, the states want to charge us rent - in the form of property taxes - on the property we own, and neither of them can balance their books. The American public is at a breaking point, through with political correctness, suspicious of a government that spies upon us, regulates us, lies to us and sends our kids to die in useless wars which are never won. The controlled mainstream media propagandizes and cajoles anyone who doesn't align properly with the official corporate-government-military line.

Truly, in the short history of our Republic, we are on the cusp of complete breakdown in finance, education, morals, and decency.

And, while the blame can be placed on the people itself, because we voted for the spineless, unaccountable elected officials who have led us to this point, it should fall on the shoulders of those doing the governing, the legislating, the ones who are routinely bribed to pass legislation that favors corporations over people, banks over homeowners, and diminishment of our rights and liberties over common sense.

Our current government is the most corrupt to ever inhabit the halls of congress and the White House, our state houses and our government mansions. Is it any wonder that only half of the people who can vote, do vote?

Wall Street insiders hold all the cards, and they're gradually folding them. The Dow Industrials, S&P 500 and NASDAQ were all lower by massive amounts again today, for the second time in three this year. If this is a portent of what's ahead for the rest of the year, the ride may not be bumpy at all, merely a slide into the mediocrity created by greed, failed, moronic policies of the Federal Reserve, all with the implicit consent of the government, a government that is not worth the support of the people.

The slow collapse of stocks that has been on display the first week of this year has already been gaining steam since prior to last summer. Stocks peaked in late May and are 6-8% lower (depending on which index you choose) from their inflated high points. The Dow is down nearly 500 points in just three days this year and more than 850 points since the Fed decided, in their insipid, desperate desire, to raise interest rates mid-December.

Manufacturing, as measured by the ISM, has shown contraction for two consecutive months. US Services PMI dropped to 54.3 - the lowest since January 2015. ISM Services fell to 55.3, the lowest level since March 2014.

US factory orders for November fell 4.2% year-over-year, the 13th consecutive monthly drop. We are on the verge of a recession, in the middle of a depression. The emperor has no clothes and this time, with federal funds rates straining to hold between 0.25 and 0.50%, there is no place to hide.

If this isn't the end, it's getting pretty close. According to the most widely-accepted charting methods, stocks will enter a correction phase within a month, if not sooner. Corporate profits are falling, as companies cannot concoct any more accounting tricks to show even meager profits. Quarterly results are due out over the next three to four weeks and prospects for corporate earnings are poor. For retailers, energy stocks and consumer goods producers, the results - stemming from missing expectations for the holiday season and an oversupply of crude oil and distillates - might be devastating.

Stores are being shuttered in malls across the country and with them, marginal jobs which will not come back. The only bright spots are that inflation is nil, gasoline is cheap, and the winter, thus far, has been mild, at least in the heavily-populated Northeast.

Somehow, America will survive. However, the America of 2016 is a far cry from what the country was just 30 years ago, and a dim representation of what our Founding Fathers conceived.

S&P 500: 1,990.26, -26.45 (1.31%)
Dow: 16,906.51, -252.15 (1.47%)
NASDAQ: 4,835.76, -55.67 (1.14%)

Stocks, Gold Silver Beaten Mercilessly; Boo!

Pretty ugly day all around. In addition to stocks taking a hit, gold and silver were beaten down, as per usual whenever the elitist scum feels threatened.

Not much else to report except a ridiculous - to the upside - Chicago PMI report, which surged at the fastest rate in over 30 years.

Dow 15,545.75, -73.01 (0.47%)
Nasdaq 3,919.71, -10.91 (0.28%)
S&P 500 1,756.54, -6.77 (0.38%)
10-Yr Bond 2.54%, +0.02
NYSE Volume 3,825,998,000
Nasdaq Volume 2,187,464,000
Combined NYSE & NASDAQ Advance - Decline: 2193-3400
Combined NYSE & NASDAQ New highs - New lows: 240-69
WTI crude oil: 96.38, -0.39
Gold: 1,323.70, -25.60
Silver: 21.87, -1.116
Corn: 428.25, -2.00

First Half Boffo for Stocks, But Ends on a Stinker

As odd as the recent equity market has been, today's action ranked right up there in bizarro-land.

First, the Chicago PMI was leaked a few minutes early (which has been alleged to have happened at least twice in the past), sending stocks screaming lower. The 51.6 figure was well below estimates of 55.0, sending stocks to their lows of the day just after 10:00 am EDT, the Dow off by some 140 points. An hour later, however, all was forgotten and presumably forgiven, as the Dow briefly peaked above the flat line.

The remainder of the session had the NASDAQ modestly higher, the S&P hugging the unchanged mark and the Dow drifting about in the red.

That was until the very final minutes of the day, when the Russell 2000 rebalancing sent stocks screeching lower once again, all of the indices finishing near their lows, ending the first half of the trading year with a resounding thud.

Even though US stocks have out-performed just about every other asset class on the planet over the first six months of 2013, the last month has been quite the disappointment, June being the only down month of the year for the major averages, and the first down month for the Dow Industrials since November, 2012.

For the week, the Dow gained 110 points, down both Monday and Friday, while up sharply mid-week. The NASDAQ picked up 46 points for the week, while the S&P 500 added 13.85. Each of the indices closed out the month, the second quarter and the first half below their 50-day moving averages.

While gains in equities were easy to come by in the first half of the year, the second half holds many challenges, especially with many funds and big hitters already sitting on impressive gains. Most of the major brokerages have been diddling with second half projections, most of they of the rosy variety.

We shall see as the market opens with a holiday shortened week on July 1.

Gold reversed course from yesterday's manic selloff, while silver added more than 5% on the day, a possible market reversal for the precious metals.

Dow 14,909.60, -114.89 (0.76%)
NASDAQ 3,403.25, +1.38 (0.04%)
S&P 500 1,606.28, -6.92 (0.43%)
NYSE Composite 9,121.62, -21.94 (0.24%)
NASDAQ Volume 2,274,401,750
NYSE Volume 4,899,537,500
Combined NYSE & NASDAQ Advance - Decline: 3342-3116
Combined NYSE & NASDAQ New highs - New lows: 214-53
WTI crude oil: 96.56, -0.49
Gold: 1,231.30, +19.70
Silver: 19.57, +1.037

March Payrolls Huge Miss; Economy a Pack of Lies, Rolling Over

Let's just get one thing straight: there are lies, statistics and more lies in their interpretation, and even worse prevarication when it comes to market response.

When today's March Non-Farm Payroll data was rolled out at 8:30 am EDT - an hour prior to the opening bell - the response in the futures was automatic and immediate.

On expectations that the recovering US economy was to have produced 197,000 new jobs during the month, the actual number - 88,000 - was a miss of such enormous magnitude that it begs for perspective.

The miss was the worst since December 2009, when the economy was still taking baby steps toward said recovery and it was the lowest number of new jobs since June of last year. Incredibly, the unemployment rate fell to 7.6%, though this was due to 663,000 individuals dropping out of the labor force, sending the labor participation rate to 63.3%, the lowest level since 1979, with a record 90 million Americans (aged 16 and up) out of the labor force.

Surely with numbers like these, the United States is on a sustainable path... to complete disintegration, anarchy and poverty. There simply is no way to get around how poorly the economy is performing, a full five years and three months after it entered recession in December 2007, and four years after it supposedly exited that recession (June 2009).

Whether or not one believes we ever exited the Great Recession (or, as some call it, the Greater Depression) is merely a matter of semantics, the truth is that the economy has been and is going nowhere fast. Growth is a chimera, more statistical noise boosted by inflation; jobs have been hard to come by and those that are available are mostly of the entry-level, burger-flipping variety. Meanwhile, the Federal Reserve continues to pump $85 billion into the banking system each and every month, and still, nothing.

The talking heads on CNBC and Bloomberg tried to blame it on everything from the weather to the sequester to the tax increase imposed in January to, probably, the phase of the moon, but the reality is that we have structural issues that are generational, worldwide and widely the cause of the gross inequalities between rich and poor, with the crony capitalists - in cahoots with cheap, shiftless politicians - pushing more and more debt onto a system already overburdened with it.

Anyone who purports to tell you that the economy is improving, ask them how and why, and wait for the usual non-answers that housing is improving (it's not), that there are more jobs (marginally, there are, but not enough to keep up with population growth) or, the usual, "this is America, and we are great," complete failure response.

The stock market took a huge dive at the open, the Dow losing as many as 172 points, the S&P off by 21 and the NASDAQ down a whopping 58 points before the riggers came in and bid up the whole complex - especially ramping it in the final half hour - to close down with losses erased by roughly two-thirds.

We are in a sad, sorry state of affairs, when what used to be the most efficient, dynamic markets in the world are now nothing more than a crooked casino, run by oligarchs, bankers and unseen hands that are both out of control and above the law.

Significantly, gold and silver were both up sharply on the day, as the flight to safety finally made an appearance.

This economy is rolling over, like a sick patient who hasn't received the correct treatment. We're about to go into a tailspin that will make 2008 look like a casual stroll along the beach. The bankers, politicians and the media continues to spin the happy "recovery" meme, when all data shows the economy going in reverse. Data-wise, the US was a woeful 0-for-6 the past eight days, with the Chicago PMI missing the mark, along with the ISM index, the ISM services index, the ADP employment report, initial unemployment claims and finally, today's non-farm payrolls.

How many misses and bad data points will it take for the politicians to admit their policies are failures, the media to admit they are blind and the bankers admit they've been robbing common people blind since time immemorial?

Nobody should be holding their breath waiting, that's for sure.

Dow 14,565.25, -40.86 (0.28%)
NASDAQ 3,203.86, -21.12 (0.65%)
S&P 500 1,553.28, -6.70 (0.43%)
NYSE Composite 9,000.24, -27.59 (0.31%)
NASDAQ Volume 1,608,289,875
NYSE Volume 3,788,675,500
Combined NYSE & NASDAQ Advance - Decline: 2866-3582
Combined NYSE & NASDAQ New highs - New lows: 118-81
WTI crude oil: 92.70, -0.56
Gold: 1,575.90, +23.50
Silver: 27.22, +0.453

Cyprus Banks Re-Open; S&P Makes New All-Time High

Not certain which of these two historic events will eventually bear more weight, but the banks in Cyprus opened at noon (Cyprus time) on Thursday after being shuttered for more than two weeks and the S&P made an all-time closing high.

For investors, the S&P event is a watershed moment, capping a long bull run of just over four years that began at 666 on the index and now closes nearly 100 points better.

For the citizens of Cyprus, the events of the past two weeks and the reopening of the banks today will have great weight, but in the opposite direction. Now that the banking situation in the Mediterranean island nation are more or less "normalized" - with uninsured depositors (over 100,000 euros) likely to lose 40% or more of their deposits - and the country headed directly into a depression, the contagion, for now, limited, though anybody with large deposits in any European bank has to be walking on eggshells presently.

The limits for Cypriots are stiff: withdrawals from banks are limited to 300 euros per day; checks cannot be cashed, only deposited; leaving the island with more than 3000 euros is outlawed. Welcome to the Cyprus debt prison and hotel. Payrolls are exempt from limits as the banking officials want to see money circulating to some degree, though people will be surely more frugal in their spending habits.

The Dow closed at another record high and ends the quarter (Markets are closed Friday) up 11%, marking the best quarterly returns since 1998. The S&P was right behind, clocking a 10% return for the quarter.

As the market has shown throughout the four-year bull run, news doesn't matter; it's all good on Wall Street. The Chicago Purchasing Managers' Index fell to 52.4 in March, down sharply from the 56.8 reported in February.

Initial jobless claims also cam in worse than expected, rising to 357K, up from 341K in the prior week.

Monday is the start of a new month and a new quarter, as well as being April Fool's Day, which begs the question: who will be the fools, those who exited on the record high today or those looking to squeeze more gains out of the long-running bull market?

The highs on the S&P are nominal ones, slightly above levels hit in 2000 and 2007, more commonly known as a triple top.

It's never a good idea to buy high, because you're likely to end up selling lower, but it's really tough to bet against Ben Bernanke and the Fed printing presses churning out $85 billion a month in free money. The sprinters are far ahead at the moment, but investing is more of a marathon. And, don't forget, this rally has been built not only on quickly depreciating greenbacks but on horrifyingly low volume. Additionally, the advance-Decline line has been exhibiting much less breadth than one would normally associate with a raging bull.

Pick your poison, but don't keep all your eggs in one basket.

Happy Easter!

Dow 14,578.54, +52.38 (0.36%)
NASDAQ 3,267.52, +11.00 (0.34%)
S&P 500 1,569.19, +6.34 (0.41%)
NYSE Composite 9,106.83, +36.38 (0.40%)
NASDAQ Volume 1,555,418,875.00
NYSE Volume 3,481,085,250
Combined NYSE & NASDAQ Advance - Decline: 3865-2537
Combined NYSE & NASDAQ New highs - New lows: 557-32
WTI crude oil: 97.23, +0.65
Gold: 1,594.80, -11.40
Silver: 28.32, -0.289

Red Alert: Markets Leak Lower Second Straight Session

The 0.1% decline in fourth quarter 2012 GDP appears to have been taken a bit more seriously than first expected, as stocks fell for the second consecutive session on Thursday. Adding to the dour sentiment on the US economy, initial unemployment claims spiked to 368,000 after last week's multi-year low of 330,000 was seen as initially buoyant but now looks to be more of an aberration than a harbinger of things to come.

Stocks were higher in the morning, but drifted through the day, eventually ending lower despite a furious, failed attempt to paint the tape in the final ten minutes of trading. Of the major indices, only the NASDAQ was close to the break even mark, closing down fractionally.

Chicago PMI for January was a major surprise, coming in at 55.6 on expectations of 50.0%, but even this was not enough to bolster the markets.

The real story came in terms of personal income, which sported a gain of 2.6% in December, a boon for the average consumer, a bane for business, but overall, likely a wash, as the reading was prior to government's decision to roll back the temporary cut in Social Security deductions. Wage earners are seeing less in their paychecks while oil, fuel and food are beginning to show signs of ramping up in price, a formula not apparently anticipated by by the Fed/government/business brian trust which wants to control everything from guns, to stock prices to health insurance premiums.

There's an eventuality about all of this control-orientation that reeks of collapse, anarchy and non-compliance from the general populace. If not for food stamps, rent subsidies and other socialist mechanisms polluting the formerly-free markets, the economy would have been dead and buried long ago.

As for the skimmers on Wall Street, their attempts to manage the markets lower amid weakening expectations are, for now, succeeding, though on this final day of trading in January - one of the best months ever for stocks - there was little in the way of window dressing, the usual ritual of fund managers seeking to impress clients.

With non-farm payroll data due out prior to Friday's opening bell, everything is on hold, though sentiment seems to be turning a bit more negative than usual. Estimates are for a net increase of 200,000 jobs created in December, after ADP reported a gain of 192,000 on Wednesday, counting only the private sector.

Washington's been eerily silent of late, supposedly getting down to work on immigration and possibly other pressing issues, but debate will soon liven over a budget, something congress and the president has failed to address for four years.

A big discrepancy in the Advance-Decline line - 3546-2897 - the opposite of what one would expected on a negative trading day, indicates that investors were busily unloading losers and scrambling for safety. Consumer stocks, in addition to energy, healthcare and transportation were the largest sector losers, with utilities and services the only sectors slightly positive.

Wall Street's tea leaves will tell more tomorrow, and if hiring was less than expected in December, downward pressure will remain in charge and perhaps be amplified.

Dow 13,860.58, -49.84 (0.36%)
NASDAQ 3,142.13, -0.18 (0.01%)
S&P 500 1,498.11, -3.85 (0.26%)
NYSE Composite 8,892.59, -11.73 (0.13%)
NASDAQ Volume 2,134,474,750
NYSE Volume 4,027,212,000
Combined NYSE & NASDAQ Advance - Decline: 3546-2897
Combined NYSE & NASDAQ New highs - New lows: 316-39
WTI crude oil: 97.10, -0.84
Gold: 1,663.80, -16.10
Silver: 31.42, -0.60

May Finishes Badly; PMI Weakest in Over Three Years

Considering the crush of bad data that the markets encountered this morning, today's marginal negative close was something of a marvel. In fact, had stocks not taken an abrupt U-turn in the final 20 minutes of trading, one could have said that markets were ignoring the headlines.

As a whole, the month of May was about as dismal as has been seen since the aftermath of the '08 collapse. Both the S&P 500 and the Dow were down roughly 6%, wiping out most of the gains of the year. Energy, financials and materials were the three hardest hit sectors. Crude oil took more than a 17% haircut during the month, putting it technically in a bear market.

The five positive days on the Dow for the month was the worst for May since 1969 and the 17 down days bettered a May mark dating back to 1956.

Among the data releases from the morning that set the overall tone for the US markets were the announced job cuts in May, that jumped 67% from a year ago according to Challenger, Gray & Christmas, the 133K private sector jobs created in the month - 24,000 lower than the estimate - according to ADT, 383K initial unemployment claims, and a drop in the second estimate of first quarter GDP to 1.9% from the 2.2% previously supplied.

All of those releases were prior to the opening bell, but at 10:00 am EDT the hammer hit the market hard, as the Chicago PMI dropped from 56.2 in April to a current reading of 52.7, the worst showing since September 2009.

With that announcement, stocks did a face-plant, with all of the major indices falling quickly to the lows of the day. There was no sign of capitulation, that likely being saved for Friday's non-farm payroll report, which has all investors walking on eggs this week.

Taking the bad economic news in usual shrugging-off fashion, stocks climbed back to positive territory - except for the NASDAQ which was down all day - nearing the close, but fell apart at the end, finishing May with one of the worst performances on record, the major indices clinging to smallish gains for the year and the major averages resting just above their 200-day moving averages.

With prospects for a robust reading on jobs from the BLS not encouraging, Friday appears to be shaping up as a make or break session, notwithstanding issues ranging from Europe to bank downgrades on the horizon.

The 10-year bond fell to another historic low, closing with a yield of 1.57%, indicative of a flight to safety as investors worry about recession in Europe and how a slowdown there will affect US firms, many of which derive a significant portion of their revenues from the crumbling continent. Also under consideration are how the continued crisis in Europe will affect US banks, some of which have significant exposure to various countries in the Eurozone.

Crude oil continued its relentless slide, hitting its lowest price level in seven months and down 17% in May alone. Oil futures have entered a bear market, more than 20% off their highs, a condition drivers can only celebrate, as the national average price of retail gas at the pump is down to $3.62 per gallon according to AAA's fuel gauge report.

With May out of the way, tomorrow's 8:30 am EDT announcement on payrolls could be a make-or-break event for markets teetering on the brink.

Dow 12,393.45, -26.41 (0.21%)
NASDAQ 2,827.34, -10.02 (0.35%)
S&P 500 1,310.33, -2.99 (0.23%)
NYSE Composite 7,464.45, -6.95 (0.09%)
NASDAQ Volume 2,090,245,500
NYSE Volume 4,434,600,000
Combined NYSE & NASDAQ Advance - Decline: 2760-2984
Combined NYSE & NASDAQ New highs - New lows: 73-213
WTI crude oil: 86.53, -1.29
Gold: 1,562.60, -0.80
Silver: 27.76, -0.23

Reality Bites: Stock Charts Hit with Deflation Ugly Stick

One look at any of today's major index charts - or European charts, for that matter - tells the real story of the world economy and the overall effects of globalization, fiat money and constant Keynesian-modeled tinkering.

Down at the open and no chance of a rally at any point was the order of the day. Markets were completely flattened following Tuesday's slap-happy, bogus insider ramp job. With any luck, the same traders and rich, brassy speculators who made a few ducats on the way up yesterday are upside-down today.

While US markets were royally screwed, European bourses were overwhelmingly slammed to earth, with the major indices whacked more than 1.75%, led downward by the CAC 40, smashed a whopping 2.24% as the EUR/USD sank below 1.24 on its inexorable path to parity and then, extinction.

All indications from not just today's trade, but the overall tenor of markets since the end of April, are that Europe's crisis is not going to be solved easily, if at all. There's no hiding from the big stick of deflation, no crying in a deflationary spiral, except by the weak and unprepared, who deserve nothing but woe, destitution and poverty. May they take all of the major banking interests with them.

The carnage was unavoidable. The US 10-year note fell to an historic low yield of 1.62%, which, along with the German Bund, is headed for negative returns.

Whether or not this is coordinated end-game by the world's central bankers and our own small-minded Ben Bernanke, the siren's cry of lower prices has been heard loud and clear. By the end of fall or sooner, the entire charade should be over, for all intents and purposes. Adam Smith's invisible hand has given globalists the undeniable back-slap one receives for overindulgence, malinvestment and outright economic stupidity.

The pseudo-rally from the depths of 2008-09 is officially defunct and all that's left is picking up the pieces when everything crashes to the floor before falling into the abyss. It's almost as if the ancient tradition of the jubilee - in which all debts are forgiven - has been secretly woven into the fabric of modern economics. The crush of unpaid obligations will affect rich and poor alike. Only those with investments in useful machinery, arable land, real estate and precious metals will be spared, though their lot will no doubt be a difficult one.

Ordinary working class folk should be cheering the downfall of the tyrannical central banking regime, though anyone relying on pensions for retirement cushion should have already begun reordering their priorities. The last three-and-a-half years have been nothing more than a chance to prepare for the ultimate collapse of the global banking and sovereign state cabal and their over-leveraged, inflationist, dangerous, deadly ideas.

Resistance is futile against the wicked spiral of deflation, as it carries the weight of the world down with it, as derivatives are unwound and the banking and finance system breaks down. The worry is that governments will impose iron-fisted regimes and police states to quell the disquiet populace once the rioting begins, and it will, sure as day follows night.

As stocks tumbled, precious metals strengthened today, a significant development not seen in recent months and a trend almost certain to continue. Oil's drop continues and a plunge below $90/barrel today was an event long overdue. The world is absolutely glutted with the stuff as demand continues to plunge. Everything will be - or should be - cheaper as 2012 unfolds further.

The chaos should only worsen in this shortened week as the culmination is Friday's sure to be horrific non-farm payroll report. Tomorrow will afford an early sneak preview as ADT releases their private payroll data for May and hour and a quarter prior to the ringing of the bell at the Wall Street loser's casino. Additionally, Thursday will be heavy with data, with Challenger job cuts, initial unemployment claims and the second GDP estimate all due prior to US market opening. It should almost surely worsen from there forward with Chicago PNI and crude inventories guiding early-day trading.

It would require nothing short of divine intervention or an alien landing for the remainder of the week to be nothing short of a bloodbath.

Free houses for everyone! At least for those who need shelter and have a creative mind and two good hands with which to rebuild, that is.

Dow 12,419.86, -160.83 (1.28%)
NASDAQ 2,837.36, -33.63 (1.17%)
S&P 500 1,313.32, -19.10 (1.43%)
NYSE Composite 7,476.36, -138.68 (1.82%)
NASDAQ Volume 1,629,529,250
NYSE Volume 3,441,592,750
Combined NYSE & NASDAQ Advance - Decline: 1011-4774
Combined NYSE & NASDAQ New highs - New lows: 42-134
WTI crude oil: 87.82, -2.94
Gold: 1,563.40, +14.70
Silver: 27.98, +0.19

Window Dressing Day Spoiled by Chicago PMI; Fantasy Economics Meets Reality

Normally, the last day of the month is marked by incessant buying of momentum stocks by fund managers and other hucksters hoping to impress clients by owning shares of the most popular companies, but today's shopping spree was truncated by a terrible Chicago PMI report, which weighed down markets, sending all of the major indices into the red.

The PMI report, which was released to the public just fifteen minutes into the session, printed at 56.2, the lowest number since November, 2009, missing expectations of 60.0 by a country mile.

Despite any and all opinions to the contrary, this number was just another in a string of disappointing economic data, highlighted by last week's first estimate of first quarter GDP of 2.2% annualized growth. While commentators have thus far downplayed the importance of the GDP figure, the evidence is stark, especially when reinforced by the PMI today.

Not wishing to face the bitter truth that the US - and by many measures, the global - economy has stalled out once again, Wall Street refuses to set about the arduous task of taking profits and marking stocks down to reasonable valuations, whatever those might be. Stocks have been trading far from fundamentals and investors haven't paid heed to the undercurrents of decline in Europe, Asia and here in the Western Hemisphere, though that line of thinking may be changing soon.

Sell in May and Stay Away goes the timeless adage. Why stocks should encounter such a seasonal variation is of questionable veracity, but if oil prices (which declined today) remain elevated as they have been through the summer, the banking and investing goons and their paid servants in Washington DC might get a dose of bad medicine courtesy of Mr. Market, delivered by Adam Smith's fabled invisible hand that routinely cycles in and out of market dynamics and pays special attention to bubbles and irrationality.

Beyond high oil prices, the US housing industry is still in a shambles, despite the clarion call to investors rushing in to snatch up foreclosed properties with the intent to turn them into rentals. This current calamity-in-the-making ignores the most basic tenet of community: home ownership is an issue of pride. Taking what were once owner-occupied dwellings and turning them into rentals (to whom and at what price we do not know) is a basic destructor of neighborhoods and communities. The dwellings fall into disrepair, the neighborhood deteriorates and eventually, the fine "rental investment" becomes a rat hole and drug house, surrounded by wary neighbors who decry their falling property values and eventually abandon the area.

Once a neighborhood changes from owner-occupied to rental status, the changes, though subtle, are irreversible, the tipping point likely reached when at least 40% of the properties assume rental status. The changes may take years or even decades in normal times, though in the current situation, in which home values have already been whacked for a loop, buying at bargain basement prices, while alluring to investors and productive of cash flow, may turn out to be just the beginning of a non-virtuous cycle. Renters move in, neighborhoods decline, property values continue to fall and recouping the original investment may never materialize. The next step in the process is that of the investors walking away, having milked the value from the properties via rental income, the community destroyed by their ravenous profit appetite. That's why neighborhoods become ghettos in the first place and stay ghettos, ever after. Wash, rinse, repeat.

Beside the ill-conceived notion that the real estate market has bottomed (a laughable and lamentable idea if ever there was one - it was the topic of a one-page feature in the current issue of Esquire, so there's that canard), the Fed is stalling on plans for more stimulus, which is apparently needed, even though it doesn't work long run, and Europe is fast-falling into recession. China's growth is being internalized, austerity policies haven't done squiddly-doo to revamp broken sovereign balance sheets and the debt bubble continues to expand.

Some day, the Keynesians in and out of government and the policy houses will finally be outed by forces of markets which are stronger than any academic noise and nonsense. The real world doesn't always cooperate with economic theory and we are seeing it played out at breathtaking pace.

There's truly only one solution for an overhang of malinvestment and debt: loss. And it will surely visit those who have the most to lose.

Mark down April as the worst month for stocks thus far, but lay bets that there will be worse to come.

Dow 13,213.63, -14.68 (0.11%)
NASDAQ 3,046.36, -22.84 (0.74%)
S&P 500 1,397.91, -5.45 (0.39%)
NYSE Composite 8,118.95, -32.96 (0.40%)
NASDAQ Volume 1,585,325,125
NYSE Volume 3,379,976,250
Combined NYSE & NASDAQ Advance - Decline: 2056-3568
Combined NYSE & NASDAQ New highs - New lows: 190-40
WTI crude oil: 104.87, -0.06
Gold: 1,664.20, -0.60
Silver: 30.96, -0.39

Another Great Session for Equity Day-Traders as January Posts Positive

Yesterday, a gap lower at the open. Today, a gap up.

This is all according to plan, which excludes individual investors to the great benefit to those in the know.

Imagine being an insider. On Monday, you buy shares of your particular stocks of the day at the lows of the day, around 10:00 to 10:30 am ET and all day long, you watch as they gain in value. Then, on Tuesday, you sell at some high point right before the dismal Chicago PMI and Conference Board's Consumer Confidence number (more on thses later). Naturally, you ignored the poor showing from the Case-Shiller 20-city index, because nobody cares about housing, right?

You're a winner, in all aspects except for honesty, integrity and fairness. Worry not, because you or your firm made massive money all through the month of January, as the Dow rose 3%, the S&P gained 4% and the NASDAQ was up 8%.

Smashing! Except that gold and silver trounced your paper-made profits. Gold finished the month of January with a 13.9% gain and silver was up 19% for the month. And there's no chance of the metals going to zero and no counter-party risk. Well, golly.

As for that Chicago PMI, the market was looking for a number of 62.8, after December's 62.2 print. The reality was a poor 60.2, the lowest number since August, 2011, another indication that the holiday season in particular was something of an over-hyped bust and that the recovery continues to be choppy and not well-anchored. Bummer!

According to the Conference Board, consumer confidence was measured at 64.8 in December, but flopped to 61.1 in January. Double bummer!

The aforementioned Case-Shiller data, albeit back-dated, showed that home prices fell 3.7% from November 2010 through November 2011. Prices fell 0.7% (adjusted) or 1.3% (unadjusted) in November from October, as 19 of 20 cities experienced price declines. Phoenix was the only city registering a positive figure.

Not to worry. January's window dressing is complete and there's nothing to worry about heading into February... except for that nagging European debt crisis, Greece, the utter collapse in the Baltic Dry Index, and the looming showdown in washington over whether or not to extend the Bush tax cuts another 10 months, as congress, rather than deal with real issues, took the easy route in December and compromised to keep them intact through the end of February (they'll extend, as extending is part of their "extend and pretend" strategy).

No, no, nothing can go wrong. Let's just keep day-trading until...

By the way, volume continues to be dreadful, even though the Fed, through it's ZIRP to infinity policy, has forced fund managers into much more riskier trading scenarios than they normally would endeavor.

You can cite the January Barometer, which posits that "as goes January, so goes the rest of the year." except for last year, that is.

Well, keep trading stocks. They matter. Right?

Dow 12,632.91, -20.81 (0.16%)
NASDAQ 2,813.84, +1.90 (0.07%)
S&P 500 1,312.40, -0.61 (0.05%)
NYSE Composite 7,838.30, +3.89 (0.05%)
NASDAQ Volume 1,602,785,875
NYSE Volume 4,156,928,000
Combined NYSE & NASDAQ Advance - Decline: 3135-2441
Combined NYSE & NASDAQ New highs - New lows: 276-22 (extreme, poised for reversal or breakout)
WTI crude oil: 98.48, -0.30
Gold: 1,737.80, +6.80
Silver: 33.26, -0.27

Santa (Ben Bernanke) Arrives Early in Europe; Gold, Silver Surge

Stocks worldwide were up sharply Wednesday on the news that the Federal Reserve, in conjunction with the Central Banks of Canada, England, Japan, Switzerland and the European Central Bank (ECB) agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points.

It was an early Christmas gift that sparked a speculative rally and kept Europe from unraveling, again.

What we've repeatedly heard is that the current calamities of the Euro-zone are nothing like those encountered on American soil in 2008.

The plain fact that banks in Europe are under dire stress and in need of liquidity not only reprises 2008, but adds a crescendo affect that's akin to adding the NY Philharmonic, the Ohio State marching band and the Mormon Tabernacle Choir to the efforts of the Boston Pops.

Stresses on European banks, especially those in France, Belgium and Italy, have been exacerbating on a near-daily basis, with the potential for global contagion even greater than when Lehman Bros. was allowed to flail and fail.

Thus, as some unknown Europe-based bank was about to go under - rumors say $265 million in overnight borrowings from the ECB was the tip-off - the global elitist Central Bankers conspired to lift liquidity by lowering the borrowing rates on US Dollar swap arrangements by 50 basis points (1/2 percent).

Magically, not only was the global Ponzi financial system saved for the day, week or month, but the added benefit of having global equity markets spike 3-4% higher came along as an intended consequence. Yes, the globalists know what they're doing. Too bad for them that it doesn't work long term, as we know so well from recent history, circa September, 2008.

Here's a post, by none other than some character calling himself John Galt, that has both the 2008 and current Federal Reserve press releases. The similarities are striking, but also magnificent was the 2008 aftermath, the worst financial crisis of the last 70 or so years, and the resultant crash of the equity markets.

So, Santa came to town (Europe) dressed as Ben Bernanke, with his trusty elf, Tim Geithner, in tow, passing off presents to the good (and bad) bankers across the continent. While this constitutes Christmas and a Santa Claus Rally about a month prematurely, what can Europe and the global economy expect when the holiday actually arrives on December 25, lumps of coal, or perhaps soaring gold and silver prices?

The actual timing of the eventual collapse is still unknown, though this desperation move seems to indicate that the global financial structure is crumbling faster than the "unseen hands" of the central banks can prop it up. A dive in equities may not coincide with Christmas - that would be a shame - but rather sometime in early 2012, likely in the first quarter and quite possibly in January as profits are taken early in the year on stocks pumped to unwieldy heights in December. The net results being a relatively weaker dollar and higher prices for just about anything one consumes or needs. When the crash comes, of course, the Euro will descend and the dollar will rise, though the effect is probably short-term, until the Easter Bunny fills up those empty bank liquidity baskets again.

As the adage implies, this massive liquidity gift may indeed have a silver lining, encrusted with much-higher-priced gold.

Prior to the Fed's announcement, the People's Bank of China cut bank reserve requirements for the first time in three years, by 0.5%, amid signs that the Chinese economy is slowing due to slack demand for China's exports, particularly from Europe.

After the announcement, with futures up dramatically, ADP released its November Employment Change results, showing the creation of 206,000 private sector jobs during the month. The private survey is a regular precursor to Friday's BLS non-farm payroll data.

Third quarter productivity was measured as up 2.3%, while unit labor costs fell 2.5% as companies hunker down, doing more with fewer employees.

Fifteen minutes into the trading session, Chicago PMI reported a big jump, from 58.4 in October to 62.6 in November. It was an unnecessary boost to a market which had already spiked higher at the open.

There was no fade in this one-day rally, coming conveniently on the last day of the month, traditionally the day reserved for "window dressing" by fund managers. Stocks were up monstrously on the open and continued along a high, flat line for the rest of the session, until a final short-covering episode in the final fifteen minutes pushed indices even higher.

Just speculating, but it had to be one of the best market moves of the year, if not the best. Volume was sufficient, though not overwhelming. The late-day surge may be indicating that even more easy money will flow from the Fed to the hampered Eurozone.

As to whether the moves in stocks are sustainable and the even more important question of whether or not Europe is "fixed," the answers will only be known at some future date. The most cogent commentaries on Europe suggest that today's coordinated central bank motivation only covers over a dire condition in the European banking sector and is nothing more than a liquidity band-aid on a solvency open gash. Europe's funding problems remain unresolved, though any mention of default or collapse has probably been delayed by a few weeks or a month.

And just in case you're worried about food shortages or another recession, the Obama administration and congress actually did accomplish something, recently having lifted the five-year-old ban on slaughtering horses in America. Not to worry, though. Americans won't be eating Little Red Pony or Trigger any time soon (we hope). The meat will likely be shipped to Japan or Europe. However, if this is a trend-setter, cans of Lassie, Rin Tin Tin or Boo Boo Kitty may be in supermarkets soon. Dog food and cat food may take on newer, twisted meanings.

Dow 12,045.68, +490.05 (4.24%)
NASDAQ 2,620.34, +104.83 (4.17%)
S&P 500 1,246.96, +51.77 (4.33%)
NYSE Composite 7,484.49, +334.78 (4.68%)
NASDAQ Volume 2,386,048,000
NYSE Volume 5,808,163,500
Combined NYSE & NASDAQ Advance - Decline: 4913-861
Combined NYSE & NASDAQ New highs - New lows: 161-68 (this has rolled over)
WTI crude oil: 100.36. +0.56
Gold: 1,745.50, +32.10
Silver: 32.73, +0.88

MF Global Bankruptcy, Bank of Japan Send Stocks Reeling

Anyone who assumed that equity markets would behave after last week's Eurofix found out today what a sadly mistaken assumption that is. Stocks fell right from the opening bell, stabilizing about two percent lower, but capitulating in the final minutes of trading to end near session lows.

Part of the catalyst for selling stocks was the widespread appreciation that not all of Europe's problems are solved, but also the trading suspension and subsequent bankruptcy filing by MF Global (MF), a primary dealer run by former Goldman Sachs CEO, former New Jersey governor and regular Bilderberg atterndee, Jon Corzine. (Yes, it's true, the rich do sometimes eat their own.)

The firm was under pressure recently after having made sizable investments in risky European sovereign bonds, many of which have blown up and become worth much less than what MF Global had paid.

A swell fact box from Reuters shows that MF Global is the 7th largest bankruptcy since 1980, though it's probable that any bankruptcies prior to that date are smaller than #15, IndyMac, which went bust for $32.73 billion in 2008. Also worth noting is that 13 of the 15 occurred after 2000, and three of the top four happened in 2008-2009. So, the question of whether MF Global's little $41.05 billion will cause consternation and contagion, and, if so, how much?

The bankruptcy filing showed Corzine's firm listing as its largest unsecured creditors, JP Morgan Chase (JPM) $1.2 billion and Deutsche Bank about $1 billion.

With Europe still unsettled despite the outline of plans being trotted out last week (and the market rallying strongly), there's still plenty of counterparty risk whisking around the toilet bowl of global debt and MF Global, being a primary dealer, had all the advantages one could dream of and still went up in flames.

Adding to Monday's melodrama was the poor report from the Chicago PMI, which came in at 58.4 for October after a 60.4 reading in September, yet another sign that the US economy may not be doing as well as some might imagine.

The Bank of Japan intervened in its own currency, selling yen and buying US dollars. This sent the dollar soaring and the yen plummeting, in a move the Japanese central bank hopes would improve conditions for the nation's exporters. The follow-on was a crashing Euro, which confounded forex traders after the Euro had risen dramatically against the dollar over the past three weeks. Along with US stocks, commodity prices were mostly lower.

While the kick-off of the week was a rapid reversal of fortune after the extended bull rally of the past four to five weeks, there is certain to be more fireworks ahead. The Federal Reserve begins a two-day meeting on Tuesday, with a rate policy announcement due Wednesday. Hints that the Fed may embark on another round of QE have been circulating, though Fed members have not been forthcoming with details. There is also a bevy of economic data releases scheduled, with October Private Payroll data from ADP and crude inventories on Wednesday, unemployment claims, third quarter productivity, October factory orders and ISM Services on Thursday, prior to the Friday announcement from the Labor Department on non-farm payrolls for October.

With this kind of beginning, the markets will need some stroong economic data to stave off another batch of selling into perceived strength.

Dow 11,955.01 276.10 (2.26%)
NASDAQ 2,684.41 52.74 (1.93%)
S&P 500 1,253.30 31.79 (2.47%)
NYSE Compos 7,563.38 240.56 (3.08%)
NASDAQ Volume 1,788,364,125.00
NYSE Volume 4,310,269,000
Combined NYSE & NASDAQ Advance - Decline: 1125-4532
Combined NYSE & NASDAQ New highs - New lows: 59-39
WTI crude oil: 93.19, -0.13
Gold: 1,725.20, -22.00
Silver: 34.35, -0.93