A tumultuous week came to a very anti-climatic conclusion on Friday, as the President issued a challenge to congress to come up with the "framework" of a deal within the next 24 to 36 hours to solve the wrangling over the debt ceiling and budget issues.
President Obama's 11:00 am new conference did little to move the matter in a more positive direction, and stocks languished throughout the day, finally putting together a half-hearted momentum rally in the final hour of trading.
In Europe, 82 of 90 banks passed the European banking Authority stress tests, but eight failed - four of them in Spain - and 12 more received barely passing grades.
Citigroup posted better-than-expected second quarter results, but still finished in the red for the day. Taking its cue, Bank of America (BAC), which reports on July 19, fell below $10 per share, finishing exactly at 10.00, after trading as low as 9.88, the lowest in more than two years.
The entire day was rather disjointed and purposeless, as stocks drifted around until the ramp-up at the close.
For the week, the Dow shed 177 points, the NASDAQ fell 70, the S&P gave back 27 and the NYSE composite dropped 183 points.
The late rally made little sense, unless one gives credence to the thought that it was a positive sign from the markets that a debt ceiling deal would be hatched by Monday.
Dow 12,479.73, +42.61 (0.34%)
NASDAQ 2,789.80, +27.13 (0.98%)
S&P 500 1,316.14, +7.27 (0.56%)
NYSE Composite 8,227.04, +35.91 (0.44%)
Advancers led decliners, 3945-2570. The NASDAQ offered 40 new highs and 34 new lows, while the NYSE had 62 stocks make new 52-week highs and 51 reach new lows. The combined total of 102 new highs and 85 new lows is cutting the margin rather closely and is reflective of the choppiness inherent in current markets.
NASDAQ Volume 1,825,291,125
NYSE Volume 4,370,969,000
A swath of economic data points offered no suggestion of improvement. The CPI fell 0.2%, the Empire Index returned a -3.76, industrial production and capacity utilization were both stagnant at 0.2% and 76.9%, and the Michigan consumer sentiment fell from 71.5 in May to 63.8 in June.
Crude oil continued on its zig-zag path, gaining $1.55, to $97.24. Gold hit another record, up 80 cents, to $1,590.10. Silver was up 38 cents, at $39.07 per ounce.
The NFL lockout continued, but both sides seem intent on reaching a deal, saying they would continue working over the weekend in order to conclude talks as early as possible without jeopardizing the preseason or regular season.
Maybe congress should take a hint from the players and owners. The American people have had about as much stalling and posturing as they can handle.
Showing posts with label CitiGroup. Show all posts
Showing posts with label CitiGroup. Show all posts
Friday, July 15, 2011
Monday, May 9, 2011
Citi Reverse Split Causes Volume Dump; PPT Still Engaged
Covering the daily machinations of a stock market that is now nearly a vast wasteland of swap trades, churning and "gotcha" moves seldom offers much of anything substantive of which to report, but today's reverse split of Citigroup (C) may turn out to be a watershed moment for our contrived and trivial stock markets.
With Citi now a $44 stock instead of a $4.40 stock - and it being the nearly indisputable daily volume leader for many months - America's 3rd largest bank has cost the NYSE about 450,000 trades on a daily basis, today, tomorrow, forever. This dramatic upside-down-sizing caused today's NYSE volume to dip to its second-lowest level of the year.
It is more than dismal on Wall Street; it is so scary that the PPT was brought in today just before noon for a quick fixer-up, sending all the indices close to their highs of the day in a 20-minute ramp job that is certain to destroy what little remains of confidence in the veracity of US markets.
From about 11:50 am to 12:10 pm, the Dow gathered itself up for an 80 point gain, the NASDAQ gained about 27 points and the S&P added nine. The indices had been hugging the flat line until the PPT (yes, we're absolutely certain they're still working) showed up. Afterwards, stocks drifted along the new highs and closed near those newly-elevated levels.
Yet another fantastic display of why nobody trusts these markets and nobody should be trading here: the stocks are all traded between the biggest brokerages and selected hedge funds, and the whole game is rigged for their benefit. Someday, we can only hope, the whole miasma gets thrown a loop by the HFT computers and never recovers. Maybe then, the greed, corruption and utter uselessness of US stock markets can be exposed.
Dow 12,684.68, +45.94 (0.36%)
NASDAQ 2,843.25, +15.69 (0.55%)
S&P 500 1,346.29, +6.09 (0.45%)
NYSE Composite 8,478.19, +52.29 (0.62%)
For the record, advancing issues beat decliners, 4534-2055. NASDAQ new highs: 81; new lows: 39. On the NYSE, there were 120 new highs and 17 new lows. Combined volume for the NYSE and NASDAQ was at or below the lowest level of the year. While the trading volume on the NYSE was expected, the absurdly low number of trades on the NASDAQ is telling market timers that now is the time to get out of Dodge.
NASDAQ Volume 1,654,697,000.00
NYSE Volume 3,366,898,000
Commodities must be the new playground, because they had a banner day. Forget the massive drop in crude oil from last week. Today's ramp job of $5.37 on NYMEX WTI crude futures brought the price back to $102.55 at the close. One wonders whether it's actual volatility driving the wild price swings or just plain revenge by the traders who were nearly wiped out in last week's plummeting decline. In any case, the price of oil has absolutely nothing to do with fundamental. It's almost as though price discovery has become a function of speculation. There is no real price for a barrel of oil, only that which appears or appeases for the day. These markets are broken beyond repair. Time to dust off and oil up that old bike. You'll need the energy boost in order to stay ahead of the coming rolling panics in cities across America.
Gold buyers were back in earnest, raising the price $18.20, to $1513.60. Silver recovered as well, gaining $2.28, to $37.90.
If anybody can make sense of any of this, please call 1-800-CONFUSED and leave a long, descriptive message.
With Citi now a $44 stock instead of a $4.40 stock - and it being the nearly indisputable daily volume leader for many months - America's 3rd largest bank has cost the NYSE about 450,000 trades on a daily basis, today, tomorrow, forever. This dramatic upside-down-sizing caused today's NYSE volume to dip to its second-lowest level of the year.
It is more than dismal on Wall Street; it is so scary that the PPT was brought in today just before noon for a quick fixer-up, sending all the indices close to their highs of the day in a 20-minute ramp job that is certain to destroy what little remains of confidence in the veracity of US markets.
From about 11:50 am to 12:10 pm, the Dow gathered itself up for an 80 point gain, the NASDAQ gained about 27 points and the S&P added nine. The indices had been hugging the flat line until the PPT (yes, we're absolutely certain they're still working) showed up. Afterwards, stocks drifted along the new highs and closed near those newly-elevated levels.
Yet another fantastic display of why nobody trusts these markets and nobody should be trading here: the stocks are all traded between the biggest brokerages and selected hedge funds, and the whole game is rigged for their benefit. Someday, we can only hope, the whole miasma gets thrown a loop by the HFT computers and never recovers. Maybe then, the greed, corruption and utter uselessness of US stock markets can be exposed.
Dow 12,684.68, +45.94 (0.36%)
NASDAQ 2,843.25, +15.69 (0.55%)
S&P 500 1,346.29, +6.09 (0.45%)
NYSE Composite 8,478.19, +52.29 (0.62%)
For the record, advancing issues beat decliners, 4534-2055. NASDAQ new highs: 81; new lows: 39. On the NYSE, there were 120 new highs and 17 new lows. Combined volume for the NYSE and NASDAQ was at or below the lowest level of the year. While the trading volume on the NYSE was expected, the absurdly low number of trades on the NASDAQ is telling market timers that now is the time to get out of Dodge.
NASDAQ Volume 1,654,697,000.00
NYSE Volume 3,366,898,000
Commodities must be the new playground, because they had a banner day. Forget the massive drop in crude oil from last week. Today's ramp job of $5.37 on NYMEX WTI crude futures brought the price back to $102.55 at the close. One wonders whether it's actual volatility driving the wild price swings or just plain revenge by the traders who were nearly wiped out in last week's plummeting decline. In any case, the price of oil has absolutely nothing to do with fundamental. It's almost as though price discovery has become a function of speculation. There is no real price for a barrel of oil, only that which appears or appeases for the day. These markets are broken beyond repair. Time to dust off and oil up that old bike. You'll need the energy boost in order to stay ahead of the coming rolling panics in cities across America.
Gold buyers were back in earnest, raising the price $18.20, to $1513.60. Silver recovered as well, gaining $2.28, to $37.90.
If anybody can make sense of any of this, please call 1-800-CONFUSED and leave a long, descriptive message.
Friday, October 22, 2010
Welcome to the Depression in No-Fun, Distracted America
Is there any wonder why Americans find ways to distract themselves from the real world? The diversions provided by major league baseball, the NFL and other sports, shows like Glee or American Idol at least provide an escape from the drudgery that has become life in America: working to just pay bills that never cease, never go down, never go away. After the utilities, cable, phone, car insurance and other debt payments, gas and food most Americans are left with little to spend, much less save anything for a "brighter" future.
The oligarchy that we have morphed into over the past 40 years is decimating the middle class, having already created a huge and growing underclass that pays no bills, relying on food stamps and subsidized housing for basic sustenance. The rich could care less; they're just busy getting richer or trying to hold onto what they have before it's all inflated away by the Fed and the Treasury and our spendthrift congress.
We overburdened with rules and regulations that haunt us at every turn. Entrepreneurs are reluctant - no, afraid - to expand and hire anyone due to the crush of regulations, taxes, paperwork and red tape, making the thought of training and retaining employees almost unthinkable.
It would be nice to say that people want distractions because the news is always so bad, but that's not even true any more. The mainstream media doesn't even report the news properly, shielding the guilty (government, banks, politicians) from the public, left in the dark to fend for themselves when the next shock comes.
France is nearly in a state of anarchy, as is much of europe, though you'll find none of it on the major PUBLIC AIRWAVE networks. NBC even went so far as to call the potential $257 billion, or whatever stupid number they assigned to it, that will be needed to bail out Fannie Mae and Freddie Mac, the largest bailout in history, then went through a brief history, including the auto manufacturers, an some others they came up with, and then put had the temerity to show the cost of bailing out the banks at something like $17 billion.
It's outrageous that they can still call themselves a news organization. Somewhere along the line the $700 billion the banks stole from the American taxpayers has become a mere $17 billion. Supposedly, they'll argue that the banks paid most of it back. All they're doing is conditioning the public for the next bank bailout, on the order of $500 billion to $1 trillion, scheduled for late Winter or early Spring.
Even the stock market is a fool's paradise. Stocks just keep going up, no matter what. For instance, today, Fitch warned of downgrading the debt of Bank of America and Citigroup. Shares of both insolvent banks were higher at the end of the day.
Speaking of said stock market, the NASDAQ was higher all day, the Dow lower, and the S&P and NYSE hugged the flat line. The markets are broken, devoid of the individual investor that used to be the backbone of the trade. Today, 80% of the trades are computer driven and come from the top twenty or so brokerages or hedge funds.
It's simply no fun to be an American any more. Some days, people wish the system would just collapse, so we could start over again from scratch, because this one is just worn out or has become so corrupted, that it doesn't play right. Those of us who grew up in the 50s and 60s remember better times. One working parent, stay-at-home mom, mostly honest politicians, straight-forward banks, low costs for gas, food and other necessities and enough money for summer family vacations and even some left over for savings.
Forget those idyllic days, for they are long gone. What we have today instead is nothing short of catastrophic, and what we'll leave for the future will be an unmitigated wasteland.
Dow 11,132.56, -14.01 (0.13%)
NASDAQ 2,479.39, +19.72 (0.80%)
S&P 500 1,183.08, +2.82 (0.24%)
NYSE Composite 7,522.91, +7.24 (0.10%)
Despite the bifurcated headline numbers, advancers defeated decliners, 3940-2434. New highs soared past new lows, 340-46. Never mind that it was the lowest volume day in six weeks.
NASDAQ Volume 1,660,682,375
NYSE Volume 3,536,505,250
As one might have guessed, oil was up, by $1.13, to $81.69. Gold was lower by 50 cents, to $1,325.10, and silver shed two pennies, to $23.29.
We're all aware that America isn't what it used to be, but it would be nice if some of it could be saved. By kicking the can further down the road, the congress and big business are assuring us that it will never, ever again resemble anything like it was when it was good.
The oligarchy that we have morphed into over the past 40 years is decimating the middle class, having already created a huge and growing underclass that pays no bills, relying on food stamps and subsidized housing for basic sustenance. The rich could care less; they're just busy getting richer or trying to hold onto what they have before it's all inflated away by the Fed and the Treasury and our spendthrift congress.
We overburdened with rules and regulations that haunt us at every turn. Entrepreneurs are reluctant - no, afraid - to expand and hire anyone due to the crush of regulations, taxes, paperwork and red tape, making the thought of training and retaining employees almost unthinkable.
It would be nice to say that people want distractions because the news is always so bad, but that's not even true any more. The mainstream media doesn't even report the news properly, shielding the guilty (government, banks, politicians) from the public, left in the dark to fend for themselves when the next shock comes.
France is nearly in a state of anarchy, as is much of europe, though you'll find none of it on the major PUBLIC AIRWAVE networks. NBC even went so far as to call the potential $257 billion, or whatever stupid number they assigned to it, that will be needed to bail out Fannie Mae and Freddie Mac, the largest bailout in history, then went through a brief history, including the auto manufacturers, an some others they came up with, and then put had the temerity to show the cost of bailing out the banks at something like $17 billion.
It's outrageous that they can still call themselves a news organization. Somewhere along the line the $700 billion the banks stole from the American taxpayers has become a mere $17 billion. Supposedly, they'll argue that the banks paid most of it back. All they're doing is conditioning the public for the next bank bailout, on the order of $500 billion to $1 trillion, scheduled for late Winter or early Spring.
Even the stock market is a fool's paradise. Stocks just keep going up, no matter what. For instance, today, Fitch warned of downgrading the debt of Bank of America and Citigroup. Shares of both insolvent banks were higher at the end of the day.
Speaking of said stock market, the NASDAQ was higher all day, the Dow lower, and the S&P and NYSE hugged the flat line. The markets are broken, devoid of the individual investor that used to be the backbone of the trade. Today, 80% of the trades are computer driven and come from the top twenty or so brokerages or hedge funds.
It's simply no fun to be an American any more. Some days, people wish the system would just collapse, so we could start over again from scratch, because this one is just worn out or has become so corrupted, that it doesn't play right. Those of us who grew up in the 50s and 60s remember better times. One working parent, stay-at-home mom, mostly honest politicians, straight-forward banks, low costs for gas, food and other necessities and enough money for summer family vacations and even some left over for savings.
Forget those idyllic days, for they are long gone. What we have today instead is nothing short of catastrophic, and what we'll leave for the future will be an unmitigated wasteland.
Dow 11,132.56, -14.01 (0.13%)
NASDAQ 2,479.39, +19.72 (0.80%)
S&P 500 1,183.08, +2.82 (0.24%)
NYSE Composite 7,522.91, +7.24 (0.10%)
Despite the bifurcated headline numbers, advancers defeated decliners, 3940-2434. New highs soared past new lows, 340-46. Never mind that it was the lowest volume day in six weeks.
NASDAQ Volume 1,660,682,375
NYSE Volume 3,536,505,250
As one might have guessed, oil was up, by $1.13, to $81.69. Gold was lower by 50 cents, to $1,325.10, and silver shed two pennies, to $23.29.
We're all aware that America isn't what it used to be, but it would be nice if some of it could be saved. By kicking the can further down the road, the congress and big business are assuring us that it will never, ever again resemble anything like it was when it was good.
Friday, August 20, 2010
Stocks Finish with Wide Losses as Financial Continue Decline
For the third week in the past four, the major indices recored losses, which is especially poignant this week as the expiration of stock options usually encourages some upward momentum, but there was little to be found as another drab session marked the close of the week.
Stocks bottomed out just at the noon hour before rallying back somewhat, with fresh cash being put to use in what some must surely consider "bargains." There was some discussion on the internet Thursday about buying into Bank of America as the stock hit fresh 52-week lows, but broke down again on Friday to even lower levels.
Consistently the second most traded stock on the NYSE, Bank of America crumpled to a close of 12.87, marking a 34% decline from its closing high of 19.47 on April 15. In the span of four months, one of the most heavily traded stocks in the world has lost more than one third of its market cap. Something is definitely not right, and investors are voting with their feet, running away from the zombie bank as fast as they can.
What is wrong with Bank of America is also wrong with Citigroup (C), JP Mogan Chase (JPM) and Wells Fargo (WFC) to varying degrees. They are all victims of their own fortunes, made during the bubbly sub-prime housing boom days from 2003-2007 and crushed by the onslaught of those loans - and many more - going sour. These four banks share a raft of common themes, in that they all made fabulous amounts of money during the housing boom, executives were enriched grandly, all were TARP fund recipients and all were aided in the Spring of 2009 when the FASB allowed banks to employ significant judgement in "mark to market" accounting.
The rule allowed the banks enormous leeway in how they valued assets while at the same time reducing writedowns on impaired investments, including mortgage-backed securities. The rule change saved the banks from untold billions of dollars in impairment charges, but the same rule, as long as it remains in force, keeps bank capital bottled up and unable to be lent.
Honest accounting would probably put the nation's largest banks into receivership or bankruptcy and unleash a financial tsunami that would make the 2008 crash look like a gentle summer rain. In the meantime, many investors are apparently not about to wait for BofA and its counterparts to work out all of their bad, toxic and otherwise broken down investments. They are leaving the stock in droves.
BofA's brethren are in similar straits, taking on losses since mid-April of between 25-35%. Wells Fargo has dropped from 34.25 to as low as 24.27. JP Morgan Chase has gone from a high of 48.20 to as low as 35.16. And Citigroup, usually the most actively-traded stock on the NYSE, has dipped from 5 in mid-April to 3.75 today, a neat, 25% haircut.
While Wall Street pounds the table over Washington's inaction on the fiscal front, lawmakers in Washington are eerily quiet about the fate of the nation's largest banks, seeming to want the nightmare scenario of another Japan-style deflation to just go away. The truth is that they have no clue what to do next, relying on the Federal Reserve to sop up excesses in the default markets and keep interest rates at ZERO until something good happens, whatever that might be. Washington politicians are only interested in keeping their jobs, meaning that they will purposely mislead the public into a false sense of stability until the elections this November.
In the meantime, the nation suffers and America's fiscal problems become worse by the day as the corrective measures that would have already kicked these banks to the collective curbs have not been even mentioned. Bad assets need to be written down and the companies need to take their licks, but that solution is seen as messy and untenable by the ruling elite.
The entire situation reeks of insider deals, secrecy, mismanagement and falsehood, and it is killing the US economy, little by little, day in and day out.
Dow 10,213.62, -57.59 (0.56%)
NASDAQ 2,179.76, +0.81 (0.04%)
S&P 500 1,071.69, -3.94 (0.37%)
NYSE Composite 6,813.15, -37.30 (0.54%)
On the day, there were more losers than winners, by a 3567-2778 tally. Tellingly, new lows surpassed new highs, 259-226, signaling that those who were buying all afternoon were either delusional or just misguided. The markets appear ready to break down once again to fresh lows. Dipping below the 9680 mark on the Dow over the next month is certainly in the equation. Volume was a little better than most of this week, though that's another negative. Higher volume on losing days indicates, quite simply, that more stocks are being sold than bought.
NASDAQ Volume 1,913,865,250.00
NYSE Volume 4,309,225,000
Stocks were not the only asset class being beaten down. Crude oil for September delivery fell another 97 cents, to $73.46 on the NYMEX. Gold lost $6.60, to $1,227.20, and silver was hammered down nearly 2%, losing 37 cents to close the week at $17.98 the ounce.
Deflation has come, and has actually been pushing on stocks, bond yields and home prices for the past three years. Only the federal government's ability to throw large amounts of money around has kept the economy from complete collapse, though the band-aid approach seems to have failed miserably and the eventual downturn will be more severe than anyone can imagine.
Stocks bottomed out just at the noon hour before rallying back somewhat, with fresh cash being put to use in what some must surely consider "bargains." There was some discussion on the internet Thursday about buying into Bank of America as the stock hit fresh 52-week lows, but broke down again on Friday to even lower levels.
Consistently the second most traded stock on the NYSE, Bank of America crumpled to a close of 12.87, marking a 34% decline from its closing high of 19.47 on April 15. In the span of four months, one of the most heavily traded stocks in the world has lost more than one third of its market cap. Something is definitely not right, and investors are voting with their feet, running away from the zombie bank as fast as they can.
What is wrong with Bank of America is also wrong with Citigroup (C), JP Mogan Chase (JPM) and Wells Fargo (WFC) to varying degrees. They are all victims of their own fortunes, made during the bubbly sub-prime housing boom days from 2003-2007 and crushed by the onslaught of those loans - and many more - going sour. These four banks share a raft of common themes, in that they all made fabulous amounts of money during the housing boom, executives were enriched grandly, all were TARP fund recipients and all were aided in the Spring of 2009 when the FASB allowed banks to employ significant judgement in "mark to market" accounting.
The rule allowed the banks enormous leeway in how they valued assets while at the same time reducing writedowns on impaired investments, including mortgage-backed securities. The rule change saved the banks from untold billions of dollars in impairment charges, but the same rule, as long as it remains in force, keeps bank capital bottled up and unable to be lent.
Honest accounting would probably put the nation's largest banks into receivership or bankruptcy and unleash a financial tsunami that would make the 2008 crash look like a gentle summer rain. In the meantime, many investors are apparently not about to wait for BofA and its counterparts to work out all of their bad, toxic and otherwise broken down investments. They are leaving the stock in droves.
BofA's brethren are in similar straits, taking on losses since mid-April of between 25-35%. Wells Fargo has dropped from 34.25 to as low as 24.27. JP Morgan Chase has gone from a high of 48.20 to as low as 35.16. And Citigroup, usually the most actively-traded stock on the NYSE, has dipped from 5 in mid-April to 3.75 today, a neat, 25% haircut.
While Wall Street pounds the table over Washington's inaction on the fiscal front, lawmakers in Washington are eerily quiet about the fate of the nation's largest banks, seeming to want the nightmare scenario of another Japan-style deflation to just go away. The truth is that they have no clue what to do next, relying on the Federal Reserve to sop up excesses in the default markets and keep interest rates at ZERO until something good happens, whatever that might be. Washington politicians are only interested in keeping their jobs, meaning that they will purposely mislead the public into a false sense of stability until the elections this November.
In the meantime, the nation suffers and America's fiscal problems become worse by the day as the corrective measures that would have already kicked these banks to the collective curbs have not been even mentioned. Bad assets need to be written down and the companies need to take their licks, but that solution is seen as messy and untenable by the ruling elite.
The entire situation reeks of insider deals, secrecy, mismanagement and falsehood, and it is killing the US economy, little by little, day in and day out.
Dow 10,213.62, -57.59 (0.56%)
NASDAQ 2,179.76, +0.81 (0.04%)
S&P 500 1,071.69, -3.94 (0.37%)
NYSE Composite 6,813.15, -37.30 (0.54%)
On the day, there were more losers than winners, by a 3567-2778 tally. Tellingly, new lows surpassed new highs, 259-226, signaling that those who were buying all afternoon were either delusional or just misguided. The markets appear ready to break down once again to fresh lows. Dipping below the 9680 mark on the Dow over the next month is certainly in the equation. Volume was a little better than most of this week, though that's another negative. Higher volume on losing days indicates, quite simply, that more stocks are being sold than bought.
NASDAQ Volume 1,913,865,250.00
NYSE Volume 4,309,225,000
Stocks were not the only asset class being beaten down. Crude oil for September delivery fell another 97 cents, to $73.46 on the NYMEX. Gold lost $6.60, to $1,227.20, and silver was hammered down nearly 2%, losing 37 cents to close the week at $17.98 the ounce.
Deflation has come, and has actually been pushing on stocks, bond yields and home prices for the past three years. Only the federal government's ability to throw large amounts of money around has kept the economy from complete collapse, though the band-aid approach seems to have failed miserably and the eventual downturn will be more severe than anyone can imagine.
Wednesday, August 4, 2010
A Thousand Points of (False) Hope
Stocks on the major indices closed near their highs of the day, pushing the averages ahead for the 14th time in the last 21 sessions - about a month's worth.
Most of the upside movement since the 4th of July holiday has been on lighter-than-normal volume, and today was certainly no exception. Out of a universe of over 3000 stocks, the top five most active on the NYSE accounted for 12.5% of the volume, a skewing to the degree of magnitude of nearly 100 times normal, proving that when analysts say that most people trade the same stocks, they surely aren't lying about it.
Those five stocks - Citigroup (C), Bank of America (BAC), Motorola (MOT), Pfizer (PFE) and Ford (F) all trade for under $20 per share and have since Autumn of 2008, when the systemic financial collapse made everyone rethink valuation models. It's patently clear that investors have gotten stuck in a routine, especially in the case of Citi and BofA, two stocks which, under better-managed conditions would have been bankrupted and de-listed long ago. The pair of zombie banks consistently lead the most actives, as gamblers attempt to profit from fairly large percentage moves in what have become, essentially, penny stocks.
Another interesting side note on those top five is that all but Bank of America posted a gain, though Citigroup's was only a slim penny advance. BofA dropped by 14 cents, making the two most actively traded stocks the worst of the bunch. One can only speculate as to why so many trades occur on these two dogs, but there are, almost without a doubt, plenty of sellers, long-term holders who a quietly slipping their money out of them.
The advances over the past three days have pushed the Dow to a 1000-point gain over the past month, putting them right at (for Fibonacci fans) a 67% retracement of the 1500-point decline which commenced from mid-April to the first days of July.
At what appears to be a key inflection point, stocks face an uphill battle to surpass the April high of 12,200 on the Dow. Since the latest move has been fueled largely by excellent second quarter results from a wide swath of companies (notably, neither BAC nor C among them), the propellant seems to be missing for the final push, replaced by two key data points: Thursday's unemployment claims figures and Friday's July non-farm payroll report.
There were an equal amount of groans and cheers this morning when ADP released its own private payroll report for July, showing 42,000 new jobs being created during the month. Since the report does not include government employment, it serves as a proxy for Friday's figures, which are likely to come in only slightly on the positive side or even negative, due to layoffs from expired census employment. Thursday morning's unemployment data will provide another clue.
It's probably safe to say, barring any outsize surprise on the upside, that stocks are ready for a reversal after a month in a fantasy zone, though those of the bearish camp will contend that the stock market does not represent the US economy, and thus will continue to climb on their own.
There is some degree of truth to that argument, but if US-based companies refuse to hire US citizens, as they have for the past two years (ad for some, much longer than that), there will be bottom-line damage eventually, unless the companies in question are doing 75% or more of their business outside the USA, in which case they should be listed on another, non-US exchange. The US market is still the largest and most important, and people without jobs cannot continue to buy good and services at a steadily-growing rate. Of course, should congress deem that unemployment benefits should continue indefinitely, beyond the currently-absurd 99 weeks, companies might as well just lay off all US employees and allow the government to pick up the tab.
ISM services index rose from 53.8 in June, to 54.3 in July, eliciting another big whoop from perma-bulls, various tea-partiers and clueless analysts, who seem to be everywhere at once this summer.
Dow 10,680.43, +44.05 (0.41%)
NASDAQ 2,303.57, +20.05 (0.88%)
S&P 500 1,127.24, +6.78 (0.61%)
NYSE Composite 7,182.14, +35.15 (0.49%)
Advancing issues dominated decliners on the day, 4577-1880; new highs soared past new lows, 408-68; but volume, as previously mentioned, was the real story, well below normal levels and embarrassingly below what used to serve as average prior to the 2008 meltdown.
NASDAQ Volume 1,881,489,125
NYSE Volume 4,293,061,500
Commodity traders seemed unable to gain traction. Oil paused, dropping 8 cents, to $82.47. Gold gained $8.50, to $1,193.70, though silver did not follow on, losing 14 cents to $18.26.
With new economic data on the horizon, there appears to be no new catalyst with which to lift equities near-term, and longer-term prospects, heading into 2011, also seem pinned to dim, or even false, hopes.
Most of the upside movement since the 4th of July holiday has been on lighter-than-normal volume, and today was certainly no exception. Out of a universe of over 3000 stocks, the top five most active on the NYSE accounted for 12.5% of the volume, a skewing to the degree of magnitude of nearly 100 times normal, proving that when analysts say that most people trade the same stocks, they surely aren't lying about it.
Those five stocks - Citigroup (C), Bank of America (BAC), Motorola (MOT), Pfizer (PFE) and Ford (F) all trade for under $20 per share and have since Autumn of 2008, when the systemic financial collapse made everyone rethink valuation models. It's patently clear that investors have gotten stuck in a routine, especially in the case of Citi and BofA, two stocks which, under better-managed conditions would have been bankrupted and de-listed long ago. The pair of zombie banks consistently lead the most actives, as gamblers attempt to profit from fairly large percentage moves in what have become, essentially, penny stocks.
Another interesting side note on those top five is that all but Bank of America posted a gain, though Citigroup's was only a slim penny advance. BofA dropped by 14 cents, making the two most actively traded stocks the worst of the bunch. One can only speculate as to why so many trades occur on these two dogs, but there are, almost without a doubt, plenty of sellers, long-term holders who a quietly slipping their money out of them.
The advances over the past three days have pushed the Dow to a 1000-point gain over the past month, putting them right at (for Fibonacci fans) a 67% retracement of the 1500-point decline which commenced from mid-April to the first days of July.
At what appears to be a key inflection point, stocks face an uphill battle to surpass the April high of 12,200 on the Dow. Since the latest move has been fueled largely by excellent second quarter results from a wide swath of companies (notably, neither BAC nor C among them), the propellant seems to be missing for the final push, replaced by two key data points: Thursday's unemployment claims figures and Friday's July non-farm payroll report.
There were an equal amount of groans and cheers this morning when ADP released its own private payroll report for July, showing 42,000 new jobs being created during the month. Since the report does not include government employment, it serves as a proxy for Friday's figures, which are likely to come in only slightly on the positive side or even negative, due to layoffs from expired census employment. Thursday morning's unemployment data will provide another clue.
It's probably safe to say, barring any outsize surprise on the upside, that stocks are ready for a reversal after a month in a fantasy zone, though those of the bearish camp will contend that the stock market does not represent the US economy, and thus will continue to climb on their own.
There is some degree of truth to that argument, but if US-based companies refuse to hire US citizens, as they have for the past two years (ad for some, much longer than that), there will be bottom-line damage eventually, unless the companies in question are doing 75% or more of their business outside the USA, in which case they should be listed on another, non-US exchange. The US market is still the largest and most important, and people without jobs cannot continue to buy good and services at a steadily-growing rate. Of course, should congress deem that unemployment benefits should continue indefinitely, beyond the currently-absurd 99 weeks, companies might as well just lay off all US employees and allow the government to pick up the tab.
ISM services index rose from 53.8 in June, to 54.3 in July, eliciting another big whoop from perma-bulls, various tea-partiers and clueless analysts, who seem to be everywhere at once this summer.
Dow 10,680.43, +44.05 (0.41%)
NASDAQ 2,303.57, +20.05 (0.88%)
S&P 500 1,127.24, +6.78 (0.61%)
NYSE Composite 7,182.14, +35.15 (0.49%)
Advancing issues dominated decliners on the day, 4577-1880; new highs soared past new lows, 408-68; but volume, as previously mentioned, was the real story, well below normal levels and embarrassingly below what used to serve as average prior to the 2008 meltdown.
NASDAQ Volume 1,881,489,125
NYSE Volume 4,293,061,500
Commodity traders seemed unable to gain traction. Oil paused, dropping 8 cents, to $82.47. Gold gained $8.50, to $1,193.70, though silver did not follow on, losing 14 cents to $18.26.
With new economic data on the horizon, there appears to be no new catalyst with which to lift equities near-term, and longer-term prospects, heading into 2011, also seem pinned to dim, or even false, hopes.
Friday, July 16, 2010
SMASHING! Stock Hammered as Banks, Google Disappoint
The first week of second quarter earnings season actually came to an abrupt end on Tuesday, when all the major indices topped out after a six day rally. Wednesday and Thursday were flat-lined, as nervous investors jockeyed in and out of equities. With options expiring on Friday, the stage was set for a near-panic sell-off, and it was a doozy.
When Bank of America (BAC) and Citigroup (C) followed JP Morgan Chase's lead with unsettling results prior to Friday's open, the trade was set and sellers pounded stocks in the opening minutes. Just before 10:00 am, the university of Michigan's Consumer Sentiment Index delivered another in a series of economic blows, as the gauge fell from 76.0 in June, to 66.5 for the current month. The rout was on, as the Dow soon dipped down 200 points from the previous close.
There was no relief for stockholders in a relentless grind lower which lasted through the end of the session.
For the week, all f the major indices ended with losses, as the Dow finished 100 points lower, the NASDAQ shed 17 points, the S&P 500 surrendered 13 points and the NYSE Composite dropped 99 points.
Dow 10,097.90, -261.41 (2.52%)
NASDAQ 2,179.05, -70.03 (3.11%)
S&P 500 1,064.88, -31.60 (2.88%)
NYSE Composite 6,709.51, -207.30 (3.00%)
As expected, internals told the same stark story. Decliners pounded advancers, 5321-1154, with losers beating winners by a 7:1 margin on the NASDAQ. New highs managed to stay ahead of new lows, 150-124, though that trend is weakening and about to roll over again. Volume was not spectacular, though it was far better then the previous three sessions.
NASDAQ Volume 2,183,108,750
NYSE Volume 6,016,648,500
Stock investors were not alone in their desperation. Commodities were also pummeled in concert with the CPI reading (0.2). Crude for August delivery fell another 61 cents, to $76.01. Gold continued its recent shaky form, losing $20.10, to $1,188.00. Silver followed that lead, dropping 57 cents, to $17.77.
Gold hit its lowest level since May, though it is still well above its 200-day moving average. Silver continues to flirt with its 200-day MA, touching it again today. Any further deterioration in precious metals prices might just spread the panic through the commodity space in a deflationary sell-off.
Bank of America was the Dow's worst performer, losing 1.41, to 13.98, a decline of 9%. Citigroup fell 26 cents, to 3.90, a 6.25% loss. Google, after announcing a slight miss on earnings per share Thursday after the close, was punished with a 7$ decline, off 34.41, to 459.61.
All of this in the middle of earnings season does not bode well for bulls. The next two weeks will be interesting, to say the least, and challenging to see where any support might appear.
When Bank of America (BAC) and Citigroup (C) followed JP Morgan Chase's lead with unsettling results prior to Friday's open, the trade was set and sellers pounded stocks in the opening minutes. Just before 10:00 am, the university of Michigan's Consumer Sentiment Index delivered another in a series of economic blows, as the gauge fell from 76.0 in June, to 66.5 for the current month. The rout was on, as the Dow soon dipped down 200 points from the previous close.
There was no relief for stockholders in a relentless grind lower which lasted through the end of the session.
For the week, all f the major indices ended with losses, as the Dow finished 100 points lower, the NASDAQ shed 17 points, the S&P 500 surrendered 13 points and the NYSE Composite dropped 99 points.
Dow 10,097.90, -261.41 (2.52%)
NASDAQ 2,179.05, -70.03 (3.11%)
S&P 500 1,064.88, -31.60 (2.88%)
NYSE Composite 6,709.51, -207.30 (3.00%)
As expected, internals told the same stark story. Decliners pounded advancers, 5321-1154, with losers beating winners by a 7:1 margin on the NASDAQ. New highs managed to stay ahead of new lows, 150-124, though that trend is weakening and about to roll over again. Volume was not spectacular, though it was far better then the previous three sessions.
NASDAQ Volume 2,183,108,750
NYSE Volume 6,016,648,500
Stock investors were not alone in their desperation. Commodities were also pummeled in concert with the CPI reading (0.2). Crude for August delivery fell another 61 cents, to $76.01. Gold continued its recent shaky form, losing $20.10, to $1,188.00. Silver followed that lead, dropping 57 cents, to $17.77.
Gold hit its lowest level since May, though it is still well above its 200-day moving average. Silver continues to flirt with its 200-day MA, touching it again today. Any further deterioration in precious metals prices might just spread the panic through the commodity space in a deflationary sell-off.
Bank of America was the Dow's worst performer, losing 1.41, to 13.98, a decline of 9%. Citigroup fell 26 cents, to 3.90, a 6.25% loss. Google, after announcing a slight miss on earnings per share Thursday after the close, was punished with a 7$ decline, off 34.41, to 459.61.
All of this in the middle of earnings season does not bode well for bulls. The next two weeks will be interesting, to say the least, and challenging to see where any support might appear.
Wednesday, July 14, 2010
Is This the End of the Rally?
Stocks may have gotten a little ahead of earnings schedule, as there was absolutely no lift to the markets, even after Intel's (INTC) blowout quarter, announced last night after the close.
Struggling all day to find any buying interest, Dow and S&P stocks sent the majority of the day trading just below the flat line, with the NASDAQ sporting slim gains.
After the FOMC minutes were released at 2:00 pm, stocks abruptly turned lower, but traders boosted them back to nearly positive by the end of the session, ending with two indices up and two down, though marginally. Overall, the FOMC minutes may have had the most impact, as the opinions expressed revealed that a majority of Fed governors felt that while the economy would not fall into recession again, growth would be moderate and it would take five or six years for the US economy to regain a solid footing.
That kind of sentiment cannot be encouraging to the general sentiment and it showed up immediately in the lackluster trading and rocky internals.
What seems to be most disconcerting to stocks are technical n nature, as the indices are all toying with the space between the 200-day moving average and the 50-day. In each case, the two have crossed, with the 200-day now declining, along with the 50-day. Moving past the 200-day line will take some very positive news, though any gains in such a sloe environment are unlikely to be lasting. It seems as though the entire earnings season has already been wasted on the past six days, in which the indices already gained 7-8%, a big enough move in any environment. Adding to the confusion is options expiration this Friday, which has no doubt contributed in a big way to the sudden upside surge.
Dow 10,366.72, +3.70 (0.04%)
NASDAQ 2,249.84. +7.81 (0.35%)
S&P 500 1,095.17, -0.17 (0.02%)
NYSE Composite 6,903.36, -4.42 (0.06%)
Declining issues led advancers, 3535-2828, though new high remained well beyond the reach of new lows, 176-41. It should be noted that at this time last year, stocks surged powerfully, and that should negate any strengthening of new lows for a considerable period. Volume was just about average.
NASDAQ Volume 2,165,528,750
NYSE Volume 4,653,667,000
Stocks weren't the only assets stuck in neutral. Commodities hugged the unchanged mark most of the day. Oil lost 11 cents, closing at $77.04. Gold dropped $6.50, to $1,206.80, while silver added 4 cents, to $18.27.
Financial stocks are next up on the calendar, along with PPI and CPI on Thursday and Friday, respectively. JP Morgan Chase (JPM) reports prior to the open on Thursday, with Bank of America (BAC) and Citigroup (C) releasing on Friday.
There have been no major surprises, though retail sales were reportedly weak (not surprising) and Intel's earnings - in an ordinary environment - would have ignited a powerful rally in techs, though none was forthcoming.
An air of extreme caution and pessimism about the future seems to have fully enveloped Wall Street.
Struggling all day to find any buying interest, Dow and S&P stocks sent the majority of the day trading just below the flat line, with the NASDAQ sporting slim gains.
After the FOMC minutes were released at 2:00 pm, stocks abruptly turned lower, but traders boosted them back to nearly positive by the end of the session, ending with two indices up and two down, though marginally. Overall, the FOMC minutes may have had the most impact, as the opinions expressed revealed that a majority of Fed governors felt that while the economy would not fall into recession again, growth would be moderate and it would take five or six years for the US economy to regain a solid footing.
That kind of sentiment cannot be encouraging to the general sentiment and it showed up immediately in the lackluster trading and rocky internals.
What seems to be most disconcerting to stocks are technical n nature, as the indices are all toying with the space between the 200-day moving average and the 50-day. In each case, the two have crossed, with the 200-day now declining, along with the 50-day. Moving past the 200-day line will take some very positive news, though any gains in such a sloe environment are unlikely to be lasting. It seems as though the entire earnings season has already been wasted on the past six days, in which the indices already gained 7-8%, a big enough move in any environment. Adding to the confusion is options expiration this Friday, which has no doubt contributed in a big way to the sudden upside surge.
Dow 10,366.72, +3.70 (0.04%)
NASDAQ 2,249.84. +7.81 (0.35%)
S&P 500 1,095.17, -0.17 (0.02%)
NYSE Composite 6,903.36, -4.42 (0.06%)
Declining issues led advancers, 3535-2828, though new high remained well beyond the reach of new lows, 176-41. It should be noted that at this time last year, stocks surged powerfully, and that should negate any strengthening of new lows for a considerable period. Volume was just about average.
NASDAQ Volume 2,165,528,750
NYSE Volume 4,653,667,000
Stocks weren't the only assets stuck in neutral. Commodities hugged the unchanged mark most of the day. Oil lost 11 cents, closing at $77.04. Gold dropped $6.50, to $1,206.80, while silver added 4 cents, to $18.27.
Financial stocks are next up on the calendar, along with PPI and CPI on Thursday and Friday, respectively. JP Morgan Chase (JPM) reports prior to the open on Thursday, with Bank of America (BAC) and Citigroup (C) releasing on Friday.
There have been no major surprises, though retail sales were reportedly weak (not surprising) and Intel's earnings - in an ordinary environment - would have ignited a powerful rally in techs, though none was forthcoming.
An air of extreme caution and pessimism about the future seems to have fully enveloped Wall Street.
Thursday, May 20, 2010
Global Markets Under Severe Pressure; Stocks Pounded
The most common term being tossed around Wall Street and other financial capitols the past few days has been "de-risking," (which isn't even a real word), or use of the term, "taking off risk," which implies, correctly, that investing in stocks is generally risky business. That's why the game used to be reserved for wealthy, astute investors with money to spare, though today, the market is comprised of everybody from rich company CEOs to the average cabbie or retail worker, through mutual funds, 401k plans, options, hedges and other schemes that serve to make an already risky proposition even more so.
It doesn't take a Gordon Gecko or even a Warren Buffet to understand that when major investments firms are "taking off risk," i.e., selling stock and/or buying protection via puts or covered calls, that the average Joe or Jane should be doing precisely the same. If the big boys are scared, there's usually a very good reason (of which nobody will speak) to get out of the way, and today was a classic example of just how risky investing in stocks can be.
Days like today, and, incidentally, the past two weeks or trading, are precisely what your broker, financial planner or CNBC doesn't want you to know about. Profits can be gone in a flash - a day, a week - like tossing hard-earned money down a sink-hole. The analysts call these kinds of sell-offs "liquidity plays" or "wealth preservation," when all along anyone with half a brain screwed on properly knows that its just part of the game.
The blog you are reading, Money Daily, has been warning for weeks and months that the recovery in the US was artificial and not long-lasting. The airwaves are full of blame for congress and fear over the intricacies over proposed financial regulation, but the truth of the matter is that the financial collapse which began in August 2007, accelerated into the Fall of 2008 and the Winter of 2009, was never really resolved. Financial firms such as Bank of America, Citigroup and Wells Fargo were not liquidated as they should have been, but bailed out by government fiat, using taxpayer dollars to fund the excesses of a banking system gone wild.
Now, those problems are bubbling up under the surface, and, akin to an actual volcano, are about to spew the flotsam of mal-investment all over the markets. Stocks are wickedly overvalued, the US economy is in immediate danger of re-implosion and many parts of he global system, especially Europe, are in worse shape, so get ready for Financial Armageddon Part II, which was correctly forecast here for months and yesterday identified as the breaking point, when the number of daily new lows shot past the corresponding number of new highs, a trend which accelerated today.
All of the major indices closed the session by crashing through their respective 200-day moving averages, and all are in negative territory for the year. All are also off by more than 10% from their recent highs, the technical definition of a correction, though that small tidbit is the least of what's on people's minds. Where the slide may stop has become an open question.
Adding to the myriad of global problems besetting the markets was today's announcement that 471,000 people filed initial unemployment claims in the most recent week. The number of people seeking unemployment benefits has been growing recently, adding to the "double dip" argument, which now seems to have been the correct call after all.
Dow 10,068.01, -376.36 (3.60%)
NASDAQ 2,204.01, -94.36 (4.11%)
S&P 500 1,071.59, -43.46 (3.90%)
NYSE Composite 6,653.00, -274.21 (3.96%)
Not only was there a dearth of buyers in the marketplace, but all the major indices closed at or near their lows of the day and trading volume was spectacular as well. Advancing issues were completely overwhelmed by decliners, 5162-561; new lows superseded new highs, 312-77. The rout is on, and today's action was only the first or second round. The full force of deflation has yet to be fully comprehended or felt by market participants, though the selling in the oil futures should have provided some indication of what's to come, if the stock moves weren't already enough of an indication.
NYSE Volume 9,629,935,000
NASDAQ Volume 3,258,398,750
Crude oil tumbled to fresh, 10-month lows, as the June futures contracted expired and traders were bolting from it like it was the plague. Crude dropped $1.96, to $68.01, though the contract traded as low as the $65 range. Gold slipped $4.80, to $1,187.80, and silver fell another 40 cents, to $17.69, as investors scrambled into cash positions.
There isn't much more to add to today's monstrosity other than it was entirely expected and astute individuals should be already fully in cash or equivalents, tools of trades or illiquid assets of tangible value because this is only the beginning of what may turn out to be a final reckoning for the likes of zombie banks such as Bank of America, Citigroup and Wells Fargo.
It doesn't take a Gordon Gecko or even a Warren Buffet to understand that when major investments firms are "taking off risk," i.e., selling stock and/or buying protection via puts or covered calls, that the average Joe or Jane should be doing precisely the same. If the big boys are scared, there's usually a very good reason (of which nobody will speak) to get out of the way, and today was a classic example of just how risky investing in stocks can be.
Days like today, and, incidentally, the past two weeks or trading, are precisely what your broker, financial planner or CNBC doesn't want you to know about. Profits can be gone in a flash - a day, a week - like tossing hard-earned money down a sink-hole. The analysts call these kinds of sell-offs "liquidity plays" or "wealth preservation," when all along anyone with half a brain screwed on properly knows that its just part of the game.
The blog you are reading, Money Daily, has been warning for weeks and months that the recovery in the US was artificial and not long-lasting. The airwaves are full of blame for congress and fear over the intricacies over proposed financial regulation, but the truth of the matter is that the financial collapse which began in August 2007, accelerated into the Fall of 2008 and the Winter of 2009, was never really resolved. Financial firms such as Bank of America, Citigroup and Wells Fargo were not liquidated as they should have been, but bailed out by government fiat, using taxpayer dollars to fund the excesses of a banking system gone wild.
Now, those problems are bubbling up under the surface, and, akin to an actual volcano, are about to spew the flotsam of mal-investment all over the markets. Stocks are wickedly overvalued, the US economy is in immediate danger of re-implosion and many parts of he global system, especially Europe, are in worse shape, so get ready for Financial Armageddon Part II, which was correctly forecast here for months and yesterday identified as the breaking point, when the number of daily new lows shot past the corresponding number of new highs, a trend which accelerated today.
All of the major indices closed the session by crashing through their respective 200-day moving averages, and all are in negative territory for the year. All are also off by more than 10% from their recent highs, the technical definition of a correction, though that small tidbit is the least of what's on people's minds. Where the slide may stop has become an open question.
Adding to the myriad of global problems besetting the markets was today's announcement that 471,000 people filed initial unemployment claims in the most recent week. The number of people seeking unemployment benefits has been growing recently, adding to the "double dip" argument, which now seems to have been the correct call after all.
Dow 10,068.01, -376.36 (3.60%)
NASDAQ 2,204.01, -94.36 (4.11%)
S&P 500 1,071.59, -43.46 (3.90%)
NYSE Composite 6,653.00, -274.21 (3.96%)
Not only was there a dearth of buyers in the marketplace, but all the major indices closed at or near their lows of the day and trading volume was spectacular as well. Advancing issues were completely overwhelmed by decliners, 5162-561; new lows superseded new highs, 312-77. The rout is on, and today's action was only the first or second round. The full force of deflation has yet to be fully comprehended or felt by market participants, though the selling in the oil futures should have provided some indication of what's to come, if the stock moves weren't already enough of an indication.
NYSE Volume 9,629,935,000
NASDAQ Volume 3,258,398,750
Crude oil tumbled to fresh, 10-month lows, as the June futures contracted expired and traders were bolting from it like it was the plague. Crude dropped $1.96, to $68.01, though the contract traded as low as the $65 range. Gold slipped $4.80, to $1,187.80, and silver fell another 40 cents, to $17.69, as investors scrambled into cash positions.
There isn't much more to add to today's monstrosity other than it was entirely expected and astute individuals should be already fully in cash or equivalents, tools of trades or illiquid assets of tangible value because this is only the beginning of what may turn out to be a final reckoning for the likes of zombie banks such as Bank of America, Citigroup and Wells Fargo.
Friday, April 23, 2010
No Doubt About It: The Banks Stole Your Money
So much for my triple-top theory.
With the Dow putting on gains to close out the week - finishing at new highs for the 8th consecutive week - the world's most watched index is now at 18-month highs, leaving the memories of Lehman Bros., TARP and the painful housing crisis far behind in the memory hole.
But while stocks and traders are rejoicing over their riches, they fail to see, or even understand, the devastation caused by kicking 2 million families out of their homes or 8 million (probably more) out of jobs. Wall Street pros have stars on their foreheads and in their eyes. They obviously do not share the same values as most middle-class Americans.
The rally which began on March 10, 2009 has now reached extraordinary status. It is a full 12 1/2 months old, and the percentage gains off the bottom are simply spectacular.
Let's Recap:
The following are the March 9, 2009 lows, then today's closing prices, followed by the percentage gains.
Dow... 6,547.05 ... 11,204.28 ... +71,13%
S&P 500... 676.53 ... 1,217.28 ... +79.93
NASDAQ... 1,268.64 ... 2,530.15 ... +99.44
NYSE Comp. ... 4,226.31 ... 7,701.61 ... +82.23
There you have it. All anyone had to really do to turn $10,000 into roughly $18,000 over the course of the past 13 months was to buy all the stocks in any index and let it ride. For the rich and powerful, such as the lead traders at Goldman Sachs, the trick was to turn $1 billion or $10 billion into $1.8 billion or $18 billion. Being even more sophisticated, they probably had returns which far outstripped those of the entire indices.
Is there any wonder how the biggest frauds and thieves eve to walk the face of the earth (the leaders of Citigroup, Bank of America, Goldman Sachs, et. al.) were all able to pay back the government's (read: taxpayers) TARP money within a year's time?
Not only did the financial calamity which took the stock market down in the Fall of 2008 through the Winter of 2009 appear to be contrived and driven by the same people who created it, so too the "miraculous" recovery of stocks overall, and their very own firms, to boot.
On March 9, 2009, Bank of America (BAC) closed at 3.74. Citigroup (C) finished the session at 1.05; Goldman Sachs (GS), 73.28; Morgan Stanley (MS), 16.34; JP Morgan Chase (JPM), 15.79; Wells Fargo (WFC), 9.89 (actually closed at 8.06 on March 5).
Today, Bank of America finished the session at 18.43; Citigroup, 4.86; Goldman Sachs, 157.40; Morgan Stanley, 31.94; JP Morgan Chase, 44.94; and Wells Fargo, 33.48.
These are the five largest private sector financial institutions in the country. They've all done exceedingly well over the past 13 months, mostly at the expense of foreclosed-upon homeowners, people strung out on credit cards carrying rates that used to be called usury and millions of unemployed workers who lost their jobs because these bankers and traders convinced most of corporate America that the sky was falling. That the crisis occurred at the very end of the Bush administration's reign of terror was no coincidence. It was easily the greatest crime of all time.
All of these firms ruthlessly cut their dividend payouts to shreds at the height of the crisis and are still paying out less than 1% each. Citigroup pays no dividend. Goldman Sachs is the most generous, at 0.90%, at a time in which they paid their employees 43% of profits. These guys never learned to share.
Wall Street has changed dramatically from the days in which prices were quoted in eighths and sixteenths. Today's "titans" need billions of dollars to fill up their coffers in the highly rigged game of liar's poker. As a market observer - and sometimes participant - of over 35 years, I can safely say I have never seen a crash nor a rally quite as spectacular as the ones witnessed over the past 19 months. And, as the saying goes, "if it looks to good to be true, it probably isn't."
I don't know where this rally will end, or how, but it will, I imagine. Maybe it won't. Maybe the "masters of the universe" will keep stocks on a permanent upward slope in order to capture even more of the world's money supply. After all, government's just keep printing the stuff, so the bankers and frauds have to use up more of it, don't they?
I've been out of this market since December of 2009 and won't venture back in until I see some of these companies' CEOs in leg irons, which means I've probably already made my last investment in equities. I consider the current regime of manipulators and skimmers to be nothing better than common crooks. Having already stolen much of America's private wealth, they're no doubt scheming to steal the rest. At the risk of sounding like a curmudgeon, I'll keep the reporting in this same vein.
Wall Street is the biggest fraud most of us will ever see. enjoy it while it lasts.
Dow 11,204.28 69.99 (0.63%)
NASDAQ 2,530.15 11.08 (0.44%)
S&P 500 1,217.28 8.61 (0.71%)
NYSE Compos 7,701.61 58.78 (0.77%)
Advancers led decliners by a wide margin, 4406-2097. So too, new highs, all 1130 of them, crushed the 68 new lows. Volume was slimmed down from the levels earlier in the week.
NYSE Volume 5,888,237,000.00
NASDAQ Volume 2,434,851,250.00
Oil gained $1.42, to $85.12. Gold gained $10.80, to $1,153.10. Silver was higher by 18 cents, finishing at $18.19.
Everything went up today except your paycheck. Seriously, working has become the toil of suckers. If the "retirement investments" aren't wiped out by the frauds of finance, the taxman will take whatever else there is.
Good grief. Good luck.
With the Dow putting on gains to close out the week - finishing at new highs for the 8th consecutive week - the world's most watched index is now at 18-month highs, leaving the memories of Lehman Bros., TARP and the painful housing crisis far behind in the memory hole.
But while stocks and traders are rejoicing over their riches, they fail to see, or even understand, the devastation caused by kicking 2 million families out of their homes or 8 million (probably more) out of jobs. Wall Street pros have stars on their foreheads and in their eyes. They obviously do not share the same values as most middle-class Americans.
The rally which began on March 10, 2009 has now reached extraordinary status. It is a full 12 1/2 months old, and the percentage gains off the bottom are simply spectacular.
Let's Recap:
The following are the March 9, 2009 lows, then today's closing prices, followed by the percentage gains.
Dow... 6,547.05 ... 11,204.28 ... +71,13%
S&P 500... 676.53 ... 1,217.28 ... +79.93
NASDAQ... 1,268.64 ... 2,530.15 ... +99.44
NYSE Comp. ... 4,226.31 ... 7,701.61 ... +82.23
There you have it. All anyone had to really do to turn $10,000 into roughly $18,000 over the course of the past 13 months was to buy all the stocks in any index and let it ride. For the rich and powerful, such as the lead traders at Goldman Sachs, the trick was to turn $1 billion or $10 billion into $1.8 billion or $18 billion. Being even more sophisticated, they probably had returns which far outstripped those of the entire indices.
Is there any wonder how the biggest frauds and thieves eve to walk the face of the earth (the leaders of Citigroup, Bank of America, Goldman Sachs, et. al.) were all able to pay back the government's (read: taxpayers) TARP money within a year's time?
Not only did the financial calamity which took the stock market down in the Fall of 2008 through the Winter of 2009 appear to be contrived and driven by the same people who created it, so too the "miraculous" recovery of stocks overall, and their very own firms, to boot.
On March 9, 2009, Bank of America (BAC) closed at 3.74. Citigroup (C) finished the session at 1.05; Goldman Sachs (GS), 73.28; Morgan Stanley (MS), 16.34; JP Morgan Chase (JPM), 15.79; Wells Fargo (WFC), 9.89 (actually closed at 8.06 on March 5).
Today, Bank of America finished the session at 18.43; Citigroup, 4.86; Goldman Sachs, 157.40; Morgan Stanley, 31.94; JP Morgan Chase, 44.94; and Wells Fargo, 33.48.
These are the five largest private sector financial institutions in the country. They've all done exceedingly well over the past 13 months, mostly at the expense of foreclosed-upon homeowners, people strung out on credit cards carrying rates that used to be called usury and millions of unemployed workers who lost their jobs because these bankers and traders convinced most of corporate America that the sky was falling. That the crisis occurred at the very end of the Bush administration's reign of terror was no coincidence. It was easily the greatest crime of all time.
All of these firms ruthlessly cut their dividend payouts to shreds at the height of the crisis and are still paying out less than 1% each. Citigroup pays no dividend. Goldman Sachs is the most generous, at 0.90%, at a time in which they paid their employees 43% of profits. These guys never learned to share.
Wall Street has changed dramatically from the days in which prices were quoted in eighths and sixteenths. Today's "titans" need billions of dollars to fill up their coffers in the highly rigged game of liar's poker. As a market observer - and sometimes participant - of over 35 years, I can safely say I have never seen a crash nor a rally quite as spectacular as the ones witnessed over the past 19 months. And, as the saying goes, "if it looks to good to be true, it probably isn't."
I don't know where this rally will end, or how, but it will, I imagine. Maybe it won't. Maybe the "masters of the universe" will keep stocks on a permanent upward slope in order to capture even more of the world's money supply. After all, government's just keep printing the stuff, so the bankers and frauds have to use up more of it, don't they?
I've been out of this market since December of 2009 and won't venture back in until I see some of these companies' CEOs in leg irons, which means I've probably already made my last investment in equities. I consider the current regime of manipulators and skimmers to be nothing better than common crooks. Having already stolen much of America's private wealth, they're no doubt scheming to steal the rest. At the risk of sounding like a curmudgeon, I'll keep the reporting in this same vein.
Wall Street is the biggest fraud most of us will ever see. enjoy it while it lasts.
Dow 11,204.28 69.99 (0.63%)
NASDAQ 2,530.15 11.08 (0.44%)
S&P 500 1,217.28 8.61 (0.71%)
NYSE Compos 7,701.61 58.78 (0.77%)
Advancers led decliners by a wide margin, 4406-2097. So too, new highs, all 1130 of them, crushed the 68 new lows. Volume was slimmed down from the levels earlier in the week.
NYSE Volume 5,888,237,000.00
NASDAQ Volume 2,434,851,250.00
Oil gained $1.42, to $85.12. Gold gained $10.80, to $1,153.10. Silver was higher by 18 cents, finishing at $18.19.
Everything went up today except your paycheck. Seriously, working has become the toil of suckers. If the "retirement investments" aren't wiped out by the frauds of finance, the taxman will take whatever else there is.
Good grief. Good luck.
Tuesday, April 20, 2010
Interested Parties: You, Me and AIG Want Goldman Sachs Money
Recent fraud charges brought by the SEC against Goldman Sachs have brought into focus much of what went wrong in the financial meltdown of 2008.
A shorthand view of the cataclysmic months of September and October, 2008, involve the collapse of Lehman Bros., and extenuating circumstances stemming from unpaid bets against CDOs sold by many of the major US banking interests - Goldman, Bank of America (Countrywide), Citigroup, Wells Fargo (Wachovia). Those bets (call it betting against the line or insurance) were in the form of Credit Default Swaps mostly in the hands of AIG, which went bust to the tune of about $180 billion.
The government stepped in and paid off many of the counterparties, including Goldman Sachs, BofA, and many others, most of them getting 100 cents on the dollar.
With fraud being alleged, plaintiff's attorneys literally around the world are looking into suing Goldman on behalf of clients ranging from small towns to large pension funds to AIG itself. An AIG action would cause considerable consternation for Goldman and its CEO, Lloyd Blankfein, to say nothing of potential monetary damages.
Further down the food chain are millions of US homeowners who may have been swindled by unscrupulous mortgage brokers and the banks themselves. Everybody was writing mortgages, and anyone with a pulse was the qualifying criteria. While the big banks may square off for millions and billions of dollars, a deluge of class action and individual suits could overwhelm already burdened court systems across the country.
Homeowners were taken for various rides with interest only loans, balloon loans, Alt-A's and other variable-rate vehicles, the primary fraudulent factors being almost always the same: inflated incomes on top of inflated appraisals. The volume of loans meeting the fraud standards could run as high as 70% of all loans written between 2003 and 2007, when the sub-prime market reached its climax and then began to quickly deflate.
Naturally, these court cases could run on for years, but the potential litigation fees for adept attorneys could be astronomical. Suing anything and anybody related to the the mortgage or securities industry appears to be a growth sector for the economy, with high hopes to recoup either money or real estate as the eventual goal.
With all that as background, Wall Street will likely remain in a relatively cautious mode, especially once earnings season passes in two weeks. Without a catalyst to move stocks higher, the potential for financial disaster rears its ugly head again and could spook many traders who already aren't overwhelmed with love for the workings of Wall Street.
Stocks pushed ahead again on Tuesday, though there wasn't much lift to the effort, especially concerning Dow stocks. Once again, Goldman Sachs' trading desks were likely underpinning the whole market, keeping the coast clear for Blankfein, et. al.. Volume was decidedly lower than the previous two sessions, an indication that some degree of normalcy has returned, though what normal is in these turbulent times is anybody's guess.
Dow 11,117.06, +25.01 (0.23%)
NASDAQ 2,500.31, +20.20 (0.81%)
S&P 500 1,207.17, +9.65 (0.81%)
NYSE Composite 7,669.11, +72.55 (0.96%)
Gainers beat back losers by a healthy margin, 5102-1418. There were 539 new highs to just 29 new lows.
NYSE Volume 5,797,391,000
NASDAQ Volume 2,006,695,375
Commodities rebounded smartly, with oil gaining $2.00, to $83.45. Gold was up $3.40, to $1,138.60, and silver added 9 cents to $17.82.
The SEC-Goldman Sachs saga is still in the prelude. It's almost a certainty that fireworks will develop out of this singular action, leading to more lawsuits using the SEC's action as a basis for argument. Already, an Italian bank is suing Citigroup, alleging misrepresentation on a complex swap arrangement.
Stay tuned. There's more to come.
A shorthand view of the cataclysmic months of September and October, 2008, involve the collapse of Lehman Bros., and extenuating circumstances stemming from unpaid bets against CDOs sold by many of the major US banking interests - Goldman, Bank of America (Countrywide), Citigroup, Wells Fargo (Wachovia). Those bets (call it betting against the line or insurance) were in the form of Credit Default Swaps mostly in the hands of AIG, which went bust to the tune of about $180 billion.
The government stepped in and paid off many of the counterparties, including Goldman Sachs, BofA, and many others, most of them getting 100 cents on the dollar.
With fraud being alleged, plaintiff's attorneys literally around the world are looking into suing Goldman on behalf of clients ranging from small towns to large pension funds to AIG itself. An AIG action would cause considerable consternation for Goldman and its CEO, Lloyd Blankfein, to say nothing of potential monetary damages.
Further down the food chain are millions of US homeowners who may have been swindled by unscrupulous mortgage brokers and the banks themselves. Everybody was writing mortgages, and anyone with a pulse was the qualifying criteria. While the big banks may square off for millions and billions of dollars, a deluge of class action and individual suits could overwhelm already burdened court systems across the country.
Homeowners were taken for various rides with interest only loans, balloon loans, Alt-A's and other variable-rate vehicles, the primary fraudulent factors being almost always the same: inflated incomes on top of inflated appraisals. The volume of loans meeting the fraud standards could run as high as 70% of all loans written between 2003 and 2007, when the sub-prime market reached its climax and then began to quickly deflate.
Naturally, these court cases could run on for years, but the potential litigation fees for adept attorneys could be astronomical. Suing anything and anybody related to the the mortgage or securities industry appears to be a growth sector for the economy, with high hopes to recoup either money or real estate as the eventual goal.
With all that as background, Wall Street will likely remain in a relatively cautious mode, especially once earnings season passes in two weeks. Without a catalyst to move stocks higher, the potential for financial disaster rears its ugly head again and could spook many traders who already aren't overwhelmed with love for the workings of Wall Street.
Stocks pushed ahead again on Tuesday, though there wasn't much lift to the effort, especially concerning Dow stocks. Once again, Goldman Sachs' trading desks were likely underpinning the whole market, keeping the coast clear for Blankfein, et. al.. Volume was decidedly lower than the previous two sessions, an indication that some degree of normalcy has returned, though what normal is in these turbulent times is anybody's guess.
Dow 11,117.06, +25.01 (0.23%)
NASDAQ 2,500.31, +20.20 (0.81%)
S&P 500 1,207.17, +9.65 (0.81%)
NYSE Composite 7,669.11, +72.55 (0.96%)
Gainers beat back losers by a healthy margin, 5102-1418. There were 539 new highs to just 29 new lows.
NYSE Volume 5,797,391,000
NASDAQ Volume 2,006,695,375
Commodities rebounded smartly, with oil gaining $2.00, to $83.45. Gold was up $3.40, to $1,138.60, and silver added 9 cents to $17.82.
The SEC-Goldman Sachs saga is still in the prelude. It's almost a certainty that fireworks will develop out of this singular action, leading to more lawsuits using the SEC's action as a basis for argument. Already, an Italian bank is suing Citigroup, alleging misrepresentation on a complex swap arrangement.
Stay tuned. There's more to come.
Tuesday, January 19, 2010
The Three C's of Business
A long time ago, I used to own a number of weekly newspapers, one of which I started from scratch, and with the success of that enterprise was able to parlay into purchasing a building, my own presses, a complete print shop, four other weeklies and a world of headaches.
Nonetheless, when I was in my entrepreneurial heyday, I was often asked what had gotten me to my level of success. There really were a variety of correct answers, but mostly my drive, desire and commitment to become a viable media player were the factors which got me from nowhere to somewhere better.
At one point, I came up with the idea of the Three Cs for business success. They actually relate to just about any field of business endeavor, and I rediscovered them deep in my subconscious just last night over a couple of beers.
The Three Cs for Business Success:
Confidence - This is probably the most important and frequently overlooked factor in one's business life. A confident person is one who walks with his or her head high, beaming with enthusiasm about what they are doing. Confidence can wane or rise, depending on a wide number of factors. Everything from your sex life to cloudy weather contributes to your overall psychological makeup, and it's important to keep an eye on one's own confidence level because in life, as in business, others can sense desperation, apathy and all the other malevolent emotions which can lower one's self-esteem.
Oddly enough, we may not even know when our own confidence is lacking, but, sure enough, others can sense it. Some ways to keep your confidence high is to take on tough tasks at work or even in your own sphere. I actually build my confidence by doing crossword puzzles and Sudoku, those oriental numbers puzzles that have become all the rage of the latte and newspaper crowd. Just recently, I began doing Sudoku because I thought I couldn't. After struggling with the first medium level puzzle over a number of failed attempts, I finally set my mind to it and got it. Now I scream through Sudoku and crossword puzzles. Every time I successfully complete one, my confidence - that I can do anything if I set my mind to it - grows. Yours can too.
Competence - With every task in life, one must be prepared and have the proper tools with which to complete the task. A plumber without wrenches or a carpenter without a saw could not do a professional job, thus, the need for the right tools in the hands of a competent craftsman. Business is no different. The mor one knows about a particular line of work, the better he or she can become at it. You wouldn't go into a real estate negotiation if you were a product line manager for soft drinks, would you? Knowing your field of endeavor and working at it until you become highly skilled is an invaluable asset in business. Competent workers, managers or executives are difficult to find, and, usually, because they are often bright and have entrepreneurial instincts, are equally difficult to please and/or keep as employees.
Cash - You can't do much of anything without money. You could have the greatest ideas on the planet, but without the means to market them - meaning mostly money - those ideas will wither and die on the vine like overripe grapes in the sun. The saying, "cash is king" is almost always true. Cash gets better deals, better terms, and is respected the world over. A person with a sizable cash position can accomplish almost anything, especially the means by which to acquire more cash. Having a strong cash position cannot be understated. Cash does not have to deal with flat-headed bankers, testy suppliers or drawn-out negotiations. Cash, when it is used as a means to obtain credit, proves itself even more valuable. A person with $100,000 need not spend it on what he or she wants, but can use it as collateral on a loan of the same amount, and once creditworthiness is established, even more and at lower interest rates.
People with substantial amounts of cash generally don't bother with credit unless there's a definite advantage to keeping one's cash in hand, which often there is, especially on larger deals. If you want respect in the business community, pay with cash, have a large amount of cash on hand at all times and deals and offers will find you.
-----------------------
In the markets today, stocks were all the rage, as the major indices bounced back from Friday's down day. Investors looked right past Citigroup's horrifyingly large loan losses toward the health care sector, where the Massachusetts senate seat formerly held by Ted Kennedy was trending toward the Republican in the race, Scott Brown, who held a narrow lead in the polls over Democrat Martha Coakley. Voting ends at 8:00 pm ET. The significance is that if Brown wins, the democrats will no longer have a super-majority (60 seats) in the senate, and the year-long battle to push through health care reform - which is hated from almost all sides - may go up in smoke and signal a strong victory for not just the Republican party, but for democracy in general.
Dow 10,725.43, +115.78 (1.09%)
NASDAQ 2,320.40, +32.41 (1.42%)
S&P 500 1,150.23, +14.20 (1.25%)
NYSE Composite 7,443.68, +86.89 (1.18%)
Advancing issues beat down decliners, 4847-1550, a better-than 3:1 ratio. There were 573 new highs to just 62 new lows, though volume was moderate.
NYSE Volume 5,194,738,000
NASDAQ Volume 2,079,933,000
Oil managed a gain of just 5 cents, to $78.05, while natural gas fell 11 cents, to $5.54. Milder weather and a glut of energy supplies are beginning to kick in as Winter progresses. Without anything upon which to slap up higher prices besides the idea that certain large energy conglomerates want to make more money, energy prices should continue to decline into Spring.
Not so with the metals, though, as they had another banner day. Gold gained $10.00, to $1,140.50. Silver was up 37 cents to $18.80, the highest closing price since December 4, 2009, and close to the 21-month high of $19.18.
Nonetheless, when I was in my entrepreneurial heyday, I was often asked what had gotten me to my level of success. There really were a variety of correct answers, but mostly my drive, desire and commitment to become a viable media player were the factors which got me from nowhere to somewhere better.
At one point, I came up with the idea of the Three Cs for business success. They actually relate to just about any field of business endeavor, and I rediscovered them deep in my subconscious just last night over a couple of beers.
The Three Cs for Business Success:
Confidence - This is probably the most important and frequently overlooked factor in one's business life. A confident person is one who walks with his or her head high, beaming with enthusiasm about what they are doing. Confidence can wane or rise, depending on a wide number of factors. Everything from your sex life to cloudy weather contributes to your overall psychological makeup, and it's important to keep an eye on one's own confidence level because in life, as in business, others can sense desperation, apathy and all the other malevolent emotions which can lower one's self-esteem.
Oddly enough, we may not even know when our own confidence is lacking, but, sure enough, others can sense it. Some ways to keep your confidence high is to take on tough tasks at work or even in your own sphere. I actually build my confidence by doing crossword puzzles and Sudoku, those oriental numbers puzzles that have become all the rage of the latte and newspaper crowd. Just recently, I began doing Sudoku because I thought I couldn't. After struggling with the first medium level puzzle over a number of failed attempts, I finally set my mind to it and got it. Now I scream through Sudoku and crossword puzzles. Every time I successfully complete one, my confidence - that I can do anything if I set my mind to it - grows. Yours can too.
Competence - With every task in life, one must be prepared and have the proper tools with which to complete the task. A plumber without wrenches or a carpenter without a saw could not do a professional job, thus, the need for the right tools in the hands of a competent craftsman. Business is no different. The mor one knows about a particular line of work, the better he or she can become at it. You wouldn't go into a real estate negotiation if you were a product line manager for soft drinks, would you? Knowing your field of endeavor and working at it until you become highly skilled is an invaluable asset in business. Competent workers, managers or executives are difficult to find, and, usually, because they are often bright and have entrepreneurial instincts, are equally difficult to please and/or keep as employees.
Cash - You can't do much of anything without money. You could have the greatest ideas on the planet, but without the means to market them - meaning mostly money - those ideas will wither and die on the vine like overripe grapes in the sun. The saying, "cash is king" is almost always true. Cash gets better deals, better terms, and is respected the world over. A person with a sizable cash position can accomplish almost anything, especially the means by which to acquire more cash. Having a strong cash position cannot be understated. Cash does not have to deal with flat-headed bankers, testy suppliers or drawn-out negotiations. Cash, when it is used as a means to obtain credit, proves itself even more valuable. A person with $100,000 need not spend it on what he or she wants, but can use it as collateral on a loan of the same amount, and once creditworthiness is established, even more and at lower interest rates.
People with substantial amounts of cash generally don't bother with credit unless there's a definite advantage to keeping one's cash in hand, which often there is, especially on larger deals. If you want respect in the business community, pay with cash, have a large amount of cash on hand at all times and deals and offers will find you.
-----------------------
In the markets today, stocks were all the rage, as the major indices bounced back from Friday's down day. Investors looked right past Citigroup's horrifyingly large loan losses toward the health care sector, where the Massachusetts senate seat formerly held by Ted Kennedy was trending toward the Republican in the race, Scott Brown, who held a narrow lead in the polls over Democrat Martha Coakley. Voting ends at 8:00 pm ET. The significance is that if Brown wins, the democrats will no longer have a super-majority (60 seats) in the senate, and the year-long battle to push through health care reform - which is hated from almost all sides - may go up in smoke and signal a strong victory for not just the Republican party, but for democracy in general.
Dow 10,725.43, +115.78 (1.09%)
NASDAQ 2,320.40, +32.41 (1.42%)
S&P 500 1,150.23, +14.20 (1.25%)
NYSE Composite 7,443.68, +86.89 (1.18%)
Advancing issues beat down decliners, 4847-1550, a better-than 3:1 ratio. There were 573 new highs to just 62 new lows, though volume was moderate.
NYSE Volume 5,194,738,000
NASDAQ Volume 2,079,933,000
Oil managed a gain of just 5 cents, to $78.05, while natural gas fell 11 cents, to $5.54. Milder weather and a glut of energy supplies are beginning to kick in as Winter progresses. Without anything upon which to slap up higher prices besides the idea that certain large energy conglomerates want to make more money, energy prices should continue to decline into Spring.
Not so with the metals, though, as they had another banner day. Gold gained $10.00, to $1,140.50. Silver was up 37 cents to $18.80, the highest closing price since December 4, 2009, and close to the 21-month high of $19.18.
Friday, January 15, 2010
Got Bank Stocks? Sell Them on Monday.
Ever since the financial meltdown - which actually began in August of 2007 (Trust me, I'm a doctor.) when the Primary Trend in the Down Jones Industrials turned from a bull to a bear - the banks have gotten a lot of attention. Many of us do our banking at either a locally-owned bank or a friendly Credit Union. If you're smart enough to have made the decision to keep your money out of major national banks, good or you.
The too-big-to-fail national banks - Bank of America, Wells Fargo, Citigroup and JP Morgan Chase - also known as money center banks, are the main reason for the economic calamity which still grips this country, and to a lesser extent, the rest of the world. These were the ones engaged in all that risky behavior with sub-prime mortgages, credit default swaps and, more recently, the bailouts. Add to them Goldman Sachs and Morgan Stanley and you have the gang of six which nearly brought down Western capitalism as we know it.
Two of their brethren - Bear Stearns and Lehman Bros. - could not be saved, and were more than likely swallowed up more or less whole to hide the extent of the fraud, inside dealings, manipulations and other horse-trading that was so widespread during the late 90s and though the first years of the new millennium. What's troubling is that they are nowhere near out of the woods. The four big banks mentioned above are nearly insolvent. Only free money from the Federal Reserve, in the form of overnight loans at just about ZERO percent, has kept them from complete collapse. They are still poring though the toxic assets on their books, hiding and keeping off market millions of foreclosed homes and struggling to stay in business.
In case you're unaware of the ongoing problems with the big banks, just consider: JP Morgan's provision for credit losses totaled $7.28 billion during the fourth quarter.
That's about all you have to know... well, and that the other banks will report similar losses. Somehow, through financial alchemy which only the banks can perform, JP Morgan Chase posted a 4th quarter profit. Let's face it, They're full of brown stuff. Credit card delinquencies were at 8.64% in the 4th quarter. People are defaulting on credit cards at an historic rate. They're also walking away from homes in droves, many of them because they are upside-down, in other words, the amount of the mortgage exceeds the fair market price of the home.
Without work and with mortgages higher than the value of their homes, the latest trend is to make a strategic default, either through bankruptcy or by just failing to make mortgage payments, leading to the eventual foreclosure. This is what's known as a self-reinforcing feedback loop. The more home prices fall, the more people default, leading to more foreclosures and lower prices again. Soon enough, it's going to become cheaper to rent than to own as vulture landlords scoop up the foreclosed properties at a fraction of their value and rent them out to strapped, credit-less former homeowners.
The banks will never survive the onslaught of foreclosures that are due to escalate once again this Spring. Common practices by the banks now are to offer buy-downs, short sales, loan modifications and extensions in order to avoid foreclosure. Once a property is foreclosed upon, the banks are on the hook for the upkeep of the property and the taxes. With homes in some areas sitting on the market for a year to two years, eventually selling for much less than the foreclosed value, the banks are in a tough spot and doing all they can to prevent foreclosure, a lengthy, expensive process which seldom produces a positive result.
Eventually, in a foreclosure, the bank gets the property, the homeowner is put out and the vacant property deteriorates, leading to further losses. There are numerous reports, especially in the Northeastern "rust belt" of banks starting foreclosures but never finishing the process. Homeowners, thinking they have to bail, leave the property, only to receive tax bills later on, because the bank did not proceed with the sheriff's sale.
The whole mess is not going to end soon or well. It's going to take 6-10 years for the banks to work off the excesses of the sub-prime credit expansion. In The meantime, property values and interest rates will remain at historically low levels. If you own shares of any of the aforementioned banks, you should dump them if you haven't already. In fact, with the market close to highs, today could have been a warning shot for further declines to come. The economy continues to stumble along and eventually, the stock wizards will get out of the way, Government bailouts and stimulus have only paved the way for another round of declines in the stock market and in prices generally.
Dow 10,609.65, -100.90 (0.94%)
NASDAQ 2,287.99, -28.75 (1.24%)
S&P 500 1,136.03, -12.43 (1.08%)
NYSE Composite 7,356.79, -91.73 (1.23%)
Losers beat winners by a wide margin, 4664-1864; there were still 340 new highs, to just 44 new lows. Volume was substantially better than it has been all week. Uh, oh.
NYSE Volume 5,426,332,500
NASDAQ Volume 2,662,195,750
With the dollar stronger, oil took a nosedive, losing $1.44, to $78.00 (still too high). Gold lost $12.00, to $1,131.00. Silver was down 22 cents, to $18.44. The pause in the rise of the precious metals may be signaling a buy. If the economy worsens, the dollar should weaken (though as gauged against other currencies, some of which aren't doing very well themselves, the dollar may just waffle around), sending gold and silver higher. Even if the dollar doesn't lose value, the metals may still be the play as more and more people look for their perceived safety.
Tip for the day: Go to a coin dealer and buy a common silver dollar, or, as many as you can reasonably afford to put away for a couple of years. It's a near-certainty they'll be worth just as much or more in 2012. You can't say that about any other asset class, except maybe bonds.
The too-big-to-fail national banks - Bank of America, Wells Fargo, Citigroup and JP Morgan Chase - also known as money center banks, are the main reason for the economic calamity which still grips this country, and to a lesser extent, the rest of the world. These were the ones engaged in all that risky behavior with sub-prime mortgages, credit default swaps and, more recently, the bailouts. Add to them Goldman Sachs and Morgan Stanley and you have the gang of six which nearly brought down Western capitalism as we know it.
Two of their brethren - Bear Stearns and Lehman Bros. - could not be saved, and were more than likely swallowed up more or less whole to hide the extent of the fraud, inside dealings, manipulations and other horse-trading that was so widespread during the late 90s and though the first years of the new millennium. What's troubling is that they are nowhere near out of the woods. The four big banks mentioned above are nearly insolvent. Only free money from the Federal Reserve, in the form of overnight loans at just about ZERO percent, has kept them from complete collapse. They are still poring though the toxic assets on their books, hiding and keeping off market millions of foreclosed homes and struggling to stay in business.
In case you're unaware of the ongoing problems with the big banks, just consider: JP Morgan's provision for credit losses totaled $7.28 billion during the fourth quarter.
That's about all you have to know... well, and that the other banks will report similar losses. Somehow, through financial alchemy which only the banks can perform, JP Morgan Chase posted a 4th quarter profit. Let's face it, They're full of brown stuff. Credit card delinquencies were at 8.64% in the 4th quarter. People are defaulting on credit cards at an historic rate. They're also walking away from homes in droves, many of them because they are upside-down, in other words, the amount of the mortgage exceeds the fair market price of the home.
Without work and with mortgages higher than the value of their homes, the latest trend is to make a strategic default, either through bankruptcy or by just failing to make mortgage payments, leading to the eventual foreclosure. This is what's known as a self-reinforcing feedback loop. The more home prices fall, the more people default, leading to more foreclosures and lower prices again. Soon enough, it's going to become cheaper to rent than to own as vulture landlords scoop up the foreclosed properties at a fraction of their value and rent them out to strapped, credit-less former homeowners.
The banks will never survive the onslaught of foreclosures that are due to escalate once again this Spring. Common practices by the banks now are to offer buy-downs, short sales, loan modifications and extensions in order to avoid foreclosure. Once a property is foreclosed upon, the banks are on the hook for the upkeep of the property and the taxes. With homes in some areas sitting on the market for a year to two years, eventually selling for much less than the foreclosed value, the banks are in a tough spot and doing all they can to prevent foreclosure, a lengthy, expensive process which seldom produces a positive result.
Eventually, in a foreclosure, the bank gets the property, the homeowner is put out and the vacant property deteriorates, leading to further losses. There are numerous reports, especially in the Northeastern "rust belt" of banks starting foreclosures but never finishing the process. Homeowners, thinking they have to bail, leave the property, only to receive tax bills later on, because the bank did not proceed with the sheriff's sale.
The whole mess is not going to end soon or well. It's going to take 6-10 years for the banks to work off the excesses of the sub-prime credit expansion. In The meantime, property values and interest rates will remain at historically low levels. If you own shares of any of the aforementioned banks, you should dump them if you haven't already. In fact, with the market close to highs, today could have been a warning shot for further declines to come. The economy continues to stumble along and eventually, the stock wizards will get out of the way, Government bailouts and stimulus have only paved the way for another round of declines in the stock market and in prices generally.
Dow 10,609.65, -100.90 (0.94%)
NASDAQ 2,287.99, -28.75 (1.24%)
S&P 500 1,136.03, -12.43 (1.08%)
NYSE Composite 7,356.79, -91.73 (1.23%)
Losers beat winners by a wide margin, 4664-1864; there were still 340 new highs, to just 44 new lows. Volume was substantially better than it has been all week. Uh, oh.
NYSE Volume 5,426,332,500
NASDAQ Volume 2,662,195,750
With the dollar stronger, oil took a nosedive, losing $1.44, to $78.00 (still too high). Gold lost $12.00, to $1,131.00. Silver was down 22 cents, to $18.44. The pause in the rise of the precious metals may be signaling a buy. If the economy worsens, the dollar should weaken (though as gauged against other currencies, some of which aren't doing very well themselves, the dollar may just waffle around), sending gold and silver higher. Even if the dollar doesn't lose value, the metals may still be the play as more and more people look for their perceived safety.
Tip for the day: Go to a coin dealer and buy a common silver dollar, or, as many as you can reasonably afford to put away for a couple of years. It's a near-certainty they'll be worth just as much or more in 2012. You can't say that about any other asset class, except maybe bonds.
Saturday, November 28, 2009
Short Session, Big Losses on Dubai Debt
Friday's abbreviated session answered the question of why stocks did not advance much in Wednesday's pre-holiday trading, when all of the economic news was positive. Overhanging the market was word from Dubai - on Wednesday - that the government was requesting a six-month moratorium on interest payments, mostly from its major real estate developer, Dubai World.
While the news did not noticeably affect markets in the US, the news shook Asian and European markets violently on Thursday. US stock exchanges were closed for Thanksgiving.
Quoting the NY Times:
At the open on Friday, stock futures were indicating a massive sell-off, with Dow futures down more than 200 points. After an initial selling spree which sent the Dow down more than 230 points, cooler heads prevailed for a time, bringing the indices back to some level of respectability and calm. By the close, however, fears of another round of banking crises had investors scurrying for the exits, not wanting to hold positions over a weekend in which many of these issues would be pondered.
Dow 10,309.92, -154.48 (1.48%)
NASDAQ 2,138.44, -37.61 (1.73%)
S&P 500 1,091.49, -19.14 (1.72%)
NYSE Composite 7,070.09, -162.03 (2.24%)
On the day, declining issues far outpaced advancers, 5211-1086. New highs held a slim edge over new lows, 98-85. Volume was only average, indicating a hope that markets would return to a more normal tone in days ahead. There was little panic to speak of, though every sector finished in the red.
NYSE Volume 2,846,343,000
NASDAQ Volume 972,038,750
Commodities took the bigger hit. Oil tumbled $3.06, to $74.90, its lowest close in months. Gold fell $12.60, to $1,176.00, though the price had fallen by as much as $30 during the day. Silver slipped 47 cents, holding at $18.34.
What Dubai means to US banking interests is a relatively small matter, as only Bank of America (BAC) and Citigroup (C) hold anything approaching what would be considered large obligations. The general fear - a holdover from last year's major meltdown - is a more severe liquidity issue, cascading across the financial landscape in unpaid loans and the roll-over of resultant guarantees (Credit Default Swaps) which would put more banks at risk.
While it is possible that another severe shock could ensue, it's more likely that central banks will intervene in the interest of the banks, propping them up with more guarantees and looser credit facilities, much like last year's rescue. Still, there are palpable fears out there, that the entire system is prone to disruptions like this as more emerging markets face similar issues.
Paper money rolling off printing presses at high speed can only delay the inevitable. Eventually, losses must be taken or parties made whole. The most probable outcome is continuation of the deflationary spiral, which the central bankers of the world wish to avoid.
The simplest way to understand the issue is in terms of mortgages. As more money is pumped into the system, chasing the bad, assets - everything from stocks to houses - become less valuable. The home purchased for $200,000 a year ago is only worth $160,000, an so on. Devaluing currencies to reflect lower asset values, a hard, painful choice, seems the proper medicine, but one which world banking and political leaders have yet refused to consider.
While the news did not noticeably affect markets in the US, the news shook Asian and European markets violently on Thursday. US stock exchanges were closed for Thanksgiving.
Quoting the NY Times:
According to data from the Bank for International Settlements, foreign banks have $130 billion of exposure to the United Arab Emirates, with Britain having the largest exposure, $51 billion. Banks in the United States have debts of $13 billion.
At the open on Friday, stock futures were indicating a massive sell-off, with Dow futures down more than 200 points. After an initial selling spree which sent the Dow down more than 230 points, cooler heads prevailed for a time, bringing the indices back to some level of respectability and calm. By the close, however, fears of another round of banking crises had investors scurrying for the exits, not wanting to hold positions over a weekend in which many of these issues would be pondered.
Dow 10,309.92, -154.48 (1.48%)
NASDAQ 2,138.44, -37.61 (1.73%)
S&P 500 1,091.49, -19.14 (1.72%)
NYSE Composite 7,070.09, -162.03 (2.24%)
On the day, declining issues far outpaced advancers, 5211-1086. New highs held a slim edge over new lows, 98-85. Volume was only average, indicating a hope that markets would return to a more normal tone in days ahead. There was little panic to speak of, though every sector finished in the red.
NYSE Volume 2,846,343,000
NASDAQ Volume 972,038,750
Commodities took the bigger hit. Oil tumbled $3.06, to $74.90, its lowest close in months. Gold fell $12.60, to $1,176.00, though the price had fallen by as much as $30 during the day. Silver slipped 47 cents, holding at $18.34.
What Dubai means to US banking interests is a relatively small matter, as only Bank of America (BAC) and Citigroup (C) hold anything approaching what would be considered large obligations. The general fear - a holdover from last year's major meltdown - is a more severe liquidity issue, cascading across the financial landscape in unpaid loans and the roll-over of resultant guarantees (Credit Default Swaps) which would put more banks at risk.
While it is possible that another severe shock could ensue, it's more likely that central banks will intervene in the interest of the banks, propping them up with more guarantees and looser credit facilities, much like last year's rescue. Still, there are palpable fears out there, that the entire system is prone to disruptions like this as more emerging markets face similar issues.
Paper money rolling off printing presses at high speed can only delay the inevitable. Eventually, losses must be taken or parties made whole. The most probable outcome is continuation of the deflationary spiral, which the central bankers of the world wish to avoid.
The simplest way to understand the issue is in terms of mortgages. As more money is pumped into the system, chasing the bad, assets - everything from stocks to houses - become less valuable. The home purchased for $200,000 a year ago is only worth $160,000, an so on. Devaluing currencies to reflect lower asset values, a hard, painful choice, seems the proper medicine, but one which world banking and political leaders have yet refused to consider.
Thursday, October 15, 2009
Late Day Action Boosts Stocks; Google Soars; IBM Sours
As is often the case during earnings season, much of the real action happened after the closing bell. That was when tech bellwethers Google (GOOG) and IBM (IBM) announced third quarter earnings results. But first, a recap of the day's trading, which was, by most accounts, choppy and surprising at the end.
Stocks spent most of the day in a narrow range just below the break even line. Around 2:30 pm, the major indices managed to pop into the green and stayed there into the close, marking new 2009 highs for the major indices. These moves were in spite of the chorus of boos surrounding Goldman Sach's 3rd quarter earnings announcement before the bell, which was better than expectations, but not good enough to keep the stock from sliding throughout the session. Most of the interest was focused not on Goldman's stellar 3rd quarter, but on the bonuses being paid to executives.
The company practically owns the deal-making space, now that Bear Stearns and Lehman Bros. have departed, and they made boatloads of money - $3.19 billion, beating the estimates handily - but because of a Meredith Whitney downgrade on Tuesday (based on valuation - Goldman shares have nearly quadrupled since last November) and general dislike for the firm many believe runs the government, the banking business and most of the known universe. Like them or hate them, making 300% on your money in a year isn't hard to take. Sure, they pay their executives handsomely, but they bring in huge money for their shareholders, so the only people griping are those not smart enough to have gotten on the bandwagon.
The stock lost a whole 3 points and change on the day. I'm sure owners of the stock are really crying in their champagne.
Also before the bell was the usual horrid unemployment claims number. Another 514,000 Americans filed for unemployment benefits this week. These numbers cannot be taken seriously. First, unemployment benefits are so easy to come by these days that the people claiming them probably shouldn't even be counted as seriously unemployed. All you have to do is a poor job and somebody will certainly furlough you. Additionally, according to the figures, which have been over 500,000 for more than a year, there have been at least 25 million people collecting benefits in the past 12 months. That's an enormous figure, even in bad times. What matters more is how long these people stay out of work, not how many are stepping up to the collection plate.
The number of people still collecting benefits fell below 6 million, and that number has been trending lower for months, a positive sign for the economy.
Citigroup also reported before the bell and the results were mixed. The company which received the most assistance from the feds, and is partially owned by you ,me, and our neighbors across America, hasn't done a very good job of managing our money, which came as no surprise and had little influence on the general market.
Dow 10,062.94, +47.08 (0.47%)
NASDAQ 2,173.29, +1.06 (0.05%)
S&P 500 1,096.56, +4.54 (0.42%)
NYSE Composite 7,204.05. +21.67 (0.30%)
Declining issues finished slightly ahead of advancers, 3338-3081. There were 727 new highs to just 73 new lows. Volume was in the range it's been since Tuesday. There is still a ton of money on the sidelines, missing out on the rally. This stagnant money will be great for savvy traders, because when it finally does come in, it will send a strong selling signal at a supposed market top. Smart guys and gals will be able to maximize profits upon exiting. Look for an unusually high volume number to send the signal that it's time to unload.
NYSE Volume 6,184,697,500
NASDAQ Volume 2,199,385,750
Commodities were led by oil, which gained $2.40, to $77.58. The price of oil, and its derivative, gas, is approaching a level at which it can damage the economic recovery. more money being spent on fuel means less to spend on all the other things Americans enjoy. Though there's unanimity in the chorus of oil traders that the price will go higher, I'd still not engage in that trade as it can only go so far before crimping its own demand. Many would agree that it's already too high, but, since all hatred is currently focused on bankers, the oil moguls are getting a free ride. Buy some Chevron or ExxonMobil stock if you don't like the higher prices for gas. The gains will even out, and if prices do fall, your stock will only be worth a little less. It's a zero sum trade if you play it properly.
The precious metals were hit by profit taking. Gold sold off to $1,050.60, a key inflection point, down by $14.10. Silver dipped 49 cents, to $17.42.
As for Google, the company posted its largest profit and revenue ever. That about covers the state of the internet. Technology companies are extremely healthy, with squeaky clean balance sheets. Like Google, most of the larger ones have no, or very small amounts of, debt.
IBM also beat forecasts, but revenue slipped. Big Blue is still recovering from the last year in which many of its major clients suffered or went out of business. They're doing just fine, however, having hit new 52-week highs in just the past week.
Google also posted a string of new 52-week highs in recent days. The search giant is branching out into other areas, a sign that they feel supremely confident about the economy going forward.
You should too.
Stocks spent most of the day in a narrow range just below the break even line. Around 2:30 pm, the major indices managed to pop into the green and stayed there into the close, marking new 2009 highs for the major indices. These moves were in spite of the chorus of boos surrounding Goldman Sach's 3rd quarter earnings announcement before the bell, which was better than expectations, but not good enough to keep the stock from sliding throughout the session. Most of the interest was focused not on Goldman's stellar 3rd quarter, but on the bonuses being paid to executives.
The company practically owns the deal-making space, now that Bear Stearns and Lehman Bros. have departed, and they made boatloads of money - $3.19 billion, beating the estimates handily - but because of a Meredith Whitney downgrade on Tuesday (based on valuation - Goldman shares have nearly quadrupled since last November) and general dislike for the firm many believe runs the government, the banking business and most of the known universe. Like them or hate them, making 300% on your money in a year isn't hard to take. Sure, they pay their executives handsomely, but they bring in huge money for their shareholders, so the only people griping are those not smart enough to have gotten on the bandwagon.
The stock lost a whole 3 points and change on the day. I'm sure owners of the stock are really crying in their champagne.
Also before the bell was the usual horrid unemployment claims number. Another 514,000 Americans filed for unemployment benefits this week. These numbers cannot be taken seriously. First, unemployment benefits are so easy to come by these days that the people claiming them probably shouldn't even be counted as seriously unemployed. All you have to do is a poor job and somebody will certainly furlough you. Additionally, according to the figures, which have been over 500,000 for more than a year, there have been at least 25 million people collecting benefits in the past 12 months. That's an enormous figure, even in bad times. What matters more is how long these people stay out of work, not how many are stepping up to the collection plate.
The number of people still collecting benefits fell below 6 million, and that number has been trending lower for months, a positive sign for the economy.
Citigroup also reported before the bell and the results were mixed. The company which received the most assistance from the feds, and is partially owned by you ,me, and our neighbors across America, hasn't done a very good job of managing our money, which came as no surprise and had little influence on the general market.
Dow 10,062.94, +47.08 (0.47%)
NASDAQ 2,173.29, +1.06 (0.05%)
S&P 500 1,096.56, +4.54 (0.42%)
NYSE Composite 7,204.05. +21.67 (0.30%)
Declining issues finished slightly ahead of advancers, 3338-3081. There were 727 new highs to just 73 new lows. Volume was in the range it's been since Tuesday. There is still a ton of money on the sidelines, missing out on the rally. This stagnant money will be great for savvy traders, because when it finally does come in, it will send a strong selling signal at a supposed market top. Smart guys and gals will be able to maximize profits upon exiting. Look for an unusually high volume number to send the signal that it's time to unload.
NYSE Volume 6,184,697,500
NASDAQ Volume 2,199,385,750
Commodities were led by oil, which gained $2.40, to $77.58. The price of oil, and its derivative, gas, is approaching a level at which it can damage the economic recovery. more money being spent on fuel means less to spend on all the other things Americans enjoy. Though there's unanimity in the chorus of oil traders that the price will go higher, I'd still not engage in that trade as it can only go so far before crimping its own demand. Many would agree that it's already too high, but, since all hatred is currently focused on bankers, the oil moguls are getting a free ride. Buy some Chevron or ExxonMobil stock if you don't like the higher prices for gas. The gains will even out, and if prices do fall, your stock will only be worth a little less. It's a zero sum trade if you play it properly.
The precious metals were hit by profit taking. Gold sold off to $1,050.60, a key inflection point, down by $14.10. Silver dipped 49 cents, to $17.42.
As for Google, the company posted its largest profit and revenue ever. That about covers the state of the internet. Technology companies are extremely healthy, with squeaky clean balance sheets. Like Google, most of the larger ones have no, or very small amounts of, debt.
IBM also beat forecasts, but revenue slipped. Big Blue is still recovering from the last year in which many of its major clients suffered or went out of business. They're doing just fine, however, having hit new 52-week highs in just the past week.
Google also posted a string of new 52-week highs in recent days. The search giant is branching out into other areas, a sign that they feel supremely confident about the economy going forward.
You should too.
Friday, July 17, 2009
Split Friday, Positive Week for Stocks
Earnings results were just good enough - from Bank of America and Citigroup's weakness, to IBM and Google's strength - to push stocks modestly into positive territory for the day on two exchanges and marginally in the red on two others. The general ambivalence displayed by the day's trading is indicative of another topping out, or, at least a weekend resting point, as the Dow has rung up gains for 5 straight sessions, the NASDAQ, 6. It's a winning streak worthy of note and one that put an end to 4 consecutive losing weeks.
Over the past five sessions the Dow has tacked on an impressive 597 points, the NASDAQ perked up 130; the S&P gained 61 and the NYSE Composite added 411. For all the talk about there being no recovery in sight, the first wave of corporate earnings provided enough positive vibe to send the markets off on a nice upward run.
The question still remains as to whether the gains are sustainable, though given the early returns, the companies being traded seem to have adjusted to a new set of economic circumstances. While earnings are still down from what they were a year ago, so are stock prices. Investors are weighing the current results against an uncertain future, but remain positive, though skeptical. At least there seems to be little worry about a complete melt-down a la last fall.
Dow 8,743.94, +32.12 (0.37%)
NASDAQ 1,886.61, +1.58 (0.08%)
S&P 500 940.38, -0.36 (0.04%)
NYSE Composite 6,038.11, -4.94 (0.08%)
On the day, declining issues narrowly beat advancers, 3376-2936, but new highs bested new lows, 103-71. Volume remained down, though not down to levels of previous sessions, but close. The low level of trading velocity continues to be a topic overlooked by the mainstream financial press. Sluggish trading is a clear sign that investors ate still skittish and widely risk-averse. The vast majority of trades are of the short-term variety, more akin to gambling than traditional investing.
NYSE Volume 1,290,375,000
NASDAQ Volume 1,890,890,000
Commodity traders were also encouraged, sending crude futures higher again, up $1.48, to $63.50. Gold brought an additional $2.10 per ounce, at $937.50. Silver tacked on 17 cents, to close at $13.40.
The coming two weeks will be chock full of earnings hits and misses, though the general indications are that most companies have avoided all-out bust scenarios and may be looking to avoid returning to near-term bottoms from March. The US and world economies have stumbled badly, but they're still functioning, albeit at a decreased capacity.
Over the past five sessions the Dow has tacked on an impressive 597 points, the NASDAQ perked up 130; the S&P gained 61 and the NYSE Composite added 411. For all the talk about there being no recovery in sight, the first wave of corporate earnings provided enough positive vibe to send the markets off on a nice upward run.
The question still remains as to whether the gains are sustainable, though given the early returns, the companies being traded seem to have adjusted to a new set of economic circumstances. While earnings are still down from what they were a year ago, so are stock prices. Investors are weighing the current results against an uncertain future, but remain positive, though skeptical. At least there seems to be little worry about a complete melt-down a la last fall.
Dow 8,743.94, +32.12 (0.37%)
NASDAQ 1,886.61, +1.58 (0.08%)
S&P 500 940.38, -0.36 (0.04%)
NYSE Composite 6,038.11, -4.94 (0.08%)
On the day, declining issues narrowly beat advancers, 3376-2936, but new highs bested new lows, 103-71. Volume remained down, though not down to levels of previous sessions, but close. The low level of trading velocity continues to be a topic overlooked by the mainstream financial press. Sluggish trading is a clear sign that investors ate still skittish and widely risk-averse. The vast majority of trades are of the short-term variety, more akin to gambling than traditional investing.
NYSE Volume 1,290,375,000
NASDAQ Volume 1,890,890,000
Commodity traders were also encouraged, sending crude futures higher again, up $1.48, to $63.50. Gold brought an additional $2.10 per ounce, at $937.50. Silver tacked on 17 cents, to close at $13.40.
The coming two weeks will be chock full of earnings hits and misses, though the general indications are that most companies have avoided all-out bust scenarios and may be looking to avoid returning to near-term bottoms from March. The US and world economies have stumbled badly, but they're still functioning, albeit at a decreased capacity.
Friday, April 3, 2009
Wall Street Smoking Crack
The crack dealers working the area of lower Manhattan must be flush with cash because it appears certain that the brokers, dealers, wheeler-dealers, scam artists, cheats liars, high muckety-muck, junkies, flunkies, lunkheads, losers and lowlives of all stripes are consuming copious amounts of the stuff.
After a multi-week stock market run of between 20 and 25%, depending on your index of choice, a week chock-full of eyebrow-raising economic reports, a failed attempt at worldwide order and financial diplomacy at the G20, and the worst unemployment in 25 years, the masters of the financial universe decided to keep pushing prices higher, despite the aforementioned data and news, and the imminent revelations from corporate quarterly reports beginning next week.
No matter how anyone tries to justify the numbers, a loss of more than 2 million jobs just in the first quarter of this year is not good news. Stocks should have been headed lower, not higher. Watching the indices crawl forward, it seems that the charts must be from some foreign planet, not ours, which is mired amid the throes of a deepening - not improving - financial breakdown.
Apparently, the wizards of Wall Street see things differently. A slowing economy is a fine one to made ludicrous bets into according to their actions. Stimulus, bailouts, Ponzi schemes, a deteriorating housing market and job losses creates the perfect investing climate according to these geniuses. They are smoking some very powerful dope down there.
Stocks traded in tight ranges throughout the session. Today's action could have been due to indecision, consolidation or manipulation, but it was probably a little bit of each. In any case, nothing moved enough to raise anyone's blood pressure much. It was an all-around tough day for day-traders and short timers.
Dow 8,017.59, +39.51 (0.50%)
NASDAQ 1,621.87, +19.24 (1.20%)
S&P 500 842.50 8.12 (0.97%)
NYSE Composite 5,318.75, +51.65 (0.98%)
Stocks finished with their 4th straight week to the upside. That's a pretty nifty record in the middle of economic calamity and hardly believable. Wall Street insiders realize that another precipitous decline in stock values could lead to some very ugly consequences including widespread firings of top banking professionals, prosecutions and jailings of same, social unrest, and a near-complete breakdown of the social contract and economic death. Thus, the rally must continue, or, at least appear to be solid. It's just another sham being played by the monied interests of Wall Street and Washington and being dribbled along by the feigning financial press.
On the day, advancers beat decliners, 4091-2378, though new lows continued their advantage over new highs, 77-16. Volume was moderate.
NYSE Volume 1,484,215,000
NASDAQ Volume 2,140,955,000
To amplify Wall Street's insanity, read on. This hardly warranted mention on the airwaves, unbelievably.
Self-dealing made simple: The same banks which packaged the "toxic" mortgage loans - for which they received government bailout money - are now looking into buying the same assets under Treasury's Private-Public Partnership Investment Plan.
Yes, you read that right. Citigroup, Morgan Stanley, JP Morgan Chase and Goldman Sachs want to be buyers of each other's near-worthless paper, taking advantage of the government's largesse in the form of 14-1 leverage. These same banks would like to buy up each other's bad loans with roughly 15% down, the balance financed by the government, or, read correctly, the badly duped and without recourse US taxpayer.
Not only is this the worst self-dealing ever witnessed on the planet, but it also reeks of the kind of scheme Bernie Madoff recently re-popularized: PONZI. All of this will likely be swept neatly under the rug with help of the duplicitous Treasury Secretary, Fed Chairman Ben Bernanke and the Liar-King, President Barack Obama.
I know I predicted this would happen when I first heard of the proposal, so why should I - or anyone - be shocked? Our government has one purpose now, simply to serve the wishes of their puppet-masters on Wall Street. The whole bunch of them - from the President and congress to the bank CEOs - should be tried on charges of grand larceny and treason, because stealing from the very people you swore to protect and defend is nothing less.
Commodities dithered throughout the day. Oil closed 13 cents lower, at $52.51. Gold fell another $11.60, to $897.30. Silver shed 29 cents to finish the week at $12.74.
And here's a dose of honesty:
Have a nice weekend.
After a multi-week stock market run of between 20 and 25%, depending on your index of choice, a week chock-full of eyebrow-raising economic reports, a failed attempt at worldwide order and financial diplomacy at the G20, and the worst unemployment in 25 years, the masters of the financial universe decided to keep pushing prices higher, despite the aforementioned data and news, and the imminent revelations from corporate quarterly reports beginning next week.
No matter how anyone tries to justify the numbers, a loss of more than 2 million jobs just in the first quarter of this year is not good news. Stocks should have been headed lower, not higher. Watching the indices crawl forward, it seems that the charts must be from some foreign planet, not ours, which is mired amid the throes of a deepening - not improving - financial breakdown.
Apparently, the wizards of Wall Street see things differently. A slowing economy is a fine one to made ludicrous bets into according to their actions. Stimulus, bailouts, Ponzi schemes, a deteriorating housing market and job losses creates the perfect investing climate according to these geniuses. They are smoking some very powerful dope down there.
Stocks traded in tight ranges throughout the session. Today's action could have been due to indecision, consolidation or manipulation, but it was probably a little bit of each. In any case, nothing moved enough to raise anyone's blood pressure much. It was an all-around tough day for day-traders and short timers.
Dow 8,017.59, +39.51 (0.50%)
NASDAQ 1,621.87, +19.24 (1.20%)
S&P 500 842.50 8.12 (0.97%)
NYSE Composite 5,318.75, +51.65 (0.98%)
Stocks finished with their 4th straight week to the upside. That's a pretty nifty record in the middle of economic calamity and hardly believable. Wall Street insiders realize that another precipitous decline in stock values could lead to some very ugly consequences including widespread firings of top banking professionals, prosecutions and jailings of same, social unrest, and a near-complete breakdown of the social contract and economic death. Thus, the rally must continue, or, at least appear to be solid. It's just another sham being played by the monied interests of Wall Street and Washington and being dribbled along by the feigning financial press.
On the day, advancers beat decliners, 4091-2378, though new lows continued their advantage over new highs, 77-16. Volume was moderate.
NYSE Volume 1,484,215,000
NASDAQ Volume 2,140,955,000
To amplify Wall Street's insanity, read on. This hardly warranted mention on the airwaves, unbelievably.
Self-dealing made simple: The same banks which packaged the "toxic" mortgage loans - for which they received government bailout money - are now looking into buying the same assets under Treasury's Private-Public Partnership Investment Plan.
Yes, you read that right. Citigroup, Morgan Stanley, JP Morgan Chase and Goldman Sachs want to be buyers of each other's near-worthless paper, taking advantage of the government's largesse in the form of 14-1 leverage. These same banks would like to buy up each other's bad loans with roughly 15% down, the balance financed by the government, or, read correctly, the badly duped and without recourse US taxpayer.
Not only is this the worst self-dealing ever witnessed on the planet, but it also reeks of the kind of scheme Bernie Madoff recently re-popularized: PONZI. All of this will likely be swept neatly under the rug with help of the duplicitous Treasury Secretary, Fed Chairman Ben Bernanke and the Liar-King, President Barack Obama.
I know I predicted this would happen when I first heard of the proposal, so why should I - or anyone - be shocked? Our government has one purpose now, simply to serve the wishes of their puppet-masters on Wall Street. The whole bunch of them - from the President and congress to the bank CEOs - should be tried on charges of grand larceny and treason, because stealing from the very people you swore to protect and defend is nothing less.
Commodities dithered throughout the day. Oil closed 13 cents lower, at $52.51. Gold fell another $11.60, to $897.30. Silver shed 29 cents to finish the week at $12.74.
And here's a dose of honesty:
Have a nice weekend.
Tuesday, March 10, 2009
Stocks Gallop Ahead to Best Gains of 2009
At long last the market responded to extreme oversold conditions and ramped up for the biggest gains of the year.
Dow 6,926.49, +379.44 (5.80%)
Nasdaq 1,358.28, +89.64 (7.07%)
S&P 500 719.60, +43.07 (6.37%)
NYSE Composite 4,499.38, +273.07 (6.46%)
The impetus was provided by Citigroup CEO Vikram Pandit's comment that his beleaguered bank had performed well enough to be profitable (minus some odious one-time charges and government money) over the first two months of the year.
It was more than likely nothing more than than a well-timed fabrication, but investors were so starved for any kind of good news, they bought it and ran with it. The resultant gains will probably last for some time, as the market is simply worn out from selling. In fact, there's nothing resembling even the slightest resistance in the charts all the way up to 8000 on the Dow, so this could turn into a lengthy, extended bear market rally.
This move is off fresh multi-year lows, so there's no telling where stocks will go from here, though it was pleasant to see such enthusiasm over such a broad base of stocks.
Advancers absolutely trounced declining issues, 5815-863, about a 7-1 ratio. Still, new lows maintained their long-standing edge over new highs, 354-14, so, obviously, there's more work to be done before anyone starts calling a bottom, though another day or two on the upside will bring on the perma-bulls. Volume was also very strong, another factor that will bring out the bellows for a bottom being in place, which is probably more wishful thinking than actual analysis.
NYSE Volume 2,186,757,000
Nasdaq Volume 2,424,305,000
Commodities, for the most part, were the one area that did not participate in Wall Street's celebration. Oil fell $1.31, to $45.71. Gold dropped $22.10, to $895.90, back under the $900 barrier, and silver sold off in sympathy, losing 40 cents, to close at $12.54. a multi-week low.
To illustrate the absurdity of today's gigantic move forward, Citigroup was up a whopping 38%, gaining 40 cents to $1.42. Noting that, Pandit's baby will have to double and then almost double again in order for many fund investors to actually be able to trade in the stock under their charters. Citi has been under $5/share for nearly two months, and now that the United States owns roughly 36% of the company - about 6 shares for every person in America - the entire population should be beaming that they own such a hot investment.
Of course, I'm being cynical, because Citi is not a very sound bank. They, along with Bank of America, AIG and JP Morgan Chase have all been the recipients of government largesse, and are largely unsound and quite possibly insolvent. That's why there was an urgent need to "talk up" the market. Just about everybody with a high school education is angry at the banks and the government, so a rally was ordered up and they got it, in spades.
Not like this rally wasn't predictable, markets don't go straight down (as they have been) for long without some kind of snap back. The tricky part will be determining when it all falls apart again and the bears take over. It could be 3 months or 3 days.
The best trades in the world are the short term variety, and this is a perfect spot for experienced hands with steel in their veins.
Dow 6,926.49, +379.44 (5.80%)
Nasdaq 1,358.28, +89.64 (7.07%)
S&P 500 719.60, +43.07 (6.37%)
NYSE Composite 4,499.38, +273.07 (6.46%)
The impetus was provided by Citigroup CEO Vikram Pandit's comment that his beleaguered bank had performed well enough to be profitable (minus some odious one-time charges and government money) over the first two months of the year.
It was more than likely nothing more than than a well-timed fabrication, but investors were so starved for any kind of good news, they bought it and ran with it. The resultant gains will probably last for some time, as the market is simply worn out from selling. In fact, there's nothing resembling even the slightest resistance in the charts all the way up to 8000 on the Dow, so this could turn into a lengthy, extended bear market rally.
This move is off fresh multi-year lows, so there's no telling where stocks will go from here, though it was pleasant to see such enthusiasm over such a broad base of stocks.
Advancers absolutely trounced declining issues, 5815-863, about a 7-1 ratio. Still, new lows maintained their long-standing edge over new highs, 354-14, so, obviously, there's more work to be done before anyone starts calling a bottom, though another day or two on the upside will bring on the perma-bulls. Volume was also very strong, another factor that will bring out the bellows for a bottom being in place, which is probably more wishful thinking than actual analysis.
NYSE Volume 2,186,757,000
Nasdaq Volume 2,424,305,000
Commodities, for the most part, were the one area that did not participate in Wall Street's celebration. Oil fell $1.31, to $45.71. Gold dropped $22.10, to $895.90, back under the $900 barrier, and silver sold off in sympathy, losing 40 cents, to close at $12.54. a multi-week low.
To illustrate the absurdity of today's gigantic move forward, Citigroup was up a whopping 38%, gaining 40 cents to $1.42. Noting that, Pandit's baby will have to double and then almost double again in order for many fund investors to actually be able to trade in the stock under their charters. Citi has been under $5/share for nearly two months, and now that the United States owns roughly 36% of the company - about 6 shares for every person in America - the entire population should be beaming that they own such a hot investment.
Of course, I'm being cynical, because Citi is not a very sound bank. They, along with Bank of America, AIG and JP Morgan Chase have all been the recipients of government largesse, and are largely unsound and quite possibly insolvent. That's why there was an urgent need to "talk up" the market. Just about everybody with a high school education is angry at the banks and the government, so a rally was ordered up and they got it, in spades.
Not like this rally wasn't predictable, markets don't go straight down (as they have been) for long without some kind of snap back. The tricky part will be determining when it all falls apart again and the bears take over. It could be 3 months or 3 days.
The best trades in the world are the short term variety, and this is a perfect spot for experienced hands with steel in their veins.
Friday, February 27, 2009
The Amazing Shrinking Economy
Prior to the market's open, the Commerce Dept. reported that GDP for the 4th quarter of 2008 declined by 6.2%, much more than the previous estimate of -3.8%, and more than the consensus estimate of -5.2%. Word was also spreading fast that the federal government was about to take a 36% stake in troubled Citigroup, more than quadrupling taxpayer's stake in the bank.
Right out of the gate, stocks tanked, with the Dow down nearly 150 points within the first 15 minutes. After trading in a tight range through most of the day, the markets finally succumbed to the intensely negative pressure in the final hour, sending the Dow, S&P and NYSE Comp. to new lows, surpassing those made earlier this week. As I said in yesterday's headline: GAME OVER!
Dow 7,062.93, -119.15 (1.66%)
NASDAQ 1,377.84, -13.63 (0.98%)
S&P 500 735.09, -17.74 (2.36%)
NYSE Composite 4,617.05, -95.97 (2.04%)
According to this report by Lauren Tara LaCapra, citing credit analysis by Egan Jones, a proprietary firm, Bank of America should be up next to follow Citigroup to the government hand-out window.
Hasn't it become evidently clear to Tim Geithner at Treasury that his plan for submitting the banks to a "stress test" won't even come close to relieving the stress to the credit and finance system?
First, the executives, Citi's Vikram Pandit and BofA's Ken Lewis, haven't come clean as to what's lurking on (and off - as in tier three) their books, awaiting implosion. Second, the government's benchmarks in the stress tests are simply too optimistic. For instance, the GDP worst case component calls for GDP to fall by 3.3% in 2009 and grow by 0.5% in 2010. We're looking today at a fourth quarter of 2008 in which GDP declined by 6.2%, according to the government's own report, issued today, so shouldn't the worst case be closer to a 5.0% decline in GDP for 2009 and a flat year in 2010?
As far as wost cases are concerned, a drop of 5.0% isn't even that bad. It is entirely possible that GDP could collapse by as much as 8 or 9% in the first two quarters of 2009 and get worse from there. The government simply doesn't want to face reality, believing, amazingly, after all we've been through, that the system is still resilient. It's not. The major banks are broken and the government is not only complicit through non-regulation, but now looking wholly incompetent, decrepit and corrupted to its core.
So, when the government finally gets the memo, they should have the FDIC close down Citi, zero out the shareholders, pay off bondholders at pennies on the dollar, recapitalize what's left and sell it off - in parts, if necessary - to private hands - shareholders, regional banks or private investors. Then, rinse, and repeat with Wells Fargo & Company (WFC) and JP Morgan Chase (JPM). anything short of a complete shutdown of the banking behemoths will only serve to prolong the agony in the credit, bond and stock markets, severely crimp lending and prolong the recession, turning it into a depression.
The Obama administration and Geithner's Treasury Dept. must take off the kid gloves, stop treating the banks as sacred cows and deal with the colossal problems facing the nation.
One of the reasons the economy is in such a staggering decline, is how lucrative not working has become. A woman caller to the Rush Limbaugh radio show today said she recieved $459 per week in unemployment insurance benefits and the government has just added an additional $25 per week, courtesy of the stimulus bill. That equates to $25,000 per year for not working. There clearly needs to be more incentive to find work, as being on the dole has now become better than the wages of 30-40% working Americans.
Elsewhere, General Electric (GE), slashed its annual dividend, from 32 cents to 10.
Market internals confirmed the headline numbers. Declining issues ran ahead of advancing ones, 4131-1390. New lows overwhelmed new highs, 815-7. Not a single NASDAQ issue made a new 52-week high on the day. The daily advantage for new lows over new highs has now run a full 16 months, since October, 2007. Volume was the highest of the week, in a week which was probably the highest it has been all year.
NYSE Volume 2,248,907,000
NASDAQ Volume 2,457,442,000
Commodities were quiet. Oil lost 46 cents, to $44.76. Gold lost a dime, to $942.50, while silver gained 13 cents to $13.11.
The major indices closed lower for the week, for the 7th time in 8 weeks in 2009.
In closing, I want to take this opportunity to lay claim to the coinage of a new socio-economic terminology, by announcing the advent of the Post-Government Era, a spawning global movement of rampant avoidance and non-compliance of the various laws, taxes and decrees of governments around the world. As the myriad levels of government lay deeper and deeper burdens upon the populace in the large majority of industrial nations, people will naturally revolt, and that revolutionary fervor finds its roots in non-compliance, civil disobedience and outright rejection of authority.
It's deserving of the current rostrum of national governments to receive treatment of this sort, as they have, individually and as a group, compounded the problems of the people, overtaxed them to extraordinary levels and continues to treat them as worthless fodder. The Post-Government Era has begun.
You heard it here first.
Right out of the gate, stocks tanked, with the Dow down nearly 150 points within the first 15 minutes. After trading in a tight range through most of the day, the markets finally succumbed to the intensely negative pressure in the final hour, sending the Dow, S&P and NYSE Comp. to new lows, surpassing those made earlier this week. As I said in yesterday's headline: GAME OVER!
Dow 7,062.93, -119.15 (1.66%)
NASDAQ 1,377.84, -13.63 (0.98%)
S&P 500 735.09, -17.74 (2.36%)
NYSE Composite 4,617.05, -95.97 (2.04%)
According to this report by Lauren Tara LaCapra, citing credit analysis by Egan Jones, a proprietary firm, Bank of America should be up next to follow Citigroup to the government hand-out window.
Hasn't it become evidently clear to Tim Geithner at Treasury that his plan for submitting the banks to a "stress test" won't even come close to relieving the stress to the credit and finance system?
First, the executives, Citi's Vikram Pandit and BofA's Ken Lewis, haven't come clean as to what's lurking on (and off - as in tier three) their books, awaiting implosion. Second, the government's benchmarks in the stress tests are simply too optimistic. For instance, the GDP worst case component calls for GDP to fall by 3.3% in 2009 and grow by 0.5% in 2010. We're looking today at a fourth quarter of 2008 in which GDP declined by 6.2%, according to the government's own report, issued today, so shouldn't the worst case be closer to a 5.0% decline in GDP for 2009 and a flat year in 2010?
As far as wost cases are concerned, a drop of 5.0% isn't even that bad. It is entirely possible that GDP could collapse by as much as 8 or 9% in the first two quarters of 2009 and get worse from there. The government simply doesn't want to face reality, believing, amazingly, after all we've been through, that the system is still resilient. It's not. The major banks are broken and the government is not only complicit through non-regulation, but now looking wholly incompetent, decrepit and corrupted to its core.
So, when the government finally gets the memo, they should have the FDIC close down Citi, zero out the shareholders, pay off bondholders at pennies on the dollar, recapitalize what's left and sell it off - in parts, if necessary - to private hands - shareholders, regional banks or private investors. Then, rinse, and repeat with Wells Fargo & Company (WFC) and JP Morgan Chase (JPM). anything short of a complete shutdown of the banking behemoths will only serve to prolong the agony in the credit, bond and stock markets, severely crimp lending and prolong the recession, turning it into a depression.
The Obama administration and Geithner's Treasury Dept. must take off the kid gloves, stop treating the banks as sacred cows and deal with the colossal problems facing the nation.
One of the reasons the economy is in such a staggering decline, is how lucrative not working has become. A woman caller to the Rush Limbaugh radio show today said she recieved $459 per week in unemployment insurance benefits and the government has just added an additional $25 per week, courtesy of the stimulus bill. That equates to $25,000 per year for not working. There clearly needs to be more incentive to find work, as being on the dole has now become better than the wages of 30-40% working Americans.
Elsewhere, General Electric (GE), slashed its annual dividend, from 32 cents to 10.
Market internals confirmed the headline numbers. Declining issues ran ahead of advancing ones, 4131-1390. New lows overwhelmed new highs, 815-7. Not a single NASDAQ issue made a new 52-week high on the day. The daily advantage for new lows over new highs has now run a full 16 months, since October, 2007. Volume was the highest of the week, in a week which was probably the highest it has been all year.
NYSE Volume 2,248,907,000
NASDAQ Volume 2,457,442,000
Commodities were quiet. Oil lost 46 cents, to $44.76. Gold lost a dime, to $942.50, while silver gained 13 cents to $13.11.
The major indices closed lower for the week, for the 7th time in 8 weeks in 2009.
In closing, I want to take this opportunity to lay claim to the coinage of a new socio-economic terminology, by announcing the advent of the Post-Government Era, a spawning global movement of rampant avoidance and non-compliance of the various laws, taxes and decrees of governments around the world. As the myriad levels of government lay deeper and deeper burdens upon the populace in the large majority of industrial nations, people will naturally revolt, and that revolutionary fervor finds its roots in non-compliance, civil disobedience and outright rejection of authority.
It's deserving of the current rostrum of national governments to receive treatment of this sort, as they have, individually and as a group, compounded the problems of the people, overtaxed them to extraordinary levels and continues to treat them as worthless fodder. The Post-Government Era has begun.
You heard it here first.
Monday, February 23, 2009
The Sinking, Stinking S&P 500
The drumbeat of bad news and frightened investors continued unabated on Monday, after the government and Citigroup discussed plans to increase the level of US government ownership in the once-giant financial firm to as much as 40%.
Oddly enough, Citi was one of just two stocks on the Dow 30 to finish the day with gains. Odd, because on Friday, the White House issued a statement expressing that "banks in private hands" was their preference, which stabilized rapidly falling stocks, especially those of Citi and Bank of America (BAC), the other Dow issue which finished the day on the upside.
27 other Dow issues finished in the red on Monday; General Motors (GM) was unchanged at 1.77. The gains on the two banking stocks were minimal. Citigroup (C) ended the day up 0.19, to 2.14, while Bank of America gained 0.12, closing at 3.91.
While two of the largest US banks grappled with insolvency issues, the real story was witnessing the S&P 500 fall below the November 20 support level at 752.44. The NYSE Composite also broke through that same November 20 support (4651.21) during the session. Since the Dow broke down last week - and continued in free fall today - that leaves only the lonely NASDAQ as the one major index still above its 2008 bottom (1316.12).
Dow 7,114.78, -250.89 (3.41%)
NASDAQ 1,387.72, -53.51 (3.71%)
S&P 500 743.33, -26.72 (3.47%)
NYSE Composite 4,633.78, -170.73 (3.55%)
The headline numbers were more than sufficiently validated by internals. Losers beat gainers by a massive number, 5471-1183, nearly a 5-1 margin. New lows dominated new highs, 940-12. Regarding the highs-lows, it should be noted that new lows have held sway - on a day-to-day basis - every day for nearly 16 months, except for 5 or 6 instances, according to our own figures.
Volume moderated a bit, as expected, since options expiration was Friday.
NYSE Volume 1,612,611,000
NASDAQ Volume 2,040,330,000
With a dearth of either economic reports of corporate filings, investors had to fly somewhat blind, but even a bat could tell that sentiment was clearly negative, as the economy works through one of the worst recessions of all time.
The NASDAQ, S&P and NYSE Comp. are already off more than 50% from their October, 2007 highs, and the Dow is within 36 points of being exactly half of its all-time closing high of October 9, 2007 (14164.53).
Commodities continued lower as well. Crude oil for April delivery was off $1.59, to $38.44. Gold slipped $7.20, to $995.00. Silver fell 4 cents, to $14.45. The metals were hit by some profit-taking, as they have been on a tear of late, though this pause may not last long before the next leg up occurs.
The shiny stuff may be about the only true safe haven available right now as stocks are simply too risky, though some traders are moving into high-grade (BBB and above) corporate bond issues and munis, on the back of the government's recently-approved stimulus bill.
As far as a bottom in stocks is concerned, there is none in sight, though some idea of the length of the recession may provide a clue. Typically, recessions last 16-24 months, but since this one is anything but typical, it almost certainly run past the long end of that span. Since the downturn began roughly in December, 2007, we may be only 14 months in, meaning that 2009 should pretty much be written off. If the recession lasts 27 months (long by any measure except that of the Great Depression), recovery could begin March 2010.
If the markets begin to move roughly six months prior to the actual economic recovery, then October of this year may be a rough mark for a bottom and a potential time frame to begin nibbling at stocks.
With prices beaten down severely in many sectors, it would not be imprudent to take some calculated risks - especially if you have a long time horizon and ample discretionary funds - sooner. stocks have been hammered so badly, many are beginning to appear downright cheap. Nobody will be blamed for jumping the gun at this level, though only with small caliber bullets.
Oddly enough, Citi was one of just two stocks on the Dow 30 to finish the day with gains. Odd, because on Friday, the White House issued a statement expressing that "banks in private hands" was their preference, which stabilized rapidly falling stocks, especially those of Citi and Bank of America (BAC), the other Dow issue which finished the day on the upside.
27 other Dow issues finished in the red on Monday; General Motors (GM) was unchanged at 1.77. The gains on the two banking stocks were minimal. Citigroup (C) ended the day up 0.19, to 2.14, while Bank of America gained 0.12, closing at 3.91.
While two of the largest US banks grappled with insolvency issues, the real story was witnessing the S&P 500 fall below the November 20 support level at 752.44. The NYSE Composite also broke through that same November 20 support (4651.21) during the session. Since the Dow broke down last week - and continued in free fall today - that leaves only the lonely NASDAQ as the one major index still above its 2008 bottom (1316.12).
Dow 7,114.78, -250.89 (3.41%)
NASDAQ 1,387.72, -53.51 (3.71%)
S&P 500 743.33, -26.72 (3.47%)
NYSE Composite 4,633.78, -170.73 (3.55%)
The headline numbers were more than sufficiently validated by internals. Losers beat gainers by a massive number, 5471-1183, nearly a 5-1 margin. New lows dominated new highs, 940-12. Regarding the highs-lows, it should be noted that new lows have held sway - on a day-to-day basis - every day for nearly 16 months, except for 5 or 6 instances, according to our own figures.
Volume moderated a bit, as expected, since options expiration was Friday.
NYSE Volume 1,612,611,000
NASDAQ Volume 2,040,330,000
With a dearth of either economic reports of corporate filings, investors had to fly somewhat blind, but even a bat could tell that sentiment was clearly negative, as the economy works through one of the worst recessions of all time.
The NASDAQ, S&P and NYSE Comp. are already off more than 50% from their October, 2007 highs, and the Dow is within 36 points of being exactly half of its all-time closing high of October 9, 2007 (14164.53).
Commodities continued lower as well. Crude oil for April delivery was off $1.59, to $38.44. Gold slipped $7.20, to $995.00. Silver fell 4 cents, to $14.45. The metals were hit by some profit-taking, as they have been on a tear of late, though this pause may not last long before the next leg up occurs.
The shiny stuff may be about the only true safe haven available right now as stocks are simply too risky, though some traders are moving into high-grade (BBB and above) corporate bond issues and munis, on the back of the government's recently-approved stimulus bill.
As far as a bottom in stocks is concerned, there is none in sight, though some idea of the length of the recession may provide a clue. Typically, recessions last 16-24 months, but since this one is anything but typical, it almost certainly run past the long end of that span. Since the downturn began roughly in December, 2007, we may be only 14 months in, meaning that 2009 should pretty much be written off. If the recession lasts 27 months (long by any measure except that of the Great Depression), recovery could begin March 2010.
If the markets begin to move roughly six months prior to the actual economic recovery, then October of this year may be a rough mark for a bottom and a potential time frame to begin nibbling at stocks.
With prices beaten down severely in many sectors, it would not be imprudent to take some calculated risks - especially if you have a long time horizon and ample discretionary funds - sooner. stocks have been hammered so badly, many are beginning to appear downright cheap. Nobody will be blamed for jumping the gun at this level, though only with small caliber bullets.
Friday, February 20, 2009
Stocks Hammered Again, But It Should Have Been Worse
After falling below key support on Tuesday, the Dow Jones Industrials, and US equities in general, were pounded down as fears of bank nationalization and unease over the future of the economy and even the welfare of the nation itself scared investors out of many positions.
While the technical damage on the Dow was serious, it should have been even worse, if not for subversive afternoon intervention by the usual corrupt cast of characters - the PPT, Goldman Sachs, Morgan Stanley, et. al. - which brought the Dow all the way back from a 215 point loss at 1:15 pm to a small gain at 10 minutes until 3:00.
At the heart of the matter was the fates of Bank of America and Citigroup, which suffered another day of crippling losses. At the low point of the day, Bank of America (BAC) was down 1.40, to 2.53, while Citigroup (C) fell 90 cents, to 1.51. On a basis unadjusted for splits, both were at all-time lows. Bank of America closed the day down a mere 14 cents, at 3.79, though Citigroup was not so fortunate, finishing 22% lower, down 56 cents at 1.95.
BofA CEO Ken Lewis was also subpoenaed by NY Attorney General Andrew Cuomo over the bonuses paid to Merrill Lynch executives in 2008. BofA took over Merrill under government supervision during the meltdown last fall.
It was only a hastily-prepared White House statement pledging a commitment to keeping banks in private hands that kept the markets from an all-out rout.
There's little doubt that the some kind of solution must be found for the ailing banking session, and soon. The public, however, has seen enough of bailouts and handouts, so the newly-installed Obama administration and Democratically-led congress must tread lightly.
Truth of the matter is that two of the nation's largest banks (and probably more) will have to be managed by the government, or somebody sober, for some time, in order to restore even a hint of credibility in the markets. There is also a distinct possibility that the government may not have sufficient power to prevent a complete collapse of an over-leveraged banking sector. In some ways, it is nothing more than the market hurrying the bankers' self-inflicted collapse.
Yesterday's rant by Rick Santelli at the Chicago Board of Trade (Feb. 19, 2009) on CNBC created no small sensation across the blogosphere. One of his more poignant remarks was his this gem:
Santelli was even called on the carpet by NBC's Brian Williams and Matt Lauer (NBC owns CNBC) on this morning's Today Show and put across the screen from his network nemesis, Steve Leisman, a puppy lapdog for the industrial-military-communications junta which rules the government and the nation. Santelli certainly has never backed down from a fight, and his performance on the Today Show was remarkably well-reasoned and honest with obvious middle-class populist overtones.
And now the censorship begins. While attempting to retrieve the code, I was initially met with a mention that the above-referenced video was no longer available on Youtube.com, a not-very-subtle attempt by the media elite to silence the truth and keep the public under wraps.. Don't be surprised if Santelli isn't quietly relieved of his duties soon or, more likely, continually marginalized. Nevertheless, as mentioned yesterday, the genie is well out of the bottle and the public outrage at just about anything and everything concerning government and big business will not be contained much longer.
Dow 7,365.67, -100.28 (1.34%)
NASDAQ 1,441.23, -1.59 (0.11%)
S&P 500 770.05, -8.89 (1.14%)
NYSE Compos 4,804.51, -76.65 (1.57%)
Internals were as expected, favoring declining issues over advancing ones, 4906-1775. New lows dominated new highs, expanding to new levels with 1119 new lows and a mere 25 new highs. The massive number of stocks hitting 52-week lows (1 in 6) have only been seen on days of extreme market turmoil, and today surely fit that bill. Volume was the highest in weeks, owing to options expirations, market intervention, usual trading and high levels of outright open executions on the sell side.
NYSE Volume 2,117,367,000
NASDAQ Volume 2,560,465,000
Commodities remained on their own track. Oil for March delivery closed down 54 cents, at $38.94 on the final day of that contract. Gold topped the $1000 mark, gaining $25.70, to $1,002.20. In concert, silver gained 56 cents, to $14.49. All food-related commodity futures were markedly lower.
The CPI figures released this morning demonstrated an increase of 0.4%, the first gain since July, 2008, though it is more than likely only an aberration in the continuing deflationary spiral.
Stocks should have finished much lower than they did today, which only means that they will fall further at some future date. Considering the level of angst in the market, in the public, and the ineptitude of government and corporate business to constrain the wealth destruction leads one to believe that the market is well into the third and most crucial phase of the bear market, total, utter, final capitulation.
All of the major indices finished the week with substantial losses. The Dow registered its lowest close since October 27, 1997.
For the week, the Dow was down a whopping 485 points, and closing in on a 50% decline from the October 2007 all-time high. The NASDAQ lost 93 points; the S&P surrendered 57; the NYSE Composite was down 402 points.
It's not a pretty picture and not likely to improve soon.
While the technical damage on the Dow was serious, it should have been even worse, if not for subversive afternoon intervention by the usual corrupt cast of characters - the PPT, Goldman Sachs, Morgan Stanley, et. al. - which brought the Dow all the way back from a 215 point loss at 1:15 pm to a small gain at 10 minutes until 3:00.
At the heart of the matter was the fates of Bank of America and Citigroup, which suffered another day of crippling losses. At the low point of the day, Bank of America (BAC) was down 1.40, to 2.53, while Citigroup (C) fell 90 cents, to 1.51. On a basis unadjusted for splits, both were at all-time lows. Bank of America closed the day down a mere 14 cents, at 3.79, though Citigroup was not so fortunate, finishing 22% lower, down 56 cents at 1.95.
BofA CEO Ken Lewis was also subpoenaed by NY Attorney General Andrew Cuomo over the bonuses paid to Merrill Lynch executives in 2008. BofA took over Merrill under government supervision during the meltdown last fall.
It was only a hastily-prepared White House statement pledging a commitment to keeping banks in private hands that kept the markets from an all-out rout.
There's little doubt that the some kind of solution must be found for the ailing banking session, and soon. The public, however, has seen enough of bailouts and handouts, so the newly-installed Obama administration and Democratically-led congress must tread lightly.
Truth of the matter is that two of the nation's largest banks (and probably more) will have to be managed by the government, or somebody sober, for some time, in order to restore even a hint of credibility in the markets. There is also a distinct possibility that the government may not have sufficient power to prevent a complete collapse of an over-leveraged banking sector. In some ways, it is nothing more than the market hurrying the bankers' self-inflicted collapse.
Yesterday's rant by Rick Santelli at the Chicago Board of Trade (Feb. 19, 2009) on CNBC created no small sensation across the blogosphere. One of his more poignant remarks was his this gem:
You know, they’re pretty much of the notion that you can’t buy your way into prosperity, and if the multiplier that all of these Washington economists are selling us is over… that we never have to worry about the economy again. The government should spend a trillion dollars an hour because we’ll get 1.5 trillion back.
Santelli was even called on the carpet by NBC's Brian Williams and Matt Lauer (NBC owns CNBC) on this morning's Today Show and put across the screen from his network nemesis, Steve Leisman, a puppy lapdog for the industrial-military-communications junta which rules the government and the nation. Santelli certainly has never backed down from a fight, and his performance on the Today Show was remarkably well-reasoned and honest with obvious middle-class populist overtones.
And now the censorship begins. While attempting to retrieve the code, I was initially met with a mention that the above-referenced video was no longer available on Youtube.com, a not-very-subtle attempt by the media elite to silence the truth and keep the public under wraps.. Don't be surprised if Santelli isn't quietly relieved of his duties soon or, more likely, continually marginalized. Nevertheless, as mentioned yesterday, the genie is well out of the bottle and the public outrage at just about anything and everything concerning government and big business will not be contained much longer.
Dow 7,365.67, -100.28 (1.34%)
NASDAQ 1,441.23, -1.59 (0.11%)
S&P 500 770.05, -8.89 (1.14%)
NYSE Compos 4,804.51, -76.65 (1.57%)
Internals were as expected, favoring declining issues over advancing ones, 4906-1775. New lows dominated new highs, expanding to new levels with 1119 new lows and a mere 25 new highs. The massive number of stocks hitting 52-week lows (1 in 6) have only been seen on days of extreme market turmoil, and today surely fit that bill. Volume was the highest in weeks, owing to options expirations, market intervention, usual trading and high levels of outright open executions on the sell side.
NYSE Volume 2,117,367,000
NASDAQ Volume 2,560,465,000
Commodities remained on their own track. Oil for March delivery closed down 54 cents, at $38.94 on the final day of that contract. Gold topped the $1000 mark, gaining $25.70, to $1,002.20. In concert, silver gained 56 cents, to $14.49. All food-related commodity futures were markedly lower.
The CPI figures released this morning demonstrated an increase of 0.4%, the first gain since July, 2008, though it is more than likely only an aberration in the continuing deflationary spiral.
Stocks should have finished much lower than they did today, which only means that they will fall further at some future date. Considering the level of angst in the market, in the public, and the ineptitude of government and corporate business to constrain the wealth destruction leads one to believe that the market is well into the third and most crucial phase of the bear market, total, utter, final capitulation.
All of the major indices finished the week with substantial losses. The Dow registered its lowest close since October 27, 1997.
For the week, the Dow was down a whopping 485 points, and closing in on a 50% decline from the October 2007 all-time high. The NASDAQ lost 93 points; the S&P surrendered 57; the NYSE Composite was down 402 points.
It's not a pretty picture and not likely to improve soon.
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