More questions than answers in the jumbled mess of trading today.
Stocks opened down rather sharply and stayed in the red the balance of the session, but, as usual, the bulls came back in the late stages to push the Dow from a 74-point loss to almost unchanged.
Both JP Morgan Chase (JPM) and Wells-Fargo (WFC) posted positive first quarter results prior to the opening bell, but were sold off in the regular session.
Aside from the usual hijinks in stocks, the real story was in commodities, where gold and silver were battered, sending them to two-year lows.
The questions surrounding the gold trade are thus:
Did Goldman Sachs - which lowered their forecasts just days ago on gold - have anything to do with it or have advance knowledge? (Probably.)
Was the forced selling of gold from the Cyprus central bank the cause or an effect?
Understandable that gold was rocked down, but silver fell even more, by percentage. Why?
The best news of the day came from the oil pits, where crude traded just above $90 for a time today and closed down more than 2%. A cursory glance at oil prices over the past year show the downtrend fully in place. Consequently, gas at the pump is down 36 cents from a year ago, on average, and should drop even more in coming weeks with today's drop.
The commodities, along with the string of recent misses in US economic data (today, retail sales were a stinker), may be telling the market something which it does not wish to hear, setting up a correction that is long overdue. Leading that concept is the huge imbalance in the advance-decline line, given the smallish losses.
Of course, that's just the kind of thinking that leads to losses in this liquidity-fed environment, but, then again, how long can this bull run without a break and without breaking down? The current bull market is just over 48 months, and the general length of bull markets is somewhere between 44 and 62 weeks. Time may be running short, or , is this time different?
The word from the Fed is simple. Stay long. Stay strong.
Ah, conventional wisdom is so... simple.
Dow 14,865.06, -0.08 (0.00%)
NASDAQ 3,294.95, -5.21 (0.16%)
S&P 500 1,588.85, -4.52 (0.28%)
NYSE Composite 9,188.11, -45.91 (0.50%)
NASDAQ Volume 1,459,983,750
NYSE Volume 3,534,229,250
Combined NYSE & NASDAQ Advance - Decline: 2478-3940
Combined NYSE & NASDAQ New highs - New lows: 260-53
WTI crude oil: 91.29, -2.22
Gold: 1,501.40, -63.50
Silver: 26.33, -1.366
Showing posts with label Cyprus. Show all posts
Showing posts with label Cyprus. Show all posts
Friday, April 12, 2013
Thursday, March 28, 2013
Cyprus Banks Re-Open; S&P Makes New All-Time High
Not certain which of these two historic events will eventually bear more weight, but the banks in Cyprus opened at noon (Cyprus time) on Thursday after being shuttered for more than two weeks and the S&P made an all-time closing high.
For investors, the S&P event is a watershed moment, capping a long bull run of just over four years that began at 666 on the index and now closes nearly 100 points better.
For the citizens of Cyprus, the events of the past two weeks and the reopening of the banks today will have great weight, but in the opposite direction. Now that the banking situation in the Mediterranean island nation are more or less "normalized" - with uninsured depositors (over 100,000 euros) likely to lose 40% or more of their deposits - and the country headed directly into a depression, the contagion, for now, limited, though anybody with large deposits in any European bank has to be walking on eggshells presently.
The limits for Cypriots are stiff: withdrawals from banks are limited to 300 euros per day; checks cannot be cashed, only deposited; leaving the island with more than 3000 euros is outlawed. Welcome to the Cyprus debt prison and hotel. Payrolls are exempt from limits as the banking officials want to see money circulating to some degree, though people will be surely more frugal in their spending habits.
The Dow closed at another record high and ends the quarter (Markets are closed Friday) up 11%, marking the best quarterly returns since 1998. The S&P was right behind, clocking a 10% return for the quarter.
As the market has shown throughout the four-year bull run, news doesn't matter; it's all good on Wall Street. The Chicago Purchasing Managers' Index fell to 52.4 in March, down sharply from the 56.8 reported in February.
Initial jobless claims also cam in worse than expected, rising to 357K, up from 341K in the prior week.
Monday is the start of a new month and a new quarter, as well as being April Fool's Day, which begs the question: who will be the fools, those who exited on the record high today or those looking to squeeze more gains out of the long-running bull market?
The highs on the S&P are nominal ones, slightly above levels hit in 2000 and 2007, more commonly known as a triple top.
It's never a good idea to buy high, because you're likely to end up selling lower, but it's really tough to bet against Ben Bernanke and the Fed printing presses churning out $85 billion a month in free money. The sprinters are far ahead at the moment, but investing is more of a marathon. And, don't forget, this rally has been built not only on quickly depreciating greenbacks but on horrifyingly low volume. Additionally, the advance-Decline line has been exhibiting much less breadth than one would normally associate with a raging bull.
Pick your poison, but don't keep all your eggs in one basket.
Happy Easter!
Dow 14,578.54, +52.38 (0.36%)
NASDAQ 3,267.52, +11.00 (0.34%)
S&P 500 1,569.19, +6.34 (0.41%)
NYSE Composite 9,106.83, +36.38 (0.40%)
NASDAQ Volume 1,555,418,875.00
NYSE Volume 3,481,085,250
Combined NYSE & NASDAQ Advance - Decline: 3865-2537
Combined NYSE & NASDAQ New highs - New lows: 557-32
WTI crude oil: 97.23, +0.65
Gold: 1,594.80, -11.40
Silver: 28.32, -0.289
For investors, the S&P event is a watershed moment, capping a long bull run of just over four years that began at 666 on the index and now closes nearly 100 points better.
For the citizens of Cyprus, the events of the past two weeks and the reopening of the banks today will have great weight, but in the opposite direction. Now that the banking situation in the Mediterranean island nation are more or less "normalized" - with uninsured depositors (over 100,000 euros) likely to lose 40% or more of their deposits - and the country headed directly into a depression, the contagion, for now, limited, though anybody with large deposits in any European bank has to be walking on eggshells presently.
The limits for Cypriots are stiff: withdrawals from banks are limited to 300 euros per day; checks cannot be cashed, only deposited; leaving the island with more than 3000 euros is outlawed. Welcome to the Cyprus debt prison and hotel. Payrolls are exempt from limits as the banking officials want to see money circulating to some degree, though people will be surely more frugal in their spending habits.
The Dow closed at another record high and ends the quarter (Markets are closed Friday) up 11%, marking the best quarterly returns since 1998. The S&P was right behind, clocking a 10% return for the quarter.
As the market has shown throughout the four-year bull run, news doesn't matter; it's all good on Wall Street. The Chicago Purchasing Managers' Index fell to 52.4 in March, down sharply from the 56.8 reported in February.
Initial jobless claims also cam in worse than expected, rising to 357K, up from 341K in the prior week.
Monday is the start of a new month and a new quarter, as well as being April Fool's Day, which begs the question: who will be the fools, those who exited on the record high today or those looking to squeeze more gains out of the long-running bull market?
The highs on the S&P are nominal ones, slightly above levels hit in 2000 and 2007, more commonly known as a triple top.
It's never a good idea to buy high, because you're likely to end up selling lower, but it's really tough to bet against Ben Bernanke and the Fed printing presses churning out $85 billion a month in free money. The sprinters are far ahead at the moment, but investing is more of a marathon. And, don't forget, this rally has been built not only on quickly depreciating greenbacks but on horrifyingly low volume. Additionally, the advance-Decline line has been exhibiting much less breadth than one would normally associate with a raging bull.
Pick your poison, but don't keep all your eggs in one basket.
Happy Easter!
Dow 14,578.54, +52.38 (0.36%)
NASDAQ 3,267.52, +11.00 (0.34%)
S&P 500 1,569.19, +6.34 (0.41%)
NYSE Composite 9,106.83, +36.38 (0.40%)
NASDAQ Volume 1,555,418,875.00
NYSE Volume 3,481,085,250
Combined NYSE & NASDAQ Advance - Decline: 3865-2537
Combined NYSE & NASDAQ New highs - New lows: 557-32
WTI crude oil: 97.23, +0.65
Gold: 1,594.80, -11.40
Silver: 28.32, -0.289
Monday, March 25, 2013
Hurrah! Boo! Cyprus is Saved! Cyprus is Doomed!
There are so many angles to the story of what happened to Cyprus over the past week or so that it boggles the mind to consider just a few of the long-term ramifications, but, clearly, the deal struck late, late Sunday evening by the ECB, IMF and the European Commission, deferred to by the president of Cyprus - who really didn't have much say and actually threatened to resign (he should have) - was a game changer in more ways than one.
First, the deal.
Instead of making everybody pay, which was the original plan foisted upon the Cypriot parliament and summarily dismissed in a unanimous vote, the brain trust that is the ECB worked out a plan that would fold up one insolvent bank - Laiki - and reorganize another (Bank of Cyprus), impose capital control limiting withdrawals to 100 euros, and force depositors with over 100,000 euros - because there are so few bond holders - to pay down the bank's debt, with a levy of up to 40% on those deposits.
OK? Stay with me here. Because the plan is not a bailout, but a reorganization, the parliament of Cyprus will not have to vote on it. There. All fixed.
Except that mush of the money that's going to be "levied" in the "reorganization" is Russian money, laundered or otherwise, and the Russians are not very happy, even though Angela Merkel is. Hmmm... Russians unhappy, Germans happy. That doesn't sound familiar, does it?
Further, banks in Cyprus are supposed to open tomorrow, but probably won't, and even when they do, the flight of capital will be intense, even at the absurdly tiny levels of 100 euros a day. This story is still very, very fluid and has a multitude of effects on all of Europe and the rest of the world, so, stay tuned.
As far as the markets were concerned, news of a "solution" to the Cyprus problem was greeted with hallelujahs and buying, with the futures of US indices all heading skyward and the Euro ramping up against the dollar.
Stocks in the US (and Europe) opened higher, leveled off until, until, Dutch Finance Minister and recently-appointed head of the ECB, Jeroen Dijsselblom, went on the record to say that the Cyprus solution may well be a "template" for other troubled banks in the Eurozone.
Uh-oh. markets tanked. The Dow, which was up 51 points, went negative by 128. European bourses revered. The EUR/USD FX pair went negative in a big way. Impairment of depositor money (government-sanctioned theft) is not what rich people want to hear. Never mind the poor and not-so-poor with deposits of under 100,000 euros, which are guaranteed by the bankrupt ECB, it's the rich people's money that's going to bail out banks in the future Europe.
Ouchie! But, that's what should happen. Insolvent banks should be wound down first by smacking the junior and then senior bond holders and, if that's not enough to cover the debts, uninsured depositors pony up the balance.
So, that's Cyprus, the future of Europe and the global financial system all rolled up into 12 or 14 neat paragraphs. If you've got over 100,000 euros in any bank these days, you are either as nuts as our Federal Reserve chairman or a big business that needs that amount of capital to meet payroll, expenses, etc. For those, there is no alternative (well, there is, but what business really wants to keep that much cash lying around?).
For people with less than 100,000 euros or the equivalent in dollars (about $129,000 right now), how much do you want to risk in any bank, any bank which could be closed indefinitely in case of a financial crisis or emeeeeeeergency, with no access to your funds until the "officials" deem the situation resolved?
Let's just say that the answer for most people would be, "not much."
Well, that just raises another fearsome looking ugly head in the form of capital controls (you can only take out "so much" today) or, outright loss. The answer is bank runs of the kind not seen since the Great Depression, when, remember, banks were closed for weeks and longer and some never reopened. IT CAN HAPPEN HERE because it already did.
So, where do you put all that extra cash of yours, lucky you? Most Americans have sums of money in "investments" which are just promises and based upon given market levels which change from day to day. Trust. It's a fun term.
Others have money in banks. Best advice is, if you must keep your dough in a bank, spread it around. A better solution would be to invest (you have enough money, right?) in a very heavy safe, a good alarm system, a coule of good firearms and maybe a couple of alert, healthy guard dogs. Yeah. Old school, like medieval days, which is to where the world is headed. Maybe a moat filled with crocodiles, drawbridge and turrets should be the new home design for the 2020s?
You laugh. Don't. Money in banks, as proven by the bizarre and brazen moves of the psychopathic leaders of the ECB, IMF and EU. is not as safe as you'd like to think. Ask anyone who lived through the Great Depression. Most people kept more money stuffed into their mattresses than in their local banks, and, with good reason. The banks failed and their money was gone. Poof!
The choice is yours, dear readers, play the game of chicken with the elites, who have no taste nor mercy for the likes of you and yours, or take action. keep in banks only what you need, because, when you think of it, the FDIC insures deposits of up to $250,000 in the US. That went up from $50,000 prior to the crash in 2008. Why? Because people smart enough to understand what was going on were taking their money out and the government and the banks would really have gone bust in a huge way had there been real banks runs like in the 1930s.
Without looking it up, the FDIC budget is something along the lines of $50 billion. The amount of deposits in US banks is on the order of $14 TRILLION. Do the math.
That's it for today. We're all Cypriots now.
Dow 14,447.75, -64.28 (0.44%)
NASDAQ 3,235.30, -9.70 (0.30%)
S&P 500 1,551.69, -5.20 (0.33%)
NYSE Composite 9,022.95, -42.85 (0.47%)
NASDAQ Volume 1,665,435,625
NYSE Volume 3,539,278,250
Combined NYSE & NASDAQ Advance - Decline: 2714-3624
Combined NYSE & NASDAQ New highs - New lows: 489-49 (straining)
WTI crude oil: 94.81, +1.10
Gold: 1,604.50, -1.60
Silver: 28.82, +0.117
First, the deal.
Instead of making everybody pay, which was the original plan foisted upon the Cypriot parliament and summarily dismissed in a unanimous vote, the brain trust that is the ECB worked out a plan that would fold up one insolvent bank - Laiki - and reorganize another (Bank of Cyprus), impose capital control limiting withdrawals to 100 euros, and force depositors with over 100,000 euros - because there are so few bond holders - to pay down the bank's debt, with a levy of up to 40% on those deposits.
OK? Stay with me here. Because the plan is not a bailout, but a reorganization, the parliament of Cyprus will not have to vote on it. There. All fixed.
Except that mush of the money that's going to be "levied" in the "reorganization" is Russian money, laundered or otherwise, and the Russians are not very happy, even though Angela Merkel is. Hmmm... Russians unhappy, Germans happy. That doesn't sound familiar, does it?
Further, banks in Cyprus are supposed to open tomorrow, but probably won't, and even when they do, the flight of capital will be intense, even at the absurdly tiny levels of 100 euros a day. This story is still very, very fluid and has a multitude of effects on all of Europe and the rest of the world, so, stay tuned.
As far as the markets were concerned, news of a "solution" to the Cyprus problem was greeted with hallelujahs and buying, with the futures of US indices all heading skyward and the Euro ramping up against the dollar.
Stocks in the US (and Europe) opened higher, leveled off until, until, Dutch Finance Minister and recently-appointed head of the ECB, Jeroen Dijsselblom, went on the record to say that the Cyprus solution may well be a "template" for other troubled banks in the Eurozone.
Uh-oh. markets tanked. The Dow, which was up 51 points, went negative by 128. European bourses revered. The EUR/USD FX pair went negative in a big way. Impairment of depositor money (government-sanctioned theft) is not what rich people want to hear. Never mind the poor and not-so-poor with deposits of under 100,000 euros, which are guaranteed by the bankrupt ECB, it's the rich people's money that's going to bail out banks in the future Europe.
Ouchie! But, that's what should happen. Insolvent banks should be wound down first by smacking the junior and then senior bond holders and, if that's not enough to cover the debts, uninsured depositors pony up the balance.
So, that's Cyprus, the future of Europe and the global financial system all rolled up into 12 or 14 neat paragraphs. If you've got over 100,000 euros in any bank these days, you are either as nuts as our Federal Reserve chairman or a big business that needs that amount of capital to meet payroll, expenses, etc. For those, there is no alternative (well, there is, but what business really wants to keep that much cash lying around?).
For people with less than 100,000 euros or the equivalent in dollars (about $129,000 right now), how much do you want to risk in any bank, any bank which could be closed indefinitely in case of a financial crisis or emeeeeeeergency, with no access to your funds until the "officials" deem the situation resolved?
Let's just say that the answer for most people would be, "not much."
Well, that just raises another fearsome looking ugly head in the form of capital controls (you can only take out "so much" today) or, outright loss. The answer is bank runs of the kind not seen since the Great Depression, when, remember, banks were closed for weeks and longer and some never reopened. IT CAN HAPPEN HERE because it already did.
So, where do you put all that extra cash of yours, lucky you? Most Americans have sums of money in "investments" which are just promises and based upon given market levels which change from day to day. Trust. It's a fun term.
Others have money in banks. Best advice is, if you must keep your dough in a bank, spread it around. A better solution would be to invest (you have enough money, right?) in a very heavy safe, a good alarm system, a coule of good firearms and maybe a couple of alert, healthy guard dogs. Yeah. Old school, like medieval days, which is to where the world is headed. Maybe a moat filled with crocodiles, drawbridge and turrets should be the new home design for the 2020s?
You laugh. Don't. Money in banks, as proven by the bizarre and brazen moves of the psychopathic leaders of the ECB, IMF and EU. is not as safe as you'd like to think. Ask anyone who lived through the Great Depression. Most people kept more money stuffed into their mattresses than in their local banks, and, with good reason. The banks failed and their money was gone. Poof!
The choice is yours, dear readers, play the game of chicken with the elites, who have no taste nor mercy for the likes of you and yours, or take action. keep in banks only what you need, because, when you think of it, the FDIC insures deposits of up to $250,000 in the US. That went up from $50,000 prior to the crash in 2008. Why? Because people smart enough to understand what was going on were taking their money out and the government and the banks would really have gone bust in a huge way had there been real banks runs like in the 1930s.
Without looking it up, the FDIC budget is something along the lines of $50 billion. The amount of deposits in US banks is on the order of $14 TRILLION. Do the math.
That's it for today. We're all Cypriots now.
Dow 14,447.75, -64.28 (0.44%)
NASDAQ 3,235.30, -9.70 (0.30%)
S&P 500 1,551.69, -5.20 (0.33%)
NYSE Composite 9,022.95, -42.85 (0.47%)
NASDAQ Volume 1,665,435,625
NYSE Volume 3,539,278,250
Combined NYSE & NASDAQ Advance - Decline: 2714-3624
Combined NYSE & NASDAQ New highs - New lows: 489-49 (straining)
WTI crude oil: 94.81, +1.10
Gold: 1,604.50, -1.60
Silver: 28.82, +0.117
Friday, March 22, 2013
Cyprus Situation Still Uncertain; US Traders Content to Take the Risk
With the situation in Cyprus still murky, at best, US investors shrugged off the dilemma from overseas and bid stocks up to their best levels of the week during Friday's session, ending the week down marginally, but essentially flat.
Holding stocks over the weekend seems a risky bet, being that the troika has given the Cypriot government until Monday to sort things out and come up with a solution to salvage what's left of their failed banking system and creaking government.
The latest from Nicosea, the capitol of Cyprus, appeared to have the parliament eyeing a tax on depositors once again in an effort to keep the deal offered by the ECB and IMF on the table. The parliament had unanimously rejected the option to tax deposits in Cypriot banks earlier in the week, but it now appears that they have run out of viable options.
How the tax, or levy, is finally worked out remains a sticking point. Deposits of under 100,000 euros are supposedly protected by law, as they are by the FDIC in the US, but lawmakers and Eurozone leaders seem willing to overturn that protection in favor of bailing out the troubled banks and economy of Cyprus.
Taxing savers will no doubt raise the specter of fear in many european nations, that regular depositors will no longer be protected by laws designed to keep governments and financial authorities' hands off the people's money.
With Europe already on a weekend, there's little doubt what savers in countries like Greece, italy, spain and Portugal have been doing on Friday: withdrawing sufficient fund to weather the weekend and beyond, should the leaders in the EU and Cyprus continue on their mad path to destruction of confidence in the financial system.
Banks in Cyprus will remain closed until Tuesday, no matter what is decided or left up in the air. The weekend should prove to be an interesting one from the standpoint of global economic viability.
Dow 14,512.03, +90.54 (0.63%)
NASDAQ 3,245.00, +22.40 (0.70%)
S&P 500 1,556.89, +11.09 (0.72%)
NYSE Composite 9,065.65, +56.00 (0.62%)
NASDAQ Volume 1,631,320,375
NYSE Volume 3,145,706,000
Combined NYSE & NASDAQ Advance - Decline: 3898-2398
Combined NYSE & NASDAQ New highs - New lows: 323-29 (flat)
WTI crude oil: 93.71, +1.26
Gold: 1,606.10, -7.70
Silver: 28.70, -0.514
Holding stocks over the weekend seems a risky bet, being that the troika has given the Cypriot government until Monday to sort things out and come up with a solution to salvage what's left of their failed banking system and creaking government.
The latest from Nicosea, the capitol of Cyprus, appeared to have the parliament eyeing a tax on depositors once again in an effort to keep the deal offered by the ECB and IMF on the table. The parliament had unanimously rejected the option to tax deposits in Cypriot banks earlier in the week, but it now appears that they have run out of viable options.
How the tax, or levy, is finally worked out remains a sticking point. Deposits of under 100,000 euros are supposedly protected by law, as they are by the FDIC in the US, but lawmakers and Eurozone leaders seem willing to overturn that protection in favor of bailing out the troubled banks and economy of Cyprus.
Taxing savers will no doubt raise the specter of fear in many european nations, that regular depositors will no longer be protected by laws designed to keep governments and financial authorities' hands off the people's money.
With Europe already on a weekend, there's little doubt what savers in countries like Greece, italy, spain and Portugal have been doing on Friday: withdrawing sufficient fund to weather the weekend and beyond, should the leaders in the EU and Cyprus continue on their mad path to destruction of confidence in the financial system.
Banks in Cyprus will remain closed until Tuesday, no matter what is decided or left up in the air. The weekend should prove to be an interesting one from the standpoint of global economic viability.
Dow 14,512.03, +90.54 (0.63%)
NASDAQ 3,245.00, +22.40 (0.70%)
S&P 500 1,556.89, +11.09 (0.72%)
NYSE Composite 9,065.65, +56.00 (0.62%)
NASDAQ Volume 1,631,320,375
NYSE Volume 3,145,706,000
Combined NYSE & NASDAQ Advance - Decline: 3898-2398
Combined NYSE & NASDAQ New highs - New lows: 323-29 (flat)
WTI crude oil: 93.71, +1.26
Gold: 1,606.10, -7.70
Silver: 28.70, -0.514
Thursday, March 21, 2013
Situation in Cyprus Still Unresolved; European, US Stocks Hit
If Americans could pull themselves away from their TV sets and the NCAA tournament for a few moments, some of them might come to the realization that what's happening in Cyprus might just have huge global implications in the not-so-distant future.
While the story so far consists of a multitude of moving parts, what is known so far is that Cypriot banks - oversized in relation to the nation's GDP - are in deep, deep trouble and that the "troika" (EU, ECB and IMF) has given the tiny island nation until Monday to come up with a viable plan.
Many ATM machines have already run out of cash and one bank (Laiki) has already imposed capital controls, limiting withdrawals to 260 euros ($340) per person to conserve its dwindling funds. Rumors have it that Laiki will be folded into one or two of the other major banks in the nation, even though reported by CNBC, those reports have not been verified by reliable sources. The situation remains fluid with European officials, Russia (whose residents are responsible for the bulk of deposits in Cyprus' banks) and the Cypriot parliament are busy concocting ideas to rescue the banking system and the government, though nothing seems to be working particularly well at the moment.
Possible outcomes for Cyprus are varied and somewhat indecipherable at present, but what is known is that depositors almost certainly will be forced to surrender some of their funds via a tax, or levy, because there aren't enough bondholders in the banks to make up for the shortfall. Normally, those holders of bank debt would be first on the hook, but this situation is different from what has already occurred in Ireland, Greece, Spain, Portugal and Italy.
Nonetheless, whatever happens in Cyprus will have ramifications across Europe and the world. If the troika's plan to tax deposits becomes reality, it will almost certainly cause some degree of bank runs in the aforementioned countries that are already in trouble. The damage done to confidence in the system will be more severe. Banking and finance, largely based upon trust, cannot withstand wholesale looting of depositor accounts, no matter how small or seemingly trivial the amounts. The expectation is that banks are a safe place to park funds and the potential of either not having access to funds or having money appropriated (read: stolen) in order to bail out the bank itself or the government, is not part of the agreement.
Europeans are now looking at events in Cyprus through jaundiced eyes. The crisis is nigh upon four years old and the peripheral countries are still in recession, as is the whole of Europe. To date, all the plans of the EU, ECB and the IMF have amounted to only playing for time, and time is running short, both on the patience of the populaces and the viability of various governments.
The fear is that once the genie of appropriating depositor funds comes out of the bottle, it will be hard, if not impossible, to put back and will likely spread. No matter the eventual deal struck in Cyprus, capital flight is a certainty, the question being from where and to where the money will flow.
There's a certain unfairness about all of it, and a general sense of fear that hit markets this week with a thud. In the US, the damage has been downplayed thus far, but today's losses were the worst of the week and sent the major average to their lowest closes in nearly two weeks.
With the situation still unresolved, the anxiety on Wall Street and in other money centers around the globe is palpable. Unrestrained money printing, QE, low interest rates and other assorted "emergency" measures will not be able to trump a wholesale loss of confidence in the financial system itself, a condition which is likely long overdue.
Naturally, one cannot expect ordinary citizens and businesspeople around to world to immediately and simultaneously catch onto what's really occurring, but word is spreading, and quickly.
A piece of advice to everyone would be to watch one's finances carefully and keep a stash of cash outside the banking system, just in case. After all, it was one of our founding fathers - Benjamin Franklin - who opined, "an ounce of prevention is worth a pound of cure." And the cure has yet to be found.
Also of note is that traditional "safe havens" - gold and silver - have been appreciating slightly, with today's moves the most significant.
Dow 14,421.49, -90.24 (0.62%)
NASDAQ 3,222.60, -31.59 (0.97%)
S&P 500 1,545.80, -12.91 (0.83%)
NYSE Composite 9,009.66, -71.43 (0.79%)
NASDAQ Volume 1,691,711,000
NYSE Volume 3,571,124,500
Combined NYSE & NASDAQ Advance - Decline: 2138-4254
Combined NYSE & NASDAQ New highs - New lows: 303-28 (stretched)
WTI crude oil: 92.45, -1.05
Gold: 1,613.80, +6.30
Silver: 29.21, +0.395
While the story so far consists of a multitude of moving parts, what is known so far is that Cypriot banks - oversized in relation to the nation's GDP - are in deep, deep trouble and that the "troika" (EU, ECB and IMF) has given the tiny island nation until Monday to come up with a viable plan.
Cyprus has been told it must raise 5.8 billion euros ($7.5 billion) if it is to receive 10 billion euros ($12.9 billion) from its fellow eurozone countries and the International Monetary Fund.In the meantime, the banks remain closed, ostensibly to reopen on Tuesday of next week.
Many ATM machines have already run out of cash and one bank (Laiki) has already imposed capital controls, limiting withdrawals to 260 euros ($340) per person to conserve its dwindling funds. Rumors have it that Laiki will be folded into one or two of the other major banks in the nation, even though reported by CNBC, those reports have not been verified by reliable sources. The situation remains fluid with European officials, Russia (whose residents are responsible for the bulk of deposits in Cyprus' banks) and the Cypriot parliament are busy concocting ideas to rescue the banking system and the government, though nothing seems to be working particularly well at the moment.
Possible outcomes for Cyprus are varied and somewhat indecipherable at present, but what is known is that depositors almost certainly will be forced to surrender some of their funds via a tax, or levy, because there aren't enough bondholders in the banks to make up for the shortfall. Normally, those holders of bank debt would be first on the hook, but this situation is different from what has already occurred in Ireland, Greece, Spain, Portugal and Italy.
Nonetheless, whatever happens in Cyprus will have ramifications across Europe and the world. If the troika's plan to tax deposits becomes reality, it will almost certainly cause some degree of bank runs in the aforementioned countries that are already in trouble. The damage done to confidence in the system will be more severe. Banking and finance, largely based upon trust, cannot withstand wholesale looting of depositor accounts, no matter how small or seemingly trivial the amounts. The expectation is that banks are a safe place to park funds and the potential of either not having access to funds or having money appropriated (read: stolen) in order to bail out the bank itself or the government, is not part of the agreement.
Europeans are now looking at events in Cyprus through jaundiced eyes. The crisis is nigh upon four years old and the peripheral countries are still in recession, as is the whole of Europe. To date, all the plans of the EU, ECB and the IMF have amounted to only playing for time, and time is running short, both on the patience of the populaces and the viability of various governments.
The fear is that once the genie of appropriating depositor funds comes out of the bottle, it will be hard, if not impossible, to put back and will likely spread. No matter the eventual deal struck in Cyprus, capital flight is a certainty, the question being from where and to where the money will flow.
There's a certain unfairness about all of it, and a general sense of fear that hit markets this week with a thud. In the US, the damage has been downplayed thus far, but today's losses were the worst of the week and sent the major average to their lowest closes in nearly two weeks.
With the situation still unresolved, the anxiety on Wall Street and in other money centers around the globe is palpable. Unrestrained money printing, QE, low interest rates and other assorted "emergency" measures will not be able to trump a wholesale loss of confidence in the financial system itself, a condition which is likely long overdue.
Naturally, one cannot expect ordinary citizens and businesspeople around to world to immediately and simultaneously catch onto what's really occurring, but word is spreading, and quickly.
A piece of advice to everyone would be to watch one's finances carefully and keep a stash of cash outside the banking system, just in case. After all, it was one of our founding fathers - Benjamin Franklin - who opined, "an ounce of prevention is worth a pound of cure." And the cure has yet to be found.
Also of note is that traditional "safe havens" - gold and silver - have been appreciating slightly, with today's moves the most significant.
Dow 14,421.49, -90.24 (0.62%)
NASDAQ 3,222.60, -31.59 (0.97%)
S&P 500 1,545.80, -12.91 (0.83%)
NYSE Composite 9,009.66, -71.43 (0.79%)
NASDAQ Volume 1,691,711,000
NYSE Volume 3,571,124,500
Combined NYSE & NASDAQ Advance - Decline: 2138-4254
Combined NYSE & NASDAQ New highs - New lows: 303-28 (stretched)
WTI crude oil: 92.45, -1.05
Gold: 1,613.80, +6.30
Silver: 29.21, +0.395
Wednesday, March 20, 2013
Cyprus Still an Issue; Fed Statement a Snoozer
For some reason known only to those who choose to follow rather than lead, everything market-related hinged upon the release of the FOMC policy statement on federal funds rates, which, as almost everyone in the civilized world already knew, would remain unchanged.
Nonetheless, the bearded chairman and his scholarly cohorts ripped Cyprus from the front pages of economic news for the day and delivered their usual hokum statement about "moderate growth", "targeted inflation" and other assorted word-bites designed to make the markets kowtow to their planned economic dictums.
The committee also released forecasts on economic growth and unemployment for the remainder of 2013, 2104 and 2015 - forecasts which are generally nothing but flights of fancy and will almost certainly miss their marks widely.
And, there was a press conference and question and answer period, in which chairman Bernanke reread the aforementioned statement, added a few humorless remarks and fielded a number of softball questions from the drooling press pool.
It was enough to lull babies and pets to sleep.
Meanwhile, the ECB and IMF continue to wrestle with the issue of what to do about Cyprus, which is still unsettled and operating without banks being open for a fifth straight day. Today's announcement was that Cypriot banks will remain closed until Tuesday of next week, as the government expects massive bank runs once they are open for business.
Imagine the grand, self-important EU ministers losing any remaining credibility over what amounts to a three to six billion euro matter. Incredible as it sounds, that's what's happening.
Party on, America.
Party on, Europe.
Dow 14,511.73, +55.91 (0.39%)
NASDAQ 3,254.19, +25.09 (0.78%)
S&P 500 1,558.71, +10.37 (0.67%)
NYSE Composite 9,081.09, +63.42 (0.70%)
NASDAQ Volume 1,605,044,125
NYSE Volume 3,682,038,000
Combined NYSE & NASDAQ Advance - Decline: 4657-1782
Combined NYSE & NASDAQ New highs - New lows: 506-37
WTI crude oil: 92.96, +0.80
Gold: 1,607.50, -3.80
Silver: 28.82, -0.026
Nonetheless, the bearded chairman and his scholarly cohorts ripped Cyprus from the front pages of economic news for the day and delivered their usual hokum statement about "moderate growth", "targeted inflation" and other assorted word-bites designed to make the markets kowtow to their planned economic dictums.
The committee also released forecasts on economic growth and unemployment for the remainder of 2013, 2104 and 2015 - forecasts which are generally nothing but flights of fancy and will almost certainly miss their marks widely.
And, there was a press conference and question and answer period, in which chairman Bernanke reread the aforementioned statement, added a few humorless remarks and fielded a number of softball questions from the drooling press pool.
It was enough to lull babies and pets to sleep.
Meanwhile, the ECB and IMF continue to wrestle with the issue of what to do about Cyprus, which is still unsettled and operating without banks being open for a fifth straight day. Today's announcement was that Cypriot banks will remain closed until Tuesday of next week, as the government expects massive bank runs once they are open for business.
Imagine the grand, self-important EU ministers losing any remaining credibility over what amounts to a three to six billion euro matter. Incredible as it sounds, that's what's happening.
Party on, America.
Party on, Europe.
Dow 14,511.73, +55.91 (0.39%)
NASDAQ 3,254.19, +25.09 (0.78%)
S&P 500 1,558.71, +10.37 (0.67%)
NYSE Composite 9,081.09, +63.42 (0.70%)
NASDAQ Volume 1,605,044,125
NYSE Volume 3,682,038,000
Combined NYSE & NASDAQ Advance - Decline: 4657-1782
Combined NYSE & NASDAQ New highs - New lows: 506-37
WTI crude oil: 92.96, +0.80
Gold: 1,607.50, -3.80
Silver: 28.82, -0.026
Tuesday, March 19, 2013
Cypriot Parliament Rejects Savings Levy; EU, ECB, IMF Relent
Congrats to the Cyprus parliament for calling the bluff on the EU, ECB and the IMF.
Shortly after noon EDT, the Cypriot parliament voted unanimously - in a rare show of anti-Euro solidarity - to reject the bailout plan proposed by the "troika" (EU, ECB, IMF) that would have imposed a tax on savers, a stark violation of the rule of law.
The plan called for a 9.9% tax on savings accounts in banks with holdings of more than 100,000 Euros, and a 6.5% levy on those under the 100,000 Euro threshold.
The vote had been delayed for two days, but, in the end, the parliament stood up for the welfare of the people and the sanctity of personal property rights, or, could it have been a reaction to a very real threat from retaliation from Russian oligarchs and mobsters (recognized as one and the same, in some circles)?
Much of the billions of Euros on deposit in Cypriot banks belong to Russians, a fact not lost on those who had the fate of their country and countrymen in their hands.
Whatever the case, the troika's gambit to impose a tax on savings accounts went up in flames, fabulously, though one has to fear that this was more of a test run for a future raid on the money held by individuals and companies in banks across Europe. So deep was the opposition that the parliament rejected the plan in toto, sending the ECB and IMF back to the drawing board.
The EU quickly issued a statement to the effect that it would use existing means to bailout the banks in Cyprus, and with them, the bankrupt government. Though nothing material was offered right away, all in Europe know that whatever solution the troika devises will be austere toward the general populace and kind to banks.
In the end, it will be the people who suffer most, as it has been in Greece, Portugal, Ireland and, to a lesser extent, Spain and Italy.
At one point during the back-and-forth of memos and media bites, one of the EU finance ministers quipped that Europe was two-thirds of the way through the crisis. Skeptics of the overall viability of the European Union will note that using 2008 as a baseline, the year 2014 would serve as an end to the crisis, otherwise meaning the collapse of the EU and the end of the Euro as a multi-national currency.
It doesn't get any stranger than in Europe, the dystopian nightmare conceived as a method to compete on a global scale which has devolved rapidly into an Orwellian series of meetings, dictums, bailouts, trial runs and sovereign failures.
America took the drama in stride, the markets stumbling through the early part of the session only to rally in the afternoon, though the crisis in Cyprus is still far from over. This was only act one of what will certainly be a three-to-five piece performance.
While it may be back to normal (whatever that means) for US and global markets for the next few days, the FOMC meeting of the Fed wraps up tomorrow at 2:00 pm EDT and the budget battle in the US congress continues to gain pace, with the Senate and House bills far from resolution.
As usual, congress will be out of session beginning March 25, though it must pass a continuing resolution by the 27th in order to forestall a government shutdown due to lack of funding. As in Europe, the nefarious machinations of government are never without a dramatic deadline. Thus, the remainder of the week will shift focus from the tiny island nation of Cyprus to the secluded denizens within the halls of congress.
For now...
Dow 14,455.82, +3.76 (0.03%)
NASDAQ 3,229.10, -8.49 (0.26%)
S&P 500 1,548.34, -3.76 (0.24%)
NYSE Composite 9,018.73, -26.71 (0.30%)
NASDAQ Volume 1,648,331,375
NYSE Volume 3,809,744,750
Combined NYSE & NASDAQ Advance - Decline: 2643-3781
Combined NYSE & NASDAQ New highs - New lows: 313-42 (shrinkage)
WTI crude oil: 92.16, -1.58
Gold: 1,611.30, +6.70
Silver: 28.84, -0.031
Shortly after noon EDT, the Cypriot parliament voted unanimously - in a rare show of anti-Euro solidarity - to reject the bailout plan proposed by the "troika" (EU, ECB, IMF) that would have imposed a tax on savers, a stark violation of the rule of law.
The plan called for a 9.9% tax on savings accounts in banks with holdings of more than 100,000 Euros, and a 6.5% levy on those under the 100,000 Euro threshold.
The vote had been delayed for two days, but, in the end, the parliament stood up for the welfare of the people and the sanctity of personal property rights, or, could it have been a reaction to a very real threat from retaliation from Russian oligarchs and mobsters (recognized as one and the same, in some circles)?
Much of the billions of Euros on deposit in Cypriot banks belong to Russians, a fact not lost on those who had the fate of their country and countrymen in their hands.
Whatever the case, the troika's gambit to impose a tax on savings accounts went up in flames, fabulously, though one has to fear that this was more of a test run for a future raid on the money held by individuals and companies in banks across Europe. So deep was the opposition that the parliament rejected the plan in toto, sending the ECB and IMF back to the drawing board.
The EU quickly issued a statement to the effect that it would use existing means to bailout the banks in Cyprus, and with them, the bankrupt government. Though nothing material was offered right away, all in Europe know that whatever solution the troika devises will be austere toward the general populace and kind to banks.
In the end, it will be the people who suffer most, as it has been in Greece, Portugal, Ireland and, to a lesser extent, Spain and Italy.
At one point during the back-and-forth of memos and media bites, one of the EU finance ministers quipped that Europe was two-thirds of the way through the crisis. Skeptics of the overall viability of the European Union will note that using 2008 as a baseline, the year 2014 would serve as an end to the crisis, otherwise meaning the collapse of the EU and the end of the Euro as a multi-national currency.
It doesn't get any stranger than in Europe, the dystopian nightmare conceived as a method to compete on a global scale which has devolved rapidly into an Orwellian series of meetings, dictums, bailouts, trial runs and sovereign failures.
America took the drama in stride, the markets stumbling through the early part of the session only to rally in the afternoon, though the crisis in Cyprus is still far from over. This was only act one of what will certainly be a three-to-five piece performance.
While it may be back to normal (whatever that means) for US and global markets for the next few days, the FOMC meeting of the Fed wraps up tomorrow at 2:00 pm EDT and the budget battle in the US congress continues to gain pace, with the Senate and House bills far from resolution.
As usual, congress will be out of session beginning March 25, though it must pass a continuing resolution by the 27th in order to forestall a government shutdown due to lack of funding. As in Europe, the nefarious machinations of government are never without a dramatic deadline. Thus, the remainder of the week will shift focus from the tiny island nation of Cyprus to the secluded denizens within the halls of congress.
For now...
Dow 14,455.82, +3.76 (0.03%)
NASDAQ 3,229.10, -8.49 (0.26%)
S&P 500 1,548.34, -3.76 (0.24%)
NYSE Composite 9,018.73, -26.71 (0.30%)
NASDAQ Volume 1,648,331,375
NYSE Volume 3,809,744,750
Combined NYSE & NASDAQ Advance - Decline: 2643-3781
Combined NYSE & NASDAQ New highs - New lows: 313-42 (shrinkage)
WTI crude oil: 92.16, -1.58
Gold: 1,611.30, +6.70
Silver: 28.84, -0.031
Monday, March 18, 2013
March Madness Redefined: Cyprus, the ECB and the IMF
March - in the United States, at least - is traditionally known for the great sporting event of the year, the annual NCAA Men's Basketball Tournament, otherwise known as March Madness, because of the wild nature of the proceedings, the drama, last-second, game-winning shots (Buzzer Beaters) and the twists and turns taken en route to crowing a national champion.
Over the weekend, unbeknownst to college basketball fans and most regular American citizens, a new manner of March madness was created by the European Central Bank, the IMF and the nation of Cyprus. The reason nobody in America knew about what has been occurring on and around the tiny Mediterranean island is the usual: the US press is terminally asleep at the media wheel.
Re-capping the key events in this twisted tableau, the entire mess began years ago, as banks (the usual culprits) in Cyprus found themselves woefully underfunded and the government virtually bankrupt. Leave it at that, as yet another European nation finds itself with an unbearable debt burden and no reasonable way out.
The EU and the ECB have been grappling with the Cyprus situation for at least the last two years, doing little to nothing about it, their energies directed more at larger peripheral nations like Greece (a complete disaster), Spain (gaining fast on Greece), Ireland (terminally indebted), Portugal and Italy. These PIIGS, as they are lovingly called, have social and financial issues that needed more immediate attention and have been given directives, bailouts, loans and assorted "fixes" from the EU and the IMF, facilitating debt repurchases, funding ongoing governmental operations and generally kicking the proverbial can further down the road to the eventual collapse of the Euro.
Finally getting around to Cyprus this weekend, the EU and IMF decided that they would bail out the nation's banks to the tune of 10 billion Euros, a pittance comparatively, though the number fell short of what is really needed, which is more in the range of 16 to 17 billion Euros. even with that amount, tiny Cyprus would still have a debt-to-GDP ratio of about 180%. Shameful.
The kicker was that the proposed six-to-seven billion euros was to be funded from bank deposits.
STOP. Read that again. Yes, the EU and IMF told the Cypriot parliament to vote on a measure that would impair (tax) bank deposits at anywhere from six to 9.99%, the lower figure reserved for bank deposits below 100,000 Euros, the higher one applied to holdings over that figure. These are deposits of PEOPLE, companies, married couples, retirees which the leaders and brian-trust of the ECB thought reasonable to raid, to tax, to steal.
Never mind that bank deposits in all of Europe are guaranteed by the ECB up to 100,000 Euros, the six percent "tax" would be taken directly from bank accounts should parliament approve the proposal.
This, in the parlance of sports and March Madness, is what's known as a game changer. According to this banker proposal, your money, which you saved and deposited in a bank you thought was safe - and insured - could just simply be taxed away by authorities of some supra-national organization upon approval of your own parliament. Forget the rule of law, Forget property rights. Forget everything you ever thought about civilization, money, government and society. If there's a chance that your bank or your nation may not be able to make payments on debt, YOU PAY.
Curiously, this whole affair began on Friday night, after all the banks were closed for the weekend, and preceding a bank holiday in Cyprus on Monday. Since that time, all manner of posing, posturing, name-calling, demonstrations and other assorted madness has taken place, by EU finance ministers, various heads of state, the Cypriot parliament, the people of Cyprus and others, including just about every talking head on the financial news networks.
Currently, the parliament - having delayed the vote twice already - has announced to the one million residents of Cyprus that banks would be closed until Thursday. The joke of the day on that note was "which Thursday?"
So, bottom line is that the situation is still fluid, there's plenty of time for EU idiots and IMF monsters to make more absurd statements and demands, but, until something gets resolved, banks are closed, ATMs are out of cash and Cyprus will gradually devolve into something... not sure exactly what.
For more information on what may be the story of the year, the best single source is, as usual, ZeroHedge.com, which has been running numerous articles since the story broke. For more information, try this Bing News link, the Washington Post story, another by CBS News and one from the Christian Science Monitor.
No other story mattered at all today, and it's likely that no other story will matter for the remainder of the week, because, if governments or pseudo-authorities like the ECB and IMF can force their will upon a sovereign government to the extent that it violates its own laws by confiscating, stealing, expropriating the funds of its own citizens, we have truly entered a new world order, one that is owned by bankers and their appointed lackeys in high government positions.
For the record, nearly all markets were down, globally, Asian markets taking the news most seriously and the worst affected, followed by European markets and then, the US, which downplayed the event after utures had tanked prior to the opening bell and actually found a way to briefly trade in positive territory (Dow and S&P) during the afternoon.
On the Dow, support was breached early in the session and again at the close. If you're looking for a bottomless pit, the Dow is now it, though Europe and all of its exchanges will race it to the bottom unless something changes radically over the coming few days. If people cannot trust the banks to hold their money, it's the beginning of the end for the decrepit, lawless global banking cartel we've all come to know and loathe.
Dow 14,452.06, -62.05 (0.43%)
NASDAQ 3,237.59, -11.48 (0.35%)
S&P 500 1,552.10, -8.60 (0.55%)
NYSE Composite 9,045.44, -71.24 (0.78%)
NASDAQ Volume 1,547,766,750
NYSE Volume 3,522,718,500
Combined NYSE & NASDAQ Advance - Decline: 2352-4125
Combined NYSE & NASDAQ New highs - New lows: 271-34
WTI crude oil:
Gold:
Silver:
Over the weekend, unbeknownst to college basketball fans and most regular American citizens, a new manner of March madness was created by the European Central Bank, the IMF and the nation of Cyprus. The reason nobody in America knew about what has been occurring on and around the tiny Mediterranean island is the usual: the US press is terminally asleep at the media wheel.
Re-capping the key events in this twisted tableau, the entire mess began years ago, as banks (the usual culprits) in Cyprus found themselves woefully underfunded and the government virtually bankrupt. Leave it at that, as yet another European nation finds itself with an unbearable debt burden and no reasonable way out.
The EU and the ECB have been grappling with the Cyprus situation for at least the last two years, doing little to nothing about it, their energies directed more at larger peripheral nations like Greece (a complete disaster), Spain (gaining fast on Greece), Ireland (terminally indebted), Portugal and Italy. These PIIGS, as they are lovingly called, have social and financial issues that needed more immediate attention and have been given directives, bailouts, loans and assorted "fixes" from the EU and the IMF, facilitating debt repurchases, funding ongoing governmental operations and generally kicking the proverbial can further down the road to the eventual collapse of the Euro.
Finally getting around to Cyprus this weekend, the EU and IMF decided that they would bail out the nation's banks to the tune of 10 billion Euros, a pittance comparatively, though the number fell short of what is really needed, which is more in the range of 16 to 17 billion Euros. even with that amount, tiny Cyprus would still have a debt-to-GDP ratio of about 180%. Shameful.
The kicker was that the proposed six-to-seven billion euros was to be funded from bank deposits.
STOP. Read that again. Yes, the EU and IMF told the Cypriot parliament to vote on a measure that would impair (tax) bank deposits at anywhere from six to 9.99%, the lower figure reserved for bank deposits below 100,000 Euros, the higher one applied to holdings over that figure. These are deposits of PEOPLE, companies, married couples, retirees which the leaders and brian-trust of the ECB thought reasonable to raid, to tax, to steal.
Never mind that bank deposits in all of Europe are guaranteed by the ECB up to 100,000 Euros, the six percent "tax" would be taken directly from bank accounts should parliament approve the proposal.
This, in the parlance of sports and March Madness, is what's known as a game changer. According to this banker proposal, your money, which you saved and deposited in a bank you thought was safe - and insured - could just simply be taxed away by authorities of some supra-national organization upon approval of your own parliament. Forget the rule of law, Forget property rights. Forget everything you ever thought about civilization, money, government and society. If there's a chance that your bank or your nation may not be able to make payments on debt, YOU PAY.
Curiously, this whole affair began on Friday night, after all the banks were closed for the weekend, and preceding a bank holiday in Cyprus on Monday. Since that time, all manner of posing, posturing, name-calling, demonstrations and other assorted madness has taken place, by EU finance ministers, various heads of state, the Cypriot parliament, the people of Cyprus and others, including just about every talking head on the financial news networks.
Currently, the parliament - having delayed the vote twice already - has announced to the one million residents of Cyprus that banks would be closed until Thursday. The joke of the day on that note was "which Thursday?"
So, bottom line is that the situation is still fluid, there's plenty of time for EU idiots and IMF monsters to make more absurd statements and demands, but, until something gets resolved, banks are closed, ATMs are out of cash and Cyprus will gradually devolve into something... not sure exactly what.
For more information on what may be the story of the year, the best single source is, as usual, ZeroHedge.com, which has been running numerous articles since the story broke. For more information, try this Bing News link, the Washington Post story, another by CBS News and one from the Christian Science Monitor.
No other story mattered at all today, and it's likely that no other story will matter for the remainder of the week, because, if governments or pseudo-authorities like the ECB and IMF can force their will upon a sovereign government to the extent that it violates its own laws by confiscating, stealing, expropriating the funds of its own citizens, we have truly entered a new world order, one that is owned by bankers and their appointed lackeys in high government positions.
For the record, nearly all markets were down, globally, Asian markets taking the news most seriously and the worst affected, followed by European markets and then, the US, which downplayed the event after utures had tanked prior to the opening bell and actually found a way to briefly trade in positive territory (Dow and S&P) during the afternoon.
On the Dow, support was breached early in the session and again at the close. If you're looking for a bottomless pit, the Dow is now it, though Europe and all of its exchanges will race it to the bottom unless something changes radically over the coming few days. If people cannot trust the banks to hold their money, it's the beginning of the end for the decrepit, lawless global banking cartel we've all come to know and loathe.
Dow 14,452.06, -62.05 (0.43%)
NASDAQ 3,237.59, -11.48 (0.35%)
S&P 500 1,552.10, -8.60 (0.55%)
NYSE Composite 9,045.44, -71.24 (0.78%)
NASDAQ Volume 1,547,766,750
NYSE Volume 3,522,718,500
Combined NYSE & NASDAQ Advance - Decline: 2352-4125
Combined NYSE & NASDAQ New highs - New lows: 271-34
WTI crude oil:
Gold:
Silver:
Monday, June 25, 2012
Europe's Pain Keeps World Markets in Red as Week Begins Badly
Back in the headlines again, Europe's continuing woes took front and center position in Monday's investment landscape.
Spain kicked off the festivities with a formal request for aid of up to 100 billion euros for their busted banking sector as they await a ratings cut from Moody's on all Spanish banks, expected to be delivered after the close of US equity markets.
The reality of another bank bailout by the EU and the rumors of the Moody's downgrade was enough to send all European indices lower, lead by the Athens Index Composite, which fell 6.84%. The Swiss Market was harmed the least, down on 0.75%, while the French and German bourses fell by more than two percent.
Greece added to the downside momentum as newly-appointed Finance Minister Vassilis Rapanos resigned his post due to ill health. The tiny island nation of Cyprus became the latest victim, telling the EU that it needs a bailout for its banks - heavily exposed to Greece - and its public sector economy. Estimates call for immediate funds of between 5-10 billion Euros to keep the nation banks and government operating.
US markets fell out of bed like a drunk with a bad hangover, down right from the opening bell through to the close, with the NASDAQ leading the way lower, followed closely by the S&P 500.
Stocks staged a small, uninspired rally near the end of the day, but there was little support to the buying. The evidence that the world is on the brink of a catastrophic global depression are simply too obvious to mask further. Investors are running scared money into the meat-grinder that is otherwise known as the capital markets in hopes that the European leaders will offer some kind of plan to end the crisis, one which has already spread across the nations on the southern periphery.
Internals suggested that today's moves could be a turing point for US markets as losers led gainers by a more than 3:1 margin and new lows outnumbered new highs by nearly 2:1.
The new highs to new lows reading, which has been consistent over the years as an early indicator of bullish and bearish trends has recently vacillated between positive and negative, so a sustained period in which new lows exceed new highs would point toward a more severe downturn and a return to bear market conditions.
As of today's close, the Dow is resting at 6% below the May 1 highs, so a move below 11,000 would have to be reached before true bear market conditions (-20%) would prevail. With the situation in Europe continuing to unravel and conditions in the US not gathering any momentum and actually, according to the latest data, already showing signs of stress and weakness, a downturn of that severity cannot be ruled out through the summer months, which are traditionally a slow period for stocks.
Whether the pain comes in the form of a sudden event or as a slow, painful, prolonged ordeal depends greatly upon how panicked investors become. With news and events so highly unpredictable, but bordering on crisis levels, a major happenstance could come from any quarter, be it Syria's upheavals, Germany contentious position or the collapse of Greece or Spain or even the unthinkable, Italy or France.
Once again, it cannot be stressed too much that events may be politically manipulated to coincide with the US presidential election in November, so great caution is urged, especially into the latter stages of the election cycle, late September into October.
Of course, media control being practically omnipresent, the outbreak of war or economic apocalypse could be spun into a positive, though that kind of propagandizing would only satisfy the controllers wishing to make a quick killing as it would likely be unsustainable in light of the true picture.
Following Friday's phony fermentation to the upside on global banks' repudiation of Moody's massive, across-the-board downgrades, it's a very good possibility that the manufactured rally was nothing more than another scam on the public to the profit of the banking cartel, who went long and then short, winning on both sides of the trade.
With that kind of perfidious behavior prevailing in nearly all capital markets, day-to-day movements should be greatly discounted and longer term trends the focus of greater scrutiny.
Dow 12,502.66, -138.12 (1.09%)
Nasdaq 2,836.16, -56.26 (1.95%)
S&P 500 1,313.72, -21.30 (1.60%)
NYSE Composite 7,491.90, -124.69 (1.64%)
NYSE Volume 3,433,923,250
Nasdaq Volume 1,432,183,125
Combined NYSE & NASDAQ Advance - Decline: 1362-4261
Combined NYSE & NASDAQ New highs - New lows: 87-163
WTI crude oil: 79.21, -0.55
Gold: 1,588.40, +21.50
Silver: 27.52, +0.86
Spain kicked off the festivities with a formal request for aid of up to 100 billion euros for their busted banking sector as they await a ratings cut from Moody's on all Spanish banks, expected to be delivered after the close of US equity markets.
The reality of another bank bailout by the EU and the rumors of the Moody's downgrade was enough to send all European indices lower, lead by the Athens Index Composite, which fell 6.84%. The Swiss Market was harmed the least, down on 0.75%, while the French and German bourses fell by more than two percent.
Greece added to the downside momentum as newly-appointed Finance Minister Vassilis Rapanos resigned his post due to ill health. The tiny island nation of Cyprus became the latest victim, telling the EU that it needs a bailout for its banks - heavily exposed to Greece - and its public sector economy. Estimates call for immediate funds of between 5-10 billion Euros to keep the nation banks and government operating.
US markets fell out of bed like a drunk with a bad hangover, down right from the opening bell through to the close, with the NASDAQ leading the way lower, followed closely by the S&P 500.
Stocks staged a small, uninspired rally near the end of the day, but there was little support to the buying. The evidence that the world is on the brink of a catastrophic global depression are simply too obvious to mask further. Investors are running scared money into the meat-grinder that is otherwise known as the capital markets in hopes that the European leaders will offer some kind of plan to end the crisis, one which has already spread across the nations on the southern periphery.
Internals suggested that today's moves could be a turing point for US markets as losers led gainers by a more than 3:1 margin and new lows outnumbered new highs by nearly 2:1.
The new highs to new lows reading, which has been consistent over the years as an early indicator of bullish and bearish trends has recently vacillated between positive and negative, so a sustained period in which new lows exceed new highs would point toward a more severe downturn and a return to bear market conditions.
As of today's close, the Dow is resting at 6% below the May 1 highs, so a move below 11,000 would have to be reached before true bear market conditions (-20%) would prevail. With the situation in Europe continuing to unravel and conditions in the US not gathering any momentum and actually, according to the latest data, already showing signs of stress and weakness, a downturn of that severity cannot be ruled out through the summer months, which are traditionally a slow period for stocks.
Whether the pain comes in the form of a sudden event or as a slow, painful, prolonged ordeal depends greatly upon how panicked investors become. With news and events so highly unpredictable, but bordering on crisis levels, a major happenstance could come from any quarter, be it Syria's upheavals, Germany contentious position or the collapse of Greece or Spain or even the unthinkable, Italy or France.
Once again, it cannot be stressed too much that events may be politically manipulated to coincide with the US presidential election in November, so great caution is urged, especially into the latter stages of the election cycle, late September into October.
Of course, media control being practically omnipresent, the outbreak of war or economic apocalypse could be spun into a positive, though that kind of propagandizing would only satisfy the controllers wishing to make a quick killing as it would likely be unsustainable in light of the true picture.
Following Friday's phony fermentation to the upside on global banks' repudiation of Moody's massive, across-the-board downgrades, it's a very good possibility that the manufactured rally was nothing more than another scam on the public to the profit of the banking cartel, who went long and then short, winning on both sides of the trade.
With that kind of perfidious behavior prevailing in nearly all capital markets, day-to-day movements should be greatly discounted and longer term trends the focus of greater scrutiny.
Dow 12,502.66, -138.12 (1.09%)
Nasdaq 2,836.16, -56.26 (1.95%)
S&P 500 1,313.72, -21.30 (1.60%)
NYSE Composite 7,491.90, -124.69 (1.64%)
NYSE Volume 3,433,923,250
Nasdaq Volume 1,432,183,125
Combined NYSE & NASDAQ Advance - Decline: 1362-4261
Combined NYSE & NASDAQ New highs - New lows: 87-163
WTI crude oil: 79.21, -0.55
Gold: 1,588.40, +21.50
Silver: 27.52, +0.86
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