How To Tell The Economy Is Really Horrible

A number of interesting developments highlighted today's off-the-street action concerning US stock markets and the general global economy. They were all internet-related, but have nothing to do with the share prices of the companies affected, but first, let's take a recap of the actual carnage in the markets today.

Asia was awash in red ink, as Japan circles the monetary drain (must be Adam Smith's "invisible hand" pulling the plug) sending the Nikkei down to new depths, as noted below, along with Hong Kong's Hang Seng Index, which suffered an even more severe loss in points and percentage:

Nikkei 225: 15,713.39, -372.05, -2.31%
Hang Seng Index 18,545.80, -742.37, -3.85%

With China's markets closed for the week as the country celebrates Chinese New Year, over in Hong Kong, it was back to work after a three-day hiatus. The HSI fell out at the open and never recovered. As many in the US apparently do not know, all of Asia's major markets - including Australia, recently - are in bear market territory. The Hang Seng topped out at 28,588 in late April, 2015. Today's loss puts it down 35% from its highs.

While the Asian markets were spitting up blood, Europe opened with a bang to the downside, as Sweden announced its central bank was cutting interest rates further into the negative. Sweden’s Riksbank cut its benchmark interest rate from -0.35% to -0.5%. So, theoretically, anyone wishing to keep 100,000 Krona in a Swedish bank has the awesome privilege of paying the bank 500 of those Krona for the year.

That, in addition to the ongoing banking collapse (Duetshe Bank, in particular), sent Euro stock bourses reeling. Germany's DAX was off 2.93%. In England, the FTSE was down 2.36%. France's CAC 40 fell by 4.05%, and the Euro Stoxx 50 was battered some 108 points, a 3.90% downside.

US traders left no stone unturned, sending the markets close to the August lows and the NASDAQ within 50 points of the magic bear market line (-20%), until a spurious story about Saudi oil cuts saved the day around 2:30 pm. The Dow was down more than 400 points at the lows, and there was some talk about the S&P bouncing off a key level at 1812. Truth be told, key levels and support lines aren't going to matter much in coming days, weeks and months, because there is growing evidence that recession has arrived in the US, just as it has washed up on the shores of Asia and Europe.

Now, back to those off-Wall Street developments that offer many clues on how to know the economy isn't doing very well.

First, there was the outage at ZeroHedge.com just as the market was opening. Anybody who wants the straight, uncensored, bearish view of markets instinctively heads for "the Hedge" as it is known, the site famous for it's inveterate grinding on the wheels of finance. An apparent DDOS attack took the site offline for about 30 minutes and was the second such attack in as many weeks.

While the culprit is unknown, tin-foil cap types point to the NSA or another government agency which wishes to keep at least a leash on the unruly junkyard dog.

Second, MSN Money disabled comments on all its stories. While news of this was not reported widely, its unknown exactly when the company decided it didn't want to hear from its readers. MSN Money follows the lead of Bloomberg, which disabled commenting across its web properties last year. Censorship. It's what's for dinner, and you can't complain about it.

Third, Janet Yellen completed her annual testimony to congress today with a visit to the Senate Banking Committee, chaired by Richard Shelby (R-AL), and failed to goose the markets. When the Fed Chair has less influence on markets than a teen beauty queen at a gay pride rally, take that as a sign markets are more than a little jittery.

Gold and silver continued to rally, with gold up more than $50 at one point in the day. Silver was fast approaching $16/oz. It was under $15 as of Monday's fix. The two precious metals are the best-performing assets (along with select bonds) of 2016.

And finally, Yahoo Editor-in-Chief, Andy Serwer, had to pen this little gem of statist nonsense, explaining that nobody knows why stocks are going down. Server proves that he has quit an imagination, or none.

All in all, it appears the media, government, and the financial world are not about ready to let the muppets get a feeling that something bad is heading their way, despite Yellen fielding questions about the Fed being "out of bullets" and negative interest rates.

The status quo is getting very, very nervous and it's beginning to show. With the US heading into a three-day weekend (Monday is President's Day. In case your boss didn't tell you, you don't have to come in.) and China's markets re-opening on Monday, tomorrow's trading might be more than just a little interesting. The week has gone badly so far, and it is doubtful many will want to head into the break long.



Hate Crime for Thursday:
S&P 500: 1,829.08, -22.78 (1.23%)
Dow: 15,660.18, -254.56 (1.60%)
NASDAQ: 4,266.84, -16.76 (0.39%)

Crude Oil 27.30 -0.55% Gold 1,247.00 +4.39% EUR/USD 1.1316 +0.32% 10-Yr Bond 1.64 -3.58% Corn 360.00 -0.07% Copper 2.01 -0.72% Silver 15.80 +3.36% Natural Gas 1.99 -2.79% Russell 2000 953.72 -1.01% VIX 28.14 +7.04% BATS 1000 19,734.69 -1.33% GBP/USD 1.4484 -0.35% USD/JPY 112.5900 -0.01%

Can You Hear Me Now? MONEY DAILY Predictions Prove Prescient As Stocks Drop on First Trading Day of 2016

As 2015 drew to a close, Money Daily put forward a number of predictions for what 2016 would bring as pertaining to economies and financial markets.

While one day's trading cannot be considered anything more than market "noise," the historic sell-off of January 4 - the first trading day of the new year - proved to be the worst performance to start a year since 2008, and one of the top ten worst starts to a year in market history.

While stocks were down large in the US, they were worse in Asia and Europe. The Shanghai Composite was shaved by 6.9%, Japan's Nikkei tumbled nearly 600 points, a loss of 3.06%.

Germany's DAX was the hardest hit of Europe's majors, losing 4.28%. England's FTSE 100 fell 2.39; France's CAC-40 was down 2.47%.

In the US, most of the carnage was done by midday. Stocks drifted into the closing hour, and were boosted substantially off their lows by a face-ripping, short-covering rally in the last half hour of trading.

It was an unnerving beginning to a year which promises much in the way of surprises with limited upside for stocks, which have been and continue to be wildly overvalued.

Some of the bigger names were high on the list of losers. Netflix (NFLX) fell 3.86%; Alphabet (Google, GOOG) dropped 2.25%; Amazon was the biggest of the tech wrecks, dropping 38.90 points, a 5.76% loss.

WTI crude oil first rose, but came back to earth and was down for the day, finishing around 36.80 on the day.

S&P 500: 2,012.66, -31.28 (1.53%)
Dow: 17,148.94, -276.09 (1.58%)
NASDAQ: 4,903.09, -104.32 (2.08%)

Wall Street Pouts Despite Twitter IPO; Jobs Data on Deck

Busy day today for the gods of greed, buyers of bluster, falcons of fraud, purveyors of prevarication.

Wall Street was all a-twitter over the IPO of Twitter (TWTR), the latest Web 2.0 mega-fad company gone public, which opened today on the NYSE with a bang. The stock was issued at 26, but opened at 44, quickly ramped up above 50 per share and closed at 44.90, good for a 78% gain. The company - based on "tweets" of 140 characters - is valued at about 29 times sales, pretty rich, especially for a enterprise that's still losing money. Well, at least the founders are now billionaires... on paper.

Prior to the opening bell, there was a flurry of activity from across the Atlantic pond, as Europe's Mario Draghi, ECB president extraordinaire, announced key rate cuts of 25 basis points, leaving the base rate at .25 and the key lending rate at .50. Observers in America wondered what took the Euros so long, though one must consider that they have been in the business of wrecking their own economies and fleecing the public a lot longer than their American counterparts, so they can kick the old can-can a lot longer and down an even shorter road without causing much of a stir.

The response from traders across the continent and in the UK was resoundingly mixed, with the German DAX higher, Britain's FTSE lower and the French CAC-40 barely changed. Don't these people understand the concept of cheap money? Pikers, the lot of them, except, of course, for the stodgy, stingy, and oh-so-proper Germans.

At 8:30 am ET, the US blasted off a couple of economic indicators, releasing the first reading on third quarter GDP at a robust 2.8%, a ribald lie if ever there was one, but enough to scare the few remaining hairs off the head of Lloyd Blankfien and others of his balding ilk. Good news is once again bad news, it appears, and any growth approaching three percent in the US sends shivers up the spineless bankers' backs, because they believe their buddies, Mr. Bernanke and the incoming Mr. Yellen, may cease the easy money programs that has catapulted every dishonest banker into ever-higher tax brackets.

The most recent initial unemployment claims - which were down 9,000 from the previous week, at 336,000, remained stubbornly high, though apparently not quite high enough for the barons of buyouts. These dopes saw this as another sign of a strengthening US economy, so, shortly after the opening bell, stocks did an abrupt about-face and trended lower throughout the session, with little respite.

In other news, Goldman Sachs is under investigation for rigging foreign exchange (FOREX) trading and just about everything else they do, and, yesterday, the Blackstone Group began pitching its rent-backed securities.

Really. They did. And some people actually bought them.

The advance-decline line cratered, with losers leading gainers by a 7:2 ratio, and new lows continue to close the gap on daily new highs, a trend metric that may just flip over if today's losses are indeed presaging something un-funny about tomorrow's delayed October non-farm jobs data, due out an hour before the opening bell. The way to read this is that the government is likely to report that something in the range of 120-150,000 new jobs were created during the month, which would be more proof of economic improvement, exactly what the market doesn't want. Either that, or it's going to be a real stink-bomb, because the forecast is only for 100,000.

Business as usual, my friends. Monkey business, that is.

Dow 15,593.98, -152.90 (0.97%)
Nasdaq 3,857.33, -74.61 (1.90%)
S&P 500 1,747.15, -23.34 (1.32%)
10-Yr Bond 2.61%, -0.03
NYSE Volume 4,092,416,000
Nasdaq Volume 2,196,542,750
Combined NYSE & NASDAQ Advance - Decline: 1276-4371
Combined NYSE & NASDAQ New highs - New lows: 197-101
WTI crude oil: 94.20, -0.60
Gold: 1,308.50, -9.30
Silver: 21.66, -0.111
Corn: 420.50, -0.75

St. Valentine's Day Mascara

No, that's not a misprint in the headline. The word is "mascara" - the stuff women apply to darken, thicken, lengthen, and/or define their eyelashes. It's a cosmetic, as in rouge, or lipstick, as in lipstick on a pig, which is exactly what the algos and buy-siders did to today's undeniably weak, directionless market.

Face it, Europe is a bona-fide basket case, Japan is devaluing its currency so fast that George Soros made nearly a billion dollars on the trade in just over three months.

The news coming out of Euro-fantasy-land was less than encouraging. Eurozone fourth quarter 2012 GDP fell by 0.6%.

Making matters a little more interesting - and more frightening - were the figures for the zone's three largest economies - Germany, France and Italy - whose own GDP fell by 0.6%, 0.3% and 0.9%, respectively.

The Eurozone, even after all the bank and sovereign bailouts, pledges of doing everything possible to promote growth by the likes of Germany's Angela Merkel and EU President Mario Draghi, has resulted in three consecutive quarters of negative GDP. Europe is already in the throes of an economic collapse, thanks largely to protectionism for banks and excessive liquidity from European central bankers (most of whom are Goldman Sachs alum, BTW).

While the GDP numbers may be bad enough, consider youth unemployment (ages 15-25) in the Eurozone to be spreading like the bubonic plague. Greece reported youth unemployment over 60%; Spain over 50% and Portugal just topped 40%. Thirteen of the 27 EU member states are reporting youth unemployment over 25%. Austerity: it's what's for dinner.

Europe is solid proof that the elite class is making up the rules as they go along, and the general public is viewed as collateral damage only. Here in the good old USA, we have our own concerns with the sequestration schedule to commence March 1, which will result in massive federal budget cuts. The president and congress haven't even begun to discuss how they'll handle that, though they uniformly say that sequestration (it doesn't rhyme with castration for no reason) is something they'd prefer to avoid.

Have they acted? No. Will they? Probably, but, like the fiscal cliff deal this past December, it will be a stop-gap measure and cost taxpayers more. Nobody ever cuts anything in Washington, only the rate of growth of programs, because what's important to them is keeping lobbyists and voters (government employees and beneficiaries of government largesse) dumb and happy.

So, on what does this algo-concocted market focus? Berkshire Hathaway's buyout of Heinz. Poor suckers that Americans are, they put ketchup on their chicken and pork hot dogs on day old buns while Uncle Warren reaps the profits. If ever there was a crony capitalist, Warren Buffet's picture belongs next to the definition.

Sure, unemployment claims were down - from 368K to 341K - but aren't those figures still too high? The new normal means just doing better than expectations, even if those expectations are sub-par. It's akin to taking your kid out for ice cream because he got a C in math instead of a D. As a nation, we've lowered our standards in everything from our political leaders to what passes for entertainment.

Along with everything else, we've lowered our standards for rational markets. Today's split decision is just another shining example of the truth hiding in plain sight. Sooner or later, even the talking heads on CNBC are going to come to the realization that making new all-time highs with a -0.1% GDP and unemployment at eight percent doesn't really pass the smell test. Someday. Maybe. Note the video below with Rick Santelli, everyone's favorite financial ranter, extrapolating out on what we've been saying nearly every day on this blog: that being a trader is nearly impossible under current conditions.

And, just as a side note, New York Mayor Bloomberg, who first banned drink containers larger than 16 ounces, has proposed a ban on styrofoam containers, and... it's likely to pass his rubber stamp city council.

Let's see, smokes are $10-12 a pack in NY, you can't smoke in any of the bars, night clubs or public buildings; you must drink from small containers and those soon cannot be made of styrofoam. All this makes one pine for the good old days of the seventies. Ed Koch was mayor. Son of Sam was shooting kids in parking lots. Reggie Jackson was blasting balls out of the original Yankee Stadium and you could buy just about any kind of drug - from weed to cocaine - on just about any street corner. Bloomberg. He's just not a fun guy.

Dow 13,973.39, -9.52 (0.07%)
NASDAQ 3,198.66, +1.78 (0.06%)
S&P 500 1,521.38, +1.05 (0.07%)
NYSE Composite 8,951.33, -4.27 (0.05%)
NASDAQ Volume 1,884,832,750
NYSE Volume 3,867,864,500
Combined NYSE & NASDAQ Advance - Decline: 3259-3130
Combined NYSE & NASDAQ New highs - New lows: 505-39
WTI crude oil: 97.31, +0.30
Gold: 1,635.50, -9.60
Silver: 30.35, -0.516

Print, Baby, Print; Dow Over 14,000 Again

The Dow topped the 14,000 mark for the first time since February 1, setting a closing high that was the best in more than five years.

Thank you, Mr. Bernanke.

There's no substitute for rampant liquidity in a market climate such as this one. Uncertainty continues to abound, the economies of the developed nations are in the proverbial toilet, circling the bowl either in recession (Europe), complete deflationary stagnation (Japan), or barely chugging along at under 2% GDP (USA).

Of late, the Japanese have embarked on "unlimited" quantitative easing (printing money with nothing at all backing it), though the US continues as king of the hill, with the world's largest sovereign economy, the Fed buying up all the rancid mortgage paper and monetizing the federal debt to the tune of $85 billion a month (a touch over $1 trillion per year, annualized).

Europe seems to be getting the message that it's finally time to play no-holds-barred currency war, though the socialists on the continent seem fairly sanguine about continuing their efforts to bail out banks and sovereigns one-by-one, a little at a time, rather than using the bazooka approach favored by Mr. Bernanke.

Sooner or later, the Europeans will devalue by printing, mostly because the high level of the Euro is crimping Germany's exports, and, if Germany's economy suffers, one can probably bet on the good people of Deutschland not being very supportive of the Euro and/or wanting more in return from their Euro-brethren to the south, who, like the American welfare caste, produce nothing, but get much in return.

So the US and other major countries will continue to print, print, print their feckless paper fiat, a time-honored practice that has never ended well, ever. In the meantime, however (and that meantime could stretch out to 2016, 2017, or beyond), one cannot fault stock investors in their search for yield. The past four years in stocks has been nothing but Fat City Easy Street to the xxxxxth degree. During the period from March 9, 2009 until the present, it's been nothing but straight up for stocks, to a point at which the general market is now sporting a 14 multiple, even though many companies are not growing earnings one whit, others making their numbers through cost-cutting and downsizing.

Global finance is in an unsustainable state, but, as long as the printing presses continue to churn out crisp currency, nobody seems to care.

There are signs that it's getting a bit wearisome. Oil is heading over $100 a barrel for WTI crude, despite a glut on the market, especially in the US. Food prices have moderated lately, but they're higher overall than a year, two, three years ago and will only rise from here.

It's a great market for speculators, especially those wearing blinders. Giddy-up!

Dow 14,018.70, +47.46 (0.34%)
NASDAQ 3,186.49, -5.51 (0.17%)
S&P 500 1,519.43, +2.42 (0.16%)
NYSE Composite 8,955.92, +36.90 (0.41%)
NASDAQ Volume 1,719,904,375
NYSE Volume 3,424,131,000
Combined NYSE & NASDAQ Advance - Decline: 4076-2361
Combined NYSE & NASDAQ New highs - New lows: 450-31
WTI crude oil: 97.51, +0.48
Gold: 1,649.60, +0.50
Silver: 31.02, +0.109

Markets Continue Dull Streak; Germany Slow Go on Gold Move

How dull is this market?

The Dow Jones Industrials hit their lows of the day just minutes into trading, losing 66 points, then rallied off that until stabilizing - though still in the red - around 11:00 am ET.

From that point until the close, the index traded in a range of just 25 points.

This is what happens when headline-scanning algos do 80% of the trading. When there's no news, nothing happens. So, if you're trading on fundamentals - things like price-earnings ratios, comparative advantage, free cash flow, etc. - you can just sit and wait until your particular stock of choice latches itself to a broad rally or makes some headline-grabbing news.

And, if that's what's become of our "free" markets, good luck, because the computers will beat you every time. They can find and scan a headline, react and trade in a matter of seconds, or, in much less the time an average web page takes to load.

Now, is there any reason at all for individual investors to trade stocks? One would believe no.

About all that was not moving the market today were a series of equally dull economic reports, like the CPI, at 0.0%. There's no inflation (really?) and no deflation, which, unless one knew better, would be defined as stagflation (or maybe lackflation).

The NAHB Housing Market Index remained steady at 47, whatever that means; industrial production bumped up 0.3%, which was down from last month's reading of an increase of 1.0%, and capacity utilization improved from 78.7% to 78.8%.

Outside of Goldman Sachs' (GS) huge earnings and revenue beat and JP Morgan's (JPM) narrow beat ex-one-time-charges (but of course), what may have put a pall over the session was the World Bank lowering its global growth (that's a joke, son) projection from 3.0% to 2.4%.

Seriously, the sloped-browed, slack-jawed dunces at the World Bank don't have a crystal ball, but, for some unholy reason, people believe they know what they're doing. Some of us are dubious. But, then again, some of us don't trust anything that comes out of the mouth of politicians or bankers or even stock analysts.

Ho-hum. It seems even the bright-minded Germans, who shook things up a little yesterday by wanting some of their gold back, really don't want it all that badly, after all. GATA reports that Germany will take all of seven years to repatriate some 300 tons of its gold from the Federal Reserve in New York. It will likely take a shorter period of time to remove all of its gold - 374 tons - from the vaults in Paris, but it plans on keeping whatever is in the London vaults there indefinitely, amounting of 13% of all its gold.

The plan is to hold 50% of its gold at home, the rest in London and New York. La-de-dah.

Dow 13,511.08, -23.81 (0.18%)
NASDAQ 3,117.54, +6.76 (0.22%)
S&P 500 1,472.57, +0.23 (0.02%)
NYSE Composite 8,710.22, -22.88 (0.26%)
NASDAQ Volume 1,648,059,375
NYSE Volume 3,198,232,750
Combined NYSE & NASDAQ Advance - Decline: 2775-3605
Combined NYSE & NASDAQ New highs - New lows: 263-10
WTI crude oil: 94.24, +0.96
Gold: 1,683.20, -0.70
Silver: 31.54, +0.013

Stocks Get Whacked Again; Dow Down 100+; Support on Major Indices Breached

Make no doubt about it, there's real fear on Wall Street.

For the second day in a row, stocks spent the day wallowing in negative territory, amid fears of the fiscal cliff - higher taxes, imposed budget cuts, more - the souring condition of the European Union, notably Greece and, yes, Germany, post-election hand wringing, and generally overpriced stocks in a market that is supposed to be buoyed by unlimited bond purchases by the Federal Reserve.

Word to the Street: It's not working.

Stock market participants who were brave enough to bid stocks up at the open (aka, suckers) were immediately punished for thinking that after the worst down day in a year on the Dow, stocks were ready to rebound, as all the major averages got a brief boost at the open but fell back into the red shortly after the first half hour of trading.

Trading volumes were brisk and stocks continued to gyrate lower, finally ending with a rush to finish at the lows of the day right at the closing bell, hardly an encouraging sign for those who believe this recent pull-back was nothing but blues for Mr. Romney's loss in the presidential sweepstakes.

All of the major indices closed below their 200-day moving averages, the first time this has happened since the end of May, beginning of June, when investors were worried that the Fed would not extend its easing measures (they did, of course).

In the current environment, traders are more or less on their own. Many funds have closed their books for the year and are taking on losses as sharp-nosed hedge fund managers skewer the slow-footed and long-term types with shorting and controlled demolitions of individual stocks and groups. High beta stocks, which posted the greatest gains over the past 10 months, are being hammered relentlessly as profit-taking has become more akin to skinning tomatoes, a slippery job at best and a troublesome trade at worst.

There are scant buyers, though the "semi-invisible" hand of the Plunge Protection Team (PPT) may actually be keeping stocks from falling directly into the East River or beyond.

Foreign markets have been hard hit as well, with almost all Asian, European and Latin American markets feeling the pinch the past two days.

In Europe, the truly laughable situation that the ECB finds itself in is truly one for he history books, as Greece steps closer to civil war after voting once again for austerity measures and another round of cash from the monetary authorities in Brussels and Germany. Thing are relatively quiet in the other Southern European detor nations, though Spanish bond yields are beginning to rise, frightening everybody from Angela Merkel - who wants more time (sorry, honey, you've had enough) - to Mario Draghi, who has expressed openly that the lone bright spot in the EU - Germany - is beginning to lose its luster.

Thankfully for most traders, tomorrow is Friday, making the end of what will likely go down as one of the worst weeks of the year, with the Dow down more than 400 points thus far, and the issues presented to the market anything but resolved.

It's been said many times that the market hates uncertainty, and that's all they've got in front of them presently. Worse yet, the underlying conditions set by global central bankers are proving more destructive and costly than anyone could possibly have imagined (except for a few select bloggers and out-of-the-mainstream market watchers). The favored positions of bailing out banks, major companies and sovereign nations with increased easing of monetary policy and near-zero interest rates has created an environment with no escape hatch.

The hands of the central bankers are tied, and with them, all appendages of the trading community. If there was ever a time to book profits (what's left of them), it's now, or rather, it was Tuesday. Since the massive ramp job in anticipation of a Romney victory, stocks have been beaten and battered to a point at which the Dow now sports a gain of less than 600 points on the year, roughly a five percent move from the close of 12217.56 on December 30, 2011.

The NASDAQ being the hardest-hit in the recent downtrend, had the most to give up and is still holding onto a gain of nearly 300 points, having begun the year off the close at 2605.15 at the end of last year. Starting the year at 1257, the S&P 500 is still holding onto a 120-point gain, just less than 10% higher on the year, which, in normal times, would be considered excellent, but those gains seem to be eroding faster than the confidence that the Democrats and Republicans in Washington can find an ultimate solution (they can't; they're broke themselves).

New highs have been subsumed by new lows, 91-185, the second straight day in which the lows have registered a win. It, however, this is just the beginning of a correction of seven to fifteen percent, there's further to fall, something many on wall Street don't want to think about until maybe Monday, when all hell may break loose.

There's still one more day to get through this week and all pretense has been removed. There's a general fear about being in the market at all presently and the last man standing is not the preferred position, nor is the act of catching a falling knife, currently the only places left on the market floor.

From a chartists' perspective, the move lower was nearly overdue, but the timing could not have been more predictable after the major indices made new highs in early October, fall back, and failed to achieve those same levels later in the month, at which point began the eventual fall-out. The bull market which began in March of 2009 is now getting a little long in the tooth, at 44 months, and it could be all she wrote as third quarter results were messy to horrifying and Wall Street's dirty little secret - that stocks are not growing their earnings - is beginning to get out.

Tomorrow could see a bit of a snap-back, dead cat bounce, but all indications are that more pain is ahead and that period could extend through the remainder of 2012 and into next year.

There were winners, ominous ones at that: gold and silver.

Dow 12,811.32, -121.41 (0.94%)
NASDAQ 2,895.58, -41.71 (1.42%)
S&P 500 1,377.51, -17.02 (1.22%)
NYSE Composite 8,050.83, -87.98 (1.08%)
NASDAQ Volume 1,876,133,130
NYSE Volume 3,759,670,250
Combined NYSE & NASDAQ Advance - Decline: 1462-4062
Combined NYSE & NASDAQ New highs - New lows: 185-91
WTI crude oil: 85.09, +0.65
Gold: 1,726.00, +12.00
Silver: 32.24, +0.579

Obama Wins; Stock Market Sinks on Tax Hike, Fiscal Cliff Fears, Europe

Tuesday was an early night in terms of presidential politics as President Barack Obama was elected overwhelmingly to a second term, whipping Republican challenger in almost every battleground state and winning the popular vote handily.

With the vote in Florida still being tallied (anybody surprised?), the Sunshine State turned out to be mostly inconsequential as the president swept the key states of Virginia, Ohio, Wisconsin, Iowa, Pennsylvania (which never really was in play), New Hampshire, Colorado and Nevada. Romney's sole win in the so-called "swing states" was in North Carolina, a state which Obama took by a narrow 0.3% in 2008.

Once the midwest states of Wisconsin, Iowa and Ohio were declared for Obama, the race was over, but it wasn't until after midnight in the East that Mitt Romney gave his concession speech and later, President Obama gave a ripping, rhetorical speech extolling the virtues of freedom of choice, tolerance and working together toward shared goals and the great creation of our founders, the United States of America, individual states bound together by social compact.

In the House and Senate races, the makeup of congress remained largely the same, with Republicans dominating the House and Democrats strengthening their grip on the senate, winning key races in Virginia, Florida, and, especially, Massachusetts, where Elizabeth Warren, the fiery consumer rights advocate, took the seat away from Republican incumbent Scott Brown, in a major setback for big banks.

Warren, who worked on TARP and other reforms in Washington, especially the implementation of a consumer protection division at the Federal Reserve, will likely end up on the Senate banking Committee, possibly winning the chairmanship.

Another critical Senate race was won in Connecticut by Christopher Murphy, who defeated Linda McMahon, who wrestling millionaire who spent $100 million on her own campaign.

Jon Tester retained his Senate seat from Montana in a close race with Republican challenger Denny Rehberg, keeping the balance of power firmly in their control with 55 seats, along with one independent, Bernie Sanders of Vermont. The Democrats likely gained another ally when former governor, independent Angus King of Maine, won an open Senate seat that had been held by Republican Olympia Snowe. King has not indicated which party he would caucus with, though most believe it will be with Democrats. King won on the simple idea of making filibusters less of an effective measure in killing legislation, believing that excessive filibustering by Senate Republicans had blocked almost all significant legislation over the past four years.

There was little change in the House, as Reublicans retained control with 232 seats to 191 held by Democrats with a number of vacancies.

It wasn't long before other voices began to be heard, especially those on Wall Street who had been counting on a win by Republican Romney. Before the market opened, futures began a steep decline, though the catalyst may have nad more to do with comments by ECB president Mario Draghi and some dismal production figures from Germany, regarded as a stronghold in the recession-plagued continent.

Shortly after Germany's industrial production was reported to have fallen 1.2% in September, Draghi said that the crisis in Europe was beginning to take its toll on the industrial powerhouse that is the German economy.

Heading into the first post-election session, Dow futures were pointing toward a loss of more than 100 points at the open, and the result was worse, with the 132-point gain from Tuesday wiped out in the opening minute.

Stocks continued their descent until bottoming out just before noon, down 369 points, the biggest decline of the year, though some strengthening took all of the indices off their lows as the day progressed.

Still, the losses were dramatic and especially in the banking sector, where ank of America (BAC), Goldman Sachs (GS), JP Morgan Chase (JPM) and other big bank concerns were off more than five percent. All 10 S&P sectors finished in the red, the S&P could not defend the 1400 level and nearly bounced off its 200-day moving averages, the NASDAQ - aided by Apple's continued decline into bear market territory - broke down below its 200-DMA and the Dow closed below its 200-DMA for the first time since the beginning of June.

In Greece, rioters threw fire bombs at police in anticipation of another vote on austerity measures designed to pave the way for another round of financing from the troika of the IMF, EU and ECB. The vote, scheduled for midnight in Greece (5:00 pm ET), is expected to pass, though the populace has seemingly had enough of policies dictated by outsiders.

For Wall Street, the day presented a perfect storm of disappointment, fears of higher taxes on dividends, tighter regulations of banks, uncertainty over tax and spending policies heading into 2013, and renewed concerns over our trading partners in Europe.

The steep declines may have only been a beginning, however, as no policies have changed, and, actually, the political makeup in Washington remained the same as it had been the day before. The continued gridlock coming from the White House and Capitol Hill may be the most disconcerting factor of all.

Some internal damage was done to markets, with the advance-decline line showing a nearly 5-1 edge for losers and new highs being surpassed by new lows, 94-174.

With none of the important initiatives nearing resolution, there seems to be nowhere for the market to go but down, now that the election is over, earnings season is just about finished and the market must focus on fundamentals and locking in gains for the year. The remainder of 2012 may prove to be quite challenging to investors.

Dow 12,932.73, -312.95 (2.36%)
NASDAQ 2,937.29, -74.64 (2.48%)
S&P 500 1,394.53, -33.86 (2.37%)
NYSE Composite 8,138.80, -173.55 (2.09%)
NASDAQ Volume 4,322,112,500
NYSE Volume 2,059,028,750
Combined NYSE & NASDAQ Advance - Decline: 961-4613
Combined NYSE & NASDAQ New highs - New lows: 94-174
WTI crude oil: 84.44, -4.27
Gold: 1,714.00, -1.00
Silver: 31.66, -0.373

ADP Jobs Data Sends Stocks Soaring; Hurricane Sandy Forgotten by Wall Street

Apparently, if we use Wall Street as a proxy for the general economy (which has proven over and over again to NOT be the case), the damages from Hurricane Sandy will not cost corporations anything. In fact, today's gains all but forgot that most of the Eastern coastline of the United States - from Maryland and Delaware to Connecticut - are federal disaster areas.

All that mattered to Wall Street was getting stocks higher, putting on a good face, especially after the "new methodology" of the ADP private payroll survey - with an assist from Moody's (now there's a clean bunch) - is acceptable in advance of Friday's October non-farm payroll data.

The ADP report was hardly believable, showing that there were 158,000 new private sector jobs created in the month of October. This makes the estimates for NFP of 250,000 tomorrow a slam dunk and possibly already priced in.

Off the ADP news, which was released at 8:15 am EDT, stocks shot up at the open, ramped to highs between 10:00 and 11:00 am and held their gains well into the close.

Everything's great! Except that real unemployment is somewhere around 15%, the US borrows 40% of every dollar it spends and fraud and manipulation by banks and corporations continues to go unchecked. Not to worry, we're going to elect Mitt Romney, who will fix it all, because the fix is in, at least according to Wall Street and Fox news.

There's another scandal brewing, however, that will overshadow everything up to this point in the now-four-year-old financial crisis, involving gold, specifically, the gold stored in vaults in New York and London for other nations. Germany has been trying to get a peek at their gold, but has been continually rebuffed.

Jim Willie's latest salvo at the banking elite has a very good take on the matters at hand.

Here's what one of the commenters had to say about gold and bankers:

“Tiny Ghana demanded its gold return from London, but suddenly its leader (John Atta Mills) showed up dead.”

We’re supposed to be surprised by this? Consider that president Andrew Jackson messed with the banksters and had 5 unsuccessful attempts on his life. President Lincoln messed with the banksters via printing debt-free greenbacks and ended up dead. President James Garfield supported a bi-metallic money standard and ended up dead. President William McKinley was assassinated after publicly supporting sound money and a gold standard. President Kennedy authorized the US Treasury to print silver certificates, interfering with the Fed’s position of sole US money creator and ended up dead. Am I missing anyone who messed with the banksters honey pot and was killed? Probably. Murdering your opponents IS the routine behavior of a thugocracy.

Kind of says it all, doesn't it?

Dow 13,232.62, +136.16 (1.04%)
NASDAQ 3,020.06, +42.83 (1.44%)
S&P 500 1,427.59, +15.43 (1.09%)
NYSE Composite 8,311.36, +89.97 (1.09%)
NASDAQ Volume 1,884,510,500
NYSE Volume 3,925,129,250
Combined NYSE & NASDAQ Advance - Decline: 3949-1550
Combined NYSE & NASDAQ New highs - New lows: 291-77
WTI crude oil: 87.09, +0.85
Gold: 1,715.50, -3.60
Silver: 32.25, -0.068

Germany's Merkel Jeered in Athens; Liars, Cheaters, Swindlers and Psychopaths

Markets around the globe took a bit of a beating on Tuesday, just as earnings season is about to get underway in the United States.

The catalyst for today's decline is unknown, though the first major drop in US markets coincided neatly with German Chancellor Angela Merkel's visit to Athens, Greece, where she was jeered by thousands, including some dressed in Nazi uniforms, brandishing swastika flags, and gave the Heil, Hitler straight-armed salute that signified the reign of terror that Germany inflicted upon Europe some 70 years ago.

Greeks, their children, and others who fell under Nazi influence have not forgotten. There are still many unhealed wounds in Europe stemming from Nazi occupation of most of the continent and the lives lost during the deadliest of wars.

The demonstration by the Greeks was isolated, but still calls to mind the devastation that befell Europe under Adolf Hitler and his hordes of merciless killers. Of course, America's entry into the World War II signaled the beginning of the end of Hitler's reign of terror. Like all psychopaths, he was exposed and defeated, freeing the continent from the grip of fascism.

Seeing the sarcastic rendering of neo-Naziism could prove a heartening reminder that nearly all liars, cheaters, swindlers and psychopaths are eventually brought to some form of justice, either exposing themselves by their own foolish deeds or brought out from the shadows by those who choose to confront them, deny them and defeat them.

It would be refreshing to think that all the liars and cheaters of the world would be found out and demonstrably punished, though reality teaches that that is not the case. From the scandalous likes of mega-bankers to the small-minded, petty fools who concoct flimsy excuses by which to break deals, or the equally stupid types who hear only what they want to hear and make up stories, put words in other people's mouths and are general abusers, these all should be found out and made to pay dearly for their transgressions.

Failing the exposure of frauds and liars, the best the righteous can hold in their hearts is the thought that the prevaricators, manipulators and others of their ilk have to live with themselves, unforgivable and not forgiven. Their puny lives consist of their own little hell, an isolated, brutal existence that stains the soul and darkens the mind. The psychopaths among us cannot love, cannot feel the pain of others but can only inflict it, fool themselves with false pride, believing that they are somehow better, privileged, never at fault and unapologetic. They are sick, depraved and truly despicable human beings.

To these pariahs, the upstanding, the honest, the happy people of the world say, good riddance. Your personal torment is payback enough for your evil transgressions.

As for the markets, some interesting developments in the A-D line, which was 7-2 in favor of the losers and the new highs - new lows indicator, which flipped over to negative, 49-39 on the NASDAQ, though remained in favor of new highs on the NYSE, 97-26, a much narrower gap than in recent days. Paying close attention to both of these indicators may be investing 101, but they are among the most reliable metrics when change is in the wind, and a correction has been and still is, long overdue.

As earnings season heats up, we'll find out whether the market can sustain itself on the wings of Bernanke's put, unlimited MBS bond purchases, ZIRP and other Keynesian-like manipulations.

Dow 13,473.53, -110.12 (0.81%)
NASDAQ 3,065.02, -47.33 (1.52%)
S&P 500 1,441.48, -14.40 (0.99%)
NYSE Composite 8,279.11, -80.02 (0.96%)
NASDAQ Volume 1,646,239,125
NYSE Volume 3,187,523,500
Combined NYSE & NASDAQ Advance - Decline: 1244-4293
Combined NYSE & NASDAQ New highs - New lows: 146-65
WTI crude oil: 92.39, +3.06
Gold: 1,765.00, -10.70
Silver: 33.98, -0.032

Germany Goes All In; Wall St. Waits on the Fed

Today was Europe's turn. Tomorrow will be America's.

Before most Americans were even awake, Europeans were rejoicing the German Constitutional Court's ruling that the ESM (Emergency Stabilization Fund), used to bail out failing sovereign governments was, according to German law, constitutional, and the ECB could go forward with its plans to bail out Greece and Portugal, and, possibly Spain and Italy, if need be.

The court did add one stipulation, however, that the German portion of the funding would have to be approved by parliament if there wer any increases to the size of the fund.

Thus, Europe and the Euro were saved, once again, by the alchemy of Ponzi-economics, for now.

The ESM, along with other emergency funding mechanisms from the ECB, should "stabilize" the Eurozone for another year to 18 months. Then, well, who knows?

Hurrah.

In the US, markets hung close to the flat line in anticipation of the FOMC interest rate policy announcement, where the Federal Reserve may or may not announce another round of Quantitative Easing, better known as QE, and, in this case, since it would be the third (or fourth, if you count operation twist) round of easing, QE3.

Three cheers.

The announcement will be delivered around 2:15 pm EDT on Thursday, unless, of course, like the German court ruling, it is leaked to the press first.

Some day, investors will want to know about individual stocks, but not these days.

Dow 13,333.35, +9.99(0.07%)
NASDAQ 3,114.31, +9.78(0.32%)
S&P 500 1,436.56, +3.00(0.21%)
NYSE Composite 8,267.16, +21.01(0.25%)
NASDAQ Volume 1,680,020,000
NYSE Volume 3,555,939,250
Combined NYSE & NASDAQ Advance - Decline: 3429-2094
Combined NYSE & NASDAQ New highs - New lows: 336-30
WTI crude oil: 97.01, -0.16
Gold: 1,733.70, -1.20
Silver: 33.29, 10.27

Stocks Drop on Fears of NO QE by Fed

Nothing but headlines and rumors are moving the markets these days - and, incidentally, it's Monday, so stocks must go down - and, since Europe's already been sated by ECB president Mario Draghi's new proposal to bail out all sovereign nations in need by purchasing one, two and three year bond issues in exchange for said nations' acceptance of "conditions," all eyes have turned to the two-day FOMC meeting at which Chairman Ben Bernanke is supposed to announce his own version of bond-buying (AKA, QE3).

But, as with all things Ponzi-oriented and subject to whims, official data and sentiment - to say nothing of the upcoming presidential election - speculators, insiders, hedge fund managers and other market participants are a little nervous about what's to come on Wednesday afternoon, when the FOMC will surely announce no chance in policy, keeping rates at zero, and after that...

Chairman Bernanke may well hint at new stimulative measures or actually set a date for a plan to proceed, or, he may weigh all the factors, including Friday's uninspired non-farm payroll data, and do nothing (which would be, historically speaking, the correct path).

If that's the case - and that's what had investors worried in the final hour of trade today - then expect a sharp pull-back from the currently-inflated levels on the major indices. Additionally, the German high court is set to rule, earlier in the day on Wednesday, on the constitutionality of the ESM, and that could be an even bigger deal.

Some 70% or more of the German populace is opposed to the ESM, the funding mechanism that is supposed to - just like all other failed plans - save the Euro, because the bulk of the fund would be bourn by Germany and the good people of that country who pay taxes, which are already viewed as too high. The thought of more taxation in Germany, one of the highest-taxed nations in the world, is unpalatable to most, but taxpayers, alas, do not have a vote. The ruling will come at about the time markets open in the US, setting up for what could be a wicked roller coaster ride.

Thus, there's enough nervousness on Wall Street to make even the coolest of operators break into a cold sweat these days, as uncertainty exists at all levels of economies globally and in the political world.

Today's double digit losses on the major exchanges could be nothing more than profit-taking, or a precursor to some terrible future without government stimulus on both the European and American continents.

How sad. Brokers and dealers might actually have to do some fundamental analysis for a change instead of depending on round after round of money printing to keep the stock markets at nose-bleed levels. Time will tell, and the time is nigh.

Dow 13,254.29, -52.35 (0.39%)
NASDAQ 3,104.02, -32.40 (1.03%)
S&P 500 1,429.08, -8.84 (0.61%)
NYSE Composite 8,192.40, -42.11 (0.51%)
NASDAQ Volume 1,578,686,000
NYSE Volume 3,213,290,000
Combined NYSE & NASDAQ Advance - Decline: 2228-3284
Combined NYSE & NASDAQ New highs - New lows: 332-38
WTI crude oil: 96.54, +0.12
Gold: 1,731.80, -8.70
Silver: 33.63, -0.06

Why Nothing Matters Any More

We've all heard the phrase, "this is going to end badly," before, and, like a failed love affair, so too the centrally-planned economies masquerading as free markets will also surely end in tears, tatters, remorse and recrimination.

Following in the footsteps (or, as the case may be, the mouthpiece) of ECB president Mario Draghi, today, German Chancellor Angela Merkel and French President Francois Hollande issued a joint statement after a teleconference, saying they their government would "do everything to protect" the Euro.

And, with that, the markets were once again off to the races, continuing a rally that is based upon nothing more than promises to pile more debt upon the mountainous pile of unpayable sovereign obligations already in existence, create more deteriorating fiat money, continue bailing out failed financial institutions and keeping interest rates at artificially low yields.

Nothing good has come from any of these efforts thus far, except to perpetuate the status quo of financial fraud run amok without penalties for wrongdoers and the funding of political campaigns by the very same transgressors and beneficiaries of central bank largesse.

Today, the US government announced first quarter GDP grew at a rate of 1.5%, which, in normal times, would be fairly disturbing news, but, couched in the belief that the slowing economy will encourage the Federal Reserve to engender another round of quantitative easing (QE) at its meeting next week of the FOMC, the market soared like an eagle catching a thermal updraft.

The effects of all this money printing and free flow of capital into and out of banks and into government coffers to spend freely beyond their means has been effectively maintained by ultra-low interest rates offered to the world's biggest banks, the ones that were bailed out in 2008, and continue to go to the discount window for Federal Funds at 10 to 16 basis points, invest in longer-term notes and pocket the difference, known as the carry trade. It's easy street for the TBTF banks, which continue to borrow and no loan money, except, of course, to the worst creditors of them all, governments, which haven't balanced their books in decades.

Were the banks and foreign central banks to suspend lending to the US and European entities - an occurrence which has a 100% likelihood to happen at some point - the economic calamity would be unthinkable, thus, the game continues. At certain points, casualties occur, but they are patched over by bailouts or simply shoved aside, as in cases such as Madoff, MG Global and previously, Lehman Bros., Countrywide Financial, Bear Stearns or Merrill Lynch.

The losses are socialized, or, passed onto the taxpayer as it were, though if taxes were at rates commensurate to meet all government obligations and pay off the burgeoning debt load, the average paycheck would be 80-90% taxes and 10-20% take home. It would be likely that most people would stop working for companies, go into a side business of their own and not pay taxes, while larger businesses would suffer from a lack of qualified, willing labor and the whole super-structure of the global economy would grind quickly to a complete halt.

In some sense, that is already happening, and it will continue to worsen, everywhere there are unpayable debt burdens placed upon the citizenry. In Europe, the German people are already braying at the notion of higher and higher tax rates to pay for bailing out the southern states of Greece, Portugal and soon, Spain and Italy.

While the Germans have profited and prospered from fiscal and monetary discipline, the regime of Angela Merkel is rapidly fostering a growing debt burden that will force taxes higher and eventually cripple their own economy. While most of southern Europe is already in a recession and Greece, at least, a depression, Germany, being the lender of last resort, so to speak, is nearing a political breaking point, where the populace is about ready to take a stand against the free-spending policies of their government.

Merkel is tip-toeing on a high wire (a horrifying mental image), balancing her own political future against the success or failure of the Euro. Germany benefits from the declining euro because of its huge export base, so abandoning it and returning to the Deutschemark is out of the question, as the new currency would be among the strongest in the world, making German products prohibitively expense in other countries.

France, which behind Germany is the second largest economy in Europe, seems content to tax and spend to promote their socialist agenda of government handouts to everyone, shorter working hours and large, public pensions. The French people are notorious protesters, who will take to the street at even the slightest hint that any kind of public benefit will be cut, and, as they showed former president Sarkozy the door this past Spring, they will vote against any mention of austerity, a dirty word in the Gallic nation.

In America, it's the culling of the middle class that proceeds apace. Wages have been stagnant, new job creation sparse and sporadic, but price increases in food and energy, along with threats of higher taxes have all but eliminated discretionary spending and saving for growing numbers. The middle class has become a huge class of debt slaves, content to keep paying and playing along until the pensions and social security and health care monies are exhausted.

The rest of the world has other problems, though even growth countries like China, India, Brazil (together with Russia, making up the BRICs nations) are slowing down as the speculative economies strip out all wealth to the top one percent of earners and actual productive growth falters.

There is a tipping point somewhere down the road, and it's a wonder that the whole global mess hasn't completely fallen apart by now, but it does appear that those in charge of "managing" the economy can keep the plates spinning for a while longer, maybe as much as three to five years. By then, these central planners hope that entrepreneurs will have bolstered the fragile, stagnant economy back to life and that a more normalized functioning will have emerged.

It's a pipe dream built on the faulty assumption that expanded liquidity can supplant insolvency. It never has, and it won't. The end game comes from a deflationary spiral in which too little money is chasing too many goods, even in an era of expansionary monetary supply (inflation). The problem is that the money is going into the wrong hands, to those of the bankers, who hoard their cash for liquidity and speculation, as seen repeatedly in the stock market, while the middle and lower classes go begging for credit (at usurious rates), jobs, and eventually, food.

In every instance in which a reserve currency such as the US dollar was not backed by gold, silver or both, or other tangible assets as collateral for debt creation, that currency has failed and been replaced. Every time.

And this time is not different. It's just taking longer than expected.

Dow 13,075.66, +187.73 (1.46%)
NASDAQ 2,958.09, +64.84 (2.24%)
S&P 500 1,385.97, +25.95 (1.91%)
NYSE Composite 7,912.16, +157.65 (2.03%)
NASDAQ Volume 2,085,560,250
NYSE Volume 4,290,734,500
Combined NYSE & NASDAQ Advance - Decline: 4511-1073
Combined NYSE & NASDAQ New highs - New lows: 343-86
WTI crude oil: 90.13, +0.74
Gold: 1,618.00, +2.90
Silver: 27.50, +0.05

Uh, Oh, Here We Go Again? German Economy Cracking

Just a day after the Federal Reserve's announcement of an extension of operation twist, reports from Europe, especially one showing a drastic slowdown in German manufacturing (Flash PMI), at its lowest level in three years, sent first, European stocks lower, and then, US stocks to even steeper losses by percentages.

Apparently, European investors had already sensed the slowdown, because the losses were not that severe as in the US. However, many of the European nations are already in or on the verge of recession, and their stock indices already in bear market territory.

For US investors, the Dow took its second-worst one-day plunge of the year, as did the NASDAQ and &P 500, exacerbated by a sharp decline in the Philadelhia Fed Index. The June reading came in at -16.2, on expectations of -0.2 (not sure just who was expecting the somewhat rosy, small negative number).

Oil also took another dip, recording the worst two-day decline in nine months.

The key numbers for stocks and commodities are below. There's little more to say except that this one-day event is just another in a long, continuous stream of deflationary, depressing economic data sets that seemingly has no end in sight.

The collapse of the global economy is like watching a slow-moving hurricane heading for a vulnerable coastal city, a la Katrina wiping out New Orleans a number of years ago. Nobody wants to believe it is going to be horrifying and devastating, but it continues apace and the closer it gets, the more people begin running for cover... or their lives.

There is almost no doubt that the world is heading for a major economic event, one which will not only devastate some of the more notorious crooks on the planet, i.e., bankers, but will also change the players and nature of national and global politics.

Just in time for a presidential election. The timing is just so delicious and sickening.

Read 'em and... don't weep. There's no crying in high finance.

Dow 12,573.57, -250.82 (1.96%)
NASDAQ 2,859.09, -71.36 (2.44%)
S&P 500 1,325.51, -30.18 (2.23%)
NYSE Composite 7,562.51, -195.40 (2.52%)
NASDAQ Volume 1,697,187,750
NYSE Volume 3,915,656,000
Combined NYSE & NASDAQ Advance - Decline: 1105-4507
Combined NYSE & NASDAQ New highs - New lows: 104-83
WTI crude oil: 78.20, -3.25
Gold: 1,565.50, -50.40
Silver: 26.84, -1.55

Week's Events Point to Global Collapse; Max Keiser Speaks Out on Germany Bank Downgrade, Global Economy

Editor's Note: This was a particularly trying and nervous week for the markets, as political and economic tensions seemed to escalate on daily basis. From China's interest rate easing to the downgrade of Germany's banks to the rising wave of racism and bias, the swirl of history seemed to take on an unusually pungent aroma, one which permeated all levels of discussion and event horizons.

I am horrified at my own - and that of Max Keiser and many other non-mainstream journalists - prognosis for the future of the global financial system, which is being rendered apart by self-created forces which have taken on unforeseen lives of their own. A complete crash could occur almost at any time without warning, with a ferocity that would make 2008-09 look like a leisurely stroll. With all my heart, I wish my predictions turn out to be 100% incorrect, though continuing and recent developments point in the opposite direction.

Of course, the elitist coalition of bankers and sovereign leaders will continue to apply bandages and tourniquets as needed, even though they must know that a mortal wound cannot be patched, that wound being the complete insolvency of the world's largest banks, begun in 2008 and proceeding this week to completely engulf all of Spain's mightiest financial institutions.

As the week drew to a close, US markets garnered further gains on what had to be the lowest trading volume day of the year. (Money Daily does not keep complete records of much, but the daily volume reports at the end of each daily post provide that statistic - though scrolling through five-plus months of posts is a bit of an arduous task late on a Friday afternoon. Trust in the fact that if today was not indeed the lowest volume of the year, it was in the lowest three.)

Zero Hedge (zerohedge.com) reports that volume for the week was the slightest of the year, in a week which produced the year's best gains. This kind of rigged result is exactly what's wrong with markets and the economy in general: they aren't functioning. Today's plaster to the upside, accompanied by abysmal volume is manifestation of the banker Ponzi in full bloom, trading amongst each other in a rigged game to the detriment of formerly-free markets.

At some point, the manipulation will come to an end, and likely an abrupt one, fully engineered by Rothchilds and fellow Illuminati types.

A point of reference is the upcoming November US presidential election, which incumbent president, Barack Obama, is purposely throwing, having done his job for his bankster allocators. The first hint that Obama was not fully engaged or committed to winning a second term came in the form of his absurd opposition to the Keystone XL Pipeline. His stance to block the project - which would bring oil from Canada's oil sands to America, but, as of last notice may be headed to China instead - until after the election, baffled all but the mainstream press, who haven't the collective mind power or journalistic will to delve into matters that involve anything more than rehashing the contents of official news releases.

Today's statement that the private sector in America is doing "OK" is the second nail in the defeat of Obama at the polls. Such obvious policy blunders and plainly unfounded statements point to nothing less than self-imposed defeat to the weakest Republican candidacy since Bill Clinton's second term re-election. Mr. Obama is an eloquent, intelligent speaker, but he has failed to ignite any fire of passion in either Democrats or independents. It's a very good bet that handing the presidency to the biggest shill for the 1%, in the person of Mitt Romney, is a reality.

For the week - again, the best of the year on the lightest volume - the Dow gained an ungodly 456 points, this on the heels of the month of May in which the blue chips gave back more than 800 points. Bear in mind that this gain comes as global conditions worsen, with little to no positive data or news.

The same kind of ride-up occurred on the NASDAQ, up 110 points, and the S&P, which registered a gain of 45 points. The whole affair is nothing more than a dog-and-pony show, and one which is not particularly well-staged. The sheeple of the world take it all in without question, that being one of the keys to the problem.

Along with the low volume, the session was characterized by slender breadth and a slight edge for new highs over new lows. Commodities, which began with oil down by more than $2.00 on the current futures price, were relatively flat by day's end.

In line with developments of the past few weeks - and years, for more perspective - the contagion from banking to sovereigns to currencies is accelerating, nearing an extremely dangerous global condition of collapse.


If implosion happens within weeks, it would be no surprise to the growing number of people who view the past four years of currency manipulation and incessant printing with disdain and skepticism. Global elites are desperately clinging to largely Keynesian ideas and potential solutions which have little to nothing to do with solving the epic calamity unfolding in real time.

There's no telling how much longer the global condition can be restrained as events in areas around the world are spiraling out of control at a rate of speed that is nearly impossible to track.

The Nicholas Brothers

Forget about the press reports and news conferences with governmental/political leaders like Obama, Merkel, Draghi, et. al. Issues on the ground are overtaking the ability of the political process to deal with the expanding crisis. The powerful are becoming less so, and eventually will be held responsible, and thus, powerless as populations erupt in wave upon wave of tension, uprising, catastrophe. Greece is just the most visible example, while Syria is already a lost cause due to the inaction or inability of bodies such as NATO or the loosely-aligned Euro-American force majure to act properly - and promptly - to quell the spreading genocide. Spain, Italy and France continue their joint descent into anarchy which will eventually pull all of Europe down with it.

Must see TV: Host of the Keiser Report, Max Keiser, brilliantly lays out the present and near-future in this six-minute segment courtesy of Russia Today.



In keeping with our new-found hobby of digging up rich pieces of joyful Americana from bygone eras, the following clip from the 1942 film, Orchestra Wives, featuring the Glenn Miller band with Tex Beneke performing "I've Got a Gal in Kalamazoo" along with the fast-talking, high-stepping dancing duo, the Nicholas Brothers, the elder Fayard, and Harold.

It's a real piperoo! Enjoy.



On a strictly personal note: Many thanks to the two saints on earth who appeared today as needed. Whatever one's personal beliefs, there is a power in faith that is beyond our small level of comprehension.

Dow 12,554.20, +93.24 (0.75%)
NASDAQ 2,858.42, +27.40 (0.97%)
S&P 500 1,325.66, +10.67 (0.81%)
NYSE Composite 7,553.77, +33.94 (0.45%)
NASDAQ Volume 1,396,691,125
NYSE Volume 3,497,203,500
Combined NYSE & NASDAQ Advance - Decline: 3810-1757
Combined NYSE & NASDAQ New highs - New lows: 111-78
WTI crude oil: 84.10, -0.72
Gold: 1,591.40, +3.40
Silver: 28.47, -0.06

US Markets Stalled Out, Waiting for Europe's Next Gambit

There's an old Wall Street adage that goes something like, "don't short a dull market," but, if this market goes any higher and gets any duller, the adage might as well be thrown out along with most long positions in stocks.

After Tuesday's snooze-fest, Wednesday's market was even sleepier, with participation at low ebb. Volume has nearly completely dried up, but the thin trading has reduced volatility somewhat. In fact, the VIX, which measures implied volatility in the S&P 500, hasn't pitched above 30 (an abnormally high level to begin with) since November 30, or one week ago.

What traders are most concerned with is once again Europe, but more specifically, the two days of meetings scheduled in Europe, one by the ECB, tomorrow, and the other a crisis summit of leaders of the Euro-zone nations on Friday that is hoped to pave the way toward an end of the two-year-old debt crisis that has gripped European markets and locked down US markets for the past two days.

As is the usual case with relying on Europe to fix our own stock market, it's probably a bad idea. Some leading economists of the region, particularly those from Germany, who have the best view of the situation, are saying that whatever solutions come out of this week's crisis summit, Europe's problems are likely to remain contentious for another eighteen months to two years.

Noting that, and understanding that debt issues which took decades to produce are not going to be solved at one meeting (it has been promised before and not been delivered), so one has to question both the positioning in US stocks, which have been essentially flat since the middle of August, and the reliability of ancient words of wisdom in an era that has been marked by unusual actions from the Fed and other central banks in developed countries.

If everybody's waiting on Europe, just what do they expect? A grand plan which all 17 countries that use the Euro as currency can agree to? Good luck with that. European leaders are now calling for majority consensus rather than unanimity. Meanwhile the ratings agencies, specifically Standard & Poor's, are scaring the daylights out of each and every one of them, threatening credit rating downgrades across the continent if there's no substantial progress come Friday.

What this telegraphed sucker punch from S&P is saying is more political than economic, essentially telling all of Europe to stop playing around the periphery and get to the core of the matter, which would entail some countries (think Spain, Portugal, Italy and Greece) having to give up some degree of sovereignty in order to remain in the good graces of the European Union and the ECB. And while fiscal unity, or, at least some semblance of fiscal responsibility would be a step in the right direction, the citizenry of those countries might not take lightly to having new masters above their own elected leaders somewhere in Germany, Brussels or France.

Since the crisis meeting isn't until Friday, that's probably when US markets might perk up, but, if the game plan remains the same in Europe - promise much, deliver little - they will be sending a message to markets around the world that the issues present are too large, too diverse and too complex for all 17 Euro-zone nations to reach agreement on any unifying principles laid down.

In that scenario, we may just get another two days of slumber on the street as even more participants make a premature exit from stocks in 2011, fleeing to cash or bonds until the dust settles after the holidays.

And what about that Santa Claus rally that usually commences over the final two weeks of the year? There may be one, but it won't have much gusto on low volume and it's not likely to last long. Stocks are already creeping back toward their late July - early August levels and there's just not enough economic "juice" in the system for which a rally can be sustained. The major US indices have flirted recently with the flat line for the year and that's probably where they're going to remain.

Meanwhile, all one can do is hold one's breath waiting for Europe's next move. Everyone is waiting to exhale.

Dow 12,196.37, +46.24 (0.38%)
NASDAQ 2,649.21, -0.35 (0.01%)
S&P 500 1,261.01, +2.54 (0.20%)
NYSE Composite 7,559.71, +20.39 (0.27%)
NASDAQ Volume 1,654,001,000
NYSE Volume 4,158,213,000
Combined NYSE & NASDAQ Advance - Decline: 2804-2747
Combined NYSE & NASDAQ New highs - New lows: 119-63
WTI crude oil: 100.49, -0.79
Gold: 1,744.80, +13.00
Silver: 32.63, -0.12

Following Friday's Flop, a Monday Pop; The Crisis Hasn't Ended

After Black Friday's classic pop and flop (the Dow was up 123 points, only to close down 26, and that was all in a half-session which lasted just 3 1/2 hours), stocks stormed back on rumors of a European fix-up engineered by the IMF and maybe the influence of the German economy, or maybe the Fed, or maybe... well, you get the point, it's all rumors and shadows, now that the extent of Europe's problems have been put to the light of day.

Estimates range to as high as $30 trillion dollars to fix what ails Europe, which is, after all, the same problems facing the United States, though in a longer timeline: un-payable debt brought on by years of overspending by governments, underfunded pension plans (think Social Security), flatlining government revenue and economies that cannot grow without artificial stimulus.

On Wall Street, the focus was on all the crazed morons shopping on Black Friday, which has been touted as one of the most successful single retail days ever. While that may be so, underlying the massive volumes of shoppers and sales the day after Thanksgiving are slim margins and now a three-week lull until the final week before Christmas, in which, traditionally, 40% of all holiday shopping takes place.

But Wall Street - and indeed, markets worldwide - celebrated Black Friday's success as if Gerald Ford had single-handedly beat inflation with his WIN (Whip Inflation Now) buttons. The truth - something seldom seen in the mainstream media these days - about Black Friday and how it translates into higher profits for the more than 5000 companies listed on the US stock markets is simply that it doesn't matter.

Warm weather across most of the country may have sent shoppers out in droves, but bottom lines are what's supposed to matter on Wall Street, and the results of the Christmas shopping season won't fully be known for another month-and-a-half.

As the markets have demonstrated quite convincingly over the past four months running, today's gains are tomorrow's profits taken or, for the long term holders (overnight, as opposed to outright day-trading), losses sustained. So, hold off on making any bold projections about Santa Claus rallies or long-term growth prospects until the remainder of the week and the month play out.

Not to pooh-pooh a solid ramp job on abysmally-low volume, but the charts are telling us that the circus of a crisis in Europe is simply the back end of what happened in America from 2007-2009. A good portion of the toxic debt bundled into MBS was sold into Europe, exacerbating an already bad situation. Unless the IMF, the Fed and the leaders of Europe really can fart flying unicorns on demand, the fix to the global economy is not going to happen this year, and probably not next.

The "recovery" which was supposed to have begun in 2009 is now more than 2 1/2 years old and unemployment is still "officially" over nine percent, though real economists put actual joblessness somewhere between 16 and 23%. The income gaps between rich and poor, elderly and young and across the spectrum of races and colors continue to expand. Congress continues to diddle over politics while only eight percent of the country believes they are doing a good job, proving that yes, you can fool some of the people some of the time.

National governments are imploding at an accelerating rate as financial instability threatens to topple the ruling elite. The crisis, begun in 2007 with the pop of the sub-prime bubble, is still in mid-flight (or descent, as the case may be). Europe's problems, while they may not be ours in America, sure have a familiar look to them and it may take some time, but they'll land here in America in due time, hopefully right about the time we're convinced Newt Gingrich (sounds a lot like Grinch, and that's not without irony) has the chops to save the nation.

Just for perspective, the Dow Jones Industrials peaked at 14,154 in November of 2007. Today they stand at 11,523, and, if a 20% decline defines a bear market, the current 18.6% drop from the peak had us right there in bear country over the past four months with a market - manipulated as it may be - that struggles with every gain, only to give it right back in a day or a week or so.

Confidence may be a fleeting emotion, but one necessary to keep a dynamic economy growing and strengthening. We don't have any, and there's little reason to believe there will be much coming around soon.

Dow 11,523.01, +291.23 (2.59%)
NASDAQ 2,527.34, +85.83 (3.52%)
S&P 500 1,192.55, +33.88 (2.92%)
NYSE Composite 7,120.55 +222.37 (3.22%)
NASDAQ Volume 1,623,548,125
NYSE Volume 3,839,968,500
Combined NYSE & NASDAQ Advance - Decline: 4783-968
Combined NYSE & NASDAQ New highs - New lows: 97-156
WTI crude oil: 98.21, +1.44
Gold: 1,710.80, +25.10
Silver: 32.16, 1.15

Failed German Bond Auction Sends Stocks Scurrying Lower

Germany, a tower of strength throughout the ongoing European debt crisis, got a taste of the bad medicine which has been doled out mostly across Southern European nations, as an auction for $8.1 billion in German Bunds was not well received, as bids covered only $5.9 billion of the offering.

Additionally, investors demanded a higher yield on the 10-year note, pushing the yield to a six-week high at 2.02%, higher than the corresponding 10-year note in US treasuries, which plummeted to as low as 1.88% during the course of the day.

Foremost on the minds of traders of all stripes, the question was simple, "If Europe's strongest nation cannot fund itself, what's next for the continent and for the rest of the planet?"

The news struck just prior to the opening of US markets. Along with unusual readings on US durable goods orders, personal income and personal spending, markets opened sharply lower and languished in the red all day.

Personal income for October showed a gain of 0.4%, while personal spending increased a mere 0.1%. Along with those figures, both below forecasts, the national savings rate fell to 4.1% in the third quarter compared to 5.1% in the second quarter, suggesting that Americans are dipping into savings or saving less in order to make ends meet, a scenario of which most lower and middle-income citizens are already well aware.

Durable goods orders, a key driver of broad economic growth, fell sharply, off 0.7% and yielded another odd number. Without transportation orders (autos, planes, etc.), durables were up 0.7%.

Spooking the market even more were poor results in the flash reading of China's PMI, which showed contraction, at 48.0, down from 51.0 in October. The flash reading generally captures about 85-90% of the businesses surveyed. The final reading will be released on December 1.

As US markets pause to give thanks (for what, nobody's exactly sure) on Thursday, economies and markets are gripped by turmoil, fear and trepidation over an imminent recession and possible currency collapse in Europe and elsewhere. With half of Europe likely already in recession, global growth seems to be stalling out in much the same fashion as it did in 2008. The Euro fell to its lowest level against the US dollar in six weeks, though still holding valiantly to the 1.33 level, though without relentless priming and pumping from the US Fed, the Euro seems doomed to fall to levels not seen since the Euro's earliest days.

That Europe can actually fund itself and fix the problems caused by decades of overspending appears more and more a fiction that only financial broadcasters and government officials mouth. Whether they actually believe what they're saying is a matter for speculators.

The Dow Jones Industrial Average fell for the fifth time in the last sixth sessions. The NASDAQ and S&P 500 fell for the sixth consecutive day. All of the major averages are now back below where they started the year and each has fallen below its 50-day moving average. The number of advances was at a three-month low and new 52-week lows outpaced 52-week highs by its highest margin since August.

All sectors were lower, led by energy, basic materials, technology and financials. Bank of America, possibly the most-hated financial institution in the world (though Goldman Sachs may garner even more angst) fell to 5.14 at the close, the lowest level since March of 2009, the bottom of the 2008-09 downturn. All 30 Dow stocks finished lower on the day.

Gobble, gobble, Happy Thanksgiving. See you on Black Friday.

Dow 11,257.55, -236.17 (2.05%)
NASDAQ 2,460.08, -61.20 (2.43%)
S&P 500 1,161.79, -26.25 (2.21%)
NYSE Composite 6,951.56, -143.33 (2.02%)
NASDAQ Volume 1,715,325,750
NYSE Volume 3,798,937,500
Combined NYSE & NASDAQ Advance - Decline: 767-4911
Combined NYSE & NASDAQ New highs - New lows: 39-371
WTI crude oil: 96.17, -1.84
Gold: 1,695.90, -6.50
Silver: 31.88, -1.07

Markets Rebound as Fed Stands Pat; Greece in a Bind over Bailout

Dow 11,836.04, +178.08 (1.53%)
NASDAQ 2,639.98, +33.02 (1.27%)
S&P 500 1,237.90, +19.62 (1.61%)
NYSE Compos 7,461.10, +123.96 (1.69%)
NASDAQ Volume 1,942,050,875
NYSE Volume 4,062,845,250
Combined NYSE & NASDAQ Advance - Decline: 4528-1072
Combined NYSE & NASDAQ New highs - New lows: 47-45
WTI crude oil: 92.51, +0.32
Gold: 1,729.60, +17.80
Silver: 33.94, +1.21

Recapping the days events in no-frills fashion:

German Chancellor Angela Merkel and French President Nicolas Sarkozy met with the IMF and Greece's Prime Minister George Papandreou to discuss the Greek leader's abrupt call for a national referendum on whether or not to accept the Euro bailout and associated austerity measures. According to early, unconfirmed reports, Papandreou would not budge on a plebesite early next year, pushing the EU leaders to issue a freeze on Greece's $8 billion in bailout funds, a move which could send the whole European debt crisis into a new, more dangerous phase as the Greek government will surely run out of cash prior to the proposed referendum.

The Federal Reserve chose to take no policy action on the federal funds rate, keeping the effective rate between 0.25% and zero. The Fed added some language to its statement, highlighting more positive tones as the US economy gathered steam in the 3rd quarter.

The ADP private payroll survey estimated that US employers added 110,000 private sector jobs in the month of October, after a revised 116,000 job gains in September.

Stocks ended a two-day losing streak, though the Fed's announcement and subsequent news conference didn't move markets much in either direction.

Volatility remains quite high, with the S&P Volatility Index (^VIX) ending the day at 32.74.

All interest will turn to employment over the next two days, as unemployment claims are announced Thursday morning and the BLS' non-farm payroll data come out on Friday, both releases timed for prior to the markets' opening bell. Continuing news from Europe is also likely to be at the top of investor interest.

Global Stocks in Love with European Rescue Plan

If yesterday's gains were the equivalent of irrational exuberance, then today's stock risings around the world must be something akin to unconditional love for all things European, Euro, Eurozone or Euro-centric.

In the pre-dawn hours of Thursday, the meeting of leaders from the 17 nations comprising the the Eurozone - the nations employing the Euro as official currency - within the 27-nation European Union, broke from their marathon meeting and outlined a bold, yet still unfinished plan to stave off the collapse of Greece, keep key European banks solvent and expand the European Financial Stability Facility (yes, we know, you were wondering what EFSF stood for) to Euro 1 trillion ($1.41 trillion).

Greek debt-issuers, denominated mostly by major European banks, would be required to write down bonds by 50% (a haircut, as it is known), a proposal that many of the prominent banks had wished to avoid - and still may fight - was pushed through by the Eurozone leaders as a necessary action to keep the government of Greece from default and insolvency. The total amount to be written down on Greek debt came roughly to Euro 100 billion ($141 billion), though analysts debated the actual figure, most arguing the the recapitalization of the banks must be a much higher number.

Despite the lack of clarity over the details of the plan, stock indices around the world exploded to the upside on the news. The Hang Seng gained 3.26%, with other markets in the region all positive, though it was the European bourses themselves which registered the largest gains by far.

In Germany, the DAX finished more than 5% higher, the French CAC-40 soared 6.28% and Austria's ATX surged 6.11%. Other european markets registered significant gains.

While the European markets were notching higher through their afternoon, US futures were indication an explosive open with Dow futures in the green to the tune of - at times - more than 300 points. When US markets opened, the response was quick and certain, with all of the major indices higher in the early going, the NASDAQ setting the pace all day and finishing with a phenomenal gain of nearly 88 points and the S&P outdoing it with a 3.43% hike by days' end.

That Europe's long-awaited plan will proceed without hitches is uncertain, though there are sure to be bumps along the road. For now, however, the global stock market reaction appears to be showing broad approval and unequivocal support.

Buoying the euphoric sentiment in the US was the initial reading of US 3rd quarter GDP, which came in as expected, showing a growth rate of 2.5%, when skeptics of the somewhat-dormant US recovery had predicted much lower numbers, some believing that America was heading back into recession. With the holiday season fast approaching, chances for a double-dip recession have by now been effectively squashed.

Not only were stocks radically higher, with the Dow piercing the 12,000 threshold for the first time since August 1, the index on pace for it's best October ever, but commodities were also up sharply across the board, with oil, gold, silver, corn, soybean and wheat futures all posting superlative gains.

At the end of the day, the markets put on a show of global confidence not seen in some time, registering some of the best gains since the 2008-09 US financial catastrophe. What remains to be seen is whether the European leaders can actually implement the plan and keep the global economy churning. For today, at least, the consensus seems to be primed for their best efforts.

Dow 12,208.55, +339.51 (2.86%)
NASDAQ 2,738.63, +87.96 (3.32%)
S&P 500 1,284.59, +42.59 (3.43%)
NYSE Composite 7,813.99, +307.84 (4.10%)
NASDAQ Volume 2,851,696,750
NYSE Volume 6,600,709,000
Combined NYSE & NASDAQ Advance - Decline: 4956-827
Combined NYSE & NASDAQ New highs - New lows: 282-31
WTI crude oil: 93.96, +3.76
Gold: 1,747.70, +24.20
Silver: 35.11, +1.80