As expected, Fed Chairman Ben Bernanke gave his highly-anticipated speech at Jackson Hole, Wyoming this morning and did not outline any further Federal Reserve policies - specifically another round of quantitative easing (QE) - that would have signaled not only a weak, struggling economy, but more easy money for bankers, stock traders and the like.
Not that money isn't easy already. The Fed, in its last policy statement earlier this month, specifically stated that they would keep federal funds rates at close to zero until the middle of 2013. In the simplest of terms, the cost of money can't get any lower than zero, so any other stimulative motions would have - as have the last two rounds of QE - essentially been throwing good money after bad.
Wall Street's reaction to the Chairman's relaxed posture on monetary policy was not unexpected, but still a bit obtuse. After falling off precipitously in early trading (the Dow registered a 200+ point loss), stocks gathered momentum, went positive and ended the day - and the week - with broad gains. The only factor missing from the upside move was volume. Today's rally, like many which preceded it during the days of QE2, was rather muffled.
Two events, an ocean apart, will likely have major impacts moving forward into Monday. The Greece rescue plan has run into some turbulence, as Greece has set terms for the level of private participation and Euro nations spar and debate collateral obligations from the Greeks, now that Finland and Austria have secured such from the Greek government.
Along the Eastern coast of the United States, shorelines were being evacuated as Hurricane Irene meanders toward the Mid-Atlantic states of South and North Carolina, Virginia, Maryland and Delaware. The sizable storm is expected to make landfall on Saturday at North Carolina's Outer Banks and proceed with a bee-line path toward the major metropolitan areas of Philadelphia, Northern New Jersey, New York and Boston.
Expected to raise water levels with a storm surge of as much as 20 feet, Irene has the potential to bring devastation to some of the most populated areas of the country.
Traders didn't seem to make much of such turbulent conditions in both the weather and the global economy. They also shrugged off the decline in the second estimate of GDP, from 1.3% to 1.0%, which was announced prior to the opening bell. The University of Michigan's consumer confidence index also rose slightly, from 54.9 to 55.7, but, like Bernanke's speech, the news seemed unimportant.
As it turned out, the major indices put in their first winning week in the last five, a hopeful sign that the averages have encountered only a correction and have not fallen back into bear market territory, even though there's quite a bit of chatter about a resumption of the recession, muted growth prospects and a subtle notion that the FOMC will announce some policy directions at their September meeting, possibly to include some form of monetary easing.
Dow 11,284.54, +134.72 (1.21%)
NASDAQ 2,479.85, +60.22 (2.49%)
S&P 500 1,176.80, +17.53 (1.51%)
NYSE Composite 7,245.82, +96.15 (1.34%)
Despite the exceedingly low volume, advancers slaughtered decliners, 5258-1302. NASDAQ new highs numbered just nine (9), with 106 making new lows. On the NYSE, there were 13 new highs, but 101 new lows. The combined totals of 22 new highs and 207 new lows continue to suggest further downside developments.
NASDAQ Volume 1,860,127,125
NYSE Volume 4,936,341,500
Oil was relatively unchanged for the second straight day, with WTI crude futures posting a gain of just seven cents, closing out the week at $85.37.
Gold roared back against the margin hikes and central bank shorting, posting a wicked gain of $56.20, boosting the price per ounce back to $1827.50. Silver continued its bounce, up 22 cents, to $41.34.
With stocks and precious metals both rising on the day, one questions which group of speculators has the market sentiment measured correctly as the two asset groups are usually polar opposites.
As long as there's more debt being created to pay back already soured debt, you can bet the gold bugs and silver eagles have it right.
Showing posts with label Greece. Show all posts
Showing posts with label Greece. Show all posts
Friday, August 26, 2011
Monday, August 8, 2011
Debt Downgrade Fallout: Stocks Shattered, Gold Soars, Europe a Wasteland
At 9:00 pm Eastern time on Friday night, August 5, S&P officially released their downgrade of US debt from AAA to AA+, prompting widespread panic and sharp rebukes from the White House, who claimed, in effect, that S&P had made what amounted to "math errors."
Over the weekend, much was made of the downgrade, as the Obama hit the airwaves with gusto, rebuking the call from the ratings agency. Fitch and Moody's had previously reaffirmed the US debt as AAA, the highest possible sovereign bond rating, but S&P would not back down, and the downgrade remained in effect.
What S&P reasoned was that the US government did not take the necessary steps - in its theatrical production of waiting until the last possible moment to pass a debt ceiling increase - to address the structural problems facing it. S&P rightly concluded that US debt levels were and continue to rise and discretionary spending levels have not been controlled. Therefore, they downgraded the nation's debt and threaten to do it a second time, sometime around November, if the 12-member congressional committee charged with dealing with long term debt does not come up with actionable, concrete, debt reduction proposals.
As markets opened on Monday, the effects of a global panic were evident, especially on the heels of a 10% decline in US indices over the past two weeks and Thursday's dramatic sell-off of over four per cent on major markets.
First, it was the Asian markets which tanked at their various openings and continued through the day to sell off anywhere from 1.5 to 4.0%. Next up was Europe, where the crisis over bailing out Italy and Spain have reached a point of no return. EU officials stressed that they would be in the market with the ECB, buying up italian and Spanish debt, but that did little to change the outlook of investors, which had turned sour over the past fortnight.
Appetite for risk was at a low, as European markets suffered steep losses. England's FTSE was the best of the lot, down only 2.62%. France's CAC-40 took a 4.68% loss and Germany's DAX shed 5.02%. Other Euro-zone markets fell between 3.76 and 6.11%.
By the time US markets were to open, index futures had been hammered down to presage an inauspicious opening. Within minutes of the bell, the Dow was down more than 200 points, the S&P had taken a 25-point hit and the NASDAQ fell more than 70 points, though those declines were nothing compared to the carnage that lay ahead.
By the end of the day, after a minor rally in the first 15 minutes of the final hour, stocks were trading at or near their lows, with the Dow Jones Industrials surrendering the 6th-worst performance in its history. While the Dow suffered a 5.5% decline on the day, the other indices were actually much worse, with the NYSE Composite topping them all, coming home with a 7.05% loss.
It wasn't just the debt downgrade that spurred the sell-off. Conditions in Europe have worsened significantly over the past few months, to the point that European Union officials are without reasonable solutions to the debt contagion spreading across the region. While the ECB has managed to prop up smaller countries like Greece, Portugal and Ireland, Italy especially poses a much larger concern.
All the European leaders could muster on Monday was a terse statement which offered no concrete proposals but plenty of assurances, which was be roundly written off by markets. To wit:
The irony is that one of them, Italy, has been the source of the most recent anguish.
Essentially, the funds available to the ECB fall short of meeting the debt purchases needed to save Italy and Spain. Europe will have to engage in quantitative easing, as was the case in the United States over the past two years, to stave off defaults and the threat of a cascading crisis which would envelop all of Europe and likely doom the 11-year-old Euro currency.
If the EU decides upon cheapening the currency - which it almost certainly will do - theknock-on effect will be to sink the Euro, probably close to parity with the US Dollar. As the dollar would grow in strength, commodities, particularly oil and gas for auto use, would plummet, a boon to US drivers and to the general economy. Costs of imports would also decline, on a relative basis, giving American consumers more purchasing power.
Within the same scenario, however, are pitfalls for the global manufacturers and companies that populate the S&P 500, NASDAQ and the Dow. A stronger US Dollar would make them less competitive in foreign markets, shrinking margins and thus, profits. Thus, the great selling rush today was more of a statement on the global condition rather than that of the debt downgrade, which, when all is said and done, won't amount to a hill of beans. In fact, treasuries were up sharply today, as yields fell to their lowest levels in over a year.
The benchmark 10-year note fell 25 basis points in just one day, from 2.56% on Friday to 2.31% on Monday. The 30-year bond fell 19 basis points, to 3.65% as the yield curve continues to flatten. Money is going out of stocks and into bonds, and whether they're AAA or AA+ doesn't matter to those seeking a safe haven. The ridiculously low yields offered are a moot point. As one trader put it, "Investors aren't looking at making money; they're more concerned with getting their money back."
And, therein, the next crisis, in bonds, especially if the US government doesn't get its house in order soon. Higher rates and another downgrade could trigger a default of impossible proportions as the US would be unable to roll over its debt and fund itself without incurring higher borrowing costs. Ditto for Europe. Rising interest rates signals the end game for fiat currencies globally and back to some form of honest money, most likely on a gold standard.
The market events of the past few days, in which the major indices lost more than 10% are not the end of the crisis, but rather the beginning of the end of a great generational bear market that began in 2007 and will eviscerate all risk assets until nobody wants to hold anything any more.
Markets have entered the final stages of the third leg down. QE 1 and 2 staved off the collapse, but there will be no bailouts this time around. It's every man, woman, child and company for itself. There will be some winners, but mostly there will be losers, anguish, agony and the disappearance of great hordes of wealth.
Dow 10,809.85, -634.76 (5.55%)
NASDAQ 2,357.69, -174.72 (6.90%)
S&P 500 1,119.46, -79.92 (6.66%)
NYSE Composite 6,895.97, -523.10 (7.05%)
The internals were equally as stunning as the headline numbers. Declining issues decimated advancers, 6553-375, a ratio of 17.5:1. It was truly one of the deepest, broadest declines in stock market history. On the NASDAQ, there were four (4) new highs next to 725 new lows. The NYSE had just three (3) new highs, but 1292 stocks making new 52-week lows. The combined total of seven (7) new highs and 2017 new lows rivals or exceeds the figures presented during the fallout of 2008-2009.
Volume was at the highest levels of the year, exceeding that of last Thursday, which was then the high volume day of the year. Investors aren't just scared, they are trampling each other running through the exits at breakneck speed.
NASDAQ Volume 4,002,857,250
NYSE Volume 11,046,384,000
Crude oil futures were pounded again, as the front-month contract on WTI crude fell $5.57, to $81.31. Gas prices will soon fall below $3.50 - and possibly below $3.00 - a gallon as current supplies are depleted and replaced by less expensive distillates. According to AAA, the average price of gas in the US is now $3.66 per gallon, but the deep declines have not yet been factored into the equation. That will happen over the next two to three weeks.
Gold was the big winner of the day, soaring $61.30, to $1,713.20, another all-time record price as investors, companies, nations, central banks and housewives scrambled to find reliable assets. Silver, still constrained by high margin requirements, gained $1.17, to $39.38. Silver is almost certainly the most under-appreciated asset in the world, though that will soon change. As the crisis escalates and governments make more and more bad moves, the precious metals will skyrocket to unforeseen heights.
The banking sector took it on the chin, but none more than Bank of America (BAC) which is on the verge of a well-deserved bankruptcy. shares of the nation's largest banks fell 20% on the day, losing 1.66, to close at 6.51. Just a few weeks ago, BofA was trading at a price nearly double that. The unfolding mortgage crisis, brought about by Bank of America's 2008 purchase of Countrywide, has become a fatal blow to the once proud institution.
David Tepper's Appaloosa Management Fund has reportedly sold its stake in Bank of America (BAC) and Wells Fargo (WFC), while significantly trimming Citigroup (C) from the portfolio.
Adding to the irony, AIG has sued Bank of America for $10 billion, citing "massive fraud" in its representations of mortgage-backed securities (MBS).
However, Citigroup analyst Keith Horowitz takes the booby prize for reiterating a "buy" rating on Bank of America shares this morning. Timing is not one of Mr. Horowitz's strong points, it would appear.
On top of all this, the FOMC of the Federal Reserve will issue a policy statement Tuesday at 2:00 pm EDT, followed by a news conference from Chairman Ben Bernanke. That alone should equate to another 300-point decline in the Dow.
For those with a morbid curiosity, check out the slideshow of the 10 worst days on the Dow, already outdated, as August 8, 2011, will go down in the history books as the 6th worst day for the blue chip index of all time.
Henry Blodgett and Aaron Task have a nice summation of the situation in the video below:
Over the weekend, much was made of the downgrade, as the Obama hit the airwaves with gusto, rebuking the call from the ratings agency. Fitch and Moody's had previously reaffirmed the US debt as AAA, the highest possible sovereign bond rating, but S&P would not back down, and the downgrade remained in effect.
What S&P reasoned was that the US government did not take the necessary steps - in its theatrical production of waiting until the last possible moment to pass a debt ceiling increase - to address the structural problems facing it. S&P rightly concluded that US debt levels were and continue to rise and discretionary spending levels have not been controlled. Therefore, they downgraded the nation's debt and threaten to do it a second time, sometime around November, if the 12-member congressional committee charged with dealing with long term debt does not come up with actionable, concrete, debt reduction proposals.
As markets opened on Monday, the effects of a global panic were evident, especially on the heels of a 10% decline in US indices over the past two weeks and Thursday's dramatic sell-off of over four per cent on major markets.
First, it was the Asian markets which tanked at their various openings and continued through the day to sell off anywhere from 1.5 to 4.0%. Next up was Europe, where the crisis over bailing out Italy and Spain have reached a point of no return. EU officials stressed that they would be in the market with the ECB, buying up italian and Spanish debt, but that did little to change the outlook of investors, which had turned sour over the past fortnight.
Appetite for risk was at a low, as European markets suffered steep losses. England's FTSE was the best of the lot, down only 2.62%. France's CAC-40 took a 4.68% loss and Germany's DAX shed 5.02%. Other Euro-zone markets fell between 3.76 and 6.11%.
By the time US markets were to open, index futures had been hammered down to presage an inauspicious opening. Within minutes of the bell, the Dow was down more than 200 points, the S&P had taken a 25-point hit and the NASDAQ fell more than 70 points, though those declines were nothing compared to the carnage that lay ahead.
By the end of the day, after a minor rally in the first 15 minutes of the final hour, stocks were trading at or near their lows, with the Dow Jones Industrials surrendering the 6th-worst performance in its history. While the Dow suffered a 5.5% decline on the day, the other indices were actually much worse, with the NYSE Composite topping them all, coming home with a 7.05% loss.
It wasn't just the debt downgrade that spurred the sell-off. Conditions in Europe have worsened significantly over the past few months, to the point that European Union officials are without reasonable solutions to the debt contagion spreading across the region. While the ECB has managed to prop up smaller countries like Greece, Portugal and Ireland, Italy especially poses a much larger concern.
All the European leaders could muster on Monday was a terse statement which offered no concrete proposals but plenty of assurances, which was be roundly written off by markets. To wit:
We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growthThat was the extent of the communique from the magnificent seven of the United States, Canada, Great Britain, France, Germany, Italy and Japan.
The irony is that one of them, Italy, has been the source of the most recent anguish.
Essentially, the funds available to the ECB fall short of meeting the debt purchases needed to save Italy and Spain. Europe will have to engage in quantitative easing, as was the case in the United States over the past two years, to stave off defaults and the threat of a cascading crisis which would envelop all of Europe and likely doom the 11-year-old Euro currency.
If the EU decides upon cheapening the currency - which it almost certainly will do - theknock-on effect will be to sink the Euro, probably close to parity with the US Dollar. As the dollar would grow in strength, commodities, particularly oil and gas for auto use, would plummet, a boon to US drivers and to the general economy. Costs of imports would also decline, on a relative basis, giving American consumers more purchasing power.
Within the same scenario, however, are pitfalls for the global manufacturers and companies that populate the S&P 500, NASDAQ and the Dow. A stronger US Dollar would make them less competitive in foreign markets, shrinking margins and thus, profits. Thus, the great selling rush today was more of a statement on the global condition rather than that of the debt downgrade, which, when all is said and done, won't amount to a hill of beans. In fact, treasuries were up sharply today, as yields fell to their lowest levels in over a year.
The benchmark 10-year note fell 25 basis points in just one day, from 2.56% on Friday to 2.31% on Monday. The 30-year bond fell 19 basis points, to 3.65% as the yield curve continues to flatten. Money is going out of stocks and into bonds, and whether they're AAA or AA+ doesn't matter to those seeking a safe haven. The ridiculously low yields offered are a moot point. As one trader put it, "Investors aren't looking at making money; they're more concerned with getting their money back."
And, therein, the next crisis, in bonds, especially if the US government doesn't get its house in order soon. Higher rates and another downgrade could trigger a default of impossible proportions as the US would be unable to roll over its debt and fund itself without incurring higher borrowing costs. Ditto for Europe. Rising interest rates signals the end game for fiat currencies globally and back to some form of honest money, most likely on a gold standard.
The market events of the past few days, in which the major indices lost more than 10% are not the end of the crisis, but rather the beginning of the end of a great generational bear market that began in 2007 and will eviscerate all risk assets until nobody wants to hold anything any more.
Markets have entered the final stages of the third leg down. QE 1 and 2 staved off the collapse, but there will be no bailouts this time around. It's every man, woman, child and company for itself. There will be some winners, but mostly there will be losers, anguish, agony and the disappearance of great hordes of wealth.
Dow 10,809.85, -634.76 (5.55%)
NASDAQ 2,357.69, -174.72 (6.90%)
S&P 500 1,119.46, -79.92 (6.66%)
NYSE Composite 6,895.97, -523.10 (7.05%)
The internals were equally as stunning as the headline numbers. Declining issues decimated advancers, 6553-375, a ratio of 17.5:1. It was truly one of the deepest, broadest declines in stock market history. On the NASDAQ, there were four (4) new highs next to 725 new lows. The NYSE had just three (3) new highs, but 1292 stocks making new 52-week lows. The combined total of seven (7) new highs and 2017 new lows rivals or exceeds the figures presented during the fallout of 2008-2009.
Volume was at the highest levels of the year, exceeding that of last Thursday, which was then the high volume day of the year. Investors aren't just scared, they are trampling each other running through the exits at breakneck speed.
NASDAQ Volume 4,002,857,250
NYSE Volume 11,046,384,000
Crude oil futures were pounded again, as the front-month contract on WTI crude fell $5.57, to $81.31. Gas prices will soon fall below $3.50 - and possibly below $3.00 - a gallon as current supplies are depleted and replaced by less expensive distillates. According to AAA, the average price of gas in the US is now $3.66 per gallon, but the deep declines have not yet been factored into the equation. That will happen over the next two to three weeks.
Gold was the big winner of the day, soaring $61.30, to $1,713.20, another all-time record price as investors, companies, nations, central banks and housewives scrambled to find reliable assets. Silver, still constrained by high margin requirements, gained $1.17, to $39.38. Silver is almost certainly the most under-appreciated asset in the world, though that will soon change. As the crisis escalates and governments make more and more bad moves, the precious metals will skyrocket to unforeseen heights.
The banking sector took it on the chin, but none more than Bank of America (BAC) which is on the verge of a well-deserved bankruptcy. shares of the nation's largest banks fell 20% on the day, losing 1.66, to close at 6.51. Just a few weeks ago, BofA was trading at a price nearly double that. The unfolding mortgage crisis, brought about by Bank of America's 2008 purchase of Countrywide, has become a fatal blow to the once proud institution.
David Tepper's Appaloosa Management Fund has reportedly sold its stake in Bank of America (BAC) and Wells Fargo (WFC), while significantly trimming Citigroup (C) from the portfolio.
Adding to the irony, AIG has sued Bank of America for $10 billion, citing "massive fraud" in its representations of mortgage-backed securities (MBS).
However, Citigroup analyst Keith Horowitz takes the booby prize for reiterating a "buy" rating on Bank of America shares this morning. Timing is not one of Mr. Horowitz's strong points, it would appear.
On top of all this, the FOMC of the Federal Reserve will issue a policy statement Tuesday at 2:00 pm EDT, followed by a news conference from Chairman Ben Bernanke. That alone should equate to another 300-point decline in the Dow.
For those with a morbid curiosity, check out the slideshow of the 10 worst days on the Dow, already outdated, as August 8, 2011, will go down in the history books as the 6th worst day for the blue chip index of all time.
Henry Blodgett and Aaron Task have a nice summation of the situation in the video below:
Tuesday, July 12, 2011
No Rest for the Wicked; Stocks Fall Again
Conditions in Europe have not really changed much since yesterday's news of a crisis in Italy's continuing funding, except that Greece - before even receiving all of its most recent bailout money - already has put out its hand for more.
The word for the deepening debt crisis in Europe most-bantered about these days is contagion, the likelihood that issues of underfunding and failing to meet obligations by sovereign governments will spread. Here's a tip: contagion is already in effect. A few years ago Iceland defaulted on debt, refused to take austerity and cash from the IMF and is well on its way to a newfound prosperity without the rigors of international finance and fractional reserve banking.
However, on the continent, Ireland, Greece, and now Italy are suffering strains of the same disease - that of over-promising (mostly on government employee pensions and benefits) and failing to pull in enough revenue in taxes, fees and levies to pay out promptly and graciously. Portugal and Spain are not far behind, and the tiny nation of Belarus has already defaulted and devalued its currency. Belgium is also a basket case.
Contagion is here and its happening now.
What this really means is two things: 1) The European Union is in its death throes after just 11 years of existence, and, 2) Many of the largest banks in Europe are nearing the end of their government-supplied rope and will hang.
And maybe there's a third link to the disaster that is modern Europe: people will cheat, steal, riot, and eventually revolt. Forget collecting taxes. Government officials will be happy if they escape with the clothes on their backs and a few thousand Euros to see them safely out of their respective countries. Whether or not the contagion has enough virulence to travel across the Atlantic Ocean and infect the United States is a matter for politicians and their media lackeys, because the United States is the world's largest debtor with a total debt (on the books, not including the unfunded liabilities of Social Security, Medicade and Medicare) well beyond its annual GDP, making the United States the worst of all nations with a debt-to-GDP ration of over 100%.
Not only is the USA a basket case gone full retard, the debt is growing larger every day, and every day the Obama administration and the congress dithers over raising the debt ceiling (they all agree that the US cannot default), the situation worsens. We are in the midst of the most enthralling and frightening economic condition of all time. Many, many grave errors have occured over the past thirty years, not the least of which was the hollowing out of our industrial base which provided good jobs for millions of Americans. Those jobs went to Mexico and then to Southeast Asia and China. They are gone, many for good, and there is no way to bring them back soon.
It brings up an interesting proposition, supposing that the mindless cretins we call our "leaders" in Washington haggle and argue right up to the August 2nd deadline. Who gets stiffed in the case of a default? Would the US actually stop paying its military? Social Security recipients? Food stamp mouth-breathers? How about China?
There are no good answers, only bad and horrible conclusions. The answer is China. Stiff the Chinese on their $1.8 billion or so in bond holdings and go to war, as war solves all problems in a way. Both countries get decimated in a protracted struggle or blow each other and the rest of the Northern Hemisphere away in a nuclear holocaust. The first way is slow, painful and regrettable. The second is quick and completely devastating, and since neither side would likely opt for MAD (mutually assured destruction), the first choice is rather obvious.
Will it happen? Hopefully not. And there's the very good chance that the politicians, controlled by the banking and industrialist interests, would opt on stiffing seniors. What the heck, they're old and going to die soon anyway, why not just accelerate the process. And wipe out the food stamp class as well. They contribute nothing, so starve them to death. Nice scenarios, no?
Whatever happens over the next few weeks, nothing is really going to be solved. Even if the government officials decide on a compromise of $3 trillion in budget cuts over ten years, the annual deficit will probably be close to a trillion dollars each and every year. They're only cutting $300 billion a year out of the budget. It's kind of like using a sponge to empty a bucket. It works, but not very well. By 2022, the national debt will have grown to over $24 trillion, and that's if they work out a compromise that cuts some of the deficit and tax revenues remain steady for the next ten years, two possibilities that are not very good bets.
In other words, you, me, your kids, their friends, your neighbors and their neighbors are royally screwed unless we begin taking off the rose-colored shades and rid ourselves of the infliction known as normalcy bias pretty soon. Normal is going away. Austerity, poverty and desperation will become rampant, as they're already spreading across the land and are in place in Europe.
Not to sound like the whack-job on the street corner, shouting, "prepare or die," it is time to hunker down and get serious about the issues plaguing the globe, most of which start and end at your local bank branch, which is probably a Chase, Bank of America or Wells Fargo. They're the problem, have been the problem and will continue to be the problem until they are forced to meet their realities and be broken up, though that will not happen. We're beyond that, and, with the politicians thinking more about elections in 2012 rather than whether or not there will be a nation and an engaged electorate at that time, the chances of complete systemic breakdown are greater than they were in 2008, when the unthinkable almost happened. This time, there will be no bailout, because it will be the government going under.
Whether that's a good thing or not will be for historians to judge, but one thing's for certain: we cannot continue along this path much further without some kind of catastrophe. It's coming faster than anyone can imagine.
As for the markets, the major indices bounced along the flat line for most of the session, with the NASDAQ (where the highest risk stocks reside) taking the worst of it. There was a slight bounce after the Fed released the minutes from the last FOMC meeting, in which it was revealed that the Fed governors were torn between more stimulus and raising rates. There cannot be a greater divide of opinion, which, at such a critical time, is a very, very bad omen and portends more mistakes by the Fed straight ahead.
That bounce lasted only a few minutes as stocks fell to their worst levels of the day into the close. It was truly ugly and sets up some very dicey trading for the remainder of the week. Even as earnings are rolling out from a variety of companies, interpreting economic data is going to be a challenge. PPI is out on Thursday along with initial unemployment claims, and Friday, a veritable stew of data comes forth: CPI, Industrial Production, Capacity Utilization, the Empire Index for NY state and the Michigan gauge of consumer sentiment. Things could get very messy down on the trading floors. Good time to stock up on tissues and handkerchiefs because there's likely to be a bit of sweating and some crying before the week is out.
Dow 12,446.88, -58.88 (0.47%)
NASDAQ 2,781.91, -20.71 (0.74%)
S&P 500 1,313.64, -5.85 (0.44%)
NYSE Composite 8,192.75, -35.98 (0.44%)
Declining issues outpaced advancers, 3806-2726. There were 56 new highs and 37 new lows on the NASDAQ. The NYSE showed 46 new highs and 37 new lows. Combined, there were 102 new highs and 74 new lows. Not much margin for error as the tide seems to be turning very bearish, very quickly. Today's volume was a bit perky, with much of it occurring in the final two hours' rush for the exits, another disturbing sign.
NASDAQ Volume 2,028,997,125
NYSE Volume 4,215,946,500
For those of us who drive combustion engine vehicles, another knife in the back from our friendly oil producers, who drove the price of WTI crude up another $2.28, to $97.43. Gold, however, made a new all-time high at $1,562.30, gaining $16.20 on the day. Silver added 35 cents to $36.10.
With gold and silver rising, stocks falling, and, by the way, the 10-year note down to a yield of 2.87% - from 3.12% a week ago - all signs point to a very rough patch dead ahead. The flattening of the yield curve is happening at an unprecedentedly rapid pace. The clowns in Washington better come to a deal soon, like tomorrow, because financial armageddon awaits. The same goes for the millionaire players and billionaire owners of the NFL. People are tired of gamesmanship and waiting.
Now is the time for decisive action.
The word for the deepening debt crisis in Europe most-bantered about these days is contagion, the likelihood that issues of underfunding and failing to meet obligations by sovereign governments will spread. Here's a tip: contagion is already in effect. A few years ago Iceland defaulted on debt, refused to take austerity and cash from the IMF and is well on its way to a newfound prosperity without the rigors of international finance and fractional reserve banking.
However, on the continent, Ireland, Greece, and now Italy are suffering strains of the same disease - that of over-promising (mostly on government employee pensions and benefits) and failing to pull in enough revenue in taxes, fees and levies to pay out promptly and graciously. Portugal and Spain are not far behind, and the tiny nation of Belarus has already defaulted and devalued its currency. Belgium is also a basket case.
Contagion is here and its happening now.
What this really means is two things: 1) The European Union is in its death throes after just 11 years of existence, and, 2) Many of the largest banks in Europe are nearing the end of their government-supplied rope and will hang.
And maybe there's a third link to the disaster that is modern Europe: people will cheat, steal, riot, and eventually revolt. Forget collecting taxes. Government officials will be happy if they escape with the clothes on their backs and a few thousand Euros to see them safely out of their respective countries. Whether or not the contagion has enough virulence to travel across the Atlantic Ocean and infect the United States is a matter for politicians and their media lackeys, because the United States is the world's largest debtor with a total debt (on the books, not including the unfunded liabilities of Social Security, Medicade and Medicare) well beyond its annual GDP, making the United States the worst of all nations with a debt-to-GDP ration of over 100%.
Not only is the USA a basket case gone full retard, the debt is growing larger every day, and every day the Obama administration and the congress dithers over raising the debt ceiling (they all agree that the US cannot default), the situation worsens. We are in the midst of the most enthralling and frightening economic condition of all time. Many, many grave errors have occured over the past thirty years, not the least of which was the hollowing out of our industrial base which provided good jobs for millions of Americans. Those jobs went to Mexico and then to Southeast Asia and China. They are gone, many for good, and there is no way to bring them back soon.
It brings up an interesting proposition, supposing that the mindless cretins we call our "leaders" in Washington haggle and argue right up to the August 2nd deadline. Who gets stiffed in the case of a default? Would the US actually stop paying its military? Social Security recipients? Food stamp mouth-breathers? How about China?
There are no good answers, only bad and horrible conclusions. The answer is China. Stiff the Chinese on their $1.8 billion or so in bond holdings and go to war, as war solves all problems in a way. Both countries get decimated in a protracted struggle or blow each other and the rest of the Northern Hemisphere away in a nuclear holocaust. The first way is slow, painful and regrettable. The second is quick and completely devastating, and since neither side would likely opt for MAD (mutually assured destruction), the first choice is rather obvious.
Will it happen? Hopefully not. And there's the very good chance that the politicians, controlled by the banking and industrialist interests, would opt on stiffing seniors. What the heck, they're old and going to die soon anyway, why not just accelerate the process. And wipe out the food stamp class as well. They contribute nothing, so starve them to death. Nice scenarios, no?
Whatever happens over the next few weeks, nothing is really going to be solved. Even if the government officials decide on a compromise of $3 trillion in budget cuts over ten years, the annual deficit will probably be close to a trillion dollars each and every year. They're only cutting $300 billion a year out of the budget. It's kind of like using a sponge to empty a bucket. It works, but not very well. By 2022, the national debt will have grown to over $24 trillion, and that's if they work out a compromise that cuts some of the deficit and tax revenues remain steady for the next ten years, two possibilities that are not very good bets.
In other words, you, me, your kids, their friends, your neighbors and their neighbors are royally screwed unless we begin taking off the rose-colored shades and rid ourselves of the infliction known as normalcy bias pretty soon. Normal is going away. Austerity, poverty and desperation will become rampant, as they're already spreading across the land and are in place in Europe.
Not to sound like the whack-job on the street corner, shouting, "prepare or die," it is time to hunker down and get serious about the issues plaguing the globe, most of which start and end at your local bank branch, which is probably a Chase, Bank of America or Wells Fargo. They're the problem, have been the problem and will continue to be the problem until they are forced to meet their realities and be broken up, though that will not happen. We're beyond that, and, with the politicians thinking more about elections in 2012 rather than whether or not there will be a nation and an engaged electorate at that time, the chances of complete systemic breakdown are greater than they were in 2008, when the unthinkable almost happened. This time, there will be no bailout, because it will be the government going under.
Whether that's a good thing or not will be for historians to judge, but one thing's for certain: we cannot continue along this path much further without some kind of catastrophe. It's coming faster than anyone can imagine.
As for the markets, the major indices bounced along the flat line for most of the session, with the NASDAQ (where the highest risk stocks reside) taking the worst of it. There was a slight bounce after the Fed released the minutes from the last FOMC meeting, in which it was revealed that the Fed governors were torn between more stimulus and raising rates. There cannot be a greater divide of opinion, which, at such a critical time, is a very, very bad omen and portends more mistakes by the Fed straight ahead.
That bounce lasted only a few minutes as stocks fell to their worst levels of the day into the close. It was truly ugly and sets up some very dicey trading for the remainder of the week. Even as earnings are rolling out from a variety of companies, interpreting economic data is going to be a challenge. PPI is out on Thursday along with initial unemployment claims, and Friday, a veritable stew of data comes forth: CPI, Industrial Production, Capacity Utilization, the Empire Index for NY state and the Michigan gauge of consumer sentiment. Things could get very messy down on the trading floors. Good time to stock up on tissues and handkerchiefs because there's likely to be a bit of sweating and some crying before the week is out.
Dow 12,446.88, -58.88 (0.47%)
NASDAQ 2,781.91, -20.71 (0.74%)
S&P 500 1,313.64, -5.85 (0.44%)
NYSE Composite 8,192.75, -35.98 (0.44%)
Declining issues outpaced advancers, 3806-2726. There were 56 new highs and 37 new lows on the NASDAQ. The NYSE showed 46 new highs and 37 new lows. Combined, there were 102 new highs and 74 new lows. Not much margin for error as the tide seems to be turning very bearish, very quickly. Today's volume was a bit perky, with much of it occurring in the final two hours' rush for the exits, another disturbing sign.
NASDAQ Volume 2,028,997,125
NYSE Volume 4,215,946,500
For those of us who drive combustion engine vehicles, another knife in the back from our friendly oil producers, who drove the price of WTI crude up another $2.28, to $97.43. Gold, however, made a new all-time high at $1,562.30, gaining $16.20 on the day. Silver added 35 cents to $36.10.
With gold and silver rising, stocks falling, and, by the way, the 10-year note down to a yield of 2.87% - from 3.12% a week ago - all signs point to a very rough patch dead ahead. The flattening of the yield curve is happening at an unprecedentedly rapid pace. The clowns in Washington better come to a deal soon, like tomorrow, because financial armageddon awaits. The same goes for the millionaire players and billionaire owners of the NFL. People are tired of gamesmanship and waiting.
Now is the time for decisive action.
Monday, July 11, 2011
Problems Abound: Jobs, Italy, Greece; Stocks in Retreat
Quoting from Friday's post: "Monday may, in fact, turn into a real blood-bath."
Well, it may not have been real blood, and it was more of a dousing rather than a bath, but stocks got hit pretty hard on Monday, following the less-than-impressive sell-off after the dismal non-farm payroll report which ended last week's rally in rather abrupt fashion.
The poor start to the new week was blamed - according to most pundits and exclamatory TV barkers - almost entirely on debt issues related to Italy, though there are more issues and problems popping up every day. The scapegoat Italians seem to be having the same problem most Western nations are: too much debt and not enough revenue.
What has the EU concerned is the not the size of the bailout which might be needed to shore up Italy's evolving debt crisis, it is the size of Italy's economy, the third largest in the European Union. Halping out smaller countries like Greece or Ireland are mere child's play by comparison. Italy is a nation of 60 million people, or, about 1/5th the size of the United States. That's a big problem, akin to having Texas, New Mexico, Arizona, Colorado, Wyoming and Louisiana all threaten to default on public debt at once.
The absolute fact of the matter is that the EU simply cannot go about printing up more Euros to bail out nation after nation. Sooner or later, the currency will become worthless and the nascent "grand experiment" of a unified Europe will fall completely apart. Already, there are signs of trouble in Germany, which has been acting - along with the US Federal Reserve - as the main funding source for bailout money, but in the end the major European banks will become victims of their own Ponzi scheme.
You see, money really doesn't grow on trees and just whipping it up out of thin air makes for instability and eventual anarchy. This is the situation in which we all are headed, and in a hurry. Would the financiers of the leading nations have confessed to their sins during the Lehman debacle in 2008, much of this would not be occurring, but, being the type of people who are prone to lie and cover up crimes and major blunders, world leaders would rather play this silly game of bailout rather than face the music (and jail time or guillotines).
Eventually, it's all going to implode into a global depression, rivaling or exceeding the pain and suffering of the 1930s. By some accounts, parts of the world, such as the Middle East, the Horn of Africa, certain counties in Georgia and Florida, along with Greece and Ireland, are already in a deep, never-ending depression. All that's keeping the rest of the world from falling apart is the non-stop printing of US dollars and the helping hand of uncle Ben Bernanke at the Fed.
While there are those who believe we in America will suffer a bout of hyper-inflation a la the Weimar Republic, the fact remains that wage growth is stagnant, money supply is insufficient to handle all claims in a mass default and the other income-producing part of the great capitalist triangle (money, labor, materials), that being materials, are still rather abundant.
We should all be preparing for the "great reset" in which everything becomes worth less than it was the day before, except maybe food, for that is the only requisite commodity essential to sustaining human life. One hates to be the messenger for bad news, but starvation and death may indeed become preferable, for some, to living under the thumb of a global police state in a condition of abject poverty. It's coming, and, as today's evidence and that of the past three years can attest, it's gaining momentum.
Incidentally, only eight stocks in the S&P 500 were winners today, and all 30 Dow components finished on the downside. Financials led the way, with Bank of America (BAC) and Morgan Stanley (MS) hitting new 52-week closing lows.
Here are the sad facts from fat-cat Wall Street:
Dow 12,505.76, -151.44 (1.20%)
NASDAQ 2,802.62, -57.19 (2.00%)
S&P 500 1,319.49, -24.31 (1.81%)
NYSE Composite 8,228.73, -181.46 (2.16%)
Losing issues trampled gainers, 5494-1122, the largest margin of losers to winners in quite some time, probably not since 2008. On the NASDAQ, there were, hard to believe, 49 new highs and 32 new lows. On the NYSE, a little closer to reality, 34 new highs and 30 new lows. The combined total of 83 new highs and 66 new lows masks the fact that many of the new highs were nothing but bear funds, inverse, triple leveraged ETFs and other derivative products. Even looking through the listings of new highs on the NYSE shows most stocks finishing well below their stated 52-week high. Surely, we can trust the Rupert Muchdoch-owned Wall Street Journal to not fudge statistics, right?
Volume was pretty weak, even for a massive down day, though this low level of trading has by now morphed into a new normal, so lower and lower volume figures should not be cause for alarm as market participants exit or are destroyed.
NASDAQ Volume 1,778,419,250
NYSE Volume 3,843,530,000
WTI crude oil traded down again, losing $1.05, to $95.15. Gold gained $7.60, to $1,549.20, close to an all-time high, though silver was punished once more for attempting to be regarded as money, dipping 85 cents, to $35.70 per ounce.
Not all the news was bad... well, yes it was, as Alcoa (AA) reported after the bell that it missed LOWERED estimates by a penny, at 32 cents per share as opposed to the consensus of 33 cents. Share were lower all day, preceding the after-hours announcement and continued to slide.
That is not a good way to kick off 2nd quarter earnings season.
Well, it may not have been real blood, and it was more of a dousing rather than a bath, but stocks got hit pretty hard on Monday, following the less-than-impressive sell-off after the dismal non-farm payroll report which ended last week's rally in rather abrupt fashion.
The poor start to the new week was blamed - according to most pundits and exclamatory TV barkers - almost entirely on debt issues related to Italy, though there are more issues and problems popping up every day. The scapegoat Italians seem to be having the same problem most Western nations are: too much debt and not enough revenue.
What has the EU concerned is the not the size of the bailout which might be needed to shore up Italy's evolving debt crisis, it is the size of Italy's economy, the third largest in the European Union. Halping out smaller countries like Greece or Ireland are mere child's play by comparison. Italy is a nation of 60 million people, or, about 1/5th the size of the United States. That's a big problem, akin to having Texas, New Mexico, Arizona, Colorado, Wyoming and Louisiana all threaten to default on public debt at once.
The absolute fact of the matter is that the EU simply cannot go about printing up more Euros to bail out nation after nation. Sooner or later, the currency will become worthless and the nascent "grand experiment" of a unified Europe will fall completely apart. Already, there are signs of trouble in Germany, which has been acting - along with the US Federal Reserve - as the main funding source for bailout money, but in the end the major European banks will become victims of their own Ponzi scheme.
You see, money really doesn't grow on trees and just whipping it up out of thin air makes for instability and eventual anarchy. This is the situation in which we all are headed, and in a hurry. Would the financiers of the leading nations have confessed to their sins during the Lehman debacle in 2008, much of this would not be occurring, but, being the type of people who are prone to lie and cover up crimes and major blunders, world leaders would rather play this silly game of bailout rather than face the music (and jail time or guillotines).
Eventually, it's all going to implode into a global depression, rivaling or exceeding the pain and suffering of the 1930s. By some accounts, parts of the world, such as the Middle East, the Horn of Africa, certain counties in Georgia and Florida, along with Greece and Ireland, are already in a deep, never-ending depression. All that's keeping the rest of the world from falling apart is the non-stop printing of US dollars and the helping hand of uncle Ben Bernanke at the Fed.
While there are those who believe we in America will suffer a bout of hyper-inflation a la the Weimar Republic, the fact remains that wage growth is stagnant, money supply is insufficient to handle all claims in a mass default and the other income-producing part of the great capitalist triangle (money, labor, materials), that being materials, are still rather abundant.
We should all be preparing for the "great reset" in which everything becomes worth less than it was the day before, except maybe food, for that is the only requisite commodity essential to sustaining human life. One hates to be the messenger for bad news, but starvation and death may indeed become preferable, for some, to living under the thumb of a global police state in a condition of abject poverty. It's coming, and, as today's evidence and that of the past three years can attest, it's gaining momentum.
Incidentally, only eight stocks in the S&P 500 were winners today, and all 30 Dow components finished on the downside. Financials led the way, with Bank of America (BAC) and Morgan Stanley (MS) hitting new 52-week closing lows.
Here are the sad facts from fat-cat Wall Street:
Dow 12,505.76, -151.44 (1.20%)
NASDAQ 2,802.62, -57.19 (2.00%)
S&P 500 1,319.49, -24.31 (1.81%)
NYSE Composite 8,228.73, -181.46 (2.16%)
Losing issues trampled gainers, 5494-1122, the largest margin of losers to winners in quite some time, probably not since 2008. On the NASDAQ, there were, hard to believe, 49 new highs and 32 new lows. On the NYSE, a little closer to reality, 34 new highs and 30 new lows. The combined total of 83 new highs and 66 new lows masks the fact that many of the new highs were nothing but bear funds, inverse, triple leveraged ETFs and other derivative products. Even looking through the listings of new highs on the NYSE shows most stocks finishing well below their stated 52-week high. Surely, we can trust the Rupert Muchdoch-owned Wall Street Journal to not fudge statistics, right?
Volume was pretty weak, even for a massive down day, though this low level of trading has by now morphed into a new normal, so lower and lower volume figures should not be cause for alarm as market participants exit or are destroyed.
NASDAQ Volume 1,778,419,250
NYSE Volume 3,843,530,000
WTI crude oil traded down again, losing $1.05, to $95.15. Gold gained $7.60, to $1,549.20, close to an all-time high, though silver was punished once more for attempting to be regarded as money, dipping 85 cents, to $35.70 per ounce.
Not all the news was bad... well, yes it was, as Alcoa (AA) reported after the bell that it missed LOWERED estimates by a penny, at 32 cents per share as opposed to the consensus of 33 cents. Share were lower all day, preceding the after-hours announcement and continued to slide.
That is not a good way to kick off 2nd quarter earnings season.
Wednesday, June 29, 2011
Greece Passes Austerity; Next Up: US Debt Limit
While there was little doubt that the Greek parliament would "do the right thing" and pass the 5-year austerity package in order to secure another $17 billion in their continuing slavish relationship with the IMF, ECB and EU, the results on the streets of Athens suggest that the plan may not be to the liking of the average Greek, if there is such a creature.
Imagine this happening in the United States. A consortium of banks hold the US government hostage, saying, in effect, "do this, or we cut off your allowance." The this being the layoff of thousands of government employees, wage cuts for others, a 10% tax increase and the selling off (privatization) of state assets, one wonders how the Greek populace will like living in abject poverty for the remainder of their lives. In America, one need not wonder. It would most likely pass, but the popular fury and anger would be ferocious.
So it is in Greece, where protesters hailed rocks and stocks at police throughout the day and police returned with salvos of tear gas. There was a great deal of looting and confrontation with the police, but few arrests. It seems the Greek police, some of whom will be paid less in a few weeks than they are now, or may not have jobs at all, have a bit of a heart for their countrymen and women.
Essentially, along with the 10% tax increase, services will be cut by about 25%, along with available government positions and wages. $50 in Greek assets will be privatized, begging the question of just what the Parthenon may be worth to some European oligarch-trash who wish to add it to their art collection.
The measure passed with a vote of 155-138, with some abstentions, since the Greek parliament is comprised of 300 members. But one has to wonder just how long it will last before the money-starved Greeks begin to turn on the government again and again, seeing the bailout as nothing more than another stalling tactic for a bankrupt nation and largesse for the elitist bankers.
Stocks and commodities both were buoyed by the passage, as the globalists averted another crisis in the flawed and corrupt fiat money system. So, the result, higher prices for everything, except, of course, wages.
The next chink in the armor to be fixed would be the US insolvency issue, that of raising the debt debt ceiling so the world's largest net creditor can continue to borrow and spend until the elections of 2012, at least. The deadline of August 2nd approaches with all due haste, though both houses of congress will not be convened at the same time, if they keep to their schedules.
The House was already in recess this week and will be until July 5th, though the senate recess - scheduled for July 4-10, is in doubt, with Democrats seeking to cancel it, and Republicans all too willing to stay in Pro Forma session, fearing recess appointments by the President.
With any luck, the tow houses of financial horror could actually do some deal-making between the 10t of July and the August 2 deadline, and that would be almost a surety, as both houses will recess on August 8 and not return until September 5, after Labor Day and well beyond the statutory constraints of passing a new debt ceiling.
Just like in Greece, however, it's expected that the senate and the president will approve some kind of deal at the last moment, ensuring maximum discomfort and anxiety for the good people of America. Of course, any talk of a balanced budget amendment, currently being espoused by various Republicans, should be recognized immediately as a complete sham, though there is some hope that some semblance of spending restraint may be written into any new bill. The long money is on the government beating the deadline by days and getting back to doing what they do best, spending money they don't have.
Dow 12,261.42, +72.73 (0.60%)
NASDAQ 2,740.49, +11.18 (0.41%)
S&P 500 1,307.41, +10.74 (0.83%)
NYSE Composite 8,228.50, +92.52 (1.14%)
Gainers beat losers by a solid margin, 4185-2361. On the NASDAQ, new highs were better than new lows by a 100-29 margin, while on the NYSE, the new highs outnumbered new lows, 81-14. The combined total of 181 new highs to 43 new lows suggests that we're back to "risk on" for the foreseeable future, though, being summer, a sideways trend always has great potential. Volume was light, but not actually awful.
NASDAQ Volume 1,816,885,000
NYSE Volume 4,316,723,500
WTI crude futures rose remarkably again, up $1.88, to $94.77, along with gasoline, which has been rocketing of late. The most recent price gouges have not shown up at the punp yet, though they surely will by the weekend. AAA reports that the average price of a gallon of unleaded regular is $3.54, with higher price in the more populous states of the Northeast and West coast.
Gold got a little nibble of a bid, rising $9.10, to $1511.20. Silver spiked 92 cents, to $34.86.
Tomorrow morning initial unemployment claims numbers may do damage to the current three-day rally in stocks, though a positive report could produce more cries of "soft patch" and a continuation of the "risk on" trade.
Imagine this happening in the United States. A consortium of banks hold the US government hostage, saying, in effect, "do this, or we cut off your allowance." The this being the layoff of thousands of government employees, wage cuts for others, a 10% tax increase and the selling off (privatization) of state assets, one wonders how the Greek populace will like living in abject poverty for the remainder of their lives. In America, one need not wonder. It would most likely pass, but the popular fury and anger would be ferocious.
So it is in Greece, where protesters hailed rocks and stocks at police throughout the day and police returned with salvos of tear gas. There was a great deal of looting and confrontation with the police, but few arrests. It seems the Greek police, some of whom will be paid less in a few weeks than they are now, or may not have jobs at all, have a bit of a heart for their countrymen and women.
Essentially, along with the 10% tax increase, services will be cut by about 25%, along with available government positions and wages. $50 in Greek assets will be privatized, begging the question of just what the Parthenon may be worth to some European oligarch-trash who wish to add it to their art collection.
The measure passed with a vote of 155-138, with some abstentions, since the Greek parliament is comprised of 300 members. But one has to wonder just how long it will last before the money-starved Greeks begin to turn on the government again and again, seeing the bailout as nothing more than another stalling tactic for a bankrupt nation and largesse for the elitist bankers.
Stocks and commodities both were buoyed by the passage, as the globalists averted another crisis in the flawed and corrupt fiat money system. So, the result, higher prices for everything, except, of course, wages.
The next chink in the armor to be fixed would be the US insolvency issue, that of raising the debt debt ceiling so the world's largest net creditor can continue to borrow and spend until the elections of 2012, at least. The deadline of August 2nd approaches with all due haste, though both houses of congress will not be convened at the same time, if they keep to their schedules.
The House was already in recess this week and will be until July 5th, though the senate recess - scheduled for July 4-10, is in doubt, with Democrats seeking to cancel it, and Republicans all too willing to stay in Pro Forma session, fearing recess appointments by the President.
With any luck, the tow houses of financial horror could actually do some deal-making between the 10t of July and the August 2 deadline, and that would be almost a surety, as both houses will recess on August 8 and not return until September 5, after Labor Day and well beyond the statutory constraints of passing a new debt ceiling.
Just like in Greece, however, it's expected that the senate and the president will approve some kind of deal at the last moment, ensuring maximum discomfort and anxiety for the good people of America. Of course, any talk of a balanced budget amendment, currently being espoused by various Republicans, should be recognized immediately as a complete sham, though there is some hope that some semblance of spending restraint may be written into any new bill. The long money is on the government beating the deadline by days and getting back to doing what they do best, spending money they don't have.
Dow 12,261.42, +72.73 (0.60%)
NASDAQ 2,740.49, +11.18 (0.41%)
S&P 500 1,307.41, +10.74 (0.83%)
NYSE Composite 8,228.50, +92.52 (1.14%)
Gainers beat losers by a solid margin, 4185-2361. On the NASDAQ, new highs were better than new lows by a 100-29 margin, while on the NYSE, the new highs outnumbered new lows, 81-14. The combined total of 181 new highs to 43 new lows suggests that we're back to "risk on" for the foreseeable future, though, being summer, a sideways trend always has great potential. Volume was light, but not actually awful.
NASDAQ Volume 1,816,885,000
NYSE Volume 4,316,723,500
WTI crude futures rose remarkably again, up $1.88, to $94.77, along with gasoline, which has been rocketing of late. The most recent price gouges have not shown up at the punp yet, though they surely will by the weekend. AAA reports that the average price of a gallon of unleaded regular is $3.54, with higher price in the more populous states of the Northeast and West coast.
Gold got a little nibble of a bid, rising $9.10, to $1511.20. Silver spiked 92 cents, to $34.86.
Tomorrow morning initial unemployment claims numbers may do damage to the current three-day rally in stocks, though a positive report could produce more cries of "soft patch" and a continuation of the "risk on" trade.
Tuesday, June 28, 2011
Last Gasp or Last Hurrah?
As another day-long rally appeared out of the blue for the second consecutive day on virtually no news, one must question the tendency of the market to gain so vigorously without the benefit of positive reinforcement.
With stocks being nearly the only place to find yield these days, there has to be adequate risk appetite, and that's where the low volume standard comes into play. On these monstrous upside days, the volume has remained quiet, signaling to the astute investor that such rallies are nothing more than algorithm-inspired events and have little to nothing to do with news flow, fundamentals or general sentiment.
As such, there's little to report on today's ramp-job than to mention that the Greek parliament will vote on the austerity plan by which they will get the next portion of their bailout money on Wednesday morning, 5:00 am EDT, so as goes the vote, so will stocks. A failure for the parliament to pass the measure would result - mostly likely - in a massive default by the Greek government or some other form of restructuring, because, as we all know, bankers cannot lose money, even if they lend to the worst, non-performing, severe-credit-risk entities, like sovereign nations such as Greece, Portugal and Ireland.
If the vote passes, the people will riot and burn most of Athens back to it's root of civilization foundations. Thus, nobody wins, except the banks, though it could be a hollow, short-lived victory as not only Greece, but other EU nations, have debt well beyond their ability to repay, no matter how much they tax the populace.
We have reached a tipping point in the global economy and the sooner politicians and bankers realize that their Ponzi scheme has hit a wall, the quicker the world can get back on track to some normalized kind of functioning reality. Until then, though, it's risk on, rally on!
Dow 12,188.61, +145.05 (1.20%)
NASDAQ 2,729.31, +41.03 (1.53%)
S&P 500 1,296.67, +16.57 (1.29%)
NYSE Composite 8,135.98, +104.90 (1.31%)
Advancers finished well ahead of declining issues, 5045-1528. NASDAQ new highs: 100, new lows: 22. On the NYSE, 75 new highs, 23 new lows, bringing the combined total to 175 new highs and 45 new lows on the day. As decisive as those results may be, skepticism abounds due to the aforementioned thoughts and the incredibly low volume.
NASDAQ Volume 1,660,870,000.00
NYSE Volume 3,650,911,750
Oil rose $2.28, to $92.89, defying all manner of logic. Someday soon, hopefully the assholes (that's what they are and that's what I'm calling them) trading oil futures are going to be hit with a bolt of lightning and the realization that absurdly high oil prices are a detriment to global growth. It could not happen soon enough.
Gold was up 4.10, to $1501.00, while silver rose 36 cents, to $33.94, both breaking a three-day losing streak.
With stocks being nearly the only place to find yield these days, there has to be adequate risk appetite, and that's where the low volume standard comes into play. On these monstrous upside days, the volume has remained quiet, signaling to the astute investor that such rallies are nothing more than algorithm-inspired events and have little to nothing to do with news flow, fundamentals or general sentiment.
As such, there's little to report on today's ramp-job than to mention that the Greek parliament will vote on the austerity plan by which they will get the next portion of their bailout money on Wednesday morning, 5:00 am EDT, so as goes the vote, so will stocks. A failure for the parliament to pass the measure would result - mostly likely - in a massive default by the Greek government or some other form of restructuring, because, as we all know, bankers cannot lose money, even if they lend to the worst, non-performing, severe-credit-risk entities, like sovereign nations such as Greece, Portugal and Ireland.
If the vote passes, the people will riot and burn most of Athens back to it's root of civilization foundations. Thus, nobody wins, except the banks, though it could be a hollow, short-lived victory as not only Greece, but other EU nations, have debt well beyond their ability to repay, no matter how much they tax the populace.
We have reached a tipping point in the global economy and the sooner politicians and bankers realize that their Ponzi scheme has hit a wall, the quicker the world can get back on track to some normalized kind of functioning reality. Until then, though, it's risk on, rally on!
Dow 12,188.61, +145.05 (1.20%)
NASDAQ 2,729.31, +41.03 (1.53%)
S&P 500 1,296.67, +16.57 (1.29%)
NYSE Composite 8,135.98, +104.90 (1.31%)
Advancers finished well ahead of declining issues, 5045-1528. NASDAQ new highs: 100, new lows: 22. On the NYSE, 75 new highs, 23 new lows, bringing the combined total to 175 new highs and 45 new lows on the day. As decisive as those results may be, skepticism abounds due to the aforementioned thoughts and the incredibly low volume.
NASDAQ Volume 1,660,870,000.00
NYSE Volume 3,650,911,750
Oil rose $2.28, to $92.89, defying all manner of logic. Someday soon, hopefully the assholes (that's what they are and that's what I'm calling them) trading oil futures are going to be hit with a bolt of lightning and the realization that absurdly high oil prices are a detriment to global growth. It could not happen soon enough.
Gold was up 4.10, to $1501.00, while silver rose 36 cents, to $33.94, both breaking a three-day losing streak.
Tuesday, June 21, 2011
Greek Parliament Gives Papandreou Vote, Austerity, Riots to Follow
According to sources, the Greek parliament gave Prime Minister George Papandreou a needed vote of confidence, allowing for an infusion of $17 billion in fresh loans from the IMF/EU.
With the public now facing even harsher austerity measures, rioting and demonstrations are expected.
No actual tally has come through, but the decision seems clear: Bail out the banks and keep the people under thumb.
With the public now facing even harsher austerity measures, rioting and demonstrations are expected.
No actual tally has come through, but the decision seems clear: Bail out the banks and keep the people under thumb.
Markets Up on Greek Deal Hopes
Well, that headline is not a joke. Surely, nobody on Wall Street has ever heard the phrase, "beware Greeks bearing gifts," though by tomorrow, everyone will know whether the second bailout of Greece - with a third coming by the end of August, almost certainly - will be a bonus or a canard.
The issues facing the Greek government are the roll-over of some $10 billion in maturing debt, plus another $40 billion in August. Right now, the deal is on, if Greek prime minister, George Papandreou, receives a vote of confidence from the Greek parliament, in a vote scheduled at the stroke of midnight in Greece (5:00 pm EDT).
Papandreou looked to have enough votes to win the crucial vote of confidence in parliament which would pave the way to passage of the latest austerity measures next week, ensuring a $12 billion advance from the ECB and the IMF.
With time winding down on the vote, crowds were beginning to form in Syntagma Square, directly across from the Parliament building. A vote of no confidence would be seen as a victory for the Greek populace, and if Papandreou does get the needed votes, rioting and confrontation are a near-certainty, as much of the population would like to detach Greece from the EU, return to the drachma and move on. (We will post an update of the vote as soon as it is confirmed.)
Elsewhere, investors looked past more horrifying housing numbers, as existing home sales in May fell by 3.8% from April and are down 15.3% from the same time last year, according to the report released by the National Association of Realtors (NAR).
So, once again, Wall Street demonstrated just how far detached from Main Street it really is, a chasm that only seems to keep widening.
Dow 12,190.01, +109.63 (0.91%)
NASDAQ 2,687.26, +57.60 (2.19%)
S&P 500 1,295.52, +17.16 (1.34%)
NYSE Composite 8,156.27, +124.05 (1.54%)
Advancing issues defeated decliners, 5430-1205. On the NASDAQ, there were 55 new highs and 32 new lows. The NYSE registered 68 new highs and 25 new lows, effectively ending the 12-day stretch in which the lows held the advantage with the combined numbers at 123 new highs and 57 new lows. What a difference a Greek makes!
Volume on the day was marginally better than on Monday, which is saying very little.
NASDAQ Volume 1,825,893,375
NYSE Volume 3,913,965,750
WTI crude futures edged up 14 cents, to $93.40. Gold added $6.30, to $1546.80 and silver was up 37 cents to $36.43. The moves in precious metals reflected the uncertainty of global economic conditions.
Tomorrow the Federal Reverse Open Market Committee will issue another one of the periodic edicts, keeping interest rates at near ZERO, and, presumably, will include the words, "extended period" for how long they believe it will be before they actually raise rates one iota.
The Fed is stuck in no-man's land, with a stumbling, structurally-impaired domestic economy and the threat of inflation due to a falling dollar. Thus far, the Fed has taken the easy route of monetary stimulation, throwing trillions into a stagnant economy, and that's likely to be their choice for many months, if not years, to come.
In reality, Greece is a side-show.
The issues facing the Greek government are the roll-over of some $10 billion in maturing debt, plus another $40 billion in August. Right now, the deal is on, if Greek prime minister, George Papandreou, receives a vote of confidence from the Greek parliament, in a vote scheduled at the stroke of midnight in Greece (5:00 pm EDT).
Papandreou looked to have enough votes to win the crucial vote of confidence in parliament which would pave the way to passage of the latest austerity measures next week, ensuring a $12 billion advance from the ECB and the IMF.
With time winding down on the vote, crowds were beginning to form in Syntagma Square, directly across from the Parliament building. A vote of no confidence would be seen as a victory for the Greek populace, and if Papandreou does get the needed votes, rioting and confrontation are a near-certainty, as much of the population would like to detach Greece from the EU, return to the drachma and move on. (We will post an update of the vote as soon as it is confirmed.)
Elsewhere, investors looked past more horrifying housing numbers, as existing home sales in May fell by 3.8% from April and are down 15.3% from the same time last year, according to the report released by the National Association of Realtors (NAR).
So, once again, Wall Street demonstrated just how far detached from Main Street it really is, a chasm that only seems to keep widening.
Dow 12,190.01, +109.63 (0.91%)
NASDAQ 2,687.26, +57.60 (2.19%)
S&P 500 1,295.52, +17.16 (1.34%)
NYSE Composite 8,156.27, +124.05 (1.54%)
Advancing issues defeated decliners, 5430-1205. On the NASDAQ, there were 55 new highs and 32 new lows. The NYSE registered 68 new highs and 25 new lows, effectively ending the 12-day stretch in which the lows held the advantage with the combined numbers at 123 new highs and 57 new lows. What a difference a Greek makes!
Volume on the day was marginally better than on Monday, which is saying very little.
NASDAQ Volume 1,825,893,375
NYSE Volume 3,913,965,750
WTI crude futures edged up 14 cents, to $93.40. Gold added $6.30, to $1546.80 and silver was up 37 cents to $36.43. The moves in precious metals reflected the uncertainty of global economic conditions.
Tomorrow the Federal Reverse Open Market Committee will issue another one of the periodic edicts, keeping interest rates at near ZERO, and, presumably, will include the words, "extended period" for how long they believe it will be before they actually raise rates one iota.
The Fed is stuck in no-man's land, with a stumbling, structurally-impaired domestic economy and the threat of inflation due to a falling dollar. Thus far, the Fed has taken the easy route of monetary stimulation, throwing trillions into a stagnant economy, and that's likely to be their choice for many months, if not years, to come.
In reality, Greece is a side-show.
Monday, June 20, 2011
Seriously, a Rebound? No Volume, and Slim Gains
It's almost summer, so stocks and the people who trade them aren't going to take much of anything too seriously. It's a good thing that the American culture is as laid-back as it is, because if people watched their money, markets and politicians with reasoned discipline, we'd all be in the soup - or soup lines.
Being that the weather's more suited for surfing than high finance, Wall Street put on its best summery smile today and boosted stocks for no particular reason other than there wasn't any disturbing economic news from Greece, or Washington, or anywhere else for that matter.
It's these kinds of days that Wall Street could use a steady diet of to produce what will be called a "summer rally" despite the Fed cutting off funds via the end of QE2, and Greece more likely than not to default. Whatever Greece decides to do about their fiscal and monetary condition, it will have far-reaching effects, mostly on European banks, but surely some spill-over will do damage on American shores. Everyone's in for a piece of the action, and haircuts for the bond-holders seems to be the likely outcome, though the EU and IMF ministers would much rather lay it all on the backs of the Greek people, through austerity, budget cuts and a wrecked economy.
However, since nobody took any decisive action today, it was safe to make a few bets in the cavernous casino that is Wall Street. Besides, after six losing weeks, the markets were set up for a technical bounce, in other words, more suckers got taken today.
Dow 12,080.38, +76.02 (0.63%)
NASDAQ 2,629.66, +13.18 (0.50%)
S&P 500 1,278.36, +6.86 (0.54%)
NYSE Composite 8,032.22, +32.11 (0.40%)
While the gains weren't much to speak of, neither was the breadth. Winners beat losers, 3991-2443, roughly a 5:3 margin. NASDAQ showed that there was still a good deal of selling going on as only 29 stocks made new highs, but 104 hit new lows. ON the NYSE, 32 new highs and 53 new lows, so the combined total was another winner for the new lows, the 12th straight of that variety, with 61 new highs and 157 new lows.
Since volume was non-existent, one would be correct in believing that the correction was just taking a breather. Nothing goes in straight lines, so count this as one of the few good days in a continuum of downers.
NASDAQ Volume 1,612,915,750
NYSE Volume 3,371,598,000
Crude oil continues to demonstrate weakness, up only 25 cents on the day, to $93.26. Some of the crude decline is beginning to show up at the pump. AAA reports the national average at $3.65 for a gallon of unleaded regular, with the lowest to be found in Tennessee, at $3.45/gallon.
Gold gained $1.40, to $1541.40, while silver was up 14 cents, to $36.04.
All in all, it was a dull session, which is probably the way it should be. Wild swings are for gamblers and home run hitters. A dose of slowness - like the way markets were back in the 50s and 60s - might not be such a bad thing.
Ah, summer. Ya gotta love it. Almost makes one fell like taking the car out for a spin. Well, maybe.
Being that the weather's more suited for surfing than high finance, Wall Street put on its best summery smile today and boosted stocks for no particular reason other than there wasn't any disturbing economic news from Greece, or Washington, or anywhere else for that matter.
It's these kinds of days that Wall Street could use a steady diet of to produce what will be called a "summer rally" despite the Fed cutting off funds via the end of QE2, and Greece more likely than not to default. Whatever Greece decides to do about their fiscal and monetary condition, it will have far-reaching effects, mostly on European banks, but surely some spill-over will do damage on American shores. Everyone's in for a piece of the action, and haircuts for the bond-holders seems to be the likely outcome, though the EU and IMF ministers would much rather lay it all on the backs of the Greek people, through austerity, budget cuts and a wrecked economy.
However, since nobody took any decisive action today, it was safe to make a few bets in the cavernous casino that is Wall Street. Besides, after six losing weeks, the markets were set up for a technical bounce, in other words, more suckers got taken today.
Dow 12,080.38, +76.02 (0.63%)
NASDAQ 2,629.66, +13.18 (0.50%)
S&P 500 1,278.36, +6.86 (0.54%)
NYSE Composite 8,032.22, +32.11 (0.40%)
While the gains weren't much to speak of, neither was the breadth. Winners beat losers, 3991-2443, roughly a 5:3 margin. NASDAQ showed that there was still a good deal of selling going on as only 29 stocks made new highs, but 104 hit new lows. ON the NYSE, 32 new highs and 53 new lows, so the combined total was another winner for the new lows, the 12th straight of that variety, with 61 new highs and 157 new lows.
Since volume was non-existent, one would be correct in believing that the correction was just taking a breather. Nothing goes in straight lines, so count this as one of the few good days in a continuum of downers.
NASDAQ Volume 1,612,915,750
NYSE Volume 3,371,598,000
Crude oil continues to demonstrate weakness, up only 25 cents on the day, to $93.26. Some of the crude decline is beginning to show up at the pump. AAA reports the national average at $3.65 for a gallon of unleaded regular, with the lowest to be found in Tennessee, at $3.45/gallon.
Gold gained $1.40, to $1541.40, while silver was up 14 cents, to $36.04.
All in all, it was a dull session, which is probably the way it should be. Wild swings are for gamblers and home run hitters. A dose of slowness - like the way markets were back in the 50s and 60s - might not be such a bad thing.
Ah, summer. Ya gotta love it. Almost makes one fell like taking the car out for a spin. Well, maybe.
Thursday, June 16, 2011
From Greece to Philadelphia, It Is All Bad
Whether it's indecision by the IMF, the EU, the Greek government or any other body that has an interest in the continued operation of the nation formerly known as Greece, markets have been roiled by the chain of events, delays, misconceptions and outright fabrications that have come to light over the past two weeks in the continuing collapse of Greece, and, by proxy, the European Union.
The situation has been in flux and flummoxed for a fortnight, with no apparent end in sight. Various people whose names all sound like Pompondreaus and will soon be forgotten pledge to make austerity nation of the Greeks, resign their office or do some other dastardly deed, hoping to end the crisis, though, in reality, everybody knows that Greece must be set free to return to the Drachma as their official currency and be done with the eleven-year-old experiment that is the Euro.
Ditto that for Portugal, Ireland, Belgium and sooner or later, Italy and Spain. Within a few years time, if not much sooner, the European Union will cease to exist.
Between now and whenever the bankers and politicians can decide on how best to divide the spoils of their failed experiment in a unified currency, we are likely to see more riots, food lines, general strikes, paramilitary actions, riots, shortages, lies, changes of governments, riots and as much discontent as a continent can have without actually being at war. Of course, war is always an option, one which may be used as an interim resort, by which to save the fannies and faces of the corrupt and wholly bankrupt European banking system.
The effect on the US is felt in myriad ways. For one, our sovereign dollar becomes better looking as a "safe" currency, our bonds become more expensive and yield less and US global stocks go for a merry-go ride, such as today's.
Also affecting the price of stocks - discounting the usual front-running, insider scams and outright HFT manipulation - was the report from the Philadelphia Fed on business activity within that district, which sank from an already-abysmal reading of 3.9 in May to -7.7 in June, the worst number since July of 2009. This followed Wednesday's stunner from the NY region, which had the Empire Index at -7.8 in June after a 11.9 number in May. Both indices measure general manufacturing and business conditions for their respective regions and show a general malaise reappearing when we're supposed to be in the midst of a recovery.
It's simply not happening, as continuing unemployment claims showed, dropping a bit to 414,000 in the most recent week, though still far too high a number to indicate anything other than continued pain and a lack of available jobs for the shrinking American workforce.
Stocks responded with a zig-zag effect, up in the morning, down in the afternoon, with a half-hearted rally at the end. Apparently there is some stomach for the larger, established, global industrial stocks contained in the Dow 30.
Dow 11,961.52, +64.25 (0.54%)
NASDAQ 2,623.70, -7.76 (0.29%)
S&P 500 1,267.64, +2.22 (0.18%)
NYSE Composite 7,963.60, -4.21 (0.05%)
Internals were not bifurcated in the least, offsetting any calming effect the headline numbers might suggest. Declining issues led advancers once more, 3562-3022. The NASDAQ saw a mere 13 stocks make new highs, while 112 recorded new lows. New lows led new highs on the NYSE as well, 82-16, giving the edge to new lows for the 10th straight session, 194-29. Eventually, most likely on a free-fall day in which the Dow is down 300 or more points, this measure will read off the charts, with over 1000 stocks hitting new lows. It is a moment to watch for, because it will signal the second phase of the bear market, the one which usually lasts the longest and is the most painful, in which stocks trade sideways to down for an extended period of time. Watch for it in a few weeks or months, though it could come at any time, depending on the particular catalyst.
Volume was along the same range as yesterday's, not much help to anyone doing technical analysis, though probably favoring the bearish case more than anything else.
NASDAQ Volume 1,985,734,500.00
NYSE Volume 4,642,697,500
Unfortunately, WTI crude oil futures were up 14 cents, to $94.95, instead of continuing the precipitous decline. It's an odd paradox for the American consumer. While most would like to see oil around $60 a barrel, which would drive gasoline prices down to around $3.00 per gallon, the correlated rise in the dollar would also serve to drive stocks lower, such is the pair-trade these days. However, the resulting stronger dollar would do more than just keep fuel prices down. It would keep more money in the hands of consumers while lowering the cost of just about everything, because everything needs to be shipped from one place to another. Additional discretionary money in the consumer's hands would lead, most likely, to paying down more debt, which is needed, and giving a general boost to the economy, also sorely needed.
Why it will not happen is because it is inherently deflationary, something by which the Federal Reserve and the US Treasury cannot abide, simply because lower prices for consumer end-products, outright deflation and improving conditions would also push interest rates higher, making the debt more expensive to repay. Thanks to the wizardry of the Federal Reserve, Americans are barred from lower prices, saving, and actually living in a world in which every last penny is not spent on either food, energy or taxes.
It is completely untenable and eventually one side will have to give in. A few million starving Americans might just force the Fed's hand and allow natural market forces to take hold. (I am dreaming of course, but do not wake me.)
Precious metals were essentially flat, with gold up 10 cents, to $1529.30 and silver down six cents, at $35.53.
Friday will be interesting if only to see whether the current losing streak for stocks continues for a nearly unprecedented seventh straight week. With it being a quadruple-witching day, we should certainly have our doubts. The markets are temporarily oversold, so any impetus at all should result in at least a small rally, which will save the day, though the war is far from being over.
The situation has been in flux and flummoxed for a fortnight, with no apparent end in sight. Various people whose names all sound like Pompondreaus and will soon be forgotten pledge to make austerity nation of the Greeks, resign their office or do some other dastardly deed, hoping to end the crisis, though, in reality, everybody knows that Greece must be set free to return to the Drachma as their official currency and be done with the eleven-year-old experiment that is the Euro.
Ditto that for Portugal, Ireland, Belgium and sooner or later, Italy and Spain. Within a few years time, if not much sooner, the European Union will cease to exist.
Between now and whenever the bankers and politicians can decide on how best to divide the spoils of their failed experiment in a unified currency, we are likely to see more riots, food lines, general strikes, paramilitary actions, riots, shortages, lies, changes of governments, riots and as much discontent as a continent can have without actually being at war. Of course, war is always an option, one which may be used as an interim resort, by which to save the fannies and faces of the corrupt and wholly bankrupt European banking system.
The effect on the US is felt in myriad ways. For one, our sovereign dollar becomes better looking as a "safe" currency, our bonds become more expensive and yield less and US global stocks go for a merry-go ride, such as today's.
Also affecting the price of stocks - discounting the usual front-running, insider scams and outright HFT manipulation - was the report from the Philadelphia Fed on business activity within that district, which sank from an already-abysmal reading of 3.9 in May to -7.7 in June, the worst number since July of 2009. This followed Wednesday's stunner from the NY region, which had the Empire Index at -7.8 in June after a 11.9 number in May. Both indices measure general manufacturing and business conditions for their respective regions and show a general malaise reappearing when we're supposed to be in the midst of a recovery.
It's simply not happening, as continuing unemployment claims showed, dropping a bit to 414,000 in the most recent week, though still far too high a number to indicate anything other than continued pain and a lack of available jobs for the shrinking American workforce.
Stocks responded with a zig-zag effect, up in the morning, down in the afternoon, with a half-hearted rally at the end. Apparently there is some stomach for the larger, established, global industrial stocks contained in the Dow 30.
Dow 11,961.52, +64.25 (0.54%)
NASDAQ 2,623.70, -7.76 (0.29%)
S&P 500 1,267.64, +2.22 (0.18%)
NYSE Composite 7,963.60, -4.21 (0.05%)
Internals were not bifurcated in the least, offsetting any calming effect the headline numbers might suggest. Declining issues led advancers once more, 3562-3022. The NASDAQ saw a mere 13 stocks make new highs, while 112 recorded new lows. New lows led new highs on the NYSE as well, 82-16, giving the edge to new lows for the 10th straight session, 194-29. Eventually, most likely on a free-fall day in which the Dow is down 300 or more points, this measure will read off the charts, with over 1000 stocks hitting new lows. It is a moment to watch for, because it will signal the second phase of the bear market, the one which usually lasts the longest and is the most painful, in which stocks trade sideways to down for an extended period of time. Watch for it in a few weeks or months, though it could come at any time, depending on the particular catalyst.
Volume was along the same range as yesterday's, not much help to anyone doing technical analysis, though probably favoring the bearish case more than anything else.
NASDAQ Volume 1,985,734,500.00
NYSE Volume 4,642,697,500
Unfortunately, WTI crude oil futures were up 14 cents, to $94.95, instead of continuing the precipitous decline. It's an odd paradox for the American consumer. While most would like to see oil around $60 a barrel, which would drive gasoline prices down to around $3.00 per gallon, the correlated rise in the dollar would also serve to drive stocks lower, such is the pair-trade these days. However, the resulting stronger dollar would do more than just keep fuel prices down. It would keep more money in the hands of consumers while lowering the cost of just about everything, because everything needs to be shipped from one place to another. Additional discretionary money in the consumer's hands would lead, most likely, to paying down more debt, which is needed, and giving a general boost to the economy, also sorely needed.
Why it will not happen is because it is inherently deflationary, something by which the Federal Reserve and the US Treasury cannot abide, simply because lower prices for consumer end-products, outright deflation and improving conditions would also push interest rates higher, making the debt more expensive to repay. Thanks to the wizardry of the Federal Reserve, Americans are barred from lower prices, saving, and actually living in a world in which every last penny is not spent on either food, energy or taxes.
It is completely untenable and eventually one side will have to give in. A few million starving Americans might just force the Fed's hand and allow natural market forces to take hold. (I am dreaming of course, but do not wake me.)
Precious metals were essentially flat, with gold up 10 cents, to $1529.30 and silver down six cents, at $35.53.
Friday will be interesting if only to see whether the current losing streak for stocks continues for a nearly unprecedented seventh straight week. With it being a quadruple-witching day, we should certainly have our doubts. The markets are temporarily oversold, so any impetus at all should result in at least a small rally, which will save the day, though the war is far from being over.
Wednesday, June 8, 2011
Stocks Continue Slide through Sixth Straight Session
Another day, another decline on US stock markets.
One should not be at all surprised by the development that stocks have found the path of least resistance to be lower. After all, they were goosed the past two years by almost $2 tillion in Federal Reserve subsidies and slippery dealings by the major banks.
Once again, stocks started out near their highs of the day, and, through a choppy session, ended in a massive sell-off into the close. The NASDAQ took the brunt of the beating, never making it out of negative territory the entire day. Again, this is unsurprising, as most of the momentum stocks which drove the two-year rally are indexed on the NASDAQ.
The bigger picture involves risk of all sorts, much of which is unquantifiable, such as the level of interest in, or general terms of, the bailout of Greece and whether or not the congressional clowns can come to some agreement on lifting the debt ceiling or not. Absent reliable information on either of those issues, and adding to the fact that there's scant economic data upon which to trade, stocks took another leg down in what is fast becoming a summer of discontent.
Perhaps the government agents and Wall Street wizards should be just happy to take their lumps in money, lest the American public come after them hammer and tong. They have destroyed not only the general economy of the nation, but have misused the public trust to a point at which there no longer is any.
The path to Dow 10,000 or S&P 1000 is likely going to be paved with the corpses of the major banks, still insolvent in many regards, especially Bank of America (BAC), which hit another tw-year low today, losing 0.11 to 10.54. Wells-Fargo (WFC), JP Morgan Chase (JPM), Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS) all took on water, though these stocks and the averages were all aided by a futile, though furious, late rally in the final fifteen minutes of trading.
Dow 12,048.48, -21.87 (0.18%)
NASDAQ 2,675.38, -26.18 (0.97%)
S&P 500 1,279.56, -5.38 (0.42%)
NYSE Composite 8,081.33, -50.34 (0.62%)
Despite the seemingly paltry losses, internals were crushed once again, and therein lies the problem with the markets. Almost everything is still overvalued and the reversal, by fear, extends to all equities. Declining issues hammered advancers, 4824-1767. On the NASDAQ, there were 22 new highs and 140 new lows, Over on the Big Board, 23 new highs, and 97 new lows, putting our totals at 45 new highs and 237 new lows, the fifth straight win for the lows, an expanding margin of difference and a sure sign the correction has further leg-stretching to do.
Volume perked up a bit from the previous two sessions, another indication that the selling pressure is intense and not about to abate.
NASDAQ Volume 2,038,875,125
NYSE Volume 4,442,987,500
Defying all logic, crude oil futures rose $1.65, to $100.74, as OPEC nations meet in Vienna, but came to no agreement on raising production quotas. It was another rough day from precious metals speculators, with gold down $6.90, to 1537.80, and silver off 17 cents, to $36.97.
Markets may get some relief from initial unemployment claims due out prior to the market open tomorrow, but counting on that is akin to betting the Cubs will make the playoffs. Not a sound bet.
One should not be at all surprised by the development that stocks have found the path of least resistance to be lower. After all, they were goosed the past two years by almost $2 tillion in Federal Reserve subsidies and slippery dealings by the major banks.
Once again, stocks started out near their highs of the day, and, through a choppy session, ended in a massive sell-off into the close. The NASDAQ took the brunt of the beating, never making it out of negative territory the entire day. Again, this is unsurprising, as most of the momentum stocks which drove the two-year rally are indexed on the NASDAQ.
The bigger picture involves risk of all sorts, much of which is unquantifiable, such as the level of interest in, or general terms of, the bailout of Greece and whether or not the congressional clowns can come to some agreement on lifting the debt ceiling or not. Absent reliable information on either of those issues, and adding to the fact that there's scant economic data upon which to trade, stocks took another leg down in what is fast becoming a summer of discontent.
Perhaps the government agents and Wall Street wizards should be just happy to take their lumps in money, lest the American public come after them hammer and tong. They have destroyed not only the general economy of the nation, but have misused the public trust to a point at which there no longer is any.
The path to Dow 10,000 or S&P 1000 is likely going to be paved with the corpses of the major banks, still insolvent in many regards, especially Bank of America (BAC), which hit another tw-year low today, losing 0.11 to 10.54. Wells-Fargo (WFC), JP Morgan Chase (JPM), Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS) all took on water, though these stocks and the averages were all aided by a futile, though furious, late rally in the final fifteen minutes of trading.
Dow 12,048.48, -21.87 (0.18%)
NASDAQ 2,675.38, -26.18 (0.97%)
S&P 500 1,279.56, -5.38 (0.42%)
NYSE Composite 8,081.33, -50.34 (0.62%)
Despite the seemingly paltry losses, internals were crushed once again, and therein lies the problem with the markets. Almost everything is still overvalued and the reversal, by fear, extends to all equities. Declining issues hammered advancers, 4824-1767. On the NASDAQ, there were 22 new highs and 140 new lows, Over on the Big Board, 23 new highs, and 97 new lows, putting our totals at 45 new highs and 237 new lows, the fifth straight win for the lows, an expanding margin of difference and a sure sign the correction has further leg-stretching to do.
Volume perked up a bit from the previous two sessions, another indication that the selling pressure is intense and not about to abate.
NASDAQ Volume 2,038,875,125
NYSE Volume 4,442,987,500
Defying all logic, crude oil futures rose $1.65, to $100.74, as OPEC nations meet in Vienna, but came to no agreement on raising production quotas. It was another rough day from precious metals speculators, with gold down $6.90, to 1537.80, and silver off 17 cents, to $36.97.
Markets may get some relief from initial unemployment claims due out prior to the market open tomorrow, but counting on that is akin to betting the Cubs will make the playoffs. Not a sound bet.
Monday, May 23, 2011
Euro Debt Crisis Exacting Heavy Toll on Global Markets
Make no mistake about it, today was the start of the great reckoning. The beginning of the end of easy money policies, of kicking the can down the road, of failing to come face-to-face with the reality of the global credit crisis that began in 2008 and never really ended.
Oddly enough, it comes on a day in which the US President, Mr. Obama, is headed to Europe for a meeting of the G-8, in which the globalist governors will mete out whatever they see fit for the peasantry of their populous nations. It's a little like playing Russian roulette with all the chambers loaded. You're going to get it no matter how lucky you are.
The interesting aspect of the day's trading happened not specifically today, but actually last Friday, when futures went limit down shortly after the US close. It was a weekend warning shot that the powers in control would be taking their various pounds of flash come Monday. And they did, sending markets around the planet down by one, two and three per cent.
Here in the USA, one-month lows were the order of the day, though that's hardly exciting news. The pertinent take-away is that the great unwind of asset values has begun - or resumed - as the major indices finished the session today less than 4% off their recent multi-year highs.
What was notable was the changing of the guard on the new highs - new lows indicator. For more than two years - with only slight variations - new highs have exceeded new lows on both the NYSE and the NASDAQ. Today, new lows outnumbered new highs on the NASDAQ and the gap narrowed on the NYSE. Even though this is not the first time this has happened recently, its frequency and narrow range makes it a particularly potent indicator at this point in time. Once this turns, it tends to remain in place for quite a while, periods between changes in leadership are measured in years.
Market movements are often subtle and difficult to pinpoint, though this one has been telegraphed for quite some time. The debt condition of Greece, Portugal, Belgium, Italy, Spain and Ireland are unsustainable situations as is the salve of QE2 and ZIRP here in the US. Japan, literally and figuratively, has been swept off the face of leading economic nations and uprisings across the Middle East and North Africa (called the MENA region, for short) threaten the global economy.
Even the leaders of the most powerful nations know that this little game of chicken, complete with artificial stimuli, bailouts, buybacks, swaps, jawboning and other gimmicks cannot proceed forever. Europe must get serious about its long-term structural deficiencies and the US must confront the debt limit and its own burgeoning solvency problem, and both must do so quickly. Thus, preparedness for financial armageddon is underway, and, if one listens closely to the pundits and analysts populating the airwaves and internet, most are calling upon investors to take a pause, pare back on stocks and raise cash, which is, in the parlance of Wall Street, like saying, "run for your life!"
There's an opportunity for the globalist agenda to sail through this period of austerity, consolidation and downgrading of the private sector fairly unscathed, but be assured that the plan is afoot and the stock indices will bear the brunt of what will amount to a massive global deflation. In a year or two, they will once again announce victory over the forces of debt and monetary destruction and proceed to blow the bubbles once more.
In this environment, no asset class is safe, though cash and equivalents, gold and silver, are good starting points. Growth will be minimal, as measured by GDP, if positive at all, and the opportunity for fresh recessions are abundant. Today was just another in a series of well-timed warning shots. Prepare or die.
Dow 12,381.26, -130.78 (1.05%)
NASDAQ 2,758.90, -44.42 (1.58%)
S&P 500 1,317.37, -15.90 (1.19%)
NYSE Composite 8,236.55, -120.98 (1.45%)
Losers soared over winners on the session, 5257-1342, a 4:1 ratio, though hardly a complete rout. It could have been much worse. On the NASDAQ, 37 new highs, but 86 new lows. The NYSE recorded 51 new highs and 44 new lows, the smallest gap in nearly two months. Taken together, the 88 new highs do not reach up to the 130 new lows, and that is the important set of figures to watch, the combined number. Continued weakness has been forecasting a more serious tumble for the past two months. Volume, despite the massive decline, remained at severely low levels. Once again, the major players have been unable to draw in the usually-gullible public, which is tapped out and wants no part of the Wall Street circus. Thus, they play amongst themselves, like a pack of starving wolves who will eventually turn upon each other.
NASDAQ Volume 1,806,104,625
NYSE Volume 3,761,192,500
Crude took another turn down, the front-end NYMEX contract for WTI losing $2.40, to $97.70. Gold managed a gain of $3.70, to $1517.20, while silver advanced by only a penny, to $35.07.
The major indices completed three straight weeks of negative results on Friday. Monday's opening gambit to the downside portends worse to come. March Durable Goods Orders data on Wednesday and the second 2nd quarter GDP estimate on Thursday will most likely add to the sense of pervasive desperation.
Oddly enough, it comes on a day in which the US President, Mr. Obama, is headed to Europe for a meeting of the G-8, in which the globalist governors will mete out whatever they see fit for the peasantry of their populous nations. It's a little like playing Russian roulette with all the chambers loaded. You're going to get it no matter how lucky you are.
The interesting aspect of the day's trading happened not specifically today, but actually last Friday, when futures went limit down shortly after the US close. It was a weekend warning shot that the powers in control would be taking their various pounds of flash come Monday. And they did, sending markets around the planet down by one, two and three per cent.
Here in the USA, one-month lows were the order of the day, though that's hardly exciting news. The pertinent take-away is that the great unwind of asset values has begun - or resumed - as the major indices finished the session today less than 4% off their recent multi-year highs.
What was notable was the changing of the guard on the new highs - new lows indicator. For more than two years - with only slight variations - new highs have exceeded new lows on both the NYSE and the NASDAQ. Today, new lows outnumbered new highs on the NASDAQ and the gap narrowed on the NYSE. Even though this is not the first time this has happened recently, its frequency and narrow range makes it a particularly potent indicator at this point in time. Once this turns, it tends to remain in place for quite a while, periods between changes in leadership are measured in years.
Market movements are often subtle and difficult to pinpoint, though this one has been telegraphed for quite some time. The debt condition of Greece, Portugal, Belgium, Italy, Spain and Ireland are unsustainable situations as is the salve of QE2 and ZIRP here in the US. Japan, literally and figuratively, has been swept off the face of leading economic nations and uprisings across the Middle East and North Africa (called the MENA region, for short) threaten the global economy.
Even the leaders of the most powerful nations know that this little game of chicken, complete with artificial stimuli, bailouts, buybacks, swaps, jawboning and other gimmicks cannot proceed forever. Europe must get serious about its long-term structural deficiencies and the US must confront the debt limit and its own burgeoning solvency problem, and both must do so quickly. Thus, preparedness for financial armageddon is underway, and, if one listens closely to the pundits and analysts populating the airwaves and internet, most are calling upon investors to take a pause, pare back on stocks and raise cash, which is, in the parlance of Wall Street, like saying, "run for your life!"
There's an opportunity for the globalist agenda to sail through this period of austerity, consolidation and downgrading of the private sector fairly unscathed, but be assured that the plan is afoot and the stock indices will bear the brunt of what will amount to a massive global deflation. In a year or two, they will once again announce victory over the forces of debt and monetary destruction and proceed to blow the bubbles once more.
In this environment, no asset class is safe, though cash and equivalents, gold and silver, are good starting points. Growth will be minimal, as measured by GDP, if positive at all, and the opportunity for fresh recessions are abundant. Today was just another in a series of well-timed warning shots. Prepare or die.
Dow 12,381.26, -130.78 (1.05%)
NASDAQ 2,758.90, -44.42 (1.58%)
S&P 500 1,317.37, -15.90 (1.19%)
NYSE Composite 8,236.55, -120.98 (1.45%)
Losers soared over winners on the session, 5257-1342, a 4:1 ratio, though hardly a complete rout. It could have been much worse. On the NASDAQ, 37 new highs, but 86 new lows. The NYSE recorded 51 new highs and 44 new lows, the smallest gap in nearly two months. Taken together, the 88 new highs do not reach up to the 130 new lows, and that is the important set of figures to watch, the combined number. Continued weakness has been forecasting a more serious tumble for the past two months. Volume, despite the massive decline, remained at severely low levels. Once again, the major players have been unable to draw in the usually-gullible public, which is tapped out and wants no part of the Wall Street circus. Thus, they play amongst themselves, like a pack of starving wolves who will eventually turn upon each other.
NASDAQ Volume 1,806,104,625
NYSE Volume 3,761,192,500
Crude took another turn down, the front-end NYMEX contract for WTI losing $2.40, to $97.70. Gold managed a gain of $3.70, to $1517.20, while silver advanced by only a penny, to $35.07.
The major indices completed three straight weeks of negative results on Friday. Monday's opening gambit to the downside portends worse to come. March Durable Goods Orders data on Wednesday and the second 2nd quarter GDP estimate on Thursday will most likely add to the sense of pervasive desperation.
Friday, May 6, 2011
Skimming Off the Fear Factor
Another week in the books for the crippled economy saw stocks rise on a better-than-expected jobs report and commodities take a bit of a breather as the dollar and bonds both gained.
for the week, the major averages were down anywhere from 1.3% to 1.7%, with the Dow faring best and the S&P the worst.
For analysis of the control factor in all trading, see this morning's post.
When the BLS' non-farm payroll report came out prior to the opening bell, futured roared back to life and equity markets opened sharply higher. The Dow was up as many as 175 points, but the rally fizzled as renewed weakness in Europe prompted a flight to safety to the US dollar.
News that Greece was pondering a move to leave the EU, or at least abandon the Euro as its main currency, kept the Euro sliding right into the weekend.
As the dollar gained strength, trades came off in risk assets, mainly equities, as investors were once again cheered then spooked by forces other than fundamentals.
Dow 12,638.74, +54.57 (0.43%)
NASDAQ 2,827.56, +12.84 (0.46%)
S&P 500 1,340.20, +5.10 (0.38%)
NYSE Composite 8,425.90, +28.50 (0.34%)
Advancing issues finished well ahead of decliners on the day, 4144-2356. New highs beat new lows on the NASDAQ, 68-36. The story was more exaggerated on the NYSE, where 133 new highs towered over 15 new lows. Volume was back in the doldrums, following heavy flight volume the previous two sessions.
NASDAQ Volume 2,007,823,250
NYSE Volume 4,907,953,500
After being whipsawed into submission, a few brave souls ventured back into the commodity trade, but it was definitely not for the faint of heart. NYMEX WTI crude oil continued to sell off, losing another $2.62, to finish out the week in NY at $97.18.
Gold bugs were welcomed back with open arms, as the shiny yellow metal yielded a gain of $19.30, to stand at $1492.40 as of this writing. Silver was less warmly received, but still managed to bounce of the lows and add 65 cents, to $35.31, though there is still concern another round of trimming is yet on the way.
The calendar for next week is rather light until Thursday, which kicks off with unemployment claims, PPI and retail sales, followed on Friday with the monthly CPI figures and the University of Michigan consumer sentiment index. With first quarter earnings now winding down, the markets will be looking for clues for direction, as this week's action has left many dazed and confused.
for the week, the major averages were down anywhere from 1.3% to 1.7%, with the Dow faring best and the S&P the worst.
For analysis of the control factor in all trading, see this morning's post.
When the BLS' non-farm payroll report came out prior to the opening bell, futured roared back to life and equity markets opened sharply higher. The Dow was up as many as 175 points, but the rally fizzled as renewed weakness in Europe prompted a flight to safety to the US dollar.
News that Greece was pondering a move to leave the EU, or at least abandon the Euro as its main currency, kept the Euro sliding right into the weekend.
As the dollar gained strength, trades came off in risk assets, mainly equities, as investors were once again cheered then spooked by forces other than fundamentals.
Dow 12,638.74, +54.57 (0.43%)
NASDAQ 2,827.56, +12.84 (0.46%)
S&P 500 1,340.20, +5.10 (0.38%)
NYSE Composite 8,425.90, +28.50 (0.34%)
Advancing issues finished well ahead of decliners on the day, 4144-2356. New highs beat new lows on the NASDAQ, 68-36. The story was more exaggerated on the NYSE, where 133 new highs towered over 15 new lows. Volume was back in the doldrums, following heavy flight volume the previous two sessions.
NASDAQ Volume 2,007,823,250
NYSE Volume 4,907,953,500
After being whipsawed into submission, a few brave souls ventured back into the commodity trade, but it was definitely not for the faint of heart. NYMEX WTI crude oil continued to sell off, losing another $2.62, to finish out the week in NY at $97.18.
Gold bugs were welcomed back with open arms, as the shiny yellow metal yielded a gain of $19.30, to stand at $1492.40 as of this writing. Silver was less warmly received, but still managed to bounce of the lows and add 65 cents, to $35.31, though there is still concern another round of trimming is yet on the way.
The calendar for next week is rather light until Thursday, which kicks off with unemployment claims, PPI and retail sales, followed on Friday with the monthly CPI figures and the University of Michigan consumer sentiment index. With first quarter earnings now winding down, the markets will be looking for clues for direction, as this week's action has left many dazed and confused.
Tuesday, May 25, 2010
Money At Risk: Dow Plunges 290, Recovers, Gives Investors False Hope
Just like the "flash crash" of May 6, there will be no explanation given for the reversal of fortunes today in stocks. When all of the other major global markets - Japan, China, Hong Kong, Korea, France, Great Britain, Germany, Brazil - were down anywhere from two to four per cent, and US markets initially crash, but then recover to walk away barely bruised, what does that tell you?
That we're special, somehow? That the US is in so much better shape than the rest of the world that if their economies all imploded, ours would receive hardly a scratch? Anyone who buys into such cockeyed logic should have "MORON" stamped upon their forehead.
No, what that tells anybody with any knowledge of how deeply corrupted our stock exchanges have become, is that they are a massively rigged game, and the winners are mostly insiders at banks and brokerages pushing the market in whichever ways delights their fancies and fattens their bottom lines.
Stocks fell to levels below both the 1000-point flash crash and below all preceding 2010 lows. That happened right out of the gate, within 15 minutes of the open. Stock futures had been forewarning a brutal open, with Dow futures down as much as 250 points prior to the bell-ringing. These kinds of gap opens serve only to benefit inside traders, to the detriment of individual investors and fund managers who cannot move massive amounts of stock without really rattling markets.
The average Jane or Joe who doesn't keep an eye peeled on CNBC all day long may only notice the Dow was down 20 points and be happy with that, never knowing that it was lower by 290 just 15 minutes into the session. The S&P 500 actually finished with a fractional gain, after being down by as many as 32 points.
Possibly the most egregious display of manipulation was in the NASDAQ, which was down by as many as 73 points but recovered to finish down only two points.
Did the issues which hammered all other markets simply go away by the time US markets were trading? No. Those issues were belligerent behavior by North Korea toward their neighbors to the South, a slowdown of economic activity and a potential real estate bubble in China and the continuing fiscal woes of the entire continent of Europe, though more specifically, the potential default of the governments of Greece and Spain.
What most casual observers and investors may not realize is that the markets will return to those lows. Whether they do that tomorrow, Thursday, Friday, next week or next month is immaterial. The major indices all fell below their 200-day moving averages last week and continue to mostly reside there. One day's action will not change the fact that new lows were set in place and such lows will almost always be retested. The Dow and S&P were in the throes of a triple bottom breakdown, falling below the lows of February and early May. That kind of violation of support just doesn't go away, stocks have to be handled to erase losses and fresh bottoms.
Call it whatever you like, but today set up a new bottom and one of the more severe head fakes ever seen. Downside risk is still predominant and there's a high likelihood that the final push - after 3:00 - was caused mostly by short covering. US markets should not be considered a safe haven for any investor, simply because they are so obviously rigged. They may move strongly in one direction or the other - or both, like today - without reason.
Dow 10,043.75, -22.82 (0.23%)
NASDAQ 2,210.95, -2.60 (0.12%)
S&P 500 1,074.03, +0.38 (0.04%)
NYSE Composite 6,665.83, -0.91 (0.01%)
Market internals offer much better perspective. Declining issues were dominant over advancers, 4334-2242. New lows maintained their advantage over new highs and actually expanded their edge, 369-88. Volume was heavy, owing to the fact that a lot of stock had to be moved around to erase those early losses.
NYSE Volume 8,458,538,000.00
NASDAQ Volume 2,893,359,500.00
Another indication of what really happened today in markets comes from the commodity pits, where July Crude was down $1.68, to $68.75, a fresh closing contract low. Gold finished up $4.00, to $1,197.80, though silver closed down 22 cents, at $17.76.
The deflation trade is still on, meaning one should be either in cash or equivalents, short, living in another country, or all of the above. Money at risk stays at risk, especially in markets so obviously flawed.
Please pay particular attention to anyone who tells you that 1140 on the S&P is a "bottom." You are advised to run - as quickly as possible - as far away as possible from anyone holding that point of view.
That we're special, somehow? That the US is in so much better shape than the rest of the world that if their economies all imploded, ours would receive hardly a scratch? Anyone who buys into such cockeyed logic should have "MORON" stamped upon their forehead.
No, what that tells anybody with any knowledge of how deeply corrupted our stock exchanges have become, is that they are a massively rigged game, and the winners are mostly insiders at banks and brokerages pushing the market in whichever ways delights their fancies and fattens their bottom lines.
Stocks fell to levels below both the 1000-point flash crash and below all preceding 2010 lows. That happened right out of the gate, within 15 minutes of the open. Stock futures had been forewarning a brutal open, with Dow futures down as much as 250 points prior to the bell-ringing. These kinds of gap opens serve only to benefit inside traders, to the detriment of individual investors and fund managers who cannot move massive amounts of stock without really rattling markets.
The average Jane or Joe who doesn't keep an eye peeled on CNBC all day long may only notice the Dow was down 20 points and be happy with that, never knowing that it was lower by 290 just 15 minutes into the session. The S&P 500 actually finished with a fractional gain, after being down by as many as 32 points.
Possibly the most egregious display of manipulation was in the NASDAQ, which was down by as many as 73 points but recovered to finish down only two points.
Did the issues which hammered all other markets simply go away by the time US markets were trading? No. Those issues were belligerent behavior by North Korea toward their neighbors to the South, a slowdown of economic activity and a potential real estate bubble in China and the continuing fiscal woes of the entire continent of Europe, though more specifically, the potential default of the governments of Greece and Spain.
What most casual observers and investors may not realize is that the markets will return to those lows. Whether they do that tomorrow, Thursday, Friday, next week or next month is immaterial. The major indices all fell below their 200-day moving averages last week and continue to mostly reside there. One day's action will not change the fact that new lows were set in place and such lows will almost always be retested. The Dow and S&P were in the throes of a triple bottom breakdown, falling below the lows of February and early May. That kind of violation of support just doesn't go away, stocks have to be handled to erase losses and fresh bottoms.
Call it whatever you like, but today set up a new bottom and one of the more severe head fakes ever seen. Downside risk is still predominant and there's a high likelihood that the final push - after 3:00 - was caused mostly by short covering. US markets should not be considered a safe haven for any investor, simply because they are so obviously rigged. They may move strongly in one direction or the other - or both, like today - without reason.
Dow 10,043.75, -22.82 (0.23%)
NASDAQ 2,210.95, -2.60 (0.12%)
S&P 500 1,074.03, +0.38 (0.04%)
NYSE Composite 6,665.83, -0.91 (0.01%)
Market internals offer much better perspective. Declining issues were dominant over advancers, 4334-2242. New lows maintained their advantage over new highs and actually expanded their edge, 369-88. Volume was heavy, owing to the fact that a lot of stock had to be moved around to erase those early losses.
NYSE Volume 8,458,538,000.00
NASDAQ Volume 2,893,359,500.00
Another indication of what really happened today in markets comes from the commodity pits, where July Crude was down $1.68, to $68.75, a fresh closing contract low. Gold finished up $4.00, to $1,197.80, though silver closed down 22 cents, at $17.76.
The deflation trade is still on, meaning one should be either in cash or equivalents, short, living in another country, or all of the above. Money at risk stays at risk, especially in markets so obviously flawed.
Please pay particular attention to anyone who tells you that 1140 on the S&P is a "bottom." You are advised to run - as quickly as possible - as far away as possible from anyone holding that point of view.
Thursday, May 6, 2010
Major Market Madness as EU Faces an Abyss
Greece has exploded into near-anarchy. Most of Southern Europe is about to enter similar circumstances, as Italy, Spain and Portugal face the same kind of debt crisis that is sweeping the globe. Ireland and Iceland have already felt the wrath of economic unwinding and the panic doesn't stop at small-country borders.
The unprecedentedly-swift breakdown which occurred today on US stock markets is a symptom of a wider contagion, a currency, central bank, sovereign confidence crisis.
Around 2:00 pm, with stocks already suffering significant losses and live video of protesters being attacked by riot police in Athens airing worldwide, markets turned even more dire, doubling their losses in a matter of minutes. By 2:15, the wheels were off as the Dow fell from 250 points down to a 990-point loss in the blink of an eye. For about 10 minutes, markets were in freefall. Traders reported a near-complete capitulation, with buyers completely absent from the market in almost all stocks.
Once again, however, the slide was staunched by some heavy-handed trading in futures and the more-than-likely subterfuge of the major investment banks and their allies in crime, the government-approved President's Working Group on Financial Markets (Plunge Protection Team. i.e., the PPT). As quickly as the markets fell, the rebounded. The Dow recovered to a loss of roughly 400 points and seemed to stabilize at that point. After a wild 15 minutes of trading that left everybody stunned and questioning exactly what happened, the markets churned onward toward the close, ending with massive losses, nonetheless.
Dow 10,520.32, -347.80 (3.20%)
NASDAQ 2,319.64, -82.65 (3.44%)
S&P 500 1,128.15, -37.72 (3.24%)
NYSE Composite 7,011.92, -246.10 (3.39%
The substantial declines on the day were more than bourn out by the internal indicators. Declining issues completely overwhelmed advancers, 6015-742, or, by a margin of about 9:1. It was one of the biggest one-day routs in recent years, and there have been a good number of those. The key measure was the number of new highs to new lows, which completely flipped over from a year-long trend. There were 612 new lows to 196 new highs, a complete reversal, which, if history is any kind of guide, is a loud siren that the bears are firmly back in control.
Another screaming indicator was the day's volume, literally off the charts. This is the kind of volume seen only at the extremes, likely one of the 5 or 10 highest-volume days in the history of US stock markets. Since the direction was decidedly to the downside, more selling should be expected in days to come.
NYSE Volume 11,772,131,000.00
NASDAQ Volume 4,292,823,500.00
Concerning the heavy selling that sent stocks into a short-lived abyss, the commentators on CNBC cited such simplistic theories as a computer glitch, false prints and other preposterous theories, all along avoid the obvious truth: the economic crisis did not end in March of 2009, when stocks began a year-long rally. Financial markets are still fragile, one might say, tenuous, and only clandestine moves by insiders kept stocks from recording a record sell-off.
At some point, CNBC or another expert may release a story explaining the sudden downturn on the back of a rogue trade or computer malfunction. Any such story should be viewed with an additional dose of skepticism if only because of the various levels the major indices broke through during the panic. All of them shattered their 50-day moving averages during the session and closed well below them. Markets have been trending lower for the better part of the past two weeks and this kind of momentum-turning-to-panic trading cannot be discounted as a one-off event.
The likelihood of further market declines in the very near term and extending into the longer term is very high. The debt-deflation bomb has not yet run its course. Not until massive amounts of money and companies are liquidated will the disease be purged from the global economy. Expect widespread panic in European markets as countries fall like dominoes with a side-effect around the world. US markets will not be spared, as the US is only the best among peers at this juncture. Major economies will survive, though France, Germany, Great Britain and the USA will be severely crippled by year's end.
Our beloved "recovery" has been a complete fabrication, fueled by the media and the mechanics of commerce in Washington and on Wall Street. Individual investors have largely shunned equities in favor of bonds and tangible assets such as gold, which was an outside winner on the day. Greece and the rest of the Southern European countries are financially on death's door, facing complete default. Soon, one will capitulate and flee the European Union and denounce the Euro. When that occurs, the ten-year experiment at cross-border governance will be essentially over. The EU will disintegrate and the Euro will be completely unwound. The main hope is that troops do not begin excursions into neighboring nations, as has been the centuries-old history of Europe.
Even today, as it has been throughout the life of the EU, the stronger Norther economies have considerable enmity toward their Southern neighbors. The chance of the entire continent devolving into skirmishes over currencies would neither be unexpected nor unprecedented. Wars are usually how nations resolve major financial squeezes and Europe is certainly in one now.
Besides the dire conditions in Europe, the Gulf oil spill remains unchecked and tomorrow's non-farm employment report - to be released to the public at 8:30 am ET - doesn't offer much optimism. Most of the supposed 185,000 jobs created in April will be attributed mostly to government hiring of temporary census workers and the whisper campaign is that not as many were needed due, ironically, of the efficiency of the operation. Should the non-farm number fall significantly below expectations - a real possibility - an immediate continuation of the plunge will probably occur.
The best hope is for the proverbial, "dead cat bounce," which might ease tensions temporarily, until, at best, the next round of crisis selling. So severely strained and wrought with fraud, inter-leveraging and toxicity, financial markets have entered a semi-permanent state of crisis. When this chapter of global finance is finally unwound, the world won't end, but the pain will have spread deeper and wider than anyone could have expected.
For the baby boomer generation, the nightmare may have only begun. Those without high debt may find themselves in better positions than many of their over-leveraged peers.
Some of the numbers emerging from this historic day in finance (and underscoring the idea that this was not a one-off event):
Crude oil futures continued their steady decline, losing another $2.86, to close at $77.11, the lowest print in months. Safe-haven gold improved by $22.30, climbing above the $1200 mark to finally settle at $1,196.90. Silver couldn't keep pace, losing 2 cents, to $17.49.
All of the major indices have suffered huge blows over the past two weeks, and all closed below their 50-day moving averages.
The Dow Jones Industrials are less than 100 points higher for the year. For the year, the NASDAQ is up only 50 points, the S&P ahead by just 13 points, the NYSE Composite - the broadest index - is down 173 points, all of that loss, and more, occurring today.
All of the 30 Dow components closed lower, many of them with 3.5 to 4.5% losses. Citigroup touched a low of 3.90, closing at 4.01, as all financial stocks were pounded lower.
Treasuries and the US dollar were sharply higher. The dollar index hit fresh highs while the Euro broke down to 14-month lows against the greenback. The benchmark 10-year treasury closed at a 3.40% yield, 55 basis points lower than just a month ago.
The unprecedentedly-swift breakdown which occurred today on US stock markets is a symptom of a wider contagion, a currency, central bank, sovereign confidence crisis.
Around 2:00 pm, with stocks already suffering significant losses and live video of protesters being attacked by riot police in Athens airing worldwide, markets turned even more dire, doubling their losses in a matter of minutes. By 2:15, the wheels were off as the Dow fell from 250 points down to a 990-point loss in the blink of an eye. For about 10 minutes, markets were in freefall. Traders reported a near-complete capitulation, with buyers completely absent from the market in almost all stocks.
Once again, however, the slide was staunched by some heavy-handed trading in futures and the more-than-likely subterfuge of the major investment banks and their allies in crime, the government-approved President's Working Group on Financial Markets (Plunge Protection Team. i.e., the PPT). As quickly as the markets fell, the rebounded. The Dow recovered to a loss of roughly 400 points and seemed to stabilize at that point. After a wild 15 minutes of trading that left everybody stunned and questioning exactly what happened, the markets churned onward toward the close, ending with massive losses, nonetheless.
Dow 10,520.32, -347.80 (3.20%)
NASDAQ 2,319.64, -82.65 (3.44%)
S&P 500 1,128.15, -37.72 (3.24%)
NYSE Composite 7,011.92, -246.10 (3.39%
The substantial declines on the day were more than bourn out by the internal indicators. Declining issues completely overwhelmed advancers, 6015-742, or, by a margin of about 9:1. It was one of the biggest one-day routs in recent years, and there have been a good number of those. The key measure was the number of new highs to new lows, which completely flipped over from a year-long trend. There were 612 new lows to 196 new highs, a complete reversal, which, if history is any kind of guide, is a loud siren that the bears are firmly back in control.
Another screaming indicator was the day's volume, literally off the charts. This is the kind of volume seen only at the extremes, likely one of the 5 or 10 highest-volume days in the history of US stock markets. Since the direction was decidedly to the downside, more selling should be expected in days to come.
NYSE Volume 11,772,131,000.00
NASDAQ Volume 4,292,823,500.00
Concerning the heavy selling that sent stocks into a short-lived abyss, the commentators on CNBC cited such simplistic theories as a computer glitch, false prints and other preposterous theories, all along avoid the obvious truth: the economic crisis did not end in March of 2009, when stocks began a year-long rally. Financial markets are still fragile, one might say, tenuous, and only clandestine moves by insiders kept stocks from recording a record sell-off.
At some point, CNBC or another expert may release a story explaining the sudden downturn on the back of a rogue trade or computer malfunction. Any such story should be viewed with an additional dose of skepticism if only because of the various levels the major indices broke through during the panic. All of them shattered their 50-day moving averages during the session and closed well below them. Markets have been trending lower for the better part of the past two weeks and this kind of momentum-turning-to-panic trading cannot be discounted as a one-off event.
The likelihood of further market declines in the very near term and extending into the longer term is very high. The debt-deflation bomb has not yet run its course. Not until massive amounts of money and companies are liquidated will the disease be purged from the global economy. Expect widespread panic in European markets as countries fall like dominoes with a side-effect around the world. US markets will not be spared, as the US is only the best among peers at this juncture. Major economies will survive, though France, Germany, Great Britain and the USA will be severely crippled by year's end.
Our beloved "recovery" has been a complete fabrication, fueled by the media and the mechanics of commerce in Washington and on Wall Street. Individual investors have largely shunned equities in favor of bonds and tangible assets such as gold, which was an outside winner on the day. Greece and the rest of the Southern European countries are financially on death's door, facing complete default. Soon, one will capitulate and flee the European Union and denounce the Euro. When that occurs, the ten-year experiment at cross-border governance will be essentially over. The EU will disintegrate and the Euro will be completely unwound. The main hope is that troops do not begin excursions into neighboring nations, as has been the centuries-old history of Europe.
Even today, as it has been throughout the life of the EU, the stronger Norther economies have considerable enmity toward their Southern neighbors. The chance of the entire continent devolving into skirmishes over currencies would neither be unexpected nor unprecedented. Wars are usually how nations resolve major financial squeezes and Europe is certainly in one now.
Besides the dire conditions in Europe, the Gulf oil spill remains unchecked and tomorrow's non-farm employment report - to be released to the public at 8:30 am ET - doesn't offer much optimism. Most of the supposed 185,000 jobs created in April will be attributed mostly to government hiring of temporary census workers and the whisper campaign is that not as many were needed due, ironically, of the efficiency of the operation. Should the non-farm number fall significantly below expectations - a real possibility - an immediate continuation of the plunge will probably occur.
The best hope is for the proverbial, "dead cat bounce," which might ease tensions temporarily, until, at best, the next round of crisis selling. So severely strained and wrought with fraud, inter-leveraging and toxicity, financial markets have entered a semi-permanent state of crisis. When this chapter of global finance is finally unwound, the world won't end, but the pain will have spread deeper and wider than anyone could have expected.
For the baby boomer generation, the nightmare may have only begun. Those without high debt may find themselves in better positions than many of their over-leveraged peers.
Some of the numbers emerging from this historic day in finance (and underscoring the idea that this was not a one-off event):
Crude oil futures continued their steady decline, losing another $2.86, to close at $77.11, the lowest print in months. Safe-haven gold improved by $22.30, climbing above the $1200 mark to finally settle at $1,196.90. Silver couldn't keep pace, losing 2 cents, to $17.49.
All of the major indices have suffered huge blows over the past two weeks, and all closed below their 50-day moving averages.
The Dow Jones Industrials are less than 100 points higher for the year. For the year, the NASDAQ is up only 50 points, the S&P ahead by just 13 points, the NYSE Composite - the broadest index - is down 173 points, all of that loss, and more, occurring today.
All of the 30 Dow components closed lower, many of them with 3.5 to 4.5% losses. Citigroup touched a low of 3.90, closing at 4.01, as all financial stocks were pounded lower.
Treasuries and the US dollar were sharply higher. The dollar index hit fresh highs while the Euro broke down to 14-month lows against the greenback. The benchmark 10-year treasury closed at a 3.40% yield, 55 basis points lower than just a month ago.
Tuesday, May 4, 2010
Recovery Fake Out: America Becoming Zombie Nation
Television has a mesmerizing effect on people. It offers the uncanny ability to either engross the viewer or put them to sleep. On that latter point, just ask the hosts of late-night shows, like Jay Leno, who do their audience counts within the first fifteen minutes of the show because after that, Americans are nodding off "en masse."
TV is a kind of drug for the modern masses. Viewers tend to believe just about anything they see or hear on the tube, so when the major networks and their cable outlets keep chirping that the US economy is on the road to recovery, people automatically go along. After all, who wants to believe that the recent economic crisis - that actually had its roots in the late 90s - isn't already over? Nobody wants to be the party-pooper. We all need to get moving toward a brighter future. Right?
Well, some of us aren't convinced, especially since we've seen little evidence that the government or Wall Street has done anything to prevent another global economic meltdown like the one we witnessed in the fall of 2008, and since $8-12 trillion worth of extended benefits to the Wall Street zombie financial firms and another nearly $1 trillion in excess government spending (most of which went to near-bankrupt state treasuries), has produced no new jobs and few tangible results that look even remotely like a growing economy.
No, the troika of Wall Street, Washington and the well-kept, neat-and-tidy media non-investigators have pulled the wool over America's eyes again. And why not? As a nation, gullible Americans keep trusting governments, investment advisors and media pundits who say things are "getting better" even when we see no evidence of such in our personal lives. Have you or your spouse or any of your friends gotten a raise lately? Are firms fighting over the services of you or your buddies? Are you turning down lots of job offers? Are malls and strip centers opening new stores? Are restaurants and small businesses expanding? Are local, state and federal governments concerned more about dealing with tax-receipt surpluses or bone-crushing deficits?
Are prices going up so fast you can't seem to keep up? (Don't answer that yet.) Or are they somewhat stable in most areas? Food and fuel prices have remained fairly constant for over a year now.
Truth of the matter - sorry to keep harping on this, but nobody seems to get it - is that the downturn hasn't ended. In fact, it may be in a debt-induced state of near-term denial. Sure, Wall Street and stocks in general have recovered magnificently, but they did so on the back of billions of dollars worth of government no-interest loans (bailouts) and trillions worth of guarantees. It's what they do. They were given money and told to invest and spend. It wasn't that difficult of a task.
Right now, though, doubt is creeping back into the formula. Stocks may have reached an emotional and intellectual peak, a point at which neither enthusiasm nor analysis would lead an astute investor to buy. Then there's Goldman Sach, Greece and the rest of Europe to worry about, to say nothing of that growing oil slick in the Gulf of Mexico.
Of course, behind the scenes are millions of unsold homes in bank inventories, more foreclosures soon to come down the pike and those 8 million unemployed people on extended, extended benefits who still can't find reasonable work.
We also cannot leave out the Treasury and the Fed...
According to a new missive from Agora Financial (I neither support or decry their positions, and I am in no way affiliated with them), the US Treasury has already borrowed money from these sources:
All they're saying is that your pension plans may soon be obliterated by either a massive crash, debt explosion or spiraling inflation. The smart money is on the first two. Inflation is still a decade away. It simply cannot occur within the framework of a struggling economy with high unemployment (the government's own U6 reading is at 17%).
After Monday's wild ride upside, Tuesday was a real bummer, bringing Greece and most of Europe back into focus. Globablly, markets were hammered and the US was not spared by PPT intervention, late-breaking "good" news or any of the usual clandestine tricks. This one looks like the real deal. Unless Friday's April jobs report is a real hummer, stocks and the economy will continue down, probably slumping through the remainder of the second quarter, into the third.
Dow 10,926.77, -225.06 (2.02%)
NASDAQ 2,424.25, -74.49 (2.98%)
S&P 500 1,173.60, -28.66 (2.38%)
NYSE Composite 7,337.25, -205.87 (2.73%
The tone of today's decline was stark. declining issues overwhelmed advancers, 5611-1013. New highs eked out a small advantage over new lows, the smallest margin in many months, 169-98. That's a scary notion: that there may be more daily new lows than new highs some time soon. We had become so accustomed to seeing a huge gap there, but that particular metric, if it turns over, could be forecasting a major downturn. Volume was magnificent, close to the highest levels of the year, another ominous sign.
NYSE Volume 7,379,542,500.00
NASDAQ Volume 2,869,652,750.00
Oil was sent lower by speculators spooked by a weaker Euro, dropping $3.45, to $82.74. Gold trended lower for a second straight day, down $14.10, to $1,168.60, while silver took a spanking, losing $1.00, to $17.82.
This is not a pretty picture. despite $trillions of stimulus worldwide, massive bailouts and extraordinary measures by governments around the planet, nothing has been able to keep the global economy from continuing to contract. The recent upturn in GDP is mostly a chimera, short-lived and over-hyped. Nobody went bust except the bottom of the market: families, individuals and small businesses. All of the big firms were saved and are now operating as zombies. They have no real life of their own. All their numbers are crooked or cooked or both and the mood - not just in America, but globally - is dour.
We're at a critical turning point, and if there's no "sell in may and go away," a "June Swoon" is almost certain.
TV is a kind of drug for the modern masses. Viewers tend to believe just about anything they see or hear on the tube, so when the major networks and their cable outlets keep chirping that the US economy is on the road to recovery, people automatically go along. After all, who wants to believe that the recent economic crisis - that actually had its roots in the late 90s - isn't already over? Nobody wants to be the party-pooper. We all need to get moving toward a brighter future. Right?
Well, some of us aren't convinced, especially since we've seen little evidence that the government or Wall Street has done anything to prevent another global economic meltdown like the one we witnessed in the fall of 2008, and since $8-12 trillion worth of extended benefits to the Wall Street zombie financial firms and another nearly $1 trillion in excess government spending (most of which went to near-bankrupt state treasuries), has produced no new jobs and few tangible results that look even remotely like a growing economy.
No, the troika of Wall Street, Washington and the well-kept, neat-and-tidy media non-investigators have pulled the wool over America's eyes again. And why not? As a nation, gullible Americans keep trusting governments, investment advisors and media pundits who say things are "getting better" even when we see no evidence of such in our personal lives. Have you or your spouse or any of your friends gotten a raise lately? Are firms fighting over the services of you or your buddies? Are you turning down lots of job offers? Are malls and strip centers opening new stores? Are restaurants and small businesses expanding? Are local, state and federal governments concerned more about dealing with tax-receipt surpluses or bone-crushing deficits?
Are prices going up so fast you can't seem to keep up? (Don't answer that yet.) Or are they somewhat stable in most areas? Food and fuel prices have remained fairly constant for over a year now.
Truth of the matter - sorry to keep harping on this, but nobody seems to get it - is that the downturn hasn't ended. In fact, it may be in a debt-induced state of near-term denial. Sure, Wall Street and stocks in general have recovered magnificently, but they did so on the back of billions of dollars worth of government no-interest loans (bailouts) and trillions worth of guarantees. It's what they do. They were given money and told to invest and spend. It wasn't that difficult of a task.
Right now, though, doubt is creeping back into the formula. Stocks may have reached an emotional and intellectual peak, a point at which neither enthusiasm nor analysis would lead an astute investor to buy. Then there's Goldman Sach, Greece and the rest of Europe to worry about, to say nothing of that growing oil slick in the Gulf of Mexico.
Of course, behind the scenes are millions of unsold homes in bank inventories, more foreclosures soon to come down the pike and those 8 million unemployed people on extended, extended benefits who still can't find reasonable work.
We also cannot leave out the Treasury and the Fed...
According to a new missive from Agora Financial (I neither support or decry their positions, and I am in no way affiliated with them), the US Treasury has already borrowed money from these sources:
Little Luxembourg, no bigger than Rhode Island, gave us $104.2 billion. Russia has us on the hook for another $120 billion. Brazil, nearly $140 billion. Secretive banks in the Caribbean, nearly $190 billion...
Those thugs that run Iran, Iraq, Libya, Nigeria, Indonesia, and Venezuela? So far — along with a half-dozen other oil-producing nations — they've got us dangling for another $191 billion in I.O.U.s.
Great Britain just loaned us $214 billion. D.C. borrowed $523 billion from bankrupt state governments. And, as if the bank bailouts weren't bad enough, we're in hock another $630 billion to Wall Street financial firms and other buyers.
Japan owns a $712 billion slice of America. China owns a staggering $776 billion call on our capital. And guess who tops the list? The Fed itself, which uses dollars they print to buy up $4.785 TRILLION of their own debt, just to keep the prosperity illusion alive.
All they're saying is that your pension plans may soon be obliterated by either a massive crash, debt explosion or spiraling inflation. The smart money is on the first two. Inflation is still a decade away. It simply cannot occur within the framework of a struggling economy with high unemployment (the government's own U6 reading is at 17%).
After Monday's wild ride upside, Tuesday was a real bummer, bringing Greece and most of Europe back into focus. Globablly, markets were hammered and the US was not spared by PPT intervention, late-breaking "good" news or any of the usual clandestine tricks. This one looks like the real deal. Unless Friday's April jobs report is a real hummer, stocks and the economy will continue down, probably slumping through the remainder of the second quarter, into the third.
Dow 10,926.77, -225.06 (2.02%)
NASDAQ 2,424.25, -74.49 (2.98%)
S&P 500 1,173.60, -28.66 (2.38%)
NYSE Composite 7,337.25, -205.87 (2.73%
The tone of today's decline was stark. declining issues overwhelmed advancers, 5611-1013. New highs eked out a small advantage over new lows, the smallest margin in many months, 169-98. That's a scary notion: that there may be more daily new lows than new highs some time soon. We had become so accustomed to seeing a huge gap there, but that particular metric, if it turns over, could be forecasting a major downturn. Volume was magnificent, close to the highest levels of the year, another ominous sign.
NYSE Volume 7,379,542,500.00
NASDAQ Volume 2,869,652,750.00
Oil was sent lower by speculators spooked by a weaker Euro, dropping $3.45, to $82.74. Gold trended lower for a second straight day, down $14.10, to $1,168.60, while silver took a spanking, losing $1.00, to $17.82.
This is not a pretty picture. despite $trillions of stimulus worldwide, massive bailouts and extraordinary measures by governments around the planet, nothing has been able to keep the global economy from continuing to contract. The recent upturn in GDP is mostly a chimera, short-lived and over-hyped. Nobody went bust except the bottom of the market: families, individuals and small businesses. All of the big firms were saved and are now operating as zombies. They have no real life of their own. All their numbers are crooked or cooked or both and the mood - not just in America, but globally - is dour.
We're at a critical turning point, and if there's no "sell in may and go away," a "June Swoon" is almost certain.
Friday, April 30, 2010
Markets Go Boom... and Bust
What happened of significance that stocks would sell of so drastically on Friday?
Was it the DOJ announcing that a criminal probe of Goldman Sach's was underway (And that the G-Men were looking at issues other than the ABACUS deal noted in the SEC charges.)? Shares of Goldman Sachs (GS) fell 15.04, to 145.20, a decline of 9.4%, during Friday's session.
That might be a good start for a general market decline.
Or maybe that oil spill in the Gulf of Mexico is causing more than average general ill-will to be directed at multi-national corporations who pollute, don't pay taxes and cause monstrous disasters such as is unfolding in the marshes along the Louisiana coastline?
What about Greece... and Portugal... and Spain... and Italy? Is the debt bomb exploding over Europe destined to visit mainland America? Finance ministers are meeting over the weekend in hopes of hammering out a bailout for the destitute Greeks (they won't).
Could it be that the Senate finally getting around to debating - after weeks of Republican stonewalling at the behest of the nation's largest financial firms - senator Dodd's financial regulation legislation that has, as one of its many tentacles, authority to liquidate firms that it deems insolvent (Bank of America, Wells Fargo and Citigroup come to mind) and a slew of other amendments which would make the kind of cowboy financial engineering that typified the sub-prime era difficult to repeat.
All of those are good starting points for argument, but there are two likely causes which intersect with all other issues. First quarter GDP was reported to be measured at 3.2%, annualized. That is after 4th quarter '09 coming in at 5.6%. Investors with even fifth grade educations can do the math: the economy is slowing again and that brings to the forefront the words everybody dreads: "double dip."
The second cause is likely more mechanical than analytical. Stocks have been hovering around multi-year highs. People with large stakes and large profits probably figured that today was a good day to sell, just like Wednesday was. The reason Wall Street more resembles a casino than an investment market is because the big money, the people calling the shots and pulling the levers are all gamblers at heart. And, as gambling operations generally produce few winners but lots of losers, the winners are likely getting out of town.
From an emotional chart perspective, one look at a two year Dow chart reveals that the index is bumping into the bottom of the pre-Lehman resistance of September '08. Since little has been done to correct the abuses of the time or restore credibility and liquidity to credit markets, it only stands to reason that there will be no move through that Dow resistance level from 11,200 to 11,750.
Flagging Friday finishes are always troubling, but today's should be marked with multiple red flags. The global economic model, based largely upon central banking, fractional reserve requirements, fiat currencies already heavily in debt (read: insolvent) and currently devolving into nation-gobbling monstrosities, is severely broken and thus, sliced, diced, ad whipsawed according to the prevailing tone.
Economies, from you next-door neighbor to the county seat, to states and nations, are tettering on a balance beam built on public good will and creditworthiness and there isn't much of either of those in quantity at the present time. One could purport that economic circumstances today are worse than they were in 2008. Massive borrowing and easy money policies have not stemmed the tide of deflation that continues to waffle through every aspect of civilization.
One area which experienced strong gains on Friday was commodities, especially gold. With uncertain times comes a need to hold something material and money flowed into tangible assets today in a scared trade. More evidence of widespread deflation came from the bond pits, where the 10-year treasury dipped to 3.65% yield today. Interest rates simply have nowhere to go but down in a slumping, or even stagnating, economy.
Dow 11,008.61, -158.71 (1.42%)
NASDAQ 2,461.19, -50.73 (2.02%)
S&P 500 1,186.68, -20.10 (1.67%)
NYSE Composite 7,474.40, -114.89 (1.51%
There were 4904 losing stocks to 1669 winners. 547 new highs dwarfed a mere 41 new lows. Volume was significant as it has been most of the past 8 trading days. Money is moving, from stocks to commodities, fixed income and cash, a perfect brew for a further deflationary spiral, which never really stopped moving, but was only slowed by monetary moves by the Fed and other central banks.
NYSE Volume 6,859,333,000.00
NASDAQ Volume 2,689,440,250.00
Crude oil rallied 98 cents, to $86.15. Gold built another $11.70 on top of recent gains, finishing the week at $1,180.10, a 2010 high. Silver also rose 6 cents, to $18.61.
There's a world of hurt gaining momentum out there, and you can bet your last Kentucky Derby (tomorrow), mint julep dollar that the famous schemers and weasels of Wall Street are going to be left holding the most recent bag of pain. No, that taks has been assigned, as usual, to the middle class, the little guy, the working class.
Isn't it time to stop believing in the fairy tales of high finance and posturing politicians?
Was it the DOJ announcing that a criminal probe of Goldman Sach's was underway (And that the G-Men were looking at issues other than the ABACUS deal noted in the SEC charges.)? Shares of Goldman Sachs (GS) fell 15.04, to 145.20, a decline of 9.4%, during Friday's session.
That might be a good start for a general market decline.
Or maybe that oil spill in the Gulf of Mexico is causing more than average general ill-will to be directed at multi-national corporations who pollute, don't pay taxes and cause monstrous disasters such as is unfolding in the marshes along the Louisiana coastline?
What about Greece... and Portugal... and Spain... and Italy? Is the debt bomb exploding over Europe destined to visit mainland America? Finance ministers are meeting over the weekend in hopes of hammering out a bailout for the destitute Greeks (they won't).
Could it be that the Senate finally getting around to debating - after weeks of Republican stonewalling at the behest of the nation's largest financial firms - senator Dodd's financial regulation legislation that has, as one of its many tentacles, authority to liquidate firms that it deems insolvent (Bank of America, Wells Fargo and Citigroup come to mind) and a slew of other amendments which would make the kind of cowboy financial engineering that typified the sub-prime era difficult to repeat.
All of those are good starting points for argument, but there are two likely causes which intersect with all other issues. First quarter GDP was reported to be measured at 3.2%, annualized. That is after 4th quarter '09 coming in at 5.6%. Investors with even fifth grade educations can do the math: the economy is slowing again and that brings to the forefront the words everybody dreads: "double dip."
The second cause is likely more mechanical than analytical. Stocks have been hovering around multi-year highs. People with large stakes and large profits probably figured that today was a good day to sell, just like Wednesday was. The reason Wall Street more resembles a casino than an investment market is because the big money, the people calling the shots and pulling the levers are all gamblers at heart. And, as gambling operations generally produce few winners but lots of losers, the winners are likely getting out of town.
From an emotional chart perspective, one look at a two year Dow chart reveals that the index is bumping into the bottom of the pre-Lehman resistance of September '08. Since little has been done to correct the abuses of the time or restore credibility and liquidity to credit markets, it only stands to reason that there will be no move through that Dow resistance level from 11,200 to 11,750.
Flagging Friday finishes are always troubling, but today's should be marked with multiple red flags. The global economic model, based largely upon central banking, fractional reserve requirements, fiat currencies already heavily in debt (read: insolvent) and currently devolving into nation-gobbling monstrosities, is severely broken and thus, sliced, diced, ad whipsawed according to the prevailing tone.
Economies, from you next-door neighbor to the county seat, to states and nations, are tettering on a balance beam built on public good will and creditworthiness and there isn't much of either of those in quantity at the present time. One could purport that economic circumstances today are worse than they were in 2008. Massive borrowing and easy money policies have not stemmed the tide of deflation that continues to waffle through every aspect of civilization.
One area which experienced strong gains on Friday was commodities, especially gold. With uncertain times comes a need to hold something material and money flowed into tangible assets today in a scared trade. More evidence of widespread deflation came from the bond pits, where the 10-year treasury dipped to 3.65% yield today. Interest rates simply have nowhere to go but down in a slumping, or even stagnating, economy.
Dow 11,008.61, -158.71 (1.42%)
NASDAQ 2,461.19, -50.73 (2.02%)
S&P 500 1,186.68, -20.10 (1.67%)
NYSE Composite 7,474.40, -114.89 (1.51%
There were 4904 losing stocks to 1669 winners. 547 new highs dwarfed a mere 41 new lows. Volume was significant as it has been most of the past 8 trading days. Money is moving, from stocks to commodities, fixed income and cash, a perfect brew for a further deflationary spiral, which never really stopped moving, but was only slowed by monetary moves by the Fed and other central banks.
NYSE Volume 6,859,333,000.00
NASDAQ Volume 2,689,440,250.00
Crude oil rallied 98 cents, to $86.15. Gold built another $11.70 on top of recent gains, finishing the week at $1,180.10, a 2010 high. Silver also rose 6 cents, to $18.61.
There's a world of hurt gaining momentum out there, and you can bet your last Kentucky Derby (tomorrow), mint julep dollar that the famous schemers and weasels of Wall Street are going to be left holding the most recent bag of pain. No, that taks has been assigned, as usual, to the middle class, the little guy, the working class.
Isn't it time to stop believing in the fairy tales of high finance and posturing politicians?
Tuesday, April 27, 2010
Goldman Execs Grilled; Market Stumbles as Greek Tragedy Unfolds
Aeschylus or Sophocles could not have written such a story as is unfolding in the finances of the nation of Greece and the Senate hearings on Goldman Sachs. It is as though the Gods themselves have delivered their wrath upon the wealthy, the greedy and the high-and-mighty of society.
On Capitol Hill, Senator Levin opened the current round of hearings in the Senate Permanent Subcommittee on Investigations by outlining the purported abuses by Goldman Sachs which helped lead the US real estate market and the general economy into what some are calling the "Great Recession" of 2008.
As the day and the questioning wore on, Goldman Sachs executives squirmed and cajoled and grimaced through arguments designed to clear them of even the appearance of impropriety in their mortgage securitization dealings and subsequent profiteering off the collapse of such investment vehicles. The polished and evidently well-trained Goldman executives kept a sombre tone as they alternately denied wrongdoing and admitted "mistakes" in the handling of their own and clients' money as the real estate market ballooned, popped and dropped from 2006 through 2008.
The questioning focused on a key point: whether Goldman Sachs was purposely betting it's own money against the very investments it had sold to clients. The firm admits losing money as the market cascaded lower, but then making more by buying credit default swaps which eventually paid off as the CDO market crashed. Goldman executives have steadfastly denied making trades at odds with those of their clients, though the argument is paper-thin and the Senate investigation has unearthed scores of examples exactly the opposite. Goldman calls their investments in credit default swaps pure hedging, but the tide certainly seems to be working against them, both in the hearing room and in the court of public opinion.
A continent away, Greek bond yields soared to over 18% on 2-year notes, as S&P cut its rating to junk status. Greece continues to struggle through one of its worst fiscal and monetary crises of the modern age, with government pay, pensions and entitlements pushing the government close to default. Today's development come in the wake of weeks of negotiations by the IMF and EU on a bailout package for the southern European nation.
There seems to be little doubt that Greece will default in part or in total, with Portugal, Italy and Spain next in line for the pain of financial armageddon. What worries officials in other European nations is the fate of the European Union itself and the ten-year experiment with the unified currency, the Euro.
Reaction was mostly aligned to the Greek story, though the Goldman Sachs hearings were riveting attention as well. Stocks in Europe suffered huge losses in all of its equity markets, with values of the major nation indices falling anywhere from 2% to nearly 4%. France's CAC 40 fell the most, down 3.82% on the day.
In the Americas, a similar story, with major indices piling on losses. The Canadian markets fared best of all, losing just more than 1 percent.
US stock losses come fast on the heels of an 8-week buying splurge despite signs everywhere that the global economy and sovereign debt issues were coming to a head. Even though it's the height of earnings season in the US, nothing could stem the stampede of sellers which descended on Wall Street. Stocks fell by their largest one-day amounts in months, on heavy volume, signaling that the worst may be yet to come.
Dow 10,991.99, -213.04 (1.90%)
NASDAQ 2,471.47, -51.48 (2.04%)
S&P 500 1,183.71, -28.34 (2.34%)
NYSE Composite 7,463.09, -214.56 (2.79%)
Declining issues overwhelmed advancers, 5396-1220, a better-than 4:1 ratio. The number of new highs was shaved down to 407, with 51 stocks recording new lows.
NYSE Volume 8,348,664,500.00
NASDAQ Volume 2,766,927,750.00
Commodity prices were mixed, due to differences in their utility. Crude oil, which is consumed worldwide, fell $1.76, to $82.44, mostly on fears of reduced demand. Gold, primarily a store of wealth or a hedge against currencies, was higher by $8.10, finishing at $1,161.70. Silver, however, which carries investment qualities and industrial functions, dropped 22 cents, to $18.12.
Elsewhere, consumer confidence in April galloped ahead to 57.9, from a March reading of 52.3, though the encouraging number was largely ignored. The Case-Shiller 20-City Real Estate index rose a disappointing 0.64% year-over-year for the month of February, stirring speculation that the US residential real estate market may be months - if not years - from recovery, with the potential for another 15% downturn still on the horizon.
All is not well in our financial world. Titans are being brought under the whip, nations may fail, social unrest may reach a fever pitch by the time our next federal elections roll around in November. With the usually-slow months of summer approaching, stocks seem unstable investments, at best.
Cash, equivalents, Treasuries and other highly-liquid assets are being preferred for the moment.
Making matters even more convoluted, on Monday, Republicans in the Senate blocked debate on Senator Dodds' Financial Reform legislation by a 57-40 vote. 60 votes are needed to bring the bill to the Senate floor. Another test vote failed on Monday, with Republicans grandstanding, saying dishonestly that the bill would reach deep “into every nook and cranny of American business.”
Bring on the sirens and the wailing.
On Capitol Hill, Senator Levin opened the current round of hearings in the Senate Permanent Subcommittee on Investigations by outlining the purported abuses by Goldman Sachs which helped lead the US real estate market and the general economy into what some are calling the "Great Recession" of 2008.
As the day and the questioning wore on, Goldman Sachs executives squirmed and cajoled and grimaced through arguments designed to clear them of even the appearance of impropriety in their mortgage securitization dealings and subsequent profiteering off the collapse of such investment vehicles. The polished and evidently well-trained Goldman executives kept a sombre tone as they alternately denied wrongdoing and admitted "mistakes" in the handling of their own and clients' money as the real estate market ballooned, popped and dropped from 2006 through 2008.
The questioning focused on a key point: whether Goldman Sachs was purposely betting it's own money against the very investments it had sold to clients. The firm admits losing money as the market cascaded lower, but then making more by buying credit default swaps which eventually paid off as the CDO market crashed. Goldman executives have steadfastly denied making trades at odds with those of their clients, though the argument is paper-thin and the Senate investigation has unearthed scores of examples exactly the opposite. Goldman calls their investments in credit default swaps pure hedging, but the tide certainly seems to be working against them, both in the hearing room and in the court of public opinion.
A continent away, Greek bond yields soared to over 18% on 2-year notes, as S&P cut its rating to junk status. Greece continues to struggle through one of its worst fiscal and monetary crises of the modern age, with government pay, pensions and entitlements pushing the government close to default. Today's development come in the wake of weeks of negotiations by the IMF and EU on a bailout package for the southern European nation.
There seems to be little doubt that Greece will default in part or in total, with Portugal, Italy and Spain next in line for the pain of financial armageddon. What worries officials in other European nations is the fate of the European Union itself and the ten-year experiment with the unified currency, the Euro.
Reaction was mostly aligned to the Greek story, though the Goldman Sachs hearings were riveting attention as well. Stocks in Europe suffered huge losses in all of its equity markets, with values of the major nation indices falling anywhere from 2% to nearly 4%. France's CAC 40 fell the most, down 3.82% on the day.
In the Americas, a similar story, with major indices piling on losses. The Canadian markets fared best of all, losing just more than 1 percent.
US stock losses come fast on the heels of an 8-week buying splurge despite signs everywhere that the global economy and sovereign debt issues were coming to a head. Even though it's the height of earnings season in the US, nothing could stem the stampede of sellers which descended on Wall Street. Stocks fell by their largest one-day amounts in months, on heavy volume, signaling that the worst may be yet to come.
Dow 10,991.99, -213.04 (1.90%)
NASDAQ 2,471.47, -51.48 (2.04%)
S&P 500 1,183.71, -28.34 (2.34%)
NYSE Composite 7,463.09, -214.56 (2.79%)
Declining issues overwhelmed advancers, 5396-1220, a better-than 4:1 ratio. The number of new highs was shaved down to 407, with 51 stocks recording new lows.
NYSE Volume 8,348,664,500.00
NASDAQ Volume 2,766,927,750.00
Commodity prices were mixed, due to differences in their utility. Crude oil, which is consumed worldwide, fell $1.76, to $82.44, mostly on fears of reduced demand. Gold, primarily a store of wealth or a hedge against currencies, was higher by $8.10, finishing at $1,161.70. Silver, however, which carries investment qualities and industrial functions, dropped 22 cents, to $18.12.
Elsewhere, consumer confidence in April galloped ahead to 57.9, from a March reading of 52.3, though the encouraging number was largely ignored. The Case-Shiller 20-City Real Estate index rose a disappointing 0.64% year-over-year for the month of February, stirring speculation that the US residential real estate market may be months - if not years - from recovery, with the potential for another 15% downturn still on the horizon.
All is not well in our financial world. Titans are being brought under the whip, nations may fail, social unrest may reach a fever pitch by the time our next federal elections roll around in November. With the usually-slow months of summer approaching, stocks seem unstable investments, at best.
Cash, equivalents, Treasuries and other highly-liquid assets are being preferred for the moment.
Making matters even more convoluted, on Monday, Republicans in the Senate blocked debate on Senator Dodds' Financial Reform legislation by a 57-40 vote. 60 votes are needed to bring the bill to the Senate floor. Another test vote failed on Monday, with Republicans grandstanding, saying dishonestly that the bill would reach deep “into every nook and cranny of American business.”
Bring on the sirens and the wailing.
Tuesday, April 13, 2010
Greece Gets Great Loans; Talbot's a Loser; Stocks Tack on More Gains
If anybody out there can offer advice on how to write the same story 33 different ways, I'll be your first subscriber, because that has been my primary task since February 8, the date of the last interim bottom on the Dow.
While the index hasn't been going straight up, it often seems that way, as, over the span of the past 44 trading days, the Dow has advanced 33 of them. That's a 3-1 ratio of up days over down, and a winning investing formula in anyone's book. I admit, due to my disbelief in the overall economic recovery that everyone keeps talking about but nobody sees, to have completely missed this 1100+ point rally.
That's my fault, but I'm also not about to jump in at these seemingly inflated levels, either. I remain steadfastly, stubbornly, in cash, and it's not a matter of wanting to catch the next low, because I probably won't be investing in stocks for the next few years, at least not US stocks.
Today was more of the broken record variety of days on the Street. Stocks were up, though not by much. Earnings are beginning to trickle into investor equations, with Alcoa (AA) announcing earnings in line with forecasts on Monday at 10 cents per share in the 1st quarter on revenue of $4.9 billion, lower than consensus estimates of $5.24 billion.
After the closing bell today, Intel (INTC) announced 1st quarter results of 43 cents per share, beating the street consensus of 38 cents. Revenue for the chip giant was $10.3 billion, on expectations of $9.84 billion.
Earnings season is off to a good start. Even a company like Talbot's showed a profit of 7 cents per share, even better if you exclude one-time items (Why not? It's a party!). The women's retailer then shows 13 cents per share.
The company had been on the brink of failure, but has redefined itself over the past two years. Still, it's profit was a mere $4.1 million for the quarter, but shares rose significantly due to the amount of short interest. Selling at nearly $15 per share, investors are taking a pretty heavy risk with Talbot's. The company shows negative return on equity, virtually no growth, a p/e of 27 and nearly a half billion dollars in debt. That debt burden alone is enough to keep heavy volume investors away and the shorts making their downside bets.
Talbot's looks a lot like the nation of Greece, which should be the subject of some focus due to the favorable loans it secured from the EU and IMF. Greece will be able to finance its debts at around 5%, or about 100-120 basis points below market rates. The unusually-generous terms have been applied because all of the European finance ministers understand that a Greek default would likely have a severe domino effect on countries like Portugal, Italy, Ireland and Spain. The stronger nations, especially Germany, would likewise be affected, either having to underwrite immense losses or suffer a collapse of its own economy or the Euro.
While a decoupling from the Euro might be the very best thing for the Germans and the continent as a whole, scrapping the entire Euro project has not been something widely anticipated, though it could very well happen within the next 2-3 years. The Southern countries aren't nearly as industrious as their Northern neighbors, and the German populace isn't taking kindly to the concept of bailing out countries which cannot manage their internal budgets. Giving Greece better terms than the very best borrowers, when they are, in fact, sub-prime, at best, reeks of the kind of unfair "picking winners" that was a hallmark of the infamous bank bailouts in the US.
With Greece, failure is being rewarded. With Talbot's, failure has only been delayed. The losers will be the investors who could not judge the risk, as it should be.
Dow 11,019.42, +13.45 (0.12%)
NASDAQ 2,465.99, +8.12 (0.33%)
S&P 500 1,197.30, +0.82 (0.07%)
NYSE Composite 7,638.35, -3.40 (0.04%)
Volume was a little bit perkier than normal, possibly owing to options expiration on Friday or the flood of earnings announcements due out over the next two weeks. Advancing issues outnumbered losers, though marginally, 3362-3108. New highs bettered new lows, 646-50.
NYSE Volume 5,806,878,000
NASDAQ Volume 2,557,582,750
As oil dropped for the fifth straight day, CNN Money ran this headline, Oil declines on oversupply worries. All we can say, after watching naked speculation take the price above $87 last week is, "no kidding?" Crude dropped another 29 cents, to $84.05 on the day, which is still $20-35 above where it should be. The oil speculators are so concerned about keeping the price this high due to imminent, continuing threats of production cuts by the oil-rich nations of the mid-East. Their economies are teetering on insolvency and a price of at least $80 per barrel is needed to keep them current on payments. Eventually, somebody's going to see the light and force the price lower, despite the economic realities facing the royal Suadis and other potentates in the region. Maybe Russia.
Gold dropped $8.80, to $1,152.80, while silver slid 16 cents to $18.24. Once again, the metals are unable to break out to new highs, for reasons that should, by now, be pretty obvious to everyone.
Where are the jobs, and how about that housing market?
While the index hasn't been going straight up, it often seems that way, as, over the span of the past 44 trading days, the Dow has advanced 33 of them. That's a 3-1 ratio of up days over down, and a winning investing formula in anyone's book. I admit, due to my disbelief in the overall economic recovery that everyone keeps talking about but nobody sees, to have completely missed this 1100+ point rally.
That's my fault, but I'm also not about to jump in at these seemingly inflated levels, either. I remain steadfastly, stubbornly, in cash, and it's not a matter of wanting to catch the next low, because I probably won't be investing in stocks for the next few years, at least not US stocks.
Today was more of the broken record variety of days on the Street. Stocks were up, though not by much. Earnings are beginning to trickle into investor equations, with Alcoa (AA) announcing earnings in line with forecasts on Monday at 10 cents per share in the 1st quarter on revenue of $4.9 billion, lower than consensus estimates of $5.24 billion.
After the closing bell today, Intel (INTC) announced 1st quarter results of 43 cents per share, beating the street consensus of 38 cents. Revenue for the chip giant was $10.3 billion, on expectations of $9.84 billion.
Earnings season is off to a good start. Even a company like Talbot's showed a profit of 7 cents per share, even better if you exclude one-time items (Why not? It's a party!). The women's retailer then shows 13 cents per share.
The company had been on the brink of failure, but has redefined itself over the past two years. Still, it's profit was a mere $4.1 million for the quarter, but shares rose significantly due to the amount of short interest. Selling at nearly $15 per share, investors are taking a pretty heavy risk with Talbot's. The company shows negative return on equity, virtually no growth, a p/e of 27 and nearly a half billion dollars in debt. That debt burden alone is enough to keep heavy volume investors away and the shorts making their downside bets.
Talbot's looks a lot like the nation of Greece, which should be the subject of some focus due to the favorable loans it secured from the EU and IMF. Greece will be able to finance its debts at around 5%, or about 100-120 basis points below market rates. The unusually-generous terms have been applied because all of the European finance ministers understand that a Greek default would likely have a severe domino effect on countries like Portugal, Italy, Ireland and Spain. The stronger nations, especially Germany, would likewise be affected, either having to underwrite immense losses or suffer a collapse of its own economy or the Euro.
While a decoupling from the Euro might be the very best thing for the Germans and the continent as a whole, scrapping the entire Euro project has not been something widely anticipated, though it could very well happen within the next 2-3 years. The Southern countries aren't nearly as industrious as their Northern neighbors, and the German populace isn't taking kindly to the concept of bailing out countries which cannot manage their internal budgets. Giving Greece better terms than the very best borrowers, when they are, in fact, sub-prime, at best, reeks of the kind of unfair "picking winners" that was a hallmark of the infamous bank bailouts in the US.
With Greece, failure is being rewarded. With Talbot's, failure has only been delayed. The losers will be the investors who could not judge the risk, as it should be.
Dow 11,019.42, +13.45 (0.12%)
NASDAQ 2,465.99, +8.12 (0.33%)
S&P 500 1,197.30, +0.82 (0.07%)
NYSE Composite 7,638.35, -3.40 (0.04%)
Volume was a little bit perkier than normal, possibly owing to options expiration on Friday or the flood of earnings announcements due out over the next two weeks. Advancing issues outnumbered losers, though marginally, 3362-3108. New highs bettered new lows, 646-50.
NYSE Volume 5,806,878,000
NASDAQ Volume 2,557,582,750
As oil dropped for the fifth straight day, CNN Money ran this headline, Oil declines on oversupply worries. All we can say, after watching naked speculation take the price above $87 last week is, "no kidding?" Crude dropped another 29 cents, to $84.05 on the day, which is still $20-35 above where it should be. The oil speculators are so concerned about keeping the price this high due to imminent, continuing threats of production cuts by the oil-rich nations of the mid-East. Their economies are teetering on insolvency and a price of at least $80 per barrel is needed to keep them current on payments. Eventually, somebody's going to see the light and force the price lower, despite the economic realities facing the royal Suadis and other potentates in the region. Maybe Russia.
Gold dropped $8.80, to $1,152.80, while silver slid 16 cents to $18.24. Once again, the metals are unable to break out to new highs, for reasons that should, by now, be pretty obvious to everyone.
Where are the jobs, and how about that housing market?
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