Showing posts with label Greece. Show all posts
Showing posts with label Greece. Show all posts

Thursday, May 17, 2012

Dark Day for Wall Street as Financial System Stressed to Limit

Compared to the preceding twelve days of market meltdown, today's finish qualified as the worst on a number of different levels.

The paucity of buyers produced something of a free-fall right from the opening bell, which accelerated in the final hour of trading. There were a couple of attempts at rallies - at 10:00 am and again just after noon - but both failed horribly as there was no support and traders, many of whom have been in the "buy the dip" camp until recently, sold into the brief upticks.

Volume was also noticeably higher, an indication that the selling has more room to run over the next days and weeks. The causes of today's particular collapsing equity valuations were the same that have dominated the markets over the past three weeks and are no nearer resolution than they were at the beginning of the month.

Greece continues to slide into anarchy and chaos, taking the rest of the EU - and the world - along for the careening ride to oblivion, unemployment fears in the US remain high, global growth may be nearing stall-out speed and an inactive congress and Federal Reserve - both eerily quiet - are doing nothing to alleviate any of the political, tax and regulatory issues.

The 156-point loss on the Dow was the second worst since the slide began on May 2nd, beaten only by the 168-pont decline of Friday, May 4th, the day the BLS disappointed everybody with poor April jobs numbers. That such a massive decline would come nearly two weeks later, without a respite rally in between, displays clearly how weak and uncertain markets are at the present juncture.

Through today's close, the Dow has lost a stunning 837 points since the May 1 close; the NADSAQ, with a loss of more than two percent today alone, has been beaten back 246 points since May 2nd, while the S&P 500 has given back just over 100 points since May 1st, finishing just above the technically-insignificant 1300 mark, though emotionally, the number carries great sentiment weight.

Adding to the existing problems were a couple of key economic data points released today. Initial unemployment claims came in flat for the most recent reporting week at 370,000, still stubbornly high. The Philadelphia Fed manufacturing index, which was supposed to ring up a slightly higher reading, to 8.8, from 8.5 in April, was a sorry disappointment when it printed at a devastating -5.8. And the index of leading indicators, which was expected to post a gain of 0.2%, actually fell by 0.1%, all of this adding up to excessive worry and a rush to get out of equities for the safety of bonds.

The 10-year benchmark bond closed at an historic low of 1.702, which is probably a solid number considering the level of deflation that is expected over the coming months. A yield approaching 2% against an environment of low to no growth - or even a recession or worse - is likely to be a pretty good hedging instrument.

JP Morgan Chase's (JPM) continuing drama with its $2 billion portfolio loss has expanded by another billion according to the NY Times, while the FBI and SEC have both opened inquiries into the trade and CEO Jaime Dimon has been called to testify before the Senate Banking Committee on the matter.

Mr. Dimon, whose firm also faces a number of shareholder lawsuits stemming from the trade, continues to maintain the position in the trade, attempting to slowly unwind the derivative bet from hell while counter-parties turn the screws tighter. It would not be a surprise to see eventual losses from this blunderbust approach the $5 or $6 billion figure, wiping out the entire quarter's profit for the bank with the supposed "fortress balance sheet."

Dimon will have to do some fancy tap-dancing when he appears before the Senate inquiry, because the trade, widely known as the "London Whale" was the furthest it could have been from an outright hedge, being a pure speculation trade, exacerbated by piling in deeper as the losses worsened.

On brighter notes, gold and silver did an abrupt about-face, despite the dollar index continuing to rise and the Euro settling nearly flat on Forex markets, while oil slid again, along with wholesale gasoline prices, which will eventually result in further price declines at the pump.

The widely-anticipated Facebook IPO, slated to hit the street Friday morning, priced at $38 per share, at the upper end of the expected range. While Mark Zuckerberg and others will become instant billionaires tomorrow, the timing for such a lucrative cash-out day could not have come at a worst time. Facebook will almost certainly reward early investors, but the story of one good stock will do little to alleviate long-term, long-standing economic issues that have plagued the markets for weeks.

Greek banks are seeing devastating outflows of capital, as are those in Spain. Europe's descent into economic hell has accelerated and the EU ministers and ECB economists have found now way out.

Widespread defaults, from sovereign nations, to banks, to businesses will be at the top of the news for at least the next six to 12 months.

It's been 41 years since then-president Richard M. Nixon closed the gold window and nations have been trading on pure fiat - backed only by promises - ever since. The promises now broken, the era of debt-money is quickly drawing to an unseemly and devastating end.

Real estate, precious metals and cash are all that stand between personal devastation for not millions, but billions of people worldwide. All paper assets, including stocks, bonds, letters of credit and contracts will be blown away by winds of economic chaos and change.

Dow 12,442.49, -156.06 (1.24%)
NASDAQ 2,813.69, -60.35 (2.10%)
S&P 500 1,304.86, -19.94 (1.51%)
NYSE Composite 7,480.75, -112.07 (1.48%)
NASDAQ Volume 1,915,098,500
NYSE Volume 4,597,205,500
Combined NYSE & NASDAQ Advance - Decline: 915-4734
Combined NYSE & NASDAQ New highs - New lows: 31-310 (1-10 on the wrong side; never good)
WTI crude oil: 92.56, -0.25
Gold: 1,574.90, +38.30
Silver: 28.02, +0.82

Wednesday, May 16, 2012

Volume Up, Stocks Down As Malaise in May Exhibits the Results of Bad Karma

With higher and higher volumes showing up on individual stocks as well as the major averages virtually every passing day, the idea that there's something basically wrong with the markets and the global economy is beginning to build into a self-defeating, repeating, cyclical tailspin.

The major indices did another midday about-face, in classic bear market fashion, even though economic data in the US was relatively positive.

Housing starts were up - at an annualized rate of 717K on expectations of 675K, though building permits were lower than anticipated. That stocks, especially those of home builders, would rally on such news was not unexpected, though just because somebody puts a shovel in the ground does not necessarily imply that these newly-constructed homes will eventually be bought, much less completed.

However, two more broad measures of the economy were also positive. Industrial production grew at a rate of 1.1% in April, while capacity utilization for the month printed at 79.2%, a very strong and encouraging number.

Investors simply cannot shake the co-mingled issues of Europe, especially Greece, the falling Euro and rising dollar, all of which contributes to what could be a tough state of affairs for many of the US markets' global entities, which ship and sell around the world. Exports from the US will be especially damaged as the weaker foreign currencies and stronger US dollar make for pricier goods in faraway markets where demand has been slowing.

Following along the same logic, commodity prices are trending lower as well, which would help companies' bottom line cost structures and help keep them competitive, though traders are not confident there will be strong enough demand to produce meaningful pricing power and sustainable profit margins.

Underlying all these concerns are three major issues: Greece and the Euro, the upcoming presidential and congressional elections, and, political implications of US policy: the expiration of tax cuts at the end of 2012 along with uncertainty regarding President Obama's health care bill (now in the hands of the US Supreme Court) and a closetful of unwritten regulations, many of them centered on the financial industry through the Dodd-Frank legislation.

Further below the surface lies the uncertainty regarding the Fed's next move, as Operation Twist, aka QE3, expires at the end of June. Thus far, Fed chair Ben Bernanke nor any of the Fed's governors have hinted whether further easing would be forthcoming, and, at the end of the day, that is simply a nightmare scenario for the general economy and the banks, because without easy money, the fears are that global commerce will grind to a halt.

Markets hate uncertainty, and there's an abundance of that commodity in the flow right now, so there's no reason to believe that stocks will do anything but decline as profits are taken and few new positions are being staked out until there is resolution on some of these issues.

In the meantime, consumers are enjoying a bit of relief at the pump, as oil has fallen in just the past two weeks to its lowest level since December of last year and show no signs of bottoming. At the same time, housing prices keep declining and therein lies the conundrum of deflation. Everything costs less, but nobody is willing to pay now, because prices will likely be lower in a few days, weeks or months.

Obviously, there's no quick fix to any of this and behind closed doors, the leaders of the world's great nations and their central bankers are scared stiff.

The bad karma that's been spread worldwide by the political and monetary leaders is coming full circle it seems.

Dow 12,598.55, -33.45 (0.26%)
NASDAQ 2,874.04, -19.72 (0.68%)
S&P 500 1,324.80, -5.86 (0.44%)
NYSE Composite 7,592.80, -43.01 (0.56%)
NASDAQ Volume 1,842,974,250
NYSE Volume 4,254,574,000
Combined NYSE & NASDAQ Advance - Decline: 1843-3756
Combined NYSE & NASDAQ New highs - New lows: 76-255
WTI crude oil: 92.81, -1.17
Gold: 1,536.60, -20.50
Silver: 27.20, -0.88

Wednesday, May 9, 2012

Stocks Exhibiting Serious Weakness as Correction Completes Day Six

For the fourth straight day, US markets exhibited the same trading pattern on the major indices: A plunge at the open and the rest of the day spent trundling back higher. This is the effect of an overabundance of trading algos all programmed to begin buying at certain levels. Fully 85% or more of all trades are handled by machines, drwing into question the overall wisdom of a market built on lies, false assumptions, sketchy models and the overwhelming directive that stocks MUST go higher, all the time, no matter the news or events in the real world.

In any case, it's made it easier for real, human investors to get the heck out of dodge, and it's likely that a good portion of the really smart money has already exited. This is apparent from the price of bonds, which have been in rally mode all week, pushing yields near historic lows.

The cause for all of the latest market turmoil is no big surprise; it is Europe, specifically Greece, but peripherally Spain and France, which seem the two most likely targets for increased political volatility, and thus, stock declines.

The Greeks have the world by the proverbial short hairs at the moment. At any given time, the EU, ECB, IMF or any of the nearly nations could tell the the government of Greece that it's game over, or that they'll loan them money anyway, which is exactly what happened today.

It was reported that the Greek government, even if it received the latest round of bailout money, could not meet it's obligations, so, one has to wonder, why bother? That's the line of the hard left parties in Greece at the moment. They don't want any more IMF or ECB bailout funds, preferring to go it alone, presumably to leave the Euro as a currency behind and take back up the drachma as its national money.

Of course, all of this uncertainty has a negative effect on stocks, though US markets have suffered much less than their European counterparts, some of which have already fallen into bear market territories, along with China, which has been in the grip of the bear for the past two years, but that's another story, and something that is also worrying the gloablists and their plans to control world commerce.

There is a problem with the US markets and their repeating pattern of falls and rises. The intra-day plunges keep getting deeper and deeper, setting new support levels which will, over time, be proven to have about all the holding power of a paper towel in a hurricane. Eventually, the computers will either be turned off or reprogrammed and the flush of stocks down the drain will be swift and complete. Even as it stands, stocks are off sharply over the past six sessions, with the Dow down all six, and the S&P and NASDAQ down five of six, the only positive returns for the duo being extremely marginal gains on Monday - a point on the NASDAQ, less than that (0.48) on the S&P.

Tomorrow, the drama continues, with the US throwing in with initial unemployment claims, a number that may be secondary to the uneasiness in Europe, but should provide a secondary betting point for the open. Stay tuned. It's just beginning to get interesting, as the same pattern as 2011 is playing out again, almost to to day, when stocks peaked at the end of April.

Volume was elevated once again and new lows beat new highs for the fourth consecutive session.

Dow 12,835.06, -97.03 (0.75%)
NASDAQ 2,934.71, -11.56 (0.39%)
S&P 500 1,354.58, -9.14 (0.67%)
NYSE Composite 7,827.75, -59.51 (0.75%)
NASDAQ Volume 1,959,315,250
NYSE Volume 3,949,908,500
Combined NYSE & NASDAQ Advance - Decline: 1865-3709
Combined NYSE & NASDAQ New highs - New lows: 106-161
WTI crude oil: 96.81, -0.20
Gold: 1,594.20, -10.30
Silver: 29.24, -0.22

Tuesday, May 8, 2012

Equities Continue Retreat on Greece, Euro Breakup Fears

Sooner or later, the deniers will realize that the global economy is coming apart at the seams and that holding any kind of asset that isn't tangible, liquid or immediately tradable may not be worth the risk.

Almost daily, there are signs that the euro experiment is imploding, with Greece and France now at the forefront, but Italy, Spain and Portugal not far behind in terms of insolvency, anarchy and chaos.

The issues are the same: governments promised too much, spent too much and now don't have the funds to continue operating as they were during boom times. The specific trouble for nations using the Euro as currency is that they cannot print their way out of their messes, a la the United States, and must rely on the continued support of their neighboring nations and the ECB and IMF to fund their operations.

In Greece, the leader of Greece's Left Coalition party, Alexis Tsipras, began to start forming a coalition government, calling for repudiation of the bailout measures forced upon the nation and an investigation into whether the bailouts were even legal.

As Greece moved closer and closer to anarchy, chaos, and the eventual default upon its debts, it is becoming more clear that Greece will not long remain a member of the Eurozone, it's fate sealed by decades of underfunding pensions, loose tax policies and general corruption at high levels of the government.

France's new president, Francois Hollande, has promised voters to curtail the austerity measures that have cut jobs and pensions and has crippled the nation's economy.

European stocks were, by and large, down on the day, while in the US, the major indices suffered heavy losses early on, but rallied in the afternoon on nothing but vapors and in defiance of the reality offered by a collapsing European Union and general sluggishness in the global economy.

The Dow was down as many as 198 points before the afternoon rally cut those losses in half. The same was true on the NASDAQ and S&P, the latter down 22 points before shaving them to a marginal decline.

Despite the completely bogus and likely foolhardy buying into the dip mentality that is pervasive in these day-traded, momentum markets, the smartest of the smart money has probably already headed for the hills, seeking safe havens in treasuries or other hard assets, though one could not tell that from the action in gold, which, along with silver, was battered down and did not experience relief.

Central banks have been buying gold with both hands recently, all the better for them is their ability to dictate price to the market, swooping in to buy at bargain prices. However, today's activity was reminiscent of early 2008, before the great collapse that took all assets lower, though gold and silver began rebounding months before equities. Today's trade was more than likely the result of margin calls on stocks, being paid off by selling gold and silver, another foolhardy strategy.

While the utter collapse of the Euro and the global economy is by no means a certainty, signs of slowing and antecedent deflation are emerging, the real question being how far the US Federal Reserve, the ECB and other central banks will go with more policy easing and money printing before the game engulfs them completely.

The late-day rally on wall Street may have eased some nerves and cooled some of the fear, but the trend is surely in place, as stocks have fallen in four of the past five sessions (five for five for the Dow).

Also notable was the heavy volume, another sign that investors who want out are getting out, albeit not at the prices they may have wanted. Additionally, new highs - new lows has been negative for three consecutive sessions.

Dow 12,932.09, -76.44 (0.59%)
NASDAQ 2,946.27, -11.49 (0.39%)
S&P 500 1,363.72, -5.86 (0.43%)
NYSE Composite 7,887.26, -61.50 (0.77%)
NASDAQ Volume 2,169,278,000
NYSE Volume 4,215,958,500
Combined NYSE & NASDAQ Advance - Decline: 2403-3181
Combined NYSE & NASDAQ New highs - New lows: 110-178
WTI crude oil: 97.01, -0.93
Gold: 1,604.50, -34.60
Silver: 29.46, -0.66

Monday, May 7, 2012

US and European Subdued Reaction to French, Greek Voting

The tide has turned in Europe... against austerity, whatever that means, and towards more socialistic societies in both France and Greece, as Francois Hollande defeated right wing president Nicolas Sarkozy on Sunday, and the Greek Parliamentary elections produced a government with no clear majority for any party and difficult coalitions to be formed ahead.

While the French election results represent a complete shift in sentiment, the issues for Greece will almost surely come to the forefront of Europe's continuing debt crisis as minority parties will almost surely attempt to block the wholesale gutting of the country by the ECB and IMF. Recent agreements over debt restructuring and repayment are already suffering serious difficulty; the opportunity for a disorderly default by the Hellenic nation certainly back on the table.

Reaction in Asia was negative, with all markets suffering losses, probably the eventual result for markets globally, once the "all is well" phony, manipulated response in Europe and America is worked through. european markets were mixed, as were those in the US, the result of more central planning and full-spectrum control, which will eventually fail.

There was no other economic news worth noting, though, as is usually the case in controlled, bogus markets, the day's results were muted and in plain opposition to facts.

There will almost certainly be a period of adjustment in the Western markets before the full brunt of a sea change in politics is accepted. Until then, expect markets in the US and Europe to behave as they have been, adrift on piles of freshly-printed worthless money, in denial of the truth and more than likely sideways before heading into the awaiting maw of the abyss into which they must fall.

Almost imperceptibly, the decline in equity prices has already begun. New lows bettered new highs for the second straight session, an indicator that should not be ignored during a period of rapid change.

Dow 13,008.53, -29.74 (0.23%)
NASDAQ 2,957.76, +1.42 (0.05%)
S&P 500 1,369.58, +0.48 (0.04%)
NYSE Composite 7,948.77, +15.47 (0.19%)
NASDAQ Volume 1,738,947,625
NYSE Volume 3,535,832,750
Combined NYSE & NASDAQ Advance - Decline: 3054-2523
Combined NYSE & NASDAQ New highs - New lows: 112-134
WTI crude oil: 97.94, -0.55
Gold: 1,639.10, -6.10
Silver: 30.12, -0.31

Friday, March 9, 2012

Greece OK for Now; NFP Prints at 233K; Trading Volume Pathetic

Two major news events largely determined the tenor of trade on US markets Friday.

The Greek restructuring plan went as the global banking cartel liked, with non-governmental lenders taking a 53.5% haircut on bad Greek bonds, while the troika's funding facilities remained intact.

Triggering the collective action clauses and a credit "event" according to the ISDA (International Swaps and Derivatives Association) in which affected parties will settle up on March 19. With just a little over $3 billion in Credit Default Swaps affected in the deal, the effect is little more than a rounding error in the international scheme of things, or roughly the amount Bank of America writes off in a typical quarter.

Prior to the open, the BLS offered another positive reading on unemployment, with the official rate staying unchanged at 8.3%, as the US economy created 233K jobs during February, strongly aided by a raft of temporary hires and the usual fudging by the Labor Department.

Like it or not, the impression is that the US continues to emerge from the depths of the Great Recession, as the calendar turned three years old on the current bull market in equities.

For the week, the major indices were little changed, and, despite all the hoopla, trading volume continued to be incredibly weak, especially on Friday, one of the lowest-volume days of the year, which has seen nothing but poor volume.

Market participants appear to be smug over the developments in Greece and Europe, which continues to avert crises on a regular basis, even though Greece is now in a depression, their latest quarter GDP showing a 7.5% decline.

But, hey, it's the weekend and college basketball is heading into its wild March Madness phase, so relax and enjoy seems to be the operative mindset, though commodity prices, especially in oil, gold and silver, tell a different story.

Dow 12,922.02, +14.08 (0.11%)
NASDAQ 2,988.34, +17.92 (0.60%)
S&P 500 1,370.87, +4.96 (0.36%)
NYSE Composite 8,102.13, +19.75 (0.24%)
NASDAQ Volume 1,553,531,125
NYSE Volume 3,527,470,750
Combined NYSE & NASDAQ Advance - Decline: 3837-1653
Combined NYSE & NASDAQ New highs - New lows: 278-26
WTI crude oil: 107.38, +0.80
Gold: 1,711.50, +12.80
Silver: 34.21, +0.38

Thursday, March 8, 2012

Market Knee-Jerk Response to Greek Deal is a Bullish One

Though there has been no official announcement, apparently, market participants believe that the Greek restructuring of their private debt (a 53.5% haircut for bond-holders) is a done deal.

This was always assumed to be the case, as nobody wanted a credit event and a triggering of the collective action clauses (though that WILL happen) and thus, force payouts of CDS as if Greece actually did default (which it of course did, which is why it suddenly changed its laws regarding bonds).

If all of this sounds too fantastic or incomprehensible is because all reporting today was based entirely upon rumors. The actual tally of how many and what percentage of the private bond holders agreed to the deal won't be known until 1:00 am ET at the earliest and probably not until 8:00 am ET, when the group arranging the deal will hold a news conference.

As usual, the most measured and unbiased reporting is being done by the Christian Science Monitor which has as its headline, Greece to investors: take a haircut so we can get our bailout and includes this little gem a few paragraphs into the article:
According to the deal the Greek government negotiated with the Institute of International Finance (IIF), which represents most of Greece's private sector creditors, investors will write off 53.5 percent of debt – which amounts to a waiver of 74 percent when the loss in future interest is taken into account – and exchange the rest of bonds they are holding into new papers which are worth less, have a longer maturity, and pay less interest.
So, according to equity market participants, having private bondholders - mostly banks and hedge funds - take a 74% loss on their investments - only to repackage a new deal to the same defaulting party - is better than having a country actually default on its debt and start over. Plus, this agreement paves the way for Greece to take on more debt that it can't possibly repay, ensuring that we'll reprise this particular farce all over again somewhere down the road.

If that is what passes for good news these days, then there's little wonder why most individuals are not invested in the stock markets, nor want to be. It also serves as a prime example of why most people don't trust banks, governments or the media, because instead of having debtors who can't pay back loans default, the prevaricators of this particular brand of financial suicide actually prefer pretending and replaying the same canard over and over again (like the US government and the Fed did with the too big to fail banks in 2008-09), all along adding even more debt, more derivative bets (CDS) and more equity market euphoria to the calculus.

It's a dangerous game, one in which any individual large player could pull the rug out from beneath everyone else at a moment's notice, although that's a scenario unlikely to occur because it would be the equivalent of playing Russian roulette with all chambers loaded.

If today's good news is that Greece isn't defaulting - at least not today - and the markets respond positively, one must ponder what would happen if there was some actual good news. Recalling images of the late Great One, Jackie Gleason, from the Honeymooners, "to the moon, Alice, to the moon."

Dow 12,907.94, +70.61 (0.55%)
NASDAQ 2,970.42, +34.73 (1.18%)
S&P 500 1,365.91, +13.28 (0.98%)
NYSE Composite 8,082.36, +102.58 (1.29%)
NASDAQ Volume 1,620,493,125
NYSE Volume 3,442,931,750
Combined NYSE & NASDAQ Advance - Decline: 4295-1323
Combined NYSE & NASDAQ New highs - New lows: 199-30
WTI crude oil: 106.58, +0.42
Gold: 1,698.70, +14.80
Silver: 33.83, +0.25




Tuesday, March 6, 2012

Individual Investors Not Buying Growth and Recovery Myths

Institutional investors, like hedge funds, mutual funds, retirement funds and the like, have a vested interest in keeping stock prices on the rise, such as has been seen in the first few months of this new year.

On the flip side, individual investors have shied away from equities in a meaningful way since the economic collapse of 2008 and few have ventured back. Their reasoning became evident today as stocks were hard-hit globally, beginning overnight in Asia and accelerating with large losses on the european exchanges. By the time the opening bell rang in New York, Wall Street was bracing for a world of hurt.

Remember that disturbing, repeating pattern mentioned at length here yesterday? The one in which stocks fell sharply at the open, only to gradually improve throughout the remainder of the session?

As it appears today, those dips and rises might have been nothing more than smart money getting out ahead of the carnage to come. The repeated attempts and failures for the Dow to close over 13,000 were at least a set-up for a trend top in stocks and may have signaled an impending correction or even outright rout.

The reasons for weakness in stocks could have been predicted by the constancy of low trading volumes, mixed to negative economic data and the non-confirmation by the transportation index. Wall Street's professional prostelitizing over the need for individuals to "get back into the market" or "stay invested" has been running contrary to evidence for quite some time, and it may finally begin to sink in that continual growth is an impossibility and the US "recovery" is nothing but a well-managed myth, propagated by the control freaks in Washington and New York and promulgated by the whores of the media.

Wall Street's five-month-long, liquidity-fueled bogus rally is coming to a quick end. All the cheerleaders for "dow 13,000" are going to look pretty stupid in coming weeks and months as the widely-watched average hovers closer to 12,000 and possibly even lower. How low it will go nobody knows for sure, though there are elements already in place, like Greece, Europe in recession, slowing economies in China, India and Brazil, high food and fuel prices, that could plunge the world into a re-enactment of the 2008 crash, only that this time, fed funds rates are already at zero and tens of trillions of dollars have been thrown at the problems without results.

Today's drop was the first triple-digit decline for the Dow of the new year and the largest percentage decline since November 23. That it comes a day before the release of the ADP private employment data report - which serves as a proxy for Friday's NFP call - is probably not a coincidence. Neither is it coincidental that private bond investors in the Greek bailout will vote on whether or not to accept the terms of a debt restructuring (read: haircut) on Thursday. Bad news might remain in the shadows for a while and might be purposely ignored, but eventually it surfaces, and by then it's usually worse than expected.

In the globally-connected world created by the Keynesian genii central bank economists, Greece's problems are Europe's and our own, and Chinas and everybody's. The contagion which will proceed from Europe will engulf all markets and all countries. Central bankers will have two options: lying and printing, which has been proven ineffective, or, bank liquidations, sovereign defaults and global deflation. They will likely opt for more "pretend and extend" tactics, leading to more inflation and more phony markets in which people of common sense will not participate. The other, proper, Austrian-style solution may be more painful at first for some, but once the toxic debts and zombie banks are flushed from the system, real recovery can begin.

This week and the next two may prove to be as pivotal in terms of the survivability for the entire global economic structure as any time in the last thirty years.

One should not be worried unless one has a job, a pension or most of one's wealth in stocks because the one-percenters of the world are about to become even more vilified than ever as the world's problems are brought out into the open and some may even join the ranks of the feeble top 20 percent. What the global nanking and political cartel has wrought will almost surely destroy more than a few ill-gotten fortunes and many more honestly-made ones, but, whatever path is taken, more economic pain is nearly assured, though this time it will be more evenly distributed.

In fact, those clinging to the bottom rungs of the economic ladder may fare best of all.

Dow 12,759.15, -203.66 (1.57%)
NASDAQ 2,910.32, -40.16 (1.36%)
S&P 500 1,343.36, -20.97 (1.54%)
NYSE Composite 7,920.13, -171.14 (2.12%)
NASDAQ Volume 1,870,041,375
NYSE Volume 4,171,692,250
Combined NYSE & NASDAQ Advance - Decline: 724-4956
Combined NYSE & NASDAQ New highs - New lows: 50-82 (flipped, finally)
WTI crude oil: 104.70, -2.02
Gold: 1,672.10, -31.80
Silver: 32.78, -0.91

Friday, March 2, 2012

Down Day All Around as Week Ends; Spain says 'No' to Austerity

Either everybody and their brothers-in-law were taking profits on Friday or there's some kind of disturbance in the Force, because not only were stocks down, but so were oil, gold and silver.

Just for the record, it was another brutally low volume day in equities and very light on economic data. Sure enough, however, our friends in Europe attempted to make things interesting as Spanish Prime Minister Mariano Rajoy defied his EU overlords in Brussels by setting a softer budget target than originally agreed upon.

The targeted budget deficit for 2012 was supposed to be no larger than 4.4 percent of GDP, but Rajoy targeted a deficit that will amount to 5.8 percent of assumed GDP.

Of course, the numbers game is a nebulous one, especially considering Spain's unemployment rate hovering around 20% nationwide.

As EU leaders prepared for a summit beginning Saturday in Brussels, they were greeted by hundreds of union protesters railing against austerity. Similar protest were held in Greece and Spain. Across Spain, students protested cuts to education budgets and the demonstrators clashed with police in Barcelona.

The Spanish demonstrations were large, estimated in the tens of thousands.

Back here on planet America, there were no protests of any size to speak of, though it seemed like everyone was more in a mood to forget about money and budgets and just go home for the weekend.

Dow 12,977.57, -2.73 (0.02%)
NASDAQ 2,976.19, -12.78 (0.43%)
S&P 500 1,369.63, -4.46 (0.32%)
NYSE Composite 8,125.17, -49.94 (0.61%)
NASDAQ Volume 1,754,632,875
NYSE Volume 3,346,330,500
Combined NYSE & NASDAQ Advance - Decline: 1748-3844
Combined NYSE & NASDAQ New highs - New lows: 185-42 (beginning of convergence?)
WTI crude oil: 106.70, -2.14
Gold: 1,709.80, -12.40
Silver: 34.52, -1.14


Wednesday, February 22, 2012

Greek Debt Prison; Real Estate's Bogus Stats and Obama's Phantom Recovery

Let's Just Pretend.

That's what Wall Street, the EU and the central bankers of the world want you to do. Pretend.

Pretend there is a way out for Greece. Pretend that the US economy is growing, that the debtsof all nations will eventually be paid off through the magic of "growth," that your future, and that of your kids' will be secure.

None of it is true. The headlines from the likes of Reuters, Bloomberg and Dow Jones only parrot what the elite bankers and corrupt governments feed them. Journalism died during the Bush administration of the 2000s. The rule of law is being killed every day by the likes of the AG settlement, the non-prosecution of anybody involved in the mortgage/robo-signing/foreclosure scams and the constitution has been marginalized by congress and presidential orders.

What makes it even more frightful is that it seems to worsen every day. No statistics can be trusted and the words coming from the mouths of politicians ring hollow and void.

Take just a few of today's news items for instance. President Obama - to great fanfare - proposed new tax rates for businesses in the US. Never mind that they have less chance than Lindsay Lohan giving up drinking of ever being signed into law. Sure, they sound good (if by good you mean that the government is somehow entitled to the ridiculous amount of 28% of you company's net profits), but they will be twisted and broken and flailed about by a congress that knows nothing better than obfuscation, ridicule and deceit.

Then take a look at the January's existing home sales figures released by the NAR. Again, the trumpets blared that real estate is recovering, with the month's sales up 4.2% from December to an unadjusted 4.57 million, annualized (why do they annualize these figures in an age in which numbers can be recorded and crunched in an instant? It's easier to FAKE them that way.). Never mind that distressed properties boosted the number materially or that the rate of deals falling through continues to rise or that mortgage applications fell again this week.

But wait a minute. Last month's number was 4.61 million... Well, that was revised down to 4.38 million. So, that gain in December actually turned out to be a decline. Next month, the NAR can revise the January number down too, so that February shows a gain. It's a con. A shell game. And the American public is the mark.

And then there's the Greek deal, the third bailout for the nation in the past two years. It's not enough that the EU is "loaning" them another $172 billion ($130 billion Euros), but this one comes with various strings attached, such as a special account that requires Greece to pay its creditors before paying its own expenses; a permanent monitoring task force from the European Commission; private investors forced to eat 53.5% of the money they've already loaned (and are not getting back); drastic cuts to pensions, the minimum wage, defense spending, healthcare and public sector jobs; and more.

With these new conditions, Greece, for all intents and purposes, is no longer a sovereign state. Rather, it is a debt-slave, a ward of the European Union. Obviously, centuries of in-breeding among Europe's elite ruling class has taught them well how to subjugate the will of the masses.

But maybe there's hope. Since the signing of the Greek deal on Monday, stocks in Europe have done nothing but decline. There is little faith among professional investors that this arrangement will result in anything more than a temporary reprieve and an ultimate default.

In the US, stocks wandered around for the second straight day, though this time they finally bit the bullet and had to fall. Not by much, but any decline in stocks is a blow to the monied interests and they seem worried about Greece, about the price of gas and about the economy in general. And the volume was again absurdly low, because nobody but the banks, hedge funds and HFTs are playing.

They might even begin to worry that people are sick and tired of being lied to and are beginning to wake up.

Wake up, America. How much longer can these charades continue?

Dow 12,938.67, -27.02 (0.21%)
NASDAQ 2,933.17, -15.40 (0.52%)
S&P 500 1,357.66, -4.55 (0.33%)
NYSE Composite 8,094.39, -21.03 (0.26%)
NASDAQ Volume 1,676,971,875
NYSE Volume 3,608,714,750
Combined NYSE & NASDAQ Advance - Decline: 2032-3589
Combined NYSE & NASDAQ New highs - New lows: 162-24
WTI crude oil: 106.28, +0.03
Gold: 1,771.30, +12.80
Silver: 34.25, -0.18

Tuesday, February 21, 2012

Dow Runs at 13,000, Relents, as Oil Tops $106/Barrel; Gold, Silver Rocket Higher

On the heels of a three-day weekend and a late-night session of EU finance ministers which apparently (maybe, sort of, kinda) came to a conclusion on funding for the failed state of Greece, the Dow Jones Industrials were poised to exceed 13,000, a number not seen since May of 2008.

While the Eurocrats dithered, wrangled and finally agreed to a very messy agreement to stave off the imminent default of the Republic of Greece, most Americans were sleeping, though the conditions of the Greek people continued to worsen, seemingly by the hour.

Nonetheless, stocks opened with the usual ebullience afforded the opening of a new week of stock profit pursuits and quickly came within a whisker of the magic 13,000 level, before falling quickly backward at 10:00 am, as the Euro plunged.

Undiscouraged, the monkey algos, which amount for more than 70% of all trades, turned around as the Euro resumed gaining value against the US dollar and the Dow eventually broke through the haloed mark, though just briefly, on three different occasions during the session.

Meanwhile, the price of a barrel of WTI crude oil surpassed $105/barrel and just after 2:30, rang up $106. At that, the market had had enough and the day's rally was quickly over, the Dow - and all of the major averages - falling into the red before recovering slightly into the close for a split finish.

While there is still some guarded optimism over the Greek "deal" struck by the EU ministers, there are more than just a few doubters that the country will ever recover from the depression caused by decades of overspending, cheating on taxes (it's a Greek - and exceedingly a global - way of life) and an overhang of debt that would make even mighty Atlas himself shy from the task of holding aloft the birthplace of democracy.

Stock profiteers aside, there's ample reason to believe that Greece's ongoing tragedy will help pull down the rest of the Eurozone, and with it the global economy, fiat money and eventually, governments. The major economies of the world are playing with fire, printing without remorse nor sufficient moral appreciation of what the aftermath of global inflation will bring.

Today's skittish market turnaround may have been the first chapter in what could be "the great unraveling." Too little has been done - here in the US, in Europe, China and Japan - to address the underlying issues of the great recession, with the economists of the world having come up with no answer other than to simply pile more debt on top of the already enormous mountain of unpayable debts built up during the go-go 90s and moribund 2000s.

If there's any wonder why gold and silver took off today like they were launched out of cannons, the chart below may explain why the now-12-year bull run of the precious metals may just be getting started.

Dow 13,000 may be a pretty number and cause for celebration in some board rooms and on certain stock desks, but it has little to do with the overall health of the economy of any nation. Relentless printing of money, backed by "full faith and credit" has become the norm and we will all be the poorer for it in time and the price of oil is merely the tip of the spear that will pierce all the misconceptions and hopeful tones emanating from Wall Street, the City of London, Shanghai and Tokyo.


Dow 12,965.69, +15.82 (0.12%)
NASDAQ 2,948.57, -3.21 (0.11%)
S&P 500 1,362.21, +0.98 (0.07%)
NYSE Composite 8,115.42, +0.91 (0.01%)
NASDAQ Volume 1,815,109,000
NYSE Volume 3,766,193,750
Combined NYSE & NASDAQ Advance - Decline: 2490-3168
Combined NYSE & NASDAQ New highs - New lows: 260-16 (ridiculous)
WTI crude oil: 105.84, +2.60
Gold: 1,758.50, +32.60
Silver: 34.43, +1.21

Friday, February 17, 2012

Freaky Friday: $6 Trillion In Fake Bonds, Euro-Greek Bond Swap; March 23rd Looking Grim

For a Friday, the news flow certainly was heavy.

The morning began with a report out of Italy, that $6 trillion worth of allegedly "fake" US Treasury bonds were seized by Italian police and the US Secret Service along with eight men involved in the counterfeiting and money laundering scam. Authorities said that the individuals arrested were planning to purchase plutonium from Nigeria, a story that has a familiar ring, last used as part of the pretense for going to war with Iraq after 9/11.

This story has all the markings of either a false flag event or wild conspiracy. Details are sketchy, though the assembled mainstream news media has already accepted the idea that the bonds are fakes. Don't expect to hear or see much more about this after today, except from bloggers and investigators outside the mainstream.

The European Central Bank (ECB) swapped its Greek bonds for new ones to ensure it isn’t forced to take losses in a debt restructuring. This story also greeted the morning in New York, without much fanfare, except for the press mimicking the officials at the ECB that Greece is moving closer to a resolution of its debt issues before the fateful date of March 20 arrives.

ZeroHedge has a pretty good take on the implications and possible illegalities of the move, which will apparently trigger the collective action clauses (CAC) and also Credit Default Swaps, as it would be a default event. Ooopsie. Could be a cascade coming.

Related, but unconfirmed, is a report that some banks already have documents detailing a March 23 default by Greece in which Greek banks will be closed, accounts frozen and Euro-denominated currency will become worthless in the land of Plato and Aristotle.

March 23 happens to be a Friday, which makes sense, since the report says the major credit agencies will declare Greece in default, and late Friday afternoons, after US markets have closed, seems to be the preferred time for any nasty news from the credit raters.

Late in the day, our normally-inept congress managed to PURPOSELY UNDERFUND THE SOCIAL SECURITY TRUST FUND by passing a bill to extend the roughly-30% cut to employees for the rest of the year and keep unemployment benefits flowing to the millions of Americans who just can't seem to find a good job.

Amid all of this, the stock market looked like a side show, with stocks limping along to yet another positive close - except for the NASDAQ, mostly because Apple finished down 0.09 - on horrifyingly-low volume.

It's tough to make this stuff up, but somebody must be, because financial markets are acting as if they're from another dimension or distant galaxy. The only reasonable correlation that can be assumed these days is that if the Euro is up, so will be US stocks. Oh, and any mention of Iran or the Strait of Hormuz is good for at least another 40-cent move higher in the price of crude, which has retail gasoline now priced at US record levels for February.

Hey, it's a three-day weekend. We can worry about Greece on Tuesday. But, don't drive too much. Could just wreck your budget.

Dow 12,950.10, +46.02 (0.36%)
NASDAQ 2,951.78, -8.07 (0.27%)
S&P 500 1,361.23, +3.19 (0.23%)
NYSE Composite 8,114.51, +22.32 (0.28%)
NASDAQ Volume 1,972,077,750
NYSE Volume 3,675,412,000
Combined NYSE & NASDAQ Advance - Decline: 3082-2535
Combined NYSE & NASDAQ New highs - New lows: 303-12 (0 new lows on NYSE. WOW!)
WTI crude oil: 103.24, +0.93
Gold: 1,725.90, -2.50
Silver: 33.22, -0.15

Wednesday, February 15, 2012

Numbers Racket: Greece, Euro, Apple, Transports and 100 Dow Points

Let's get real here.

Raise your hand if you think Greece is NOT going to default.

Very well. Maybe the rest of you with hands on hips or in pockets will appreciate the news out of Europe this morning, which somehow managed to pump futures toward a strong positive opening.

What's that? Even though Dow futures were up more than 80 points before former Treasury Secretary Hank (martial law) Paulson appeared on CNBC for the usual softball interview and were up 47 points just seconds before the open, the Dow only managed an initial gain of... hmmmm, less than 20 points.

Eurozone's 17 nations' (non) growth rate for the 4th quarter of 2011 was -0.3, the only countries showing gains in GDP growth being France and Slovakia.

Five countries in europe are already in recession. No surprise here, as Greece, Belgium, the Netherlands, Portugal and Italy have experienced two consecutive quarters of GDP decline. The one country everyone has an eye on is Germany, where output for the quarter fell by 0.2%, because the Germans have been the only country in the region showing any sign of elasticity and ability to weather the financial storms.

However, the rest of the Eurozone is dragging Germany's usually strong industrial sector down with the rest of the continent, a development that could prove disastrous as the EU plods through a troubling 2012.

Stocks took a spanking today in the US after the aforementioned recession news and then the communique out of Brussels from the esteemed EU finance ministers (a Baptist minister, a Catholic priest and an EU finance minister walk into a bar... oh, never mind) reminded the assembled money watchers worldwide that they are experts at procrastination and posturing.

While yesterday's commitment letter from Greek conservative leader Antonis Samaras stated that he would go along with the proposed - and passed by the Greek parliament - austerity measures, the potential future leader of Greece (give him about 6 months before he is bought off and retires, if he even wins the April race for Premier) contained a small caveat, saying he might reconsider, once, of course, the authorities deliver the 130 billion (or maybe it's more like 202 billion) Euros promised by the supra-government of the EU.

What happened today could best be described as controlled demolition. While the Dow was subsumed, hovering from 15 to 35 points in the red, the NASDAQ was wildly positive, though 90% of the gain was due to just one stock, Apple (APPL), which exploded in a number of ways on the day.

First, Apple rocketed to an all-time high of 526.29, but closed the day at the somewhat pedestrian level of 497.67. That's a pretty big round-turn, even for a stock with such a heady valuation. The decline was magnificent, falling 20 points in just the noon hour, and stumbling to a nearly 12-point loss in the remainder of the day. Volume was more than four times the average daily volume (12 million shares) at 53,457,212.

But Apple was just the NASDAQ story. The Dow charted its own path, guided by the Euro-dollar trade. The Euro slumped and finished below the psychotic 131 level, a number which is absolutely meaningless unless you're swapping currencies or considering travel to the doomed continent. But, stocks have followed the Euro-Dollar relationship like clockwork this year. Euro up, US stocks up, with the converse also true. The real value of the ephemeral Euro is all in the mind and to which equally worthless paper currency to which you compare it. If one would be so bold to compare it to some commodity - say, gold - well, a Euro won't buy you a single grain and it's gotten worse throughout its 11+ year life with each turning of the calendar.

So, the Dow set down at the close with its worse loss of 2012, which is not so much a surprise, being that the index (and all the other majors) has overheated in what has been an unusually-warm winter. But the Dow could just not surrender 100 points on the day, despite it being down 125 points at its worst level and down 108 points only one minute prior to the close. Perhaps that number (-100) has meaning to some people, but for the rest of us, -97.33 will just have to do.

What is alarming and scary (like Europe isn't enough of a fear factor) is the action in the Dow Transports, which suffered a two percent decline on the day, easily outstripping the widely-followed indices.(please have a gander at the 1 year chart with the 80% down-spike in November)

Another unpleasant thought concerns the timing of this week's reversal of fortune, just two days prior to options expiry, normally the strongest and upward-tilted week of any month in this Ponzi-like market scheme. Today's volume was also quite strong across all indices.

If stocks aren't making gains just prior to options expiry, then something very wrong is happening behind the scenes. It could be as simple as the market being overbought, or waking up to the awful European reality or the threat of war with Iran which looms larger each passing day.

Then again, it could just be that the low level of market participation has the major traders now drooling over each other's lunches. US stocks have been on a tear since October and the time and sentiment are ripe for a nasty correction.

A clue could come the day the Dow closes with a loss of more than 100 points, though that might prove to be a day too late and many billions of dollars short. Today's near-100-point loss should provide more than enough caution to everyone.

Keep a close eye on gold, and especially, silver, which has underperformed for the past two weeks. Any sustained gains in the precious metals should serve notice that there's something big brewing.

Dow 12,780.95, -97.33 (0.76%)
NASDAQ 2,915.83, -16.00 (0.55%)
S&P 500 1,343.23, -7.27 (0.54%)
NYSE Composite 7,998.65, -30.97 (0.39%)
NASDAQ Volume 2,036,710,750
NYSE Volume 4,045,495,750
Combined NYSE & NASDAQ Advance - Decline: 2267-
Combined NYSE & NASDAQ New highs - New lows: 264-23
WTI crude oil: 101.80, +1.06
Gold: 1,728.10, +10.40
Silver: 33.41, +0.06

Tuesday, February 14, 2012

Greek Drama Causes Wild Swings in US Stocks

Leave it to those wild, crazy, dancing Greeks to make a mockery of equity markets.

The information coming out of Athens, then Brussels, then back to Athens caused US stock indices to dive at the open, hit their lows of the day just a half hour before the close and then rally back to the flat line at the close.

It was Greek tragicomedy at its very best.

The day opened to word from Athens that the leader of Greece's conservative party, the outspoken Antonis Samaras, would not sign a letter committing to the austerity package approved by the Greek parliament on Sunday and added that if he were to become Greece's Prime Minister in the April elections, he would seek to re-negotiate the terms of that deal.

With that information in hand, EU finance ministers cancelled a scheduled Wednesday meeting that was intended to finalize the Greek agreement, paving the way for another round of bailout money before the country goes belly up on March 20.

That news sent markets into a choppy downside drift through the bulk of the session, with stocks hitting their lows right around 3:30 pm New York time.

But then, Samaras apparently had a change of heart - conveniently just before the close in New York - saying that he would sign the commitment letter, which sent stocks soaring in the final half hour of trading. The S&P - which still finished in the red bounced 10 points during that time, with the Dow picking up about 80 points and the NASDAQ good for an 18-point burst.

At the end of the day, it all worked out to not much ado about something, though nobody is sure just what's going to occur next in quickly-failing country of Greece.

The Euro dropped below 1.31 to the US dollar during the session, but rallied back above that benchmark late in the day. The Dollar Index, which was positive all day, took a bit of a trim, but still ended positive.

Volume was once more anemic, suggesting that there are only a few humans still playing in the news-and-computer-driven trading markets. In the most general terms, it's simply too risky to venture in and out of the markets no matter how often CNBC reminds us that stocks are up for the year or that corporate profits are solid.

There's an end-game out there, and it is currently hovering over the Parthenon. Ironic as it may be, the nation which brought democracy into the mainstream centuries ago has become the test site for centrally-planned financial suicide.

Dow 12,878.28, +4.24 (0.03%)
NASDAQ 2,931.83, +0.44 (0.02%)
S&P 500 1,350.50, -1.27 (0.09%)
NYSE Composite 8,029.61, -26.62 (0.33%)
NASDAQ Volume 1,879,330,000
NYSE Volume 3,839,528,250
Combined NYSE & NASDAQ Advance - Decline: 2094-3532
Combined NYSE & NASDAQ New highs - New lows: 174-14
WTI crude oil: 100.74, -0.17
Gold: 1,717.70, -7.20
Silver: 33.35, -0.37

Monday, February 13, 2012

Greece Passes Austerity Measures; Obama Budget Goes to Congress; Apple Closes Above 500

Any angst over Greece's passing of their mandatory austerity measures was quickly dispelled by the markets on Monday. Most European bourses finished the day solidly in the green, and US markets followed suit, posting gains which pretty much eviscerated Friday's fear-induced declines.

Even though the austerity in Greece is a death-knell for the country and widespread rioting took place in the capitol of Athens and elsewhere, the globalist elements of the EU, ECB and IMF viewed the vote as a positive referendum on the overall health of the Euro system.

Realistically, Greece will never be able to repay its debts nor will it be able to accommodate all of the cuts to social welfare programs and government employment, but the parliament did what was most expeditious to secure financing from its feudal masters in Germany and keep the game going.

The scheme - from the view of the IMF, ECB and Angela Merkel - seems to be to keep Greece functioning as a neo-slave-state to keep the Euro from collapsing, and, thus far, it seems to be working. A disorderly default by the Greeks might just be the catalyst that destroys whatever unity is left in the EuroZone, an outcome the supra-governmental EU leaders will fight bitterly with truckloads of money (it doesn't matter how much, they'll just print more) and the current kind of kabuki theatre that is disguised as "austerity" for the free-spending Greeks.

Their fear is that Greece's demise could foment similar outcomes in Portugal, Ireland and elsewhere, particularly Spain and Italy, and the continental currency experiment of the Euro would come crashing down upon their collective heads. Problematic as it may be, the monetarists in Brussels are committed to spending whatever it takes to keep the EuroZone intact by relentless money printing and worry about the consequences of widespread poverty, inflation, social unrest and ultimately, a continent-wide depression, later. We wish them luck, mostly because they'll need it, as desperate as the situation has become.

Here in the States, President Obama submitted his 2013 budget to congress, where it was deemed by many (mostly Republicans seeking to unseat the president this fall) as dead on arrival. Obama's 3.8 Trillion monstrosity would reduce military outlays while hiking outlays to infrastructure projects and features higher taxes for the wealthy and a $1.33 trillion deficit, marking the fourth straight year that the federal budget deficit would top one trillion dollars, despite an Obama campaign promise from 2008 to cut the deficit in half by the end of his first term.

Investors shrugged off the details and went about their task of re-inflating the corporate sector, sending stock prices close to their highest levels of 2012, though volume on the NYSE was the lowest for a non-Holiday session in over a decade.

Oil closed above $100 per barrel, despite US gas consumption being historically weak and Apple (AAPL) closing above 500 per share for the first time in its history. Apple is currently the largest company in the world by market cap, surpassing oil giant ExxonMobil for the top spot.

The major indices followed their now-routine pattern of a gap-up open followed by a mid-morning decline and rally and a flat-lining finish.

Dow 12,874.04, +72.81 (0.57%)
NASDAQ 2,931.39, +27.51 (0.95%)
S&P 500 1,351.77, +9.13 (0.68%)
NYSE Composite 8,056.25, +64.22 (0.80%)
NASDAQ Volume 1,613,612,250
NYSE Volume 3,462,219,000
Combined NYSE & NASDAQ Advance - Decline: 4236-1411
Combined NYSE & NASDAQ New highs - New lows: 262-12 (par-tay!)
WTI crude oil: 100.91, +2.24
Gold: 1,724.90, -0.40
Silver: 33.72, +0.12

Friday, February 10, 2012

Greece: Deal or No Deal; Booking Profits Today

Finally, after four days of running essentially in place, stocks took a morning downturn and turned it into an all-day event, as US indices suffered their worst loss of 2012.

The catalyst for the day-long decline was none other than Greece, where the deal struck on new austerity measures just yesterday quickly became unglued as the leader of the LAOS party, Giorgios Karatzaferis, said publicly that his 16-seat faction (of Greece's 300-member parliament) would vote against the planned austerity measures this Sunday.

The departure of the small faction caused a major uproar in financial markets, which see the defection as a major blow to the overall refinancing plan put in place by the EU, ECB and IMF (the "troika"). Globalist financial leaders have demanded that the Greek government sign onto the strict austerity measures before taking further steps to ease the crisis in Greece with another round of bailout funds before the deadline for Greece to repay roughly $14 billion occurs on March 20.

Additionally, as many as five cabinet ministers of the newly-formed Greek coalition government have reportedly resigned, signaling even further defections from the nation-destroying plan to keep Greece afloat and the Archbishop of Athens - and leader of the Orthodox church - sent a letter to Prime Minister Lucas Papademos warning of a "social explosion" of poverty, homelessness and rioting should the country continue on its current, destructive path.

Even today, protesters hurled gas bombs and rocks at Greek police in and around the capitol as the nation enters a dangerous, deadly phase of its struggle for sovereignty.

The bottom line is that Greece can and probably should extract itself from the EU and begin - as soon as humanly possible - converting from the disabled Euro currency back to the drachma. The levels of debt are far too onerous for Greece to ever repay without severe costs in lives and livelihoods, and the rising passions of the people may dictate to the government and the gloablist EU statists the correct course for the country, lest it fall to the desires of those clamoring for continued support from the ECB, which thus far have produced only a worsening situation.

A disorderly default by Greece would open the door to similar situations in Portugal and especially Ireland, where debt slavery is becoming a way of life and the citizens of the Emerald Isle find themselves chained to the wishes of their banker overlords. Extrication from the EuroZone and the Euro currency is now being seen as a path toward self-sufficiency and national unity in countries with severe debt issues, including Spain, Italy and Belgium.

Dissolution of the European Union and destruction of the Euro currency caused by domino-like defections is an end-game that the globalists and supra-governing mechanisms of the EU cannot even begin to comprehend and that is why almost all European stock markets - along with US markets - ended the day deep in the red.

The losses today in the Dow, NASDAQ and S&P 500 were a sudden shift from the plodding gains of recent days and may be signaling a shift in global economic expectations. Today was surely a day in which some short-term traders ran for cover, as US Treasury bonds improved, pushing yields lower.

A move lower in oil, gold and silver, as the US dollar rose in value is probably a temporary condition, at least for the metals, but any continued move lower by the Euro - which took a sudden downturn on today's news - would more than likely contribute to a run on equities as the correlation trade between the US dollar, the Euro and risk assets continues to suggest.

With the turn of the new year, the Euro has strengthened, but the destruction today should serve as a warning to investors and speculators that the recent strength is hardly sustainable. Imagining a Euro at 1.20 to the dollar, or even at par, could turn out to be the worst nightmare for many hedge funds and even long-term investors.

US stocks have reached a point of no return - at or near multi-year highs - and the concept of a euro-fomented retreat is not only palpable, but probable at this juncture.

Investors worldwide will be holding their collective breaths this weekend in anticipation of the Sunday vote by Greece's parliament and the response from the European financial authorities. While complete resolution is a distant hope, some clarity should come to markets by Monday, though the projected outcomes are radically different.

Plenty of profits were booked today, and, if the Greek situation continues to devolve into chaos, many more traders and investors will be heading for the sidelines. The markets - indeed, all of Europe and most of the world - are headed toward a climatic conclusion or convulsion in the days and weeks ahead. Should the Greeks decide to reject austerity and the burdens of continued debt, all bets are off.

Dow 12,801.23, -89.23 (0.69%)
NASDAQ 2,903.88, -23.35 (0.80%)
S&P 500 1,342.64, -9.31 (0.69%)
NYSE Composite 7,992.05, -89.20 (1.10%)
NASDAQ Volume 1,786,934,125
NYSE Volume 3,798,787,500
Combined NYSE & NASDAQ Advance - Decline: 1420-4233
Combined NYSE & NASDAQ New highs - New lows: 144-21
WTI crude oil: 98.67, -1.17
Gold: 1,725.30, -15.90
Silver: 33.60, 0.31

Thursday, February 9, 2012

50 State AGs Bend to Will of Banks in Foreclosure Settlement Deal

This is the kind of market that causes financial writers to suffer a severe case of "writers block," the disease that infests the creative part of the mind because there's simply no action in financial markets.

For the fourth day in a row, the major stock indices barely budged, but managed to produce marginal gains, except for the NYSE Composite, which was down slightly. The pattern was virtually the same, with a dip in the morning followed by a quick comeback and a flat to slightly rising curve through the session. One change was that the advance-decline line favored the downside, but guess what? Options expiry is next Friday, so expect the markets to continue climbing though the middle of next week. Bankers gotta eat, ya know?

There was a bit of news from Greece, where the government finally agreed to tougher austerity measures which will reduce wages, headcount, and pensions. The deal cleared the way for talks with the troika to resume, though there are still significant hurdles to be worked out with both the public funding sources and the private ones.

The agreement did little to move US markets, which have been stuck in a regimen of low volume and little movement all week (I mentioned that earlier, I know).

In the other major development of the day, the 50 state Attorneys General announced that their deal with the five major banks involved in the sub-prime, robo-signing mortgage and foreclosure fiasco had been finalized, with the holdouts from California, New York and Delaware finally coming around to see it the banks' way.

The $26 billion deal will provide little relief to underwater homeowners (maybe $1500-2000) and offers a $2000 cash bonus to people who lost their homes to fraudulent foreclosures between 2008-2011. Anyone who paid their mortgage on time, is currently in foreclosure or falls outside those chosen dates: out of luck.

That the deal was yet another windfall for the banks cannot be understated. These banks, through shoddy originations, poor (sometimes none) documentation, fraud and other nefarious tactics, bilked the American public, the US government and mortgage-backed securities bondholders of billions, if not trillions of dollars, worldwide. The paltry sum of $26 billion spread out over a three-year span is nothing more than a rounding error for these white-collar criminals.

If there's outrage to be heard from the general public, don't count on it amounting to much as the US populace has already put up with enough government and business malfeasance the past 12 years that the screamers and shouters are already worn out from 9/11, the security state, illegal wiretaps, TSA gropings, the Iraq and Afghanistan wars, etc. The list goes on and on and the American public has virtually resigned itself to the fact that resisting the influence of a broken, fascist federal government is tantamount to economic suicide and hardly worth the effort.

Little by little, the feds have taken away essential liberties granted by the constitution (that "piece of paper" as GW Bush called it) and are in the process of shredding every last ounce of fight and goodness that typified the America of yesteryear. It's depressing, but blatantly obvious that the direction of the country is careening quickly toward an oligarchy in which the well-connected, well-heeled are treated far differently than the poor working slobs. Money is power and the feds know this well. This is the most corrupt government in the world and neither the Democrats nor the Republicans have a monopoly on the corruptive power as they both drink from the same hose: that of the rich, in deference to the citizenry.

The only potential upside to the plight of the average American is that the federalistas are hopelessly incompetent, so compliance with all their rules, regulations, edicts and taxes can generally be avoided with a little bit of ingenuity and a good dose of umbrage. The downside is that as federal tax revenues decrease (a logical occurrence and already well underway), the bureaucrats and oligarchs will become even more oppressive and brutal. Those of us wishing to stay and fight or hope for the best had better be prepared for another decade of distrust, distortions and dishonesty from the top down, though, as Americans - and others - have been noted for in the past, defiance of officials and mendacious governance can be a powerful elixir for those who have been harmed.

Today's "settlement" with Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial (formerly known as GMAC) is nothing more than a cover for the inadequacies of our elected Attorneys General, who found it more expeditious to glad-hand their political donors than follow the rule of law. What a shame. America used to be such a nice place.

Dow 12,890.46, +6.51 (0.05%)
NASDAQ 2,927.23, +11.37 (0.39%)
S&P 500 1,351.95, +1.99 (0.15%)
NYSE Composite 8,081.25, -1.73 (0.02%)
NASDAQ Volume 2,148,275,750
NYSE Volume 4,058,775,250
Combined NYSE & NASDAQ Advance - Decline: 2687-2940
Combined NYSE & NASDAQ New highs - New lows: 289-13 (no comment)
WTI crude oil: 99.84 (really?)
Gold: 1,741.20, +9.90
Silver: 33.92, +0.21

Wednesday, February 8, 2012

Stocks Remain Sluggishly in Stall Mode Awaiting Greek Workout

Considering that there are nearly 7 billion people on Planet Earth, one wouldn't think that the economic fate of a country as small as Greece (population: 10,787,690 in the 2011 census) would rattle markets as much as the Hellenic nation has, but there's much more to the equation than just Greece and its populace.

If Greece is unable to come to terms with private and public financiers, and have their people agree to even more stringent austerity measures, there's the very real chance that Greece would formally default on its debt and thus be driven from the EuroZone. Ancillary to that argument is the suspicion that other derelict nations which use the Euro as their primary currency - countries such as Portugal, Spain, Italy, Belgium and Hungary - might also fall under the sway of separation from the Euro currency, a chain of events that would surely bring financial markets and whole economies to a state of panic and confusion.

So, while the unity party in Greece and Premier Lucas Papademos ponder their next moves, the world slowly turns.

Stocks were little changed for the third straight session in New York, treading water in a narrow trading range on a paucity of volume. However, if anything has been learned since the near-death experience of 2008, maybe the merry marketeers have discovered that slow is good.

Stocks have advanced at a snail's pace this week, with the Dow adding 19 points and change over the three days. Despite the angst over the situation in Europe, some are still finding equities worth buying and, yes, holding.

Should Greece formally default, it should not be the end of the world for US investors in particular. There's been plenty of time to decouple from Europe, though the effect of a cascading currency crisis would, almost certainly, have a deleterious aftermath.

On the opposite side of the equation is the hope-against-hope that the Greeks will accept austerity, private bondholders will take a 50-70% haircut and the troika will also manage to find a way to sweep the unpaid debts under the rug of international finance.

Since the ECB, IMF and our own Federal Reserve can just flip the money switch at will, there's little doubt that whatever the circumstances, and however dire the conditions for the people of Greece, the economic Ponzi scheme will continue without as much as a loud belch from the bowls of central bank vaults.

As it was in 2008 in America, little will change, although the though of visiting the home of the Acropolis and the Parthenon with American money at an exchange rate measured in cheap drachmas instead of overvalued Euros is rather appealing.

Dow 12,883.95, +5.75 (0.04%)
NASDAQ 2,915.86, +11.78 (0.41%)
S&P 500 1,349.96, +2.91 (0.22%)
NYSE Composite 8,083.47, +13.76 (0.17%)
NASDAQ Volume 1,952,598,125
NYSE Volume 4,050,664,250
Combined NYSE & NASDAQ Advance - Decline: 3218-2394
Combined NYSE & NASDAQ New highs - New lows: 279-11
WTI crude oil: 98.71, +0.30
Gold: 1,731.30, -17.10
Silver: 33.70, -0.49

Tuesday, February 7, 2012

Light Volume, Low Volatility: Signs of Stagnation?

Since the dramatic rise to fresh multi-year highs this past Friday, the first tow days of this week have been nothing more than a major snooze-fest. Whatever the issue, stocks seemed stalled at these lofty levels, perhaps in anticipation of some new developments in the ongoing struggle to keep Greece functioning or possibly due to angst over the conditions in Iran, Syria, Egypt or some other place that seems ripe to explode.

The pattern for the last two days has been oddly similar, with stocks lower at the open, then a spike higher around 10:00 am ET, and a flattening out for the remainder of the session. The difference between yesterday and today is that yesterday's action kept the major indices in the red, while today's trade was mostly on the positive side of the ledger.

Tuesday was a little bit like Groundhog Day in that regard, and also due to Fed chairman Ben Bernanke delivering pretty much the same canned remarks to the Senate as he gave to the House last week.

A 24-hour general strike cripple Greece's already-impaired infrastructure so that negotiations on three fronts - dealing with private bondholders, dealing with funds from the troika, and acceptance of harsh austerity measures - were held mostly without much fanfare or publicity.

Greece's unity government (an oxymoron if ever there was one) needs to work out arrangements with each of their two parties of creditors, and with its own people, to secure another round of financing of 130 billion euro ($172 billion) before a scheduled March 20 payment on 14.5 billion euro of maturing debt.

Since it's obvious to everyone that Greece can't manage its own money, much less the bailout funds pumped into it just last Summer, the threat of default and expulsion from the Eurozone continues to weigh on Europe and the rest of the world.

It's a cruel game of chicken and Europe, in particular, is the worst for it.

One proposal that was floated by German Chancellor Angela Merkel is to force the Greek government to allocate interest payments into an escrow account, so their profligate ways won't threaten future debt payments, much like a teenager with a co-signer on an installment loan. If it wasn't so sadly true, such an attempt to reign in Greece's spendthrift ways might qualify as humor. Unfortunately, the tragedy that is 21st century Greece does not look like it's going to have a happy ending.

Dow 12,878.20, +33.07 (0.26%)
NASDAQ 2,904.08, +2.09 (0.07%)
S&P 500 1,347.05, +2.72 (0.20%)
NYSE Composite 8,069.70, +21.67 (0.27%)
NASDAQ Volume 1,784,894,750
NYSE Volume 3,727,102,750
Combined NYSE & NASDAQ Advance - Decline: 2959-2649
Combined NYSE & NASDAQ New highs - New lows: 249-7 (wow)
WTI crude oil: 98.41, +1.50
Gold: 1,748.40, +23.50
Silver: 34.19, +0.44

Monday, February 6, 2012

As Greece Prepares for Potential Default, Markets Take Pause

The troubled nation of Greece took center stage again today, as talks to reach agreement on restructuring private and public debt reached yet another impasse and discussions between Primier Lucas Papademos and leaders of the recently-formed unity government also could not agree on austerity measures to be imposed in order to receive the next round of bailout money from the trokia - the EU, ECB and IMF.

Today, Papademos asked experts at Athens' finance ministry to compile a detailed analysis of what a Greek default would entail. The immediate response was that a bankruptcy of Greece would make what happened in Argentina more than a decade ago look like "a picnic."

With that backdrop, stocks opened sharply lower and remained in the red for the duration of the session, which marked the lowest volume day of the year. Rather than outright selling, traders seemed content to wait and watch developments in Europe, hoping that a default of Greece can be avoided. The major averages, though all down for the session, finished at or near their highs of the day.

Stocks are still up for the year. Today's pullback, like many before it, was minor and actually created more opportunities for day-traders than anyone else.

Dow 12,845.13, -17.10 (0.13%)
NASDAQ 2,901.99, -3.67 (0.13%)
S&P 500 1,344.33, -0.57 (0.04%)
NYSE Composite 8,041.85, -18.58 (0.23%)
NASDAQ Volume 1,648,986,500
NYSE Volume 3,310,194,500
Combined NYSE & NASDAQ Advance - Decline: 2293-3331
Combined NYSE & NASDAQ New highs - New lows: 211-9
WTI crude oil: 96.91, -0.93
Gold: 1,724.90, -15.40
Silver: 33.71, -0.04