Warren Buffet Really Gets Under Your Skin; Big Market Decline Probably Means Nothing

Warrenn Buffett bears a
striking resemblance to the Wizard of Oz.

Announced today, the merger of Kraft and Heinz creates the fifth largest food company in the world and the third-largest in North America.

At the center of this mega-merger is none other than America's cuddliest billionaire, Warren Buffett and his squid-like Berkshire-Hathaway corporation. With this, Buffett now touches nearly all aspects of the average American's daily life, and, most essentially his or her food consumption.

Buffett, it was pointed out by a wily poster on a popular financial website, needs only to buy a significant interest in Monsanto or ADM and Newcomer Funeral Homes and he would have his had firmly in a "cradle to grave" solution for every man and woman in the United States, growing GMO-laced food products which deny nutrition and selling them nationally, slowly killing humans, and then taking a share of their post-breathing lives with embalming, burying or cremation.

Thus, Mr. Buffett has finally gotten under the skin of the average American consumer, and not in a good way. The combination of Heinz (John Kerry's wife, Theresa Heinz is a major owner) and Kraft would have been subject to severe scrutiny by regulators under an effective anti-trust regime, but the antiquated notion of competition has been slowly squeezed from the national conscience long ago.

In our new dystopian world, we will have but a few providers of every necessary service. Reference the merger of Charter Communications and Time Warner Cable, Staples and Office Depot, et. al. Fewer choices, fewer decisions to make. What a wonderful world.

As far as the massive market declines on the day are concerned, they are probably about the same as the last dozen or twenty or so that have occurred since March of 2009, when the current bull market began when the FASB abandoned all reason and did away with mark-to-market accounting. Since then it's been all fraud, all the time, with no end in sight.

Today's big dips in stocks are nothing more than a continuum of the controlled demolition of the global economy, led by the United States stock markets. Sell-offs are nothing more than profit-taking efforts by the controlling interests and their whiz-bang computers, to be followed, in short order, by concentrated buying and new all-time highs.

Nothing new under the sun. And nothing to see here. Move along, now.

Meanwhile, the Atlanta Fed predicts the first quarter 2015 GDP growth at 0.2%, WTI crude oil futures were up 3% on the day in the face of a string of the largest crude stockpile supply growth ever, but likely the cause/result of a falling dollar. Durable goods for February were down for the second straight month.

Some of this actually makes sense, but only on a selected basis.

Dow 17,718.54, -292.60 (-1.62%)
S&P 500 2,061.05, -30.45 (-1.46%)
NASDAQ 4,876.52, -118.21 (-2.37%)

DEAD MARKET: Stock Indices Finish Week Nearly Unchanged

As has been repeated here and on other financial sites ad nauseum, this is about as dull a market as has ever been seen.

Even though the Dow Industrials finished positive on the day, it spent most of Friday's session in negative territory, down by as many as 61 points just 90 minutes prior to the close. It actually turned positive just two minutes before the closing bell.

The NASDAQ suffered its first losing week of the year, a laughable 1.84 point decline. The Dow fell - on a weekly basis - for the second straight week, a whopping 11-point loss on top of last week's monumental 17 point decline. A cumulative loss of 28 points in two weeks (10 trading days) is nothing more than a rounding error.

As for the darling S&P, it continued its 2013 winning streak, closing up again for the seventh straight week, though only by a mere 1.86 points. They dynamic S&P 500 went the entire week without moving more than three points on a closing basis. That's dull with a capital D.

With all this excitement, thank goodness the exchanges are closed on Monday for President's Day. The traders and all us weary writers really need a break.

Whew!

Late Breaking: The SEC has filed charges in unusual trading activity in options just prior to Berkshire Hathaway's takeover of H.J. Heinz (HNZ). Geez, Uncle Warren involved in something less than ethical? The horror. The ironic twist is that Business Insider, operated by banned trader/analyst Henry Blodget, was the first on the web with the story, proving that, even on Wall Street, truth is stranger than fiction.

Dow 13,981.76, +8.37 (0.06%)
NASDAQ 3,192.03, -6.63 (0.21%)
S&P 500 1,519.79, -1.59 (0.10%)
NYSE Compos... 8,932.17, -20.91 (0.23%)
NASDAQ Volume 1,831,044,125
NYSE Volume 4,096,131,750
Combined NYSE & NASDAQ Advance - Decline: 2977-3410
Combined NYSE & NASDAQ New highs - New lows: 489-45
WTI crude oil: 95.86, -1.45
Gold: 1,609.50, -26.00
Silver: 29.85, -0.504

St. Valentine's Day Mascara

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

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

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

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

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

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

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

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

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

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

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

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

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

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