Showing posts with label IMF. Show all posts
Showing posts with label IMF. Show all posts

Thursday, January 23, 2020

Stocks Slide As IMF Revises Global Growth Projections Lower... Again

In the Senate, the impeachment trial of President Trump is well underway, though some Senators are wondering how the House managers can keep up their opening statement for another 16 hours without being laughed out of the chamber.

Adam Schiff, Gerold Nadler and their associates dithered and danced around the same tired narrative that's been their staple for the past six months and nobody is really buying it. Perhaps that's why stocks slumped late in the day, due to overwhelming boredom.

Impeachment aside, stocks were off to a solid start on Wednesday, but failed to make much progress, with the Dow actually ending in the red after being up 124 points early in the session.

There are be a plethora of reasons to be selling stocks at this juncture, main among them valuation, but the continuing slowdown in global trade and potential for most of Europe to fall into a recession are probably the most "top of mind" as winter winds blow cold across the Northern Hemisphere.

Lowering its 2019 forecast (a little late) for the sixth straight time, the IMF dropped expectations for global growth to 2.9%, down 0.1 from it's previous 3.0% expectation. Most of the data is already in place. The IMF, like everyone else, is monitoring fourth quarter results from corporations around the world.

In what has to be regarded as somewhat on the cheeky side, the IMF also lowered its 2020 forecast, from 3.4% to 3.3%. It's ludicrous to believe that the amalgamated egoistic economists at the IMF can get any prediction right, especially one calling for improvement when the early evidence is clearly favoring decline. Within a few months, these brainiacs will be revising their crystal ball projections and tea leaf readings to something more aligned with reality.

Considering that the US, at least, is at the far end of an 11-year bull market, some slowdown would be expected and it's notable that the brain-dead at the IMF cannot fathom the declining birth rate effects of demographics in developed countries, most of which have fallen below replacement figures.

With cheerleaders like those at the IMF and the relentless money creation by the Fed, there's little wonder the rich get richer as fake predictions are afforded the most credence.

At some point, the Fed will stop printing or the dollar will hyper-inflate. At that point, the IMF can revise upward and still find itself woefully behind the curve.

At the Close, Wednesday, January 22, 2020:
Dow Jones Industrial Average: 29,186.27, -9.77 (-0.03%)
NASDAQ: 9,383.77, +12.96 (+0.14%)
S&P 500: 3,321.75, +0.96 (+0.03%)
NYSE: 14,110.24, +0.26 (+0.00%)

Thursday, October 17, 2019

IMF Warns Pension Funds, Insurers, Shadow Banking On Overvalued Stocks

At last, some honesty.

The International Monetary Fund (IMF) and World Bank, holding its week-long annual meeting in (where else?) Washington, DC from October 15-20, has issued a report about stock valuations and the dangers faced by pension funds, insurers, and institutional investors.

Because low interest rates in many parts of the world are cause investors to reach for yield, the IMF sees inherent risk of overvaluation and imprudent borrowing as potential pitfalls should an economic downturn occur.

Their solution would be for more stringent regulation and closer monitoring of large institutional investors and so-called "shadow banking" outlets like insurers and non-bank financial companies. Obviously, the chiefs at the IMF have not read their history well enough, as there's ample proof that during ties of loose monetary policy, central bankers have a tendency to look the other way, fall suddenly into deep sleep, or simply miss obvious signs of trouble developing.

Famously, leading up to the Great Financial Crisis, then-chairman, Ben Bernanke, dubiously opined on May 17, 2007, "The subprime mess is grave but largely contained." A year later, the global economy was in tatters, fending off complete collapse.

While there are certainly signs that stocks are overvalued, and those signs have been apparent for a long time, years, in fact, the conceptual framework currently in use by investors is that the Fed and other central banks, fully in control of markets, will not allow any serious decline in equities, particularly in developed nations, and especially int eh United States.

That's the kind of certitude and unabashed frothiness that leads not-so-directly to insolvency, like trying to catch a falling knife.

It's laudable for the IMF to issue such a report and offer potential solutions to problems which may arise, but who's listening?

At the Close, Wednesday, October 15, 2019:
Dow Jones Industrial Average: 27,001.98, -22.82 (-0.08%)
NASDAQ: 8,124.18, -24.52 (-0.30%)
S&P 500: 2,989.69, -5.99 (-0.20%)
NYSE Composite: 12,994.89, -11.15 (-0.09%)

Monday, January 7, 2019

Volatility Tamped Down By PPT A Probable Cause For Monday's Dullness

Chip stocks (NVDA, ADM) led the big gain on the NASDAQ, but the session overall was lackluster, with a dip at the open and a weak close.

Investors are still unconvinced the volatility of the past few months has abated. Today felt more like a temporary reprieve rather than a new paradigm. There's also the very good possibility that the Plunge Protection Team (PPT) is still active, especially considering the quick turnaround this morning. It was classic insider action, like hitting sellers over the head with a sledgehammer.

The PPT has absolutely no subtlety about it which makes their intrusions somewhat obvious, as has always been the case, even back in the days when people thought they were a myth or some kind of financial urban legend. As it turned out, the PPT was always a real thing, and a threat to fair, unmolested, open markets. Now that they've been out in the open for at least a decade, not much is left to the imagination. US markets - and, likely, almost every other market in the world - have been highly manipulated by central banks and governments working in cahoots and that's unlikely to end soon.

With friends like these in markets and the preponderance of investments in stocks, investing today is riskier than it has ever been. Who wants to play in a casino knowing that the dealer has the ability to cheat at any time? As unsuitable as it is for large money players to intervene at times of crisis, it's even worse when they do so at the drop of a hat, or, as the case may be, a few thousand points on the Dow.

It's not pleasant to witness wild swings in entire indices on a regular basis, which is why so many individual investors are so jaded. They know their money is at extreme risk all the time. There has to be a better way, and there used to be, prior to the financialization era we currently are enduring, before everything from mom's mortgage to pizza stocks are part and parcel of every fund's basic needs.

The trouble with markets today are the real probability that in the case of an extended bear market, the entire global financial system would simply implode. It keeps more than just a few heads at the IMF, BIS, and the Fed from sleeping well at night.

Dow Jones Industrial Average January Scorecard:

Date Close Gain/Loss Cum. G/L
1/2/19 23,346.24 +18.78 +18.78
1/3/19 22,686.22 -660.02 -641.24
1/4/19 23,433.16 +746.94 +105.70
1/7/19 23,531.35 +98.19 +203.89

At the Close, Monday, January 7, 2019:
Dow Jones Industrial Average: 23,531.35, +98.19 (+0.42%)
NASDAQ: 6,823.47, +84.61 (+1.26%)
S&P 500: 2,549.69, +17.75 (+0.70%)
NYSE Composite: 11,605.96, +72.62 (+0.63)

Saturday, September 8, 2018

Weekend Wrap: Investors Disappointed, Spurring September Selloff; Tesla On The Ropes; EM Bears

Tech and transportation stocks, the Dow, and the S&P 500 all registered positive gains in August, but once the three-day Labor Day holiday turned the calendar to September, much of summer's optimism turned to autumn angst as all four of the major indices - lead by tech and the NASDAQ - began showing signs of weariness.

The NASDAQ lost ground in all four of the short week's trading sessions, combining for a 2.55% decline in the first week of September. While much of the losses can be attributed to profit-taking, the biggest declines belonged to the beloved FAANGs, all of which fell in a wide-based tech retreat. Facebook (FB) Amazon (AMZN), Apple (APPL), Netflix (NFLX) and Alphabet, parent of Google (GOOG) all suffered losses, though the biggest decline was seen on the stock of Tesla (TSLA), as continuing concerns over the health not only of the company's finances, but of founder and CEO, Elon Musk, snatched nearly 13% off its price in four days.

Shares of the electric car-maker are down 30% since reaching a peak of 379.57 on August 7. Tesla closed out the week at 263.24, within 10 points of its 52-week low due to a rash of executive departures and strange behavior by Musk, which included threats to critics, talk of taking the company private, crying, drinking, and taking a toke on a joint during a podcast interview.

While Musk's behavior is certainly a major factor influencing the share price, more concerning are questions over the company's continued viability. Yet to turn a profit, Tesla is burdened with an excessive amount of debt and faces competition in the electric car space from the likes of BMW, Porsche, Audi, and scores of Japanese and American automakers as the number of competitive electric autos already in market or due to be soon has steadily increased over the past 18 months.

With a poor track record, mounting issues with reliability and safety, and Musk's seemingly manic-depressive behavior, investors are bracing for the worst, fleeing in record numbers. With share prices still at stratospheric levels, the declines should continue for the foreseeable future.

As for the other tech titans, it would appear that Apple, Google, and Amazon are still in a safe zone, despite lofty valuations, but Facebook and Netflix may suffer further declines. Both companies have internal and external problems which have yet to be addressed adequately. The numbers suggest that users of the social platform and streaming video service are not increasing at the same rates previously encountered and continued growth is a major question.

The Dow appeared to be the safe space for traders until Friday, when it led markets lower despite positive news on employment, with September jobs increasing by 201,000 in August, ahead of analyst estimates, and wage growth increasing to 2.9% annualized.

Though the numbers were encouraging for the middle class, the investor class may have been eyeing the bullish employment figures with a jaded eye, focusing on the upcoming FOMC meeting at the end of the month (September 25-26), in which the Fed is expected to raise the key federal funds rate another 25 basis points, to 2.00-2.25%. The usual knee-jerk reaction to Fed rate hikes is to sell equities and buy bonds, and that dynamic may well have been in play on Friday and might contribute to further selling in the weeks leading up to the policy meeting.

Also on the minds of investors was the global drawdown in emerging markets, which is approaching or already is in bear market conditions. The strong dollar and use of the US as a safe haven has led to capitulation in currencies and markets, especially in Turkey and Argentina, each of which have suffered sharp currency devaluations over the past six months. Turkey is stubbornly fighting the carnage from within, whereas Argentina has supposedly reached agreement on a bailout loan from the International Monetary Fund (IMF). Argentina's condition in world markets seems to be that of a chronic abuser as this is a repetitive pattern by that deadbeat debtor nation.

While the EM bust has yet to affect US markets in any major way, European and Far East markets have felt some pain, especially in Germany, as the DAX is already in correction, down more than 10% this year. If and when the EM issues become a contagion will be a top of mind issue in the weeks and months ahead.

Precious metals and the entire commodity complex continued to face stiff selling. Gold and silver are trading at three-year lows and are vulnerable to any number of potential market shocks. They are traditionally the first assets sold in a widespread market rout and may be signaling more trouble ahead.

While caution is always advisable, the run-up to the US midterm elections may be particularly volatile as cantankerous political forces vie for control of the enormous state and federal governmental complex.

Dow Jones Industrial Average September Scorecard:

Date Close Gain/Loss Cum. G/L
9/4/18 25,952.48 -12.34 -12.34
9/5/18 25,974.99 +22.51 +10.17
9/6/18 25,995.87 +20.88 +31.05
9/7/18 25,916.54 -79.33 -48.28

At the Close, Friday, September 7, 2018:
Dow Jones Industrial Average: 25,916.54, -79.33 (-0.31%)
NASDAQ: 7,902.54, -20.18 (-0.25%)
S&P 500: 2,871.68, -6.37 (-0.22%)
NYSE Composite: 12,911.12, -27.79 (-0.21%)

For the Week:
Dow: -48.28 (-0.19%)
NASDAQ: -207.00 (-2.55%)
S&P 500: -29.84 (-1.03%)
NYSE Composite: -105.77 (-0.81%)

Friday, September 7, 2018

Tech Rout Deepens As Users Shed Facebook, Global Meltdown Continues, Musk Lights Up

As the Dow posted a second straight smallish gain, the NASDAQ was once again bruised as investors reassessed positions in various high-profile social media and internet stocks.

On Thursday and into early trading Friday, equity indices around the world were in a sea of red, though South American stocks rebounded into their Thursday closes as Argentina prepares for a new round of financing from the IMF. Argentina's currency and stocks have been in free fall, and the IMF bailout is yet another in a series of bad financing deals for the South American basket case.

Facebook (FB) suffered another in a continuing series of declines, losing 4.65 points to close at 162.53. The 2.78% loss was the sixth in the last seven session, leaving the troubled social media platform down 55 points since July 25th, the most recent catalyst a Pew Research report that found one in four users deleting the Facebook app from their mobile phones among other startling statistics.

Facebook's problems stem from revelations that they violated their own privacy policies by sharing private user data with third parties, but perhaps more and more people are beginning to realize that the high school acquaintances they've reconnected with on Facebook are still boorish, stupid, or otherwise stuck on themselves.

Being the ultimate tool for narcissism, Facebook's days may be numbered.

Tesla (TSLA) stock was taking a hit (pun intended) after enigmatic founder and CEO, Elon Musk, was seen toking on a blunt filled with tobacco and marijuana on Joe Rogan's popular Podcast. Shares were trending lower, down 1.40% prior to the regular trading open.

Perhaps Musk's message to shareholders should be, "just chill."

Facebook and Tesla shares are both down more than 20% from recent highs.

Dow Jones Industrial Average September Scorecard:

Date Close Gain/Loss Cum. G/L
9/4/18 25,952.48 -12.34 -12.34
9/5/18 25,974.99 +22.51 +10.17
9/6/18 25,995.87, +20.88 +31.05

At the Close, Thursday, September 6, 2018:
Dow Jones Industrial Average: 25,995.87, +20.88 (+0.08%)
NASDAQ: 7,922.73, -72.45 (-0.91%)
S&P 500: 2,878.05, -10.55 (-0.37%)
NYSE Composite: 12,938.91, -29.64 (-0.23%)

Wednesday, July 26, 2017

Stocks Rock No Matter The News As Long As Central Banks Spend

Proof that you can't fight people who print their own money...

Courtesy of Bloomberg and various central banks, the correlation between central banks sucking up trillions in assets and gains in global stocks is remarkable.

So, anybody thinking they're a stock-picking genius over the past eight years really needs therapy for an over bloated ego, just as the bloat in central bank balance sheets gently guides shares of all companies higher.

The frightening parts of this scenario - shown without doubt in the chart - are what happens when these central banks begin unloading assets, and what will be the timing and nature of this asset disposal sale? Will they all sell at once, or will be it be of the Chinese water torture variety, with a slow, drip, drip, drip as equities reach for fair value, far below where they reside today.

What are the consequences of this massive liquidity injection, since it's clearly already established policy and responsible for massive gains over the past eight years.

The most obvious solution for people with plenty of paper wealth would be to convert it to real assets, in the form of real estate, machinery, gemstones, precious metals, art, collectibles, and, realistically, staples, like food and water.

If the wheels come off the global Ponzi, people will starve. Look no further than Venezuela for proof that economic implosion causes severe social repercussions.

Of course, the vast majority of people living on planet Earth will be unprepared, duped into trading worthless paper and empty promises for more worthless paper and even emptier promises. Peer into underfunded pension plans - like Detroit's public plans, for instance, or many corporate plans that went belly up - for proof of what exactly that looks like.

At the end of this grand experiment called "global fiat money" for lack of a better term, what will become of the global economy, the ECB, the World Bank, the IMF, the Federal Reserve, the most massive control frauds ever foisted upon an unsuspecting public? They, and their governors, directors, and executives will try to "save us" from the financial blight, when it is they themselves causing it.

And people will continue to be duped into lives of slavish devotion to false gods.

At The Close, 7/25/17:
Dow: 21,613.43, +100.26 (0.47%)
NASDAQ: 6,412.17, +1.37 (0.02%)
S&P 500: 2,477.13, +7.22 (0.29%)
NYSE Composite: 11,965.72, +61.01 (0.51%)

Tuesday, April 12, 2016

Bad News Sends Stocks, Oil, Higher; Silver Outshines All

Stocks moved higher based on nothing other than an "informed diplomatic source" that said Russia and Saudi Arabia had agreed to freeze oil production. Along with stocks, oil futures moved notably higher, topping $41.50 a barrel.

The news was taken with so much enthusiasm that traders apparently forgot that there exists a worldwide glut of crude oil larger than any before it. They also disregarded obvious topping patterns in stocks and upcoming earnings reports, including those of the big banks which happen to be saddled with bad oil loans.

News that the IMF cut its global growth forecast for 2016 for the fourth time in a year, backing it off to 3.2%, was also disregarded, as was the US March budget deficit came in at double what it was last year, a whopping $108 billion.

In an unrelated move, silver continued its non-stop ascent, closing in New York at its highest price since late October of 2015, topping $16/ounce for the first time this year. The price of silver has risen more than 8% in the past week.

S&P 500: 2,061.72, +19.73 (0.97%)
Dow: 17,721.25, +164.84 (0.94%)
NASDAQ: 4,872.09, +38.69 (0.80%)

Crude Oil 41.56 +2.97% Gold 1,257.40 -0.05% EUR/USD 1.1390 -0.12% 10-Yr Bond 1.78 +3.31% Corn 361.25 +1.26% Copper 2.15 +2.85% Silver 16.22 +1.50% Natural Gas 2.02 +5.60% Russell 2000 1,105.71 +1.04% VIX 14.85 -8.67% BATS 1000 20,682.61 0.00% GBP/USD 1.4269 +0.24% USD/JPY 108.5655 +0.57%

Friday, January 3, 2014

Reinhart and Rogoff Return: Debt Overhang, Financial Repression, Inflation and 'Saver's Tax'

Forgetting the day-to-day action of the stock market for a moment to focus on the really, really larger issue of macro-economics, comes this daft little piece of literature from the infamous duo of Carmen M. Reinhart and Kenneth S. Rogoff, prepared for the IMF, entitled, boorishly, "Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten," as though the central bankers of the world have forgotten their purposes in life, which would be, in no particular order:
1. Create and control all of the world's currency;
2. Put governments, businesses and individuals in debt;
3. Act like you're doing everyone a favor.

The authors of this [PDF] 21-page memo to the IMF bring up some old tomes familiar to those in the central banking business, which, more likely than not, they have NOT forgotten, not at all, such as financial repression, inflation (the central way central banks enrich themselves and impoverish the rest of the world), and outright debt defaults, this final theme one which the central banks will encourage sovereigns to pursue, in the best interest of everyone.

When one reads this little write-up and thinks it through, a couple of ideas immediately sprout forth from the pages.

One, inflation, the central banker's ally in its never-ending quest to eventually destroy the value of all currencies, has been latent and absent for some time, something the Fed head, Ben Bernanke, has openly whined about, and probably privately been chastised by his handlers in the global banking cartel. Inflation will have to make a big comeback, soon, lest the Fed and fellow central banks lose out on massive profits from the ongoing, recent economic crises gripping all nations.

They have the means to do so, and they certainly will, now that they've successfully re-capitalized their member banks (all the biggest ones, which were insolvent in 2008), through various means, the most obvious being the "taper," or winding down of their balance sheet, and higher interest rates, making money more expensive and credit all-but-impossible to get, which will have the desired result of pushing prices skyward while crashing the stock markets and making most citizens, now already poorer due to the stealth tax of low interest rates over a prolonged period, severe debt slaves.

The central banks, through their conduits in central sovereign governments, will also encourage defaults on massive amounts of debt, causing even more panic and a rush of cries from governments to individuals for the central banks to "save us," when in reality, it is they who are causing the pain.

While Reinhart and Rogoff are surely on the right track - though a bit opaque in their language - they are telegraphing the next moves for central bankers, who will, soon enough, declare that all their efforts have not succeeded in creating economic prosperity, so they will embark on, sorry, more austere measures. Governments will overtax and overburden their citizens (to some degree this is already occurring in Europe and Japan), but eventually - maybe in five years, or ten, or more - there will at last be a period of economic "normalcy" with interest rates on, say, 10-year notes at about 5%, inflation raging along at 5-8% (payback for the years of no or low inflation) and employment (with associated confiscatory taxes and fees) steadily declining for some countries, still high for others.

For most people and businesses, surviving this period will be tantamount to picking up nickels in front of a runaway steamroller: barely profitable, but highly risky. Many will be crushed; others wounded, the steamroller that is the Fed, the ECB, the IMF, World Bank and the BIS will grind nations, businesses and individuals into wretched little nothings.

That's the message from these authors, and, no, the central bankers of the world have not forgotten. It's coming. Not all at once, and not with any dramatic waving of wands or arms or hands, but slowly, gradually, eventually...

On the second day of trading for 2014, stocks took a bit of a roller-caster ride not dissimilar to those encountered during bear markets, but with a twist of day-trading irony, up at the open, crashing back to unchanged mid-day, rallying late before giving all of it back, the Dow being the only average on the positive side of the ledger today, the NASDAQ still down, the S&P marginally negative.

No, this was not a snap-back rally, and no, again, everybody's not waiting for Monday to "really" start trading. These first two sessions of 2014 were real and they count. Money is being pulled out of the market because money knows what's ahead, and it's seeking safe harbor.

Two things to note: the divergence of the a-d line from the headline close, and the continued low numbers of new highs and new lows.

Thanks for a week of hope and no change.

DOW 16,469.99, +28.64 (+0.17%)
NASDAQ 4,131.91, -11.16 (-0.27%)
S&P 1,831.37, -0.61 (-0.03%)
10-Yr Note 97.90, +0.60 (+0.62%) Yield: 3.00%
NASDAQ Volume 1.56 Bil
NYSE Volume 2.76 Bil
Combined NYSE & NASDAQ Advance - Decline: 3577-2094
Combined NYSE & NASDAQ New highs - New lows: 205-21
WTI crude oil: 93.96, -1.48
Gold: 1,238.60, +13.40
Silver: 20.21, +0.083
Corn: 423.50, +3.00

Thursday, January 2, 2014

January Barometer? Stocks Fall on First Trading Day of 2014


Stocks are only supposed to go higher, and the idea that we would begin the new year with a large selloff in stocks is a disturbing development to those in charge of propagandizing our glorious and ever-expanding economy.

The last time stocks fell on the first trading day of a new year was 2008, and, unless you've been living under a rock the past five years, you know what happened that year.

Not to say that a precipitous decline on the first trading day of the new year is a bad omen or a signal of a down year for stocks, but, referencing the January Effect, there's an 88% positive correlation between the direction of stocks for the entire month of January and the rest of the year, so, starting off with a sharp decline is not the best indication of general health, wealth and happiness going forward.

Obviously, it's too early to tell wither stocks go from here, but the apologists were out in force on CNBC, citing the fact that volume was on the very low side, something they neglected to inform upon during the late-year rally of the past two weeks, when trading volume was among the lowest of the year. Actually, Thursday's volume was higher than the average of the previous two weeks on a daily basis, and closer to normal than at any time since December 16.

With the major indices all up more than 25% in 2013, it would not come as a surprise to anyone should the market face some headwinds in 2014. It deserves mention that while the indices did very well, profits - as Larry Kudlow so often opines, "the mother's milk of stocks" - were higher by only six percent for the year, trailing paper gains by a margin wide enough to haul a bear trap through.

The bad news for holders of stock certificates (or the electrons which signify ownership in a brokerage account - not quite exactly the same thing) is that the selling was rather broad-based, as per the advance-decline line. The good news for the rest of us - those who own hard assets like land, gold, silver, machinery and vehicles - is that deflation seems to not want to go away. Gold and silver were higher, with silver shining at a nearly 4% gain on the day, and corn was down, so the price of corn in silver terms continues the trend lower, which, as our notes imply, according to Adam Smith, that is a deflationary trend of great significance. Crude oil also was off sharply.

Lower prices for all manner of consumer goods would be a definite boon for consumers and the general economy, though it's arguable that Wall Street and the international banking cartel headquartered at the Federal Reserve and World Bank might not be so pleased.

A sneaking suspicion that another grand transfer of wealth - on a scale beyond that of 2008-09 - is about to commence has been bandied about by skeptics of the recovery story. Maybe it's just a one-day trade and there's nothing more to it, though it needs to be pointed out that trades made today - especially those sales at a profit - won't necessarily be taxed for a very long time, around March 15, 2015, to be precise. Now, that could explain more about today's price action than just about any other macro or micro-economic factor present.

DOW 16,441.35, -135.31 (-0.82%)
NASDAQ 4,143.07, -33.52 (-0.80%)
S&P 1,831.98, -16.38 (-0.89%)
10-Yr Note 98.00, -0.03 (-0.03%) Yield: 2.99%
NASDAQ Volume 1.62 Bil
NYSE Volume 3.06 Bil
Combined NYSE & NASDAQ Advance - Decline: 1995-3764
Combined NYSE & NASDAQ New highs - New lows: 185-41
WTI crude oil: 95.44, -2.98
Gold: 1,225.20, +22.90
Silver: 20.13, +0.758
Corn: 420.50, -1.50

Monday, March 25, 2013

Hurrah! Boo! Cyprus is Saved! Cyprus is Doomed!

There are so many angles to the story of what happened to Cyprus over the past week or so that it boggles the mind to consider just a few of the long-term ramifications, but, clearly, the deal struck late, late Sunday evening by the ECB, IMF and the European Commission, deferred to by the president of Cyprus - who really didn't have much say and actually threatened to resign (he should have) - was a game changer in more ways than one.

First, the deal.

Instead of making everybody pay, which was the original plan foisted upon the Cypriot parliament and summarily dismissed in a unanimous vote, the brain trust that is the ECB worked out a plan that would fold up one insolvent bank - Laiki - and reorganize another (Bank of Cyprus), impose capital control limiting withdrawals to 100 euros, and force depositors with over 100,000 euros - because there are so few bond holders - to pay down the bank's debt, with a levy of up to 40% on those deposits.

OK? Stay with me here. Because the plan is not a bailout, but a reorganization, the parliament of Cyprus will not have to vote on it. There. All fixed.

Except that mush of the money that's going to be "levied" in the "reorganization" is Russian money, laundered or otherwise, and the Russians are not very happy, even though Angela Merkel is. Hmmm... Russians unhappy, Germans happy. That doesn't sound familiar, does it?

Further, banks in Cyprus are supposed to open tomorrow, but probably won't, and even when they do, the flight of capital will be intense, even at the absurdly tiny levels of 100 euros a day. This story is still very, very fluid and has a multitude of effects on all of Europe and the rest of the world, so, stay tuned.

As far as the markets were concerned, news of a "solution" to the Cyprus problem was greeted with hallelujahs and buying, with the futures of US indices all heading skyward and the Euro ramping up against the dollar.

Stocks in the US (and Europe) opened higher, leveled off until, until, Dutch Finance Minister and recently-appointed head of the ECB, Jeroen Dijsselblom, went on the record to say that the Cyprus solution may well be a "template" for other troubled banks in the Eurozone.

Uh-oh. markets tanked. The Dow, which was up 51 points, went negative by 128. European bourses revered. The EUR/USD FX pair went negative in a big way. Impairment of depositor money (government-sanctioned theft) is not what rich people want to hear. Never mind the poor and not-so-poor with deposits of under 100,000 euros, which are guaranteed by the bankrupt ECB, it's the rich people's money that's going to bail out banks in the future Europe.

Ouchie! But, that's what should happen. Insolvent banks should be wound down first by smacking the junior and then senior bond holders and, if that's not enough to cover the debts, uninsured depositors pony up the balance.

So, that's Cyprus, the future of Europe and the global financial system all rolled up into 12 or 14 neat paragraphs. If you've got over 100,000 euros in any bank these days, you are either as nuts as our Federal Reserve chairman or a big business that needs that amount of capital to meet payroll, expenses, etc. For those, there is no alternative (well, there is, but what business really wants to keep that much cash lying around?).

For people with less than 100,000 euros or the equivalent in dollars (about $129,000 right now), how much do you want to risk in any bank, any bank which could be closed indefinitely in case of a financial crisis or emeeeeeeergency, with no access to your funds until the "officials" deem the situation resolved?

Let's just say that the answer for most people would be, "not much."

Well, that just raises another fearsome looking ugly head in the form of capital controls (you can only take out "so much" today) or, outright loss. The answer is bank runs of the kind not seen since the Great Depression, when, remember, banks were closed for weeks and longer and some never reopened. IT CAN HAPPEN HERE because it already did.

So, where do you put all that extra cash of yours, lucky you? Most Americans have sums of money in "investments" which are just promises and based upon given market levels which change from day to day. Trust. It's a fun term.

Others have money in banks. Best advice is, if you must keep your dough in a bank, spread it around. A better solution would be to invest (you have enough money, right?) in a very heavy safe, a good alarm system, a coule of good firearms and maybe a couple of alert, healthy guard dogs. Yeah. Old school, like medieval days, which is to where the world is headed. Maybe a moat filled with crocodiles, drawbridge and turrets should be the new home design for the 2020s?

You laugh. Don't. Money in banks, as proven by the bizarre and brazen moves of the psychopathic leaders of the ECB, IMF and EU. is not as safe as you'd like to think. Ask anyone who lived through the Great Depression. Most people kept more money stuffed into their mattresses than in their local banks, and, with good reason. The banks failed and their money was gone. Poof!

The choice is yours, dear readers, play the game of chicken with the elites, who have no taste nor mercy for the likes of you and yours, or take action. keep in banks only what you need, because, when you think of it, the FDIC insures deposits of up to $250,000 in the US. That went up from $50,000 prior to the crash in 2008. Why? Because people smart enough to understand what was going on were taking their money out and the government and the banks would really have gone bust in a huge way had there been real banks runs like in the 1930s.

Without looking it up, the FDIC budget is something along the lines of $50 billion. The amount of deposits in US banks is on the order of $14 TRILLION. Do the math.

That's it for today. We're all Cypriots now.

Dow 14,447.75, -64.28 (0.44%)
NASDAQ 3,235.30, -9.70 (0.30%)
S&P 500 1,551.69, -5.20 (0.33%)
NYSE Composite 9,022.95, -42.85 (0.47%)
NASDAQ Volume 1,665,435,625
NYSE Volume 3,539,278,250
Combined NYSE & NASDAQ Advance - Decline: 2714-3624
Combined NYSE & NASDAQ New highs - New lows: 489-49 (straining)
WTI crude oil: 94.81, +1.10
Gold: 1,604.50, -1.60
Silver: 28.82, +0.117

Friday, March 22, 2013

Cyprus Situation Still Uncertain; US Traders Content to Take the Risk

With the situation in Cyprus still murky, at best, US investors shrugged off the dilemma from overseas and bid stocks up to their best levels of the week during Friday's session, ending the week down marginally, but essentially flat.

Holding stocks over the weekend seems a risky bet, being that the troika has given the Cypriot government until Monday to sort things out and come up with a solution to salvage what's left of their failed banking system and creaking government.

The latest from Nicosea, the capitol of Cyprus, appeared to have the parliament eyeing a tax on depositors once again in an effort to keep the deal offered by the ECB and IMF on the table. The parliament had unanimously rejected the option to tax deposits in Cypriot banks earlier in the week, but it now appears that they have run out of viable options.

How the tax, or levy, is finally worked out remains a sticking point. Deposits of under 100,000 euros are supposedly protected by law, as they are by the FDIC in the US, but lawmakers and Eurozone leaders seem willing to overturn that protection in favor of bailing out the troubled banks and economy of Cyprus.

Taxing savers will no doubt raise the specter of fear in many european nations, that regular depositors will no longer be protected by laws designed to keep governments and financial authorities' hands off the people's money.

With Europe already on a weekend, there's little doubt what savers in countries like Greece, italy, spain and Portugal have been doing on Friday: withdrawing sufficient fund to weather the weekend and beyond, should the leaders in the EU and Cyprus continue on their mad path to destruction of confidence in the financial system.

Banks in Cyprus will remain closed until Tuesday, no matter what is decided or left up in the air. The weekend should prove to be an interesting one from the standpoint of global economic viability.

Dow 14,512.03, +90.54 (0.63%)
NASDAQ 3,245.00, +22.40 (0.70%)
S&P 500 1,556.89, +11.09 (0.72%)
NYSE Composite 9,065.65, +56.00 (0.62%)
NASDAQ Volume 1,631,320,375
NYSE Volume 3,145,706,000
Combined NYSE & NASDAQ Advance - Decline: 3898-2398
Combined NYSE & NASDAQ New highs - New lows: 323-29 (flat)
WTI crude oil: 93.71, +1.26
Gold: 1,606.10, -7.70
Silver: 28.70, -0.514

Thursday, March 21, 2013

Situation in Cyprus Still Unresolved; European, US Stocks Hit

If Americans could pull themselves away from their TV sets and the NCAA tournament for a few moments, some of them might come to the realization that what's happening in Cyprus might just have huge global implications in the not-so-distant future.

While the story so far consists of a multitude of moving parts, what is known so far is that Cypriot banks - oversized in relation to the nation's GDP - are in deep, deep trouble and that the "troika" (EU, ECB and IMF) has given the tiny island nation until Monday to come up with a viable plan.

Cyprus has been told it must raise 5.8 billion euros ($7.5 billion) if it is to receive 10 billion euros ($12.9 billion) from its fellow eurozone countries and the International Monetary Fund.
In the meantime, the banks remain closed, ostensibly to reopen on Tuesday of next week.

Many ATM machines have already run out of cash and one bank (Laiki) has already imposed capital controls, limiting withdrawals to 260 euros ($340) per person to conserve its dwindling funds. Rumors have it that Laiki will be folded into one or two of the other major banks in the nation, even though reported by CNBC, those reports have not been verified by reliable sources. The situation remains fluid with European officials, Russia (whose residents are responsible for the bulk of deposits in Cyprus' banks) and the Cypriot parliament are busy concocting ideas to rescue the banking system and the government, though nothing seems to be working particularly well at the moment.

Possible outcomes for Cyprus are varied and somewhat indecipherable at present, but what is known is that depositors almost certainly will be forced to surrender some of their funds via a tax, or levy, because there aren't enough bondholders in the banks to make up for the shortfall. Normally, those holders of bank debt would be first on the hook, but this situation is different from what has already occurred in Ireland, Greece, Spain, Portugal and Italy.

Nonetheless, whatever happens in Cyprus will have ramifications across Europe and the world. If the troika's plan to tax deposits becomes reality, it will almost certainly cause some degree of bank runs in the aforementioned countries that are already in trouble. The damage done to confidence in the system will be more severe. Banking and finance, largely based upon trust, cannot withstand wholesale looting of depositor accounts, no matter how small or seemingly trivial the amounts. The expectation is that banks are a safe place to park funds and the potential of either not having access to funds or having money appropriated (read: stolen) in order to bail out the bank itself or the government, is not part of the agreement.

Europeans are now looking at events in Cyprus through jaundiced eyes. The crisis is nigh upon four years old and the peripheral countries are still in recession, as is the whole of Europe. To date, all the plans of the EU, ECB and the IMF have amounted to only playing for time, and time is running short, both on the patience of the populaces and the viability of various governments.

The fear is that once the genie of appropriating depositor funds comes out of the bottle, it will be hard, if not impossible, to put back and will likely spread. No matter the eventual deal struck in Cyprus, capital flight is a certainty, the question being from where and to where the money will flow.

There's a certain unfairness about all of it, and a general sense of fear that hit markets this week with a thud. In the US, the damage has been downplayed thus far, but today's losses were the worst of the week and sent the major average to their lowest closes in nearly two weeks.

With the situation still unresolved, the anxiety on Wall Street and in other money centers around the globe is palpable. Unrestrained money printing, QE, low interest rates and other assorted "emergency" measures will not be able to trump a wholesale loss of confidence in the financial system itself, a condition which is likely long overdue.

Naturally, one cannot expect ordinary citizens and businesspeople around to world to immediately and simultaneously catch onto what's really occurring, but word is spreading, and quickly.

A piece of advice to everyone would be to watch one's finances carefully and keep a stash of cash outside the banking system, just in case. After all, it was one of our founding fathers - Benjamin Franklin - who opined, "an ounce of prevention is worth a pound of cure." And the cure has yet to be found.

Also of note is that traditional "safe havens" - gold and silver - have been appreciating slightly, with today's moves the most significant.

Dow 14,421.49, -90.24 (0.62%)
NASDAQ 3,222.60, -31.59 (0.97%)
S&P 500 1,545.80, -12.91 (0.83%)
NYSE Composite 9,009.66, -71.43 (0.79%)
NASDAQ Volume 1,691,711,000
NYSE Volume 3,571,124,500
Combined NYSE & NASDAQ Advance - Decline: 2138-4254
Combined NYSE & NASDAQ New highs - New lows: 303-28 (stretched)
WTI crude oil: 92.45, -1.05
Gold: 1,613.80, +6.30
Silver: 29.21, +0.395

Tuesday, March 19, 2013

Cypriot Parliament Rejects Savings Levy; EU, ECB, IMF Relent

Congrats to the Cyprus parliament for calling the bluff on the EU, ECB and the IMF.

Shortly after noon EDT, the Cypriot parliament voted unanimously - in a rare show of anti-Euro solidarity - to reject the bailout plan proposed by the "troika" (EU, ECB, IMF) that would have imposed a tax on savers, a stark violation of the rule of law.

The plan called for a 9.9% tax on savings accounts in banks with holdings of more than 100,000 Euros, and a 6.5% levy on those under the 100,000 Euro threshold.

The vote had been delayed for two days, but, in the end, the parliament stood up for the welfare of the people and the sanctity of personal property rights, or, could it have been a reaction to a very real threat from retaliation from Russian oligarchs and mobsters (recognized as one and the same, in some circles)?

Much of the billions of Euros on deposit in Cypriot banks belong to Russians, a fact not lost on those who had the fate of their country and countrymen in their hands.

Whatever the case, the troika's gambit to impose a tax on savings accounts went up in flames, fabulously, though one has to fear that this was more of a test run for a future raid on the money held by individuals and companies in banks across Europe. So deep was the opposition that the parliament rejected the plan in toto, sending the ECB and IMF back to the drawing board.

The EU quickly issued a statement to the effect that it would use existing means to bailout the banks in Cyprus, and with them, the bankrupt government. Though nothing material was offered right away, all in Europe know that whatever solution the troika devises will be austere toward the general populace and kind to banks.

In the end, it will be the people who suffer most, as it has been in Greece, Portugal, Ireland and, to a lesser extent, Spain and Italy.

At one point during the back-and-forth of memos and media bites, one of the EU finance ministers quipped that Europe was two-thirds of the way through the crisis. Skeptics of the overall viability of the European Union will note that using 2008 as a baseline, the year 2014 would serve as an end to the crisis, otherwise meaning the collapse of the EU and the end of the Euro as a multi-national currency.

It doesn't get any stranger than in Europe, the dystopian nightmare conceived as a method to compete on a global scale which has devolved rapidly into an Orwellian series of meetings, dictums, bailouts, trial runs and sovereign failures.

America took the drama in stride, the markets stumbling through the early part of the session only to rally in the afternoon, though the crisis in Cyprus is still far from over. This was only act one of what will certainly be a three-to-five piece performance.

While it may be back to normal (whatever that means) for US and global markets for the next few days, the FOMC meeting of the Fed wraps up tomorrow at 2:00 pm EDT and the budget battle in the US congress continues to gain pace, with the Senate and House bills far from resolution.

As usual, congress will be out of session beginning March 25, though it must pass a continuing resolution by the 27th in order to forestall a government shutdown due to lack of funding. As in Europe, the nefarious machinations of government are never without a dramatic deadline. Thus, the remainder of the week will shift focus from the tiny island nation of Cyprus to the secluded denizens within the halls of congress.

For now...

Dow 14,455.82, +3.76 (0.03%)
NASDAQ 3,229.10, -8.49 (0.26%)
S&P 500 1,548.34, -3.76 (0.24%)
NYSE Composite 9,018.73, -26.71 (0.30%)
NASDAQ Volume 1,648,331,375
NYSE Volume 3,809,744,750
Combined NYSE & NASDAQ Advance - Decline: 2643-3781
Combined NYSE & NASDAQ New highs - New lows: 313-42 (shrinkage)
WTI crude oil: 92.16, -1.58
Gold: 1,611.30, +6.70
Silver: 28.84, -0.031

Monday, March 18, 2013

March Madness Redefined: Cyprus, the ECB and the IMF

March - in the United States, at least - is traditionally known for the great sporting event of the year, the annual NCAA Men's Basketball Tournament, otherwise known as March Madness, because of the wild nature of the proceedings, the drama, last-second, game-winning shots (Buzzer Beaters) and the twists and turns taken en route to crowing a national champion.

Over the weekend, unbeknownst to college basketball fans and most regular American citizens, a new manner of March madness was created by the European Central Bank, the IMF and the nation of Cyprus. The reason nobody in America knew about what has been occurring on and around the tiny Mediterranean island is the usual: the US press is terminally asleep at the media wheel.

Re-capping the key events in this twisted tableau, the entire mess began years ago, as banks (the usual culprits) in Cyprus found themselves woefully underfunded and the government virtually bankrupt. Leave it at that, as yet another European nation finds itself with an unbearable debt burden and no reasonable way out.

The EU and the ECB have been grappling with the Cyprus situation for at least the last two years, doing little to nothing about it, their energies directed more at larger peripheral nations like Greece (a complete disaster), Spain (gaining fast on Greece), Ireland (terminally indebted), Portugal and Italy. These PIIGS, as they are lovingly called, have social and financial issues that needed more immediate attention and have been given directives, bailouts, loans and assorted "fixes" from the EU and the IMF, facilitating debt repurchases, funding ongoing governmental operations and generally kicking the proverbial can further down the road to the eventual collapse of the Euro.

Finally getting around to Cyprus this weekend, the EU and IMF decided that they would bail out the nation's banks to the tune of 10 billion Euros, a pittance comparatively, though the number fell short of what is really needed, which is more in the range of 16 to 17 billion Euros. even with that amount, tiny Cyprus would still have a debt-to-GDP ratio of about 180%. Shameful.

The kicker was that the proposed six-to-seven billion euros was to be funded from bank deposits.

STOP. Read that again. Yes, the EU and IMF told the Cypriot parliament to vote on a measure that would impair (tax) bank deposits at anywhere from six to 9.99%, the lower figure reserved for bank deposits below 100,000 Euros, the higher one applied to holdings over that figure. These are deposits of PEOPLE, companies, married couples, retirees which the leaders and brian-trust of the ECB thought reasonable to raid, to tax, to steal.

Never mind that bank deposits in all of Europe are guaranteed by the ECB up to 100,000 Euros, the six percent "tax" would be taken directly from bank accounts should parliament approve the proposal.

This, in the parlance of sports and March Madness, is what's known as a game changer. According to this banker proposal, your money, which you saved and deposited in a bank you thought was safe - and insured - could just simply be taxed away by authorities of some supra-national organization upon approval of your own parliament. Forget the rule of law, Forget property rights. Forget everything you ever thought about civilization, money, government and society. If there's a chance that your bank or your nation may not be able to make payments on debt, YOU PAY.

Curiously, this whole affair began on Friday night, after all the banks were closed for the weekend, and preceding a bank holiday in Cyprus on Monday. Since that time, all manner of posing, posturing, name-calling, demonstrations and other assorted madness has taken place, by EU finance ministers, various heads of state, the Cypriot parliament, the people of Cyprus and others, including just about every talking head on the financial news networks.

Currently, the parliament - having delayed the vote twice already - has announced to the one million residents of Cyprus that banks would be closed until Thursday. The joke of the day on that note was "which Thursday?"

So, bottom line is that the situation is still fluid, there's plenty of time for EU idiots and IMF monsters to make more absurd statements and demands, but, until something gets resolved, banks are closed, ATMs are out of cash and Cyprus will gradually devolve into something... not sure exactly what.

For more information on what may be the story of the year, the best single source is, as usual,, which has been running numerous articles since the story broke. For more information, try this Bing News link, the Washington Post story, another by CBS News and one from the Christian Science Monitor.

No other story mattered at all today, and it's likely that no other story will matter for the remainder of the week, because, if governments or pseudo-authorities like the ECB and IMF can force their will upon a sovereign government to the extent that it violates its own laws by confiscating, stealing, expropriating the funds of its own citizens, we have truly entered a new world order, one that is owned by bankers and their appointed lackeys in high government positions.

For the record, nearly all markets were down, globally, Asian markets taking the news most seriously and the worst affected, followed by European markets and then, the US, which downplayed the event after utures had tanked prior to the opening bell and actually found a way to briefly trade in positive territory (Dow and S&P) during the afternoon.

On the Dow, support was breached early in the session and again at the close. If you're looking for a bottomless pit, the Dow is now it, though Europe and all of its exchanges will race it to the bottom unless something changes radically over the coming few days. If people cannot trust the banks to hold their money, it's the beginning of the end for the decrepit, lawless global banking cartel we've all come to know and loathe.

Dow 14,452.06, -62.05 (0.43%)
NASDAQ 3,237.59, -11.48 (0.35%)
S&P 500 1,552.10, -8.60 (0.55%)
NYSE Composite 9,045.44, -71.24 (0.78%)
NASDAQ Volume 1,547,766,750
NYSE Volume 3,522,718,500
Combined NYSE & NASDAQ Advance - Decline: 2352-4125
Combined NYSE & NASDAQ New highs - New lows: 271-34
WTI crude oil:

Tuesday, November 27, 2012

Washington Gets Back to Work (Kinda); Stocks Slump Despite (Kinda) Positive Data

Tuesday began with a flurry of good news.

First, over in Bizzarro-world(aka Europe), EU ministers were glad-handing and slapping each other's backs for another successful bailout of Greece (really, is this the third, fourth or fifth? Who's counting?), then, at 8:30 am ET, durable goods orders came in better than expected.

At 9:00 am ET, the September Case-Shiller Housing Index showed another in a series of positive gains for housing. Better yet, consumer confidence hit a four-and-a-half-year high, reported at 10:00 am ET.

So, why were the markets in such a sour mood, why did they end lower, and why were they not even lower than where they finished?

Ah, grasshopper, so many questions...

First, that somewhat refreshing zero print on durables was, in fact, pretty ugly, once one ventured to peek under the hood. As Zero Hedge reports, a continued collapse in durable goods new orders virtually guarantees that we're already in a recession, fiscal cliff or not (more on that canard later).

The Case-Shiller data, which showed the average price of a home purchase up by 3.6% nationally, has to be faded a little, only because housing is not stocks, and, even though home-buying is a relevant statistic, it matters little in the broader scheme of things, especially when the banks are keeping massive numbers of homes off the market in what's known as "foreclosure stuffing." Those in the know, really, really do know.

As far as the consumer confidence number, well, anybody who allows themselves to be branded a consumer for purposes of a survey can't be all that bright, after all.

In the case of the nth installment of the Greek bailout, there were scant details, the IMF hasn't signed off on it yet, the "deal" has to be approved by each member (17) country, so, the Euro sold off, anathema to US markets.

And then, about 2:30 pm ET, US lawmakers (that's a joke, son) emerged from talks over the fiscal cliff (that's not a pun, son) and did what everyone thought they'd do, since their track record is so plain and clear on this point: point fingers at the other side for not playing fairly.

Senate majority leader Harry Reid: "...little progress with Republicans..."

Senate minority leader Mitch McConnell: "...some difficulty turning off the campaign..."

Is it any surprise to anybody that working out a deal in DC was going to be a difficult, if not impossible, issue? After all, this whole "fiscal cliff" miasma started more than a year ago when the two sides failed to reach conciliatory postures on increasing the debt limit, and that puny increase of roughly $1.2 trillion is about to run out.

So, with no deal even remotely being discussed, the Titans of Wall Street started selling in earnest and continued selling into the close. They will probably still be selling when the opening bell rings on Wednesday and maybe even beyond that, because depending on Washington politicians to reach a concord on any matter of even insignificant importance is like getting cats and frogs to behave well together. It's just not going to happen.

Further, indispensable reading from the Wall Street Journal comes in the form of an editorial by Chris Cox and Bill Archer - respectively, former chairman of the House Republican Policy Committee and the Securities and Exchange Commission and former chairman of the House Ways & Means Committee - explaining why the fiscal cliff of $600 billion is merely a puff of smoke compared to the conflagration that is the real unfunded liabilities of Medicare and Social Security, refreshingly written in language even a protesting Wal-Mart worker could comprehend.

The saga continues to unfold tomorrow. Oh, by the way, so many people did their holiday shopping on Thanksgiving, Black Friday, Small Business Saturday and online on Cyber Monday this year, and, considering that since Turkey Day was so early this year that there's an extra week in the holiday shopping season, retail sales are going to be very slow for the one, two, three, four next weeks, until the last Saturday before Christmas (the 25th is a Tuesday), so, Happy Holidays! Free houses, Greek bailouts, durable goods and fiscal cliff-diving for everyone... including consumers!

Dow 12,878.13, -89.24 (0.69%)
Nasdaq 2,967.79, -8.99 (0.30%)
S&P 500 1,398.94, -7.35 (0.52%)
10-Yr Bond 1.65% -0.02
NYSE Volume 3,294,930,000
Nasdaq Volume 1,762,521,750
Combined NYSE & NASDAQ Advance - Decline: 2462-3041
Combined NYSE & NASDAQ New highs - New lows: 154-40
WTI crude oil: 87.18, -0.56
Gold: 1,742.30, -7.30
Silver: 33.98, -0.156

Wednesday, October 10, 2012

Dow Tanks, Takes Other Averages with It as Global Slowdown Concerns Mount

There was no last hour rally for stocks on wednesday, no reprise of the late-day rallies that typified behavior through the summer and into the early days of fall.

Investors were taking profits and worried about the future after Alcoa (AA) kicked off 3rd quarter earnings season after the close Tuesday with a downbeat outlook, calling for reduced demand for aluminum in a worldwide slowdown.

The leading global producer of aluminum reported a third quarter net loss of $143 million, or -13 cents per share, compared with a profit of $172 million, or 15 cents per share, in the year-ago period. Excluding one-time items, adjusted profit was 3 cents per share, which beat consensus estimates which were calling for a roughly break-even quarter.

The company lowered its 2012 growth forecast for aluminum from seven percent to six, saying weak demand from China was the leading cause for the revision.

The Dow led the indices into the red, dragging the S&P and NASDAQ lower throughout a session which witnessed slow deterioration in share prices from the open into the close as an IMF report released on Tuesday, calling for lower 2013 growth worldwide, continued to weigh on markets.

Adding to the chorus calling for slowing growth, OPEC said that current production levels were ample heading into 2013 as demand continues to wane. That sent oil prices tumbling from early-day gains to a loss at the close of floor trading.

It was the third straight negative day on the Dow, the fourth for the S&P and NASDAQ and the first triple-digit loss on the Dow since July 23-24.

Stocks have been moving lower this week after reaching an interim high of 13,610.15 on the 5th of October, the day the non-farm payroll data was released. Since then, stocks have moved markedly lower, with the Dow down two percent in the first three days of this week, closing today just above the 50-day moving average.

The NASDAQ, the worst performer of the major indices this week, broke through its 50-day moving average on Tuesday and failed to recover today, spending only a few brief moments this morning on the plus side before deteriorating through the session.

Also hovering dangerously close to its 50-day MA, the S&P 500 has been down since making a double top on the 5th of October.

The two most robust indicators, the advance-decline line and the new highs - new lows metric continued to deteriorate, with the NASDAQ showing more new lows than highs for the second straight session, 32-53, and new highs holding a very slim edge - 42-33 - on the NYSE. Cumulatively, new lows outpaced new highs 86-74.

All this occurred without any assistance from Europe, where stocks were lower in nearly all Eurozone nations. Meetings scheduled for next week to hammer out bailout details for various countries and banking systems are seen to be troublesome and also weighing on sentiment, which has recently turned negative.

Dow 13,344.97, -128.56 (0.95%)
NASDAQ 3,051.78, -13.24 (0.43%)
S&P 500 1,432.56, -8.92 (0.62%)
NYSE Composite 8,220.62, -58.48 (0.71%)
NASDAQ Volume 1,763,862,625
NYSE Volume 2,927,658,250
Combined NYSE & NASDAQ Advance - Decline: 2271-3218
Combined NYSE & NASDAQ New highs - New lows: 74-86
WTI crude oil: 91.25, -1.14
Gold: 1,765.10, +0.10
Silver: 34.11, +0.124

Monday, July 23, 2012

Why There Probably Won't Be a Stock Market Crash

With US stocks suffering back-to-back losses of more than 100 points Friday and Monday on the Dow, conventional thinking might be assuming that the market has hit a short term top and they may well be correct.

Others continue to ponder the overall fate of the entire fiat-money global financial system and wondering when it's going to implode, if ever. Many have been waiting since 2008 for a full reset, but policy changes, bailouts, stimulus and interest rate manipulation have managed to keep the carnage contained, at least in the US.

Today in Europe, it was something of a different story, as many national equity exchanges were victims of among the worst losses of the year. Most indices were down more than two percent, with the Greek Athex Composite Share Price Index falling more than seven percent on pronouncement by the IMF in Der Spiegel magazine that the world's fail-safe lender of last resort may not help Greece in any further restructuring or servicing of debt.

Naturally, after the Dow was down 239 points in early trading, IMF officials reversed their opinion, saying that they would indeed be there for the Greeks, just as they have all along. This is now the accepted method of moving markets - by word of mouth, rumor and denial - and part of the reason why the economic collapse has more resembled a train wreck in slow motion.

Along those lines, a couple of columns by the estimablePaul Craig Roberts and Nomi Prins have received a great deal of attention as they examine the libor-rigging scandal and how that effectively kept banks and governments in collusion from complete collapse.

In the first article, from July 14,
The Real Libor Scandal, Roberts and Prins assert that the banks which "fixed" the libor rate were the main beneficiaries in something of a quid pro quo for the assistance they received from various governments and central banks:
Indicative of greater deceit and a larger scandal than simply borrowing from one another at lower rates, banks gained far more from the rise in the prices, or higher evaluations of floating rate financial instruments (such as CDOs), that resulted from lower Libor rates. As prices of debt instruments all tend to move in the same direction, and in the opposite direction from interest rates (low interest rates mean high bond prices, and vice versa), the effect of lower Libor rates is to prop up the prices of bonds, asset-backed financial instruments, and other “securities.” The end result is that the banks’ balance sheets look healthier than they really are.

Governments were also beneficiaries of a lower libor, as they could sell their bonds at rates below inflation while still maintaining enormous budget deficits:
In other words, we would argue that the bailed-out banks in the US and UK are returning the favor that they received from the bailouts and from the Fed and Bank of England’s low rate policy by rigging government bond prices, thus propping up a government bond market that would otherwise, one would think, be driven down by the abundance of new debt and monetization of this debt, or some part of it.

In a follow up to the first article, The Libor Scandal In Full Perspective Roberts expands upon the concept of ever-lower interest rates on government bonds into a full-blown indictment of government in collusion with the libor-fixing insolvent banks on charges of fraud:
As the Federal Reserve and the Bank of England are themselves fixing interest rates at historic lows in order to mask the insolvency of their respective banking systems, they naturally do not object that the banks themselves contribute to the success of this policy by fixing the LIbor rate and by selling massive amounts of interest rate swaps, a way of shorting interest rates and driving them down or preventing them from rising.

Roberts goes even further, demonizing Robert Rubin, whose actions to dismantle regulations in the US such as the Glass-Steagle Act put into motion over-leverage by the banks which resulted in the 2008 crisis and continue to this day:
As villainous as they might be, Barclays bank chief executive Bob Diamond, Jamie Dimon of JP Morgan, and Lloyd Blankfein of Goldman Sachs are not the main villains. The main villains are former Treasury Secretary and Goldman Sachs chairman Robert Rubin, who pushed Congress for the repeal of the Glass-Steagall Act, and the sponsors of the Gramm-Leach-Bliley bill, which repealed the Glass-Steagall Act. Glass-Steagall was put in place in 1933 in order to prevent the kind of financial excesses that produced the current ongoing financial crisis.

The articles are both "must read" material which outline the persistent fraud necessary to keep the fiat money crisis from imploding completely, with scenarios for its eventual collapse, not from within, but from outside.

As the stock markets are kept afloat at higher-than-usual levels by manipulators within the around the system, so too, the bond markets are manipulated, often by the very same people.

With powerful institutions plotting and defrauding the public on both sides of all trades, there's little wonder that every time there's an event which causes even a hint of panic, the authorities rush in to save the day, and with it, the global economic system from the carnage which eventually will engulf it all.

Dow 12,721.46, -101.11 (0.79%)
NASDAQ 2,890.15, -35.15 (1.20%)
S&P 500 1,350.52, -12.14 (0.89%)
NYSE Composite 7,670.54, -89.05 (1.15%)
NASDAQ Volume 1,586,828,750
NYSE Volume 3,576,762,250
Combined NYSE & NASDAQ Advance - Decline: 1242-4363
Combined NYSE & NASDAQ New highs - New lows: 113-202 (reversal)
WTI crude oil: 88.14, -3.69
Gold: 1,577.40, -5.40
Silver: 27.04, -0.26

Monday, July 16, 2012

Markets Lower for Seventh Straight Monday in Sideways Trading

Get ready for a real roller coaster ride this week.

With Monday's declines marking the seventh straight Monday in which the market has sustained losses - an event which hasn't occurred since 2002 - the stage is set for more fun and games brought to you by the criminal syndicate that runs Wall Street, and, to some extent, your lives.

Citigroup (C) delivered a second quarter earnings beat prior to the open which failed to move futures off their declining dime, sending stocks straight downhill at the open, a not-unforeseen event, given Friday's massive melt-up.

And therein lies the crux of the market-is-rigged argument. If stocks are headed lower on Mondays, there isn't much analysis to do if you're running a big fund, or even a little one. Same might be true for Tuesday and Wednesday; you'll nibble a little maybe, but make your big move on Thursday, because Friday, as we all know all too well, is payday, and, thanks to concoctions like weekly options expiry and the usual third Friday of the month expiry (which happens to be this Friday), you can make money without break a sweat.

That seems to be the current game plan, since, after all, the world is heading to hell in a handbasket, so, savvy players will make the most of uncertainty, to say nothing of inside information and shared strategies.

Topping the news wires today were retail sales - down for the third straight month - and the IMF lowering its wildly optimistic global growth estimate for 2013 from 4.1% to 3.9%, though neither of those indicators seemed to touch off much sentiment other than bolstering the already overtly pessimistic.

Ben Bernanke appears before congress Tuesday and Wednesday, which might be newsworthy if he actually had any power over the markets (he doesn't), though many a hopeful banker will be listening in for any hints that the Fed may try more easing, a strategy which has worked well for speculators but come up snake eyes for the US and global economies.

A few weeks back, it was suggested here that stocks could be headed for a nighty downturn or a sideways/lower trade at best. So far, the sideways has been playing out, though the lower part of the formula seems to be headed off just about every Friday.

This week could be more of the same, with the aforementioned options expiration ending the week on a note the bankers love most, the sound of ringing cash registers.

Of course, this being the middle of summer, volume was nothing to speak of, though that's become somewhat the norm since the only players left are flesh-eating zombie bankers, flush with the Fed's newly-minted cash and nothing better to do with it than gamble it all away.

Dow 12,727.21, -49.88 (0.39%)
NASDAQ 2,896.94, -11.53 (0.40%)
S&P 500 1,353.64, -3.14 (0.23%)
NYSE Composite 7,743.06, -15.62 (0.20%)
NASDAQ Volume 1,438,632,500
NYSE Volume 2,883,821,000
Combined NYSE & NASDAQ Advance - Decline: 2271-3292
Combined NYSE & NASDAQ New highs - New lows: 277-71
WTI crude oil: 88.43, +1.33
Gold: 1,591.60, -0.40
Silver: 27.32, -0.05

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

Friday, February 24, 2012

Playing the Market, Twitter-Mob Style; Mogambo Guru Returns

It was certainly an exciting - if uneventful (depending on perspective) - end to the week, as the pumpers on CNBC breathlessly kept viewers in a strange state of animated suspense and anticipation over whether the Dow would actually close above the "psychologically important" (only to them) 13,000 level and the wrangling over details of the latest Greek bailout continued apace across the pond.

But, a funny thing happened on the way to 13,000 - or rather on the way down away from it - this morning, shortly after 10:00 am ET.

With the Dow at what would become the highs of the day, a sudden about-face took place, sending the index screaming for mercy in a 37-point drop over a roughly ten minute span.

Moves like this are not uncommon in the world of fast-paced HTF algos (a subject which has been noted here all too often in the past), but today's event might have had a bit of a different skew. Yesterday afternoon, a group of individuals (no names, please) decided to have a bit of fun, or mischief, possibly at the expense of the well-heeled crowd that convenes on Wall Street regularly.

A plan was concocted to see if a bunch of unrelated, inconspicuous internet users could have an effect on the HTF algos, which, as we know, track headlines from the likes of Bloomberg and the Wall Street Journal, but also follow trends on social websites like Facebook and Twitter.

The idea was that everyone would Tweet, at precisely 10:03 am, "Greece defaults" and see if the dumb algos would fall for the bait. The tweets went out, not all at the same time, and not uniform by any means, though the 10:03 time-stamp was extended, with various mentions of Greece defaulting flowing into the Twitter-verse in earnest for about twenty minutes.

Whether the tweeters actually managed to trip up the HFT traders and their zipity-do-dah algorithms is now and will likely forever be a matter of speculation, but if there were an actual cause and effect, it brings some interesting - and scary - possibilities to the table.

Suppose such crowd-sourced media were actually effective in moving the algos, thus affecting the price of an entire index? What then would be the effect on an individual stock? Were a group of people intent of making some money with this trick, it might be easier than anyone imagines, somewhat akin to elevator whisper campaigns designed to take down candidates in local elections or the old pump-and-dump strategies that were so effective in the early dotcom days of the internet, circa 1998-2001.

A plan could easily be put together to move a stock a few points in one direction or another, with appropriate bets placed by those "in the know." If truly effective, the profits could be staggering. Truth is, that's probably what has been happening in the US markets and elsewhere for quite some time, but especially theses days, as the market seems less than reluctant to trade on rumors and headlines rather than fundamentals.

Whatever the case, today's experiment via Twitter might raise a few eyebrows and give people some ideas. As for 13,000 on the Dow, the CNBC presenters and those with an emotional tie to the number will just have to wait until next week.

The other major development of the day also took place on the internet, and actually happened on Thursday, when the frightful visage of the Mogambo Guru suddenly reappeared sporting his own blog. The majestic Mogambo Guru (MMG) had been a regular typist and word-twister of financial follies on the Daily Reckoning for a long time, though he had taken an absence from penning the occasional witty and irreverent column (OWAIC).

Now that he's back and regularly submitting his thoughts to the public via a blog there should be little doubt that his hordes of faithful followers (HHOFF) will flock to his work like... ummm, bees to honey, or something like that.

Welcome back, oh great, glorious, hallowed, devious and mischievous Guru! Your absence left a hold in the fabric of time and space, but we're sure you'll be promptly attending to mending it.

Just a few quick notes for the weekend:

Today's volume, which has been horribly anemic on a regular basis anyway, was fairly ghastly today, the lowest in a decade, notes ZeroHedge.

There's a meeting of the G20 in Mexico City over the weekend in which the big fight is supposed to be between the IMF's Christine Lagarde and the finance ministers and representatives of Germany. The IMF wants more dough and the Germans are tiring of spending so much. Besides the main event, the undercard features thousands of police in riot gear protecting the one percenters from rock-hurling Mexican hooligans and potentially, armed drug cartel operatives. One has to admit that setting a meeting of world leaders in a place as dangerous as Mexico City offers a bit of intrigue, to say nothing of its inducement to all kinds of mayhem.

Dow 12,982.95, -1.74 (0.01%)
NASDAQ 2,963.75, +6.77 (0.23%)
S&P 500 1,365.74, +2.28 (0.17%)
NYSE Composite 8,151.96, +15.72 (0.19%)
NASDAQ Volume 1,641,587,000
NYSE Volume 3,367,789,000
Combined NYSE & NASDAQ Advance - Decline: 2827-2792
Combined NYSE & NASDAQ New highs - New lows: 281-11 (Really?)
WTI crude oil: 109.77, +1.94 (pain at the pump)
Gold: 1,776.40, -9.90
Silver: 35.34, -0.22