Editor's Note: Our regrets and apologies to readers for missing our regularly-scheduled post after the close on Monday. There were negotiations from which we could not extricate ourselves in a timely manner.
Stocks took a dive on Monday, but rebounded sharply on Turnaround Tuesday, raising the indices nicely, but not back to levels seen before Monday's decline.
In the news on Monday was Europe (remember them?), once again rearing its ugly, socialist head over stories emanating from Spain over alleged corruption in the government of Prime Minister Mariano Rajoy (no, really?), which the Spanish PM has denied. While there's little doubt that corruption exists in all levels of government worldwide, especially at the sovereign or federal level, proving such becomes a task not for the feint of heart, as there are vested interests which will defend their salaries, positions and perks like maddened pit bulls.
Italy was also in the news Monday, as fraud and conspiracy charges are being levied against the world's oldest bank, Banca Monte dei Paschi di Siena, and are slowly but surely finding their way to the top of government, eventually to land in the lap of Prime Minister Mario Monti.
National elections are slated for February 24-25, with former Premier Silvio Berlusconi, 76, gaining on front-runner Pier Luigi Bersani. Unemployment and rampant waves of criminality are among major issues in Italy.
On the US home front, the Justice Department finally found some level of damming evidence over which to bring charges against Standard & Poor's. The rating agency is alleged with fraud over their ratings of sub-prime loans in the 2004-06 period, helping bring about the 2008-09 market crash and financial panic. The government is seeking $5 billion in damages.
While the DoJ has reportedly combed through two million pages of emails and internal documents, the real reason for the agency to now bring charges is that - after four months of negotiations with the firm - it wants and needs the money that fines will bring to the federal coffers. Besides that, statues of limitations on fraud are expiring quickly, prompting action. It's a shame this is happening so late in the game and also that the banks which originated and packaged the faulty loans aren't being prosecuted as well.
There was a rush of earnings news, mostly positive, though YUM Brands (YUM) was hard hit on Tuesday even though the company beat on both the top and bottom lines. At the heart of the company's issues is KFC, and tainted chicken sold though their Chinese outlets. The government is continuing its probe of the company which guided forward flat earnings due to the issues arising from the problematic cluckers. KFC is highly profitable in China. More than 40% of YUM's profits come from China.
Dow 13,979.30, +99.22(0.71%)
NASDAQ 3,171.58, +40.41(1.29%)
S&P 500 1,511.29, +15.58(1.04%)
NYSE Composite 8,920.13, +67.31(0.76%)
NASDAQ Volume 2,150,602,500
NYSE Volume 3,859,714,750
Combined NYSE & NASDAQ Advance - Decline: 4674-1828
Combined NYSE & NASDAQ New highs - New lows: 386-22
WTI crude oil: 96.64, +0.47
Gold: 1,673.50, -2.90
Silver: 31.88, +0.159
Showing posts with label Italy. Show all posts
Showing posts with label Italy. Show all posts
Tuesday, February 5, 2013
Tuesday, July 24, 2012
More Losses For European, US Markets; Apple Misses Big on Earnings, Revenue
As per the usual, US stocks pared much of their losses in the final fourty minutes of trading, the Dow shaving its decline in half, with the other major indices following suit.
The trend has been lower for three straight sessions, with the Dow losing somewhere in the vicinity of 100 points a day. Catalysts for the declines are various and diverse, from poor US data - the Richmond Fed manufacturing index came in at -17 on expectations of -1, the lowest level since April 2009 - concerns over the Spanish government needing a bailout, or Moody's lowering the outlooks for Germany, the Netherlands and Luxembourg to negative late Monday.
Even China got some play as their flash PMI number rose to the best level in five months, though at 49.5, still showed contraction. The blip from the Far East was seen as a positive, though more than likely, a minor one, as one month's data surely does not make a trend and data from China is widely regarded as highly unreliable.
In Europe, most of the stock indices took losses, though not as heavily as on Monday. The mood on the continent is extremely guarded, as yields on benchmark 10-year notes in Spain and Italy have hovered around or exceeded the 7% mark.
Here in the states, the 10-year yield continues to fall, as predicted by Paul Craig Roberts and other astute economists (see yesterday's post), to a record low yield of 1.39, while the 30-year bond closed at 2.46, also a record low.
Market conditions and sentiment appear to be quickly worsening, with the advance-decline line negative for three straight days and the new highs - new lows metric having reversed to negative on Monday and continuing to worsen with Tuesday's session.
Commodities were mostly lower, with the notable exception of oil, which continues to be boosted by ongoing uncertainty over Iran, though the corn and soybean futures markets were notably nixed, as slack demand seems to be trumping even the effect of the worst drought since the 1950s.
All of the data and market moves seem to be pointing toward Friday's initial reading of second quarter GDP, slated for release at 8:30 am EDT on Friday. Forecasts range from 0.3% to 1.7% growth, though estimates have been coming down from a variety of sources in recent days and third quarter and second half GDP outlooks have been routinely revised lower.
As it turns out, however, the biggest news of the day came may have come after the markets had already closed, when Apple (APPL) reported a fiscal third quarter earnings miss that sent the stock markedly lower.
From the LA Times:
If Apple, the bellwether for all tech stocks and a major component of the S&P 500 and NASDAQ 100, cannot beat lowered expectations, then perhaps the idea that a global deflationary slowdown is well underway might finally dawn on not ony the wizards of Wall Street but the average Joe and Jane Sixpacks, who likely already have gotten the memo, having not enough income to afford an iPad or iPhone, essentially spending whatever income they have on survival items like food and fuel.
Good grief! Can it get any worse?
We already know the answer to that.
Dow 12,617.32, -104.14 (0.82%)
NASDAQ 2,862.99, -27.16 (0.94%)
S&P 500 1,338.31, -12.21 (0.90%)
NYSE Composite 7,590.61, -79.92 (1.04%)
NASDAQ Volume 1,735,519,125.00
NYSE Volume 3,853,596,750
Combined NYSE & NASDAQ Advance - Decline: 1484-4064
Combined NYSE & NASDAQ New highs - New lows: 118-210
WTI crude oil: 88.50, +0.36
Gold: 1,576.20, -1.20
Silver: 26.81, -0.23
The trend has been lower for three straight sessions, with the Dow losing somewhere in the vicinity of 100 points a day. Catalysts for the declines are various and diverse, from poor US data - the Richmond Fed manufacturing index came in at -17 on expectations of -1, the lowest level since April 2009 - concerns over the Spanish government needing a bailout, or Moody's lowering the outlooks for Germany, the Netherlands and Luxembourg to negative late Monday.
Even China got some play as their flash PMI number rose to the best level in five months, though at 49.5, still showed contraction. The blip from the Far East was seen as a positive, though more than likely, a minor one, as one month's data surely does not make a trend and data from China is widely regarded as highly unreliable.
In Europe, most of the stock indices took losses, though not as heavily as on Monday. The mood on the continent is extremely guarded, as yields on benchmark 10-year notes in Spain and Italy have hovered around or exceeded the 7% mark.
Here in the states, the 10-year yield continues to fall, as predicted by Paul Craig Roberts and other astute economists (see yesterday's post), to a record low yield of 1.39, while the 30-year bond closed at 2.46, also a record low.
Market conditions and sentiment appear to be quickly worsening, with the advance-decline line negative for three straight days and the new highs - new lows metric having reversed to negative on Monday and continuing to worsen with Tuesday's session.
Commodities were mostly lower, with the notable exception of oil, which continues to be boosted by ongoing uncertainty over Iran, though the corn and soybean futures markets were notably nixed, as slack demand seems to be trumping even the effect of the worst drought since the 1950s.
All of the data and market moves seem to be pointing toward Friday's initial reading of second quarter GDP, slated for release at 8:30 am EDT on Friday. Forecasts range from 0.3% to 1.7% growth, though estimates have been coming down from a variety of sources in recent days and third quarter and second half GDP outlooks have been routinely revised lower.
As it turns out, however, the biggest news of the day came may have come after the markets had already closed, when Apple (APPL) reported a fiscal third quarter earnings miss that sent the stock markedly lower.
From the LA Times:
The technology giant said profit rose 21% to $8.8 billion, or $9.32 per share, on revenue of $35 billion, up 22% from a year earlier. The results were less than what analysts had expected. Shares plummeted in after-hours trading, falling $34, or nearly 6%, to $566.78.
Analysts surveyed by Thomson Reuters had estimated that Apple would post earnings per share of $10.36 on revenue of $37.2 billion. A year earlier, the Cupertino, Calif., technology behemoth reported record quarterly revenue of $28.6 billion and record profit of $7.3 billion, or $7.79 a share. That was a 121% increase over its third-quarter 2010 earnings per share.
If Apple, the bellwether for all tech stocks and a major component of the S&P 500 and NASDAQ 100, cannot beat lowered expectations, then perhaps the idea that a global deflationary slowdown is well underway might finally dawn on not ony the wizards of Wall Street but the average Joe and Jane Sixpacks, who likely already have gotten the memo, having not enough income to afford an iPad or iPhone, essentially spending whatever income they have on survival items like food and fuel.
Good grief! Can it get any worse?
We already know the answer to that.
Dow 12,617.32, -104.14 (0.82%)
NASDAQ 2,862.99, -27.16 (0.94%)
S&P 500 1,338.31, -12.21 (0.90%)
NYSE Composite 7,590.61, -79.92 (1.04%)
NASDAQ Volume 1,735,519,125.00
NYSE Volume 3,853,596,750
Combined NYSE & NASDAQ Advance - Decline: 1484-4064
Combined NYSE & NASDAQ New highs - New lows: 118-210
WTI crude oil: 88.50, +0.36
Gold: 1,576.20, -1.20
Silver: 26.81, -0.23
Tuesday, July 10, 2012
Cacaphony of News Events Sends Stocks Lower
Tuesday was full of news items - most of them bad - which cumulatively took US stock markets down a few notches.
In classic bear market fashion, stocks opened higher, but quickly gave up their gains - the Dow managed to tack on 103 points at the high of the day, just before 10:00 am EDT - and turned negative, where they stayed the remainder of the session, the losses accelerating into the close.
Early in the day, Italy's Prime Minister, Mario Monti, expressed an interest for his country to tap into Eurozone bailout funds, for "bond support," an option previously not mentioned as Monti tries to turn around his country's flagging economy, but prescient, as Italy's banking system is one of the weakest of European nations.
Monti's suggestive remarks blunted a broad rally on European bourses, though most managed to finish with sizable gains, his comments coming late in the trading day.
Not so fortunate were US markets, which received the dispatch around 11:00 am EDT. The first news of the week from Europe that was not all roses and Perrier sent shivers through the exchanges as investors took heed and began selling in earnest.
Italy's woes were lumped on top of news that Patriot Coal, suffering from the lowest coal prices in 24 years, due to mild winters and increased use of natural gas, filed for bankruptcy protection in Manhattan, NY. The company's bonds are under severe pressure, selling for 26-34 cents on the dollar, depending on maturity. The stock (PCX) price ended Thursday at 0.61 cents and did not trade today, though some after hours quotes have it at 0.37 cents.
Adding to the day's malaise, the city of Scranton, PA, under severe financial pressure, cut municipal employees' pay to minimum wage, $7.25 per hour, citing a need to keep costs down and raise capital.
The woes of Scranton, mythical home to the hit series, "The Office," are notable, following the bankruptcy of Pennsylvania's state capitol, Harrisburg, and other municipal bankruptcies in Stockton, California and Jackson, Mississippi.
Just adding fuel to the raft of bad news was J.C. Penny, which announced 350 job cuts at their headquarters in Plano, Texas. The retailer is attempting a turnaround after years of sluggish sales and sputtering growth, though the economic climate hasn't been very cooperative. JCP finished down 1.27, at 20.76, a share price less than half what it was just five months ago.
All of these news items, which seem to be billowing up daily, sent stocks into a tailspin, though short-covering and the PPT managed to keep the major indices from closing at their lows.
There is little doubt that the US and global economies are facing stiff headwinds from an overabundance of debt, fraud and malfeasance, which won't be easily fixed.
The trend continues to be one of losing bets on stocks while legislators sit upon their collective hands - because it's an election year - and the global, criminal banking cartel continues to skim and chip away at the edges of everybody's wealth.
How long the crisis mentality will prevail is unknown, though one has to believe that all hell is about to break loose, both in the US and Europe - to say nothing about the hard landing in China - surely to fracture before the November elections.
It's a mess, and, if you're one of the sheeple who can't see the forest for the trees, it's time to start weeding and cutting some brush. The situation worsens by the day and financial authorities have nothing to offer but more debt, piled upon heaps and loads of the stuff.
On a personal note, it is with great regret that I note the passing of Helen Mittermeyer, mother of one of my two best friends, Paul Mittermeyer.
Helen left this earth on Monday afternoon, succumbing to complications from cancer after a short illness. She leaves behind her husband, Whitey, and four children, Paul, Ann, Daniel and Cris.
Helen was a noted writer of romance novels who wrote 30 books from 1983 through 1998. In her latter years, health issues prevented her from keeping to her craft. She also penned novels under the names Ann Cristy, Hayton Monteith, and Danielle Paul.
A warm, caring, generous, outgoing person with a permanent smile and a zest for life, Helen will be missed by all.
-- Rick Gagliano
Dow 12,653.12, -83.17 (0.65%)
NASDAQ 2,902.33, -29.44 (1.00%)
S&P 500 1,341.47, -10.99 (0.81%)
NYSE Composite, 7,667.56, -68.78 (0.89%)
NASDAQ Volume 1,697,232,250.00
NYSE Volume 3,439,462,750
Combined NYSE & NASDAQ Advance - Decline: 1859-3706
Combined NYSE & NASDAQ New highs - New lows: 299-74
WTI crude oil: 83.91, -2.08
Gold: 1,579.80, -9.30
Silver: 26.88, -0.56
In classic bear market fashion, stocks opened higher, but quickly gave up their gains - the Dow managed to tack on 103 points at the high of the day, just before 10:00 am EDT - and turned negative, where they stayed the remainder of the session, the losses accelerating into the close.
Early in the day, Italy's Prime Minister, Mario Monti, expressed an interest for his country to tap into Eurozone bailout funds, for "bond support," an option previously not mentioned as Monti tries to turn around his country's flagging economy, but prescient, as Italy's banking system is one of the weakest of European nations.
Monti's suggestive remarks blunted a broad rally on European bourses, though most managed to finish with sizable gains, his comments coming late in the trading day.
Not so fortunate were US markets, which received the dispatch around 11:00 am EDT. The first news of the week from Europe that was not all roses and Perrier sent shivers through the exchanges as investors took heed and began selling in earnest.
Italy's woes were lumped on top of news that Patriot Coal, suffering from the lowest coal prices in 24 years, due to mild winters and increased use of natural gas, filed for bankruptcy protection in Manhattan, NY. The company's bonds are under severe pressure, selling for 26-34 cents on the dollar, depending on maturity. The stock (PCX) price ended Thursday at 0.61 cents and did not trade today, though some after hours quotes have it at 0.37 cents.
Adding to the day's malaise, the city of Scranton, PA, under severe financial pressure, cut municipal employees' pay to minimum wage, $7.25 per hour, citing a need to keep costs down and raise capital.
The woes of Scranton, mythical home to the hit series, "The Office," are notable, following the bankruptcy of Pennsylvania's state capitol, Harrisburg, and other municipal bankruptcies in Stockton, California and Jackson, Mississippi.
Just adding fuel to the raft of bad news was J.C. Penny, which announced 350 job cuts at their headquarters in Plano, Texas. The retailer is attempting a turnaround after years of sluggish sales and sputtering growth, though the economic climate hasn't been very cooperative. JCP finished down 1.27, at 20.76, a share price less than half what it was just five months ago.
All of these news items, which seem to be billowing up daily, sent stocks into a tailspin, though short-covering and the PPT managed to keep the major indices from closing at their lows.
There is little doubt that the US and global economies are facing stiff headwinds from an overabundance of debt, fraud and malfeasance, which won't be easily fixed.
The trend continues to be one of losing bets on stocks while legislators sit upon their collective hands - because it's an election year - and the global, criminal banking cartel continues to skim and chip away at the edges of everybody's wealth.
How long the crisis mentality will prevail is unknown, though one has to believe that all hell is about to break loose, both in the US and Europe - to say nothing about the hard landing in China - surely to fracture before the November elections.
It's a mess, and, if you're one of the sheeple who can't see the forest for the trees, it's time to start weeding and cutting some brush. The situation worsens by the day and financial authorities have nothing to offer but more debt, piled upon heaps and loads of the stuff.
On a personal note, it is with great regret that I note the passing of Helen Mittermeyer, mother of one of my two best friends, Paul Mittermeyer.
Helen left this earth on Monday afternoon, succumbing to complications from cancer after a short illness. She leaves behind her husband, Whitey, and four children, Paul, Ann, Daniel and Cris.
Helen was a noted writer of romance novels who wrote 30 books from 1983 through 1998. In her latter years, health issues prevented her from keeping to her craft. She also penned novels under the names Ann Cristy, Hayton Monteith, and Danielle Paul.
A warm, caring, generous, outgoing person with a permanent smile and a zest for life, Helen will be missed by all.
-- Rick Gagliano
Dow 12,653.12, -83.17 (0.65%)
NASDAQ 2,902.33, -29.44 (1.00%)
S&P 500 1,341.47, -10.99 (0.81%)
NYSE Composite, 7,667.56, -68.78 (0.89%)
NASDAQ Volume 1,697,232,250.00
NYSE Volume 3,439,462,750
Combined NYSE & NASDAQ Advance - Decline: 1859-3706
Combined NYSE & NASDAQ New highs - New lows: 299-74
WTI crude oil: 83.91, -2.08
Gold: 1,579.80, -9.30
Silver: 26.88, -0.56
Friday, July 6, 2012
Poor Jobs Report Sends Stocks Reeling
The recovery that wasn't continues to glide along on a path to... somewhere, but probably, for most Americans, nowhere.
It's not like conditions are horrifying for most people, but standards of living are slipping overall, there are still 20 million of so Americans unemployed or underemployed, but the food stamps and welfare checks keep coming like clockwork, so what's the worry?
After this morning's dismal non-farm payroll report showed a net gain of 80,000 jobs - not enough to keep up with the growing labor force (which, recently, according to government statistics - lies, mostly - is shrinking) - stocks set out on a course to the serious downside, where they belong, but, after some thought, investors, or suckers, if you will, dove back in and brought the major indices back to more respectable levels.
The Dow had been down as much as 193 points, the S&P off by 19 and the NASDAQ down 55 before the afternoon crowd came in and hoisted the averages upwards, beginning just after 2:00 pm EDT in a very thinly-traded market.
Bankers and hedgies must be a lot like most people - or sheeple - in that they are so shallow and superficial as to believe that today's sharp decline and manufactured rally will convince anyone with a brain that the miasma of the debt clutch, high unemployment and Europe's special set of problems are not deeper, more profound and long-lasting than the suck-up media would have us believe.
Following last Friday's melt-up on Europe's latest "solution" stocks have clambered about a bit, and, as of today have given back only about a third of those ill-gotten gains. There's a growing apprehension that the lofty levels of equities and insistence by central bankers to keep printing more worthless fiat is going to cause a bust bigger than anyone wants to imagine. However, given that the current scheme of low to even negative interest rates - as Denmark posted just yesterday - has thus far kept the wolf from the door for nearly four years, central bank and government can-kicking may just be able to sustain itself for another two, three or four years.
Of course, there's always the possibility that something could go horribly wrong, like having most of the major global banking firms under investigation for rigging key rates, as is the current case concerning the libor, or that Italians might just give up on the technocratic form of governance that strips away wealth a little bit at a time and decide to go back to an agrarian lifestyle, an epochal event that would surely shatter the Euro for good, but, until such an event or "black swan," the global ponzi of the central bankers and their lieutenants within the banking cartel should continue without much interruption.
One has only to look around a bit, at places like Stockton, California, which recently filed for bankruptcy, or the new Section 8 neighbors in your formerly pristine, peaceful suburb or the dependency of old-timers, poor people and previously middle class folks on government programs to get a feeling that all is not well.
It's a depressing thought to think that our elected leaders and captains of industry have colluded against the best interests of the citizenry, but, that's what seems to have taken place over the past decade or so, or, at least it's become more out in the open during that time.
There aren't many good solutions to global economic crises, and he central bankers of the world have thrown everything, including the kitchen sink, at this one, to little avail. The day is approaching when all of the economists, bankers, politicians and CEOs are proven to be charlatans, their proposals and ideas completely wrong. That day will come; the trick is to know the exact date.
Until then, free houses for everyone!
Dow 12,772.47, -124.20 (0.96%)
NASDAQ 2,937.33, -38.79 (1.30%)
S&P 500 1,354.68, -12.90 (0.94%)
NYSE Composite 7,756.61, -81.17 (1.04)
NASDAQ Volume 1,419,548,625
NYSE Volume 2,650,810,250
Combined NYSE & NASDAQ Advance - Decline: 1708-3841
Combined NYSE & NASDAQ New highs - New lows: 225-36
WTI crude oil: 84.45, -2.77
Gold: 1,578.90, -30.50
Silver: 26.92, -0.75
It's not like conditions are horrifying for most people, but standards of living are slipping overall, there are still 20 million of so Americans unemployed or underemployed, but the food stamps and welfare checks keep coming like clockwork, so what's the worry?
After this morning's dismal non-farm payroll report showed a net gain of 80,000 jobs - not enough to keep up with the growing labor force (which, recently, according to government statistics - lies, mostly - is shrinking) - stocks set out on a course to the serious downside, where they belong, but, after some thought, investors, or suckers, if you will, dove back in and brought the major indices back to more respectable levels.
The Dow had been down as much as 193 points, the S&P off by 19 and the NASDAQ down 55 before the afternoon crowd came in and hoisted the averages upwards, beginning just after 2:00 pm EDT in a very thinly-traded market.
Bankers and hedgies must be a lot like most people - or sheeple - in that they are so shallow and superficial as to believe that today's sharp decline and manufactured rally will convince anyone with a brain that the miasma of the debt clutch, high unemployment and Europe's special set of problems are not deeper, more profound and long-lasting than the suck-up media would have us believe.
Following last Friday's melt-up on Europe's latest "solution" stocks have clambered about a bit, and, as of today have given back only about a third of those ill-gotten gains. There's a growing apprehension that the lofty levels of equities and insistence by central bankers to keep printing more worthless fiat is going to cause a bust bigger than anyone wants to imagine. However, given that the current scheme of low to even negative interest rates - as Denmark posted just yesterday - has thus far kept the wolf from the door for nearly four years, central bank and government can-kicking may just be able to sustain itself for another two, three or four years.
Of course, there's always the possibility that something could go horribly wrong, like having most of the major global banking firms under investigation for rigging key rates, as is the current case concerning the libor, or that Italians might just give up on the technocratic form of governance that strips away wealth a little bit at a time and decide to go back to an agrarian lifestyle, an epochal event that would surely shatter the Euro for good, but, until such an event or "black swan," the global ponzi of the central bankers and their lieutenants within the banking cartel should continue without much interruption.
One has only to look around a bit, at places like Stockton, California, which recently filed for bankruptcy, or the new Section 8 neighbors in your formerly pristine, peaceful suburb or the dependency of old-timers, poor people and previously middle class folks on government programs to get a feeling that all is not well.
It's a depressing thought to think that our elected leaders and captains of industry have colluded against the best interests of the citizenry, but, that's what seems to have taken place over the past decade or so, or, at least it's become more out in the open during that time.
There aren't many good solutions to global economic crises, and he central bankers of the world have thrown everything, including the kitchen sink, at this one, to little avail. The day is approaching when all of the economists, bankers, politicians and CEOs are proven to be charlatans, their proposals and ideas completely wrong. That day will come; the trick is to know the exact date.
Until then, free houses for everyone!
Dow 12,772.47, -124.20 (0.96%)
NASDAQ 2,937.33, -38.79 (1.30%)
S&P 500 1,354.68, -12.90 (0.94%)
NYSE Composite 7,756.61, -81.17 (1.04)
NASDAQ Volume 1,419,548,625
NYSE Volume 2,650,810,250
Combined NYSE & NASDAQ Advance - Decline: 1708-3841
Combined NYSE & NASDAQ New highs - New lows: 225-36
WTI crude oil: 84.45, -2.77
Gold: 1,578.90, -30.50
Silver: 26.92, -0.75
Friday, June 8, 2012
Week's Events Point to Global Collapse; Max Keiser Speaks Out on Germany Bank Downgrade, Global Economy
Editor's Note: This was a particularly trying and nervous week for the markets, as political and economic tensions seemed to escalate on daily basis. From China's interest rate easing to the downgrade of Germany's banks to the rising wave of racism and bias, the swirl of history seemed to take on an unusually pungent aroma, one which permeated all levels of discussion and event horizons.
I am horrified at my own - and that of Max Keiser and many other non-mainstream journalists - prognosis for the future of the global financial system, which is being rendered apart by self-created forces which have taken on unforeseen lives of their own. A complete crash could occur almost at any time without warning, with a ferocity that would make 2008-09 look like a leisurely stroll. With all my heart, I wish my predictions turn out to be 100% incorrect, though continuing and recent developments point in the opposite direction.
Of course, the elitist coalition of bankers and sovereign leaders will continue to apply bandages and tourniquets as needed, even though they must know that a mortal wound cannot be patched, that wound being the complete insolvency of the world's largest banks, begun in 2008 and proceeding this week to completely engulf all of Spain's mightiest financial institutions.
As the week drew to a close, US markets garnered further gains on what had to be the lowest trading volume day of the year. (Money Daily does not keep complete records of much, but the daily volume reports at the end of each daily post provide that statistic - though scrolling through five-plus months of posts is a bit of an arduous task late on a Friday afternoon. Trust in the fact that if today was not indeed the lowest volume of the year, it was in the lowest three.)
Zero Hedge (zerohedge.com) reports that volume for the week was the slightest of the year, in a week which produced the year's best gains. This kind of rigged result is exactly what's wrong with markets and the economy in general: they aren't functioning. Today's plaster to the upside, accompanied by abysmal volume is manifestation of the banker Ponzi in full bloom, trading amongst each other in a rigged game to the detriment of formerly-free markets.
At some point, the manipulation will come to an end, and likely an abrupt one, fully engineered by Rothchilds and fellow Illuminati types.
A point of reference is the upcoming November US presidential election, which incumbent president, Barack Obama, is purposely throwing, having done his job for his bankster allocators. The first hint that Obama was not fully engaged or committed to winning a second term came in the form of his absurd opposition to the Keystone XL Pipeline. His stance to block the project - which would bring oil from Canada's oil sands to America, but, as of last notice may be headed to China instead - until after the election, baffled all but the mainstream press, who haven't the collective mind power or journalistic will to delve into matters that involve anything more than rehashing the contents of official news releases.
Today's statement that the private sector in America is doing "OK" is the second nail in the defeat of Obama at the polls. Such obvious policy blunders and plainly unfounded statements point to nothing less than self-imposed defeat to the weakest Republican candidacy since Bill Clinton's second term re-election. Mr. Obama is an eloquent, intelligent speaker, but he has failed to ignite any fire of passion in either Democrats or independents. It's a very good bet that handing the presidency to the biggest shill for the 1%, in the person of Mitt Romney, is a reality.
For the week - again, the best of the year on the lightest volume - the Dow gained an ungodly 456 points, this on the heels of the month of May in which the blue chips gave back more than 800 points. Bear in mind that this gain comes as global conditions worsen, with little to no positive data or news.
The same kind of ride-up occurred on the NASDAQ, up 110 points, and the S&P, which registered a gain of 45 points. The whole affair is nothing more than a dog-and-pony show, and one which is not particularly well-staged. The sheeple of the world take it all in without question, that being one of the keys to the problem.
Along with the low volume, the session was characterized by slender breadth and a slight edge for new highs over new lows. Commodities, which began with oil down by more than $2.00 on the current futures price, were relatively flat by day's end.
In line with developments of the past few weeks - and years, for more perspective - the contagion from banking to sovereigns to currencies is accelerating, nearing an extremely dangerous global condition of collapse.
If implosion happens within weeks, it would be no surprise to the growing number of people who view the past four years of currency manipulation and incessant printing with disdain and skepticism. Global elites are desperately clinging to largely Keynesian ideas and potential solutions which have little to nothing to do with solving the epic calamity unfolding in real time.
There's no telling how much longer the global condition can be restrained as events in areas around the world are spiraling out of control at a rate of speed that is nearly impossible to track.
Forget about the press reports and news conferences with governmental/political leaders like Obama, Merkel, Draghi, et. al. Issues on the ground are overtaking the ability of the political process to deal with the expanding crisis. The powerful are becoming less so, and eventually will be held responsible, and thus, powerless as populations erupt in wave upon wave of tension, uprising, catastrophe. Greece is just the most visible example, while Syria is already a lost cause due to the inaction or inability of bodies such as NATO or the loosely-aligned Euro-American force majure to act properly - and promptly - to quell the spreading genocide. Spain, Italy and France continue their joint descent into anarchy which will eventually pull all of Europe down with it.
Must see TV: Host of the Keiser Report, Max Keiser, brilliantly lays out the present and near-future in this six-minute segment courtesy of Russia Today.
In keeping with our new-found hobby of digging up rich pieces of joyful Americana from bygone eras, the following clip from the 1942 film, Orchestra Wives, featuring the Glenn Miller band with Tex Beneke performing "I've Got a Gal in Kalamazoo" along with the fast-talking, high-stepping dancing duo, the Nicholas Brothers, the elder Fayard, and Harold.
It's a real piperoo! Enjoy.
On a strictly personal note: Many thanks to the two saints on earth who appeared today as needed. Whatever one's personal beliefs, there is a power in faith that is beyond our small level of comprehension.
Dow 12,554.20, +93.24 (0.75%)
NASDAQ 2,858.42, +27.40 (0.97%)
S&P 500 1,325.66, +10.67 (0.81%)
NYSE Composite 7,553.77, +33.94 (0.45%)
NASDAQ Volume 1,396,691,125
NYSE Volume 3,497,203,500
Combined NYSE & NASDAQ Advance - Decline: 3810-1757
Combined NYSE & NASDAQ New highs - New lows: 111-78
WTI crude oil: 84.10, -0.72
Gold: 1,591.40, +3.40
Silver: 28.47, -0.06
I am horrified at my own - and that of Max Keiser and many other non-mainstream journalists - prognosis for the future of the global financial system, which is being rendered apart by self-created forces which have taken on unforeseen lives of their own. A complete crash could occur almost at any time without warning, with a ferocity that would make 2008-09 look like a leisurely stroll. With all my heart, I wish my predictions turn out to be 100% incorrect, though continuing and recent developments point in the opposite direction.
Of course, the elitist coalition of bankers and sovereign leaders will continue to apply bandages and tourniquets as needed, even though they must know that a mortal wound cannot be patched, that wound being the complete insolvency of the world's largest banks, begun in 2008 and proceeding this week to completely engulf all of Spain's mightiest financial institutions.
As the week drew to a close, US markets garnered further gains on what had to be the lowest trading volume day of the year. (Money Daily does not keep complete records of much, but the daily volume reports at the end of each daily post provide that statistic - though scrolling through five-plus months of posts is a bit of an arduous task late on a Friday afternoon. Trust in the fact that if today was not indeed the lowest volume of the year, it was in the lowest three.)
Zero Hedge (zerohedge.com) reports that volume for the week was the slightest of the year, in a week which produced the year's best gains. This kind of rigged result is exactly what's wrong with markets and the economy in general: they aren't functioning. Today's plaster to the upside, accompanied by abysmal volume is manifestation of the banker Ponzi in full bloom, trading amongst each other in a rigged game to the detriment of formerly-free markets.
At some point, the manipulation will come to an end, and likely an abrupt one, fully engineered by Rothchilds and fellow Illuminati types.
A point of reference is the upcoming November US presidential election, which incumbent president, Barack Obama, is purposely throwing, having done his job for his bankster allocators. The first hint that Obama was not fully engaged or committed to winning a second term came in the form of his absurd opposition to the Keystone XL Pipeline. His stance to block the project - which would bring oil from Canada's oil sands to America, but, as of last notice may be headed to China instead - until after the election, baffled all but the mainstream press, who haven't the collective mind power or journalistic will to delve into matters that involve anything more than rehashing the contents of official news releases.
Today's statement that the private sector in America is doing "OK" is the second nail in the defeat of Obama at the polls. Such obvious policy blunders and plainly unfounded statements point to nothing less than self-imposed defeat to the weakest Republican candidacy since Bill Clinton's second term re-election. Mr. Obama is an eloquent, intelligent speaker, but he has failed to ignite any fire of passion in either Democrats or independents. It's a very good bet that handing the presidency to the biggest shill for the 1%, in the person of Mitt Romney, is a reality.
For the week - again, the best of the year on the lightest volume - the Dow gained an ungodly 456 points, this on the heels of the month of May in which the blue chips gave back more than 800 points. Bear in mind that this gain comes as global conditions worsen, with little to no positive data or news.
The same kind of ride-up occurred on the NASDAQ, up 110 points, and the S&P, which registered a gain of 45 points. The whole affair is nothing more than a dog-and-pony show, and one which is not particularly well-staged. The sheeple of the world take it all in without question, that being one of the keys to the problem.
Along with the low volume, the session was characterized by slender breadth and a slight edge for new highs over new lows. Commodities, which began with oil down by more than $2.00 on the current futures price, were relatively flat by day's end.In line with developments of the past few weeks - and years, for more perspective - the contagion from banking to sovereigns to currencies is accelerating, nearing an extremely dangerous global condition of collapse.
If implosion happens within weeks, it would be no surprise to the growing number of people who view the past four years of currency manipulation and incessant printing with disdain and skepticism. Global elites are desperately clinging to largely Keynesian ideas and potential solutions which have little to nothing to do with solving the epic calamity unfolding in real time.
There's no telling how much longer the global condition can be restrained as events in areas around the world are spiraling out of control at a rate of speed that is nearly impossible to track.
 |
| The Nicholas Brothers |
Forget about the press reports and news conferences with governmental/political leaders like Obama, Merkel, Draghi, et. al. Issues on the ground are overtaking the ability of the political process to deal with the expanding crisis. The powerful are becoming less so, and eventually will be held responsible, and thus, powerless as populations erupt in wave upon wave of tension, uprising, catastrophe. Greece is just the most visible example, while Syria is already a lost cause due to the inaction or inability of bodies such as NATO or the loosely-aligned Euro-American force majure to act properly - and promptly - to quell the spreading genocide. Spain, Italy and France continue their joint descent into anarchy which will eventually pull all of Europe down with it.
Must see TV: Host of the Keiser Report, Max Keiser, brilliantly lays out the present and near-future in this six-minute segment courtesy of Russia Today.
In keeping with our new-found hobby of digging up rich pieces of joyful Americana from bygone eras, the following clip from the 1942 film, Orchestra Wives, featuring the Glenn Miller band with Tex Beneke performing "I've Got a Gal in Kalamazoo" along with the fast-talking, high-stepping dancing duo, the Nicholas Brothers, the elder Fayard, and Harold.
It's a real piperoo! Enjoy.
On a strictly personal note: Many thanks to the two saints on earth who appeared today as needed. Whatever one's personal beliefs, there is a power in faith that is beyond our small level of comprehension.
Dow 12,554.20, +93.24 (0.75%)
NASDAQ 2,858.42, +27.40 (0.97%)
S&P 500 1,325.66, +10.67 (0.81%)
NYSE Composite 7,553.77, +33.94 (0.45%)
NASDAQ Volume 1,396,691,125
NYSE Volume 3,497,203,500
Combined NYSE & NASDAQ Advance - Decline: 3810-1757
Combined NYSE & NASDAQ New highs - New lows: 111-78
WTI crude oil: 84.10, -0.72
Gold: 1,591.40, +3.40
Silver: 28.47, -0.06
Friday, January 13, 2012
Friday the 13th Unlucky for JP Morgan, Europe Sovereigns as Debt Ratings Are Slashed
Friday the 13th was unlucky for most investors as stocks slipped over concerns of "imminent" credit downgrades in Europe and JP Morgan Chase's (JPM) quarterly results disappointed on revenue.
JP Morgan released 4th quarter and annual results prior to the opening bell sending related financial stocks into a tailspin.
JPM's earnings excluding items met expectations of 90 cents per share, a decrease from $1.12 per share in the year-earlier period, but full-year net income was $19 billion, down from $26.72 billion a year ago and well below analyst expectations of $23 billion. Quarterly net income was $3.72billion, down from $4.83 billion a year earlier.
JP Morgan was down 93 cents at the close, to 35.92, a loss of 2.52%.
It wasn't long after trading commenced in New York that news began leaking out, via Reuters, that many European nation's credit ratings were about to be downgraded by Standard & Poor's, which had put all 17 Eurozone nations on credit watch negative on December 5th.
The persistent rumors haunted european bourses, which fell dramatically on the news. Finally, after US markets closed in advance of a three-day weekend, S&P confirmed, dropping the credit ratings of nine countries, leaving only Germany with the gold-standard, AAA rating.
The following list, courtesy of London's daily Telegraph details the action:
France CUT one notch to AA+
Austria CUT one notch to AA+
Italy CUT two notches to BBB+
Spain CUT two notches to A
Portugal CUT two notches to BB (junk)
Belgium AFFIRMED at AA (the country was cut in November)
Malta CUT one notch to A-
Cyprus CUT one notch to BB+ (junk)
Luxembourg AFFIRMED at AAA
Germany AFFIRMED at AAA
Slovenia CUT one notch to A+
Slovakia CUT one notch to A
Ireland AFFIRMED at BBB+
The Netherlands AFFIRMED at AAA
Estonia AFFIRMED at AA-
All outlooks remain negative, except for Germany and Slovakia.
US stocks were crushed in the early going, but rallied throughout the afternoon, limiting losses. The Dow Jones Industrials were off by as much as 160 points in early going.
The Euro fell to its lowest level in 16 months vs. the US Dollar, at $1.2667, which is actually good news for European exporters and generally bad for US companies doing business in Europe.
Volume in US markets was weak (same old story) as participation levels have fallen off dramatically since the 08-09 financial crisis, many individual investors pulling money out of equities via funds and/or personal accounts. The low trading levels is somewhat of a bell-weather for the economy, mirror low participation rates in the labor force as Americans seek alternatives to both investment and traditional working roles.
The losses today pretty much cut the week's gains for the major indices in half. Stocks have been grinding higher through the first two weeks of the year, but there seems to be little conviction from traders.
Next week will be chock-full of earnings reports, many of which will meet or beat expectations, though the number of pre-announcements has been running unusually high for the 4th quarter and investors are nervous, as action in the financials and JP Morgan, in particular, made quite clear.
Also, Greek talks with creditors have broken down, leaving open the possibility that the proposed 50% voluntary haircuts on Greek debt would become involuntary, triggering credit default swaps payouts as early as March, when Greece is scheduled to receive another round of funding from the IMF and ECB.
Dow 12,422.06, -48.96 (0.39%)
NASDAQ 2,710.67, -14.03 (0.51%)
S&P 500 1,289.09, -6.41 (0.49%)
NYSE Composite 7,632.03, -49.23 (0.64%)
NASDAQ Volume 1,686,001,750
NYSE Volume 3,692,377,750
Combined NYSE & NASDAQ Advance - Decline: 1874-3682
Combined NYSE & NASDAQ New highs - New lows: 142-50
WTI crude oil: 98.70, -0.40
Gold: 1,630.80, -16.90
Silver: 29.52, -0.60
JP Morgan released 4th quarter and annual results prior to the opening bell sending related financial stocks into a tailspin.
JPM's earnings excluding items met expectations of 90 cents per share, a decrease from $1.12 per share in the year-earlier period, but full-year net income was $19 billion, down from $26.72 billion a year ago and well below analyst expectations of $23 billion. Quarterly net income was $3.72billion, down from $4.83 billion a year earlier.
JP Morgan was down 93 cents at the close, to 35.92, a loss of 2.52%.
It wasn't long after trading commenced in New York that news began leaking out, via Reuters, that many European nation's credit ratings were about to be downgraded by Standard & Poor's, which had put all 17 Eurozone nations on credit watch negative on December 5th.
The persistent rumors haunted european bourses, which fell dramatically on the news. Finally, after US markets closed in advance of a three-day weekend, S&P confirmed, dropping the credit ratings of nine countries, leaving only Germany with the gold-standard, AAA rating.
The following list, courtesy of London's daily Telegraph details the action:
France CUT one notch to AA+
Austria CUT one notch to AA+
Italy CUT two notches to BBB+
Spain CUT two notches to A
Portugal CUT two notches to BB (junk)
Belgium AFFIRMED at AA (the country was cut in November)
Malta CUT one notch to A-
Cyprus CUT one notch to BB+ (junk)
Luxembourg AFFIRMED at AAA
Germany AFFIRMED at AAA
Slovenia CUT one notch to A+
Slovakia CUT one notch to A
Ireland AFFIRMED at BBB+
The Netherlands AFFIRMED at AAA
Estonia AFFIRMED at AA-
All outlooks remain negative, except for Germany and Slovakia.
US stocks were crushed in the early going, but rallied throughout the afternoon, limiting losses. The Dow Jones Industrials were off by as much as 160 points in early going.
The Euro fell to its lowest level in 16 months vs. the US Dollar, at $1.2667, which is actually good news for European exporters and generally bad for US companies doing business in Europe.
Volume in US markets was weak (same old story) as participation levels have fallen off dramatically since the 08-09 financial crisis, many individual investors pulling money out of equities via funds and/or personal accounts. The low trading levels is somewhat of a bell-weather for the economy, mirror low participation rates in the labor force as Americans seek alternatives to both investment and traditional working roles.
The losses today pretty much cut the week's gains for the major indices in half. Stocks have been grinding higher through the first two weeks of the year, but there seems to be little conviction from traders.
Next week will be chock-full of earnings reports, many of which will meet or beat expectations, though the number of pre-announcements has been running unusually high for the 4th quarter and investors are nervous, as action in the financials and JP Morgan, in particular, made quite clear.
Also, Greek talks with creditors have broken down, leaving open the possibility that the proposed 50% voluntary haircuts on Greek debt would become involuntary, triggering credit default swaps payouts as early as March, when Greece is scheduled to receive another round of funding from the IMF and ECB.
Dow 12,422.06, -48.96 (0.39%)
NASDAQ 2,710.67, -14.03 (0.51%)
S&P 500 1,289.09, -6.41 (0.49%)
NYSE Composite 7,632.03, -49.23 (0.64%)
NASDAQ Volume 1,686,001,750
NYSE Volume 3,692,377,750
Combined NYSE & NASDAQ Advance - Decline: 1874-3682
Combined NYSE & NASDAQ New highs - New lows: 142-50
WTI crude oil: 98.70, -0.40
Gold: 1,630.80, -16.90
Silver: 29.52, -0.60
Tuesday, December 13, 2011
Stocks Ripped Lower Again; More Questions than Answers
Since US stock markets are so delightfully linked t the fates of Europe, the same old story keeps repeating itself over and over, such as today, as the Euro fell sharply (1.00 EUR = 1.30348 USD) against major currencies and the Dollar Index closed at an eleven-month high (DXY:IND 80.273 0.708 0.89%).
While those dual developments are intertwined, the parties involved - from European, US and Chinese exporters to American and European consumers - will feel the effects in dramatically different manners.
Naturally, for most of Europe, a collapsing Euro is bad for consumers, making everything imported more expensive, but great for exporters, whose goods are cheaper by comparison in importing nations.
The opposite is true for the US, which is why stocks are usually down when the Euro dips and the dollar strengthens. Americans should welcome a stronger dollar, especially at this time of year, because all those trinkets and holiday goodies - mostly from China - will be cheaper, though probably not right away.
As has been a repeatedly-held view in this space, the Euro is headed for catastrophe, and it's going to occur sooner than anyone thinks, probably before the middle of 2012. German people are sick and tired of bailing out the Southern countries, Greece has already defaulted on some debt, Italy, Spain, Portugal, Ireland and Belgium are holding on for dear life and the ECB is going to be quickly as tapped out of funds as its leaders are of ideas.
The idea of printing more money, as has been the case in the US, with dubious effect, will only make matters worse when inflation rages and dissatisfied citizens stop paying taxes in deference to feeding their families. The trouble is that sovereign debt, ridiculously rated at AAA or beyond, is about to be downgraded across the Euro-zone and beyond.
For those unfamiliar, sovereign debt is the money governments borrow to fund everything from pensions to schools to war machines (like here in the US). Most of Europe should be rated no better than A or A+, a move that is coming soon from either S&P, Moody's or Fitch, because nations have shown over time that while they may always repay on time, they are profligate spenders and tax revenues are dropping, not expanding. Balance sheets (those things nobody likes to look at) of most governments are ridiculous when compared to that of an average American or European family, who don't get the benefit of positive credit ratings, pay higher interest rates than silly governments, yet most manage to pay bills on time and keep their households in relative sanity.
With all of the monstrous debt of Europe and the US overshadowing just about all other economic realities, there are more questions than answers these days, a few of them being:
Those are just teaser questions, without good answers from politicians, regulators, academics or economists. The tough ones await in the new year.
And, to those kids waiting for Santa Claus, you've got 11 days left to try being good. For the scoundrels on Wall Street, awaiting the famous, year-end Santa Claus Rally, you've been bad, so just coal (clean coal, for sure) for you, and, even if there is a rally, it will only get the indices back to where they were a week or a day or two ago, and 2011 will go down in the books as a year of near-zero (or less) returns. So much for owning stocks.
A couple of quick points on economic data. November retail sales figures were up 0.2%. There's one word to describe all the hoopla over Black Friday and the whole retail consumerism mantra. BULL---T.
The FOMC of the Fed had its last policy meeting of 2011 and did nothing. Thanks, for nothing.
Dow 11,954.94, -66.45 (0.55%)
NASDAQ 2,579.27, -32.99 (1.26%)
S&P 500 1,225.73, -10.74 (0.87%)
NYSE Composite 7,276.65, -86.84 (1.18%)
NASDAQ Volume 1,732,941,625
NYSE Volume 4,080,177,000
Combined NYSE & NASDAQ Advance - Decline: 1462-4165
Combined NYSE & NASDAQ New highs - New lows: 107-146 (more red)
WTI crude oil: 100.14, +2.37 (higher due to fears over Iran)
Gold: 1,663.10, -5.10
Silver: 31.26, +0.26
While those dual developments are intertwined, the parties involved - from European, US and Chinese exporters to American and European consumers - will feel the effects in dramatically different manners.
Naturally, for most of Europe, a collapsing Euro is bad for consumers, making everything imported more expensive, but great for exporters, whose goods are cheaper by comparison in importing nations.
The opposite is true for the US, which is why stocks are usually down when the Euro dips and the dollar strengthens. Americans should welcome a stronger dollar, especially at this time of year, because all those trinkets and holiday goodies - mostly from China - will be cheaper, though probably not right away.
As has been a repeatedly-held view in this space, the Euro is headed for catastrophe, and it's going to occur sooner than anyone thinks, probably before the middle of 2012. German people are sick and tired of bailing out the Southern countries, Greece has already defaulted on some debt, Italy, Spain, Portugal, Ireland and Belgium are holding on for dear life and the ECB is going to be quickly as tapped out of funds as its leaders are of ideas.
The idea of printing more money, as has been the case in the US, with dubious effect, will only make matters worse when inflation rages and dissatisfied citizens stop paying taxes in deference to feeding their families. The trouble is that sovereign debt, ridiculously rated at AAA or beyond, is about to be downgraded across the Euro-zone and beyond.
For those unfamiliar, sovereign debt is the money governments borrow to fund everything from pensions to schools to war machines (like here in the US). Most of Europe should be rated no better than A or A+, a move that is coming soon from either S&P, Moody's or Fitch, because nations have shown over time that while they may always repay on time, they are profligate spenders and tax revenues are dropping, not expanding. Balance sheets (those things nobody likes to look at) of most governments are ridiculous when compared to that of an average American or European family, who don't get the benefit of positive credit ratings, pay higher interest rates than silly governments, yet most manage to pay bills on time and keep their households in relative sanity.
With all of the monstrous debt of Europe and the US overshadowing just about all other economic realities, there are more questions than answers these days, a few of them being:
- Where's the money (over $1 billion) that MF Global took from investors?
- How soon will the ratings agencies lower the credit ratings of Italy, Spain, Portugal, France and the rest of the Euro-zone nations, and, how far down will they go?
- If US banks are borrowing at 0-0.25% from the Fed, why are credit card rates 8, 10, 15 and even 28% for US consumers who have solid track records of on-time payments?
- Can government statistics be trusted at all?
- Why would anyone under the age of 40 contribute to Social Security if not that it's automatically deducted from their paychecks?
- If the world is headed for global depression, won't all asset classes, including gold and silver, devalue?
- Why are government employees in the US paid 30-40% more than their private-industry counterparts and receive gold-plated health care and pensions, when the US population - who pays them - work for less, have fewer benefits and many have no guaranteed retirement plans?
- Why is the world's greatest criminal, Hank Paulson, still a free man?
- Where is Eric Holder, the Attorney General, and why hasn't he even investigated any of the banks or the prior administration?
- Why must Americans choose between Mitt Romney or Newt Gingrich as the Republican presidential nominee when Ron Paul and Michelle Bachmann have better positions and more consistent voting records?
- Why is President Obama opposed to the Keystone pipeline that would bring oil from Canada (our largest trading partner and a friendly one) and thousands of high-paying jobs?
- Why is 20% supposed to be a "fair" percentage one should pay in federal taxes when most people outside the middle class pay little to nothing?
Those are just teaser questions, without good answers from politicians, regulators, academics or economists. The tough ones await in the new year.
And, to those kids waiting for Santa Claus, you've got 11 days left to try being good. For the scoundrels on Wall Street, awaiting the famous, year-end Santa Claus Rally, you've been bad, so just coal (clean coal, for sure) for you, and, even if there is a rally, it will only get the indices back to where they were a week or a day or two ago, and 2011 will go down in the books as a year of near-zero (or less) returns. So much for owning stocks.
A couple of quick points on economic data. November retail sales figures were up 0.2%. There's one word to describe all the hoopla over Black Friday and the whole retail consumerism mantra. BULL---T.
The FOMC of the Fed had its last policy meeting of 2011 and did nothing. Thanks, for nothing.
Dow 11,954.94, -66.45 (0.55%)
NASDAQ 2,579.27, -32.99 (1.26%)
S&P 500 1,225.73, -10.74 (0.87%)
NYSE Composite 7,276.65, -86.84 (1.18%)
NASDAQ Volume 1,732,941,625
NYSE Volume 4,080,177,000
Combined NYSE & NASDAQ Advance - Decline: 1462-4165
Combined NYSE & NASDAQ New highs - New lows: 107-146 (more red)
WTI crude oil: 100.14, +2.37 (higher due to fears over Iran)
Gold: 1,663.10, -5.10
Silver: 31.26, +0.26
Wednesday, December 7, 2011
US Markets Stalled Out, Waiting for Europe's Next Gambit
There's an old Wall Street adage that goes something like, "don't short a dull market," but, if this market goes any higher and gets any duller, the adage might as well be thrown out along with most long positions in stocks.
After Tuesday's snooze-fest, Wednesday's market was even sleepier, with participation at low ebb. Volume has nearly completely dried up, but the thin trading has reduced volatility somewhat. In fact, the VIX, which measures implied volatility in the S&P 500, hasn't pitched above 30 (an abnormally high level to begin with) since November 30, or one week ago.
What traders are most concerned with is once again Europe, but more specifically, the two days of meetings scheduled in Europe, one by the ECB, tomorrow, and the other a crisis summit of leaders of the Euro-zone nations on Friday that is hoped to pave the way toward an end of the two-year-old debt crisis that has gripped European markets and locked down US markets for the past two days.
As is the usual case with relying on Europe to fix our own stock market, it's probably a bad idea. Some leading economists of the region, particularly those from Germany, who have the best view of the situation, are saying that whatever solutions come out of this week's crisis summit, Europe's problems are likely to remain contentious for another eighteen months to two years.
Noting that, and understanding that debt issues which took decades to produce are not going to be solved at one meeting (it has been promised before and not been delivered), so one has to question both the positioning in US stocks, which have been essentially flat since the middle of August, and the reliability of ancient words of wisdom in an era that has been marked by unusual actions from the Fed and other central banks in developed countries.
If everybody's waiting on Europe, just what do they expect? A grand plan which all 17 countries that use the Euro as currency can agree to? Good luck with that. European leaders are now calling for majority consensus rather than unanimity. Meanwhile the ratings agencies, specifically Standard & Poor's, are scaring the daylights out of each and every one of them, threatening credit rating downgrades across the continent if there's no substantial progress come Friday.
What this telegraphed sucker punch from S&P is saying is more political than economic, essentially telling all of Europe to stop playing around the periphery and get to the core of the matter, which would entail some countries (think Spain, Portugal, Italy and Greece) having to give up some degree of sovereignty in order to remain in the good graces of the European Union and the ECB. And while fiscal unity, or, at least some semblance of fiscal responsibility would be a step in the right direction, the citizenry of those countries might not take lightly to having new masters above their own elected leaders somewhere in Germany, Brussels or France.
Since the crisis meeting isn't until Friday, that's probably when US markets might perk up, but, if the game plan remains the same in Europe - promise much, deliver little - they will be sending a message to markets around the world that the issues present are too large, too diverse and too complex for all 17 Euro-zone nations to reach agreement on any unifying principles laid down.
In that scenario, we may just get another two days of slumber on the street as even more participants make a premature exit from stocks in 2011, fleeing to cash or bonds until the dust settles after the holidays.
And what about that Santa Claus rally that usually commences over the final two weeks of the year? There may be one, but it won't have much gusto on low volume and it's not likely to last long. Stocks are already creeping back toward their late July - early August levels and there's just not enough economic "juice" in the system for which a rally can be sustained. The major US indices have flirted recently with the flat line for the year and that's probably where they're going to remain.
Meanwhile, all one can do is hold one's breath waiting for Europe's next move. Everyone is waiting to exhale.
Dow 12,196.37, +46.24 (0.38%)
NASDAQ 2,649.21, -0.35 (0.01%)
S&P 500 1,261.01, +2.54 (0.20%)
NYSE Composite 7,559.71, +20.39 (0.27%)
NASDAQ Volume 1,654,001,000
NYSE Volume 4,158,213,000
Combined NYSE & NASDAQ Advance - Decline: 2804-2747
Combined NYSE & NASDAQ New highs - New lows: 119-63
WTI crude oil: 100.49, -0.79
Gold: 1,744.80, +13.00
Silver: 32.63, -0.12
After Tuesday's snooze-fest, Wednesday's market was even sleepier, with participation at low ebb. Volume has nearly completely dried up, but the thin trading has reduced volatility somewhat. In fact, the VIX, which measures implied volatility in the S&P 500, hasn't pitched above 30 (an abnormally high level to begin with) since November 30, or one week ago.
What traders are most concerned with is once again Europe, but more specifically, the two days of meetings scheduled in Europe, one by the ECB, tomorrow, and the other a crisis summit of leaders of the Euro-zone nations on Friday that is hoped to pave the way toward an end of the two-year-old debt crisis that has gripped European markets and locked down US markets for the past two days.
As is the usual case with relying on Europe to fix our own stock market, it's probably a bad idea. Some leading economists of the region, particularly those from Germany, who have the best view of the situation, are saying that whatever solutions come out of this week's crisis summit, Europe's problems are likely to remain contentious for another eighteen months to two years.
Noting that, and understanding that debt issues which took decades to produce are not going to be solved at one meeting (it has been promised before and not been delivered), so one has to question both the positioning in US stocks, which have been essentially flat since the middle of August, and the reliability of ancient words of wisdom in an era that has been marked by unusual actions from the Fed and other central banks in developed countries.
If everybody's waiting on Europe, just what do they expect? A grand plan which all 17 countries that use the Euro as currency can agree to? Good luck with that. European leaders are now calling for majority consensus rather than unanimity. Meanwhile the ratings agencies, specifically Standard & Poor's, are scaring the daylights out of each and every one of them, threatening credit rating downgrades across the continent if there's no substantial progress come Friday.
What this telegraphed sucker punch from S&P is saying is more political than economic, essentially telling all of Europe to stop playing around the periphery and get to the core of the matter, which would entail some countries (think Spain, Portugal, Italy and Greece) having to give up some degree of sovereignty in order to remain in the good graces of the European Union and the ECB. And while fiscal unity, or, at least some semblance of fiscal responsibility would be a step in the right direction, the citizenry of those countries might not take lightly to having new masters above their own elected leaders somewhere in Germany, Brussels or France.
Since the crisis meeting isn't until Friday, that's probably when US markets might perk up, but, if the game plan remains the same in Europe - promise much, deliver little - they will be sending a message to markets around the world that the issues present are too large, too diverse and too complex for all 17 Euro-zone nations to reach agreement on any unifying principles laid down.
In that scenario, we may just get another two days of slumber on the street as even more participants make a premature exit from stocks in 2011, fleeing to cash or bonds until the dust settles after the holidays.
And what about that Santa Claus rally that usually commences over the final two weeks of the year? There may be one, but it won't have much gusto on low volume and it's not likely to last long. Stocks are already creeping back toward their late July - early August levels and there's just not enough economic "juice" in the system for which a rally can be sustained. The major US indices have flirted recently with the flat line for the year and that's probably where they're going to remain.
Meanwhile, all one can do is hold one's breath waiting for Europe's next move. Everyone is waiting to exhale.
Dow 12,196.37, +46.24 (0.38%)
NASDAQ 2,649.21, -0.35 (0.01%)
S&P 500 1,261.01, +2.54 (0.20%)
NYSE Composite 7,559.71, +20.39 (0.27%)
NASDAQ Volume 1,654,001,000
NYSE Volume 4,158,213,000
Combined NYSE & NASDAQ Advance - Decline: 2804-2747
Combined NYSE & NASDAQ New highs - New lows: 119-63
WTI crude oil: 100.49, -0.79
Gold: 1,744.80, +13.00
Silver: 32.63, -0.12
Friday, November 18, 2011
Rough Week for Stocks Ends Mixed; Markets Gripped by fear and Uncertainty
Despite some favorable economic news during the course of the week, market participants mostly shunned equities as Europe's ongoing crisis and the lack of a deal by the congressional super-committee kept money mostly on the sidelines or taking profits (and losses).
Since the US stock market has become more akin to a day-trading casino than an investment culture, traders now routinely react swiftly to breaking news and events, preferring to stay out of the way or grab quick profits as the tableau of international economic falderal unfolds. The week was marked by more speculation than actual news, as Italian and Spanish 10-year notes criss-crossed the 7% yield threshold and Germany continues to balk at being the savior of the Southern nations, even as Chancellor Angela Merkel admitted that her country was ready to cede some degree of sovereignty in order to salvage what's left of the European monetary union.
Germany holds the key to whether the decade-old European Union will survive, being the largest and strongest economy in the region. While Merkel has made pronouncements pleasing to her neighbors to the West and South, she is losing a degree of favor at home, as many Germans don't exactly share her views and dislike the role of Germany as the bailout nation for weaker economies.
Funding for Greece, Italy, Portugal and Spain has become an issue so delicate and abstract that one solution offered was for the ECB to loan money to the IMF, which would then fund the ailing nations, though that kind of Ponzi scheme would only work to relieve the ECB of their presumptive role of being the "lender of last resort" such as the US Federal Reserve was during the 2008 crisis.
It's a touchy situation in Europe, with new governments in Italy and Greece, both tottering on the brink of default, though Greece's predicament - with no new funding coming soon - is degrees more perilous.
Here in the USA, congressional members have not exactly been forthright in their effort to reach a compromise on the roughly $1.2 trillion in budget cuts which was the mandated approach after the August debt ceiling debacle.
With the US public debt officially exceeding $15 trillion on Thursday and the prospects for another $1 trillion-plus deficit in the coming fiscal year, one would think that congress and their "super-committee" would have found some resolution before their November 23rd deadline, but, as usual, congressional members are deadlocked, mostly along party lines, with Republicans steadfastly refusing to approve anything which even smells like a tax hike and Democrats seemingly all too happy to allow the blame to accrue to their across-the-aisle counterparts.
With the deadline looming just five days ahead, members of the committee are pondering letting the deadline pass, which would trigger automatic spending-cuts, otherwise known as sequestration, though that approach is also riddled with question marks as some members have openly suggested that even those automatic cuts could be ripped asunder, primarily because of opposition to cuts to the Department of Defense.
The comedy of errors which began last Spring with the threatened shutdown of the federal government over budget issues threatens the US credit rating, already taken down a notch in August by Standard and Poor's. Failure to reach agreement might not engender another rating cut, though scuttling the previously agreed-to automatic cuts just might cause S&P to downgrade the US again.
Against this backdrop of a do-nothing congress without political will or wherewithal, and a fractured Europe an landscape, one can hardly blame traders for seeking the safety of cash or Treasuries. Volume on the stock exchanges this week has been dismal, exacerbated by a missing $600 million in investor funds courtesy of the recently-bankrupt MF Global. The fund, run by former Goldman Sachs CEO and New Jersey Governor Jon Corzine, made heavy bets on European debt and found themselves in too deep. The current thinking is that MF Global used client funds to shore up losing positions before going belly-up, a practice that is wholly criminal.
However, since nobody ever goes to trial or jail for financial follies in the US, regulators are being very tight-lipped about the matter, even though reputations have already been badly tarnished and over half a billion dollars is either unavailable or lost.
For the week, the Dow Jones Industrials took it on the chin to the tune of a 357-point decline. The S&P 500 fell 50 points during the week, the NASDAQ down 106 points and the NYSE Composite off by 294 points, hardly a ringing endorsement during a week that ended with options expiration, normally the forebear of a rally.
Maybe, with all the hurt, pain, fear and uncertainty, the big money went short.
Dow 11,796.16, +25.43 (0.22%)
NASDAQ 2,572.50, -15.49 (0.60%)
S&P 500 1,215.65, -0.48 (0.04%)
NYSE Composite 7,282.47, +8.32 (0.11%)
NASDAQ Volume 1,754,685,000
NYSE Volume 3,679,453,750
Combined NYSE & NASDAQ Advance - Decline: 3011-2563
Combined NYSE & NASDAQ New highs - New lows: 40-128
WTI crude oil: 97.41, -1.41
Gold: 1,725.10, +4.90
Silver: 32.42, +0.92
Since the US stock market has become more akin to a day-trading casino than an investment culture, traders now routinely react swiftly to breaking news and events, preferring to stay out of the way or grab quick profits as the tableau of international economic falderal unfolds. The week was marked by more speculation than actual news, as Italian and Spanish 10-year notes criss-crossed the 7% yield threshold and Germany continues to balk at being the savior of the Southern nations, even as Chancellor Angela Merkel admitted that her country was ready to cede some degree of sovereignty in order to salvage what's left of the European monetary union.
Germany holds the key to whether the decade-old European Union will survive, being the largest and strongest economy in the region. While Merkel has made pronouncements pleasing to her neighbors to the West and South, she is losing a degree of favor at home, as many Germans don't exactly share her views and dislike the role of Germany as the bailout nation for weaker economies.
Funding for Greece, Italy, Portugal and Spain has become an issue so delicate and abstract that one solution offered was for the ECB to loan money to the IMF, which would then fund the ailing nations, though that kind of Ponzi scheme would only work to relieve the ECB of their presumptive role of being the "lender of last resort" such as the US Federal Reserve was during the 2008 crisis.
It's a touchy situation in Europe, with new governments in Italy and Greece, both tottering on the brink of default, though Greece's predicament - with no new funding coming soon - is degrees more perilous.
Here in the USA, congressional members have not exactly been forthright in their effort to reach a compromise on the roughly $1.2 trillion in budget cuts which was the mandated approach after the August debt ceiling debacle.
With the US public debt officially exceeding $15 trillion on Thursday and the prospects for another $1 trillion-plus deficit in the coming fiscal year, one would think that congress and their "super-committee" would have found some resolution before their November 23rd deadline, but, as usual, congressional members are deadlocked, mostly along party lines, with Republicans steadfastly refusing to approve anything which even smells like a tax hike and Democrats seemingly all too happy to allow the blame to accrue to their across-the-aisle counterparts.
With the deadline looming just five days ahead, members of the committee are pondering letting the deadline pass, which would trigger automatic spending-cuts, otherwise known as sequestration, though that approach is also riddled with question marks as some members have openly suggested that even those automatic cuts could be ripped asunder, primarily because of opposition to cuts to the Department of Defense.
The comedy of errors which began last Spring with the threatened shutdown of the federal government over budget issues threatens the US credit rating, already taken down a notch in August by Standard and Poor's. Failure to reach agreement might not engender another rating cut, though scuttling the previously agreed-to automatic cuts just might cause S&P to downgrade the US again.
Against this backdrop of a do-nothing congress without political will or wherewithal, and a fractured Europe an landscape, one can hardly blame traders for seeking the safety of cash or Treasuries. Volume on the stock exchanges this week has been dismal, exacerbated by a missing $600 million in investor funds courtesy of the recently-bankrupt MF Global. The fund, run by former Goldman Sachs CEO and New Jersey Governor Jon Corzine, made heavy bets on European debt and found themselves in too deep. The current thinking is that MF Global used client funds to shore up losing positions before going belly-up, a practice that is wholly criminal.
However, since nobody ever goes to trial or jail for financial follies in the US, regulators are being very tight-lipped about the matter, even though reputations have already been badly tarnished and over half a billion dollars is either unavailable or lost.
For the week, the Dow Jones Industrials took it on the chin to the tune of a 357-point decline. The S&P 500 fell 50 points during the week, the NASDAQ down 106 points and the NYSE Composite off by 294 points, hardly a ringing endorsement during a week that ended with options expiration, normally the forebear of a rally.
Maybe, with all the hurt, pain, fear and uncertainty, the big money went short.
Dow 11,796.16, +25.43 (0.22%)
NASDAQ 2,572.50, -15.49 (0.60%)
S&P 500 1,215.65, -0.48 (0.04%)
NYSE Composite 7,282.47, +8.32 (0.11%)
NASDAQ Volume 1,754,685,000
NYSE Volume 3,679,453,750
Combined NYSE & NASDAQ Advance - Decline: 3011-2563
Combined NYSE & NASDAQ New highs - New lows: 40-128
WTI crude oil: 97.41, -1.41
Gold: 1,725.10, +4.90
Silver: 32.42, +0.92
Wednesday, November 9, 2011
Stocks Whacked as Italian Bonds Blow Out, Euro Dives
Today was all about Italy, in the aftermath of Tuesday's tumultuous parliamentary session, Italian Prime Minister Silvio Berlusconi announced that he would resign after parliament passes economic reforms demanded by the European Union. He also promised not to run in Italy's next election.
While the initial market response to Berlusconi's departure was mildly positive, in the belief that a new government might make a difference, the bond markets broadly disagreed, sending yields on Italy's 10-year note to over 7%, a level broadly believed to be one at which Italy would not be able to finance itself. The country has built up a mammoth debt load of €1.9 trillion, and financial experts agree that at 7% on the 10-year and an even higher rate on the five-year, Italy will be unable to avoid either default or a bailout by EU authorities.
With the bond markets were facing up to Italy's demise, the Euro traded lower against other currencies, including the US dollar, which, in turn caused a collapse in US equity prices, culminating in a mammoth decline on the Dow of nearly 400 points or 3.2%, with the other major indices dropping by even larger percentages.
The conditions in Europe continue to deteriorate by the day, and the Italian problems could bring on an even more calamitous situation than has prevailed prior to this most recent debt catastrophe because Italy is simply too large for a bailout. There simply is not enough money available to the ECB or the recently-enlarged EFSF.
All other economic data and financial news paled by comparison to the realization that Italy would follow Ireland, Greece and Portugal down the debt-hole.
Every market sector was lower, led by financial stocks, conglomerates and basic materials, each of which registered a decline of more than 4.5 percent.
It was a dismal day for stocks, but one the market had been anticipating, though hoping it would never come. A default by a country the size of Italy may cause the Euro to become vastly devalued (and maybe even doom it as a viable currency), pushing up the US dollar, exactly the opposite of what the Wall Street insiders prefer. It's another seminal moment in the financial crisis that will not end.
Dow 11,780.94, -389.24 (3.20%)
NASDAQ 2,621.65, -105.84 (3.88%)
S&P 500 1,229.11, -46.81 (3.67%)
NYSE Composite 7,357.91, -314.00 (4.09%)
NASDAQ Volume 2,107,168,250
NYSE Volume 4,639,047,500
Combined NYSE & NASDAQ Advance - Decline: 634-5048
Combined NYSE & NASDAQ New highs - New lows: 39-97
WTI crude oil: 95.74, -1.06
Gold: 1,791.60, -7.60
Silver: 34.36, -0.79
While the initial market response to Berlusconi's departure was mildly positive, in the belief that a new government might make a difference, the bond markets broadly disagreed, sending yields on Italy's 10-year note to over 7%, a level broadly believed to be one at which Italy would not be able to finance itself. The country has built up a mammoth debt load of €1.9 trillion, and financial experts agree that at 7% on the 10-year and an even higher rate on the five-year, Italy will be unable to avoid either default or a bailout by EU authorities.
With the bond markets were facing up to Italy's demise, the Euro traded lower against other currencies, including the US dollar, which, in turn caused a collapse in US equity prices, culminating in a mammoth decline on the Dow of nearly 400 points or 3.2%, with the other major indices dropping by even larger percentages.
The conditions in Europe continue to deteriorate by the day, and the Italian problems could bring on an even more calamitous situation than has prevailed prior to this most recent debt catastrophe because Italy is simply too large for a bailout. There simply is not enough money available to the ECB or the recently-enlarged EFSF.
All other economic data and financial news paled by comparison to the realization that Italy would follow Ireland, Greece and Portugal down the debt-hole.
Every market sector was lower, led by financial stocks, conglomerates and basic materials, each of which registered a decline of more than 4.5 percent.
It was a dismal day for stocks, but one the market had been anticipating, though hoping it would never come. A default by a country the size of Italy may cause the Euro to become vastly devalued (and maybe even doom it as a viable currency), pushing up the US dollar, exactly the opposite of what the Wall Street insiders prefer. It's another seminal moment in the financial crisis that will not end.
Dow 11,780.94, -389.24 (3.20%)
NASDAQ 2,621.65, -105.84 (3.88%)
S&P 500 1,229.11, -46.81 (3.67%)
NYSE Composite 7,357.91, -314.00 (4.09%)
NASDAQ Volume 2,107,168,250
NYSE Volume 4,639,047,500
Combined NYSE & NASDAQ Advance - Decline: 634-5048
Combined NYSE & NASDAQ New highs - New lows: 39-97
WTI crude oil: 95.74, -1.06
Gold: 1,791.60, -7.60
Silver: 34.36, -0.79
Tuesday, November 8, 2011
Stronger Euro, Oil, US Stocks Make Wall Street a Winner
Whatever it is these Wall Street geniuses are smoking, they should be encouraged to pass some along to the rest of America, because, as Main Street struggles with high unemployment, stagnant wages, underwater housing and simply making ends meet, stocks just continue to run higher, as they did today.
Besides Italian President Silvio Berlusconi preparing to step down amid his country's burgeoning debt crisis, there wasn't much news on the European front, and even less news here in the USA, but traders saw fit to add to positions, or at least goose stocks a touch higher though still in the same range that's persisted since the end of July.
Almost all asset classes were marked up as the Euro gathered strength, pushing down the value of the dollar. That's all you need to know. Wall Street has this game figured out, like it or not, and they're not deviating from the game plan. Stocks are king no matter what happens in the rest of the world, until they're not, and we all know what happens then.
Meanwhile, the next crisis looming comes from - you guessed it - Washington, where lawmakers (yeah, that's a good term, like they make any that matter) were busy fighting with each other, as they normally do, just two weeks from the November 23 deadline for the "Super-committee" to come up with something along the lines of $2-4 trillion in budget cuts. Time is running out on the paid monkeys in congress and progress has been slow to nil.
If a deal is not reached by the deadline, some supposedly automatic cuts will take place, though it's almost a certainty that the wily legislators will find their ways around that boondoggle as well, leaving America in just about the same shape it was in before all the nonsense began over the debt limit. The free-spenders (all of them except Ron Paul and few others) got what they wanted in August: more money, and they will allow the rest of the country to burn rather than reach consensus and compromise.
They should all be kicked out of office, or, barring that, mostly ignored. As John Bogle said last evening on CBS news, "America is losing the ability to govern itself." Maybe that will be a better outcome.
Dow 12,170.18, +101.79 (0.84%)
NASDAQ 2,727.49, +32.24 (1.20%)
S&P 500 1,275.92, +14.80 (1.17%)
NYSE Composite 7,671.91, +81.48 (1.07%)
NASDAQ Volume 1,862,988,625
NYSE Volume 3,908,488,000
Combined NYSE & NASDAQ Advance - Decline: 4134-1511
Combined NYSE & NASDAQ New highs - New lows: 124-66
WTI crude oil: 96.80, +1.28
Gold: 1,799.20, +8.20
Silver: 35.15, +0.33
Besides Italian President Silvio Berlusconi preparing to step down amid his country's burgeoning debt crisis, there wasn't much news on the European front, and even less news here in the USA, but traders saw fit to add to positions, or at least goose stocks a touch higher though still in the same range that's persisted since the end of July.
Almost all asset classes were marked up as the Euro gathered strength, pushing down the value of the dollar. That's all you need to know. Wall Street has this game figured out, like it or not, and they're not deviating from the game plan. Stocks are king no matter what happens in the rest of the world, until they're not, and we all know what happens then.
Meanwhile, the next crisis looming comes from - you guessed it - Washington, where lawmakers (yeah, that's a good term, like they make any that matter) were busy fighting with each other, as they normally do, just two weeks from the November 23 deadline for the "Super-committee" to come up with something along the lines of $2-4 trillion in budget cuts. Time is running out on the paid monkeys in congress and progress has been slow to nil.
If a deal is not reached by the deadline, some supposedly automatic cuts will take place, though it's almost a certainty that the wily legislators will find their ways around that boondoggle as well, leaving America in just about the same shape it was in before all the nonsense began over the debt limit. The free-spenders (all of them except Ron Paul and few others) got what they wanted in August: more money, and they will allow the rest of the country to burn rather than reach consensus and compromise.
They should all be kicked out of office, or, barring that, mostly ignored. As John Bogle said last evening on CBS news, "America is losing the ability to govern itself." Maybe that will be a better outcome.
Dow 12,170.18, +101.79 (0.84%)
NASDAQ 2,727.49, +32.24 (1.20%)
S&P 500 1,275.92, +14.80 (1.17%)
NYSE Composite 7,671.91, +81.48 (1.07%)
NASDAQ Volume 1,862,988,625
NYSE Volume 3,908,488,000
Combined NYSE & NASDAQ Advance - Decline: 4134-1511
Combined NYSE & NASDAQ New highs - New lows: 124-66
WTI crude oil: 96.80, +1.28
Gold: 1,799.20, +8.20
Silver: 35.15, +0.33
Monday, November 7, 2011
Euro Leads Stocks Lower, Then Higher; Income Disparity Hits Young Hardest
There are plenty of correlation trades that make plenty of sense, but perhaps the only one worth watching - from a macro perspective - is the Euro-Dollar trade because of its unique correlation to the US stock market.
Today was a prime example of how that trade controls markets, from weak hands to strong, from dead to money to risk-be-damned, full speed ahead.
As trading opened for the week, the Euro was under a great deal of stress, not only from the continuing crisis, but by way of the dual southern European national plight being waged in Greece and Italy, where both leaders - George Papandreou of Greece and Silvio Berlusconi of Italy - were rumored to be ready to step down at the drop of a falafel or calzone, so precarious their countries' dilemmas.
While Papandreou finally agreed today to step down from his post as Prime Minister in an effort for the country to form a unity government (whatever that may mean in a nation on the brink of dissolution), Berlusconi seems locked into a similar fate, given the debt issues facing his country. Bond yields have risen dramatically on Italy's benchmark 10-year bonds over recent weeks and the spread between the Italian 10-year and the 10-year German Bund hit 490 basis points today.
Also weighing on the Euro was the nearly failed auction of Euro 3 billion in bonds by the EFSF, the entity created to save European banks from catastrophe. The auction was lightly subscribed and only 2.5 billion of the bonds were sold - at a price 171 basis points over the Bund - the rest going back to the issuers at a hefty premium. The EFSF does not have enough heft to buy Italy's bonds, putting Berlusconi and his government in a very precarious position.
As the Euro sagged in the morning so did stocks in the US, as every hedge fund manager worth his or her salt is short the US dollar, a trade that provides cheap dollar liquidity to US markets but is also inherently ruinous to the long-term survivability of the world's reserve currency. As the day wore on in Europe and issues began to straighten themselves out, especially in the case of Greece, the Euro began to rise, taking the dollar down and US stocks up. Simple, Easy. A piece of cake.
The real problem with this trade - as it has been all along - is that the US is probably in better shape than Europe, which has been on the brink of a currency collapse for months, making the premise for being short the US dollar somewhat specious, or perhaps totally false, a straw man trade designed only to make the impression that all's well in the USA and keeping stocks trending higher.
Therein lies the fatal deceit of the short dollar trade. If somehow the Euro must be kept propped up - when it's true value is somewhere closer to parity with the dollar than the current 1.38:1 ratio of dollars to Euros - then the inevitability of the failure of the Euro as a currency, the EU as a common trading bloc and a massive decline in US stocks must occur. This is, without a doubt, how tightly intertwined markets now are, dangerously so, and the heads of most US banking, trading and political entities are well aware of this situation.
When the Euro blows, which it almost certainly will, US stocks will follow, and isn't that a nice, pleasant note upon which to start off your week? Of course, it gets worse. Because when stocks drop, what the middle class is going to do will make the continuing "Occupy" protests look like a kindergarten cookies and milk party. Nothing riles up a people than having their wealth pulled out from under them, and, while the bankers and politicians have thus far succeeded in keeping complete collapse a fringe argument, Europe's failings could quickly become an American nightmare.
It was revealed today just how badly broken the American system has become. Pew Research Center reported that the wealth disparity between young and old has reached its highest level ever, with "Households headed by a person 65 or older have a median net worth 47 times greater than households headed by a person under 35."
Unarguable as that fact may be, it exposes the soft underbelly of American life, wherein the elderly, otherwise known as collectors of entitlements, such as Social Security are prospering at the expense of the young, who must work hard and pay bills, debt and support their elder countrymen. It's as unfair a situation as the top 1% holding 40% of the nation's wealth, and perhaps worth fixing, with means testing, rather than turning our nation into an armed camp of elderly versus youth.
In between are the Baby Boomer generation, the first post-WWII generation to begin reaching retirement age. Some have saved, others not so much, but, as a whole, the largest segment - those born between 1950 and 1960 - are still years away from collecting a Social Security check. If one were to take a bet on just how much a person 55 to 60 years old today should expect as a monthly stipend at age 65 or 67, it would probably be wise to cut that number down by 25-45% from current expectations.
If one is inclined to believe the situation is tough right now, imagine another 50 million expecting to receive Social Security checks in coming years. The math simply does not add up unless those paying into the system are going to be taxed at 80% of their wages. It's just the truth, we're headed for even harder times ahead.
Dow 12,068.39, +85.15 (0.71%)
NASDAQ 2,695.25, +9.10 (0.34%)
S&P 500 1,261.12, +7.89 (0.63%)
NYSE Composite 7,590.43, +38.20 (0.51%)
NASDAQ Volume 1,735,945,625.00
NYSE Volume 3,629,465,250
Combined NYSE & NASDAQ Advance - Decline: 2773-2795
Combined NYSE & NASDAQ New highs - New lows: 88-64
WTI crude oil: 95.52, +1.26
Gold: 1,791.10, +35.00
Silver: 34.83, +0.74
Today was a prime example of how that trade controls markets, from weak hands to strong, from dead to money to risk-be-damned, full speed ahead.
As trading opened for the week, the Euro was under a great deal of stress, not only from the continuing crisis, but by way of the dual southern European national plight being waged in Greece and Italy, where both leaders - George Papandreou of Greece and Silvio Berlusconi of Italy - were rumored to be ready to step down at the drop of a falafel or calzone, so precarious their countries' dilemmas.
While Papandreou finally agreed today to step down from his post as Prime Minister in an effort for the country to form a unity government (whatever that may mean in a nation on the brink of dissolution), Berlusconi seems locked into a similar fate, given the debt issues facing his country. Bond yields have risen dramatically on Italy's benchmark 10-year bonds over recent weeks and the spread between the Italian 10-year and the 10-year German Bund hit 490 basis points today.
Also weighing on the Euro was the nearly failed auction of Euro 3 billion in bonds by the EFSF, the entity created to save European banks from catastrophe. The auction was lightly subscribed and only 2.5 billion of the bonds were sold - at a price 171 basis points over the Bund - the rest going back to the issuers at a hefty premium. The EFSF does not have enough heft to buy Italy's bonds, putting Berlusconi and his government in a very precarious position.
As the Euro sagged in the morning so did stocks in the US, as every hedge fund manager worth his or her salt is short the US dollar, a trade that provides cheap dollar liquidity to US markets but is also inherently ruinous to the long-term survivability of the world's reserve currency. As the day wore on in Europe and issues began to straighten themselves out, especially in the case of Greece, the Euro began to rise, taking the dollar down and US stocks up. Simple, Easy. A piece of cake.
The real problem with this trade - as it has been all along - is that the US is probably in better shape than Europe, which has been on the brink of a currency collapse for months, making the premise for being short the US dollar somewhat specious, or perhaps totally false, a straw man trade designed only to make the impression that all's well in the USA and keeping stocks trending higher.
Therein lies the fatal deceit of the short dollar trade. If somehow the Euro must be kept propped up - when it's true value is somewhere closer to parity with the dollar than the current 1.38:1 ratio of dollars to Euros - then the inevitability of the failure of the Euro as a currency, the EU as a common trading bloc and a massive decline in US stocks must occur. This is, without a doubt, how tightly intertwined markets now are, dangerously so, and the heads of most US banking, trading and political entities are well aware of this situation.
When the Euro blows, which it almost certainly will, US stocks will follow, and isn't that a nice, pleasant note upon which to start off your week? Of course, it gets worse. Because when stocks drop, what the middle class is going to do will make the continuing "Occupy" protests look like a kindergarten cookies and milk party. Nothing riles up a people than having their wealth pulled out from under them, and, while the bankers and politicians have thus far succeeded in keeping complete collapse a fringe argument, Europe's failings could quickly become an American nightmare.
It was revealed today just how badly broken the American system has become. Pew Research Center reported that the wealth disparity between young and old has reached its highest level ever, with "Households headed by a person 65 or older have a median net worth 47 times greater than households headed by a person under 35."
Unarguable as that fact may be, it exposes the soft underbelly of American life, wherein the elderly, otherwise known as collectors of entitlements, such as Social Security are prospering at the expense of the young, who must work hard and pay bills, debt and support their elder countrymen. It's as unfair a situation as the top 1% holding 40% of the nation's wealth, and perhaps worth fixing, with means testing, rather than turning our nation into an armed camp of elderly versus youth.
In between are the Baby Boomer generation, the first post-WWII generation to begin reaching retirement age. Some have saved, others not so much, but, as a whole, the largest segment - those born between 1950 and 1960 - are still years away from collecting a Social Security check. If one were to take a bet on just how much a person 55 to 60 years old today should expect as a monthly stipend at age 65 or 67, it would probably be wise to cut that number down by 25-45% from current expectations.
If one is inclined to believe the situation is tough right now, imagine another 50 million expecting to receive Social Security checks in coming years. The math simply does not add up unless those paying into the system are going to be taxed at 80% of their wages. It's just the truth, we're headed for even harder times ahead.
Dow 12,068.39, +85.15 (0.71%)
NASDAQ 2,695.25, +9.10 (0.34%)
S&P 500 1,261.12, +7.89 (0.63%)
NYSE Composite 7,590.43, +38.20 (0.51%)
NASDAQ Volume 1,735,945,625.00
NYSE Volume 3,629,465,250
Combined NYSE & NASDAQ Advance - Decline: 2773-2795
Combined NYSE & NASDAQ New highs - New lows: 88-64
WTI crude oil: 95.52, +1.26
Gold: 1,791.10, +35.00
Silver: 34.83, +0.74
Friday, November 4, 2011
Stocks Drop Initially on Poor Employment Data, Recover Late; G20 Soothes Nerves
Friday was a fitting end of the week for stocks, a the BLS released some very sketchy employment data that sent investors initially to the sell windows, shedding stocks that have run up nicely over the past two sessions.
The week included two rather large down days followed by a pair of higher sessions and Friday's slight sell-off. The Labor Department reported that the US gained 80,000 jobs in its monthly non-farm payroll release, 104,000 of which came from the private sector, offset by 24,000 government job losses.
There were a number of revisions - all upward - to September and August data. September non-farm private payrolls, originally pegged at 137,000 job gains, was revised to 191,000. August, originally reported at a flat zero, was revised for a second time, adding in another 57,000 job gain, following last month's 47,000 upward revision, making August a much better month for employment - if one is inclined to believe government data, of which everyone is not - at a net jobs gain of 107,000.
Disappointing results at the outset sent stocks to their lows of the day in early trading, but as traders digested the data, found some reason for optimism, mostly in the revisions, and, though October's gains were not enough to keep pace with natural labor force growth (roughly 125,000 a month is needed), another positive month, on top of other positive economic data, was enough to erase those losses as the session wore on.
Catching up on other data releases, third quarter productivity increased by an estimated 3.1% after two consecutive quarterly declines.
Factory orders increased by 0.3% in October, on expectations of -0.5%, and the ISM services index inched lower, to 52.9, from 53.0 in September.
The official unemployment rate was pegged at 9.0, down from 9.1 in September, though most of the decline was due to job seekers falling off unemployment roles rather than finding new employment.
Another factor in the calculation of the overall strength or weakness of the US labor market comes in the form of the BLS' notorious birth/death adjustment, which measures the number of businesses closing and shedding jobs (death) and new business start-ups adding jobs (birth). According to this arcane, rather sloppy assessment, the BLS concludes that 103,000 more jobs were created in October by new businesses than were destroyed by business closures. In other words, almost all of the private sector job gains in October were statistically generated, which is why there is some doubt to the veracity and reliability of government statistics.
In Cannes, France, leaders of the G20 nations concluded a meeting without offering any new IMF funds to help Europe deal with its lengthy debt crisis. The fact that the member nations effectively told Europe to "fix it yourself" was less of a surprise than the IMF putting Italy under monitoring of its pension, privatization and labor reforms, long overdue.
That the leading economic powers of the world would defer to next year a decision on whether Europe needed additional help could be viewed as a positive development, especially after the referendum in Greece on that country's bailout money was effectively shut down on Thursday.
For the week, the Dow lost 248 points, the NASDAQ shed 51 points and the S&P dropped 32 points.
Dow 11,983.24, -61.23 (0.51%)
NASDAQ 2,686.15, -11.82 (0.44%)
S&P 500 1,253.23, -7.92 (0.63%)
NYSE Composite 7,552.23, -52.91 (0.70%)
NASDAQ Volume 1,959,105,000.00
NYSE Volume 3,947,110,000
Combined NYSE & NASDAQ Advance - Decline: 2093-2430
Combined NYSE & NASDAQ New highs - New lows: 73-59
WTI crude oil: 94.43, +0.17
Gold: 1,756.10, -9.00
Silver: 34.08, -0.41
The week included two rather large down days followed by a pair of higher sessions and Friday's slight sell-off. The Labor Department reported that the US gained 80,000 jobs in its monthly non-farm payroll release, 104,000 of which came from the private sector, offset by 24,000 government job losses.
There were a number of revisions - all upward - to September and August data. September non-farm private payrolls, originally pegged at 137,000 job gains, was revised to 191,000. August, originally reported at a flat zero, was revised for a second time, adding in another 57,000 job gain, following last month's 47,000 upward revision, making August a much better month for employment - if one is inclined to believe government data, of which everyone is not - at a net jobs gain of 107,000.
Disappointing results at the outset sent stocks to their lows of the day in early trading, but as traders digested the data, found some reason for optimism, mostly in the revisions, and, though October's gains were not enough to keep pace with natural labor force growth (roughly 125,000 a month is needed), another positive month, on top of other positive economic data, was enough to erase those losses as the session wore on.
Catching up on other data releases, third quarter productivity increased by an estimated 3.1% after two consecutive quarterly declines.
Factory orders increased by 0.3% in October, on expectations of -0.5%, and the ISM services index inched lower, to 52.9, from 53.0 in September.
The official unemployment rate was pegged at 9.0, down from 9.1 in September, though most of the decline was due to job seekers falling off unemployment roles rather than finding new employment.
Another factor in the calculation of the overall strength or weakness of the US labor market comes in the form of the BLS' notorious birth/death adjustment, which measures the number of businesses closing and shedding jobs (death) and new business start-ups adding jobs (birth). According to this arcane, rather sloppy assessment, the BLS concludes that 103,000 more jobs were created in October by new businesses than were destroyed by business closures. In other words, almost all of the private sector job gains in October were statistically generated, which is why there is some doubt to the veracity and reliability of government statistics.
In Cannes, France, leaders of the G20 nations concluded a meeting without offering any new IMF funds to help Europe deal with its lengthy debt crisis. The fact that the member nations effectively told Europe to "fix it yourself" was less of a surprise than the IMF putting Italy under monitoring of its pension, privatization and labor reforms, long overdue.
That the leading economic powers of the world would defer to next year a decision on whether Europe needed additional help could be viewed as a positive development, especially after the referendum in Greece on that country's bailout money was effectively shut down on Thursday.
For the week, the Dow lost 248 points, the NASDAQ shed 51 points and the S&P dropped 32 points.
Dow 11,983.24, -61.23 (0.51%)
NASDAQ 2,686.15, -11.82 (0.44%)
S&P 500 1,253.23, -7.92 (0.63%)
NYSE Composite 7,552.23, -52.91 (0.70%)
NASDAQ Volume 1,959,105,000.00
NYSE Volume 3,947,110,000
Combined NYSE & NASDAQ Advance - Decline: 2093-2430
Combined NYSE & NASDAQ New highs - New lows: 73-59
WTI crude oil: 94.43, +0.17
Gold: 1,756.10, -9.00
Silver: 34.08, -0.41
Tuesday, November 1, 2011
Greece, Italy Send Stocks Overboard Again
Doings on the Continent have been keeping traders on their toes for months, but today's antics bordered on the bizarre.
First Greek Prime Minister George Papandreou called for a public referendum on the latest bailout plan, just approved days ago in late-night negotiations by European leaders. Making matters even more confused, Papandreaou scheduled the referendum for some time early next year, which would hold global markets hostage for months while the Greeks decide their own fate.
A "NO" vote on the austerity plans tied to Greece receiving more funds from the EU and IMF, would scuttle months of planning and negotiations and would likely result in Greece being tossed from the European Union. Such an outcome would surely roil markets terribly, though the mere thought of waiting two to three months for what almost certainly would be a negative result sent shock waves through European bourses and US exchanges today.
Reacting to the news, German Chancellor Angela Merkel and French President Nicolas Sarkozy planned emergency talks with leaders of the EU and the IMF, though it was not clear whether Mr. Papandreou would be invited.
And, if Greece's gambit wasn't enough to turn investors away, there's a confidence vote set for Friday, in which Papandreou's Socialist Party could lose control of the government, which it holds by only two seats in the parliament. The situation in the Mediterranean nation have moved from bad to worse to bizarre over the past few months.
In Italy, despite the agreements worked out last week, bond yields continued to spike higher, with the 10-year Italian bond reaching upwards of 6.22%, a more than 400-basis point difference over the stable German Bund. The bond spread blowout added to fears that Italy might be in more danger than previously thought - which, in itself was already severe - as the Italian government has to roll over nearly $2 trillion in bonds over the next year, a hefty sum.
Under the leadership - if one can call it such - of Prime Minister Silvio Berlusconi, Italy has failed to act on measures set down by the EU in August and leaders of two main banking and business associations have called on the prime minister to act swiftly or step aside. For his part, Berlusconi has made promises to act quickly, though many doubt he has the emotional or political will to implement the harsh austerity measures called for by other European leaders. As can-kicking goes, Berlusconi is world class, a foot-dragger with a penchant for putting off the obvious, though most of the other leaders in the EU have displayed similar inability to act courageously or quickly.
Also nagging US markets was the early-in-the-day report on ISM Manufacturing Index, which showed a marked decline, from 51.6 in September to 50.8 in October, another sign that the US economy was in danger of falling into another recession.
Stocks were pounded right from the opening bell, though a late day rally was attempted and then scuttled as news from Greece suggested more of a guessing game than any kind of deliberate policy action.
Speaking of policy, the Federal Reserve is locked in meetings on rate policy, which will be announced at 12:30 pm Wednesday, a deviation from the usual 2:15 pm time. The policy decision will be followed by a press conference with Fed Chairman Ben Bernanke. While it is virtually assured that the Fed will not change the federal funds rate from levels approaching zero, some are betting that another round of QE will be announced in some form, though the effectiveness of such an undertaking - already tried twice since the 2008 financial crisis, without effect - is very much in doubt.
Prior to that, ADP will release its private payroll data for October, which serves as a proxy for the "official" non-farm payroll data release by the Labor Dept. on Friday.
Not surprisingly, some of the biggest losers on the day were the large banks, such as Wells-Fargo (WFC), Bank of America (BAC), JP Morgan Chase (JPM), Citigroup (C) and Goldman Sachs (GS), the usual culprits now caught between a sagging economy, exposure to Europe and the unwinding of MF Global, which filed for bankruptcy protection on Monday.
The silver lining for consumers came from a two-day rally in the dollar - mainly against the Yen and Euro - sending commodity prices lower across the entire complex.
Dow 11,657.96, -297.05 (2.48%)
NASDAQ 2,606.96, -77.45 (2.89%)
S&P 500 1,218.28, -35.02 (2.79%)
NYSE Composite 7,338.48, -226.55 (2.99%)
NASDAQ Volume 2,314,571,500
NYSE Volume 5,656,978,000
Combined NYSE & NASDAQ Advance - Decline: 859-4813
Combined NYSE & NASDAQ New highs - New lows: 24-89 (flipped)
WTI crude oil: 92.19, -1.00
Gold: 1,711.80, -13.40
Silver: 32.73, -1.62
First Greek Prime Minister George Papandreou called for a public referendum on the latest bailout plan, just approved days ago in late-night negotiations by European leaders. Making matters even more confused, Papandreaou scheduled the referendum for some time early next year, which would hold global markets hostage for months while the Greeks decide their own fate.
A "NO" vote on the austerity plans tied to Greece receiving more funds from the EU and IMF, would scuttle months of planning and negotiations and would likely result in Greece being tossed from the European Union. Such an outcome would surely roil markets terribly, though the mere thought of waiting two to three months for what almost certainly would be a negative result sent shock waves through European bourses and US exchanges today.
Reacting to the news, German Chancellor Angela Merkel and French President Nicolas Sarkozy planned emergency talks with leaders of the EU and the IMF, though it was not clear whether Mr. Papandreou would be invited.
And, if Greece's gambit wasn't enough to turn investors away, there's a confidence vote set for Friday, in which Papandreou's Socialist Party could lose control of the government, which it holds by only two seats in the parliament. The situation in the Mediterranean nation have moved from bad to worse to bizarre over the past few months.
In Italy, despite the agreements worked out last week, bond yields continued to spike higher, with the 10-year Italian bond reaching upwards of 6.22%, a more than 400-basis point difference over the stable German Bund. The bond spread blowout added to fears that Italy might be in more danger than previously thought - which, in itself was already severe - as the Italian government has to roll over nearly $2 trillion in bonds over the next year, a hefty sum.
Under the leadership - if one can call it such - of Prime Minister Silvio Berlusconi, Italy has failed to act on measures set down by the EU in August and leaders of two main banking and business associations have called on the prime minister to act swiftly or step aside. For his part, Berlusconi has made promises to act quickly, though many doubt he has the emotional or political will to implement the harsh austerity measures called for by other European leaders. As can-kicking goes, Berlusconi is world class, a foot-dragger with a penchant for putting off the obvious, though most of the other leaders in the EU have displayed similar inability to act courageously or quickly.
Also nagging US markets was the early-in-the-day report on ISM Manufacturing Index, which showed a marked decline, from 51.6 in September to 50.8 in October, another sign that the US economy was in danger of falling into another recession.
Stocks were pounded right from the opening bell, though a late day rally was attempted and then scuttled as news from Greece suggested more of a guessing game than any kind of deliberate policy action.
Speaking of policy, the Federal Reserve is locked in meetings on rate policy, which will be announced at 12:30 pm Wednesday, a deviation from the usual 2:15 pm time. The policy decision will be followed by a press conference with Fed Chairman Ben Bernanke. While it is virtually assured that the Fed will not change the federal funds rate from levels approaching zero, some are betting that another round of QE will be announced in some form, though the effectiveness of such an undertaking - already tried twice since the 2008 financial crisis, without effect - is very much in doubt.
Prior to that, ADP will release its private payroll data for October, which serves as a proxy for the "official" non-farm payroll data release by the Labor Dept. on Friday.
Not surprisingly, some of the biggest losers on the day were the large banks, such as Wells-Fargo (WFC), Bank of America (BAC), JP Morgan Chase (JPM), Citigroup (C) and Goldman Sachs (GS), the usual culprits now caught between a sagging economy, exposure to Europe and the unwinding of MF Global, which filed for bankruptcy protection on Monday.
The silver lining for consumers came from a two-day rally in the dollar - mainly against the Yen and Euro - sending commodity prices lower across the entire complex.
Dow 11,657.96, -297.05 (2.48%)
NASDAQ 2,606.96, -77.45 (2.89%)
S&P 500 1,218.28, -35.02 (2.79%)
NYSE Composite 7,338.48, -226.55 (2.99%)
NASDAQ Volume 2,314,571,500
NYSE Volume 5,656,978,000
Combined NYSE & NASDAQ Advance - Decline: 859-4813
Combined NYSE & NASDAQ New highs - New lows: 24-89 (flipped)
WTI crude oil: 92.19, -1.00
Gold: 1,711.80, -13.40
Silver: 32.73, -1.62
Tuesday, September 20, 2011
The Rise and Fall of US Stocks All in One Day; Making a Budget and Sticking to It
The Markets
Stocks did an about-face midday on Tuesday, shaving away all of the morning gains as the afternoon wore on and word from Europe was mixed. The Dow Jones Industrials and S&P 500 each made a run at the lower end of their 50-day moving averages, hit resistance and failed, badly.
All of the averages made suspicious-looking early moves between 10 and 11 am EDT, hovered near the highs, made new highs around 2:00 pm and then fell remarkably into the close, with not even a hint of a closing bounce.
From a technical point of view, meeting resistance at the 50-day MA makes perfect sense and the indices will likely take another run at it in coming days, though it seems a hurdle too high to surpass, considering all of the significant headwinds facing companies (lowered earnings forecasts) and nations, especially those in the Eurozone - Greece, Italy, Portugal, Ireland - to say nothing about the current poor economic conditions in the USA.
Stocks have been mired in a basically directionless trading range for the better part of two months and that's making people even more nervous and keeping significant amounts of money out of stocks and into treasuries, corporate paper, cash and equivalents, gold and other tangible assets. The fear surrounding a default by Greece and the associated fallout to other European countries and banks has the market in a condition of near paralysis.
Until the sovereign debt issues are resolved one way or another, stocks will be unlikely to advance as investors are simply too afraid to stake out new, large positions.
On the data front, housing starts fell to a three-month low, from 601,000 annualized in July to 571,000 in August. With such a glut of cheap foreclosures and bank REO property on the market, in addition to the nearly 300,000 residential homes held by Fannie Mae, hope for a recovery by the end of this year are fading fast. With the onset of colder weather and the usual seasonal downturn, one could easily suggest that housing will dive even lower or bounce around the bottom until Spring of 2012 at the earliest. Of course, such numbers didn't faze Wall Street in the least. Optimists pointed out that building permits rose from 601K in July to 620K in August, though it's only a 3% move, barely more than a rounding error.
So, with Europe still a basket case and the US close behind, the markets are stuck in neutral, awaiting some kind of announcement from the FOMC, which began a two-day meeting today with a rate announcement due out tomorrow around 2:15 pm. The wording of the FOMC statement is unlikely to change dramatically, though many on the street believe the Fed will either outline some new policy such as "operation twist" in which they purchase longer-dated securities in order to drive long rates lower, or announce another round of quantitative easing, which would be dubbed QE3, though that concept, having already failed to goose the economy twice in the past two years, is unlikely to gather much traction within the Fed circle.
All should be expecting something from the Fed, even though many believe that they have exhausted nearly all of their policy tools.
Dow 11,408.66, +7.65 (0.07%)
NASDAQ 2,590.24, -22.59 (0.86%)
S&P 500 1,202.09, -2.00 (0.17%)
NYSE Composite 7,217.11, -17.52 (0.24%)
NASDAQ Volume 1,942,335,500
NYSE Volume 4,250,461,500
Combined NYSE & NASDAQ Advance - Decline: 2261-4207
Combined NYSE & NASDAQ New highs - New lows: 85-189
WTI crude oil: 86.89, +1.19
Gold: 1804.80, +26.30
Silver: 39.74, +0.09
Idea: Making and Sticking to a Budget
We've all heard forever that making a budget for household and/or business expenses and income is a smart and necessary step toward financial freedom and fiscal responsibility, but, taking our lead from Washington, few people seem able to keep the process honest or reach desired outcomes. Our federal government is probably the worst example of budgeting known to man, as the process is riddled with partisan politics, fudged calculations, unrealistic expectations and projections and extraneous falderol like earmarks, off-balance sheet expenditures and unfunded liabilities like Social Security and Medicare.
Household budgets are a bit simpler to make though not quite as difficult to keep. The best approach is to go for a monthly outlook, as most of us have recurring expenses that serve as a baseline. Things like utility bills, phone and cable bills, car payments, mortgage payments (though some of us have eliminated those recently) and credit card expenses come due at some time or another during the month and have to be paid in a reasonably timely manner.
After that, items such as food, clothing, entertainment, (liquor and cigarettes if so inclined) and other variable expenses should be calculated out on a monthly basis as best as possible. That way, one can readily see where overspending or potential savings might occur. The regular bills, known in the business world as "fixed expenses" aren't going to change much, if at all, month to month, and one will find that over time, even variable expenses don't bounce around very much.
Once one has all the monthly expenses lined up, then it's time to match it against income (if one still has any) and see how it balances out. If you are one of the lucky few who have an extra $5,000-$2,000,000 on the income side of the ledger, you can stop reading right here. You don't need a budget; you need a financial advisor or a beach house.
If, however, you're like most people, you'll see where all that money goes, and when you stop crying, you might find a little bit left over. Anything more than 10-20% above your monthly regular expenses would be a great sign. If you find yourself a few hundred dollars short each month, then there's work to do.
Where most people get into trouble is in making exceptions, overspending (usually caused by not thinking and acting on emotion), and bogus projections, like "I'll get a raise soon," or the classic fail, "when I start receiving Social Security checks..." as wishful thinking almost never returns positive results.
Another trap is not counting the little things that add up to big headaches without one noticing. Things like that morning latte - and doughnut, bagel, croissant or McDonald's McBiscuit - the extra tip for the heavenly lunch waitress or waiter, tolls, parking fees, snacks, bottled water, the occasional needed home item, more expensive gas than calculated, all contribute to budget busting in all but the most frugal environments.
There are remedies for those items, such as keeping receipts for everything or a log book exclusively for "little" expenses, but the best way is to take your monthly expense total and add 10% to it, calling it the miscellaneous expense column. If you're judicious and cautious, you'll find yourself spending less than that 10%, but it's doubtful it will add up to very much. The key concept is that every dime and dollar counts, even those $200 binge nights out with the guys or gals.
In the end, we'd all like to earn more and save more, the goal eventually being filthy rich and not having to worry about money any more. Since that's an unlikely event for the vast majority, taking a little time each month to review and preview income and expenses gives one a clearer outlook on where one's been, where one's money is going and what can be done about it.
There are an assortment of online tools and sites which can provide some assistance. Here's a good place to start, with brief reviews of some of the best budgeting websites.
Stocks did an about-face midday on Tuesday, shaving away all of the morning gains as the afternoon wore on and word from Europe was mixed. The Dow Jones Industrials and S&P 500 each made a run at the lower end of their 50-day moving averages, hit resistance and failed, badly.
All of the averages made suspicious-looking early moves between 10 and 11 am EDT, hovered near the highs, made new highs around 2:00 pm and then fell remarkably into the close, with not even a hint of a closing bounce.
From a technical point of view, meeting resistance at the 50-day MA makes perfect sense and the indices will likely take another run at it in coming days, though it seems a hurdle too high to surpass, considering all of the significant headwinds facing companies (lowered earnings forecasts) and nations, especially those in the Eurozone - Greece, Italy, Portugal, Ireland - to say nothing about the current poor economic conditions in the USA.
Stocks have been mired in a basically directionless trading range for the better part of two months and that's making people even more nervous and keeping significant amounts of money out of stocks and into treasuries, corporate paper, cash and equivalents, gold and other tangible assets. The fear surrounding a default by Greece and the associated fallout to other European countries and banks has the market in a condition of near paralysis.
Until the sovereign debt issues are resolved one way or another, stocks will be unlikely to advance as investors are simply too afraid to stake out new, large positions.
On the data front, housing starts fell to a three-month low, from 601,000 annualized in July to 571,000 in August. With such a glut of cheap foreclosures and bank REO property on the market, in addition to the nearly 300,000 residential homes held by Fannie Mae, hope for a recovery by the end of this year are fading fast. With the onset of colder weather and the usual seasonal downturn, one could easily suggest that housing will dive even lower or bounce around the bottom until Spring of 2012 at the earliest. Of course, such numbers didn't faze Wall Street in the least. Optimists pointed out that building permits rose from 601K in July to 620K in August, though it's only a 3% move, barely more than a rounding error.
So, with Europe still a basket case and the US close behind, the markets are stuck in neutral, awaiting some kind of announcement from the FOMC, which began a two-day meeting today with a rate announcement due out tomorrow around 2:15 pm. The wording of the FOMC statement is unlikely to change dramatically, though many on the street believe the Fed will either outline some new policy such as "operation twist" in which they purchase longer-dated securities in order to drive long rates lower, or announce another round of quantitative easing, which would be dubbed QE3, though that concept, having already failed to goose the economy twice in the past two years, is unlikely to gather much traction within the Fed circle.
All should be expecting something from the Fed, even though many believe that they have exhausted nearly all of their policy tools.
Dow 11,408.66, +7.65 (0.07%)
NASDAQ 2,590.24, -22.59 (0.86%)
S&P 500 1,202.09, -2.00 (0.17%)
NYSE Composite 7,217.11, -17.52 (0.24%)
NASDAQ Volume 1,942,335,500
NYSE Volume 4,250,461,500
Combined NYSE & NASDAQ Advance - Decline: 2261-4207
Combined NYSE & NASDAQ New highs - New lows: 85-189
WTI crude oil: 86.89, +1.19
Gold: 1804.80, +26.30
Silver: 39.74, +0.09
Idea: Making and Sticking to a Budget
We've all heard forever that making a budget for household and/or business expenses and income is a smart and necessary step toward financial freedom and fiscal responsibility, but, taking our lead from Washington, few people seem able to keep the process honest or reach desired outcomes. Our federal government is probably the worst example of budgeting known to man, as the process is riddled with partisan politics, fudged calculations, unrealistic expectations and projections and extraneous falderol like earmarks, off-balance sheet expenditures and unfunded liabilities like Social Security and Medicare.
Household budgets are a bit simpler to make though not quite as difficult to keep. The best approach is to go for a monthly outlook, as most of us have recurring expenses that serve as a baseline. Things like utility bills, phone and cable bills, car payments, mortgage payments (though some of us have eliminated those recently) and credit card expenses come due at some time or another during the month and have to be paid in a reasonably timely manner.
After that, items such as food, clothing, entertainment, (liquor and cigarettes if so inclined) and other variable expenses should be calculated out on a monthly basis as best as possible. That way, one can readily see where overspending or potential savings might occur. The regular bills, known in the business world as "fixed expenses" aren't going to change much, if at all, month to month, and one will find that over time, even variable expenses don't bounce around very much.
Once one has all the monthly expenses lined up, then it's time to match it against income (if one still has any) and see how it balances out. If you are one of the lucky few who have an extra $5,000-$2,000,000 on the income side of the ledger, you can stop reading right here. You don't need a budget; you need a financial advisor or a beach house.
If, however, you're like most people, you'll see where all that money goes, and when you stop crying, you might find a little bit left over. Anything more than 10-20% above your monthly regular expenses would be a great sign. If you find yourself a few hundred dollars short each month, then there's work to do.
Where most people get into trouble is in making exceptions, overspending (usually caused by not thinking and acting on emotion), and bogus projections, like "I'll get a raise soon," or the classic fail, "when I start receiving Social Security checks..." as wishful thinking almost never returns positive results.
Another trap is not counting the little things that add up to big headaches without one noticing. Things like that morning latte - and doughnut, bagel, croissant or McDonald's McBiscuit - the extra tip for the heavenly lunch waitress or waiter, tolls, parking fees, snacks, bottled water, the occasional needed home item, more expensive gas than calculated, all contribute to budget busting in all but the most frugal environments.
There are remedies for those items, such as keeping receipts for everything or a log book exclusively for "little" expenses, but the best way is to take your monthly expense total and add 10% to it, calling it the miscellaneous expense column. If you're judicious and cautious, you'll find yourself spending less than that 10%, but it's doubtful it will add up to very much. The key concept is that every dime and dollar counts, even those $200 binge nights out with the guys or gals.
In the end, we'd all like to earn more and save more, the goal eventually being filthy rich and not having to worry about money any more. Since that's an unlikely event for the vast majority, taking a little time each month to review and preview income and expenses gives one a clearer outlook on where one's been, where one's money is going and what can be done about it.
There are an assortment of online tools and sites which can provide some assistance. Here's a good place to start, with brief reviews of some of the best budgeting websites.
Monday, August 8, 2011
Debt Downgrade Fallout: Stocks Shattered, Gold Soars, Europe a Wasteland
At 9:00 pm Eastern time on Friday night, August 5, S&P officially released their downgrade of US debt from AAA to AA+, prompting widespread panic and sharp rebukes from the White House, who claimed, in effect, that S&P had made what amounted to "math errors."
Over the weekend, much was made of the downgrade, as the Obama hit the airwaves with gusto, rebuking the call from the ratings agency. Fitch and Moody's had previously reaffirmed the US debt as AAA, the highest possible sovereign bond rating, but S&P would not back down, and the downgrade remained in effect.
What S&P reasoned was that the US government did not take the necessary steps - in its theatrical production of waiting until the last possible moment to pass a debt ceiling increase - to address the structural problems facing it. S&P rightly concluded that US debt levels were and continue to rise and discretionary spending levels have not been controlled. Therefore, they downgraded the nation's debt and threaten to do it a second time, sometime around November, if the 12-member congressional committee charged with dealing with long term debt does not come up with actionable, concrete, debt reduction proposals.
As markets opened on Monday, the effects of a global panic were evident, especially on the heels of a 10% decline in US indices over the past two weeks and Thursday's dramatic sell-off of over four per cent on major markets.
First, it was the Asian markets which tanked at their various openings and continued through the day to sell off anywhere from 1.5 to 4.0%. Next up was Europe, where the crisis over bailing out Italy and Spain have reached a point of no return. EU officials stressed that they would be in the market with the ECB, buying up italian and Spanish debt, but that did little to change the outlook of investors, which had turned sour over the past fortnight.
Appetite for risk was at a low, as European markets suffered steep losses. England's FTSE was the best of the lot, down only 2.62%. France's CAC-40 took a 4.68% loss and Germany's DAX shed 5.02%. Other Euro-zone markets fell between 3.76 and 6.11%.
By the time US markets were to open, index futures had been hammered down to presage an inauspicious opening. Within minutes of the bell, the Dow was down more than 200 points, the S&P had taken a 25-point hit and the NASDAQ fell more than 70 points, though those declines were nothing compared to the carnage that lay ahead.
By the end of the day, after a minor rally in the first 15 minutes of the final hour, stocks were trading at or near their lows, with the Dow Jones Industrials surrendering the 6th-worst performance in its history. While the Dow suffered a 5.5% decline on the day, the other indices were actually much worse, with the NYSE Composite topping them all, coming home with a 7.05% loss.
It wasn't just the debt downgrade that spurred the sell-off. Conditions in Europe have worsened significantly over the past few months, to the point that European Union officials are without reasonable solutions to the debt contagion spreading across the region. While the ECB has managed to prop up smaller countries like Greece, Portugal and Ireland, Italy especially poses a much larger concern.
All the European leaders could muster on Monday was a terse statement which offered no concrete proposals but plenty of assurances, which was be roundly written off by markets. To wit:
The irony is that one of them, Italy, has been the source of the most recent anguish.
Essentially, the funds available to the ECB fall short of meeting the debt purchases needed to save Italy and Spain. Europe will have to engage in quantitative easing, as was the case in the United States over the past two years, to stave off defaults and the threat of a cascading crisis which would envelop all of Europe and likely doom the 11-year-old Euro currency.
If the EU decides upon cheapening the currency - which it almost certainly will do - theknock-on effect will be to sink the Euro, probably close to parity with the US Dollar. As the dollar would grow in strength, commodities, particularly oil and gas for auto use, would plummet, a boon to US drivers and to the general economy. Costs of imports would also decline, on a relative basis, giving American consumers more purchasing power.
Within the same scenario, however, are pitfalls for the global manufacturers and companies that populate the S&P 500, NASDAQ and the Dow. A stronger US Dollar would make them less competitive in foreign markets, shrinking margins and thus, profits. Thus, the great selling rush today was more of a statement on the global condition rather than that of the debt downgrade, which, when all is said and done, won't amount to a hill of beans. In fact, treasuries were up sharply today, as yields fell to their lowest levels in over a year.
The benchmark 10-year note fell 25 basis points in just one day, from 2.56% on Friday to 2.31% on Monday. The 30-year bond fell 19 basis points, to 3.65% as the yield curve continues to flatten. Money is going out of stocks and into bonds, and whether they're AAA or AA+ doesn't matter to those seeking a safe haven. The ridiculously low yields offered are a moot point. As one trader put it, "Investors aren't looking at making money; they're more concerned with getting their money back."
And, therein, the next crisis, in bonds, especially if the US government doesn't get its house in order soon. Higher rates and another downgrade could trigger a default of impossible proportions as the US would be unable to roll over its debt and fund itself without incurring higher borrowing costs. Ditto for Europe. Rising interest rates signals the end game for fiat currencies globally and back to some form of honest money, most likely on a gold standard.
The market events of the past few days, in which the major indices lost more than 10% are not the end of the crisis, but rather the beginning of the end of a great generational bear market that began in 2007 and will eviscerate all risk assets until nobody wants to hold anything any more.
Markets have entered the final stages of the third leg down. QE 1 and 2 staved off the collapse, but there will be no bailouts this time around. It's every man, woman, child and company for itself. There will be some winners, but mostly there will be losers, anguish, agony and the disappearance of great hordes of wealth.
Dow 10,809.85, -634.76 (5.55%)
NASDAQ 2,357.69, -174.72 (6.90%)
S&P 500 1,119.46, -79.92 (6.66%)
NYSE Composite 6,895.97, -523.10 (7.05%)
The internals were equally as stunning as the headline numbers. Declining issues decimated advancers, 6553-375, a ratio of 17.5:1. It was truly one of the deepest, broadest declines in stock market history. On the NASDAQ, there were four (4) new highs next to 725 new lows. The NYSE had just three (3) new highs, but 1292 stocks making new 52-week lows. The combined total of seven (7) new highs and 2017 new lows rivals or exceeds the figures presented during the fallout of 2008-2009.
Volume was at the highest levels of the year, exceeding that of last Thursday, which was then the high volume day of the year. Investors aren't just scared, they are trampling each other running through the exits at breakneck speed.
NASDAQ Volume 4,002,857,250
NYSE Volume 11,046,384,000
Crude oil futures were pounded again, as the front-month contract on WTI crude fell $5.57, to $81.31. Gas prices will soon fall below $3.50 - and possibly below $3.00 - a gallon as current supplies are depleted and replaced by less expensive distillates. According to AAA, the average price of gas in the US is now $3.66 per gallon, but the deep declines have not yet been factored into the equation. That will happen over the next two to three weeks.
Gold was the big winner of the day, soaring $61.30, to $1,713.20, another all-time record price as investors, companies, nations, central banks and housewives scrambled to find reliable assets. Silver, still constrained by high margin requirements, gained $1.17, to $39.38. Silver is almost certainly the most under-appreciated asset in the world, though that will soon change. As the crisis escalates and governments make more and more bad moves, the precious metals will skyrocket to unforeseen heights.
The banking sector took it on the chin, but none more than Bank of America (BAC) which is on the verge of a well-deserved bankruptcy. shares of the nation's largest banks fell 20% on the day, losing 1.66, to close at 6.51. Just a few weeks ago, BofA was trading at a price nearly double that. The unfolding mortgage crisis, brought about by Bank of America's 2008 purchase of Countrywide, has become a fatal blow to the once proud institution.
David Tepper's Appaloosa Management Fund has reportedly sold its stake in Bank of America (BAC) and Wells Fargo (WFC), while significantly trimming Citigroup (C) from the portfolio.
Adding to the irony, AIG has sued Bank of America for $10 billion, citing "massive fraud" in its representations of mortgage-backed securities (MBS).
However, Citigroup analyst Keith Horowitz takes the booby prize for reiterating a "buy" rating on Bank of America shares this morning. Timing is not one of Mr. Horowitz's strong points, it would appear.
On top of all this, the FOMC of the Federal Reserve will issue a policy statement Tuesday at 2:00 pm EDT, followed by a news conference from Chairman Ben Bernanke. That alone should equate to another 300-point decline in the Dow.
For those with a morbid curiosity, check out the slideshow of the 10 worst days on the Dow, already outdated, as August 8, 2011, will go down in the history books as the 6th worst day for the blue chip index of all time.
Henry Blodgett and Aaron Task have a nice summation of the situation in the video below:
Over the weekend, much was made of the downgrade, as the Obama hit the airwaves with gusto, rebuking the call from the ratings agency. Fitch and Moody's had previously reaffirmed the US debt as AAA, the highest possible sovereign bond rating, but S&P would not back down, and the downgrade remained in effect.
What S&P reasoned was that the US government did not take the necessary steps - in its theatrical production of waiting until the last possible moment to pass a debt ceiling increase - to address the structural problems facing it. S&P rightly concluded that US debt levels were and continue to rise and discretionary spending levels have not been controlled. Therefore, they downgraded the nation's debt and threaten to do it a second time, sometime around November, if the 12-member congressional committee charged with dealing with long term debt does not come up with actionable, concrete, debt reduction proposals.
As markets opened on Monday, the effects of a global panic were evident, especially on the heels of a 10% decline in US indices over the past two weeks and Thursday's dramatic sell-off of over four per cent on major markets.
First, it was the Asian markets which tanked at their various openings and continued through the day to sell off anywhere from 1.5 to 4.0%. Next up was Europe, where the crisis over bailing out Italy and Spain have reached a point of no return. EU officials stressed that they would be in the market with the ECB, buying up italian and Spanish debt, but that did little to change the outlook of investors, which had turned sour over the past fortnight.
Appetite for risk was at a low, as European markets suffered steep losses. England's FTSE was the best of the lot, down only 2.62%. France's CAC-40 took a 4.68% loss and Germany's DAX shed 5.02%. Other Euro-zone markets fell between 3.76 and 6.11%.
By the time US markets were to open, index futures had been hammered down to presage an inauspicious opening. Within minutes of the bell, the Dow was down more than 200 points, the S&P had taken a 25-point hit and the NASDAQ fell more than 70 points, though those declines were nothing compared to the carnage that lay ahead.
By the end of the day, after a minor rally in the first 15 minutes of the final hour, stocks were trading at or near their lows, with the Dow Jones Industrials surrendering the 6th-worst performance in its history. While the Dow suffered a 5.5% decline on the day, the other indices were actually much worse, with the NYSE Composite topping them all, coming home with a 7.05% loss.
It wasn't just the debt downgrade that spurred the sell-off. Conditions in Europe have worsened significantly over the past few months, to the point that European Union officials are without reasonable solutions to the debt contagion spreading across the region. While the ECB has managed to prop up smaller countries like Greece, Portugal and Ireland, Italy especially poses a much larger concern.
All the European leaders could muster on Monday was a terse statement which offered no concrete proposals but plenty of assurances, which was be roundly written off by markets. To wit:
We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growthThat was the extent of the communique from the magnificent seven of the United States, Canada, Great Britain, France, Germany, Italy and Japan.
The irony is that one of them, Italy, has been the source of the most recent anguish.
Essentially, the funds available to the ECB fall short of meeting the debt purchases needed to save Italy and Spain. Europe will have to engage in quantitative easing, as was the case in the United States over the past two years, to stave off defaults and the threat of a cascading crisis which would envelop all of Europe and likely doom the 11-year-old Euro currency.
If the EU decides upon cheapening the currency - which it almost certainly will do - theknock-on effect will be to sink the Euro, probably close to parity with the US Dollar. As the dollar would grow in strength, commodities, particularly oil and gas for auto use, would plummet, a boon to US drivers and to the general economy. Costs of imports would also decline, on a relative basis, giving American consumers more purchasing power.
Within the same scenario, however, are pitfalls for the global manufacturers and companies that populate the S&P 500, NASDAQ and the Dow. A stronger US Dollar would make them less competitive in foreign markets, shrinking margins and thus, profits. Thus, the great selling rush today was more of a statement on the global condition rather than that of the debt downgrade, which, when all is said and done, won't amount to a hill of beans. In fact, treasuries were up sharply today, as yields fell to their lowest levels in over a year.
The benchmark 10-year note fell 25 basis points in just one day, from 2.56% on Friday to 2.31% on Monday. The 30-year bond fell 19 basis points, to 3.65% as the yield curve continues to flatten. Money is going out of stocks and into bonds, and whether they're AAA or AA+ doesn't matter to those seeking a safe haven. The ridiculously low yields offered are a moot point. As one trader put it, "Investors aren't looking at making money; they're more concerned with getting their money back."
And, therein, the next crisis, in bonds, especially if the US government doesn't get its house in order soon. Higher rates and another downgrade could trigger a default of impossible proportions as the US would be unable to roll over its debt and fund itself without incurring higher borrowing costs. Ditto for Europe. Rising interest rates signals the end game for fiat currencies globally and back to some form of honest money, most likely on a gold standard.
The market events of the past few days, in which the major indices lost more than 10% are not the end of the crisis, but rather the beginning of the end of a great generational bear market that began in 2007 and will eviscerate all risk assets until nobody wants to hold anything any more.
Markets have entered the final stages of the third leg down. QE 1 and 2 staved off the collapse, but there will be no bailouts this time around. It's every man, woman, child and company for itself. There will be some winners, but mostly there will be losers, anguish, agony and the disappearance of great hordes of wealth.
Dow 10,809.85, -634.76 (5.55%)
NASDAQ 2,357.69, -174.72 (6.90%)
S&P 500 1,119.46, -79.92 (6.66%)
NYSE Composite 6,895.97, -523.10 (7.05%)
The internals were equally as stunning as the headline numbers. Declining issues decimated advancers, 6553-375, a ratio of 17.5:1. It was truly one of the deepest, broadest declines in stock market history. On the NASDAQ, there were four (4) new highs next to 725 new lows. The NYSE had just three (3) new highs, but 1292 stocks making new 52-week lows. The combined total of seven (7) new highs and 2017 new lows rivals or exceeds the figures presented during the fallout of 2008-2009.
Volume was at the highest levels of the year, exceeding that of last Thursday, which was then the high volume day of the year. Investors aren't just scared, they are trampling each other running through the exits at breakneck speed.
NASDAQ Volume 4,002,857,250
NYSE Volume 11,046,384,000
Crude oil futures were pounded again, as the front-month contract on WTI crude fell $5.57, to $81.31. Gas prices will soon fall below $3.50 - and possibly below $3.00 - a gallon as current supplies are depleted and replaced by less expensive distillates. According to AAA, the average price of gas in the US is now $3.66 per gallon, but the deep declines have not yet been factored into the equation. That will happen over the next two to three weeks.
Gold was the big winner of the day, soaring $61.30, to $1,713.20, another all-time record price as investors, companies, nations, central banks and housewives scrambled to find reliable assets. Silver, still constrained by high margin requirements, gained $1.17, to $39.38. Silver is almost certainly the most under-appreciated asset in the world, though that will soon change. As the crisis escalates and governments make more and more bad moves, the precious metals will skyrocket to unforeseen heights.
The banking sector took it on the chin, but none more than Bank of America (BAC) which is on the verge of a well-deserved bankruptcy. shares of the nation's largest banks fell 20% on the day, losing 1.66, to close at 6.51. Just a few weeks ago, BofA was trading at a price nearly double that. The unfolding mortgage crisis, brought about by Bank of America's 2008 purchase of Countrywide, has become a fatal blow to the once proud institution.
David Tepper's Appaloosa Management Fund has reportedly sold its stake in Bank of America (BAC) and Wells Fargo (WFC), while significantly trimming Citigroup (C) from the portfolio.
Adding to the irony, AIG has sued Bank of America for $10 billion, citing "massive fraud" in its representations of mortgage-backed securities (MBS).
However, Citigroup analyst Keith Horowitz takes the booby prize for reiterating a "buy" rating on Bank of America shares this morning. Timing is not one of Mr. Horowitz's strong points, it would appear.
On top of all this, the FOMC of the Federal Reserve will issue a policy statement Tuesday at 2:00 pm EDT, followed by a news conference from Chairman Ben Bernanke. That alone should equate to another 300-point decline in the Dow.
For those with a morbid curiosity, check out the slideshow of the 10 worst days on the Dow, already outdated, as August 8, 2011, will go down in the history books as the 6th worst day for the blue chip index of all time.
Henry Blodgett and Aaron Task have a nice summation of the situation in the video below:
Wednesday, August 3, 2011
Stocks Finally Post Gains After 7-8 Days of Losses
Sooner or later there was going to be some kind of rally and today was it, even though it wasn't anything to write home about.
After the Dow had been down for eight straight sessions and the S&P down seven in a row, the early morning trade looked to be more of the same with the major indices dropping to session lows around 10:45 am EDT. The Dow was down more than 160 points, officially touching down at 11,700, when the turnaround began. The S&P was sporting losses of nearly 20 points before heading higher and closing at the highs of the day.
It's not as though anything had changed at all. Italy is on the brink of default, following in the footsteps of neighboring EU nations, Ireland, Portugal and Greece. European-based banks are supposedly frozen with terror having exceeded all prudent boundaries for lending to highly-indebted nations.
And, here in the US, no change will come to the current jobs or housing situation as the congress has already embarked on a month-long vacation, after, of course, taking a few victory laps for their last-minute daring-do on raising the debt ceiling and putting forth a measure that cuts somewhere between $20 and $25 billion from the budget in 2012, less than 1/10th of one per cent of the entire budget, or, quite literally, a drop in the budget bucket.
The only thing moving stocks today - besides the obvious influence of the PPT - was the extremely oversold condition of the markets. The Dow is down 828 points since just July 21, exactly 10 trading sessions. There's a very realistic chance that this was only a knee-jerk reaction rally, based entirely upon the notion that stocks are cheap relative to where they were trading two weeks ago.
Dow 11,896.44, -29.82 (0.25%)
NASDAQ 2,693.07, -23.83 (0.89%)
S&P 500 1,260.34, -6.29 (0.50%)
NYSE Composite 7,853.20, -21.22 (0.27%)
Advancing issues finally took the edge over losers, 3737-2897. The NASDAQ posted 28 new highs, against 204 new lows, while the NYSE had just 14 new highs and 275 new lows, blowing the combined total up to 42 new highs and 479 new lows. This high gap indicates that stocks are on the verge of a severe, long-term breakdown, despite today's small gains. Volume was strong, but the buying seemed to be out of desperation and directed at short-term profit rather than long-term investment.
NASDAQ Volume 2,637,190,000
NYSE Volume 6,487,507,000
Two pieces of jobs-related data showed that the jobs market is still in quite the dodgy condition. The firm of Challenger, Gray and Christmas released their monthly survey of planned layoffs, which showed employers announcing 66,414 planned job cuts in July, up 60.3 percent from 41,432 in June. Meanwhile, the ADP monthly private payroll survey surged to 114,000 added jobs in July, a positive sign for Friday's non-farm payroll numbers from the BLS.
Commodities continued along their bifurcated path, with oil down $1.86, to $91.93, while gold surged to another record at $1,666.30, up a whopping $21.80 on the day. Silver rose $1.67, a gain of more than 4%, to $41.76, the highest close since May.
All of this sets up for an exciting end to the week. Thursday's initial unemployment claims will show the way on Thursday, while the non-farm payroll report - expected to show a gain of 100,000 jobs for July - should set the tone on Friday.
After the Dow had been down for eight straight sessions and the S&P down seven in a row, the early morning trade looked to be more of the same with the major indices dropping to session lows around 10:45 am EDT. The Dow was down more than 160 points, officially touching down at 11,700, when the turnaround began. The S&P was sporting losses of nearly 20 points before heading higher and closing at the highs of the day.
It's not as though anything had changed at all. Italy is on the brink of default, following in the footsteps of neighboring EU nations, Ireland, Portugal and Greece. European-based banks are supposedly frozen with terror having exceeded all prudent boundaries for lending to highly-indebted nations.
And, here in the US, no change will come to the current jobs or housing situation as the congress has already embarked on a month-long vacation, after, of course, taking a few victory laps for their last-minute daring-do on raising the debt ceiling and putting forth a measure that cuts somewhere between $20 and $25 billion from the budget in 2012, less than 1/10th of one per cent of the entire budget, or, quite literally, a drop in the budget bucket.
The only thing moving stocks today - besides the obvious influence of the PPT - was the extremely oversold condition of the markets. The Dow is down 828 points since just July 21, exactly 10 trading sessions. There's a very realistic chance that this was only a knee-jerk reaction rally, based entirely upon the notion that stocks are cheap relative to where they were trading two weeks ago.
Dow 11,896.44, -29.82 (0.25%)
NASDAQ 2,693.07, -23.83 (0.89%)
S&P 500 1,260.34, -6.29 (0.50%)
NYSE Composite 7,853.20, -21.22 (0.27%)
Advancing issues finally took the edge over losers, 3737-2897. The NASDAQ posted 28 new highs, against 204 new lows, while the NYSE had just 14 new highs and 275 new lows, blowing the combined total up to 42 new highs and 479 new lows. This high gap indicates that stocks are on the verge of a severe, long-term breakdown, despite today's small gains. Volume was strong, but the buying seemed to be out of desperation and directed at short-term profit rather than long-term investment.
NASDAQ Volume 2,637,190,000
NYSE Volume 6,487,507,000
Two pieces of jobs-related data showed that the jobs market is still in quite the dodgy condition. The firm of Challenger, Gray and Christmas released their monthly survey of planned layoffs, which showed employers announcing 66,414 planned job cuts in July, up 60.3 percent from 41,432 in June. Meanwhile, the ADP monthly private payroll survey surged to 114,000 added jobs in July, a positive sign for Friday's non-farm payroll numbers from the BLS.
Commodities continued along their bifurcated path, with oil down $1.86, to $91.93, while gold surged to another record at $1,666.30, up a whopping $21.80 on the day. Silver rose $1.67, a gain of more than 4%, to $41.76, the highest close since May.
All of this sets up for an exciting end to the week. Thursday's initial unemployment claims will show the way on Thursday, while the non-farm payroll report - expected to show a gain of 100,000 jobs for July - should set the tone on Friday.
Thursday, July 14, 2011
Italy Settles Down, But Stocks Slide Again; Google Amazes
With the continuing debt crisis in Europe taking an unusual day of rest, US stocks opened on the upside but could not maintain momentum as stalled talks over the US debt ceiling weighed heavily.
It's almost a certainty that the government clowns in Washington will come to a compromise solution similar to the budget deal in May - too little, almost too late, and sure to not address the most pressing US issues, those being housing, jobs and our very own burgeoning debt crisis.
With both sides still at odds over the scope and details, the nation is paralyzed by indecision, regulations and a tax policy that has - like the rest of the federal government - gone off the rails.
In Italy, austerity measures were passed, allowing the Italian government to issue much-needed 5-and-15-year bonds to finance continuing operations. The plan has many facets, and should (though it won't) serve as a blueprint for US measures.
That did not, however, help traders in US equities, which has this week given back much of the gains made over last week's spectacular five-day rally. Markets hate uncertainty, and even in the midst of earnings season, US stocks are very much a mixed bag of tricks, teetering on the brink of collapse.
It was a fine day for Google (GOOG), though, as the giant internet search and service company boasted profits well above Street estimates. Reporting after the closing bell, the company reported $6.92 billion in net revenue in the second quarter of 2011 and non-GAAP earnings per share of $8.74 on expectations of $6.54 billion in revenue and earnings per share of $7.87. The stock was trading up 12% in after-hours, up more than 63 points.
Dow 12,437.12, -54.49 (0.44%)
NASDAQ 2,762.67, -34.25 (1.22%)
S&P 500 1,308.87, -8.85 (0.67%)
NYSE Composite 8,191.13, -55.67 (0.68%)
Declining issues beat back advancers, 5019-1495. Though the headline numbers were hardly spectacular, except for the NASDAQ, which lost 1.22% on the day, selling was broad-based. NASDAQ stocks showed 56 new highs and 35 new lows, while the NYSE posted 46 new highs and 45 new lows. The combined total spread of 102 new highs and 80 new lows continues to deteriorate. Volume on the day was relatively solid, though that should be bearish for investors.
NASDAQ Volume 1,923,346,875
NYSE Volume 4,298,657,500
Economic data was mixed and uninspiring. Initial unemployment claims dropped to 405,000, though it was the 16th consecutive week above 400,000, another non-encouraging sign. Retail sales for June came in at plus 0.1%, and the PPI actually fell 0.4%, though the core number, which excludes food and energy, rose 0.3%. Business inventories were up 1.0% in May, as companies cited slack demand.
Commodities were also mixed. WTI crude oil fell sharply, down $2.36, to $95.69. Gold, though, set another new record high, gaining $3.40, to $1,589.30. Silver added 54 cents, gaining to $38.69 per ounce.
With the week drawing to a quick conclusion, Friday's data features the June CPI reading, the Michigan survey of consumer confidence and earnings from Citigroup (C).
It's almost a certainty that the government clowns in Washington will come to a compromise solution similar to the budget deal in May - too little, almost too late, and sure to not address the most pressing US issues, those being housing, jobs and our very own burgeoning debt crisis.
With both sides still at odds over the scope and details, the nation is paralyzed by indecision, regulations and a tax policy that has - like the rest of the federal government - gone off the rails.
In Italy, austerity measures were passed, allowing the Italian government to issue much-needed 5-and-15-year bonds to finance continuing operations. The plan has many facets, and should (though it won't) serve as a blueprint for US measures.
That did not, however, help traders in US equities, which has this week given back much of the gains made over last week's spectacular five-day rally. Markets hate uncertainty, and even in the midst of earnings season, US stocks are very much a mixed bag of tricks, teetering on the brink of collapse.
It was a fine day for Google (GOOG), though, as the giant internet search and service company boasted profits well above Street estimates. Reporting after the closing bell, the company reported $6.92 billion in net revenue in the second quarter of 2011 and non-GAAP earnings per share of $8.74 on expectations of $6.54 billion in revenue and earnings per share of $7.87. The stock was trading up 12% in after-hours, up more than 63 points.
Dow 12,437.12, -54.49 (0.44%)
NASDAQ 2,762.67, -34.25 (1.22%)
S&P 500 1,308.87, -8.85 (0.67%)
NYSE Composite 8,191.13, -55.67 (0.68%)
Declining issues beat back advancers, 5019-1495. Though the headline numbers were hardly spectacular, except for the NASDAQ, which lost 1.22% on the day, selling was broad-based. NASDAQ stocks showed 56 new highs and 35 new lows, while the NYSE posted 46 new highs and 45 new lows. The combined total spread of 102 new highs and 80 new lows continues to deteriorate. Volume on the day was relatively solid, though that should be bearish for investors.
NASDAQ Volume 1,923,346,875
NYSE Volume 4,298,657,500
Economic data was mixed and uninspiring. Initial unemployment claims dropped to 405,000, though it was the 16th consecutive week above 400,000, another non-encouraging sign. Retail sales for June came in at plus 0.1%, and the PPI actually fell 0.4%, though the core number, which excludes food and energy, rose 0.3%. Business inventories were up 1.0% in May, as companies cited slack demand.
Commodities were also mixed. WTI crude oil fell sharply, down $2.36, to $95.69. Gold, though, set another new record high, gaining $3.40, to $1,589.30. Silver added 54 cents, gaining to $38.69 per ounce.
With the week drawing to a quick conclusion, Friday's data features the June CPI reading, the Michigan survey of consumer confidence and earnings from Citigroup (C).
Tuesday, July 12, 2011
No Rest for the Wicked; Stocks Fall Again
Conditions in Europe have not really changed much since yesterday's news of a crisis in Italy's continuing funding, except that Greece - before even receiving all of its most recent bailout money - already has put out its hand for more.
The word for the deepening debt crisis in Europe most-bantered about these days is contagion, the likelihood that issues of underfunding and failing to meet obligations by sovereign governments will spread. Here's a tip: contagion is already in effect. A few years ago Iceland defaulted on debt, refused to take austerity and cash from the IMF and is well on its way to a newfound prosperity without the rigors of international finance and fractional reserve banking.
However, on the continent, Ireland, Greece, and now Italy are suffering strains of the same disease - that of over-promising (mostly on government employee pensions and benefits) and failing to pull in enough revenue in taxes, fees and levies to pay out promptly and graciously. Portugal and Spain are not far behind, and the tiny nation of Belarus has already defaulted and devalued its currency. Belgium is also a basket case.
Contagion is here and its happening now.
What this really means is two things: 1) The European Union is in its death throes after just 11 years of existence, and, 2) Many of the largest banks in Europe are nearing the end of their government-supplied rope and will hang.
And maybe there's a third link to the disaster that is modern Europe: people will cheat, steal, riot, and eventually revolt. Forget collecting taxes. Government officials will be happy if they escape with the clothes on their backs and a few thousand Euros to see them safely out of their respective countries. Whether or not the contagion has enough virulence to travel across the Atlantic Ocean and infect the United States is a matter for politicians and their media lackeys, because the United States is the world's largest debtor with a total debt (on the books, not including the unfunded liabilities of Social Security, Medicade and Medicare) well beyond its annual GDP, making the United States the worst of all nations with a debt-to-GDP ration of over 100%.
Not only is the USA a basket case gone full retard, the debt is growing larger every day, and every day the Obama administration and the congress dithers over raising the debt ceiling (they all agree that the US cannot default), the situation worsens. We are in the midst of the most enthralling and frightening economic condition of all time. Many, many grave errors have occured over the past thirty years, not the least of which was the hollowing out of our industrial base which provided good jobs for millions of Americans. Those jobs went to Mexico and then to Southeast Asia and China. They are gone, many for good, and there is no way to bring them back soon.
It brings up an interesting proposition, supposing that the mindless cretins we call our "leaders" in Washington haggle and argue right up to the August 2nd deadline. Who gets stiffed in the case of a default? Would the US actually stop paying its military? Social Security recipients? Food stamp mouth-breathers? How about China?
There are no good answers, only bad and horrible conclusions. The answer is China. Stiff the Chinese on their $1.8 billion or so in bond holdings and go to war, as war solves all problems in a way. Both countries get decimated in a protracted struggle or blow each other and the rest of the Northern Hemisphere away in a nuclear holocaust. The first way is slow, painful and regrettable. The second is quick and completely devastating, and since neither side would likely opt for MAD (mutually assured destruction), the first choice is rather obvious.
Will it happen? Hopefully not. And there's the very good chance that the politicians, controlled by the banking and industrialist interests, would opt on stiffing seniors. What the heck, they're old and going to die soon anyway, why not just accelerate the process. And wipe out the food stamp class as well. They contribute nothing, so starve them to death. Nice scenarios, no?
Whatever happens over the next few weeks, nothing is really going to be solved. Even if the government officials decide on a compromise of $3 trillion in budget cuts over ten years, the annual deficit will probably be close to a trillion dollars each and every year. They're only cutting $300 billion a year out of the budget. It's kind of like using a sponge to empty a bucket. It works, but not very well. By 2022, the national debt will have grown to over $24 trillion, and that's if they work out a compromise that cuts some of the deficit and tax revenues remain steady for the next ten years, two possibilities that are not very good bets.
In other words, you, me, your kids, their friends, your neighbors and their neighbors are royally screwed unless we begin taking off the rose-colored shades and rid ourselves of the infliction known as normalcy bias pretty soon. Normal is going away. Austerity, poverty and desperation will become rampant, as they're already spreading across the land and are in place in Europe.
Not to sound like the whack-job on the street corner, shouting, "prepare or die," it is time to hunker down and get serious about the issues plaguing the globe, most of which start and end at your local bank branch, which is probably a Chase, Bank of America or Wells Fargo. They're the problem, have been the problem and will continue to be the problem until they are forced to meet their realities and be broken up, though that will not happen. We're beyond that, and, with the politicians thinking more about elections in 2012 rather than whether or not there will be a nation and an engaged electorate at that time, the chances of complete systemic breakdown are greater than they were in 2008, when the unthinkable almost happened. This time, there will be no bailout, because it will be the government going under.
Whether that's a good thing or not will be for historians to judge, but one thing's for certain: we cannot continue along this path much further without some kind of catastrophe. It's coming faster than anyone can imagine.
As for the markets, the major indices bounced along the flat line for most of the session, with the NASDAQ (where the highest risk stocks reside) taking the worst of it. There was a slight bounce after the Fed released the minutes from the last FOMC meeting, in which it was revealed that the Fed governors were torn between more stimulus and raising rates. There cannot be a greater divide of opinion, which, at such a critical time, is a very, very bad omen and portends more mistakes by the Fed straight ahead.
That bounce lasted only a few minutes as stocks fell to their worst levels of the day into the close. It was truly ugly and sets up some very dicey trading for the remainder of the week. Even as earnings are rolling out from a variety of companies, interpreting economic data is going to be a challenge. PPI is out on Thursday along with initial unemployment claims, and Friday, a veritable stew of data comes forth: CPI, Industrial Production, Capacity Utilization, the Empire Index for NY state and the Michigan gauge of consumer sentiment. Things could get very messy down on the trading floors. Good time to stock up on tissues and handkerchiefs because there's likely to be a bit of sweating and some crying before the week is out.
Dow 12,446.88, -58.88 (0.47%)
NASDAQ 2,781.91, -20.71 (0.74%)
S&P 500 1,313.64, -5.85 (0.44%)
NYSE Composite 8,192.75, -35.98 (0.44%)
Declining issues outpaced advancers, 3806-2726. There were 56 new highs and 37 new lows on the NASDAQ. The NYSE showed 46 new highs and 37 new lows. Combined, there were 102 new highs and 74 new lows. Not much margin for error as the tide seems to be turning very bearish, very quickly. Today's volume was a bit perky, with much of it occurring in the final two hours' rush for the exits, another disturbing sign.
NASDAQ Volume 2,028,997,125
NYSE Volume 4,215,946,500
For those of us who drive combustion engine vehicles, another knife in the back from our friendly oil producers, who drove the price of WTI crude up another $2.28, to $97.43. Gold, however, made a new all-time high at $1,562.30, gaining $16.20 on the day. Silver added 35 cents to $36.10.
With gold and silver rising, stocks falling, and, by the way, the 10-year note down to a yield of 2.87% - from 3.12% a week ago - all signs point to a very rough patch dead ahead. The flattening of the yield curve is happening at an unprecedentedly rapid pace. The clowns in Washington better come to a deal soon, like tomorrow, because financial armageddon awaits. The same goes for the millionaire players and billionaire owners of the NFL. People are tired of gamesmanship and waiting.
Now is the time for decisive action.
The word for the deepening debt crisis in Europe most-bantered about these days is contagion, the likelihood that issues of underfunding and failing to meet obligations by sovereign governments will spread. Here's a tip: contagion is already in effect. A few years ago Iceland defaulted on debt, refused to take austerity and cash from the IMF and is well on its way to a newfound prosperity without the rigors of international finance and fractional reserve banking.
However, on the continent, Ireland, Greece, and now Italy are suffering strains of the same disease - that of over-promising (mostly on government employee pensions and benefits) and failing to pull in enough revenue in taxes, fees and levies to pay out promptly and graciously. Portugal and Spain are not far behind, and the tiny nation of Belarus has already defaulted and devalued its currency. Belgium is also a basket case.
Contagion is here and its happening now.
What this really means is two things: 1) The European Union is in its death throes after just 11 years of existence, and, 2) Many of the largest banks in Europe are nearing the end of their government-supplied rope and will hang.
And maybe there's a third link to the disaster that is modern Europe: people will cheat, steal, riot, and eventually revolt. Forget collecting taxes. Government officials will be happy if they escape with the clothes on their backs and a few thousand Euros to see them safely out of their respective countries. Whether or not the contagion has enough virulence to travel across the Atlantic Ocean and infect the United States is a matter for politicians and their media lackeys, because the United States is the world's largest debtor with a total debt (on the books, not including the unfunded liabilities of Social Security, Medicade and Medicare) well beyond its annual GDP, making the United States the worst of all nations with a debt-to-GDP ration of over 100%.
Not only is the USA a basket case gone full retard, the debt is growing larger every day, and every day the Obama administration and the congress dithers over raising the debt ceiling (they all agree that the US cannot default), the situation worsens. We are in the midst of the most enthralling and frightening economic condition of all time. Many, many grave errors have occured over the past thirty years, not the least of which was the hollowing out of our industrial base which provided good jobs for millions of Americans. Those jobs went to Mexico and then to Southeast Asia and China. They are gone, many for good, and there is no way to bring them back soon.
It brings up an interesting proposition, supposing that the mindless cretins we call our "leaders" in Washington haggle and argue right up to the August 2nd deadline. Who gets stiffed in the case of a default? Would the US actually stop paying its military? Social Security recipients? Food stamp mouth-breathers? How about China?
There are no good answers, only bad and horrible conclusions. The answer is China. Stiff the Chinese on their $1.8 billion or so in bond holdings and go to war, as war solves all problems in a way. Both countries get decimated in a protracted struggle or blow each other and the rest of the Northern Hemisphere away in a nuclear holocaust. The first way is slow, painful and regrettable. The second is quick and completely devastating, and since neither side would likely opt for MAD (mutually assured destruction), the first choice is rather obvious.
Will it happen? Hopefully not. And there's the very good chance that the politicians, controlled by the banking and industrialist interests, would opt on stiffing seniors. What the heck, they're old and going to die soon anyway, why not just accelerate the process. And wipe out the food stamp class as well. They contribute nothing, so starve them to death. Nice scenarios, no?
Whatever happens over the next few weeks, nothing is really going to be solved. Even if the government officials decide on a compromise of $3 trillion in budget cuts over ten years, the annual deficit will probably be close to a trillion dollars each and every year. They're only cutting $300 billion a year out of the budget. It's kind of like using a sponge to empty a bucket. It works, but not very well. By 2022, the national debt will have grown to over $24 trillion, and that's if they work out a compromise that cuts some of the deficit and tax revenues remain steady for the next ten years, two possibilities that are not very good bets.
In other words, you, me, your kids, their friends, your neighbors and their neighbors are royally screwed unless we begin taking off the rose-colored shades and rid ourselves of the infliction known as normalcy bias pretty soon. Normal is going away. Austerity, poverty and desperation will become rampant, as they're already spreading across the land and are in place in Europe.
Not to sound like the whack-job on the street corner, shouting, "prepare or die," it is time to hunker down and get serious about the issues plaguing the globe, most of which start and end at your local bank branch, which is probably a Chase, Bank of America or Wells Fargo. They're the problem, have been the problem and will continue to be the problem until they are forced to meet their realities and be broken up, though that will not happen. We're beyond that, and, with the politicians thinking more about elections in 2012 rather than whether or not there will be a nation and an engaged electorate at that time, the chances of complete systemic breakdown are greater than they were in 2008, when the unthinkable almost happened. This time, there will be no bailout, because it will be the government going under.
Whether that's a good thing or not will be for historians to judge, but one thing's for certain: we cannot continue along this path much further without some kind of catastrophe. It's coming faster than anyone can imagine.
As for the markets, the major indices bounced along the flat line for most of the session, with the NASDAQ (where the highest risk stocks reside) taking the worst of it. There was a slight bounce after the Fed released the minutes from the last FOMC meeting, in which it was revealed that the Fed governors were torn between more stimulus and raising rates. There cannot be a greater divide of opinion, which, at such a critical time, is a very, very bad omen and portends more mistakes by the Fed straight ahead.
That bounce lasted only a few minutes as stocks fell to their worst levels of the day into the close. It was truly ugly and sets up some very dicey trading for the remainder of the week. Even as earnings are rolling out from a variety of companies, interpreting economic data is going to be a challenge. PPI is out on Thursday along with initial unemployment claims, and Friday, a veritable stew of data comes forth: CPI, Industrial Production, Capacity Utilization, the Empire Index for NY state and the Michigan gauge of consumer sentiment. Things could get very messy down on the trading floors. Good time to stock up on tissues and handkerchiefs because there's likely to be a bit of sweating and some crying before the week is out.
Dow 12,446.88, -58.88 (0.47%)
NASDAQ 2,781.91, -20.71 (0.74%)
S&P 500 1,313.64, -5.85 (0.44%)
NYSE Composite 8,192.75, -35.98 (0.44%)
Declining issues outpaced advancers, 3806-2726. There were 56 new highs and 37 new lows on the NASDAQ. The NYSE showed 46 new highs and 37 new lows. Combined, there were 102 new highs and 74 new lows. Not much margin for error as the tide seems to be turning very bearish, very quickly. Today's volume was a bit perky, with much of it occurring in the final two hours' rush for the exits, another disturbing sign.
NASDAQ Volume 2,028,997,125
NYSE Volume 4,215,946,500
For those of us who drive combustion engine vehicles, another knife in the back from our friendly oil producers, who drove the price of WTI crude up another $2.28, to $97.43. Gold, however, made a new all-time high at $1,562.30, gaining $16.20 on the day. Silver added 35 cents to $36.10.
With gold and silver rising, stocks falling, and, by the way, the 10-year note down to a yield of 2.87% - from 3.12% a week ago - all signs point to a very rough patch dead ahead. The flattening of the yield curve is happening at an unprecedentedly rapid pace. The clowns in Washington better come to a deal soon, like tomorrow, because financial armageddon awaits. The same goes for the millionaire players and billionaire owners of the NFL. People are tired of gamesmanship and waiting.
Now is the time for decisive action.
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