While the world awaits an edict from the high halls of the Federal Reserve on Wednesday, when the FOMC concludes their two day meeting and announces no change in the federal funds rate, investors appear increasingly nervous, not over the expected nothingness dictum from the Fed, but from the overall malaise that has captured markets, otherwise known as stagnation.
What capitalists fear more than anything else is an economy going backwards. What we have today is an economy at stall speed, needing only the slightest of nudges to fall into recession. The US is not alone in these fears; most of Europe is teetering on the brink of a receding growth curve, and this time, there is not enough left of policy maneuvers by central bankers in the EU, Japan, China, or anywhere else in the developed or underdeveloped world, should a recession occur, to keep it from becoming a global depression.
Lessons learned from the near-collapse of the global economy in 2008-09 are that stimuli only is a short-term fix, QE is a waste of money, and lower interest rates do not stir a dormant economy. In essence, the world's central bankers are out of ideas and have been for some time. They are, and have been, pushing on a string, kicking a can down a road, keeping their fingers crossed, and hoping for an economic miracle all at the same time.
Nothing has worked. Nothing will work... until the economies of both the developed world and underdeveloped world purge themselves of debt, stop trying to implement policies that clearly do not work, go back to money backed by something other than empty promises, and stop allowing governments to run up enormous deficits serviced by ever-lower interest payments (debasing the currency all the way along).
Those are just for starters. The world finds itself on the cusp of economic, societal and philosophical revolution. Ordinary people are fed up with government, the media, and various other institutions supposedly in place to provide for the public weal. They are tired of lies, cheating at the highest levels, institutional regulatory strangulation, higher and higher taxes, and an endless stream of regulations that have stripped away their liberties and much of what some may have previously called the "good life."
The few people currently in power are only interested in keeping and maintaining their control over the populations and their power and positions. They are being seriously questioned by populations who feel betrayed, unappreciated and desperate for relief from the very governments and institutions which are supposed to improve their lives, not impoverish them.
Therefore, stocks continue to wallow. And though today's declines are not noteworthy in and of themselves, there's a growing chorus of discontent that continues to rise.
The policies and practices of the past 20 or 30 years cannot continue indefinitely.
The time is coming for major change.
Today's Dippity-Do:
S&P 500: 2,075.32, -3.74 (0.18%)
Dow: 17,674.82, -57.66 (0.33%)
NASDAQ: 4,843.55, -4.89 (0.10%)
Crude Oil 48.56 -0.65% Gold 1,287.90 +0.08% EUR/USD 1.1208 -0.71% 10-Yr Bond 1.61 -0.31% Corn 435.25 +1.22% Copper 2.04 -0.46% Silver 17.40 -0.25% Natural Gas 2.89 -0.86% Russell 2000 1,147.09 -0.31% VIX 20.54 -2.05% BATS 1000 20,677.17 0.00% GBP/USD 1.4109 -0.74% USD/JPY 106.1300 -0.03%
Showing posts with label Japan. Show all posts
Showing posts with label Japan. Show all posts
Tuesday, June 14, 2016
Friday, June 10, 2016
As Expected, Dow Falls Back Into Sub-18,000 Range
Editor's Note: Apologies are in order for the tardiness of the extended post, but the publisher has been trying to cope with an unfair labor situation and other troublesome issues. Those are now past. This blog shall forge ahead.
The week ended on a down note, as stocks fell across the board on the US indices.
While the Dow was the only one of the three major averages to close out the week with a gain, it still did not manage a close above the now-legendary 18,000 mark. Likewise, the S&P closed below 2100 and the NASDAQ slid further into sub-5000 numbers.
More institutional voices added to the chorus of caution as the week wore on, including Bill Gross, George Soros and Stan Drunkenmiller. Global condition stubbornly refuse to improve, despite vain attempts at stimulation by central banks, governments and the financial media.
US bond yields fell across the spectrum, with the curve flattening. The 10-year is at levels not seen in months, while globally, sub-zero percent returns have expanded to over $10 trillion in the aggregate.
Clearly, what the markets need is a cleansing of excessive and misplaced debt, something the authorities have managed to avoid for the past seven years and counting. The latest bailout comes via the US House of Representatives, putting US taxpayers on the hook for a significant portion of Puerto Rico's unpayable obligations.
The House overwhelmingly passed a package that would establish a financial control board made up of more bureaucrats, those indirectly responsible for the various aspects of the global malaise. The measure is nothing more than further can-kicking, pushing the debt and problems further out rather than addressing the underlying problems.
None of what governments do, in terms of rescue packages or stimulus measures, has made or will make any difference whatsoever. They simply borrow more, adding to the national debt, which, closing in on $20 trillion in the US, will never be repaid.
The sooner the farce of ZIRP, NIRP, QE, debt spending, and global free trade are foreclosed upon, the sooner the global economies can begin functioning as centers of capitalism.
Hoping for change will not bring change. Usually, change requires more radical measures. Globally, politicians all appear to be built from the same model, caring only to keep their positions of power and persuasion. That has to change, though real change begins at the micro-level, not the macro.
For now, heading into Northern Hemispheric summer, the course has not changes, despite storm clouds on the horizon.
The coming week offers four central bank meetings and pronouncements, in Switzerland, the UK, Japan and the US, where the FOMC is expected to keep rates unchanged on Wednesday, June 15.
For the Week:
Dow: +58.28 (+0.33%)
S&P 500: -3.08 (-0.15%)
NASDAQ: -47.97 (-0.97%)
Seriously? Again? Friday's Figures:
S&P 500: 2,096.07, -19.41 (0.92%)
Dow: 17,865.34, -119.85 (0.67%)
NASDAQ: 4,894.55, -64.07 (1.29%)
Crude Oil 48.88 -3.32% Gold 1,276.30 +0.28% EUR/USD 1.1253 +0.01% 10-Yr Bond 1.64 -2.44% Corn 422.25 -1.00% Copper 2.03 -0.61% Silver 17.33 +0.36% Natural Gas 2.92 -1.65% Russell 2000 1,163.93 -1.46% VIX 17.03 +16.33% BATS 1000 20,677.17 0.00% GBP/USD 1.4255 -0.04% USD/JPY 106.9400 0.00%
The week ended on a down note, as stocks fell across the board on the US indices.
While the Dow was the only one of the three major averages to close out the week with a gain, it still did not manage a close above the now-legendary 18,000 mark. Likewise, the S&P closed below 2100 and the NASDAQ slid further into sub-5000 numbers.
More institutional voices added to the chorus of caution as the week wore on, including Bill Gross, George Soros and Stan Drunkenmiller. Global condition stubbornly refuse to improve, despite vain attempts at stimulation by central banks, governments and the financial media.
US bond yields fell across the spectrum, with the curve flattening. The 10-year is at levels not seen in months, while globally, sub-zero percent returns have expanded to over $10 trillion in the aggregate.
Clearly, what the markets need is a cleansing of excessive and misplaced debt, something the authorities have managed to avoid for the past seven years and counting. The latest bailout comes via the US House of Representatives, putting US taxpayers on the hook for a significant portion of Puerto Rico's unpayable obligations.
The House overwhelmingly passed a package that would establish a financial control board made up of more bureaucrats, those indirectly responsible for the various aspects of the global malaise. The measure is nothing more than further can-kicking, pushing the debt and problems further out rather than addressing the underlying problems.
None of what governments do, in terms of rescue packages or stimulus measures, has made or will make any difference whatsoever. They simply borrow more, adding to the national debt, which, closing in on $20 trillion in the US, will never be repaid.
The sooner the farce of ZIRP, NIRP, QE, debt spending, and global free trade are foreclosed upon, the sooner the global economies can begin functioning as centers of capitalism.
Hoping for change will not bring change. Usually, change requires more radical measures. Globally, politicians all appear to be built from the same model, caring only to keep their positions of power and persuasion. That has to change, though real change begins at the micro-level, not the macro.
For now, heading into Northern Hemispheric summer, the course has not changes, despite storm clouds on the horizon.
The coming week offers four central bank meetings and pronouncements, in Switzerland, the UK, Japan and the US, where the FOMC is expected to keep rates unchanged on Wednesday, June 15.
For the Week:
Dow: +58.28 (+0.33%)
S&P 500: -3.08 (-0.15%)
NASDAQ: -47.97 (-0.97%)
Seriously? Again? Friday's Figures:
S&P 500: 2,096.07, -19.41 (0.92%)
Dow: 17,865.34, -119.85 (0.67%)
NASDAQ: 4,894.55, -64.07 (1.29%)
Crude Oil 48.88 -3.32% Gold 1,276.30 +0.28% EUR/USD 1.1253 +0.01% 10-Yr Bond 1.64 -2.44% Corn 422.25 -1.00% Copper 2.03 -0.61% Silver 17.33 +0.36% Natural Gas 2.92 -1.65% Russell 2000 1,163.93 -1.46% VIX 17.03 +16.33% BATS 1000 20,677.17 0.00% GBP/USD 1.4255 -0.04% USD/JPY 106.9400 0.00%
Monday, May 23, 2016
Stocks Finish Red As Global Economic Data Exhibits Slowdown
News out of Japan, Europe and the US put a negative spin on markets to open the week.
After the Dow closed exactly at 17,500 on Friday, there was fear that a further decline below the level - which had held for more than two months (March 17 was the last time the Dow closed under 17,500) - might trigger a more precipitous decline.
However, with bad news all around, traders figured that the Fed would have enough sense to pause on a rate hike at their June meeting.
Japan experienced deep declines in both imports and exports to major trading partners such as the USA and China. It was the seventh consecutive monthly decline in exports from Japan.
Europe's Manufacturing PMI was below estimates; the US had similar results, with the lowest Markit Manufacturing PMI (50.5) since the financial crisis in 2009.
Stock traders put on a stern face, keeping the major averages in the green most of the day, but stocks slumped in he final hour of trading, with all three majors losing ground.
Now, it appears that not only is the Federal reserve intent on raising rates sooner rather than later, but it is also becoming crystal clear that the general global economy is ailing as well and may be approaching recessionary levels.
This is not exactly how the masters of the universe wanted to start the week, though they have nobody except themselves to blame for whatever erosion of the global economy and their precious stock certificates occurs in coming months.
Stormy Monday:
S&P 500: 2,048.04, -4.28 (0.21%)
Dow: 17,492.93, -8.01 (0.05%)
NASDAQ: 4,765.78, -3.78 (0.08%)
Crude Oil 48.12 -0.60% Gold 1,249.50 -0.27% EUR/USD 1.1222 +0.03% 10-Yr Bond 1.84 -0.59% Corn 397.75 +0.82% Copper 2.06 +0.02% Silver 16.41 -0.77% Natural Gas 2.06 +0.05% Russell 2000 1,111.37 -0.08% VIX 15.82 +4.08% BATS 1000 20,677.17 0.00% GBP/USD 1.4484 -0.16% USD/JPY 109.2430 -0.81%
After the Dow closed exactly at 17,500 on Friday, there was fear that a further decline below the level - which had held for more than two months (March 17 was the last time the Dow closed under 17,500) - might trigger a more precipitous decline.
However, with bad news all around, traders figured that the Fed would have enough sense to pause on a rate hike at their June meeting.
Japan experienced deep declines in both imports and exports to major trading partners such as the USA and China. It was the seventh consecutive monthly decline in exports from Japan.
Europe's Manufacturing PMI was below estimates; the US had similar results, with the lowest Markit Manufacturing PMI (50.5) since the financial crisis in 2009.
Stock traders put on a stern face, keeping the major averages in the green most of the day, but stocks slumped in he final hour of trading, with all three majors losing ground.
Now, it appears that not only is the Federal reserve intent on raising rates sooner rather than later, but it is also becoming crystal clear that the general global economy is ailing as well and may be approaching recessionary levels.
This is not exactly how the masters of the universe wanted to start the week, though they have nobody except themselves to blame for whatever erosion of the global economy and their precious stock certificates occurs in coming months.
Stormy Monday:
S&P 500: 2,048.04, -4.28 (0.21%)
Dow: 17,492.93, -8.01 (0.05%)
NASDAQ: 4,765.78, -3.78 (0.08%)
Crude Oil 48.12 -0.60% Gold 1,249.50 -0.27% EUR/USD 1.1222 +0.03% 10-Yr Bond 1.84 -0.59% Corn 397.75 +0.82% Copper 2.06 +0.02% Silver 16.41 -0.77% Natural Gas 2.06 +0.05% Russell 2000 1,111.37 -0.08% VIX 15.82 +4.08% BATS 1000 20,677.17 0.00% GBP/USD 1.4484 -0.16% USD/JPY 109.2430 -0.81%
Thursday, May 19, 2016
End The Fed; Hawkish Tone Sends Dow Below Key Level; Gold, Silver Mercilessly Hammered
While it may seem nothing but a triviality, Money Daily has been following the most recent renge on the Dow Jones Industrial Average (DJIA) as it bounced its way between 17,500 and 18,000 since mid-March.
Today, the most widely-watched equity index in the world crossed below the lower end of that range, exclusively due to hawkish jawboning from various Federal Reserve operatives, who have spent the better part of the last seven years engaged in radical interest rate and money-creation policies, putting the entire global finacial system at risk.
To the uninformed masses - those 90-plus percent of the adult population who doesn't care or isn't bright enough to comprehend the ramifications of a global central banking system - life goes on. A debt-ridden, over-taxed population in the developed world plays giddily along as private banking interests push them one way or another. A few have escaped to off-the-grid lifestyles, some have prospered in the fiat money world of counterfeit currencies, but most are forced to take what is given, or rather, keep the small scraps the banks and governments leave on the floor after their orgy of inflation, deflation, false promises, fake data points and market mayhem and manipulation.
Thanks to the Fed and their fellow central bankers in Japan, Europe, and now China, the global population is left without price discovery mechanisms which make $30,000 cars with seven-year payment plans sound "affordable", homes which have skyrocketed in value due to artificially-low mortgage rates, fuel prices that are anything but transparent and/or stable and a general climate that continues to be counter to general principles of economy and thrift.
The Fed (and their central banker brethren) is pernicious, malevolent, deceitful, dishonest, greedy and carnivorous. They seek nothing but complete dominance without competition, a monopoly on the medium of exchange. Governments are more than willing to accept their bribery and thievery in order to retain feigned positions of power, selling out their constituents with nary a care toward the ultimate consequences of their actions.
Mandated to enact policies that promote full employment and stable prices, the Fed openly does neither, or, at best, adheres to their promises only as occasion allows, in fact promoting an inflation rate of two percent per year, which is anything but stable for prices.
So intent is the Fed on controlling every last aspect of financial activity, that they have undermined the best open markets of the world, in bonds, stocks, commodities and anything else they can get their greedy hands upon.
Markets no longer move on supply and demand or fundamental forces, but are solely and completely tethered to proclamations and idle talk of agents of the Federal Reserve, the Bank of Japan (BOJ), the People's Bank of China (PBOC), and the European Central Bank (ECB).
It's all rigged, all the time and readers are urged to do their own research into financial matters. Unless and until the fraud of banks and the agents of the Fed and other central banks are brought entirely to light there will be no financial freedom, only crony capitalism, fascist rhetoric and insane, unbalanced economic polices.
May the Farce Be With You:
S&P 500: 2,040.04, -7.59 (0.37%)
Dow: 17,435.40, -91.22 (0.52%)
NASDAQ: 4,712.53, -26.59 (0.56%)
Crude Oil 48.68 -0.20% Gold 1,255.70 -1.47% EUR/USD 1.1203 -0.12% 10-Yr Bond 1.85 -1.86% Corn 390.00 -2.38% Copper 2.07 -0.63% Silver 16.51 -3.63% Natural Gas 2.04 +1.75% Russell 2000 1,094.78 -0.74% VIX 16.33 +2.38% BATS 1000 20,677.17 0.00% GBP/USD 1.4609 +0.09% USD/JPY 109.9550 -0.20%
Today, the most widely-watched equity index in the world crossed below the lower end of that range, exclusively due to hawkish jawboning from various Federal Reserve operatives, who have spent the better part of the last seven years engaged in radical interest rate and money-creation policies, putting the entire global finacial system at risk.
To the uninformed masses - those 90-plus percent of the adult population who doesn't care or isn't bright enough to comprehend the ramifications of a global central banking system - life goes on. A debt-ridden, over-taxed population in the developed world plays giddily along as private banking interests push them one way or another. A few have escaped to off-the-grid lifestyles, some have prospered in the fiat money world of counterfeit currencies, but most are forced to take what is given, or rather, keep the small scraps the banks and governments leave on the floor after their orgy of inflation, deflation, false promises, fake data points and market mayhem and manipulation.
Thanks to the Fed and their fellow central bankers in Japan, Europe, and now China, the global population is left without price discovery mechanisms which make $30,000 cars with seven-year payment plans sound "affordable", homes which have skyrocketed in value due to artificially-low mortgage rates, fuel prices that are anything but transparent and/or stable and a general climate that continues to be counter to general principles of economy and thrift.
The Fed (and their central banker brethren) is pernicious, malevolent, deceitful, dishonest, greedy and carnivorous. They seek nothing but complete dominance without competition, a monopoly on the medium of exchange. Governments are more than willing to accept their bribery and thievery in order to retain feigned positions of power, selling out their constituents with nary a care toward the ultimate consequences of their actions.
Mandated to enact policies that promote full employment and stable prices, the Fed openly does neither, or, at best, adheres to their promises only as occasion allows, in fact promoting an inflation rate of two percent per year, which is anything but stable for prices.
So intent is the Fed on controlling every last aspect of financial activity, that they have undermined the best open markets of the world, in bonds, stocks, commodities and anything else they can get their greedy hands upon.
Markets no longer move on supply and demand or fundamental forces, but are solely and completely tethered to proclamations and idle talk of agents of the Federal Reserve, the Bank of Japan (BOJ), the People's Bank of China (PBOC), and the European Central Bank (ECB).
It's all rigged, all the time and readers are urged to do their own research into financial matters. Unless and until the fraud of banks and the agents of the Fed and other central banks are brought entirely to light there will be no financial freedom, only crony capitalism, fascist rhetoric and insane, unbalanced economic polices.
May the Farce Be With You:
S&P 500: 2,040.04, -7.59 (0.37%)
Dow: 17,435.40, -91.22 (0.52%)
NASDAQ: 4,712.53, -26.59 (0.56%)
Crude Oil 48.68 -0.20% Gold 1,255.70 -1.47% EUR/USD 1.1203 -0.12% 10-Yr Bond 1.85 -1.86% Corn 390.00 -2.38% Copper 2.07 -0.63% Silver 16.51 -3.63% Natural Gas 2.04 +1.75% Russell 2000 1,094.78 -0.74% VIX 16.33 +2.38% BATS 1000 20,677.17 0.00% GBP/USD 1.4609 +0.09% USD/JPY 109.9550 -0.20%
Friday, February 19, 2016
Stocks Finish Week Mixed to Flat, as CPI Confuses Markets
Odd for a day of options expiration, the day on Wall Street was marked by light volatility and a narrow trading range, the tone set for confusion prior to the open when CPI showed a spike in January to 0.3%, the biggest jump in more than four years.
On a year-over-year basis, excluding food and energy, CPI grew by 2.2%, the highest inflation rate since June 2012. While on the one hand, the data was supportive of further hikes in the federal funds rate, investors were concerned that such a data-driven move by the Fed might cause further declines in stocks.
With that, equities got stuck in cautious trading, ending just about where they started the day.
The minor moves did little to derail the mini-rally that comprised the better part of the holiday-shortened week.
The Dow finished ahead for the week by 418.15 (+2.62%); the S&P added 53.00 points (+2.84%); the NASDAQ ended ahead by 166.92 (+3.85%). The gains were the best of the seven weeks of trading this year, though the indices remain mired in the red zone.
With no FOMC meeting in February, investors will have to ride along until March 15-16, the dates of the next Open Market Committee, though odds are still in favor of the committee keeping rates at 0.25-0.50%, considering the poor performance of stocks following the first rate hike in December.
As was the case at the end of last year, the Fed is stuck in a serious spot, hoping to hike rates three more times this year, while the US and global economies continue to look ragged, worn out and teetering on the brink of recession.
About the best the Fed can offer in its assessment of US markets is that at least they're doing better than all other advanced economies, including France, UK, Germany, Japan, China, and Australia.
Friday's Totals:
S&P 500: 1,917.78, -0.05 (0.00%)
Dow: 16,391.99, -21.44 (0.13%)
NASDAQ: 4,504.43, +16.89 (0.38%)
Crude Oil 31.71 -3.70% Gold 1,232.10 +0.47% EUR/USD 1.1133 +0.01% 10-Yr Bond 1.7480 -0.63% Corn 365.00 -0.14% Copper 2.09 +0.58% Silver 15.44 +0.02% Natural Gas 1.80 -2.65% Russell 2000 1,010.01 +0.53% VIX 20.53 -5.13% BATS 1000 20,682.61 0.00% GBP/USD 1.4406 0.00% USD/JPY 112.5750 0.00%
On a year-over-year basis, excluding food and energy, CPI grew by 2.2%, the highest inflation rate since June 2012. While on the one hand, the data was supportive of further hikes in the federal funds rate, investors were concerned that such a data-driven move by the Fed might cause further declines in stocks.
With that, equities got stuck in cautious trading, ending just about where they started the day.
The minor moves did little to derail the mini-rally that comprised the better part of the holiday-shortened week.
The Dow finished ahead for the week by 418.15 (+2.62%); the S&P added 53.00 points (+2.84%); the NASDAQ ended ahead by 166.92 (+3.85%). The gains were the best of the seven weeks of trading this year, though the indices remain mired in the red zone.
With no FOMC meeting in February, investors will have to ride along until March 15-16, the dates of the next Open Market Committee, though odds are still in favor of the committee keeping rates at 0.25-0.50%, considering the poor performance of stocks following the first rate hike in December.
As was the case at the end of last year, the Fed is stuck in a serious spot, hoping to hike rates three more times this year, while the US and global economies continue to look ragged, worn out and teetering on the brink of recession.
About the best the Fed can offer in its assessment of US markets is that at least they're doing better than all other advanced economies, including France, UK, Germany, Japan, China, and Australia.
Friday's Totals:
S&P 500: 1,917.78, -0.05 (0.00%)
Dow: 16,391.99, -21.44 (0.13%)
NASDAQ: 4,504.43, +16.89 (0.38%)
Crude Oil 31.71 -3.70% Gold 1,232.10 +0.47% EUR/USD 1.1133 +0.01% 10-Yr Bond 1.7480 -0.63% Corn 365.00 -0.14% Copper 2.09 +0.58% Silver 15.44 +0.02% Natural Gas 1.80 -2.65% Russell 2000 1,010.01 +0.53% VIX 20.53 -5.13% BATS 1000 20,682.61 0.00% GBP/USD 1.4406 0.00% USD/JPY 112.5750 0.00%
Thursday, February 11, 2016
How To Tell The Economy Is Really Horrible
A number of interesting developments highlighted today's off-the-street action concerning US stock markets and the general global economy. They were all internet-related, but have nothing to do with the share prices of the companies affected, but first, let's take a recap of the actual carnage in the markets today.
Asia was awash in red ink, as Japan circles the monetary drain (must be Adam Smith's "invisible hand" pulling the plug) sending the Nikkei down to new depths, as noted below, along with Hong Kong's Hang Seng Index, which suffered an even more severe loss in points and percentage:
With China's markets closed for the week as the country celebrates Chinese New Year, over in Hong Kong, it was back to work after a three-day hiatus. The HSI fell out at the open and never recovered. As many in the US apparently do not know, all of Asia's major markets - including Australia, recently - are in bear market territory. The Hang Seng topped out at 28,588 in late April, 2015. Today's loss puts it down 35% from its highs.
While the Asian markets were spitting up blood, Europe opened with a bang to the downside, as Sweden announced its central bank was cutting interest rates further into the negative. Sweden’s Riksbank cut its benchmark interest rate from -0.35% to -0.5%. So, theoretically, anyone wishing to keep 100,000 Krona in a Swedish bank has the awesome privilege of paying the bank 500 of those Krona for the year.
That, in addition to the ongoing banking collapse (Duetshe Bank, in particular), sent Euro stock bourses reeling. Germany's DAX was off 2.93%. In England, the FTSE was down 2.36%. France's CAC 40 fell by 4.05%, and the Euro Stoxx 50 was battered some 108 points, a 3.90% downside.
US traders left no stone unturned, sending the markets close to the August lows and the NASDAQ within 50 points of the magic bear market line (-20%), until a spurious story about Saudi oil cuts saved the day around 2:30 pm. The Dow was down more than 400 points at the lows, and there was some talk about the S&P bouncing off a key level at 1812. Truth be told, key levels and support lines aren't going to matter much in coming days, weeks and months, because there is growing evidence that recession has arrived in the US, just as it has washed up on the shores of Asia and Europe.
Now, back to those off-Wall Street developments that offer many clues on how to know the economy isn't doing very well.
First, there was the outage at ZeroHedge.com just as the market was opening. Anybody who wants the straight, uncensored, bearish view of markets instinctively heads for "the Hedge" as it is known, the site famous for it's inveterate grinding on the wheels of finance. An apparent DDOS attack took the site offline for about 30 minutes and was the second such attack in as many weeks.
While the culprit is unknown, tin-foil cap types point to the NSA or another government agency which wishes to keep at least a leash on the unruly junkyard dog.
Second, MSN Money disabled comments on all its stories. While news of this was not reported widely, its unknown exactly when the company decided it didn't want to hear from its readers. MSN Money follows the lead of Bloomberg, which disabled commenting across its web properties last year. Censorship. It's what's for dinner, and you can't complain about it.
Third, Janet Yellen completed her annual testimony to congress today with a visit to the Senate Banking Committee, chaired by Richard Shelby (R-AL), and failed to goose the markets. When the Fed Chair has less influence on markets than a teen beauty queen at a gay pride rally, take that as a sign markets are more than a little jittery.
Gold and silver continued to rally, with gold up more than $50 at one point in the day. Silver was fast approaching $16/oz. It was under $15 as of Monday's fix. The two precious metals are the best-performing assets (along with select bonds) of 2016.
And finally, Yahoo Editor-in-Chief, Andy Serwer, had to pen this little gem of statist nonsense, explaining that nobody knows why stocks are going down. Server proves that he has quit an imagination, or none.
All in all, it appears the media, government, and the financial world are not about ready to let the muppets get a feeling that something bad is heading their way, despite Yellen fielding questions about the Fed being "out of bullets" and negative interest rates.
The status quo is getting very, very nervous and it's beginning to show. With the US heading into a three-day weekend (Monday is President's Day. In case your boss didn't tell you, you don't have to come in.) and China's markets re-opening on Monday, tomorrow's trading might be more than just a little interesting. The week has gone badly so far, and it is doubtful many will want to head into the break long.
Hate Crime for Thursday:
S&P 500: 1,829.08, -22.78 (1.23%)
Dow: 15,660.18, -254.56 (1.60%)
NASDAQ: 4,266.84, -16.76 (0.39%)
Crude Oil 27.30 -0.55% Gold 1,247.00 +4.39% EUR/USD 1.1316 +0.32% 10-Yr Bond 1.64 -3.58% Corn 360.00 -0.07% Copper 2.01 -0.72% Silver 15.80 +3.36% Natural Gas 1.99 -2.79% Russell 2000 953.72 -1.01% VIX 28.14 +7.04% BATS 1000 19,734.69 -1.33% GBP/USD 1.4484 -0.35% USD/JPY 112.5900 -0.01%
Asia was awash in red ink, as Japan circles the monetary drain (must be Adam Smith's "invisible hand" pulling the plug) sending the Nikkei down to new depths, as noted below, along with Hong Kong's Hang Seng Index, which suffered an even more severe loss in points and percentage:
Nikkei 225: 15,713.39, -372.05, -2.31%
Hang Seng Index 18,545.80, -742.37, -3.85%
With China's markets closed for the week as the country celebrates Chinese New Year, over in Hong Kong, it was back to work after a three-day hiatus. The HSI fell out at the open and never recovered. As many in the US apparently do not know, all of Asia's major markets - including Australia, recently - are in bear market territory. The Hang Seng topped out at 28,588 in late April, 2015. Today's loss puts it down 35% from its highs.
While the Asian markets were spitting up blood, Europe opened with a bang to the downside, as Sweden announced its central bank was cutting interest rates further into the negative. Sweden’s Riksbank cut its benchmark interest rate from -0.35% to -0.5%. So, theoretically, anyone wishing to keep 100,000 Krona in a Swedish bank has the awesome privilege of paying the bank 500 of those Krona for the year.
That, in addition to the ongoing banking collapse (Duetshe Bank, in particular), sent Euro stock bourses reeling. Germany's DAX was off 2.93%. In England, the FTSE was down 2.36%. France's CAC 40 fell by 4.05%, and the Euro Stoxx 50 was battered some 108 points, a 3.90% downside.
US traders left no stone unturned, sending the markets close to the August lows and the NASDAQ within 50 points of the magic bear market line (-20%), until a spurious story about Saudi oil cuts saved the day around 2:30 pm. The Dow was down more than 400 points at the lows, and there was some talk about the S&P bouncing off a key level at 1812. Truth be told, key levels and support lines aren't going to matter much in coming days, weeks and months, because there is growing evidence that recession has arrived in the US, just as it has washed up on the shores of Asia and Europe.
Now, back to those off-Wall Street developments that offer many clues on how to know the economy isn't doing very well.
First, there was the outage at ZeroHedge.com just as the market was opening. Anybody who wants the straight, uncensored, bearish view of markets instinctively heads for "the Hedge" as it is known, the site famous for it's inveterate grinding on the wheels of finance. An apparent DDOS attack took the site offline for about 30 minutes and was the second such attack in as many weeks.
While the culprit is unknown, tin-foil cap types point to the NSA or another government agency which wishes to keep at least a leash on the unruly junkyard dog.
Second, MSN Money disabled comments on all its stories. While news of this was not reported widely, its unknown exactly when the company decided it didn't want to hear from its readers. MSN Money follows the lead of Bloomberg, which disabled commenting across its web properties last year. Censorship. It's what's for dinner, and you can't complain about it.
Third, Janet Yellen completed her annual testimony to congress today with a visit to the Senate Banking Committee, chaired by Richard Shelby (R-AL), and failed to goose the markets. When the Fed Chair has less influence on markets than a teen beauty queen at a gay pride rally, take that as a sign markets are more than a little jittery.
Gold and silver continued to rally, with gold up more than $50 at one point in the day. Silver was fast approaching $16/oz. It was under $15 as of Monday's fix. The two precious metals are the best-performing assets (along with select bonds) of 2016.
And finally, Yahoo Editor-in-Chief, Andy Serwer, had to pen this little gem of statist nonsense, explaining that nobody knows why stocks are going down. Server proves that he has quit an imagination, or none.
All in all, it appears the media, government, and the financial world are not about ready to let the muppets get a feeling that something bad is heading their way, despite Yellen fielding questions about the Fed being "out of bullets" and negative interest rates.
The status quo is getting very, very nervous and it's beginning to show. With the US heading into a three-day weekend (Monday is President's Day. In case your boss didn't tell you, you don't have to come in.) and China's markets re-opening on Monday, tomorrow's trading might be more than just a little interesting. The week has gone badly so far, and it is doubtful many will want to head into the break long.
Hate Crime for Thursday:
S&P 500: 1,829.08, -22.78 (1.23%)
Dow: 15,660.18, -254.56 (1.60%)
NASDAQ: 4,266.84, -16.76 (0.39%)
Crude Oil 27.30 -0.55% Gold 1,247.00 +4.39% EUR/USD 1.1316 +0.32% 10-Yr Bond 1.64 -3.58% Corn 360.00 -0.07% Copper 2.01 -0.72% Silver 15.80 +3.36% Natural Gas 1.99 -2.79% Russell 2000 953.72 -1.01% VIX 28.14 +7.04% BATS 1000 19,734.69 -1.33% GBP/USD 1.4484 -0.35% USD/JPY 112.5900 -0.01%
Tuesday, February 9, 2016
Stocks Finish Flat, But Internals Signal Something Is Seriously Wrong
US Stocks closed today marginally on the downside, though appearances can be deceiving, as there was outright catastrophe in Japan which spilled over into worried European markets.
With Chinese markets (including the SSE and Hang Seng) the Nikkei took a magnificent beating on Tuesday, losing 918 points, a 5.40% loss on the day, sending the main index of Japan further into bear market territory. Perhaps even more significant, the JCB 10-year note yield fell to a negative number, under ZERO, for the first time in history. This marks Japan and Switzerland as the only countries in the world with negative yields out to ten years, though other countries are rapidly approaching that benchmark, in particular, Germany.
European bourses all finished their session with losses of one percent or more, and, at the open in the US, the situation appeared dire, with Dow futures down more than 150 points. Stocks quickly gained traction, turned positive near midday, flirted with the unchanged line throughout the session until finally giving it up late in the day.
But, the story is not the minor loss the major indices took, but the skew of all manner of metrics toward the negative. Bond yields continued to collapse, with the ten-year down to 1.71%. The spread between the ten and two-year note compressed down to 1.04, something of a danger zone, as the two-year actually rose two bits, to yield 0.67%.
Bank stocks were unhappy spots, with Bank of America (BAC) closing at 12.20, a new 52-week and multi-year low.
Advancers were also far behind declining stocks by a margin of more than 2-to-1. Also of note, the number of new lows (NASDAQ and NYSE combined) dwarfed new highs, 812-70, with only six of those new highs on the Naz. The central planners at the central banks can pin their hats on the day as they successfully halted the manic rallies in silver and gold, for a day, anyway.
Additionally, oil was sent back well below the $30 mark, finishing in New York at $28.38 a barrel.
The VIX is also signaling more turbulence, hanging steadily in the mid-20s range.
The rout in stocks, however, like the gains for the metals, is far from over. Consensus view on Wall Street is still concerned, but not yet panicked. Stocks are still about 5-7% away from official bear market territory, though a few bad days could send the indices reeling in the wrong direction.
In a story by Bernard Condon (AP) about how much money companies have lost doing stock buybacks, we find that the stock buybacks which goosed the market and individual stocks higher over the past six to seven years has been nothing short of a colossal flop and threatens to become an even heavier weight stopped to the stock market.
What stock buybacks did accomplish was to allow executives to boost their companies' earnings without devoting capital to expansion, while at the same time justifying their extraordinary salaries and cashing out their outrageous stock options and/or bonuses.
Investors should be outraged, and righteously so, because these companies should have been either expanding their capital base or market share or distributing dividends to their shareholders. What these stock buyback kings have done is nothing short of a fiduciary failure, which in other industries would be cause for criminal indictments.
Of course, since this all occurred within the cozy regulatory environment that is Wall Street, nothing even close to that will happen. The executives who personally profited from corporate paper profits will walk away with their cash after hollowing out scores of once-healthy companies. It may turn out to be good overall, if a few of the giant multi-nationals like Wal-Mart, Yum Brands and ExxonMobil get cut down to more reasonable sizes and markets open up for more nimble - and honest - competitors.
Tuesday's Cracker-jack pot:
S&P 500: 1,852.21, -1.23 (0.07%)
Dow: 16,014.38, -12.67 (0.08%)
NASDAQ: 4,268.76, -14.99 (0.35%)
Crude Oil 28.38 -4.41% Gold 1,189.20 -0.73% EUR/USD 1.1294 +0.86% 10-Yr Bond 1.7290 -0.35% Corn 360.50 -0.48% Copper 2.04 -2.61% Silver 15.23 -1.30% Natural Gas 2.10 -2.01% Russell 2000 964.17 -0.53% VIX 26.71 +2.73% BATS 1000 20,030.11 -0.07% GBP/USD 1.4468 +0.29% USD/JPY 115.0020 -0.51%
With Chinese markets (including the SSE and Hang Seng) the Nikkei took a magnificent beating on Tuesday, losing 918 points, a 5.40% loss on the day, sending the main index of Japan further into bear market territory. Perhaps even more significant, the JCB 10-year note yield fell to a negative number, under ZERO, for the first time in history. This marks Japan and Switzerland as the only countries in the world with negative yields out to ten years, though other countries are rapidly approaching that benchmark, in particular, Germany.
European bourses all finished their session with losses of one percent or more, and, at the open in the US, the situation appeared dire, with Dow futures down more than 150 points. Stocks quickly gained traction, turned positive near midday, flirted with the unchanged line throughout the session until finally giving it up late in the day.
But, the story is not the minor loss the major indices took, but the skew of all manner of metrics toward the negative. Bond yields continued to collapse, with the ten-year down to 1.71%. The spread between the ten and two-year note compressed down to 1.04, something of a danger zone, as the two-year actually rose two bits, to yield 0.67%.
Bank stocks were unhappy spots, with Bank of America (BAC) closing at 12.20, a new 52-week and multi-year low.
Advancers were also far behind declining stocks by a margin of more than 2-to-1. Also of note, the number of new lows (NASDAQ and NYSE combined) dwarfed new highs, 812-70, with only six of those new highs on the Naz. The central planners at the central banks can pin their hats on the day as they successfully halted the manic rallies in silver and gold, for a day, anyway.
Additionally, oil was sent back well below the $30 mark, finishing in New York at $28.38 a barrel.
The VIX is also signaling more turbulence, hanging steadily in the mid-20s range.
The rout in stocks, however, like the gains for the metals, is far from over. Consensus view on Wall Street is still concerned, but not yet panicked. Stocks are still about 5-7% away from official bear market territory, though a few bad days could send the indices reeling in the wrong direction.
In a story by Bernard Condon (AP) about how much money companies have lost doing stock buybacks, we find that the stock buybacks which goosed the market and individual stocks higher over the past six to seven years has been nothing short of a colossal flop and threatens to become an even heavier weight stopped to the stock market.
What stock buybacks did accomplish was to allow executives to boost their companies' earnings without devoting capital to expansion, while at the same time justifying their extraordinary salaries and cashing out their outrageous stock options and/or bonuses.
Investors should be outraged, and righteously so, because these companies should have been either expanding their capital base or market share or distributing dividends to their shareholders. What these stock buyback kings have done is nothing short of a fiduciary failure, which in other industries would be cause for criminal indictments.
Of course, since this all occurred within the cozy regulatory environment that is Wall Street, nothing even close to that will happen. The executives who personally profited from corporate paper profits will walk away with their cash after hollowing out scores of once-healthy companies. It may turn out to be good overall, if a few of the giant multi-nationals like Wal-Mart, Yum Brands and ExxonMobil get cut down to more reasonable sizes and markets open up for more nimble - and honest - competitors.
Tuesday's Cracker-jack pot:
S&P 500: 1,852.21, -1.23 (0.07%)
Dow: 16,014.38, -12.67 (0.08%)
NASDAQ: 4,268.76, -14.99 (0.35%)
Crude Oil 28.38 -4.41% Gold 1,189.20 -0.73% EUR/USD 1.1294 +0.86% 10-Yr Bond 1.7290 -0.35% Corn 360.50 -0.48% Copper 2.04 -2.61% Silver 15.23 -1.30% Natural Gas 2.10 -2.01% Russell 2000 964.17 -0.53% VIX 26.71 +2.73% BATS 1000 20,030.11 -0.07% GBP/USD 1.4468 +0.29% USD/JPY 115.0020 -0.51%
Monday, January 4, 2016
Can You Hear Me Now? MONEY DAILY Predictions Prove Prescient As Stocks Drop on First Trading Day of 2016
As 2015 drew to a close, Money Daily put forward a number of predictions for what 2016 would bring as pertaining to economies and financial markets.
While one day's trading cannot be considered anything more than market "noise," the historic sell-off of January 4 - the first trading day of the new year - proved to be the worst performance to start a year since 2008, and one of the top ten worst starts to a year in market history.
While stocks were down large in the US, they were worse in Asia and Europe. The Shanghai Composite was shaved by 6.9%, Japan's Nikkei tumbled nearly 600 points, a loss of 3.06%.
Germany's DAX was the hardest hit of Europe's majors, losing 4.28%. England's FTSE 100 fell 2.39; France's CAC-40 was down 2.47%.
In the US, most of the carnage was done by midday. Stocks drifted into the closing hour, and were boosted substantially off their lows by a face-ripping, short-covering rally in the last half hour of trading.
It was an unnerving beginning to a year which promises much in the way of surprises with limited upside for stocks, which have been and continue to be wildly overvalued.
Some of the bigger names were high on the list of losers. Netflix (NFLX) fell 3.86%; Alphabet (Google, GOOG) dropped 2.25%; Amazon was the biggest of the tech wrecks, dropping 38.90 points, a 5.76% loss.
WTI crude oil first rose, but came back to earth and was down for the day, finishing around 36.80 on the day.
S&P 500: 2,012.66, -31.28 (1.53%)
Dow: 17,148.94, -276.09 (1.58%)
NASDAQ: 4,903.09, -104.32 (2.08%)
While one day's trading cannot be considered anything more than market "noise," the historic sell-off of January 4 - the first trading day of the new year - proved to be the worst performance to start a year since 2008, and one of the top ten worst starts to a year in market history.
While stocks were down large in the US, they were worse in Asia and Europe. The Shanghai Composite was shaved by 6.9%, Japan's Nikkei tumbled nearly 600 points, a loss of 3.06%.
Germany's DAX was the hardest hit of Europe's majors, losing 4.28%. England's FTSE 100 fell 2.39; France's CAC-40 was down 2.47%.
In the US, most of the carnage was done by midday. Stocks drifted into the closing hour, and were boosted substantially off their lows by a face-ripping, short-covering rally in the last half hour of trading.
It was an unnerving beginning to a year which promises much in the way of surprises with limited upside for stocks, which have been and continue to be wildly overvalued.
Some of the bigger names were high on the list of losers. Netflix (NFLX) fell 3.86%; Alphabet (Google, GOOG) dropped 2.25%; Amazon was the biggest of the tech wrecks, dropping 38.90 points, a 5.76% loss.
WTI crude oil first rose, but came back to earth and was down for the day, finishing around 36.80 on the day.
S&P 500: 2,012.66, -31.28 (1.53%)
Dow: 17,148.94, -276.09 (1.58%)
NASDAQ: 4,903.09, -104.32 (2.08%)
Thursday, March 13, 2014
The Biggest Bubble of All Time is About to Be Popped
Money Daily stopped being a daily post blog in March, 2014. While the name remains the same, the posts are now on an intermittent basis, as conditions warrant, though it is advised to read the archives (from 2006-2014) regularly, even daily, for insights and historical perspective.
The handwriting, so to speak, is all over Wall Street. What has been the biggest financial bubble in the history of the world is on the verge of busting, or, what could be better still, slowly deflating.
After the crash of 2008-09, the Federal Reserve, in conjunction with central banks around the globe, injected massive amounts of liquidity into the fiat world currency markets, bolstering everything from junk bonds to consumer credit, but especially equities, otherwise known as stocks.
Since March 9, 2009, the major equity indices in the US - and, to a large degree, around the world - have rebounded on the strength of the Fed's largesse, nothing else. Now that the Fed has begun unwinding QE, the "juice" is being withdrawn. There will be no backstop for equities in the guise of unlimited liquidity from the Fed. The plan - already underway - is to reduce the amount of asset (bond) purchases by the Fed from their high of $85 billion per month, to zero. While it is unlikely the Fed will ever get to zero without reversing course or, at least, slowing the pace of their withdrawal, the March FOMC meeting will mark the third consecutive lowering of the monthly purchase level, timed in accordance with the 10-per-year FOMC schedule.
The Fed first announced in December, 2013 that it would be reducing purchases in January, 2014, and did the same in their first meeting of 2014, in January, lowering their purchase level to $65 billion in February. Since there was no meeting in February, they are expected to announce another $10 billion reduction at the March meeting next week (March 18-19). If they carry through with this expected drop to $55 billion, the market cracks which first occurred in January of this year, may turn into wholesale breaks, sending index levels below their recent lows, highlighted by the January 31 selloff.
With the S&P recovering all of its January and February losses and making new all-time highs earlier this month (the NASDAQ also made new 14-year highs), the Dow Jones Industrials did not, setting up the scenario for a bear market, according to strict Dow Theory.
If the Dow, having fallen short of its most recent high (16,588.25), continues on its path lower, exceeding the interim low of 15,340.69 (Feb. 4), this will confirm that a change in the primary tend has occurred, and a secular bear market is underway. This bear market could last anywhere from five to 20 years, possibly longer, because the recent, primary bull market - the second longest in market history - was built upon a foundation of incredibly easy money, low interest rates and global fiat currencies, unprecedented in financial history.
The fallout could be severe, popping the biggest financial asset bubble of all time, in stocks, affecting everything from individual stocks to your pension, IRA or 401k to muni bonds. In other words, be prepared for the biggest financial collapse of all time, because the last five years have been nothing but pure financial fantasy, and it's all about to come crashing to an end.
There are sure signs that the global economy is shrieking and straining to remain relevant and above water, but after blowing bubbles recently in dotcom stocks (1997-2001) and real estate (2003-2007), the Fed has reflated the economy with trillions of paper dollars, augmented by similarly spurious activities in Europe, China and Japan. The financial bubble created by central banks is of a magnitude much larger - possibly four to six times larger - than the sub-prime-induced housing meltdown, putting the figure of financial assets seriously at risk somewhere between $20 and $40 trillion dollars, an amount so unfathomable that nothing short of pure currency collapses can sufficiently make account.
(As this post is being composed (March 13, 2014, 1:10 pm EDT), the Dow Jones Industrial average has broken through its 50-day-moving average, down 194 points on the day.)
Beyond just charts and the scary finances of the central banks, China is the linchpin by which the financial dam may be breached. For the past two to three months, data out of the world's second-largest economy has been trending lower, especially in the areas of industrial production and exporting. In fact, China actually released data that showed it suffered a current account deficit, with imports exceeding exports, a very frightening development for one of the world's few export economies and a major trading partner with the US and Europe.
What the China data underscores is the overall weakness in US and European (developed) markets. The fraud of financialization has finally produced a result incompatible with the ponzi-scheme-like mantra of the central bankers. Consumers have been and are strapped for cash, a result of over-exuberant government spending, massive income disparity between the rich and poor and stagnant or declining wages in the middle of a labor shortfall crisis.
There are signs everywhere that the global economy is about to be brought back to reality, including, but by no means limited to, recent poor US unemployment data, a false housing recovery (inundated with cash buyers, flippers and speculation), inability of the government to prosecute bankers and financial operatives for mortgage and other frauds, declining adherence to the constitution and the trampling of civil rights, bogus car sales data with channel stuffing rampant, blaming the weather for poor economic results (seriously, the holiday shopping season was a complete bust), and overvaluation of speculative IPOs, tech stocks and other momentum stocks, enterprise valuations of stocks in the billions of dollars, based on nothing but pure speculation.
Nothing will stop the wreckage that the Fed and global central banks working in collusion have set in motion. The numbers are ghastly and overwhelming and the warnings have been written about for years. The time to prepare was yesterday, though there is still time, but thought processes must change. Status and wealth should not be measured by the size of one's McMansion, the price of one's car or the depth of one's stock portfolio. True wealth consists of something along these lines: a fully-paid-for home on five or more acres of land, two-thirds of it arable, food and water storage to last at least a year, a horde of cash, gold and/or silver, absolutely ZERO DEBT, and the ability and weaponry to defend it all.
Ask yourself, who among you can make claim to that, because that is real wealth, not the paper promises from Wall Street or Washington.
It's coming. And it may be approaching even faster than anyone wants to consider (think Ukraine).
Good luck.
The handwriting, so to speak, is all over Wall Street. What has been the biggest financial bubble in the history of the world is on the verge of busting, or, what could be better still, slowly deflating.
After the crash of 2008-09, the Federal Reserve, in conjunction with central banks around the globe, injected massive amounts of liquidity into the fiat world currency markets, bolstering everything from junk bonds to consumer credit, but especially equities, otherwise known as stocks.
Since March 9, 2009, the major equity indices in the US - and, to a large degree, around the world - have rebounded on the strength of the Fed's largesse, nothing else. Now that the Fed has begun unwinding QE, the "juice" is being withdrawn. There will be no backstop for equities in the guise of unlimited liquidity from the Fed. The plan - already underway - is to reduce the amount of asset (bond) purchases by the Fed from their high of $85 billion per month, to zero. While it is unlikely the Fed will ever get to zero without reversing course or, at least, slowing the pace of their withdrawal, the March FOMC meeting will mark the third consecutive lowering of the monthly purchase level, timed in accordance with the 10-per-year FOMC schedule.
The Fed first announced in December, 2013 that it would be reducing purchases in January, 2014, and did the same in their first meeting of 2014, in January, lowering their purchase level to $65 billion in February. Since there was no meeting in February, they are expected to announce another $10 billion reduction at the March meeting next week (March 18-19). If they carry through with this expected drop to $55 billion, the market cracks which first occurred in January of this year, may turn into wholesale breaks, sending index levels below their recent lows, highlighted by the January 31 selloff.
With the S&P recovering all of its January and February losses and making new all-time highs earlier this month (the NASDAQ also made new 14-year highs), the Dow Jones Industrials did not, setting up the scenario for a bear market, according to strict Dow Theory.
If the Dow, having fallen short of its most recent high (16,588.25), continues on its path lower, exceeding the interim low of 15,340.69 (Feb. 4), this will confirm that a change in the primary tend has occurred, and a secular bear market is underway. This bear market could last anywhere from five to 20 years, possibly longer, because the recent, primary bull market - the second longest in market history - was built upon a foundation of incredibly easy money, low interest rates and global fiat currencies, unprecedented in financial history.
The fallout could be severe, popping the biggest financial asset bubble of all time, in stocks, affecting everything from individual stocks to your pension, IRA or 401k to muni bonds. In other words, be prepared for the biggest financial collapse of all time, because the last five years have been nothing but pure financial fantasy, and it's all about to come crashing to an end.
There are sure signs that the global economy is shrieking and straining to remain relevant and above water, but after blowing bubbles recently in dotcom stocks (1997-2001) and real estate (2003-2007), the Fed has reflated the economy with trillions of paper dollars, augmented by similarly spurious activities in Europe, China and Japan. The financial bubble created by central banks is of a magnitude much larger - possibly four to six times larger - than the sub-prime-induced housing meltdown, putting the figure of financial assets seriously at risk somewhere between $20 and $40 trillion dollars, an amount so unfathomable that nothing short of pure currency collapses can sufficiently make account.
(As this post is being composed (March 13, 2014, 1:10 pm EDT), the Dow Jones Industrial average has broken through its 50-day-moving average, down 194 points on the day.)
Beyond just charts and the scary finances of the central banks, China is the linchpin by which the financial dam may be breached. For the past two to three months, data out of the world's second-largest economy has been trending lower, especially in the areas of industrial production and exporting. In fact, China actually released data that showed it suffered a current account deficit, with imports exceeding exports, a very frightening development for one of the world's few export economies and a major trading partner with the US and Europe.
What the China data underscores is the overall weakness in US and European (developed) markets. The fraud of financialization has finally produced a result incompatible with the ponzi-scheme-like mantra of the central bankers. Consumers have been and are strapped for cash, a result of over-exuberant government spending, massive income disparity between the rich and poor and stagnant or declining wages in the middle of a labor shortfall crisis.
There are signs everywhere that the global economy is about to be brought back to reality, including, but by no means limited to, recent poor US unemployment data, a false housing recovery (inundated with cash buyers, flippers and speculation), inability of the government to prosecute bankers and financial operatives for mortgage and other frauds, declining adherence to the constitution and the trampling of civil rights, bogus car sales data with channel stuffing rampant, blaming the weather for poor economic results (seriously, the holiday shopping season was a complete bust), and overvaluation of speculative IPOs, tech stocks and other momentum stocks, enterprise valuations of stocks in the billions of dollars, based on nothing but pure speculation.
Nothing will stop the wreckage that the Fed and global central banks working in collusion have set in motion. The numbers are ghastly and overwhelming and the warnings have been written about for years. The time to prepare was yesterday, though there is still time, but thought processes must change. Status and wealth should not be measured by the size of one's McMansion, the price of one's car or the depth of one's stock portfolio. True wealth consists of something along these lines: a fully-paid-for home on five or more acres of land, two-thirds of it arable, food and water storage to last at least a year, a horde of cash, gold and/or silver, absolutely ZERO DEBT, and the ability and weaponry to defend it all.
Ask yourself, who among you can make claim to that, because that is real wealth, not the paper promises from Wall Street or Washington.
It's coming. And it may be approaching even faster than anyone wants to consider (think Ukraine).
Good luck.
Tuesday, June 11, 2013
Stocks Decline Globally as QE and ZIRP Show There are Limits
With losers outpacing gainers by a 4:1 margin, stocks got trashed today around the globe, starting in Japan - which triggered the entire equity rout - and ending here in the USA where the Dow lost 108 points, and, despite that stiff selloff, was still easily the best performer of the major indices on a percentage basis.
The NASDAQ and NYSE Composite took the day's losses the worst, off 1.06% and 1.10% respectively. The S&P dropped by just more than one percent.
The worldwide selling spree was set off when the Japanese leadership declined to extend their bond and market easing measures past what was already in place. Speculators expected the BoJ to increase bond and ETF purchases, but came away disappointed.
That sent the Nikkei and Topix tumbling to the downside, and greeted European investors with markedly negative prospects as their trading day began.
In the US, futures were heavily to the downside, resulting in the indices hitting their lowest points just minutes into trading. Remarkably, stocks came nearly all the way back - with the Dow going positive for a few moments before noon, but the low-volume rally fooled nobody and sellers came back in force to take stocks back down for the rest of the session.
Adding to the already nervous environment, the 10-year note bounced up as high as 2.28%, but ended the day at a relatively benign 2.18%, though fear of higher rates and a tapering of the Fed's bond buying program remained a key market driver in both stocks and bonds.
A fortnight of protests in Turkey finally exploded into a somewhat violent repression by government forces, who used water cannons and tear gas to disperse about 10,000 protesters. Also, late in the day, news broke that the ACLU had filed suit against the US government over the NSA's recently-exposed monitoring of nearly all domestic communications, calling the activity unconstitutional.
This is truly a dangerous environment, both for investors and ordinary citizens. Stocks are hovering in a range just below all-time highs and recent lows, while Washington is awash in scandals ranging from covering up the assassination of a diplomat and others in Libya (Benghazi), to wiretapping reporters to having the IRS harass political opposition. In another time, there would be protests all over the Washington Mall and cries for impeachment of president Obama would be drowning out reasonable discourse. But, Americans have grown so used to government malfeasance and the country has become so dependent on government entitlements that nobody seems capable of raising their voice to an administration and a congress that has trampled the constitution ever since 9/11/2001.
What will it take to shake things up and clean the garbage out of our corrupt-to-the-core political and financial system? A severe market crash? A politician with will and integrity? A hot war in Syria? Something else?
Stay tuned for what should develop into a very contentious, heated summer of pandemonium in markets and politics. The events of the past two to three weeks have been just the warm-up act. The main attraction begins when the cronies turn on each other.
Dow 15,122.02, -116.57 (0.76%)
NASDAQ 3,436.95, -36.82 (1.06%)
S&P 500 1,626.13, -16.68 (1.02%)
NYSE Composite 9,255.44, -102.56 (1.10%)
NASDAQ Volume 1,477,085,500
NYSE Volume 3,854,662,750
Combined NYSE & NASDAQ Advance - Decline: 1286-5251
Combined NYSE & NASDAQ New highs - New lows: 131-308
WTI crude oil: 95.38, -0.39
Gold: 1,377.00, -9.00
Silver: 21.65, -0.279
The NASDAQ and NYSE Composite took the day's losses the worst, off 1.06% and 1.10% respectively. The S&P dropped by just more than one percent.
The worldwide selling spree was set off when the Japanese leadership declined to extend their bond and market easing measures past what was already in place. Speculators expected the BoJ to increase bond and ETF purchases, but came away disappointed.
That sent the Nikkei and Topix tumbling to the downside, and greeted European investors with markedly negative prospects as their trading day began.
In the US, futures were heavily to the downside, resulting in the indices hitting their lowest points just minutes into trading. Remarkably, stocks came nearly all the way back - with the Dow going positive for a few moments before noon, but the low-volume rally fooled nobody and sellers came back in force to take stocks back down for the rest of the session.
Adding to the already nervous environment, the 10-year note bounced up as high as 2.28%, but ended the day at a relatively benign 2.18%, though fear of higher rates and a tapering of the Fed's bond buying program remained a key market driver in both stocks and bonds.
A fortnight of protests in Turkey finally exploded into a somewhat violent repression by government forces, who used water cannons and tear gas to disperse about 10,000 protesters. Also, late in the day, news broke that the ACLU had filed suit against the US government over the NSA's recently-exposed monitoring of nearly all domestic communications, calling the activity unconstitutional.
This is truly a dangerous environment, both for investors and ordinary citizens. Stocks are hovering in a range just below all-time highs and recent lows, while Washington is awash in scandals ranging from covering up the assassination of a diplomat and others in Libya (Benghazi), to wiretapping reporters to having the IRS harass political opposition. In another time, there would be protests all over the Washington Mall and cries for impeachment of president Obama would be drowning out reasonable discourse. But, Americans have grown so used to government malfeasance and the country has become so dependent on government entitlements that nobody seems capable of raising their voice to an administration and a congress that has trampled the constitution ever since 9/11/2001.
What will it take to shake things up and clean the garbage out of our corrupt-to-the-core political and financial system? A severe market crash? A politician with will and integrity? A hot war in Syria? Something else?
Stay tuned for what should develop into a very contentious, heated summer of pandemonium in markets and politics. The events of the past two to three weeks have been just the warm-up act. The main attraction begins when the cronies turn on each other.
Dow 15,122.02, -116.57 (0.76%)
NASDAQ 3,436.95, -36.82 (1.06%)
S&P 500 1,626.13, -16.68 (1.02%)
NYSE Composite 9,255.44, -102.56 (1.10%)
NASDAQ Volume 1,477,085,500
NYSE Volume 3,854,662,750
Combined NYSE & NASDAQ Advance - Decline: 1286-5251
Combined NYSE & NASDAQ New highs - New lows: 131-308
WTI crude oil: 95.38, -0.39
Gold: 1,377.00, -9.00
Silver: 21.65, -0.279
Thursday, June 6, 2013
Terrific Turnaround Thursday Presages Friday's Key Jobs Report
Whipsawing the markets today in the US were a variety of cross-currents that send stocks screaming into the red in the morning and elevating to new heights in the afternoon.
Most important of all was probably the US$/Yen carry trade, in which the dollar, weakening over the past few days against the Yen took a very large hit just prior to the noon hour in New York, sending the pair below 97 (it had been as high as 105 recently), shaking investors and proponents of Abenomics, the massive stimulative package that has the imprimatur of Japan's Prime Minister, Shinzo Abe.
The Nikkei had closed modestly lower, keeping intact the downside move that has been in place the past few weeks, but the slide in the dollar was against more than just the Yen. The Euro was especially strong, after comments from ECB head Mario Draghi buoyed European markets. On the dollar dive, stocks also took it on the chin, with the Dow losing 117 points at the bottom of the day's trading range.
Also weighing on the markets were the week-long riots and demonstrations in Turkey, a key player in world markets and something of a hinge between the Middle East and the European Union. Turkey also borders Syria, as dangerous a place as there is in the world today, and tensions in Turkey could signal more widespread discontent of the citizenry from Ireland to Ethiopia, to say nothing of its value as a NATO ally and buffer against Russia, with whom we are still at war in a protracted, proxy kind of way.
Earlier in the morning, figures on initial and continuing unemployment were released, and though they were moderately improved, investors were looking past them, toward tomorrow's non-farms payroll release by the BLS.
That number is supposed to come in at around 165,000 new jobs created in the month of May, and speculators are placing bets on both sides of the coin. If the number comes in below 140,000, it will be viewed as a weak labor market, meaning that the Federal Reserve cannot - or at least should not - begin tapering its massive bond purchases. Any number over 190,000 would register as a strengthening of the employment market, meaning that the Fed could begin considering tapering as soon as their June meeting in less than two weeks (June 18-19).
Thus, a stronger US economy (unlikely) would be bad for stocks, and a weak employment picture would be good. Such is the strained logic permeating Wall Street in these strange days.
From top to bottom, the range on the Dow was nearly 200 points, but even with the rise - set off when the S&P and Dow Industrials almost simultaneously pierced their respective 50-day moving averages - the rally (or was is just a dead cat bounce) failed to erase half the losses from Wednesday's melt-down.
Sentiment appears to be changing slightly, however, as more and more speculators become aware of the inept nature of the Fed and central banks everywhere, unable to stem the tide of deflation and a sluggish global economy.
Tomorrow's jobs reports may be important to some, though it is more than likely to be a non-event, with a wide berth given to gauge the response of the Federal Reserve. Besides, it's going into a weekend and none of those Wall Street hotshots want to head to the Hamptons in a bad mood.
Of course, there's more at stake than just jobs and the economy and whether stocks should be the primary asset in one's portfolio. Bonds, buffeted about by the changing paradigm of currency devaluation and rapidly escalating trade wars have firmed up somewhat, with the ten-year closing just above a two percent yield.
On Tuesday, the EU imposed stiff tariffs on Chinese solar panels, and yesterday, the Chinese retaliated by suggesting levies on imports of French, Italian and Spanish wines, hitting the Europeans where it hurts.
With the late-day rally, the advance-decline line was positive and new lows - new highs were nearly even. Much of today's rally was likely built off of short-covering, as shorts remain gun-shy, stung by the continued beatings they've taken over the past four years, though that condition appears prime to undergo some significant change.
The wheels are beginning to come off, as Fed policies are being seen as largely ineffective and a massive waste of money, while world events should continue to heat up in coming weeks and months. Volatility could not be subdued forever and the risk that the bull market is over continues a distinct possibility.
Volume in equities was strong. Gold and silver had solid showings, especially gold, which breached the key $1400 mark to the upside.
Dow 15,040.62, +80.03 (0.53%)
NASDAQ 3,424.05, +22.58 (0.66%)
S&P 500 1,622.56, +13.66 (0.85%)
NYSE Compos... 9,260.47, +82.05 (0.89%)
NASDAQ Volume 1,732,547,125
NYSE Volume 4,008,892,500
Combined NYSE & NASDAQ Advance - Decline: 4676-1833
Combined NYSE & NASDAQ New highs - New lows: 89=87
WTI crude oil: 94.76, +1.02
Gold: 1,415.80, +17.30
Silver: 22.71, +0.235
Most important of all was probably the US$/Yen carry trade, in which the dollar, weakening over the past few days against the Yen took a very large hit just prior to the noon hour in New York, sending the pair below 97 (it had been as high as 105 recently), shaking investors and proponents of Abenomics, the massive stimulative package that has the imprimatur of Japan's Prime Minister, Shinzo Abe.
The Nikkei had closed modestly lower, keeping intact the downside move that has been in place the past few weeks, but the slide in the dollar was against more than just the Yen. The Euro was especially strong, after comments from ECB head Mario Draghi buoyed European markets. On the dollar dive, stocks also took it on the chin, with the Dow losing 117 points at the bottom of the day's trading range.
Also weighing on the markets were the week-long riots and demonstrations in Turkey, a key player in world markets and something of a hinge between the Middle East and the European Union. Turkey also borders Syria, as dangerous a place as there is in the world today, and tensions in Turkey could signal more widespread discontent of the citizenry from Ireland to Ethiopia, to say nothing of its value as a NATO ally and buffer against Russia, with whom we are still at war in a protracted, proxy kind of way.
Earlier in the morning, figures on initial and continuing unemployment were released, and though they were moderately improved, investors were looking past them, toward tomorrow's non-farms payroll release by the BLS.
That number is supposed to come in at around 165,000 new jobs created in the month of May, and speculators are placing bets on both sides of the coin. If the number comes in below 140,000, it will be viewed as a weak labor market, meaning that the Federal Reserve cannot - or at least should not - begin tapering its massive bond purchases. Any number over 190,000 would register as a strengthening of the employment market, meaning that the Fed could begin considering tapering as soon as their June meeting in less than two weeks (June 18-19).
Thus, a stronger US economy (unlikely) would be bad for stocks, and a weak employment picture would be good. Such is the strained logic permeating Wall Street in these strange days.
From top to bottom, the range on the Dow was nearly 200 points, but even with the rise - set off when the S&P and Dow Industrials almost simultaneously pierced their respective 50-day moving averages - the rally (or was is just a dead cat bounce) failed to erase half the losses from Wednesday's melt-down.
Sentiment appears to be changing slightly, however, as more and more speculators become aware of the inept nature of the Fed and central banks everywhere, unable to stem the tide of deflation and a sluggish global economy.
Tomorrow's jobs reports may be important to some, though it is more than likely to be a non-event, with a wide berth given to gauge the response of the Federal Reserve. Besides, it's going into a weekend and none of those Wall Street hotshots want to head to the Hamptons in a bad mood.
Of course, there's more at stake than just jobs and the economy and whether stocks should be the primary asset in one's portfolio. Bonds, buffeted about by the changing paradigm of currency devaluation and rapidly escalating trade wars have firmed up somewhat, with the ten-year closing just above a two percent yield.
On Tuesday, the EU imposed stiff tariffs on Chinese solar panels, and yesterday, the Chinese retaliated by suggesting levies on imports of French, Italian and Spanish wines, hitting the Europeans where it hurts.
With the late-day rally, the advance-decline line was positive and new lows - new highs were nearly even. Much of today's rally was likely built off of short-covering, as shorts remain gun-shy, stung by the continued beatings they've taken over the past four years, though that condition appears prime to undergo some significant change.
The wheels are beginning to come off, as Fed policies are being seen as largely ineffective and a massive waste of money, while world events should continue to heat up in coming weeks and months. Volatility could not be subdued forever and the risk that the bull market is over continues a distinct possibility.
Volume in equities was strong. Gold and silver had solid showings, especially gold, which breached the key $1400 mark to the upside.
Dow 15,040.62, +80.03 (0.53%)
NASDAQ 3,424.05, +22.58 (0.66%)
S&P 500 1,622.56, +13.66 (0.85%)
NYSE Compos... 9,260.47, +82.05 (0.89%)
NASDAQ Volume 1,732,547,125
NYSE Volume 4,008,892,500
Combined NYSE & NASDAQ Advance - Decline: 4676-1833
Combined NYSE & NASDAQ New highs - New lows: 89=87
WTI crude oil: 94.76, +1.02
Gold: 1,415.80, +17.30
Silver: 22.71, +0.235
Thursday, May 30, 2013
Global Equity-Ponzi Bubble Expands (except in Japan)
Apparently, Japanese Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda just don't have the same financial panache as maybe Barack Obama and Fed head, Ben Bernanke.
If they did, their stock market - the Nikkei - would not have fallen five percent on Thursday, in a continuing downdraft in Japanese equities. Had they the skills of Bernanke, their stocks would have been up, like in the US, where the major averages shrugged off Wednesday's declines and rallied throughout the session.
Then again, maybe the Japanese have something up their sleeve, issuing new foreign exchange margin trading rules within the final hour of trading in New York, which prompted the markets - especially the Dow Industrials - to discard most of the gains on the day and cause the Dollar/Yen carry trade to slip into the red.
In today's economic landscape, controlled almost entirely by central banks, these kinds of things aren't supposed to happen. Stocks are always supposed to go up, the Yen must fall against the mighty US dollar (and all other currencies), bonds stabilize at historical low levels and unicorns puke up skittles and gold nuggets.
Maybe it's that last part - those gold nuggets - that have everybody nervous. Everyone knows that the spot, or paper, or futures gold price has nothing to do with the actual price of gold in physical terms and this disconnect, though held well below the surface purposely, because, in the words of the Great Bernanke, gold is not money and is something of an "ancient relic" in financial terms.
Well, that's just too bad, because gold has always been money, along with silver, and the price one pays for actual physical metal has become disjointed from all those other artificial prices, none of which entitles the holders of some precious scrip to actual, physical metal, and that's all that really counts in the end.
A promise to buy gold or silver or to have gold or silver or to receive gold or silver is not the same as actually holding it in one's possession.
In the long run, gold and silver will always be money. All the paper "equivalents" and substitutes will be about as worthless as... well, pieces of paper.
The wheels of the global Ponzi train to Zimbabwe are about to come off and the differences between that useless spot price and the real price of gold and silver are acting as the catalysts. When the markets finally collapse, which they - by mathematical certainty - must, fingers will be pointed everywhere: at the Fed, at the government, at the rich, at the poor, at Social Security, at China. But gold and silver will be blameless because, THEY ARE MONEY, and they will forever be money, despite Mr. Bernanke's views on the subject.
Dow 15,324.53, +21.73 (0.14%)
NASDAQ 3,491.30, +23.78 (0.69%)
S&P 500 1,654.41, +6.05 (0.37%)
NYSE Composite 9,460.05, +37.56 (0.40%)
NASDAQ Volume 1,746,768,625
NYSE Volume 3,812,669,250
Combined NYSE & NASDAQ Advance - Decline: 4070-2380
Combined NYSE & NASDAQ New highs - New lows: 295-80
WTI crude oil: 93.61, +0.48
Gold: 1,411.50, +20.20
Silver: 22.69, +0.237
If they did, their stock market - the Nikkei - would not have fallen five percent on Thursday, in a continuing downdraft in Japanese equities. Had they the skills of Bernanke, their stocks would have been up, like in the US, where the major averages shrugged off Wednesday's declines and rallied throughout the session.
Then again, maybe the Japanese have something up their sleeve, issuing new foreign exchange margin trading rules within the final hour of trading in New York, which prompted the markets - especially the Dow Industrials - to discard most of the gains on the day and cause the Dollar/Yen carry trade to slip into the red.
In today's economic landscape, controlled almost entirely by central banks, these kinds of things aren't supposed to happen. Stocks are always supposed to go up, the Yen must fall against the mighty US dollar (and all other currencies), bonds stabilize at historical low levels and unicorns puke up skittles and gold nuggets.
Maybe it's that last part - those gold nuggets - that have everybody nervous. Everyone knows that the spot, or paper, or futures gold price has nothing to do with the actual price of gold in physical terms and this disconnect, though held well below the surface purposely, because, in the words of the Great Bernanke, gold is not money and is something of an "ancient relic" in financial terms.
Well, that's just too bad, because gold has always been money, along with silver, and the price one pays for actual physical metal has become disjointed from all those other artificial prices, none of which entitles the holders of some precious scrip to actual, physical metal, and that's all that really counts in the end.
A promise to buy gold or silver or to have gold or silver or to receive gold or silver is not the same as actually holding it in one's possession.
In the long run, gold and silver will always be money. All the paper "equivalents" and substitutes will be about as worthless as... well, pieces of paper.
The wheels of the global Ponzi train to Zimbabwe are about to come off and the differences between that useless spot price and the real price of gold and silver are acting as the catalysts. When the markets finally collapse, which they - by mathematical certainty - must, fingers will be pointed everywhere: at the Fed, at the government, at the rich, at the poor, at Social Security, at China. But gold and silver will be blameless because, THEY ARE MONEY, and they will forever be money, despite Mr. Bernanke's views on the subject.
Dow 15,324.53, +21.73 (0.14%)
NASDAQ 3,491.30, +23.78 (0.69%)
S&P 500 1,654.41, +6.05 (0.37%)
NYSE Composite 9,460.05, +37.56 (0.40%)
NASDAQ Volume 1,746,768,625
NYSE Volume 3,812,669,250
Combined NYSE & NASDAQ Advance - Decline: 4070-2380
Combined NYSE & NASDAQ New highs - New lows: 295-80
WTI crude oil: 93.61, +0.48
Gold: 1,411.50, +20.20
Silver: 22.69, +0.237
Thursday, May 23, 2013
US Stocks Reverse Early Losses; How Buy-Backs Distort Corporate Earnings; John Cleese Plays Merchant Banker
After yesterday's Fed comments, overnight, Japan got whipsawed, with the Nikkei down more than 7% on the session. Markets in Europe also tanked, but here in America, where any news is regarded as good, markets erased massive losses garnered out of the gate (Dow was down 127 points early in the session) and finished nearly flat, though the major indices finished in the red (not enough POMO, one assumes).
What a horrible joke this market continues to be. It is amazing and disgusting at the same time. No matter what, however, it will never go down until the big players deem it is time to do so, and, obviously, today was not that time.
Today brings more information about how the rally in equities has been manufactured by corporations buying back record amounts of stock and thusly skewing earnings reports, making them appear positive when they are nothing but figments of creative accounting.
For simplicity purposes, when a company buys back its own stock, it takes it out of circulation, lowering the number of shares by which earnings are gauged, i.e., EPS or "earnings per share."
So, if Corporation A has 1000 shares outstanding, and profits of $2000, their EPS is calculated thus, $2000 (earnings) divided by 1000 (shares) = $2.00 earnings per share.
When corporation A buys back 100 shares and actually does a little worse, with profits of $1900, this looks positive because EPS is up, because $1900 in earnings is now divided by just 900 shares, not 1000, so the resultant EPS is now $2.11, even though the company is actually shrinking.
This will only become a huge problem when people en masse realize that most corporate profits these days are nothing more than financial trickery, though that could be a long time coming, considering how 95% of America is financially illiterate.
Bottom line, this will eventually be a great thing for America, when the fraud and rot is finally rooted out, because most of these giant corporations will be nothing but hollowed out shells and real Americans can begin rebuilding a real economy.
Max Keiser has the rundown in today's edition of the Keiser Report:
Here's a a comment from ZH, that explains a simple philosophy of life (with a few edits) in response to a comment to this article:
Having wasted the time it took to read most of this article, I found your example to be most profound and gave you the second up arrow. If I could somehow bestow more "ups" I would, but the point is that the article bases the plight of an entire generation - X, in this case - on luck, timing and the evils of the "system."
The article, like most presented by CHS, is more socialist bullcrap and your comment proves him 100% wrong. Anyone with initiative and a little bit of smarts and some skills can become self-sufficient and perhapes even "wealthy" or prosperous, as is the ongoing discussion with MachoMan.
Here's how I define prosperous (for myself, and I think I'm the richest guy in the world): No debt, paid-in-full domicile, with enough land to grow enough food for 1/2 a year for self or family. Steady income stream, few, or no employees. Obviously, I run my own business.
There are many ways to make more money - and keep almost all of it out of the hands of the government leeches - than having a "job." A job or career is like a yoke around one's neck; one is forever tied to that particular skill set. When that skill set becomes antiquated or overtaken by technology, one immediately becomes lost. Those who do for themselves almost never reach this state; instead, they find new ways to do things, are constantly in search of better ways to escape the tyranny of the system. Stay in the system and your life gets ruled by it. You become a slave to debt, government or keeping up with your peers, any one of which will suck the life out of you.
Stop measuring success by money and you'll find a richness of life right in your own back yard. I strongly recommend reading anything by Gene Langsdon, but especially the Contrary Farmer's Invitation to Gardening. Lots of insight on life, living and growing stuff you can EAT.
As an aside, I broke up with a gal eight months ago who was totally materialistic, to whom nothing mattered except how much one made, how new one's car was and how many cool gadgets you had. Life is so much richer since I began reading Langsdon (last year) and left that simple-minded troll behind. (And, no, I'm not bitter. I am justified.)
Bottom line, ditch that dead-end job and become your own boss. Take some responsibility for your own life and stop whining. You'll feel better and might just thrive on your own.
Since it's only Thursday and the major indices are already staring at losses for the week, a bit of humor at the expense of bankers seems most appropriate, as in the clip below wherein Monty Python's John Cleese plays Merchant Banker.
Dow 15,294.50, -12.67 (0.08%)
NASDAQ 3,459.42, -3.88 (0.11%)
S&P 500 1,650.51, -4.84 (0.29%)
NYSE Composite 9,466.81, -41.24 (0.43%)
NASDAQ Volume 1,720,003,000
NYSE Volume 4,272,195,500
Combined NYSE & NASDAQ Advance - Decline: 2807-3659
Combined NYSE & NASDAQ New highs - New lows: 85-59
WTI crude oil: 94.25, -0.03
Gold: 1,391.80, +24.40
Silver: 22.51, 0.036
What a horrible joke this market continues to be. It is amazing and disgusting at the same time. No matter what, however, it will never go down until the big players deem it is time to do so, and, obviously, today was not that time.
Today brings more information about how the rally in equities has been manufactured by corporations buying back record amounts of stock and thusly skewing earnings reports, making them appear positive when they are nothing but figments of creative accounting.
For simplicity purposes, when a company buys back its own stock, it takes it out of circulation, lowering the number of shares by which earnings are gauged, i.e., EPS or "earnings per share."
So, if Corporation A has 1000 shares outstanding, and profits of $2000, their EPS is calculated thus, $2000 (earnings) divided by 1000 (shares) = $2.00 earnings per share.
When corporation A buys back 100 shares and actually does a little worse, with profits of $1900, this looks positive because EPS is up, because $1900 in earnings is now divided by just 900 shares, not 1000, so the resultant EPS is now $2.11, even though the company is actually shrinking.
This will only become a huge problem when people en masse realize that most corporate profits these days are nothing more than financial trickery, though that could be a long time coming, considering how 95% of America is financially illiterate.
Bottom line, this will eventually be a great thing for America, when the fraud and rot is finally rooted out, because most of these giant corporations will be nothing but hollowed out shells and real Americans can begin rebuilding a real economy.
Max Keiser has the rundown in today's edition of the Keiser Report:
Here's a a comment from ZH, that explains a simple philosophy of life (with a few edits) in response to a comment to this article:
Having wasted the time it took to read most of this article, I found your example to be most profound and gave you the second up arrow. If I could somehow bestow more "ups" I would, but the point is that the article bases the plight of an entire generation - X, in this case - on luck, timing and the evils of the "system."
The article, like most presented by CHS, is more socialist bullcrap and your comment proves him 100% wrong. Anyone with initiative and a little bit of smarts and some skills can become self-sufficient and perhapes even "wealthy" or prosperous, as is the ongoing discussion with MachoMan.
Here's how I define prosperous (for myself, and I think I'm the richest guy in the world): No debt, paid-in-full domicile, with enough land to grow enough food for 1/2 a year for self or family. Steady income stream, few, or no employees. Obviously, I run my own business.
There are many ways to make more money - and keep almost all of it out of the hands of the government leeches - than having a "job." A job or career is like a yoke around one's neck; one is forever tied to that particular skill set. When that skill set becomes antiquated or overtaken by technology, one immediately becomes lost. Those who do for themselves almost never reach this state; instead, they find new ways to do things, are constantly in search of better ways to escape the tyranny of the system. Stay in the system and your life gets ruled by it. You become a slave to debt, government or keeping up with your peers, any one of which will suck the life out of you.
Stop measuring success by money and you'll find a richness of life right in your own back yard. I strongly recommend reading anything by Gene Langsdon, but especially the Contrary Farmer's Invitation to Gardening. Lots of insight on life, living and growing stuff you can EAT.
As an aside, I broke up with a gal eight months ago who was totally materialistic, to whom nothing mattered except how much one made, how new one's car was and how many cool gadgets you had. Life is so much richer since I began reading Langsdon (last year) and left that simple-minded troll behind. (And, no, I'm not bitter. I am justified.)
Bottom line, ditch that dead-end job and become your own boss. Take some responsibility for your own life and stop whining. You'll feel better and might just thrive on your own.
Since it's only Thursday and the major indices are already staring at losses for the week, a bit of humor at the expense of bankers seems most appropriate, as in the clip below wherein Monty Python's John Cleese plays Merchant Banker.
Dow 15,294.50, -12.67 (0.08%)
NASDAQ 3,459.42, -3.88 (0.11%)
S&P 500 1,650.51, -4.84 (0.29%)
NYSE Composite 9,466.81, -41.24 (0.43%)
NASDAQ Volume 1,720,003,000
NYSE Volume 4,272,195,500
Combined NYSE & NASDAQ Advance - Decline: 2807-3659
Combined NYSE & NASDAQ New highs - New lows: 85-59
WTI crude oil: 94.25, -0.03
Gold: 1,391.80, +24.40
Silver: 22.51, 0.036
Wednesday, April 24, 2013
Flash Crash Proves Individuals are OUT of the Market and Computers Run the Show
As mentioned briefly yesterday, US and European markets are a joke. They are manipulated beyond one's wildest imagination and almost exclusively, the trading is done by computer algorithms, as was made entirely too clear by the action in yesterday's hacked AP Twitter account-flash crash.
In case you missed it - after all, it was only a four minute event - stocks lost all of their gains when somebody hacked into the Twitter account of the Associated Press (AP) and posted that there were two explosions at the white House and that President Barack Obama had been injured.
The tweet was a hoax, but the computers - which cannot deduce and make value judgements - responded by selling off all stocks. Volume, as displayed in animations from nanex.net completely dried up, leaving a few computers trading with a few other computers.
In other words, there were very few, if any, human responses to the fake tweet. Welcome to the bidless US stock markets, where only the computers can get the best prices and humans are relegated to a back seat. Any wonder why individual investors are wary of the stock markets? The same conditions likely exist - though not in such a pronounced manner - in forex and commodity markets.
It's time the American people disengage from this lunacy where only the bankers, exchanges and traders profit.
Take, for instance, today's trading, in which, when all was said and done at the close, the S&P gained a penny, the NASDAQ, 32 cents, while the Dow was down 43 points and the NYSE Composite gained almost 34 points. Surely that makes sense to some master algo inside a supercomputer somewhere beneath the trading floors, but to us dumb humans, it's somewhat confounding and confusing.
CNBC's Rick Santelli astutely pointed out that the other trade impacted by the phony tweet was none other than the Japanese Yen - US Dollar cross and the Yen/Euro cross, making the point that the Yen is now also tied into US stocks by HFT algos. Lovely.
Sooner or later, there's going to be a mistake somewhere, or some purposeful key-logging or hacking that completely disrupts trading in markets nearly around the world, and by then it will be too late. Obviously, having algos that trade on the basis of tweeted information is rife with flaws and ripe for harvest by nefarious forces.
As far as today's trading is concerned, nothing really mattered, even though the US was hit with another poor economic report, this one on durable goods orders for March, which came in at -5.1% on expectations of -3.1, so it was a bad miss on an equally bad forecast.
The spate of bad economic data has been partially offset of late by fairly good earnings reports from a smorgasbord of companies, close to half the S&P 500 having already reported. Of course, the algos are all over those, programmed to buy heavily on any earnings beats and disregard most misses.
Reality seems to have evaded Wall Street on a semi-permanent basis, but, Wall Street has never purported to have been a place for well-grounded types of people in the first place.
With sociopaths running the computers which trade the world, humans are bound to get bruised, and badly.
Gold and silver got a little bit of a bid, but a good chuck of it after the COMEX trading session ended. Oil was the top-performer with a gain of more than two percent. Oil never seems to be able to stay down for long. Funny how that always seems to be the case.
Dow 14,676.30, -43.16 (0.29%)
NASDAQ 3,269.65, +0.32 (0.01%)
S&P 500 1,578.79, +0.01 (0.00%)
NYSE Composite 9,147.77, +32.65 (0.37%)
NASDAQ Volume... 1,643,812,625.00
NYSE Volume 3,647,139,250
Combined NYSE & NASDAQ Advance - Decline: 4021-2343
Combined NYSE & NASDAQ New highs - New lows: 381-36
WTI crude oil: 91.43, +2.25
Gold: 1,423.70, +14.90
Silver: 22.83, +0.016
In case you missed it - after all, it was only a four minute event - stocks lost all of their gains when somebody hacked into the Twitter account of the Associated Press (AP) and posted that there were two explosions at the white House and that President Barack Obama had been injured.
The tweet was a hoax, but the computers - which cannot deduce and make value judgements - responded by selling off all stocks. Volume, as displayed in animations from nanex.net completely dried up, leaving a few computers trading with a few other computers.
In other words, there were very few, if any, human responses to the fake tweet. Welcome to the bidless US stock markets, where only the computers can get the best prices and humans are relegated to a back seat. Any wonder why individual investors are wary of the stock markets? The same conditions likely exist - though not in such a pronounced manner - in forex and commodity markets.
It's time the American people disengage from this lunacy where only the bankers, exchanges and traders profit.
Take, for instance, today's trading, in which, when all was said and done at the close, the S&P gained a penny, the NASDAQ, 32 cents, while the Dow was down 43 points and the NYSE Composite gained almost 34 points. Surely that makes sense to some master algo inside a supercomputer somewhere beneath the trading floors, but to us dumb humans, it's somewhat confounding and confusing.
CNBC's Rick Santelli astutely pointed out that the other trade impacted by the phony tweet was none other than the Japanese Yen - US Dollar cross and the Yen/Euro cross, making the point that the Yen is now also tied into US stocks by HFT algos. Lovely.
Sooner or later, there's going to be a mistake somewhere, or some purposeful key-logging or hacking that completely disrupts trading in markets nearly around the world, and by then it will be too late. Obviously, having algos that trade on the basis of tweeted information is rife with flaws and ripe for harvest by nefarious forces.
As far as today's trading is concerned, nothing really mattered, even though the US was hit with another poor economic report, this one on durable goods orders for March, which came in at -5.1% on expectations of -3.1, so it was a bad miss on an equally bad forecast.
The spate of bad economic data has been partially offset of late by fairly good earnings reports from a smorgasbord of companies, close to half the S&P 500 having already reported. Of course, the algos are all over those, programmed to buy heavily on any earnings beats and disregard most misses.
Reality seems to have evaded Wall Street on a semi-permanent basis, but, Wall Street has never purported to have been a place for well-grounded types of people in the first place.
With sociopaths running the computers which trade the world, humans are bound to get bruised, and badly.
Gold and silver got a little bit of a bid, but a good chuck of it after the COMEX trading session ended. Oil was the top-performer with a gain of more than two percent. Oil never seems to be able to stay down for long. Funny how that always seems to be the case.
Dow 14,676.30, -43.16 (0.29%)
NASDAQ 3,269.65, +0.32 (0.01%)
S&P 500 1,578.79, +0.01 (0.00%)
NYSE Composite 9,147.77, +32.65 (0.37%)
NASDAQ Volume... 1,643,812,625.00
NYSE Volume 3,647,139,250
Combined NYSE & NASDAQ Advance - Decline: 4021-2343
Combined NYSE & NASDAQ New highs - New lows: 381-36
WTI crude oil: 91.43, +2.25
Gold: 1,423.70, +14.90
Silver: 22.83, +0.016
Thursday, April 4, 2013
Money, Money Everywhere, But Not a Buck to Lend
The world is awash in liquidity, but nobody seems to have any money.
At least that is the case for the 90% of Americans - and probably 95% of the rest of the world - that don't have access to easy money from central banks around the world.
Consider today's action by the Bank of Japan's new finance minister Haruhiko Kuroda, pladging unprecedented monetary stimulus by doubling Japan's central bank balance sheet by the end of 2014 through outright purchases of government bonds, ranging anywhere from short term notes to the 40-year Japanese bond.
The move puts Japan on a par with the mad money printer, Ben Bernanke, and in the same camp as the ECB's Mario Draghi, who vowed last year to do anything possible to save the Euro.
Such policies, like the Fed's $85 billion monthly purchases of treasuries and MBS (near-worthless), would have been unheard of just ten years ago, but today they are accepted as matter-of-fact as the bank heads continue trying to prop up zombie banks that have been bankrupt since 2008 (1992 in Japan's case) and governments which made promises to their people in the form of health care and retirement benefits that are slowly but surely bankrupting their entire nations.
These policies are doomed to fail, as they inflate various economies, crushing the purchasing power of the average citizen to a point at which many are priced out of mere survival. Ergo, the 49 million Americans receiving food stamps, unprecedented numbers on disability or welfare, programs which strip away the dignity of the individual, making them wards of the state.
Governments worldwide cannot balance their budgets due to these absurd entitlement programs, yet common people go about their business like the legendary "Annie Hall," tripping through life, dismissing any pitfalls with a cheery "la-dee-da."
Wall Street and the markets in Japan, London and Europe are no different. Obvious economic headwinds, like today's massive miss on first time unemployment claims (385,000 on expectations of 345K) are simply shrugged off as investors have no other place to put money to work but in risky stocks, though the correct strategy in times of impending hyper-inflation would be to park in cash and tangible assets such as land, gold, silver and productive machinery, because today's prices will look like peanuts compared to what people will be paying once the inflation tiger is unleashed.
Thus far, central bankers have been lucky. Inflation hasn't been all that ferocious, though spikes in oil, gas, food and other commodities have already been notable. Keeping inflation in line has been the stagnant to negative growth of incomes. With less money, people simply can't afford to splurge, and if less money is chasing the same amount of goods, prices will remain relatively stable, though that certainly cannot be guaranteed with the incredible amount of liquidity being force-fed into the system.
Also aiding their efforts is the fact that most of the inflation has been in stocks, which are ridiculously priced. All this may be coming to an abrupt ending with first quarter earnings reports. Many companies are just barely making their estimates even though the bar continues to be lowered. At some point, investors will demand more, along the lines of 15% year-over-year earnings acceleration, higher dividends and better margins, all the things a healthy market economy would normally expect.
Earnings begin trickling out on Monday, but before that, Friday's non-farm payroll report for March needs to be presented, and, from the looks of the close today, nobody is really sweating that.
After the last three weeks of unemployment figures, however, maybe they should.
Dow 14,606.11, +55.76 (0.38%)
NASDAQ 3,224.98, +6.38 (0.20%)
S&P 500 1,559.98, +6.29 (0.40%)
NYSE Composite 9,027.83, +44.44 (0.49%)
NASDAQ Volume 1,470,237,625
NYSE Volume 3,566,827,500
Combined NYSE & NASDAQ Advance - Decline: 4003-2357
Combined NYSE & NASDAQ New highs - New lows: 123-65
WTI crude oil: 93.26, -1.19
Gold: 1,552.40, -1.10
Silver: 26.77, -0.03
At least that is the case for the 90% of Americans - and probably 95% of the rest of the world - that don't have access to easy money from central banks around the world.
Consider today's action by the Bank of Japan's new finance minister Haruhiko Kuroda, pladging unprecedented monetary stimulus by doubling Japan's central bank balance sheet by the end of 2014 through outright purchases of government bonds, ranging anywhere from short term notes to the 40-year Japanese bond.
The move puts Japan on a par with the mad money printer, Ben Bernanke, and in the same camp as the ECB's Mario Draghi, who vowed last year to do anything possible to save the Euro.
Such policies, like the Fed's $85 billion monthly purchases of treasuries and MBS (near-worthless), would have been unheard of just ten years ago, but today they are accepted as matter-of-fact as the bank heads continue trying to prop up zombie banks that have been bankrupt since 2008 (1992 in Japan's case) and governments which made promises to their people in the form of health care and retirement benefits that are slowly but surely bankrupting their entire nations.
These policies are doomed to fail, as they inflate various economies, crushing the purchasing power of the average citizen to a point at which many are priced out of mere survival. Ergo, the 49 million Americans receiving food stamps, unprecedented numbers on disability or welfare, programs which strip away the dignity of the individual, making them wards of the state.
Governments worldwide cannot balance their budgets due to these absurd entitlement programs, yet common people go about their business like the legendary "Annie Hall," tripping through life, dismissing any pitfalls with a cheery "la-dee-da."
Wall Street and the markets in Japan, London and Europe are no different. Obvious economic headwinds, like today's massive miss on first time unemployment claims (385,000 on expectations of 345K) are simply shrugged off as investors have no other place to put money to work but in risky stocks, though the correct strategy in times of impending hyper-inflation would be to park in cash and tangible assets such as land, gold, silver and productive machinery, because today's prices will look like peanuts compared to what people will be paying once the inflation tiger is unleashed.
Thus far, central bankers have been lucky. Inflation hasn't been all that ferocious, though spikes in oil, gas, food and other commodities have already been notable. Keeping inflation in line has been the stagnant to negative growth of incomes. With less money, people simply can't afford to splurge, and if less money is chasing the same amount of goods, prices will remain relatively stable, though that certainly cannot be guaranteed with the incredible amount of liquidity being force-fed into the system.
Also aiding their efforts is the fact that most of the inflation has been in stocks, which are ridiculously priced. All this may be coming to an abrupt ending with first quarter earnings reports. Many companies are just barely making their estimates even though the bar continues to be lowered. At some point, investors will demand more, along the lines of 15% year-over-year earnings acceleration, higher dividends and better margins, all the things a healthy market economy would normally expect.
Earnings begin trickling out on Monday, but before that, Friday's non-farm payroll report for March needs to be presented, and, from the looks of the close today, nobody is really sweating that.
After the last three weeks of unemployment figures, however, maybe they should.
Dow 14,606.11, +55.76 (0.38%)
NASDAQ 3,224.98, +6.38 (0.20%)
S&P 500 1,559.98, +6.29 (0.40%)
NYSE Composite 9,027.83, +44.44 (0.49%)
NASDAQ Volume 1,470,237,625
NYSE Volume 3,566,827,500
Combined NYSE & NASDAQ Advance - Decline: 4003-2357
Combined NYSE & NASDAQ New highs - New lows: 123-65
WTI crude oil: 93.26, -1.19
Gold: 1,552.40, -1.10
Silver: 26.77, -0.03
Thursday, February 14, 2013
St. Valentine's Day Mascara
No, that's not a misprint in the headline. The word is "mascara" - the stuff women apply to darken, thicken, lengthen, and/or define their eyelashes. It's a cosmetic, as in rouge, or lipstick, as in lipstick on a pig, which is exactly what the algos and buy-siders did to today's undeniably weak, directionless market.
Face it, Europe is a bona-fide basket case, Japan is devaluing its currency so fast that George Soros made nearly a billion dollars on the trade in just over three months.
The news coming out of Euro-fantasy-land was less than encouraging. Eurozone fourth quarter 2012 GDP fell by 0.6%.
Making matters a little more interesting - and more frightening - were the figures for the zone's three largest economies - Germany, France and Italy - whose own GDP fell by 0.6%, 0.3% and 0.9%, respectively.
The Eurozone, even after all the bank and sovereign bailouts, pledges of doing everything possible to promote growth by the likes of Germany's Angela Merkel and EU President Mario Draghi, has resulted in three consecutive quarters of negative GDP. Europe is already in the throes of an economic collapse, thanks largely to protectionism for banks and excessive liquidity from European central bankers (most of whom are Goldman Sachs alum, BTW).
While the GDP numbers may be bad enough, consider youth unemployment (ages 15-25) in the Eurozone to be spreading like the bubonic plague. Greece reported youth unemployment over 60%; Spain over 50% and Portugal just topped 40%. Thirteen of the 27 EU member states are reporting youth unemployment over 25%. Austerity: it's what's for dinner.
Europe is solid proof that the elite class is making up the rules as they go along, and the general public is viewed as collateral damage only. Here in the good old USA, we have our own concerns with the sequestration schedule to commence March 1, which will result in massive federal budget cuts. The president and congress haven't even begun to discuss how they'll handle that, though they uniformly say that sequestration (it doesn't rhyme with castration for no reason) is something they'd prefer to avoid.
Have they acted? No. Will they? Probably, but, like the fiscal cliff deal this past December, it will be a stop-gap measure and cost taxpayers more. Nobody ever cuts anything in Washington, only the rate of growth of programs, because what's important to them is keeping lobbyists and voters (government employees and beneficiaries of government largesse) dumb and happy.
So, on what does this algo-concocted market focus? Berkshire Hathaway's buyout of Heinz. Poor suckers that Americans are, they put ketchup on their chicken and pork hot dogs on day old buns while Uncle Warren reaps the profits. If ever there was a crony capitalist, Warren Buffet's picture belongs next to the definition.
Sure, unemployment claims were down - from 368K to 341K - but aren't those figures still too high? The new normal means just doing better than expectations, even if those expectations are sub-par. It's akin to taking your kid out for ice cream because he got a C in math instead of a D. As a nation, we've lowered our standards in everything from our political leaders to what passes for entertainment.
Along with everything else, we've lowered our standards for rational markets. Today's split decision is just another shining example of the truth hiding in plain sight. Sooner or later, even the talking heads on CNBC are going to come to the realization that making new all-time highs with a -0.1% GDP and unemployment at eight percent doesn't really pass the smell test. Someday. Maybe. Note the video below with Rick Santelli, everyone's favorite financial ranter, extrapolating out on what we've been saying nearly every day on this blog: that being a trader is nearly impossible under current conditions.
And, just as a side note, New York Mayor Bloomberg, who first banned drink containers larger than 16 ounces, has proposed a ban on styrofoam containers, and... it's likely to pass his rubber stamp city council.
Let's see, smokes are $10-12 a pack in NY, you can't smoke in any of the bars, night clubs or public buildings; you must drink from small containers and those soon cannot be made of styrofoam. All this makes one pine for the good old days of the seventies. Ed Koch was mayor. Son of Sam was shooting kids in parking lots. Reggie Jackson was blasting balls out of the original Yankee Stadium and you could buy just about any kind of drug - from weed to cocaine - on just about any street corner. Bloomberg. He's just not a fun guy.
Dow 13,973.39, -9.52 (0.07%)
NASDAQ 3,198.66, +1.78 (0.06%)
S&P 500 1,521.38, +1.05 (0.07%)
NYSE Composite 8,951.33, -4.27 (0.05%)
NASDAQ Volume 1,884,832,750
NYSE Volume 3,867,864,500
Combined NYSE & NASDAQ Advance - Decline: 3259-3130
Combined NYSE & NASDAQ New highs - New lows: 505-39
WTI crude oil: 97.31, +0.30
Gold: 1,635.50, -9.60
Silver: 30.35, -0.516
Face it, Europe is a bona-fide basket case, Japan is devaluing its currency so fast that George Soros made nearly a billion dollars on the trade in just over three months.
The news coming out of Euro-fantasy-land was less than encouraging. Eurozone fourth quarter 2012 GDP fell by 0.6%.
Making matters a little more interesting - and more frightening - were the figures for the zone's three largest economies - Germany, France and Italy - whose own GDP fell by 0.6%, 0.3% and 0.9%, respectively.
The Eurozone, even after all the bank and sovereign bailouts, pledges of doing everything possible to promote growth by the likes of Germany's Angela Merkel and EU President Mario Draghi, has resulted in three consecutive quarters of negative GDP. Europe is already in the throes of an economic collapse, thanks largely to protectionism for banks and excessive liquidity from European central bankers (most of whom are Goldman Sachs alum, BTW).
While the GDP numbers may be bad enough, consider youth unemployment (ages 15-25) in the Eurozone to be spreading like the bubonic plague. Greece reported youth unemployment over 60%; Spain over 50% and Portugal just topped 40%. Thirteen of the 27 EU member states are reporting youth unemployment over 25%. Austerity: it's what's for dinner.
Europe is solid proof that the elite class is making up the rules as they go along, and the general public is viewed as collateral damage only. Here in the good old USA, we have our own concerns with the sequestration schedule to commence March 1, which will result in massive federal budget cuts. The president and congress haven't even begun to discuss how they'll handle that, though they uniformly say that sequestration (it doesn't rhyme with castration for no reason) is something they'd prefer to avoid.
Have they acted? No. Will they? Probably, but, like the fiscal cliff deal this past December, it will be a stop-gap measure and cost taxpayers more. Nobody ever cuts anything in Washington, only the rate of growth of programs, because what's important to them is keeping lobbyists and voters (government employees and beneficiaries of government largesse) dumb and happy.
So, on what does this algo-concocted market focus? Berkshire Hathaway's buyout of Heinz. Poor suckers that Americans are, they put ketchup on their chicken and pork hot dogs on day old buns while Uncle Warren reaps the profits. If ever there was a crony capitalist, Warren Buffet's picture belongs next to the definition.
Sure, unemployment claims were down - from 368K to 341K - but aren't those figures still too high? The new normal means just doing better than expectations, even if those expectations are sub-par. It's akin to taking your kid out for ice cream because he got a C in math instead of a D. As a nation, we've lowered our standards in everything from our political leaders to what passes for entertainment.
Along with everything else, we've lowered our standards for rational markets. Today's split decision is just another shining example of the truth hiding in plain sight. Sooner or later, even the talking heads on CNBC are going to come to the realization that making new all-time highs with a -0.1% GDP and unemployment at eight percent doesn't really pass the smell test. Someday. Maybe. Note the video below with Rick Santelli, everyone's favorite financial ranter, extrapolating out on what we've been saying nearly every day on this blog: that being a trader is nearly impossible under current conditions.
And, just as a side note, New York Mayor Bloomberg, who first banned drink containers larger than 16 ounces, has proposed a ban on styrofoam containers, and... it's likely to pass his rubber stamp city council.
Let's see, smokes are $10-12 a pack in NY, you can't smoke in any of the bars, night clubs or public buildings; you must drink from small containers and those soon cannot be made of styrofoam. All this makes one pine for the good old days of the seventies. Ed Koch was mayor. Son of Sam was shooting kids in parking lots. Reggie Jackson was blasting balls out of the original Yankee Stadium and you could buy just about any kind of drug - from weed to cocaine - on just about any street corner. Bloomberg. He's just not a fun guy.
Dow 13,973.39, -9.52 (0.07%)
NASDAQ 3,198.66, +1.78 (0.06%)
S&P 500 1,521.38, +1.05 (0.07%)
NYSE Composite 8,951.33, -4.27 (0.05%)
NASDAQ Volume 1,884,832,750
NYSE Volume 3,867,864,500
Combined NYSE & NASDAQ Advance - Decline: 3259-3130
Combined NYSE & NASDAQ New highs - New lows: 505-39
WTI crude oil: 97.31, +0.30
Gold: 1,635.50, -9.60
Silver: 30.35, -0.516
Tuesday, February 12, 2013
Print, Baby, Print; Dow Over 14,000 Again
The Dow topped the 14,000 mark for the first time since February 1, setting a closing high that was the best in more than five years.
Thank you, Mr. Bernanke.
There's no substitute for rampant liquidity in a market climate such as this one. Uncertainty continues to abound, the economies of the developed nations are in the proverbial toilet, circling the bowl either in recession (Europe), complete deflationary stagnation (Japan), or barely chugging along at under 2% GDP (USA).
Of late, the Japanese have embarked on "unlimited" quantitative easing (printing money with nothing at all backing it), though the US continues as king of the hill, with the world's largest sovereign economy, the Fed buying up all the rancid mortgage paper and monetizing the federal debt to the tune of $85 billion a month (a touch over $1 trillion per year, annualized).
Europe seems to be getting the message that it's finally time to play no-holds-barred currency war, though the socialists on the continent seem fairly sanguine about continuing their efforts to bail out banks and sovereigns one-by-one, a little at a time, rather than using the bazooka approach favored by Mr. Bernanke.
Sooner or later, the Europeans will devalue by printing, mostly because the high level of the Euro is crimping Germany's exports, and, if Germany's economy suffers, one can probably bet on the good people of Deutschland not being very supportive of the Euro and/or wanting more in return from their Euro-brethren to the south, who, like the American welfare caste, produce nothing, but get much in return.
So the US and other major countries will continue to print, print, print their feckless paper fiat, a time-honored practice that has never ended well, ever. In the meantime, however (and that meantime could stretch out to 2016, 2017, or beyond), one cannot fault stock investors in their search for yield. The past four years in stocks has been nothing but Fat City Easy Street to the xxxxxth degree. During the period from March 9, 2009 until the present, it's been nothing but straight up for stocks, to a point at which the general market is now sporting a 14 multiple, even though many companies are not growing earnings one whit, others making their numbers through cost-cutting and downsizing.
Global finance is in an unsustainable state, but, as long as the printing presses continue to churn out crisp currency, nobody seems to care.
There are signs that it's getting a bit wearisome. Oil is heading over $100 a barrel for WTI crude, despite a glut on the market, especially in the US. Food prices have moderated lately, but they're higher overall than a year, two, three years ago and will only rise from here.
It's a great market for speculators, especially those wearing blinders. Giddy-up!
Dow 14,018.70, +47.46 (0.34%)
NASDAQ 3,186.49, -5.51 (0.17%)
S&P 500 1,519.43, +2.42 (0.16%)
NYSE Composite 8,955.92, +36.90 (0.41%)
NASDAQ Volume 1,719,904,375
NYSE Volume 3,424,131,000
Combined NYSE & NASDAQ Advance - Decline: 4076-2361
Combined NYSE & NASDAQ New highs - New lows: 450-31
WTI crude oil: 97.51, +0.48
Gold: 1,649.60, +0.50
Silver: 31.02, +0.109
Thank you, Mr. Bernanke.
There's no substitute for rampant liquidity in a market climate such as this one. Uncertainty continues to abound, the economies of the developed nations are in the proverbial toilet, circling the bowl either in recession (Europe), complete deflationary stagnation (Japan), or barely chugging along at under 2% GDP (USA).
Of late, the Japanese have embarked on "unlimited" quantitative easing (printing money with nothing at all backing it), though the US continues as king of the hill, with the world's largest sovereign economy, the Fed buying up all the rancid mortgage paper and monetizing the federal debt to the tune of $85 billion a month (a touch over $1 trillion per year, annualized).
Europe seems to be getting the message that it's finally time to play no-holds-barred currency war, though the socialists on the continent seem fairly sanguine about continuing their efforts to bail out banks and sovereigns one-by-one, a little at a time, rather than using the bazooka approach favored by Mr. Bernanke.
Sooner or later, the Europeans will devalue by printing, mostly because the high level of the Euro is crimping Germany's exports, and, if Germany's economy suffers, one can probably bet on the good people of Deutschland not being very supportive of the Euro and/or wanting more in return from their Euro-brethren to the south, who, like the American welfare caste, produce nothing, but get much in return.
So the US and other major countries will continue to print, print, print their feckless paper fiat, a time-honored practice that has never ended well, ever. In the meantime, however (and that meantime could stretch out to 2016, 2017, or beyond), one cannot fault stock investors in their search for yield. The past four years in stocks has been nothing but Fat City Easy Street to the xxxxxth degree. During the period from March 9, 2009 until the present, it's been nothing but straight up for stocks, to a point at which the general market is now sporting a 14 multiple, even though many companies are not growing earnings one whit, others making their numbers through cost-cutting and downsizing.
Global finance is in an unsustainable state, but, as long as the printing presses continue to churn out crisp currency, nobody seems to care.
There are signs that it's getting a bit wearisome. Oil is heading over $100 a barrel for WTI crude, despite a glut on the market, especially in the US. Food prices have moderated lately, but they're higher overall than a year, two, three years ago and will only rise from here.
It's a great market for speculators, especially those wearing blinders. Giddy-up!
Dow 14,018.70, +47.46 (0.34%)
NASDAQ 3,186.49, -5.51 (0.17%)
S&P 500 1,519.43, +2.42 (0.16%)
NYSE Composite 8,955.92, +36.90 (0.41%)
NASDAQ Volume 1,719,904,375
NYSE Volume 3,424,131,000
Combined NYSE & NASDAQ Advance - Decline: 4076-2361
Combined NYSE & NASDAQ New highs - New lows: 450-31
WTI crude oil: 97.51, +0.48
Gold: 1,649.60, +0.50
Silver: 31.02, +0.109
Tuesday, November 13, 2012
Slipping Over the Fiscal Cliff? Stocks Dumped at End of Day
Today's late day action isn't what has been the norm for this artificially-pumped-up market for the last three-and-a-half years. Normally, at the end of the session, the markets stage a "miracle" rally out of the blue, then send futures soaring into the next day's trading.
Today was a little bit different and investors better get used to it or get out, go short or just suffer losses.
Fear of the US going over the fiscal cliff and sending the economy into a tailspin recession would be an unabashed disaster, but that seems to be more on the mind of traders than anything else these days. The problem is that the issues facing the US government aren't going away soon and aren't likely to be solved by a president who's done little in four years and a congress that's done nothing good for the American public for the past 12.
So, after taking on a 67-point loss on the Dow in early trading, stocks regained their momentum (what little there was), based largely on results from Home Depot (HD) which beat third quarter estimates and was traded up to a 12-year high on the day. As has been the pattern recently, however, the rally which took the Dow up 83 points was quickly sold off, and, in the final hour of trading, stocks took the beating they so richly deserved in the morning.
If not for the bogus midday rally (which, remarkably, was a pan-Atlantic event, taking all European stock indices up sharply at the closes of their sessions), the Dow may well have suffered a 100+ loss, but the day-trading crowd that controls all buying and selling with their wickedly fast HFT computer algos couldn't have that, so, the small loss is what got cooked into the day.
With no economic news and very few significant companies reporting third quarter earnings, the markets are stuck with waiting on the government for solutions, and, from what we've seen here and in Europe and Japan, that can be a long and painful wait.
The action continues tomorrow, with just two days left before options expiration on Friday. This current round hasn't been pretty nor profitable for many.
It was the fifth straight day in which new lows topped new highs (and by a widening margin) and the same for the A-D line being negative. all of the major indices are trading below their 200-day moving averages, with no relief in sight.
Dow 12,756.18, -58.90 (0.46%)
NASDAQ 2,883.89, -20.37 (0.70%)
S&P 500 1,374.53, -5.50 (0.40%)
NYSE Composite 8,023.23, -30.83 (0.38%)
NASDAQ Volume 1,814,780,250
NYSE Volume 3,427,123,250
Combined NYSE & NASDAQ Advance - Decline: 1773-3741
Combined NYSE & NASDAQ New highs - New lows: 56-249
WTI crude oil: 85.38, -0.19
Gold: 1,724.80, -6.10
Silver: 32.49, 0.035
Today was a little bit different and investors better get used to it or get out, go short or just suffer losses.
Fear of the US going over the fiscal cliff and sending the economy into a tailspin recession would be an unabashed disaster, but that seems to be more on the mind of traders than anything else these days. The problem is that the issues facing the US government aren't going away soon and aren't likely to be solved by a president who's done little in four years and a congress that's done nothing good for the American public for the past 12.
So, after taking on a 67-point loss on the Dow in early trading, stocks regained their momentum (what little there was), based largely on results from Home Depot (HD) which beat third quarter estimates and was traded up to a 12-year high on the day. As has been the pattern recently, however, the rally which took the Dow up 83 points was quickly sold off, and, in the final hour of trading, stocks took the beating they so richly deserved in the morning.
If not for the bogus midday rally (which, remarkably, was a pan-Atlantic event, taking all European stock indices up sharply at the closes of their sessions), the Dow may well have suffered a 100+ loss, but the day-trading crowd that controls all buying and selling with their wickedly fast HFT computer algos couldn't have that, so, the small loss is what got cooked into the day.
With no economic news and very few significant companies reporting third quarter earnings, the markets are stuck with waiting on the government for solutions, and, from what we've seen here and in Europe and Japan, that can be a long and painful wait.
The action continues tomorrow, with just two days left before options expiration on Friday. This current round hasn't been pretty nor profitable for many.
It was the fifth straight day in which new lows topped new highs (and by a widening margin) and the same for the A-D line being negative. all of the major indices are trading below their 200-day moving averages, with no relief in sight.
Dow 12,756.18, -58.90 (0.46%)
NASDAQ 2,883.89, -20.37 (0.70%)
S&P 500 1,374.53, -5.50 (0.40%)
NYSE Composite 8,023.23, -30.83 (0.38%)
NASDAQ Volume 1,814,780,250
NYSE Volume 3,427,123,250
Combined NYSE & NASDAQ Advance - Decline: 1773-3741
Combined NYSE & NASDAQ New highs - New lows: 56-249
WTI crude oil: 85.38, -0.19
Gold: 1,724.80, -6.10
Silver: 32.49, 0.035
Monday, November 12, 2012
Tug-of-War Continues on Wall Street as Stock Stay Flat
Is this the new, post-election normal, or, is there just so much uncertainty in the markets that half the crowd is buying while the other half is selling?
One thing is for certain: stocks have gone nowhere - eventually settling roughly where they started - for the second session in a row. This kind of directionless pattern leaves everybody shaking their collective heads, and, on a day like today - in which bond markets were closed in observance of Veteran's Day - it's assumed that nobody made much money, including the brokerages, because volume was so low.
Currently, there is a dearth of news and the markets seem to be waiting for some kind of resolutions in Washington over the issue of the "fiscal cliff," but if Wall Street waits until the politicians do a deal, it could be a long wait indeed.
With no catalyst to the upside and stocks sitting pretty much under resistance (the Dow and NASDAQ under their 200-day moving averages, S&P sitting right on its), there's a good probability that another leg downward could be forced by some outside event - a black swan, so to speak - though nobody has any idea where or what such an event would look like.
What is a little bit odd about the trading over the past two days is that it's so close to options expiry on Friday. One would normally be expecting a ramp-up, and, that could come on Tuesday or Wednesday, regardless of what anyone thinks, hopes or believes. Wall Street is still run on the dual emotions of greed and fear, and if there's no fear (the vix was well down today), greed will overtake it and move stoks higher. Traders have to trade, and they'd rather be advising clients to get in now, off the recent move lower, than be selling on their own or their clients' behalves.
The odd trading pattern that was evident on all the major exchanges saw the averages up for the first half hour, slide slowly to the lows of the day just after 11:00 am, bottom, and then race to highs of the day in a straight line between 12:15 and 1:15 pm.
That was all she wrote, however, as stocks took a stair-step pattern back to the break even line, making the day look like a day-trader's nightmare, which it may well have been.
There was virtually nothing notable to report in either Europe or the US, though Japan's economy shrank by 3.5% in the third quarter, further evidence of the global slowdown. On the other side of the ledger, China announced strong exports, but their data has been proven time and again to be often more fiction than fact.
China may well have increased exports recently, but to whom, and why? Global demand has been flat to declining, so maybe China has rediscovered McDonald's secret sauce to fuel its success.
None of that mattered a whit in the US or Europe, which was also lackluster.
Tomorrow may be different, but, it may be more of the same. That's just the environment we have.
A couple of indications may be worthwhile in the advance-decline line, which was marginally negative, and the fat that new lows outpaced new highs for the fourth day in a row, something of a trend developing, maybe.
Dow 12,815.16, -0.23 (0.00%)
NASDAQ 2,904.26, -0.61 (0.02%)
S&P 500 1,380.00, +0.15(0.01%)
NYSE Composite 8,059.68, +6.11(0.08%)
NASDAQ Volume 1,351,375,130
NYSE Volume 2,503,732,250
Combined NYSE & NASDAQ Advance - Decline: 2343-2901
Combined NYSE & NASDAQ New highs - New lows: 89-174
WTI crude oil: 85.57, -0.50
Gold: 1,727.70, -3.20
Silver: 32.38, -0.147
One thing is for certain: stocks have gone nowhere - eventually settling roughly where they started - for the second session in a row. This kind of directionless pattern leaves everybody shaking their collective heads, and, on a day like today - in which bond markets were closed in observance of Veteran's Day - it's assumed that nobody made much money, including the brokerages, because volume was so low.
Currently, there is a dearth of news and the markets seem to be waiting for some kind of resolutions in Washington over the issue of the "fiscal cliff," but if Wall Street waits until the politicians do a deal, it could be a long wait indeed.
With no catalyst to the upside and stocks sitting pretty much under resistance (the Dow and NASDAQ under their 200-day moving averages, S&P sitting right on its), there's a good probability that another leg downward could be forced by some outside event - a black swan, so to speak - though nobody has any idea where or what such an event would look like.
What is a little bit odd about the trading over the past two days is that it's so close to options expiry on Friday. One would normally be expecting a ramp-up, and, that could come on Tuesday or Wednesday, regardless of what anyone thinks, hopes or believes. Wall Street is still run on the dual emotions of greed and fear, and if there's no fear (the vix was well down today), greed will overtake it and move stoks higher. Traders have to trade, and they'd rather be advising clients to get in now, off the recent move lower, than be selling on their own or their clients' behalves.
The odd trading pattern that was evident on all the major exchanges saw the averages up for the first half hour, slide slowly to the lows of the day just after 11:00 am, bottom, and then race to highs of the day in a straight line between 12:15 and 1:15 pm.
That was all she wrote, however, as stocks took a stair-step pattern back to the break even line, making the day look like a day-trader's nightmare, which it may well have been.
There was virtually nothing notable to report in either Europe or the US, though Japan's economy shrank by 3.5% in the third quarter, further evidence of the global slowdown. On the other side of the ledger, China announced strong exports, but their data has been proven time and again to be often more fiction than fact.
China may well have increased exports recently, but to whom, and why? Global demand has been flat to declining, so maybe China has rediscovered McDonald's secret sauce to fuel its success.
None of that mattered a whit in the US or Europe, which was also lackluster.
Tomorrow may be different, but, it may be more of the same. That's just the environment we have.
A couple of indications may be worthwhile in the advance-decline line, which was marginally negative, and the fat that new lows outpaced new highs for the fourth day in a row, something of a trend developing, maybe.
Dow 12,815.16, -0.23 (0.00%)
NASDAQ 2,904.26, -0.61 (0.02%)
S&P 500 1,380.00, +0.15(0.01%)
NYSE Composite 8,059.68, +6.11(0.08%)
NASDAQ Volume 1,351,375,130
NYSE Volume 2,503,732,250
Combined NYSE & NASDAQ Advance - Decline: 2343-2901
Combined NYSE & NASDAQ New highs - New lows: 89-174
WTI crude oil: 85.57, -0.50
Gold: 1,727.70, -3.20
Silver: 32.38, -0.147
Tuesday, April 12, 2011
Stocks Take Another Hit, But, Why?
Major US indices fell for a fourth consecutive session - with the exception of the Dow, which eked out a 1-point gain on Monday - and there are likely several reasons why this downtrend has continued and actually accelerated, with the biggest drop coming today.
After all, it is the beginning of earnings season, and first quarter results are expected to be pretty good. But is the market looking down the road, or could investors be wary of margin squeezes caused by runaway commodity prices, or consumer depression caused by over-the-top gas prices?
One thing's for sure: the winter was a long and cold one, and nobody got a break from high heating bills in a majority of the heating states of the Northeast and Midwest. That certainly couldn't have helped household budgets much and a Gallup poll released today suggests that Americans are as displeased with current and future conditions as they were this time in 2009 and through the middle of 2010.
The poll showed that only 33% of respondents in March think the economy is "getting better." That's a drop from 36% in February and 41% in January.
Another possibility is that the now-month-old tragedy in Japan is also worsening, as officials raised the level of the Fukushima Daiichi nuclear plant accident to 7, on a par with the disaster at Chernobyl, 25 years ago.
Perhaps the stock market wasn't really sold on the late-night budget deal reached on Friday night (We had expected this was only a continuing resolution and were right) and the potential that the deal could fall apart. Details are just beginning to trickle out that the cuts amount to much less than the $38.5 billion reported and that members of both parties, in bouth houses of congress, are displeased.
At Business Insider, Joe Weisenthal reports that the government might still shut down, this Friday. The AP has details from just where the phantom cuts are coming.
So, here we go again? The 2011 fiscal year ends September 30 (about 5 1/2 months from now), and the budget is still being trimmed, debated and flayed? This is no way to run a country, especially one as on the financial ropes as the USA. Get ready for more drama from the queens on Capitol Hill and at the White House.
The Hill has more detail on the cuts, which will go to a House floor vote on Thursday. The legislation is known as H.R. 1473, for those wishing to keep score at home.
Notwithstanding the aforementioned possibilities and potentialities, the Fed's ending of thier policy of handing over free money to Primary Dealers in June, via QE2, might be on the minds of many in the investment world. When that nearly $100 billion a month stops, so might Wall Street's 2-year-long party. In a related note, the Fed released it's schedule of banker handouts (POMO) for the remainder of April through May 12.
All of this news added up to some big drops in the equity markets, centered around just about 1% overall. Commodities were hit even harder (see below).
Dow 12,263.58, -117.53 (0.95%)
NASDAQ 2,744.79, -26.72 (0.96%)
S&P 500 1,314.16, -10.30 (0.78%)
NYSE Composite 8,360.46, -85.31 (1.01%)
Declining issues clobbered advancers again, 4883-1663, a nearly 3:1 ratio, the largest of the past four sessions. On the NASDAQ, new lows overtook new highs, 56-39, but it was the other way around on the stubborn NYSE, with new highs holding a slim edge over new lows, 41-20. A similar pattern was witnessed in March, with the new lows overtaking new highs on both indices for 4-6 days, but the supposed correction was cut short by a surprise rally that now seems to have run up against resistance and is failing fast. Volume was not spectacular, and would most accurately be described as moribund. Another few days of this, and another row over continuing funding to the federal government could put the kibosh on 2011 gains, short and long term.
NASDAQ Volume 1,798,176,500
NYSE Volume 4,735,433,500
Oil took another massive hit in price on Tuesday, with WTI crude futures falling $3.67, to $106.25, and even lower after NYMEX trading closed. That's a two-day drop of $6.52 per barrel and motorists can only hope the trend continues. There are a lot of speculators in the market, and estimates range from them making up anywhere from 10-40% of the oil price.
Of course, in a real world, with real world consequences coming from an actually-functioning Justice Department, that would otherwise be known as price-fixing. Since the Attorney General hasn't been seen in six or eight months, and is generally regarded as the worst ever, don't expect anything like even an investigation to commence any time soon. We hear the name of the AG is Eric Holder, but nobody's been able to confirm that.
Along with oil, a good number of food and grain commodities are coming off their highs. Corn, soybeans and wheat were down the most, with lean hogs and live cattle following the trend. Gold slipped $14.50, to $1,453.60. Silver fell 55 cents, to settle in at $40.07 per ounce.
It has been said that one day does not make a trend, and there's truth in that, but maybe four straight declines in major indices are significant enough for somebody to take notice. It's no secret that the US system is largely bankrupt and operating on fumes and smoke, so it might be just a matter of time for the markets to correct. Naturally, the meddling Fed has kept the rally going with oodles of cash, and just to be sure, they gave some to the wives of some already-rich bankers, as Matt Taibbi reports for Rolling Stone.
Fair warning: reading Taibbi's latest story might lead to vomiting or breaking of inanimate objects. Strap in securely, as this story reveals just how corrupt and unbalanced the entire bailout process has been and continues to be.
Paging Ron Paul, paging Ron Paul. The country is calling on you to run for president.
After all, it is the beginning of earnings season, and first quarter results are expected to be pretty good. But is the market looking down the road, or could investors be wary of margin squeezes caused by runaway commodity prices, or consumer depression caused by over-the-top gas prices?
One thing's for sure: the winter was a long and cold one, and nobody got a break from high heating bills in a majority of the heating states of the Northeast and Midwest. That certainly couldn't have helped household budgets much and a Gallup poll released today suggests that Americans are as displeased with current and future conditions as they were this time in 2009 and through the middle of 2010.
The poll showed that only 33% of respondents in March think the economy is "getting better." That's a drop from 36% in February and 41% in January.
Another possibility is that the now-month-old tragedy in Japan is also worsening, as officials raised the level of the Fukushima Daiichi nuclear plant accident to 7, on a par with the disaster at Chernobyl, 25 years ago.
Perhaps the stock market wasn't really sold on the late-night budget deal reached on Friday night (We had expected this was only a continuing resolution and were right) and the potential that the deal could fall apart. Details are just beginning to trickle out that the cuts amount to much less than the $38.5 billion reported and that members of both parties, in bouth houses of congress, are displeased.
At Business Insider, Joe Weisenthal reports that the government might still shut down, this Friday. The AP has details from just where the phantom cuts are coming.
So, here we go again? The 2011 fiscal year ends September 30 (about 5 1/2 months from now), and the budget is still being trimmed, debated and flayed? This is no way to run a country, especially one as on the financial ropes as the USA. Get ready for more drama from the queens on Capitol Hill and at the White House.
The Hill has more detail on the cuts, which will go to a House floor vote on Thursday. The legislation is known as H.R. 1473, for those wishing to keep score at home.
Notwithstanding the aforementioned possibilities and potentialities, the Fed's ending of thier policy of handing over free money to Primary Dealers in June, via QE2, might be on the minds of many in the investment world. When that nearly $100 billion a month stops, so might Wall Street's 2-year-long party. In a related note, the Fed released it's schedule of banker handouts (POMO) for the remainder of April through May 12.
All of this news added up to some big drops in the equity markets, centered around just about 1% overall. Commodities were hit even harder (see below).
Dow 12,263.58, -117.53 (0.95%)
NASDAQ 2,744.79, -26.72 (0.96%)
S&P 500 1,314.16, -10.30 (0.78%)
NYSE Composite 8,360.46, -85.31 (1.01%)
Declining issues clobbered advancers again, 4883-1663, a nearly 3:1 ratio, the largest of the past four sessions. On the NASDAQ, new lows overtook new highs, 56-39, but it was the other way around on the stubborn NYSE, with new highs holding a slim edge over new lows, 41-20. A similar pattern was witnessed in March, with the new lows overtaking new highs on both indices for 4-6 days, but the supposed correction was cut short by a surprise rally that now seems to have run up against resistance and is failing fast. Volume was not spectacular, and would most accurately be described as moribund. Another few days of this, and another row over continuing funding to the federal government could put the kibosh on 2011 gains, short and long term.
NASDAQ Volume 1,798,176,500
NYSE Volume 4,735,433,500
Oil took another massive hit in price on Tuesday, with WTI crude futures falling $3.67, to $106.25, and even lower after NYMEX trading closed. That's a two-day drop of $6.52 per barrel and motorists can only hope the trend continues. There are a lot of speculators in the market, and estimates range from them making up anywhere from 10-40% of the oil price.
Of course, in a real world, with real world consequences coming from an actually-functioning Justice Department, that would otherwise be known as price-fixing. Since the Attorney General hasn't been seen in six or eight months, and is generally regarded as the worst ever, don't expect anything like even an investigation to commence any time soon. We hear the name of the AG is Eric Holder, but nobody's been able to confirm that.
Along with oil, a good number of food and grain commodities are coming off their highs. Corn, soybeans and wheat were down the most, with lean hogs and live cattle following the trend. Gold slipped $14.50, to $1,453.60. Silver fell 55 cents, to settle in at $40.07 per ounce.
It has been said that one day does not make a trend, and there's truth in that, but maybe four straight declines in major indices are significant enough for somebody to take notice. It's no secret that the US system is largely bankrupt and operating on fumes and smoke, so it might be just a matter of time for the markets to correct. Naturally, the meddling Fed has kept the rally going with oodles of cash, and just to be sure, they gave some to the wives of some already-rich bankers, as Matt Taibbi reports for Rolling Stone.
Fair warning: reading Taibbi's latest story might lead to vomiting or breaking of inanimate objects. Strap in securely, as this story reveals just how corrupt and unbalanced the entire bailout process has been and continues to be.
Paging Ron Paul, paging Ron Paul. The country is calling on you to run for president.
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