Showing posts with label Ponzi. Show all posts
Showing posts with label Ponzi. Show all posts

Wednesday, January 10, 2018

Central Bank Resolve To Be Tested If China, Japan Break Ranks

In yesterday's post, reference was made to the backstopping of stock markets by the global cartel of central banks and how the aforementioned banks would not allow even the slightest decline on the main US indices.

True to form, Tuesday's trading was a textbook example of the central banking gambit, with the Dow Jones Industrial Average and S&P 500 making new all-time records, the NASDAQ and NYSE Composite tagging along.

About to be tested is central bank resolve and unity. Overnight, Japan has apparently decided to cut back on the purchase of long-dated treasury securities, and China has - according to unnamed sources (the preference of manipulators, provocateurs, and liars) - likewise decided to cut purchases of US treasuries by as much as five percent.

Being that Japan and China are he largest holders of US treasuries and at the same time partners in the global central bank ponzi scheme to keep fiat currency floating and stock brokers gloating, these developments - if found out to be the truth - could be inflammatory and possibly devastating to the value of stocks.

With the US markets set to open, futures are forecasting a negative open, though that alone will not ensure anything other than alerting the main buyers of equities - central banks - to be at the bid early and often.

At the Close, Tuesday, January 9, 2018:
Dow: 25,385.80, +102.80 (+0.41%)
NASDAQ: 7,163.58, +6.19 (+0.09%)
S&P 500: 2,751.29, +3.58 (+0.13%)
NYSE Composite: 13,120.84, +6.49 (+0.05%)

Thursday, August 11, 2016

The Most Dangerous Market Of Your Lifetime

Investors in equities - those imaginary certificates that signify ownership of a portion of a company or corporation - are giddy.

Stocks are near all-time highs with prosperity and class envy writ large on every tick higher.

Sure enough, these investors are shrewd operators of finance and business, many having earned their degrees from the highest academic schools in the world, the diplomas proudly displayed on the walls of their hedge fund offices and trading areas.

So, why would they possibly be worried about anything, particularly, the value of their holdings?

Simply put, there just aren't enough of them partaking at the font of wealth pouring out of Wall Street. Making matters more complicated and distressed is that the executives of the companies in which their wealth is concentrated have been buying back their shares at an unprecedented rate, making the shares of stock available smaller and smaller, but also boosting the price of those available, traded shares.

It's an easy supply and demand formula: fewer shares available makes them more valuable. In effect, if companies are inclined to take back their shares at inflated prices (a de-issuance, if you will), those remaining shares have to represent the entire value of the company.

Thus, a company could theoretically buy back all the shares but one, leaving that one share of stock to account for the full value of the company. In the case of an Apple or Google or any of the thousands of billion-dollar market cap companies, that one share would be "valued" at some absurd number, like $285 billion.

In such a hypothetical case, the problem arises when the owner of that $285 billion share of stock wished to unload it, convert it to cash or some other assets. Who would be the buyer? And would they actually pay the offered price (the ask) in such an illiquid market?

Obviously, the seller of that massive share of stock might have to offer a discount, and a big one. Instead of $285 billion, the seller might be forced to accept $140 billion, or less, in event of a liquidity crisis, which, incidentally, is what stock buybacks are creating. Since there hasn't been adequate demand for shares since the financial crisis of 2008-09, companies have resorted to buybacks just to keep their companies afloat, many of them becoming less and less profitable over time, making the price of their stock even more ridiculously valued.

When the rush for the exits begins in earnest, the big-time hedgies and fund managers will be bidding directly against each other, each with the same goal, to dump corporate paper assets in exchange for something more sturdy, ostensibly government bonds or hard, cold cash.

The markdowns, margin calls and defaults will be spectacular and this market, this unsustainable fantasy created by zero and negative interest rates, central bank stimulus, and government dumbness and numbness will be exposed to real supply and demand economics in a swan song for greed, manipulation, and wealth concentration.

That this will occur is unmistakable. Everything does not go up in price all the time, forever. The business cycle has not been abolished, neither here in the US, nor in Japan, China, the Eurozone or anywhere else.

Central banks are currently backstopping the entire Ponzi scheme of the stock market with interest rate swaps, repos, direct investment, and options manipulation.

It can't continue forever, though it can continue for a long time. It's a deadly and dangerous game, putting at risk the entire economy of the planet, or, at least that portion of the planet that wants to play along.

Increasingly, the as the musical chairs are being removed one by one, players are opting out and moving elsewhere. Largely, the lower and middle classes aren't playing at all. They're invested in necessities, cash, maybe collectibles, precious metals, and real estate.

Eventually, the sheer volume of trade by the 99% not in the stock market and incensed by government policies which seek to impoverish them further, will outweigh the phony prices for stocks listed on the NYSE and NASDAQ.

The stock market will suffer a severe breakdown at some point. The trick is not to know when that breakdown will occur, but to continue to prepare for its inevitability.

Most will not be prepared. Those who have prepared may or may not proper at the expense of everyone else, because the chaos - political, economic, social - will be astonishing.

The Boy Scouts of America issued their motto many years ago and it applies today: Be Prepared.

Be a Boy Scout.

Wednesday's Washout:
Dow Jones Industrial Average
18,495.66, -37.39 (-0.20%)

5,204.58, -20.90 (-0.40%)

S&P 500
2,175.49, -6.25 (-0.29%)

NYSE Composite
10,774.98, -29.53 (-0.27%)

Thursday, February 18, 2016

Chinks In The Global Ponzi Armor

What the central banks have constructed today as a "global economy" would make Bernie Madoff blush for all its arrogance and chutzpah.

The Fed buys Treasury bills, notes and bonds from the US government, the French government, Japan, Germany, UK, Australia, China, and the central banks of those countries do likewise. In essence, they are all borrowing from each other, and all of them, in the aggregate - and often enough singularly - are insolvent. It's the world's largest kiting scheme, being played on a global scale with money created out of thin air, backed by debt, most of which will never be repaid.

This kind of scam is typically known as a pyramid scheme, an airplane game, or, a Ponzi scheme, in which the creators and early adopters receive the bulk of the benefit, and those last in are left whining about promises made and unkept, with a loss of their investment and great remorse.

When one views the global economic structure from outside, it's clear that the creators of the Ponzi are the central banks, the early adopters are governments, and the vast majority of losers are savers, investors, retirees and, eventually, the young and future generations, who will inherit literally, a world of hurt, where the assets have been stripped away, wealth belongs to an upper, upper echelon of self-annoited masters, and social mobility is largely a myth.

Already, in the United States - the wealthiest nation in the world - there is evidence that the next generation to retire beyond he baby boomers, will be less well off than the previous one. Baby boomers have been retiring steadily, but their wealth has been neutered by the Zero Interest Rate Policy (ZIRP) of the Fed (soon to become NIRP), the COLAs (Cost of Living Adjustment) has been likewise zeroed out due to recalibration of how inflation is measured by the government, and taxes will take care of the rest. And that's just the Social Security end of it.

The Federal government has already put in place methods and scenarios in which they can confiscate the holdings of retirees, in 401k confiscations, wealth extraction taxes and "national emergency" legislation. In fact, senior debt holders (derivatives) would already have priority over depositors in an orderly liquidation of a major bank.

There's only one way to win at this game, and that's to not play. If possible, one would work outside the system, avoiding all taxation and contributions to unemployment insurance, social (in)security, worker's compensation theft, and the latest money extraction scheme, the ACA, otherwise known as Obamacare. Savings would likewise have to be outside the system, acquiring and holding everything from undeveloped land to precious metals, gems, to canned food, tools and machinery of trades.

It's a tough game to play, though, as the global Ponzi scheme continues to unravel in front of our very eyes, one which must be given consideration, even as a partial remedy to outright wealth confiscation through inflation, taxation or fiat.

Today's notch in the Ponzi wood:
S&P 500: 1,917.83, -8.99 (0.47%)
Dow: 16,413.43, -40.40 (0.25%)
NASDAQ: 4,487.54, -46.53 (1.03%)

Crude Oil 32.73 -0.76% Gold 1,231.30 +1.64% EUR/USD 1.1112 -0.12% 10-Yr Bond 1.76 -3.30% Corn 366.25 -0.27% Copper 2.07 -0.22% Silver 15.42 +0.28% Natural Gas 1.85 -4.63% Russell 2000 1,004.71 -0.64% VIX 21.64 -3.00% BATS 1000 20,682.61 -0.29% GBP/USD 1.4338 +0.34% USD/JPY 113.2550 -0.74%

Friday, January 8, 2016

It's Not China; Dow Dumps 1000 Points in First Week of 2016

Thursday night in the US - Friday morning in the People's Republic of China - all eyes were glued to the Shanghai Stock Exchange (SSE), to see whether Chinese authorities' plan to suspend their rules on circuit breakers - a fifteen minute pause on a 5% loss, and closing for the day should a 7% loss occur - would hold stocks up or allow massive dumping of overpriced equities.

Disappointing many who would relish the thought of a worldwide collapse of the global stock Ponzi scheme, Chinese traders showed great restraint and state-owned companies bought equities on a wholesale basis, averting a rout in the market by posting a gain of nearly two percent.

It didn't do much good to support the overwhelming narrative of the mainstream press in Europe and the United States, as shares across the continent fell by 1.5% on average across the largest bourses, and the FTSE 100 in Great Britain shedding 0.70%.

In the US, hopes were high when the BLS announced a non-farm payroll increase of 292,000 jobs for December, above even the most aggressive estimates.

The markets didn't care.

Stocks showed modest gains across the three major averages at the open, but the narrative - and the indices - failed to produce positive results. By the end of Friday's session, the S&P joined the Dow and NASDAQ in correction territory, with the Dow Jones Industrial Average showing one of the worst weekly performances of all time, mirroring the collapse in August by shedding over 1000 points.

It was a horrific start to the new year, with the major averages shedding more than 6% on the week, the Dow posting triple-digit losses on four of the five days, the NASDAQ dropping by more than 7%.

The results for the week were downright depressing, the worst weekly start to a new year in the history of US exchanges:

S&P 500: -121.94 (-5.97)
Dow: -1079.12 (-6.19)
NASDAQ: -363.78 (-7.26)

On the day:
S&P 500: 1,922.02, -21.07 (1.08%)
Dow: 16,346.18, -167.92 (1.02%)
NASDAQ: 4,643.63, -45.79 (0.98%)

Crude Oil 33.09 -0.54% Gold 1,102.30 -0.50% EUR/USD 1.0921 -0.01% 10-Yr Bond 2.13 -1.07% Corn 356.25 +0.92% Copper 2.02 -0.25% Silver 13.94 -2.82% Natural Gas 2.49 +4.53% Russell 2000 1,048.78 -1.48% VIX 26.08 +4.36% BATS 1000 20,550.58 -1.01% GBP/USD 1.4524 -0.69% USD/JPY 117.51 -0.12%
 

Friday, July 22, 2011

Week Ends with Split Decision; Gold, Silver on the Rise

After a week of ups and downs, it's probably appropriate the Friday ended with a bifurcated market: the Dow and NYSE down and the S&P and NASDAQ up.

It makes little sense to the casual observer, though the condition becomes more understandable if one is an insider, playing long and short, hedging positions, trading momentum and running super-fast computers in the 2011 version of "timing the market."

For the rest of us, forget it. Stocks have become nearly impossible to trade with any success unless one is truly gifted or just dumb lucky.

The White House and congress still haven't decided what to do about raising the debt ceiling. The Republicans' ploy of passing their ridiculous Cut, Cap and Balance bill in the House is a desperate and dangerous maneuver, costing more time as the ratings agencies and the rest of the civilized planet look on with alternate views of shock, horror and amusement. The continued stalemate virtually assures that the United States will receive a number of ratings downgrades no matter what happens from here on out.

By comparison, Europe appears far worse, though they have more than enough gall and arrogance to keep the media and the ratings agencies in check for the time being. With all of the Mediterranean nations in some sort of trouble or already having been bailed out, the European Union seems to be held together by duct tape and crewing gum.

There was nearly nothing worth reporting about this week, as the Ponzi schemers made it through another week without anybody receiving a subpoena or getting caught cheating. Score another one for the rich guys.

Dow 12,681.16, -43.25 (0.34%)
NASDAQ 2,858.83, +24.40 (0.86%)
S&P 500 1,345.02, +1.22 (0.09%)
NYSE Composite 8,408.20, -3.25 (0.04%)

Advancing issues narrowly beat decliners, 3293-3194. The NASDAQ showed 79 new highs and 23 new lows, while the NYSE registered 102 new highs and 24 new lows. The combined total of 181 new highs and 47 new lows is about par for the course in an upward-sloping market. Volume, however, dipped back into apathetic mid-summer malaise.

NASDAQ Volume 1,674,379,250
NYSE Volume 3,538,032,250

The commodity markets gave both good and bad news. Oil was up another 74 cents, to $99.87, which is bad news for everybody except oil company executives and Arab sheiks. The precious metals bore most of the good news, with gold up $14.50, to $1,601.50, and silver higher by $1.17, to $40.12. Silver appears ready to head into orbit, now that the new Hong Kong silver futures vehicle is offering some variation in pricing.

As the US economy becomes more and more bad theater, expect gold and silver to grind higher, with most of the explosive moves in silver, which is still underpriced at a 40-1 gold-silver ratio. The long-term trend is 16-1.

Today, House Republican "leader" John Boehner walked out of debt ceiling negotiations with the president, saying the two sides, "couldn't connect." No kidding, John, when you won't even allow for closing tax loopholes on millionaires and billionaires when we're suffering the worst depression of all time.

Boehner, and the rest of the "Tea Party" Nancies ought to be ashamed of what they're doing to the country. When the collapse comes, they should be handed the great bulk of the blame. President Obama has tried to deal with them, but it has become a losing battle.

God save us.

Friday, March 25, 2011

A Great Week for Stocks. Not So Good for People

Stocks were off to a slow start on Friday, but got a boost around 10:20 am EDT which lasted until shortly after noon, at which point profit-takers took over and remained in charge to the closing bell.

Overall, it was a banner week for stocks, based entirely on nothing in particular and mostly ignoring the horrendous news - both financial and international - that kept flowing every day.

For instance, the situation in Libya is nowhere near stabilizing and, given the steadfastness of Muhammar Gadaffi to remain in power, may escalate into a wider conflict. Yemen, Syria and Bahrain are still in the throes of wild civil unrest. Conditions at the nuclear reactor facilities in Japan have worsened by the day, and are nowhere near being resolved.

Portugal's government is all but dissolved and the Irish bailout is falling apart. Most of Europe is facing much the same situation as prevails in the US, no recovery and no signs of improvement. Additionally, leading political figures either don't seem to know what to do or simply don't want to do anything to better the lot of their citizenry.

Investors apparently are taking this all in stride, were it not for the fact that said investors are actually computer algorithms running at warp speed for the various banks and hedge funds who are clipping retail investors every chance they get.

The major indices were up four out of five days, the only down day being Tuesday, and it was a minor decline. The Dow finished ahead 262 points, or about 2.2%. The NASDAQ tacked on a cool 100 points, or nearly 4%. The S&P was up by 37 points, almost 3%, and the NYSE gained 205 points, or 2.5%.

Life was less good for residents of Libya, who are under military siege, and Japan, many of whom are homeless, while Tokyo residents are concerned about irradiated drinking water, already told by their authorities that the levels of iodine in some of that water is unsafe for infants and babies (and probably not too good for adults). Th remainder of the civilized world only had to put up with rising prices for gas or petrol, although life in South America and Central America remains relatively peaceful compared to the rest.

Dow 12,220.59, +50.03 (0.41%)
NASDAQ 2,743.06, +6.64 (0.24%)
S&P 500 1,313.80, +4.14 (0.32%)
NYSE Composite 8,321.78, +10.17 (0.12%)

Advancing issues bettered decliners by a score of 3980-2536. New highs on the NASDAQ totaled 143, to 21 new lows. On the NYSE, there were 243 new highs and just 8 new lows, which was not surprising, since volume was at levels not worth even watching, a sign that participation levels are a fraction of what they used to be, before the 2008 crash and the onset of completely rigged, centrally-planned, manipulated markets designed to keep the global Ponzi scheme of central bankers looking like it cannot fail.

NASDAQ Volume 1,771,109,000.00
NYSE Volume 3,934,565,000

WTI crude oil was flat, losing 20 cents, to $105.40. Gold and silver received their customary Friday smack-down, with gold losing $8.70, to $1,426.20 and silver down 33 cents, to $37.05.

Considering events, it was a banner week for the New World Order (NWO), in which everything you see or hear in the mainstream media is fake, phony and otherwise watered-down to prevent people from understanding just how dire global finances really are.

Have a great weekend and if body parts begin to glow in the dark, you can thank our leaders for keeping us safe from runaway, uncontrolled nuclear accidents.

Thursday, May 7, 2009

Ponzi Would Be Proud On Stress Test Results

First, let's not confuse Charles Ponzi (that's him on the left) with Arthur Herbert Fonzarelli (otherwise known as actor Henry Winkler in the role of "Fonzie" or "the Fonz" on 70s hit TV show "Happy Days" - shown at right). Sure, the names sound familiar, but that's where such familiarity ends.

Charles Ponzi was a swindler extraordinaire, who paid investors outlandish profits by continually bringing in fresh capital from other investors (or "suckers" as the case may be). Ponzi never actually invested any money in anything; he simply churned what seemed to be - at the time - a never-ending supply of money from pigeons to keep the appearance of a grand investment going. Thus, the term "Ponzi scheme" became popularized for this kind of endeavor, also known as a pyramid or airplane scheme.

Alfred Fonzarelli was a fictional character who exuded the hip and cool of a 50's greaser. His trademark leather jacket and slicked-back hair were elements of his persona. But Fonzie was honest, though arguably crude. Ponzi, a real person, was a cheat, and a great one. Some believe Bernie Madoff is the present-day embodiment of Charles Ponzi.

Now that we have the introductions out of the way, let's get to the core issue: that of the government's bank stress tests, which results are finally going to be released to the public, today, at 5:00 pm EDT. After months of nail-biting anticipation, it appears that 10 or 11 of the nation's largest 19 financial institutions are actually not in very good health. Here is a nice capsule of the results. Here is a NY Times article offering some rather scathing reviews on the entire stress test process from some very well-respected economic heavyweights.

Finally, here is a story and video from Yahoo! Tech Ticker which explains how Bank of America needs $34 billion of additional capital, and how they plan to get that by converting the TARP funds ostensibly "loaned" from the government (taxpayers) from preferred stock into common stock, resulting in a surplus of $11 billion with which they can then begin paying back the TARP funds. Yes, you read that right, BofA will use TARP funds to pay back TARP funds.

Only in America can bankers and politicians steal in such plain view from taxpayers. Certainly Charles Ponzi would be proud. Fonzie, for his part, might say, "Heeey, that's no way to treat people." Naturally, the truth-loving Fonzie is right. The US taxpayers are being taken to the cleaners on this one.

Maybe there's a silver lining in all of this hanky panky. Stocks were pounded down pretty well for most of today's session, on relatively strong volume. Could it be that some of the fund managers and top investors are seeing this for what it is - outright fraud - and calling an end to Wall Street's wild rally? Could be, but, considering the length and size of said recent rally, it's going to take more than a day or two of declines to straighten out the newest mess, that of stocks being wildly overvalued again.

As I've been saying all along (and I have plenty of company in my opinions, too), the banks aer not in good health. The stress tests were just a smoke screen, the PPIP is a bad joke at best, almost none of the various illiquid assets held by these banks have been disposed of, rather, they have been revalued using mark-to-model rather then the more accurate (and honest) mark-to-mark accounting, the Fed is now monetizing the national debt in addition to taking on all sorts of toxic waste, and, to top it all off, Thursday's Treasury auction of 30-year notes was a resounding failure, poorly received, with 30-year bond yields hitting 4.309%.

It's a mess of even more gigantic proportions that before the government began its meddling nearly eight months ago. Now, stocks will have to compete with higher bond yields, as will mortgage rates, which the government hoped to keep low, while the banks try to raise a cumulative $65 billion from private sources, in direct competition with the enormous Treasury sales to finance the burgeoning US debt, which will cost more and more to service if yields continue to climb.

So, a good number of investors took today's sloppy news flow and decided it was time to take some of their quick profits off the table. Not such a bad idea, despite the growing consensus that the economy is on the upswing (maybe, but probably not) with the Labor Dept. due to release nonfarm payroll data for April on Friday - tomorrow.

While the estimate is for job losses to total only 490-590,000, certainly less than March's 663,000, it's hardly cause for celebration, in light of the fact that the US economy needs to create 150,000 jobs per month just to keep pace with population increases and new entrants into the labor force. The calculations of the Labor Dept. also do not account for the 54,000 Chrysler employees being furloughed for 30 to 60 days, nor the 200,000 GM employees who will be idled for as many as 9 weeks this summer. Nor does the government count workers who have exhausted their unemployment insurance, those who are working part time instead of full time in their estimate of the unemployment rate of 8.9%. Others, including economists at the University of Maryland, put the figure at closer to 17%.

Add to the malaise that LA Dodger Manny Ramirez has been suspended by MLB for 50 games for violating their banned substance policy. He will not be paid roughly a third of his $25 million salary. So there's another $8.5 million not being spent into the economy right there! Yikes!

So, maybe today was a good time to get out of stocks. After all the major indices have risen by more than 30% over the past 8-9 weeks.

Dow 8,409.85, -102.43 (1.20%)
NASDAQ 1,716.24, -42.86 (2.44%)
S&P 500 907.39, -12.14 (1.32%)
NYSE Composite 5,800.15, -90.40 (1.53%)

Declining issues took the advantage over advancers, 4255-2281; new lows surpassed new highs once more, 95-52, and volume was stupendous, higher even than yesterday's. There certainly is no lack of trading going on as the economic wheels turn, or, grind, whichever case you prefer.

NYSE Volume 1,969,476,000
NASDAQ Volume 3,274,508,000

Commodities were bounced around by conflicting data, but oil managed a gain of 37 cents, to $56.39. Gold rose another $4.50, to $915.50, continuing the recent trend of gains, as did silver, which crossed the $13.80 threshold - the price at which melt value of US coins equals 10X their face value - with a rush, gaining 32 cents, to $14.03.

Most of the news flow for the week complete, investors will have until tomorrow morning's opening bell to weigh all the factors, including the nonfarm payroll figures, due out at 8:30 am. It's anyone's guess which way they'll turn, but one thing's for sure: the economy is not in as rosy shape as the news and pundits would have us believe. The recent bout of "green shoots" and "semi-positive" readings were more of the nature of falling at a less-pronounced pace than earlier this year or last fall. The US economy is still weakening, though not quite as quickly as before.

It's like saying a man clawed and chewed a lion only losing one arm and one leg is good news. He's still alive and he's got one of each type of limb left. Really, how many people would call that "good" news? Seriously, folks, it's not a matter of perception. The reality is not that the glass is half full or half empty, it's that the glass has a hole in the bottom.