Stocks Slump, Regain Ground In Anxious Session

Yesterday, it was big pharma that took a hit after Donald Trump singled them out in his press conference, saying that the US government would begin bidding lower prices for many prescription drugs.

Today, health care insurance companies took the hit - if only briefly - as the senate pushed forward a bill to repeal the Affordable Care Act (ACA), otherwise known as Obamacare. Aetna, Anthem, Cigna and United Health were among a handful of companies that felt some shock at the open.

The Senate voted 51-48 on a measure to repeal the current president's signature health initiative. The measure now will move to the house where its passage is all but assured, with the membership heavily weighted with Republicans.

As for the rest of the market, stocks went red at the open and trimmed early losses after 11:00 am ET. The Dow was down more than 180 points in the early going, but manage to recover almost two thirds of the losses as the session dragged forward.

Missing from the narrative today was the chorus of "Dow 20000," as the industrial index extended its failed attempt at the historic milestone for the 22nd straight session.

Maybe tomorrow...

At The Close 1.12.16:
Dow: 19,891.00, -63.28 (-0.32%)
NASDAQ: 5,547.49, -16.16 (-0.29%)
S&P 500: 2,270.44, -4.88 (-0.21%)
NYSE Composite: 11,204.15, -22.63 (-0.20%)

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:

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%

The Day After: Buyer's Remorse and the Tea Party Gambit

One day after the Fed did the unexpected - which really should have been expected, after all, since the Fed is so good at doing nothing - and kept its asset purchase program intact, stocks on Wall Street were shaken, not stirred, with the Dow and S&P posting modest losses and only the NASDAQ ahead at the close.

Since yesterday's post-announcement feeding frenzy was done at such a rapid pace, there was a feeling today that the party was great, but some may have overdone it, so positions were squared in front of tomorrow's quadruple-witching options expiry, locking in profits.

There was also a bit of nastiness coming out of Washington, DC, in the form of forty or so House Republicans promoting a bill that would fund the federal government, but only if a provision to defund the Affordable Care Act (ObamaCare) was included.

While that measure could survive a House vote, and well might, the chances of it making its way through the Senate are a different-striped animal altogether. And the chances of Obama signing it into law are absolutely zero.

If the House Republicans have their way, this stalemate could produce a partial shutdown of the federal government (please save your applause for the end of the performance) on October 1, which is just 12 days hence, so traders may have been taking a few chips off the table in advance of those ugly consequences.

Certain members of the House, known widely as Tea Partiers, would like to find a way to accomplish one of two goals: stopping ObamaCare before it is fully implemented, or, the more popular alternative, stopping the federal government from borrowing the Treasury into debt hell, a course which is already well-trodden. If the government cannot borrow any more, it stops the Federal Reserve's treasury purchases dead in its tracks and generally ends the economy as we know it, which, come to think of it, might be a brilliant idea, since the economy has strayed far from free market economics and is wholly controlled by the Federal Reserve and its vassals, the mega-bank primary dealers. Gains of all kind are generally flowing only to the top 3% or even the top 1% of the wealthiest Americans, with the rest of the populace nothing more than debt slaves.

If the Republicans in the House can stand their ground, force the government to pay its bills without further borrowing (a seeming impossibility), it could be the best thing that's happened in this country since Benny Goodman played Carnegie Hall in 1938, and that's a long time coming.

Sure, there will be dislocations and a massive depression, but on the other side would be prosperity and a more even playing field for entrepreneurs and citizens without the overarching dictates of an out-of-control oligarchy.

Sounds good, doesn't it? Let's see how this plays out, though nobody is betting that the House Tea Partiers could destroy the global economy with just one, grandiose, spectacular move.

Dow 15,636.55, -40.39 (0.26%)
Nasdaq 3,789.38, +5.74 (0.15%)
S&P 500 1,722.34, -3.18 (0.18%)
10-Yr Bond 2.75%, +0.04
NYSE Volume 4,047,428,000
Nasdaq Volume 1,742,718,375
Combined NYSE & NASDAQ Advance - Decline: 2837-3763
Combined NYSE & NASDAQ New highs - New lows: 564-34
WTI crude oil: 106.39, -1.68
Gold: 1,366.20, -3.10
Silver: 23.10, -0.192

Obama Wins; Stock Market Sinks on Tax Hike, Fiscal Cliff Fears, Europe

Tuesday was an early night in terms of presidential politics as President Barack Obama was elected overwhelmingly to a second term, whipping Republican challenger in almost every battleground state and winning the popular vote handily.

With the vote in Florida still being tallied (anybody surprised?), the Sunshine State turned out to be mostly inconsequential as the president swept the key states of Virginia, Ohio, Wisconsin, Iowa, Pennsylvania (which never really was in play), New Hampshire, Colorado and Nevada. Romney's sole win in the so-called "swing states" was in North Carolina, a state which Obama took by a narrow 0.3% in 2008.

Once the midwest states of Wisconsin, Iowa and Ohio were declared for Obama, the race was over, but it wasn't until after midnight in the East that Mitt Romney gave his concession speech and later, President Obama gave a ripping, rhetorical speech extolling the virtues of freedom of choice, tolerance and working together toward shared goals and the great creation of our founders, the United States of America, individual states bound together by social compact.

In the House and Senate races, the makeup of congress remained largely the same, with Republicans dominating the House and Democrats strengthening their grip on the senate, winning key races in Virginia, Florida, and, especially, Massachusetts, where Elizabeth Warren, the fiery consumer rights advocate, took the seat away from Republican incumbent Scott Brown, in a major setback for big banks.

Warren, who worked on TARP and other reforms in Washington, especially the implementation of a consumer protection division at the Federal Reserve, will likely end up on the Senate banking Committee, possibly winning the chairmanship.

Another critical Senate race was won in Connecticut by Christopher Murphy, who defeated Linda McMahon, who wrestling millionaire who spent $100 million on her own campaign.

Jon Tester retained his Senate seat from Montana in a close race with Republican challenger Denny Rehberg, keeping the balance of power firmly in their control with 55 seats, along with one independent, Bernie Sanders of Vermont. The Democrats likely gained another ally when former governor, independent Angus King of Maine, won an open Senate seat that had been held by Republican Olympia Snowe. King has not indicated which party he would caucus with, though most believe it will be with Democrats. King won on the simple idea of making filibusters less of an effective measure in killing legislation, believing that excessive filibustering by Senate Republicans had blocked almost all significant legislation over the past four years.

There was little change in the House, as Reublicans retained control with 232 seats to 191 held by Democrats with a number of vacancies.

It wasn't long before other voices began to be heard, especially those on Wall Street who had been counting on a win by Republican Romney. Before the market opened, futures began a steep decline, though the catalyst may have nad more to do with comments by ECB president Mario Draghi and some dismal production figures from Germany, regarded as a stronghold in the recession-plagued continent.

Shortly after Germany's industrial production was reported to have fallen 1.2% in September, Draghi said that the crisis in Europe was beginning to take its toll on the industrial powerhouse that is the German economy.

Heading into the first post-election session, Dow futures were pointing toward a loss of more than 100 points at the open, and the result was worse, with the 132-point gain from Tuesday wiped out in the opening minute.

Stocks continued their descent until bottoming out just before noon, down 369 points, the biggest decline of the year, though some strengthening took all of the indices off their lows as the day progressed.

Still, the losses were dramatic and especially in the banking sector, where ank of America (BAC), Goldman Sachs (GS), JP Morgan Chase (JPM) and other big bank concerns were off more than five percent. All 10 S&P sectors finished in the red, the S&P could not defend the 1400 level and nearly bounced off its 200-day moving averages, the NASDAQ - aided by Apple's continued decline into bear market territory - broke down below its 200-DMA and the Dow closed below its 200-DMA for the first time since the beginning of June.

In Greece, rioters threw fire bombs at police in anticipation of another vote on austerity measures designed to pave the way for another round of financing from the troika of the IMF, EU and ECB. The vote, scheduled for midnight in Greece (5:00 pm ET), is expected to pass, though the populace has seemingly had enough of policies dictated by outsiders.

For Wall Street, the day presented a perfect storm of disappointment, fears of higher taxes on dividends, tighter regulations of banks, uncertainty over tax and spending policies heading into 2013, and renewed concerns over our trading partners in Europe.

The steep declines may have only been a beginning, however, as no policies have changed, and, actually, the political makeup in Washington remained the same as it had been the day before. The continued gridlock coming from the White House and Capitol Hill may be the most disconcerting factor of all.

Some internal damage was done to markets, with the advance-decline line showing a nearly 5-1 edge for losers and new highs being surpassed by new lows, 94-174.

With none of the important initiatives nearing resolution, there seems to be nowhere for the market to go but down, now that the election is over, earnings season is just about finished and the market must focus on fundamentals and locking in gains for the year. The remainder of 2012 may prove to be quite challenging to investors.

Dow 12,932.73, -312.95 (2.36%)
NASDAQ 2,937.29, -74.64 (2.48%)
S&P 500 1,394.53, -33.86 (2.37%)
NYSE Composite 8,138.80, -173.55 (2.09%)
NASDAQ Volume 4,322,112,500
NYSE Volume 2,059,028,750
Combined NYSE & NASDAQ Advance - Decline: 961-4613
Combined NYSE & NASDAQ New highs - New lows: 94-174
WTI crude oil: 84.44, -4.27
Gold: 1,714.00, -1.00
Silver: 31.66, -0.373

Congress Passes, President Signs Debt Ceiling Increase; Markets Tank

Passing with a bi-partisan majority of 74-26 in the Senate, the debt ceiling increase and associated debt reduction elements became law today as the President signed the bill this afternoon.

The bill, laden with policies and procedures for further debt reductions from an all-star panel of twelve senators and house members - not yet announced - has been panned by economists as well as by the same politicians who voted for or against the measure, saying the proposed cuts are too small and don't begin to take effect until 2013.

Once again, as congress heads off for a month-long vacation, the deficit and debt issues, along with Medicare, Medicade and Social Security reforms, have been kicked clear down the road until Thanksgiving, when the select panel will present its recommendations.

Wall Street, meanwhile, has other concerns, namely the continuing deterioration of the the US and global economies. Stocks were especially hard-hit at the end of the day, with losses cascading into the closing lows of the day, a more calamitous condition than has been seen in markets in nearly three years.

One would have thought that with the passage of the debt ceiling increase, stocks would rally, but the opposite turns out to be the case as economic data suggests the US is heading into another recession.

The S&P lost ground for the seventh straight session; the Dow made it eight down days in a row. Eash of those situations has not occurred since the disastrous month of October, 2008.

At the other end of the spectrum, gold and silver holders had a field day, with precious metals up sharply in response to a debt reduction bill that more or less satisfies the status quo, while doing little to address the structural issues presented.

Dow 11,866.62, -265.87 (2.19%)
NASDAQ 2,669.24, -75.37 (2.75%)
S&P 500 1,254.05, -32.89 (2.56%)
NYSE Composite 7,831.98, -208.95 (2.60%)

Declining issues buried advancers, 5276-1367. On the NASDAQ, 31 new highs were overwhelmed by 140 new lows. On the NYSE, only 20 stocks made new highs, while 160 reached new 52-week lows. The combined total of 51 new highs and 300 new lows puts further emphasis on the importance of the high-low indicator, which has been presaging a deep pull-back for weeks and is now sending out the strongest sell signal of all, with expanding numbers of stocks making new lows.

Volume was quite strong, yet another indicator that the trouble for equity investors is only beginning.

NASDAQ Volume 2,411,239,500
NYSE Volume 5,976,464,500

Crude oil finished to the downside as well, losing $1.10, to $93.79, the lowest price in over a month. As mentioned above, gold was a stellar performer, picking up $22.80, to a new record high of $1,644.50. Silver was also favored, gaining 78 cents, to $40.09 and higher in the after-hours.

An advance look at Friday's non-farm payroll for July will be made available Wednesday morning at 8:15 am, when ADP releases its monthly Employment Change report.

Fade the Banks: BofA, JP Morgan, Citi, Goldman Sachs Under Scrutiny

We found significant deficiencies that represent not only unsafe and unsound practices, but a breakdown in way customers are treated...

That was the statement made by acting Comptroller of the Currency John Walsh in regards to the Consent Order directed at the nation's sixteen largest banks, issued by his and other regulatory agencies yesterday.

Initial reaction was that the ruling was more a wrist-slapping by the regulators, but Walsh came out in its defense, as did others, such as FDIC's Sheila Bair.

The order includes provisions for the banks to undertake a complete review of their foreclosure practices and rectify any errors that may have affected consumers negatively. Additionally, the banks are instructed to pursue a “comprehensive, independent review” of their foreclosures from 2009 and 2010, institute a system for a single contact person for each foreclosure or mortgage modification action. The agencies - which include the Federal Reserve and the Office of Thrift Supervision - will closely monitor the banks' progress, look more closely at their practices and determine appropriate fines for each firm.

These actions, apart from the voluminous litigation already begun and sure to follow, plus the conclusion of 50 state attorneys general is likely to cost the banks a good deal of time, effort and money. When all is said and done, revealing their openly fraudulent practices and procedures will have two major effects: 1) they will not be so prone to play fast and loose with mortgage money, and 2) housing loans will become even more difficult to get.

On the surface these outcomes may be more of a detriment to recovery in the housing market, but homes will at least become more affordable. Making it difficult to qualify for a loan, the cost of residential housing will fall accordingly until some balance is achieved in the market. After that, homeowners can begin going after tax assessments and "fair value" assessments which are now likely more than 40% too high in many hard-impacted communities.

While the process will be riddled with starts and stops, the long-range outcome should be more affordable housing for lower and middle class people, without onerous tax implications. we may be turning a corner after all.

One other note of interest in terms of bank-hating worldwide was Senator Carl Levin's well-directed attack on Goldman Sachs today:

The Senator says he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought collateralized debt obligations without knowing the firm was betting they would fall in value.

Levin believes that not only did Goldman Sachs' executives delude their clients and break their fiduciary trust, but also lied to congress when brought in front of the Financial Inquiry panel.

Heck, as our link confirms, even FoxNews is pushing this agenda forward, but it remains to be seen if Attorney General Eric Holder will come out of hiding and actually pursue prosecution. If not, maybe it's time to indict the AG himself, because Levin and other members of congress have rightly identified Goldman Sachs and their brethren in the "big banking" world as the criminals who caused the financial meltdown of 2008 and sank the economy.

Watch Senator Levin tear into Goldman Sachs' Daniel Sparks:



Wall Street's reaction to this background noise was all-too-typical behavior by the very same banks that have grown in size over the past 2 1/2 years: they turned a perfectly plausible market downturn into marginal gains. The Dow was down 107 points before the pimps and pumpers jacked it up to a 14 point gain by the closing bell.

As expected, in the face of bad news, the financial gamblers could only cover their tracks, put on happy faces and say "all is well." Perhaps these thieves will be singing another tune when a few of them are perp-walked from their ivory towers in full view of the public which has grown to hate them and all they stand for.

All we've seen from the likes of the biggest banks in America is denial of wrongdoing, obfuscation, outright lying, and complete, unabashed manipulation of all markets they touch - bonds, equities and commodities - not to mention the under-the-table mortgage securitization, CDO and debt swap markets.

They are the most ruthless criminals on the planet, completely without conscience, and hopefully, lawmakers are beginning to catch on to their evil ways. Corners must be turned; equity and law must prevail.

Dow 12,285.15, +14.16 (0.12%)
NASDAQ 2,760.22, -1.30 (0.05%)
S&P 500 1,314.52, +0.11 (0.01%)
NYSE Composite 8,374.16, +6.85 (0.08%)

Not to belabor the obviously-fragile nature of the markets, advancing issues outdid decliners oddly enough, 3611-2838. However, new lows overtook new highs on the NASDAQ, 50-49, but new highs remained stubbornly ahead of new lows on the NYSE, 53-23, though the margin has shrunk considerably over the past few session. Volume remained purely a function of lack of interest.

NASDAQ Volume 1,728,764,375
NYSE Volume 4,249,863,500

Perhaps in response to the continuing turmoil, or maybe because the "Sultans of Swap" were too busy shedding documents to keep a handle on them, commodities took another robust turn positive. Crude oil gained another $1.00 during the NYMEX session, to close at $108.11, but gold and silver took home the trophies. Gold rocketed to another in a series of all-time highs, gaining $16.80, to $1,472.40 and silver exploded up $1.43, to $41.66, though both were higher in foreign markets, with gold at $1475.70 and silver romping higher at $42.14 per ounce.

Perhaps, more than turning corners, financial markets are meeting their eventual end, with paper currencies under attack from the growing howls of the general public worldwide, unhappy with rising prices and stagnant wages, governments with too much power and not enough nerve, honesty or will to do right.

These explosive moves in the precious metals are not to be taken lightly. The global Ponzi scheme of fiat money is being put to a severe test and is failing badly, today's activity just another warm-up for the real fireworks coming when the US congress considers whether or not to raise the debt ceiling, something they've done 174 times before.

From the ominous sounds emanating from the Tea Party wing in the House of Representatives, these could be the final days not only for the dollar as a reserve currency, but for every form of money not backed by some tangible asset, of which gold and silver are the obvious choices.

After the bell, Google announced its results for the first quarter of 2011, and from the looks of how it was trading after hours, investors were none too pleased that they missed their earnings per share estimate by three cents.

Even though Google topped revenue expectations, the stock was down nearly 30 points in the after-hours, a decline of more than five per cent.

That does not bode well for tomorrow's opening, which of course will have as an added bonus, the earnings release of the bank everyone loves to hate, Bank of America. Friday ought to be a doozy of a day.