Showing posts with label US stocks. Show all posts
Showing posts with label US stocks. Show all posts

Friday, February 28, 2020

All Major US Indices Post Record Losses On Coronavirus (COVID-19) Shocks

This is how it always ends. A pileup on the interstate. Panic at the disco.

And this is only the beginning of the end of a bull market that's survived long past its sell-by date, the final six months being kept upright by oodles of fake bucks from the Fed via the repo market.

Prior to that it was stock buybacks and more Fed printing. It's over. Get used to it.

A couple of friends yesterday were in the first stage of he Kubler-Ross five levels of grief, denial, saying that the stock market would come back. This, despite evidence right in front of their faces of massive losses and still they won't move their money to a safer place.

Smart money will be making more all the way down. Most money will simply disappear.

All of the major indices suffered yesterday their worst point losses in stock market history. That's right, the worst ever.

The Dow Jones Industrials managed to dispose of 1,190.96 points, edging out the 1,175.21 trashing on February 5, 2018. The NASDAQ put down a marker that is likely to stand for a long time (if it's not broken sometime during the next few months), dropping 414 points, bettering the former record of -355.49 from April 4, 2000, by some 59 points. That's a lot.

The S&P 500 also crushed its previous record, ripping off 137.63 points, topping the old mark of -113.19 from February 5, 2018.

It's been a bad week for stocks as the coronavirus (COVID-19) continues to spread across the globe.

Oddly enough, but with some historical precedence, precious metals have been bashed down over the past few days as well, just as they were at the height of the global meltdown of 2008. Everything lost value then. Same now.

Crude oil took another bump lower, with WTI crude as low as $45.25 pr barrel. Yield on the ten-year note fell to yet another record low, checking in at 1.30% at the end of the day. The 30-year was at 1.79%.

With the final trading day of the week on deck, there isn't much more to say than glad it's over, but the tide has turned, with all the major indices already - in the span of just five days - in correction territory, donw by more than 10%. Unless something changes quickly, there's a bear market staring investors in the face.

Cant say that it hasn't been apparent. This is no surprise. All the market needed was a good scapegoat and it found one in coronavirus and its aftereffects.

At the Close, Thursday, February 27, 2020:
Dow Jones Industrial Average: 25,766.64, -1,190.96 (-4.42%)
NASDAQ: 8,566.48, -414.29 (-4.61%)
S&P 500: 2,978.76, -137.63 (-4.42%)
NYSE: 12,547.25, -499.35 (-3.83%)

Wednesday, October 3, 2018

Why Does the Dow Go Up When Everything Else Goes Down?

Divergence between the NASDAQ and the Dow Industrials has been a persistent feature over the past year, although recently, the up versus down daily routine has taken on nw dimensions, with the 30 Dow stocks outperforming all other indices routinely.

Tuesday was a case in point as all major indices, including the S&P 500, NASDAQ, Dow Transportation Index, and the Russell 2000 all ended in the red, while the Dow rose majestically to a new all-time closing high. Additionally, almost all foreign markets finished lower on the day.

While there has been no rationale to sufficiently explain the phenomenon, one might easily conclude that the Dow stocks are more stable than the more speculative offerings on other indices, or that Dow stocks, in addition to steady appreciation, offer regular dividends and are generally regarded as the best behemoth companies in the American market.

None of this can fully explain why the Dow gains while other stocks fall, but the pattern has been so obvious and consistent for so long, it merits further investigation.

Conspiracy theorists can claim manipulation in order to keep the unsuspecting masses complacent, as the Dow Jones Industrial Average is the most-widely watched index on the planet. Such an explanation would be difficult, if not impossible, to prove.

Others rightly point out that the Dow is unique in that it is not a weighted average, and gains or losses by the highest-priced offerings can send the index up or down in rather large ways.

In any case, the Dow keeps going up, no matter what other markets or indices are doing.

Dow Jones Industrial Average October Scorecard:

Date Close Gain/Loss Cum. G/L
10/1/18 26,651.21 +192.90 +192.90
10/2/18 26,773.94 +122.73 +315.63

At the Close, Tuesday, October 2, 2018:
Dow Jones Industrial Average: 26,773.94, +122.73 (+0.46%)
NASDAQ: 7,999.55, -37.76 (-0.47%)
S&P 500: 2,923.43, -1.16 (-0.04%)
NYSE Composite: 13,106.01, -19.34 (-0.15%)

Monday, February 1, 2016

January Was A Dud; February Starts Badly; Markets Due for Breakdown

Call this a "call 'em as we see 'em" post.

Stocks started February without continuation of the "Japan Negative Interest Rates" rally of Friday, falling out at the opening bell and doing little to inspire confidence throughout the session.

The stock market is down and will likely stay down for the remainder of 2016, go lower in 2017 and disintegrate in 2018. That's the optimistic point of view.

There's nothing good in this market. You pick stocks you think have a good business model, reliable earnings, maybe even a dividend, and, then, WHAM! it gets whacked like a mafioso underling who looked the wrong way at the boss.

Take for instance, the case of this stock (ADS), which last week released earnings above consensus, though the top line (revenue) fell a little short. What happened? Nobody is certain, but the stock took a 20% haircut on January 28. There seemed to be no justification for the radical downsizing of the price of Alliance Data Systems, a company heavily involved in online advertising.

That's just a sampling. Things like this happen every day, without warning nor explanation (we looked, and couldn't find a reasonable telling). So, say you had $20,000 tied up in this company. That was Wednesday. As of close of business on Thursday, you have $16,000. There's a couple months off your planned retirement.

Suppose you held it in a 401k or other such pension vehicle. There was absolutely nothing you could do about it, either before or after the fact. You were stuck, like a good sucker at a rigged casino. Thank you for playing. Come again. And individuals do. They come back for more and more punishment. They loved it the past seven years, when stocks went straight up, no matter what. But now, things have changed.

It's still not too late to pull all your money out and invest in silver, gold, cash, and anything else you might need in retirement (canned goods, anyone?).

The US stock markets - and likely, all markets, globally - suck. They suck the life out of investors and then, you get to pay taxes on any gains, and sometimes, on losses. So, suck it up or get out.

Today's closing fake numbers:
S&P 500: 1,939.38, -0.86 (0.04%)
Dow: 16,449.18, -17.12 (0.10%)
NASDAQ: 4,620.37, +6.41 (0.14%)

Crude Oil 31.64 -5.89% Gold 1,128.40 +1.07% EUR/USD 1.0888 +0.53% 10-Yr Bond 1.9660 +1.81% Corn 371.00 -0.27% Copper 2.06 -0.41% Silver 14.35 +0.75% Natural Gas 2.15 -6.48% Russell 2000 1,032.39 -0.29% VIX 19.98 -1.09% BATS 1000 20,713.55 +0.14% GBP/USD 1.4426 +1.35% USD/JPY 120.9405 -0.31%

Thursday, September 13, 2012

Ben Bernanke, Bankers' Friend; QE3 Sends Stocks Screaming Higher, Oil, Gold, Silver Rally

After the German Constitutional Court OK'd the ECB's ESM (love those acronyms!), Thursday was set up for a real bazooka blast of fresh money-printing by Fed Chairman Ben Bernanke.

And, of course, the chairman did not disappoint, announcing an unlimited bond buying scheme, whereby the Federal Reserve would commit to buying $40 billion per month of MBS (Mortgage-Backed Securities) for a time period that the chairman left open-ended.

According to the FOMC statement: "If the outlook for the labor market does not improve substantially, the committee will continue its purchase of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability..."

The FOMC statement also extended ZIRP (Zero Interest Rate Policy) through mid-2015, another easing which mostly benefits banks, which can borrow at 0-1/4%.

The Fed's move was - and will be - huge, providing liquidity and a lifeline to the banks by sopping up their horrendous MBS, which are almost all underwater, spoiled or otherwise non-performing.

A move of such scope cannot be underestimated for its overall effects to the larger economy, not only in the US, but globally. The world is already awash in US dollars, and these policy actions only exacerbate that situation. In response, the Euro has galloped ahead, trading in excess of 1.31 to the dollar.

Markets all popped, with the Dow at its highest level since autumn of 2007 and now within shouting distance of its all time high, along with the S&P.

It is absolutely amazing that stocks can be artificially propped up due to actions from the public sector, but there is a downside to consumers in the form of higher prices, especially in food and fuel. Gasoline at the pump is nearing $4.00 per gallon nationwide. The average price of a gallon of unleaded regular is now $3.87.

The Fed believes that even with their massively-inflationary policies that inflation will remain below two percent. They must be dreaming, because the price of oil, tied directly to gas and home heating fuel, continues to rise and should continue to do so in the months ahead.

That will effect all consumer prices on everything that needs to be shipped, trucked or transported, which is just about everything except food you grow in your own back yard and items you make at home (depending on where you buy raw materials).

Good-bye Mitt Romney; hello second term for Obama. The election, thanks to the Fed, should be a slam-dunk for president Obama and likely will result in congress continuing to be split, with Republicans ruling the House and Democrats the Senate.

Great. More deadlock from the pols, higher prices for everything, more riches for bankers, a weaker dollar (in just the past two weeks, that European vacation rose in price about 10%) and no way to save unless you buy hard assets, gold and silver.

The status quo remains print, print, and print some more. The middle class is being squeezed out of existence. The big hope is that the Fed will sop up so much of the horrid MBS out there that they will bankrupt themselves and someday the US will return to sound money, though that scenario is probably a few years away.

In the meantime, enjoy. Spend. The Fed and the government have your back with unlimited public spending, a new, higher federal debt ceiling (coming soon and monetized by the Fed) and fiat money out the wazoo.

It's the grandest clusterf--k of monetary policy and make-believe debt-funding in the history of the world.

Dow 13,539.86, +206.51 (1.55%)
NASDAQ 3,155.83. +41.51 (1.33%)
S&P 500 1,459.99. +23.43 (1.63%)
NYSE Composite 8,407.03, +139.71 (1.69%)
NASDAQ Volume 1,884,013,625.00
NYSE Volume 4,616,279,500
Combined NYSE & NASDAQ Advance - Decline: 4230-1321
Combined NYSE & NASDAQ New highs - New lows: 598-27 (flashing red light extreme)
WTI crude oil: 98.31, +1.30
Gold: 1,772.10, +38.40
Silver: 34.78, +1.49

Tuesday, April 10, 2012

Markets Offering Few Directional Clues Amidst Continuing Crises

Spain today, tomorrow jobs, next day China. Wholesale inventories are growing.

That's how the markets seem to be lurching from one crisis to the next, though overall performance in equity markets has - until the past five days - been outstanding.

Today's deep declines in Europe and the US notwithstanding, global economies have withstood more than three years of relentless pressure and are still standing.

This kind of vacillation leaves most analysts red-eyed and weary at the ends of most weeks and casual market observers in a state of dumbfounded blurriness.

Recapping the losses in US equity markets today need not lead one to conclude that the economy is falling over a cliff; indeed, stocks have been on a 30% tear since October, and the recent five-day decline has only clipped off a small percentage. And, it's just the start of earnings season for the first quarter, one which is predicted to be less-than-outstanding, withe the estimate for earnings growth to be less than one percent.

The Dow is on its worst five-day losing streak since August of 2011; meanwhile the S&P and NASDAQ have suffered their biggest drops since late November. The S&P broke through support at 1370 and continued down from there, slicing through its 50-day moving average, while the NASDAQ busted below 3000, a beachhead just recently breached.

Fear? Greed? Take your pick. Stocks finished close to their lows of the day, setting up just about anything for Wednesday, though the overhand from Spain's 10-year bond hovering around 6% is troubling to all.

On the bright side, Alcoa (AA) opened earnings season with a surprise, posting a nine-cent per share first quarter profit on expectations of a four-cent loss. On the other hand, last year's first quarter profit was 27 cents per share.

The 10-year US treasury closed below 2% (1.98%) for the first time in a month and WTI crude oil ended the day at roughly the same level it was at on December 30 of last year.

Most corporate economists are calling for 2-3% growth for 2012, though their track record is of misses so wide that one would be a fool to invite them onto the bar darts team.

A couple of clues to keep on the radar over the next few days, because they will be telling: the advance-decline line has been anemic for the past two weeks and the past two days have been decidedly bearish; the VIX has spiked 30% in the past eight sessions; Dow transports never confirmed the recent rally and have been taking a beating recently; new highs - new lows has rolled over in three of the past four sessions; and, crude oil has tanked.

All of these indicators are important, but it's still too early to call a trend, especially as we head into the heart of earnings season over the next two weeks. It will pay to keep a very close eye on developments. The recent downturn could easily be nothing more than profit-taking or the forerunner of a severe downturn.

So, take your pick. Up, down, left, right, forward, backwards. If you have a job, keep it. If you have some money, save it. If you need to eat, buy some food (it's still relatively cheap), if you don't have to drive, don't, and, if you think life is still pretty good, enjoy it, because, in this environment, one never knows how long the good times will last.

Keep an eye on sunrise and sunset times and any variance from published expectations.

Dow 12,715.93, -213.66 (1.65%)
NASDAQ 2,991.22, -55.86 (1.83%)
S&P 500 1,358.59, -23.61 (1.71%)
NYSE Composite 7,842.00, -150.32 (1.88%)
NASDAQ Volume 1,916,928,125
NYSE Volume 4,651,426,500
Combined NYSE & NASDAQ Advance - Decline: 924-4713
Combined NYSE & NASDAQ New highs - New lows: 45-157
WTI crude oil: 101.02, -1.44
Gold: 1,660.70, +16.80
Silver: 31.68, +0.16

Friday, October 28, 2011

Markets Calm After Massive Post-Eurofix Advance

For a day, at least, US equity markets responded in a fashion similar to what most wizened investors are accustomed. There were no wild swings or sudden accelerations, flash-crashes or HFT-inspired momentum runs. Volume was slight, as investors took a wait-and-see approach after Thursday's massive run-up, inspired by the market salve applied by European leaders.

One can imagine that said leaders engaged in some hearty back-slapping, after delay upon delay in dealing with the three separate issues involving the stability of the Euro as a currency and the Eurozone as a political/economic entity. Recapping, Greek bond-holders were to receive a 50% haircut, banks would get about $140 billion in recapitalizations and the size of the EFSF would be expanded to Euro 1 Trillion, or about $1.4 Trillion US. After negotiations had spilled into Thursday morning, the Europeans actually did deliver an outline that would satiate most of the news-hungry financial journalists and provided a framework for what is sure to be a fluid situation for months and years to come in one of the world's largest economic blocs.

For that, investors took a casual Friday attitude with them today, shoring up positions, taking profits and generally tape-watching to see if there would be any disruption to the relative calm. There were not, globally, as Asian markets were mostly higher, while European bourses and US equity markets were flat to split.

The Dow traded in a narrow range of less than 90 points, the NASDAQ and S&P 500 following with similar patterns. It was like a financial seventies flashback, without the disco music, flared jeans or leisure suits, thank goodness.

Only economic data releases could possibly upset the mood, but those delivered early in the day - personal income up 0.1%, personal spending rising by 0.6% and the University of Michigan's Consumer Sentiment gauge surprisingly up to a reading of 60.9 in October after a posting of 57.5 in September - were, for the most part, benign.

To say that it was a dull day was most likely an understatement and while some might decry the fact that there was no follow-through, one must consider the levels at which stocks are trading. October 2011 is on track to be not only the best October in the history of the Dow Jones Industrial Average, but the best month in terms of points gained in that index's long and storied history. There was probably as much chatter about the World Series as there was about stock moves. Investors have staked out positions and appear, for now, to be standing pat. A rest at these current levels would be neither surprising nor unusual. Even a further profit-taking decline would be an almost welcome reaction.

Macro-economic events have overshadowed what is usually a busy earnings season, though not completely. There is a sense that market turmoil has abated and global stocks are doing just fine, in deference to the protesters carousing in the Wall Street area and other cities.

Like kids after a raucous recess period, maybe all Wall Street wanted, or needed, was a time out.

There's a World Series game seven on Friday and an autumn weekend ahead. We'll worry about next week when it arrives.

Dow 12,231.11, +22.56 (0.18%)
NASDAQ 2,737.15, -1.48 (0.05%)
S&P 500 1,285.08, +0.49 (0.04%)
NYSE Compos 7,803.94, -10.05 (0.13%)
NASDAQ Volume 1,862,553,500
NYSE Volume 4,536,691,500
Combined NYSE & NASDAQ Advance - Decline: 2844-2792
Combined NYSE & NASDAQ New highs - New lows: 125-34
WTI crude oil: 93.32, -0.64
Gold: 1,747.20, -0.50
Silver: 35.29, +0.18

Friday, July 1, 2011

What a Week for Stocks; Metals, Not So Much

Once word that the Greek government was going to pass the severe austerity measures on its people, so as to get another $17 billion in loans from the EU/IMF, stock traders were treated to a rare "all green" week of trading, as though risk had been taken entirely out of the equation.

Even the end of QE2 and the regime of free money for primary dealers didn't slow down the express train to the upside in equities. It was truly one of the best weeks ever for US markets in terms of gains, logging in five straight days of positive returns.

Here's how they fared.

S&P 5001,268.451,339.67+71.22
NYSE COMP7,974.728,425.46450.74

On Friday, after closing out the second quarter with very positive vibes, stocks continued to rally on the first day of July and the third quarter with the best performance of the entire week, in hopes that there will not be many more natural disasters - such as Fukushima, Midwest tornadoes or Northwest floods - and that the messy situation in Greece is at least solved for now.

Apparently, there is little worry over when and whether congress will reach a deal on the debt ceiling, now that legislators have put off their usual Independence Day week-long recess, to supposedly work towards some kind of compromise on the matter.

Today's results:

Dow 12,582.77, +168.43 (1.36%)
NASDAQ 2,816.03, +42.51 (1.53%)
S&P 500 1,339.67, +19.03 (1.44%)
NYSE Composite 8,425.46, +106.36 (1.28%)

Advancing issues had their way, beating decliners, 5104-1468. NASDAQ new highs: 148; new lows: 26; NYSE New highs 168; New lows: 4. Combined: 316 new highs, 30 new lows. Volume was even softer than what has normally been a lightly-traded market, leading some to conclude (perhaps rightfully so) that the movements of stocks in the age of whirring computers and unsolvable algorithms are highly manipulated by the big brokerages.

NASDAQ Volume 1,604,401,500
NYSE Volume 3,721,877,750

While stocks were soaring along, commodities - with the notable exception of oil - took it hard. Crude oil futures declined 48 cents, to $94.94, after gaining most of the week. Gold finished at its worst level in six weeks, down $20.20, to $1,482.60, and silver was pounded down once more, losing $1.13, to $33.70, a loss of more than 3%.

By the way, just in case someone comes along and tries to tell you that oil is priced so high because we're running out of it, you do have the right to punch that person in the nose or kick in the groin, as appropriate. The worldwide collusion in the price of oil and gasoline to consumers has been going on for some time (a long time) and the "peak oil" theory is about as useful as science as an ace bandage is to a torn ACL.

In a word, it is "bunk." For more information, see and read the work of F. William Engdahl.

Seriously, do you really believe that those "fossil fuels" - coal, natural gas and oil - come from the remains of dinosaurs? Considering the amount that's been dug, mined, stripped, pumped and drilled out of the earth the past 200 years alone would lead one to believe that the Jurasic period was a shoulder-to-shoulder affair.

Friday, May 7, 2010

Wall Street Whacked Again; Europe Overwhelms Positive Employment and Gulf Oil Spill

Following the worst recession since the Great Depression, the bulk of Americans still suffering through the slow, painful "recovery" process probably is cheering every daily decline in the stock market. Where Main Street to a large extent has plumbed the depths of poverty, Wall Street has had the pleasure of using taxpayer dollars to dig their way out of the mess they themselves caused, so it's not surprising that after Thursday's "fat finger" debacle many Americans are throwing a fat finger right back at the titans of finance and their profligate ways.

News outlets claimed that a mistaken trade, hitting a a "B" instead of an "M" - as in billions vs. millions of shares - caused yesterday's 998 point plummet, thus the "fat finger" excuse, which, by the way, has been largely discredited. The truth of what happened on May 6, 2010 may never be fully known, but the idea that insiders purposely sold huge quantities in a coordinated assault has some merit.

The goal of the traders causing the plunge (probably computer programmed) was to sell enough shares of enough companies to trigger momentum trading by other computers and individuals in addition to triggering stop loss trades that would exacerbate the situation. Then, as the market plunged, notably to almost a 1000-point loss on the Dow, scoop up quantities of the same stocks after their values had been decimated, in effect, reversing the old saw of "buy low, sell high," on its head, selling high and the buying low.

If this was a coordinated, widely-spread-out trading scheme - and there's no evidence indicating that it wasn't - it seemed to have worked to perfection. Two other elements lead one to believe that it could also have been a staged event. First, the near-1000-point drop bottomed just after 2:30. Had it occurred before that time and gone down more than 1000 points, the NYSE would have shut down. Likely not wanting to tempt fate, the schemers plied their scam just after 2:30 and stopped the skid just before the 1000-point-down level was attained.

Second, CNBC and networks worldwide were airing scenes of protesters in Greece being beaten back and dispersed by riot police at precisely the moment the stock market was skidding out of control. If this were labeled a terror attack, it would fit the definition precisely, because it terrorized not only people invested or watching on TV, but the traders on the floor and in brokerages around the world.

Additionally, CNBC had commentators in place in Greece and on the Iberian peninsula, plus they brought Jim Cramer (Mad Money) onto the set for a rare appearance. At the depth of the decline, host Erin Burnett brought up a chart of Proctor Gamble, which had plunged some 20 points in a manner of minutes. Cramer cooly called it a buy and it immediately reversed course and headed back near the unchanged mark.

Commentators on CNBC also started the "fat finger" rumor and produced an additional three hours of coverage later in the evening, complete with "Markets in Turmoil" graphics and coverage from around the financial universe.

So, was the sudden collapse and subsequent, immediate 600-point rally all about finances or all about ratings? The timing seemed to synch perfectly with the anarchist overtones emanating from Athens, and the swiftness of the entire affair (less than 20 minutes) was riveting television. CNBC reported today that their web site traffic shot through the roof during and after the event.

Whatever the cause of Thursday's melt down and up, the message was loud and clear: something is amiss on Wall Street when stocks can go to zero in the space of a couple of heartbeats and nobody knows exactly why. Investors were skittish and tentative on Friday, even after the government produced the best non-farm payroll report in four years.

The employment report for April showed the US economy creating 290,000 jobs in April, with only 66,000 of those coming in the form of temporary census workers. The BLS also upgraded the previous two months, showing even more job growth than had previously been reported. That kind of upbeat news still could not shake off the tremors from Thursday's wild ride nor the unsettled affairs in Greece and across Europe, where LIBOR (London InterBank Overnight Rate) - the rate of interest banks charge each other for overnight loans - shot up dramatically.

As the European overtone kept markets subdued, US bond yields held steady or declined and the dollar gained against most other currencies, expressing the view that the United States was the best of a bad bunch as far as investments were concerned. With all the reporting on Wall Street and Europe overwhelming the news wires, the story of oil continually gushing into the Gulf - with the oil slick making landfall yesterday in Louisiana - was sadly sent to a back burner.

Traders were extremely cautious though not entirely on the sell side. The Dow dropped 279 points early in the day before rallying briefly into positive territory just 45 minutes later. The rally had no momentum, however, and stocks sold off in jumpy fashion through the remainder of the session.

Dow 10,380.43, -139.89 (1.33%)
NASDAQ 2,265.64, -54.00 (2.33%)
S&P 500 1,110.88, -17.27 (1.53%)
NYSE Composite 6,916.18, -95.74 (1.37%)

Market internals confirmed the ugly truth. Advancers were once again beaten severely by decliners, 4838-1775, and new lows exceeded new highs for the second straight day, 184-94, a significant development, signaling, in very certain terms, a continuance of the downturn. Volume was once again at fantastic heights, similar to Thursday's trading. It's obvious that much of the smart money has been heading for the exits en masse over the past two weeks and now the dumb money is following.

NYSE Volume 10,830,781,000.00
NASDAQ Volume 4,174,408,500.00

The unsettled nature of trading and uncertain future for Europe took oil down yet another notch, with crude futures closing down $2.00, to $75.11. The metals have divorced themselves from the energy complex, with gold rallying another $13.40, to $1,210.00, and silver adding 94 cents, to $18.43. Wall Street's high-velocity, highly volatile trading suggests that gold will continue to be a safe haven for wealth.

The week was among the ten worst ever for stocks, with the Dow suffering a 628-point decline. All of the major indices closed today at levels below the start of the year. They are all in negative territory for 2010.

The Dow Jones Industrials are down 7.4% from their April 26 high of 11,205.03. The NASDAQ is already technically in a correction, having fallen 10.5% from its recent high, while the S&P 500 is off 8.8%.

Stop losses? Maybe it's time to stop trading equities for the relative safety of bonds and metals. Unless conditions in various locales improve remarkably over the coming weeks, this slide should eviscerate much of the progress made in 2009. Think Dow 9000 and possibly lower, near-to-medium term.

Tuesday, February 27, 2007

Sensational! Spectacular! WOW!

Finally, something to get excited about.

In case you missed it, US stock markets nearly collapsed wholesale on Tuesday.

Check out these figures:
Dow: 12,216.24, -416.02; NASDAQ: 2,407.86, -96.66; S&P 500: 1,399.04, -50.33

Like I said in the headline, WOW! But it wasn't as though we weren't warned. Just yesterday, right here, my headline read The Correction Has Begun. If my word wasn't enough of a warning to start taking those profits and paring losses, then maybe former Fed Chairman Alan Greenspan's remarks to an economic conference in Hong Kong yesterday might have given us a clue that something was in the works.

And boy was it. This was telegraphed like a club boxer's left hook.

The fact of the matter is that today's response from, first, the Chinese stock market, then Europe's markets, and finally the US markets, was entirely well-organized and a classic prototype of blatant manipulation.

In the long run, it means little. The biggest hit in the US, on a percentage basis, was taken by the NASDAQ, which lost nearly 4% on the day. We'll survive. That stunner was, however, dwarfed by China's 9% decline, which, according to the so-called experts, was the real reason for US stocks to take a beating.

What utter hooey! If the Chinese economy stutters and stumbles, we should, as a nation, applaud long and loud. Maybe we can get a better deal on plasma TVs if they feel a little pain for a change. We're all in it together, though the US trade deficit and government overspending does play into the whole mess.

Our loose fiscal policies are the prime factors behind the whole worldwide bubble economy and we're mortgaged to the hilt. But if China takes a hit, should we worry? Maybe a little, since they hold our debt and could start calling it in or floating their currency - the yuan - a little higher, or both. But it certainly isn't the end of the world and nothing's really changed since yesterday, right?

Oh, no. That's where you would be wrong. This story by Seymour Hersh in the New Yorker makes some very poignant and troubling claims about the state and nature and inner doings of our political leadership. I won't tip it off here, but leave it to you to read it for yourself.

Well, here's a clue. Hersh is the preeminent investigative reporter of our day. He broke the Iran-Contra story and he's been on to the shenanigans of the Bush administration from the start of the Iraq War. So, would the hoi poloi in the White House and on Wall Street and in London's City get a little bit twitchy if the leaders of the world's superpower were about to get a serious spanking by the media and maybe the Congress?

Here's the timeline:
Hersh's article hits the newsstands and the web on 2/25.
Greenspan warns of a US recession on 2/26.
China's markets implode, Europe and US markets follow on 2/27.

Welcome to the winter of our discontent. My advice: Watch for falling stocks... and politicians. Yesterday, I said the Dow should settle out in the 10,350 to 11,100 range. We've still got at least another 1100 points to go.