Great News! August Jobs Numbers Miss; Stocks Aim For Moon Shot

Bad news is still good news on Wall Street.

According to the impeccable source of all financial excitement, Yahoo! News,

The August jobs report is out and it’s a miss.

The U.S. economy added 156,000 nonfarm payrolls in August while the unemployment rate rose slightly to 4.4%, according to the latest figures from the Bureau of Labor Statistics.

Economists were looking nonfarm payrolls to grow by 180,000 in August while the unemployment rate was expected to hold steady at 4.3% near a post-crisis low. The BLS noted in its report that Hurricane Harvey had “no [discernible] effect” on the employment data for August.

Wage growth was also a disappointment, with average hourly earnings rising 0.1% over the prior month and 2.5% over last year. Earnings were expected to rise 0.2% over the prior month and 2.6% over the prior year. A rise in wages is seen by economists as portending an uptick in inflation, which has disappointed this year.

The rest of the story is here.

After ten years of the most tepid "recovery" on record, and despite $14 trillion of magic money creation by the central banks of the developed countries (adding in China, it's more like $18 trillion), poor employment data is still greeted with smiles by stock jockeys, because it means the economy is not really recovering and the Fed and other globalist central banks cannot realistically raise interest rates.

That means the punch bowl will be refilled with easy credit and the bubbly stock market can advance to every higher levels of insanity.

Forget that the average P/E of S&P 500 stocks is four standard deviations above the norm, that government pension shortfalls threaten the retirement of millions of aging Americans. Forget that wages have been stagnant for 17 years running. Just buy more stocks and everything will turn out just fine.

It's madness. Nothing, absolutely nothing will change until the day comes when it all changes at once. But that day may still be years away because the central banks and government number crunchers will see to it that the veil is never removed from the eyes of ordinary people who will be taxed and regulated into the ether.

There are no jobs. Party on!

At the Close, 8/31/17:
Dow: 21,948.10, +55.67 (+0.25%)
NASDAQ: 6,428.66, +60.35 (+0.95%)
S&P 500: 2,471.65, +14.06 (+0.57%)
NYSE Composite: 11,875.69, +70.62 (+0.60%)

FOMC Leaves Rates Unchanged, Turns More Dovish; Wedbush: Stocks Crash If Trump Wins

Stock junkies got their fix on Wall Street today, as the FOMC not only kept the federal funds rate unchanged at 1/4 to 1/2%, but reversed course on their planned four rate hikes in 2016, reducing the outlook to two, which, in the nuanced parlance that can only come from crony central bankers, means one more rate hike in 2016, likely not until September, at the earliest.

Talking heads from the various analyst camps spoke of a potential June hike, though, judging from the Fed's past actions, later, rather than sooner, would be the more likely timing. With US general elections coming in November, the Fed - no longer an altruistic entity, but a purely political one - a September rate cut would produce maximum chaos, which is surely the ongoing plan.

Not to put too cynical a spin on it, but the Federal Reserve has become completely politicized under Janet Yellen, with plenty of assistance and guidance by the mother hens which dominate policy from the White House. Employing high-sounding verbiage and the trappings and aura of majesty, the Fed has managed to hypnotize global markets and US citizens with their incredible blend of experimental policy and garbled, mangled language.

What the Fed has accomplished is nothing more than a furtherance of the ongoing wealth transfer from the distressed middle and lower classes to the uber-wealthy, while shutting out innovation, creativity and entrepreneurial spirit.

In essence, they are the ultimate destroyer of the American economy via globalist intentions and actions.

With their latest salvo of lick-spittle jawboning, they perpetuate the counterfeit of the US dollar and the fraud on savers which began in earnest with the financial collapse in 2008-09.

Stock promoters couldn't be happier, sending the major indices to their highest points since early January. With no impediments standing between them and median price-earnings ratios approaching pre-1929 levels, stocks are poised to completely erase the losses incurred through the first six weeks of the year.

With today's close, the Dow and S&P are within one strong day of getting even for the annum; the NASDAQ has a little more work to do.

December 31, 2015 closing prices:
Dow: 17,425.03
S&P: 2,043.94
NASDAQ: 5,007.41

Today's Fed-jacking:
S&P 500: 2,027.22, +11.29 (0.56%)
Dow: 17,325.76, +74.23 (0.43%)
NASDAQ: 4,763.97, +35.30 (0.75%)

Crude Oil 38.49 +5.92% Gold 1,264.00 +2.68% EUR/USD 1.1227 +1.08% 10-Yr Bond 1.9380 -1.07% Corn 368.25 -0.07% Copper 2.25 +0.94% Silver 15.64 +2.48% Natural Gas 1.87 +0.97% Russell 2000 1,074.51 +0.74% VIX 14.99 -10.99% BATS 1000 20,682.61 0.00% GBP/USD 1.4269 +0.79% USD/JPY 112.5475 -0.53%

In what has to be the #1 hit piece on Donald Trump from the Wall Street crony capitalists - via Yahoo! and CNBC, Wedbush's director of equity sales, Ian Winer (shouldn't that be I'm a Whiner?) says stocks will crash 50% if Trump is elected president.

Here's a link to the article and video (and some easy comments), and if you just want the video, go here!

CNBC, the #1 financial bull--it network, doesn't want to mention that stocks should fall 50% anyhow, and the entire economy will be gutted if Hillary Clinton or Bernie Sanders wins the election.

https://screen.yahoo.com/trump-catastrophic-stocks-wedbush-214000793.html

One of the better comments, by commentator takebreathandthink:

It's true, the markets will crash 50%. Also, the seas will turn to blood, meteors will rain down from the heavens, swarms of locusts will kill all of the crops in the world, every volcano will erupt, earthquakes will rip apart the continents, and the first born of everyone in the world will die (thank God I'm the youngest in my family).

Inquiring minds want to know why Mr. Winer didn't call for a 60% or 80% crash. After all, if you're going to trash someone, why go just halfway?

Vote Trump. Wall Street hates him.

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%

Slaughter On Wall Street: Stocks Whacked Again As China Markets Close Early; Macy's Lays Off Thousands

Sure, the economy is just fine.

That's what the pundits on Bloomberg and CNBC would have you believe.

So, if everything is so darn good, why is Macy's - which has over 700 stores in the US - closing 40 stores and laying off 4,500 employees?

And why did the NASDAQ and the Dow close the day in correction territory (down 10% from high) today, with the S&P not far off?

People who host shows and are guests on TV want you to believe it's all China's fault. Over on mainland China, their stock markets closed early for the second time this year. That's twice in four days that circuit breakers have been triggered. A 7% selloff causes the market to shut down. Those are their rules. Or, rather, those were their rules.

Early in the US session, Chinese authorities announced that they were suspending the circuit-breaker rule, so their stock markets may fall a lot deeper tomorrow than a mere 7% before everything in the People's Republic goes down the drain.

It's not China's fault. It's the fault of the Fed, the government (for looking the other way and accepting bribes from corporations and banks), and the greed of Wall Street. It's also the fault of smart people taking their money out of the rigged casino, aka Wall Street, before it all vanishes, like it did in 2000, or 2008.

Also, Yahoo! is laying off 1000 employees as part of their reorganization plan. One employee that isn't being let go, but should, is CEO Marissa Mayer, of whom Money Daily said years ago was nothing but a wannabe, a poser, with no measurable skills for running a company.

Yes, the economy is not good, Wall Street and the government is run by a gang of crooks, and, incidentally, those highly-paid CEOs, like Ms. Mayer, should be in bread lines with the rest of the people being let go, because they're incompetent.

America, a once-great country, is going down the tubes, and in a big hurry. The culprit is not some foreign entity, terrorism, guns or aliens. The reasons can be found all over the country. Greedy lawyers, greedier bankers, corrupt government officials, incompetent business leaders, and, interwoven into the fabric of this country, placid, placated, ill-educated, preoccupied, self-engrossed people who vote (or don't) in elections and think they've done their part are all part of the problem, and not part of the solution.

But, people could be the solution. If people stopped making poor decisions, stopped listening to people in authority positions, and started taking responsibility for their own lives, rather than hoping for handouts from an uncle sugar government, people could solve their problems on their own.

The concept of self-reliance has been largely lost in America, but, herms hoping it's going to make a comeback when people wise up to the antics of politicians who don't deliver on their promises and kick them to the curb, where they belong.

There are lots of problems in this country that people could solve on their own if they took charge of their own lives. That, truthfully, may be asking for too much. We've wasted too much time in this country and waited too long for the governing class to do the right thing. Now, it may be too late, and we'll all just have to fend for ourselves.

Actually, that may not be too bad a thing.

The day on wall Street was not pretty, with major indices taking a third huge loss in four days. The Dow Industrials are down nearly 1000 points so far this year, putting 2016 already 6% in the red for even the safest stocks. Averages were lower all day, with no signs of rallies, and, perhaps more telling than anything, there was no snap-back at 3:30 on short covering, which has been the norm of late.

As noted by the quotes below, WTI crude oil finished with a 33 handle, a number not seen in the oil pits in 12 years. Gold and silver have broken out of moribund ranges, though holding and advancing from these levels may be difficult, as central banks collude to keep currency that may compete with the almighty dollar, euro or yen at undesirable levels.

What's undeniable about the gold and silver rigging is that it is unsustainable long-term, though central banks and their henchmen in the COMEX have managed to keep sending the prices of precious metals lower for nearly five full years. With stocks potentially falling out of favor, bonds, cash and PMs may appear to be the best bets with which to ride out a currency storm, a scenario that could be occurring in real time as the dollar/yen carry trade continues to unwind.

There is chaos everywhere, and, for the final trading day of the new year's first week, two important developments will be how the Chinese markets fare and US non-farm payroll data for December, due for release at 8:30 am ET.

Closing prices for Thursday, January 7, 2016
S&P 500: 1,943.09, -47.17 (2.37%)
Dow: 16,514.10, -392.41 (2.32%)
NASDAQ, 4,689.43, -146.34 (3.03%)

Crude Oil 33.21 -2.24% Gold 1,109.20 +1.58% EUR/USD 1.0929 +1.41% 10-Yr Bond 2.1530 -1.10% Corn 352.00 -0.35% Copper 2.02 -3.16% Silver 14.32 +2.50% Natural Gas 2.37 +4.46% Russell 2000 1,064.57 -2.72% VIX 24.99 +21.37% BATS 1000 20,761.26 -2.29% GBP/USD 1.4618 -0.05% USD/JPY 117.5480 -0.80%
 

Stocks Higher on Assumption That Fed Will NOT Immediately Taper Further

On the eve of Ben Bernanke's final FOMC meeting as Chairman of the Fed, stocks perked up in anticipation that the Fed will NOT decrease their monthly bond buying by another $10 billion.

The reasonings behind this are numerous, but mostly rely upon some poor economic data, dating back to early January's release of December non-farm payrolls, which were an admitted disaster.

Piling upon the low job creation and further decline in the workforce participation rate were Monday's new home sales for December, which fell by seven percent in the month, to a seasonally adjusted annual rate of 414,000, as reported by the Commerce Department. In November, sales fell 3.9 percent, making December the second consecutive monthly decline.

Hopping on the decline bandwagon Tuesday morning, the Case-Shiller housing index showed a month-over-month decline in November, something professor Shiller had been warning about since last May. The Standard & Poor's Case-Shiller index of home prices in 20 top cities fell 0.1% in November. A separate 10-city index also fell by 0.1%, though prices were higher by more than 13% on year-over-year data.

Perhaps the most overlooked piece of data also came forward prior to the opening bell, in the form of a massive miss on Durable Goods for December, down 4.3%. The decline was the largest since July. November was also revised lower, from 3.5% to 2.6%.

What that did for stocks was give investors further confidence that the Fed would not decrease their monthly allotment of bond purchases past the $75 billion mark come tomorrow afternoon, when the rate policy announcement is offered at 2:00 pm ET. The currency splashdown in various emerging economies - Venezuela, Argentina and Turkey, in particular - has been, in part, caused by the Fed's "tapering", withdrawing liquidity at a time when most sovereign economies are weak, at best.

A further tapering come tomorrow seems to be out of the question, according to the stock market's "bad news is good news" reaction on Tuesday. The rally could prove to be quite ephemeral, however, as stocks may very well add on more gains Wednesday after the Fed's announcement, but the condition persists. The Fed and most of their central banker brethren have been backed into a corner, wherein they cannot exit their market-propping QE policy, lest markets collapse.

With Bernanke handing over the chairmanship to Janet Yellen, there's at least some good odds that the new Fed chairwoman might even reverse course and begin adding even more QE to the mix, which would, naturally, lead to even more speculation in equities, commodities and rare works of art and real estate, sending the global economy further into the debt spiral from which it seems escape is impossible.

After the bell, AT&T modestly beat earnings expectations, and Yahoo beat on the bottom line, showing fourth quarter earnings of 46 cents on expectations of 39 cents. Revenues were in line, though shares of the oldest search portal were seen down more than five percent in after hours trading. Rumors that profit expectations fell short were being discussed as a primary cause for the selloff.

Additionally, the central bank of Turkey was expected to raise interest rates by as much as two to three percent in order to stave off further decline in the value of the Turkish Lira. The midnight meeting was taking place as of this writing though no news reports were available at the time of this posting.

DOW 15,928.56, +90.68 (+0.57%)
NASDAQ 4,097.96, +14.35 (+0.35%)
S&P 1,792.50, +10.94 (+0.61%)
10-Yr Note 99.93, +0.62 (+0.63%) Yield: 2.76%
NASDAQ Volume 1.85 Bil
NYSE Volume 3.35 Bil
Combined NYSE & NASDAQ Advance - Decline: 4069-1635
Combined NYSE & NASDAQ New highs - New lows: 68-64
WTI crude oil: 97.41, +1.69
Gold: 1,250.80, -12.60
Silver: 19.50, -0.29
Corn: 432.00, +0.25

Epic Fail: Marissa Mayer, Ron Johnson, Tim Cook and the Cult of Mediocrity

Since writing about the stock market is so damn boring these days - yeah, the Dow closed at another record high today, marginally so, though the S&P and NASDAQ couldn't quite keep up - let's take a look at some of the people who think they are shaping our collective futures.

I'm (yes, shifting to first person singular for a change) speaking here about the wannabe executives who have been boosted by people bigger than themselves - one, in particular, Steve Jobs, was actually bigger than life - and we have a triumvirate of massive failures, waiting to happen, astride some of the biggest corporate structures in America.

Marissa Mayer, the recently-installed CEO of Yahoo! (YHOO), has been catching the most attention of late, first, for her dictum that Yahoo! home-workers must begin to come into the office, and just today, on word that the redoubtable Ms. Mayer is now personally reviewing every potential new hire at the Silicon Valley firm she heads.

What a nice way to tell the HR department to F-- off! Seriously, Yahoo! employs something like 11,000 people, so, can one expect Marissa to personally interview every new employee? There's a solution to this little time-consumption mess she's created for herself, and it's called a hiring freeze. Expect one soon.

On the same matter, Ms. Mayer, is said to be leaning more towards employees who've earned degrees from prestigious universities, rather than on merit (an old-fashioned idea that people who've actually accomplished something are valuable), in order to create the correct "culture."

There's something a little disturbing about Ms. Mayer's approach to business and culture, in a way that's kind of creepy. While she told all the home-workers to make tracks back to the office or leave the employ of Yahoo!, she herself had a nursery installed near her office, so she could keep an eye on her newborn son, a benefit the former home-working-mothers do not enjoy.

Two words for Ms. Mayer: elitist. bitch.

Mayer's main claims to fame include graduating from Stanford and being the 20th employee hired by Google founders, Sergey Brin and Larry Page. Nice placement. Yahoo! stock has risen about 40% since Mayer took over as CEO, but there's little evidence to suggest Mayer has had any positive impact on the company. The site has had some redesign lately, though nothing radically different, and it still suffers from poor infrastructure and an assortment of glitches.

If Yahoo! disappeared from the internet tomorrow, it would not be missed. There are plenty of other websites which do what Yahoo! does, yet better, though, admittedly, with less organization. The internet would surely survive without Yahoo! and there would be a great talent pool of unemployed brainy types seeking more challenging employment in the valley.

Let's talk next about Tim Cook, the immediate successor to the late Steve Jobs, founder of Apple (AAPL), which, at the time of his death, was considered the greatest corporation operating in the world. Just before his death in October, 2011, Jobs, knowing he had only a few months left to live, handed over the reins to his corporate empire to Tim Cook.

Jobs, never to be mistaken as a person with great people skills, groomed Cook in his own ways, though he could certainly have not imparted his genius for inventiveness and style, nor his uncanny business acumen. For the first year under Cook, the stock soared, likely on the impetus that Jobs had left in his wake. A year out, however, Apple stock began to nosedive, and continues to falter. Apple hasn't had any new devices since the iPad Mini, and they're losing share in the smart phone wars to Samsung and other competitors.

Cook, like Mayer, happened to be in the right place at the right time, will surely be well compensated for failure, and will lead Apple back to the depths of despair the company suffered when Jobs was kicked out and replaced by John Skully. The innovation and no-nonsense management style of Jobs is long gone. Other consumer electronics firms are running circles around the once-innovative Apple.

While this is not entirely Cook's fault - one cannot be blamed just for being numb and uninspired - he'll be along for the ride... and the fall.

Third in our review of 21st century anti-heroes is another Apple wunderkind, Ron Johnson, who took over JC Penny (JCP) after being hailed as the grand designer of Apple's wonderfully-simple, yet practical stores.

Again, Johnson's story is more myth than meat. While he was head of the retail division, he also had Jobs inspecting and critically appraising every aspect of his work and also had Mickey Drexler as an advisor. Drexler, formerly of the Gap, Inc. and famously, the inventor of J. Crew, is widely and rightfully regarded as a retail genius.

In November, 2011, Johnson got the job as CEO of JCP off his glowing resume and plenty of hype. Wall Street types were peeing themselves over the thought of a person so gloriously-self-proclaimed-as-revolutionary taking over the reins at the failing mass merchandiser. Initially, the stock got a huge bump, trading as high as 43/share on the promise that Johnson would turn the company around.

The results have been nothing short of horrifying, mostly to holders of JCP stock. The hoped-for turnaround has produced nothing but a string of quarterly losses that have brought the share price down to $15, slicing it by nearly two-thirds from the heady, halcyon days of Johnson's visionary resurrection.

To his credit, Johnson has taken some responsibility, expressing in the most recent quarterly conference call that some of his strategy has not worked out very well. The company is teetering on the brink of bankruptcy, and, if it goes under, will not be missed. Like Yahoo!, there are plenty of competitors in the retail space.

It's a symptom of our misdirected times that Wall Street failures are initially hailed as heroes. They've done little to achieve their notoriety, and, arguably, are learning on the job. They are not genii in their own rights and never will be, only people who are bright followers and poor leaders. It's not their fault that they're doomed to failure, though it is sometimes fun to watch them squirm under the bright glare of public scrutiny.

If only there were a mechanism like the stock market for politicians... but, I'm entering dream-land now.

The moral of this story is that genius cannot be replaced and those chosen to walk in the footpaths of such will be handsomely paid and praised, but that garden path soon becomes adorned mostly with thorns.

The failures these people will beset upon themselves and those around them figure to be of epic proportions, and, in the case of JC Penny and Apple, already have reached what some would consider crisis stage. Companies come and go, but the stupidity of seeking out role models from the rich and connected seems a character flaw that never gets old.

...so, to close out today's chapter of "as the world yearns," this cute little song off the Beatle's Rubber Soul album came to mind. It's relevant on many different levels; recalling so many of the people I used to know but now realize that they too were mere phantoms, apparitions and shadows. This video comes complete with the lyrics, so listen along, read and learn...



Dow 14,450.06, +2.77 (0.02%)
NASDAQ 3,242.32, -10.55 (0.32%)
S&P 500 1,552.48, -3.74 (0.24%)
NYSE Composite 9,059.96, -22.27 (0.25%)
NASDAQ Volume 1,672,772,125
NYSE Volume 3,482,609,250
Combined NYSE & NASDAQ Advance - Decline: 2661-3765
Combined NYSE & NASDAQ New highs - New lows: 387-29
WTI crude oil: 92.54, +0.48
Gold: 1,591.70, +13.70
Silver: 29.17, +0.318

Clueless? You're Not Alone on Turnaround Tuesday

From the most grizzled veterans to the baby-faced nubians, nobody was able to put any kind of story or spin on the dramatic turnaround stocks made Tuesday.

After IBM and Texas Instruments both reported revenue misses for the second quarter Monday after the close, Goldman Sachs continued the trend with an earnings report that had traders scrambling for the exits before the market had even opened. When stocks did begin trading, they fell off a cliff, with the Dow down by more than 145 points within the first 15 minutes.

Stabilizing in the red, all indices were trading lower, but gained strength throughout the morning and accelerated into the afternoon session. As 2:00 pm approached, stocks had staged a stunning reversal on nothing but momentum. By the close, all of the major indices sported solid gains, keeping hopes alive that this earnings season would offer some value and momentum for the second half of the year.

Even though IBM ended lower for the day (-3.24, 126.55, -2.50%), it had pared losses substantially, after it had opened with a loss of more than 5%. Goldman Sachs, on the other hand, possibly the true catalyst behind the entire market rally, ended the day higher (+3.23, 148.91, +2.22%) after initially trading down by more than 3 1/2 points from its previous close.

Dow 10,229.96, +75.53 (0.74%)
NASDAQ 2,222.49, +24.26 (1.10%)
S&P 500 1,083.48, +12.23 (1.14%)
NYSE Composite 6,820.04, +80.40 (1.19%)

Headline numbers were supported by strong internals, with advancing issues beating back decliners, 4846-1552. New highs remained atop new lows, 214-136, though once again the disturbing trend in the NASDAQ - more new lows than highs, 67-26 - appeared for the second straight day. Volume was light, but much better than Monday's dismal showing.

NASDAQ Volume 1,944,221,875
NYSE Volume 5,323,317,000

Crude oil closed out the August futures contract up 90 cents, at $77.44, the highest price in a month. Gold rallied for a gain of $9.80, to $1,191.50. Silver added 15 cents, to $17.68.

After the bell, Yahoo! and Apple reported, with Yahoo missing on revenue though beating consensus bottom line EPS by a penny at 15 cents per share. Apple beat on almost all metrics, including gross revenue and earnings per share, setting up a potentially powerful open for tech shares on Wednesday.

Traders Take Profits; Leery Google Cries Foul

A smattering of good news appeared on Wall Street as the week opened, though the comparative numbers still indicated a slowing economy persisting.

On Monday, the Commerce Department reported that US factory orders rose by 2.3% in December, an improvement from November's 1.7% gain and the largest increase since July.

Orders for big-ticket goods were up 5%, but "nondurable" goods, including clothing, textiles and beverages slipped 0.4%.

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For the year, total orders were up just 1.4%, the worst annual performance since 2002. That was a large fall from 2006, when total factory orders rose by 5.1%.

Taken together, the annual numbers carry more weight than the one-month bump in December and investors responded by taking some profits from the previous week off the table.

By 10:00 am, the Dow Industrials were off 75 points and stocks continued to trade in a narrow, lower range for the balance of the session.

Dow 12,635.16 -108.03; NASDAQ 2,382.85 -30.51; S&P 500 1,380.82 -14.60; NYSE Composite 9,202.11 -75.47

Volume was extremely light, an indication that investors are in a wait-and-see mood, with earnings season winding down and only minor economic news scheduled for release this week.

On Wednesday, preliminary 4th quarter productivity figures and crude oil inventories will be released. On Thursday, traders will be watching the initial unemployment claims after a big jump last week. Pending home sales and consumer credit figures are also due for release on Thursday.

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Topping the news is Microsoft's (MSFT) hostile takeover bid for Yahoo (YHOO) and Google's (GOOG) scathing criticism of the potential union of two of the internet's larger players.

The response, penned by one of Google's lawyers, smacks of hypocrisy and fear. Google owns a domineering position in search that borders on a monopoly, though the combination of their two main rivals could pose a serious threat to that dominance.

Yahoo has yet to respond to the roughly $31 per share offer by Microsoft, but analysts are saying it will be difficult to refuse as it represents a 62% premium over Yahoo's price prior to the offer.

With little to move stocks, decliners took command over advancing issues, 3663-2598, though the gap between new lows and new highs continued eroding. New lows held a slim edge on the day, 121-98.

Crude oil priced $1.06 higher, at $90.02, while gold fell $4.10 to $909.40 and silver dropped 9 cents to $16.78. The reduced prices in the precious metals may indicated a prime buying opportunity in these supercharged markets which should only trend higher over the coming months.

NYSE Volume 3,290,565,000
NASDAQ Volume 2,027,786,875

Bailing Out: eBay and Yahoo

From time to time, I like to mention stocks I like or don't like. In all cases I will tell you whether I own the stocks (full disclosure). The stocks I am highlighting today - eBay and Yahoo - I do not own. Nor would I. These are two of the oldest internet properties and both have had their ups and downs, but lately, I see little to no upside, in terms of share price appreciation, for either of them.

Let's look at Yahoo first. Six years ago, they were the leaders in just about every measurable internet category. They had traffic, were the leader in search, news aggregation, games, etc. Then along came Google and stole their search crown. Other competitors sliced away at other categories. And while Yahoo still has impressive traffic numbers, they lack what every great internet company needs - innovation - and that's why their profits and share price are down.

Yahoo is exploring partnerships and integrations with local newspapers to improve the ad spending and reach in major local markets. This is a strategy that has great potential to backfire. Local ad spending on the 'net is the last great frontier, as yet unexploited by the giants. But large, clunky local newspapers, which have been slow to adopt best practices regarding their web offerings, while established entities, may not be the best prospects for innovative ad deals.

There's that word again. Innovation. Many of the largest chains of newspapers have been slow on the uptake and are still, like it or not, tied to the big bucks in print ad sales. The old tree-killing, mash-to-pulp-to-print mantra still resonates in newsrooms and ad departments across America. Teaching the old dogs of newspaper ad sales new tricks is going to be challenging, and likely unprofitable for some time to come, if ever. Ad reps at large newspapers have entrenched customer bases, many of them are in their 50s or 60s and make six-figures, so they're a tough bunch to crack. Why should they offer internet ads to their big-time clients? If it ain't broke don't fix it.

Yahoo would do better to seek out new internet-only local entities, like bloggers, wikis and ultra-local small websites. But they're stuck in that "bigger-is-better" corporate mindset, and that's yet another reason they're in failure mode.

Local ad markets represent some of the most fiercely-fought-over turfs in any selling regimen. Yahoo is in for a long, tough fight in which the landscape shifts from market to market and sometimes day to day. Good luck. It's a losing battle for both the newspapers and Yahoo. In the innovation war, they've come to a gunfight with a switchblade.

Just as i was finishing up this entry, Yahoo announced that CEO Terry Semel is stepping down and will be replaced by co-founder Jerry Yang. Leave it to Yahoo. News about their own company, and they get scooped by CNN Money. I'll stand by my prediction for short term gloom, however. This company needs more than a face-change at the top.

As for eBay, I'll just keep it simple. If it wasn't for their purchase of payment processor PayPal back around 2002, they'd be sunk lower than they already are. The company has made various large acquisitions that don't seem to offer much synergy. Take Skype, for instance. What good does a free long-distance telephone service offer a company that depends on online retail sales for 60% or more of its revenue?

If you're scratching your head on that one, you're not alone. Analysts, merchants and users of the big, fat internet auction shopping site are still trying to figure that one out.

eBay had made other questionable calls on acquisitions and they seem to have lost their focus, if they ever had one in the first place. It's almost as though they feel that the online auction format is not sustainable long term, and maybe they're right. They haven't made the one fundamental change to the auction format that could change the paradigm - taking the time element out of the auction. Most offerings on eBay languish for days before getting bids in the final minutes or seconds, if at all.

The chiefs at eBay haven't noticed that they could make more money with a better, more exciting user experience in the company's 10 year history. Already this summer, listings are down on the flagship US site. It bodes evil for the future of the auction king.

Once again, failure to innovate plagues this company as it does Yahoo. The only advancements eBay has made over the years to their core product are bloated extras that have the potential to boost their bottom line. eBay is missing the web's new wave in very noticeable ways.

Currently trading around 31, eBay should languish in the 20s for some time to come and underperform the S&P 500 through 2008, or until there's a management shake-up.

Yahoo, already trading slightly below 30, may make it's way down to the teens by the end of 2007. They've offered nothing new for so long, major shareholders may begin to bail soon.

Now, today's markets: Dull. With a capital D. Get used to it. It's summer and these kinds of days are the norm. Volume was very light and the indices didn't budge far from the flat line, though they all closed on the downside.

Dow 13,612.98 -26.50; NASDAQ 2,626.60 -0.11; S&P 500 1,531.05 -1.86; NYSE Composite 10,005.47 -8.46

Declining issues lead advancers marginally, by roughly a 10-9 margin, but new highs still superseded new lows, 427-92.

Oil was up over $68... and $69, ending $1.09 higher at $69.09. They're out of their minds, these oil people, and they deserve to see everyone in America walk to work or take alternative transportation for two months. It won't happen, but they, the sheiks and the Big Oil execs deserve a fate much, much worse than death. They're raping the US economy, the world economy, and trying to rape Iraq and next, Iran. Brutal.

Gold and silver went in opposite directions, but not far. The metals are so dull, they are barely worth reporting. A timely strategy might be to sell all your precious metal holdings now and buy back in a year from now. These particular commodities have had their days in the sun and have been treading water for months. A major fall is coming soon.

Black Eye for Big Blue But Dow Gets New High

Despite disappointment from Dow component IBM (down more than 2 points) on merely meeting analysts' first quarter estimates, the 30 blue chips of the Dow clawed their way to a new all-time high of 12,803.84. The finish was just seven points above the previous high, but it still counts. Hallelujah!

The big winner of the day was Caterpillar (CAT) up more than 2 points on the day and nearly 15% on the year. Along with the heavy equipment manufacturer, JP Morgan Chase (JPM) also added a couple of points (over 4%) to help move the entire average higher.

Without the moves from those two issues, the Dow would never had made it. 16 of the 30 component stocks were down, reflecting a somewhat bearish sentiment even on such a pin-striped, back-slapping kind of day.

The other indices we're exactly on the same page as the Dow, with the S&P and Composite showing marginal gains and the NASDAQ posting a second straight losing session.

Dow 12,803.84 +30.80; NASDAQ 2,510.50 -6.45; S&P 500 1,472.50 +1.02; NYSE Composite 9,634.87 +3.18

Volume was slightly beyond moderate, an indication of nothing more than increased interest in company earnings. Speaking of such, internet pioneer Yahoo got taken out and shot, losing 3.78 (-12%) after missing 1st quarter projections. Yahoo only made 10 cents per share as opposed to 11 in the same period of 2006.

Yahoo's miss was yet another setback in a long string of mistakes and miscues, most of them since startup Google stole most of the search business away. Yahoo has been playing catch-up and has been criticized for being complacent in the marketplace while other competitors ramped up new, innovative products and services.

Internals were a mixed bag, but still evidencing a bearish bias. Decliners beat out advancing issues by a 4-3 margin, and there were fewer new highs for the 2nd straight day, 353, but only 61 issues registered new lows.

Helping the equities at least stay in place, oil barely budged, gaining just 3 cents. Gold and silver were mixed, but both nearly flat.

More earnings tomorrow, and the market is nervous.

Yahoo! We Have a Winner.... Well, Maybe

It didn't take long for investors to sniff out a buying opportunity. Just one day after shedding 88 points, the Dow tacked on 56.64, putting the Dow almost 70 full points into the green for 2007. Reverse logic prevailed upon traders once again, as rising oil prices (+2.46, 55.04) were attributed for much of the gain. Exxon-Mobil (XOM), the one oil stock on the Dow, busted out for a 1.59 gain. The oil biggie, along with Boeing (BA +1.76), Caterpillar (CAT +1.76) and United Technologies (UTX+2.05) were the only Dow components to record gains of more than a point, but it was more than enough to offset fractional losses in 12 of the 30 Dow stocks. UTX surged on their earnings announcement, reporting profits up 38% from a year ago.

Over on the tech-heavy NASDAQ - which gained less than a single point - a mid-day sell-off accounted for the tepid closing value. The index was up nearly 19 points, but gave almost all of it back as fidgety traders awaited earnings news from Yahoo.

The news from Yahoo was not surprising nor was it encouraging. The search-and-portal company reported earnings of .19, down from .46 a year ago. Excluding certain one-time charges, they came in at .16, ahead of analysts' putrid expectations of .13.

The big shave from last year's numbers were rather expected, though it didn't stop the sellers who knocked .46 off the share price during regular market hours prior to the announcement and had nipped another .74 in after-hours trade shortly after 5:00 Eastern. However, by 5:30, trading reversed course and the stock added 1.44 on news of encouraging reports from the rollout of its new ad platform, code-named Project Panama.

With the stock trading at 26-29 and change, and earnings for the full year 2006 of a mere 49 cents, Yahoo will be hoisting around a trailing p/e of 45-50, should the stock remain at or near current levels, and that looks dubious at best. Additionally, analysts were not impressed with Yahoo's outlook for the current quarter or all of 2007, both below expectations.

Noting these minimalist readings, CEO Terry Semel's head could (and should) be on the chopping block. His tenure has been marred by the emergence of Google taking over the top spot in search and a 30% drop in share price over the last 12 months. The company also has significant image problems, not the least of which being its age. As one of the internet pioneers, the company, as a public entity, recently turned 10, regarded as ancient among internet users.

Without a little more pep in its step, regardless of how the after-hours trade shakes out, Yahoo may continue to be among the net stocks' laggards for the near term.

Next up: eBay

Markets End Week Meekly

As the short week drew to a close, the markets exhibited signs of life, but barely. Mixed signals from corporate earnings, economic reports and political tensions kept movement to a minimum. The Dow dropped a scant 2.40 points, while the Nasdaq ended its recent losing streak by adding 8.10.

The upside in tech was despite Motorola's (MOT) dismal earnings - 25 cents per share vs. 47 cents a year ago - as deals on popular cell phones continued to whittle away at margins. Gross income was 17% above last year's figures.

The company announced shortly after its earnings release that it would cut 5% of its workforce - about 3500 jobs - and investors cheered, boosting the stock by half a point.

General Electric (GE), a Dow component, also reported 4th quarter results prior to the market open, and delivered a healthy 64 cents per share, more than double last year's 30 cents. The bad news, which sent GE's shares down nearly a point, was that it was restating earnings from 2001 though the 3rd quarter of 2006, due to interest rate swaps in its commercial paper operations.

With just 8 trading days remaining in January, the Dow is 102 points to the positive for 2007, keeping alive hopes for a winning January and setting the tone for the year. It's amazing how many analysts and brokers are guided by the January effect and will follow their nose dependent solely on how the markets perform in just the first month of the year.

The Nasdaq may be a closer call, though today's close puts it 36 points over last year's finish. Further weakness from the likes of Yahoo or eBay, both of which announce results next week, could spawn more selling in tech.

Google announces on January 31, after the close. Amazon reports on February 1.