S&P Sets Record All-Time High; Fake Trump Tweet; FOMC Meeting to Begin

With an FOMC meeting in the dock for Tuesday, investors took the opportunity to ramp stocks higher prior to the expected 25 basis point cut to the federal funds rate. Just prior to the opening bell, an apparently fake news story about a presidential tweet appeared on ZeroHedge.com, saying President Trump tweeted, "today will be a good day in the stock market," and, "the China deal is moving forward ahead of schedule."

We checked the president's twitter feed and could not find any such tweet. We also checked Bloomberg, which featured an article on President Trump's tweets that related to the stock market. No such tweet was shown in the article.

This clearly looks like a somebody spoofed the grammatically-challenged Zero Hedge website. It was most likely one of their "reliable" email contacts trying to look good. It's a shame that "the Hedge" has slumped to such low levels of journalism - if that's what you want to call it - because it is normally a pretty good source for economic news not found elsewhere.

Recently, Zero Hedge has taken to posting political and other non-economic articles, to its detriment. Many of the commentators who frequented Zero Hedge in its heyday (2008-2009), prior to it being purchased by ABC Media (British Columbia, not the US media giant). According to the one-liner in the website's footer - Copyright ©2009-2019 ZeroHedge.com/ABC Media, LTD - the company took it out of the original owner's hands in 2009, as the GFC was winding down.

For the S&P 500, Monday was a special occasion, setting a new all-time record high closing. Trump may not have pumped it with a tweet, but his "America First" policies have certainly contributed to the rise of all US indices.

If stocks were overvalued prior to Monday, they are even more overvalued now, and will likely be uber-overvalued after the FOMC announces another rate cut on Wednesday.

In the meantime, earnings season is in full swing. The big story was Google parent, Alphabet, third quarter earnings, reported after the close. Alphabet posted a per-share profit of $10.12 in the quarter, decidedly below the $13.06 a share from the same period last year. Analysts polled by Bloomberg were expecting a per-share profit of $12.35.

The sizable miss was due largely to losses in investments. Among investments that may have contributed to the loss, Alphabet was involved with Uber and Slack, two companies that recently IPO'd and have lost value.

Little of this will affect Tuesday's trade outside of Alphabet (GOOG). There's far too much enthusiasm for equities and anticipation of looser monetary policy from the Fed already backed into the mix.

At the Close, Monday, October 28, 2009:
Dow Jones Industrial Average: 27,090.72, +132.66 (+0.49%)
NASDAQ: 8,325.99, +82.87 (+1.01%)
S&P 500: 3,039.42, +16.87 (+0.56%)
NYSE Composite: 13,186.43, +40.19 (+0.31%)

Has the United States Been in a Depression Since 2007?

We're going to dispense with the usual stock market blather today and promote an article posted on Zero Hedge titled, "We Are Already In Depression (If Borrowing Money Is Not Income) written by Baker & Company Advisory Group (Tim Baker).

The article is available HERE.

At the Close, Thursday, September 28, 2017:
Dow: 22,381.20, +40.49 (+0.18%)
NASDAQ: 6,453.45, +0.19 (0.00%)
S&P 500: 2,510.06, +3.02 (+0.12%)
NYSE Composite: 12,179.33, +21.68 (+0.18%)

A Message to Honest Ann

Ann, you already have the answers. I know that from previous posts of yours.

As I mentioned earlier, your own survival is paramount. Start there and move forward.

Be guided by history and the wisdom of those who have come before you.

The neocons and banksters are not your immediate concern, until you make them that.

I cannot make my point any more straightforward than to suggest you strengthen your own position and improve your immediate surroundings. You alone, nor even all of the ZH loyalists, do not have the power to dethrone the current power structure.

Aim for your own structure, your own economy. Others are doing so, though not many. Consider yourself the vanguard of a new age, because THAT will set freedom in motion.

I can only ask that you ignore the PTB. We are all ultimately responsible for our own actions.

Act responsibly.

As an aside, I have found great wisdom and guidance from reading the works of people such as John Stuart Mill, Aristotle, and recently Sun Tzu's Art of War. There are copies online of the latter. I'd suggest Adam Smith's The Wealth of Nations, but I'm stuck at page 624. Seriously, nobody should entertain to discuss anything economical unless they've read the whole thing, so there it is. I, like you, are inadequate. There's nothing stopping us, save our own human frailties, from becomeing whole.

Kicked Off Zero Hedge for Interposing Perception with Reality

Following the release of today's non-farm payroll for March (+216,000), the level of insanity at the usually-nutty-anyways Zero Hedge blog went over the edge as the site's operators simply could not stomach the idea that maybe the government can fudge statistics enough to "match the policy" (a term made popular during the Iraq War) with seven posts covering all angles on the NFP data.

Naturally, being that Zero Hedge is a hangout of gold bugs, canned food hoarders, survivalists, anarchists and iconoclasts of every stripe, the perception that 216,000 new jobs were created in March could not go unchallenged, so every attempt was made to discredit the government figures.

I applaud the efforts of Zero Hedge. They usually are pretty good at picking up on the daily failures and fabrications of the military industrial complex, and no doubt, CNBC and the shills for limitless stock buying (Perma-bulls) offer up an endless stream of material for their usual antiestablishment agenda.

But, I was surprised that upon posting some comments that drifted from the company line (government evil, bankers evil, Fed evil, gold and silver good), trying to rile up the assembled loonies, that my posting privileges had been summarily denied, my username deleted. When trying to post comments, I was met, not with a login prompt, but with this:

The username Fearless Rick has not been activated or is blocked.

Now, I've been booted from message boards before, most notably on eBay, for disagreeing with policy, but getting kicked off Zero Hedge is another story altogether, because of what they are supposed to represent: an alternative view, a departure from the norm, a counterbalance to the mainstream media.

I normally like the site, generally get good ideas from their articles (mostly reprints or excerpts of stories posted elsewhere on the web) and post my own comments often. Being banned from posting there really gave me pause, though.

A couple of comments by me not in the general spirit... here's two:

Where's Harry Wanger! He's kicked the crap out of most of our resident geniuses by picking stocks using the tried-and-true "throw darts" method.

Wall Street is laughing its ass off at ZH. Time to get back to work, serfs!

and

Over: 7 articles related to NFP. Number of typos in headlines: 2. TD needs to add +1 to the NFP data by hiring a proofreader.

Now, where's that CogDis guy? Zero Hedge readers are suffering from CD by not believing that government can create statistics to "match the policy." Now where did we hear that term before?

That little bit of taunting was, I suppose, too much criticism to accept by the mongolian editorial board at Zero Hedge. One must not bite the hand that handles the daily propaganda feed. The politburo cannot be criticized and in no way can their secrets be exposed. One must drink the Kool-aid, no matter how distasteful the flavor.

I broke the unwritten rules. C'est la vie. Que sera, sera. I was banned.

The episode gave me pause to reflect upon exactly what Zero Hedge - modeled after the fictional movie Fight Club - actually represents. Capitalism would be a good start. After all, the site actively solicits donations in addition to running the maximum allotment of Google AdSense ads on their page(s).

They are no more anti-capitalist than the Wall Street Journal or the United Way in that regard. They need money to operate, just like the rest of us.

But banning from comment those who disagree or at times are critical - like me - effectively negates all of their very own Fight Club creed and substantially reduces their level of credibility to that of outright hypocrisy.

Maybe I missed something in the movie, something about the need to follow orders and obey, obey, OBEY! I'll have to watch Fight Club again, I guess, and search for more hidden meaning.

Or maybe Tyler Durden can enlighten me.

Somehow, I doubt that, because prosperity, whether imagined or real, is anathema to the Zero Hedge business model.

Fight Club should rename itself Punk Club.

24 Seconds to Financial Incineration

Another Monday of not trading (for many) has come and gone, and with it the hopes for a US economic recovery any time soon. Even though the words - like upturn, rebound, recovery - are spoken on CNBC, evidence of them is falling in frequency as the evaporation of trading continues to take hold.

There's a real problem with the US markets and it has as much to do with technology and greed as it does with fear, uncertainty and skepticism, all of which have been on the rise not just in the past few weeks or months, but for years.

The average American (if there is anything such as "average") is invested, like it or not, in stocks to varying degrees. Some have their own online accounts, some are in mutual funds, others in 401k funds, others have their money forcibly taken from them by union fiat and pushed into a pension fund. Anyone who pays taxes is invested via society because the money they pay in taxes is inextricably wound up into public employee pension funds, most of which are glorified Ponzi schemes which need to be radially overhauled. So, for the sake of argument, we all have an interest in the smooth functioning and prosperity of our capital markets.

What amounts to the real problem, at its very core, is a rising lack of confidence that the system is fair and not manipulated. And that's because many have come to the sad realization that it is not, that it favors those with bigger bank accounts, better access and faster computers. Nothing could have put that issue more in focus than the "flash crash" of May 6, 2010, when stocks tumbled more than 600 points on the Dow Jones Industrial Index in a matter of minutes before recovering most of those losses in mere minutes afterward.

Why the "flash crash" of concern right now carries any number of rationales, but it is probably the one event - still unexplained by government regulators who vowed to "look into" the matter - that has, more than any other single event, exacerbated the flight of small investors away from stocks and stock markets.

Foremost, the regulators looking into the cause of the event are lying through their collective teeth when they say they have not figured out why it occurred. It happened because of a time lag in different trade reporting venues, between the NYSE, the specialists and other exchanges and exploitation of them by hedge fund traders. Which exchanges or traders are not readily known, though the SEC could pin those down if they so desired.

More than likely culprits include high-frequency traders (HFT) whose desks belong to some of the more well-known institutions on Wall Street, which is another reason why the government can't seem to find numerous needles in the stock market haystack. The clues are all there, all recorded, but the regulators simply do not want to expose the truth, their reasons being that even more faith in the markets would be squandered, while, in reality, their resolute desire to "keep the lid on" is only making matters worse as more and more honest investors are too afraid, been burned too many times and now have lost their last remaining sliver of faith in the markets.

An interesting article by Tyler Durden of ZeroHedge.com, published today, adds more credence to the machinations of the conspiracy crowd. Durden cites a report which demonstrates two very salient pieces of data. One is that the NBBO (National Best Bid and Offer) - the best price quoted - is not actually that at all, that it often defaults to the NYSE price. The second piece of information is even more critical: the time lag between the quoted NYSE price and the actual trading price can be as much as 24 seconds or longer in the CQS (Consolidated Quotation System).

This may sound like a lot of mumbo-jumbo to most people, but in a world dominated by enormous companies using vast amounts of money and the world's fastest computers, 24 seconds in which a quote may be off by a quarter point, a half point or more, can result in huge profits, and that's what happened during the aforementioned "flash crash" and continues as an illegal arbitrage tool of the rich and powerful to this day.

Rather than belabor the point by trying to explain it all in layman's terms, attention should be focused on Nanex.net the one company which has done a detailed analysis of the event and continues to provide cogent explanations of what's really going on behind the scenes in our swift and untidy, unbalanced, unfair markets.

The question arises that if Nanex could figure this out, why hasn't the SEC? And why hasn't this been headline news on the financial and news networks? Being that I am prone to believing the worst about corporations and our government, I urge readers to examine the facts and draw their own conclusions. I believe the work by Nanex is top-rate and unbiased, and I'll leave it at that.

All of this matters so much today because the markets are rather rapidly grinding to a halt. We've been detailing the low volume regime that's persisted for the past two weeks, and today it got even worse. Not only that, but the trading pattern of the major indices are indicating massive manipulation and arrogance by insiders and patterns suggestive of an imminent crash.

I've borrowed the chart of today's Dow for emphasis.

Note that stocks were up initially, and then fell abruptly, vacillated through most of the day and then slid lower into the close. The other indices followed roughly the same pattern all day. This is a classic bear market trading session, a sucker's market, if you will, in which stocks fly at the open suckering in the slower traders, pounded lower throughout the day, and then hammered down again into the close. As usual, some people made money off this trade, others lost. You can only guess who were the winners (HTFs, Goldman Sachs, JP Morgan, et. al.) and who were the losers (individual investors, some small hedge funds, pension and mutual funds).

This is a no-win situation for everybody as pointed out by Kristina Peterson in "Not Wolf, Not Bear, Meet the Wolf Market," published in the Wall Street Journal, which describes the current condition of the market as analogous to a pack of wolves, which, after devouring all of the prey then turn on each other. Ergo, low volume of trading, because, in the wolf market, there aren't many other animals on which to gnaw.

So, thanks for indulging me, and allowing me to explain how 24 seconds can turn into the equivalent of an eternity in financial hell.

Dow 10,174.41, -39.21 (0.38%)
NASDAQ 2,159.63, -20.13 (0.92%)
S&P 500 1,067.36, -4.33 (0.40%)
NYSE Composite 6,784.97, -28.18 (0.41%)

On the day, decliners took advantage over advancing issues, 3902-1826, though new highs exceeded new lows, 263-216.

NASDAQ Volume 1,722,462,250
NYSE Volume 3,477,778,250

Commodities continued to trend lower, especially in the energy space, where crude oil for September delivery slipped another 72 cents, to $73.10. The metals were little changed. Gold fell 40 cents, to $1,226.90, and silver was unchanged at $17.98.

Things are grinding to a halt almost everywhere, but we'll find out just how quickly with some economic data this week. Existing home sales figures for July will be released tomorrow, new home sales and durable goods on Wednesday, initial claims on Thursday and finally, the government's second estimate on GDP for the second quarter on Friday, along with the University of Michigan's Consumer Sentiment Index. It ought to be a fascinating, though slow-trading volume week.