Regular readers of this blog will note that I have been completely wrong about the current stock market rally for more than a month. I apologize for any disservice I may have done to otherwise level-headed investors, but my position remains the same. This is a bear market rally, and, as such, any gains are subject to being wiped out at a moment's notice.
That said, I have and will try my level best to temper my opinion with facts and the facts should be sufficiently clear by now that the economy is far from any real recovery. It is also my opinion that the bottom reached in March was not the absolute bottom and that there are further hurdles ahead for stocks and the general economy.
One of those hurdles was pushed back a bit further, for a second or third time. I am talking about the release of the government stress test results on 19 of the nation's largest banking institutions. The release of this information has been pushed back to Thursday of this week. They were originally to be made public today.
The government's continued coddling of the banks and closeness to them is disconcerting, not only to me, but to a good number of economists and especially to Senator Dick Durbin, who last week announced that the banks "own the place," that place being the US congress.
So, just to be clear, I am mistrustful of Wall Street's ways and will continue to proclaim this rally as false. For more interesting reading on how corrupt the government and the banks have become, check out Rob Kirby's Market Observation from April 20, called "The Big Lie" in which he points out that foreign investors have already stopped buying US Treasuries and that the Federal Reserve likely has been engaged in more buying of Treasuries than the American public is being told.
With that information in hand, we may be witnessing the beginning of a great reflation of the economy. with stocks going up, commodities, and then, everything else (except wages, of course) will rise in price. Such a scenario - which the Fed is actively promoting - will signal the death knell of America as we once knew it. You will need to own more stocks at higher and higher prices just to keep up with the gallop of inflation. It is the worst of my fears. I would much rather see deflation take firm hold because at least it keeps food, fuel and other necessities of day-to-day living affordable.
Stocks were sent soaring on Monday after data showed construction spending and home sales both higher from the previous month.
While the pair of data sets were encouraging to many on Wall Street, closer inspection of the construction spending data showed that most of the increases were in commercial and government spending, not residential. The increase was likely the result of the nearly $1 Trillion federal stimulus bill, passed in February and now hitting the mainstream and Main Street. Despite the rise, construction spending - up a whopping 0.3% in March - is still 11.1% below 2008 levels.
And while more people may be buying existing homes, they are buying them for lower prices, with investors scooping up foreclosed properties as investments.
Nonetheless, investors looked the other way on any bad news, as they have for the past 8 weeks and sent stocks soaring to 4 month highs. Of the major indices, the NASDAQ and S&P 500 are now in positive territory for the year, though the dow is getting closer, having closed at 8776.39 on December 31, 2008.
Dow 8,426.74, +214.33 (2.61%)
NASDAQ 1,763.56, +44.36 (2.58%)
S&P 500 907.24, +29.72 (3.39%)
NYSE Compos 5,800.22, +231.46 (4.16%)
For the session, advancing issues far exceeded decliners, 5333-1261. New lows retained their edge over new highs, however, 101-66. Volume ticked up somewhat from last week's subdued levels, and it remains to be seen if investor interest will remain strong at such lofty levels. The odd characteristic of this rally is that there has been no significant pull-back at any juncture, somewhat difficult to believe in the current economic environment.
NYSE Volume 1,714,092,000
NASDAQ Volume 2,554,642,000
Commodities plowed ahead as well, with oil gaining $1.27, to $54.52. Gold rose $14.00, to $902.20, with silver adding 61 cents to settle at $13.11. Foodstuffs were mixed, but all energy-related commodities shot higher.
So, Wall Street has sounded the "all clear" once again and investors have responded like sheep instead of thinking, rational beings.
Here's Art Cashin on CNBC, talking about low volume rallies in bear markets and whether or not the markets are about to "roll over."
Showing posts with label banks. Show all posts
Showing posts with label banks. Show all posts
Monday, May 4, 2009
Tuesday, April 21, 2009
Bank Oligarchs, the Fiddler President and Congressional Circus Clowns
There were no major economic data releases today, though there were a number of companies reporting 1st quarter earnings, including Bank of New York Mellon Corp., Northern Trust and State Street, all of which showed declines in earnings, though the latter beat analyst estimates.
Disappointing results from banking interests - reported eithe before the open or during the session - didn't deter investors from sparking a rally in financials, however, pushing the major indices to recoup some of Monday's dramatic decline.
After the close, CapitalOne (COF), once the nation's largest stand-alone credit card issuer, reported a net loss for the first quarter of 2009 of $111.9 million, or $0.45 per common share, which was far better than last quarter - a $1.4 billion loss, or -$3.74 per share - but far worse than the same period last year, in which the company reported a profit of $548.5 million, or $1.47 per share. during the session, shares of CapitalOne were higher by 1.67 (12.50%), but were seen lower in after-hours trading, down more than a point shortly after the earnings release.
On the Dow, 25 of 30 component stocks finished with gains. Leading the way were the three bank stocks - JP Morgan Chase (JPM), Bank of America (BAC) and Citigroup (C) - all of which ended the day at least 9.5% to the good. How the very same banks which are controlling the economy are manipulating the markets is a grand shame and these oligarchies need to be dismantled, as explained below.
Caterpillar (CAT) reported its first quarterly loss since 1992 and drug maker Merck (MRK) reported a profit but missed earnings estimates.
As for the rest of the market, suffice it to say that the market is mostly comprised of day-trading Wall Streeters and hedge fund managers who follow the leaders, which is why stocks were broadly higher today, despite the absence of any positive news.
Dow 7,969.56, +127.83 (1.63%)
Nasdaq 1,643.85, +35.64 (2.22%)
S&P 500 850.08, +17.69 (2.13%)
NYSE Composite 5,339.59, +119.47 (2.29%)
Advancing issues turned the table on decliners, beating them 4846-1627, though new lows continued the spread over new highs, by a count of 69-18. Volume was solid, though unspectacular.
NYSE Volume 1,671,525,000
Nasdaq Volume 2,435,768,000
In the commodity markets, a slight bounce from Monday's drubbing, with crude futures up 63 cents, to $46.51. Gold lost $4.60, to $882.70, with silver off a nickel, to $12.06. Futures for various foodstuffs were mostly higher.
Appearing before the Joint Economic Committee of Congress today were, among others, Federal Reserve Bank of Kansas City President Thomas Hoenig, Columbia University professor Joseph Stiglitz and MIT professor Simon Johnson, each of whom expressed skepticism over whether current government actions were effective in relieving the economic distress in the banking sector.
Will the government listen, and even more to the point, do the congressional member and senators who convened these hearings, actually understand what they're saying? Probably not. Politicians are a breed of people who understand power and politics and little more. What they do know is that their allegiance is to the Wall Street bankers, because that group, by and large, financed the campaigns that put them or keeps them in positions of power.
As usual, it will be politics first, constituents (the actual ones they're supposed to represent), last, and so, the sad saga of our nation being run into the ground by a coalition of Wall Street financiers and political puppets in Washington will continue unabated. Today's hearings are just more window dressing, designed to keep the public from rising up, rioting and throwing the whole bunch into the East and Potomac Rivers, which is precisely what should happen and very well may happen if this fiasco of keeping insolvent banks operating under clouds of secrecy and mountains of non-negotiable debt is allowed to continue much longer.
Below, Yahoo's Tech Ticker talks with former IMF chief economist and current MIT economics professor Simon Johnson about the big banks and how they stand in the way of a meaningful economic recovery.
Here is Johnson's breathtaking article, The Quiet Coup in this month's Atlantic.
Near the end of his reveling writing, Johnson finally comes to speak the unspeakable:
There you have it. A respected economist - not me, a generally disrespected populist pundit blogger - says this current condition could devolve into something worse than the Great Depression. I've held that view all along, since early in 2007, and if you check my archives at Downtown Magazine, probably as early as 2002 or 2003, when I reported on the then-emerging pension crisis which now continues beneath the surface.
Like Johnson, I hold out slim hopes that the elite in Washington and the ruling oligarchs on Wall Street will yield power without a fight of monstrous proportions, against the citizenry of the United States, and to a larger extent, the populations and governments of their trading partners globally.
Mr. Johnson and I are not alone. The chorus for concentrated government action to close down the insolvent banks and replace their inept and likely corrupt management, is growing at a very rapid pace. The longer the government dithers, the closer the nation comes to the precipice of economic, political and social destruction.
Finally, below, here's the second part of Henry Blogett's interview with Simon Johnson, in which he extolls the virtue of quick, decisive action in cleaning up and breaking up the major bank's stranglehold on the country's finances:
It's become clear to just about everyone in the world, except the pols in Washington and the banksters themselves, that breaking up the nation's biggest banks and dismantling their management and interlocking boards of directors would provide the quickest, cleanest and least costly resolution to the global financial condition. Instead, President Barack Obama, like Nero in ancient Rome, fiddles while the empire burns to the ground and the congress can only be compared to circus clowns for all the good they've done over the past six months.
Disappointing results from banking interests - reported eithe before the open or during the session - didn't deter investors from sparking a rally in financials, however, pushing the major indices to recoup some of Monday's dramatic decline.
After the close, CapitalOne (COF), once the nation's largest stand-alone credit card issuer, reported a net loss for the first quarter of 2009 of $111.9 million, or $0.45 per common share, which was far better than last quarter - a $1.4 billion loss, or -$3.74 per share - but far worse than the same period last year, in which the company reported a profit of $548.5 million, or $1.47 per share. during the session, shares of CapitalOne were higher by 1.67 (12.50%), but were seen lower in after-hours trading, down more than a point shortly after the earnings release.
On the Dow, 25 of 30 component stocks finished with gains. Leading the way were the three bank stocks - JP Morgan Chase (JPM), Bank of America (BAC) and Citigroup (C) - all of which ended the day at least 9.5% to the good. How the very same banks which are controlling the economy are manipulating the markets is a grand shame and these oligarchies need to be dismantled, as explained below.
Caterpillar (CAT) reported its first quarterly loss since 1992 and drug maker Merck (MRK) reported a profit but missed earnings estimates.
As for the rest of the market, suffice it to say that the market is mostly comprised of day-trading Wall Streeters and hedge fund managers who follow the leaders, which is why stocks were broadly higher today, despite the absence of any positive news.
Dow 7,969.56, +127.83 (1.63%)
Nasdaq 1,643.85, +35.64 (2.22%)
S&P 500 850.08, +17.69 (2.13%)
NYSE Composite 5,339.59, +119.47 (2.29%)
Advancing issues turned the table on decliners, beating them 4846-1627, though new lows continued the spread over new highs, by a count of 69-18. Volume was solid, though unspectacular.
NYSE Volume 1,671,525,000
Nasdaq Volume 2,435,768,000
In the commodity markets, a slight bounce from Monday's drubbing, with crude futures up 63 cents, to $46.51. Gold lost $4.60, to $882.70, with silver off a nickel, to $12.06. Futures for various foodstuffs were mostly higher.
Appearing before the Joint Economic Committee of Congress today were, among others, Federal Reserve Bank of Kansas City President Thomas Hoenig, Columbia University professor Joseph Stiglitz and MIT professor Simon Johnson, each of whom expressed skepticism over whether current government actions were effective in relieving the economic distress in the banking sector.
Will the government listen, and even more to the point, do the congressional member and senators who convened these hearings, actually understand what they're saying? Probably not. Politicians are a breed of people who understand power and politics and little more. What they do know is that their allegiance is to the Wall Street bankers, because that group, by and large, financed the campaigns that put them or keeps them in positions of power.
As usual, it will be politics first, constituents (the actual ones they're supposed to represent), last, and so, the sad saga of our nation being run into the ground by a coalition of Wall Street financiers and political puppets in Washington will continue unabated. Today's hearings are just more window dressing, designed to keep the public from rising up, rioting and throwing the whole bunch into the East and Potomac Rivers, which is precisely what should happen and very well may happen if this fiasco of keeping insolvent banks operating under clouds of secrecy and mountains of non-negotiable debt is allowed to continue much longer.
Below, Yahoo's Tech Ticker talks with former IMF chief economist and current MIT economics professor Simon Johnson about the big banks and how they stand in the way of a meaningful economic recovery.
Here is Johnson's breathtaking article, The Quiet Coup in this month's Atlantic.
Near the end of his reveling writing, Johnson finally comes to speak the unspeakable:
The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances.
There you have it. A respected economist - not me, a generally disrespected populist pundit blogger - says this current condition could devolve into something worse than the Great Depression. I've held that view all along, since early in 2007, and if you check my archives at Downtown Magazine, probably as early as 2002 or 2003, when I reported on the then-emerging pension crisis which now continues beneath the surface.
Like Johnson, I hold out slim hopes that the elite in Washington and the ruling oligarchs on Wall Street will yield power without a fight of monstrous proportions, against the citizenry of the United States, and to a larger extent, the populations and governments of their trading partners globally.
Mr. Johnson and I are not alone. The chorus for concentrated government action to close down the insolvent banks and replace their inept and likely corrupt management, is growing at a very rapid pace. The longer the government dithers, the closer the nation comes to the precipice of economic, political and social destruction.
Finally, below, here's the second part of Henry Blogett's interview with Simon Johnson, in which he extolls the virtue of quick, decisive action in cleaning up and breaking up the major bank's stranglehold on the country's finances:
It's become clear to just about everyone in the world, except the pols in Washington and the banksters themselves, that breaking up the nation's biggest banks and dismantling their management and interlocking boards of directors would provide the quickest, cleanest and least costly resolution to the global financial condition. Instead, President Barack Obama, like Nero in ancient Rome, fiddles while the empire burns to the ground and the congress can only be compared to circus clowns for all the good they've done over the past six months.
Thursday, February 26, 2009
Treasury's Stress Test is Not a Plan at All
Editor's Note: I've had to break today's market coverage into two parts due to a need to provide some clarity on what the administration is planning to do with the nearly-insolvent banking sector. This entry will cover that issue, while the usual post - after 4:00 pm - will cover the day's market activity.
We've been hearing about Treasury Secretary Tim Geithner's "stress test" for the nation's largest banks in shrouded tones for over a week. Finally, late yesterday, some details of the plan emerged - in an exclusive interview with Jim Lehrer on the PBS Newshour - and elsewhere.
What the stress test will entail is having the banks examine their ability to function under a variety of very broad circumstances - first, a "moderate" scenario, in which unemployment
This commentary, by Adam S. Posen, Dep. Director, Peterson Institute for International Economics, lays out some guidelines which the Obama administration is conveniently avoiding.
And here's Paul Krugman opining in the New York Times that nationalization - in other words, having the federal government take over some banks, clean them up and resell the new, functioning, properly-capitalized entities to private investors.
Geithner and the Obama administration isn't listening, despite Krugman having won the Nobel Prize for Economics and other, similarly spot-on economists and commentators urging the government to make the appropriate hard choices, as opposed to the current piecemeal approach which hasn't - and isn't likely to - work.
The assumptions in the stress testing offers banks to look at two different sets of scenarios, a baseline and an extreme, or worst case outlook.
Under the baseline scenario, unemployment is at 8.4% in 2009 and 8.8% in 2010, housing prices decline by 14% in 2009 and another 4% in 2010, and the nation's Gross Domestic Product (GDP) falls by 2.0% in 2009 and rises by 2.1% in 2010.
In the worst case set-up, the assumptions are that unemployment reaches 8.9% in 2009 and 10.3 in 2010, housing prices fall 22% in 2009 and another 7% in 2010, and the nation's GDP falls by 3.3% in 2009 and gains 0.5% in 2010.
The banks will have about six weeks to report back to Geithner with either a confirmation that they're "OK" or a request for more funding from the government. That it will take six weeks to complete what is essentially nothing more than the testing of a theoretical set of circumstances against real world assets and liabilities suggests that the entire plan is nothing more than a politically-motivated cover-up for the banking giants which actually control the government.
This Bloomberg article suggests that the "worst case" scenarios laid out by the government are not severe enough, and that the banks will not not then be looking at what possibly lies ahead for the US economy.
The assessments may indeed be less severe than what's ahead, though the housing price assumptions appear somewhat on the money. Suppose GDP falls by 5% this year and another 2% next? What if unemployment hits 10.2% this year? Then the stress tests won't be testing the banks for reality and the entire plan will fail, meaning we will be sunk into a deeper recession for a longer time by supporting zombie banks which are at the heart of the problem.
In Geithner's interview with Lehrer, a the Treasury Secretary voiced a number of interesting comments, including, on the solvency of the banks involved:
In other words, Geithner seems to be wanting to tell us that the banks are sound, despite what's been reported concerning trillions of dollars worth of bad loans, even more toxic credit default swaps and continuing credit-creation issues.
Geithner would have us believe that all of these pre-existing conditions have suddenly, magically, vanished. It's not a believable scenario.
On "nationalization", Geithner opined, "it's the wrong strategy for the country and an unnecessary strategy." Again, Geithner would have us believe that what's always worked for smaller, insolvent institutions, that being take-over by FDIC, recapitalization and an eventual return to a functioning entity on the other side, is not acceptable for the largest banks in the nation.
This is the kind of thinking which inspires skepticism in the banking system and the government's remedies. This approach would allow the likes of John Mack, Lloyd Blankfien, Vikram Pandit and Kenneth Lewis to continue to run their failed institutions - the same ones which caused the crisis in the first place - with only a limited amount of scrutiny and accountability.
This would allow the same excesses in the securitization of loans and largely unsupervised lending and investing activity to continue, while failing to address the toxic loans and swaps at the root of the problem.
There will be no accountability for what's already occurred, no civil or criminal charges brought against the bank and finance executives whose institutions already have benefited from taxpayer capital infusions. The same executives who nearly brought the world's financial system to its knees will remain at the controls of their now-defunct banks.
Naturally, the banks have lined the coffers of both the Obama administration and all members of congress with campaign contributions, so there will be no opposition from any government official - elected or otherwise - to this plan whatsoever.
The stress test and Geithner financial band-aid plan should be recognized for exactly what it is: further denial of the root of the crisis and a sure recipe for disaster.
We've been hearing about Treasury Secretary Tim Geithner's "stress test" for the nation's largest banks in shrouded tones for over a week. Finally, late yesterday, some details of the plan emerged - in an exclusive interview with Jim Lehrer on the PBS Newshour - and elsewhere.
What the stress test will entail is having the banks examine their ability to function under a variety of very broad circumstances - first, a "moderate" scenario, in which unemployment
This commentary, by Adam S. Posen, Dep. Director, Peterson Institute for International Economics, lays out some guidelines which the Obama administration is conveniently avoiding.
And here's Paul Krugman opining in the New York Times that nationalization - in other words, having the federal government take over some banks, clean them up and resell the new, functioning, properly-capitalized entities to private investors.
Geithner and the Obama administration isn't listening, despite Krugman having won the Nobel Prize for Economics and other, similarly spot-on economists and commentators urging the government to make the appropriate hard choices, as opposed to the current piecemeal approach which hasn't - and isn't likely to - work.
The assumptions in the stress testing offers banks to look at two different sets of scenarios, a baseline and an extreme, or worst case outlook.
Under the baseline scenario, unemployment is at 8.4% in 2009 and 8.8% in 2010, housing prices decline by 14% in 2009 and another 4% in 2010, and the nation's Gross Domestic Product (GDP) falls by 2.0% in 2009 and rises by 2.1% in 2010.
In the worst case set-up, the assumptions are that unemployment reaches 8.9% in 2009 and 10.3 in 2010, housing prices fall 22% in 2009 and another 7% in 2010, and the nation's GDP falls by 3.3% in 2009 and gains 0.5% in 2010.
The banks will have about six weeks to report back to Geithner with either a confirmation that they're "OK" or a request for more funding from the government. That it will take six weeks to complete what is essentially nothing more than the testing of a theoretical set of circumstances against real world assets and liabilities suggests that the entire plan is nothing more than a politically-motivated cover-up for the banking giants which actually control the government.
This Bloomberg article suggests that the "worst case" scenarios laid out by the government are not severe enough, and that the banks will not not then be looking at what possibly lies ahead for the US economy.
The assessments may indeed be less severe than what's ahead, though the housing price assumptions appear somewhat on the money. Suppose GDP falls by 5% this year and another 2% next? What if unemployment hits 10.2% this year? Then the stress tests won't be testing the banks for reality and the entire plan will fail, meaning we will be sunk into a deeper recession for a longer time by supporting zombie banks which are at the heart of the problem.
In Geithner's interview with Lehrer, a the Treasury Secretary voiced a number of interesting comments, including, on the solvency of the banks involved:
"These banks now have very substantial amounts of capital relative to what you would have seen in the US economy going into previous recessions."
In other words, Geithner seems to be wanting to tell us that the banks are sound, despite what's been reported concerning trillions of dollars worth of bad loans, even more toxic credit default swaps and continuing credit-creation issues.
Geithner would have us believe that all of these pre-existing conditions have suddenly, magically, vanished. It's not a believable scenario.
On "nationalization", Geithner opined, "it's the wrong strategy for the country and an unnecessary strategy." Again, Geithner would have us believe that what's always worked for smaller, insolvent institutions, that being take-over by FDIC, recapitalization and an eventual return to a functioning entity on the other side, is not acceptable for the largest banks in the nation.
This is the kind of thinking which inspires skepticism in the banking system and the government's remedies. This approach would allow the likes of John Mack, Lloyd Blankfien, Vikram Pandit and Kenneth Lewis to continue to run their failed institutions - the same ones which caused the crisis in the first place - with only a limited amount of scrutiny and accountability.
This would allow the same excesses in the securitization of loans and largely unsupervised lending and investing activity to continue, while failing to address the toxic loans and swaps at the root of the problem.
There will be no accountability for what's already occurred, no civil or criminal charges brought against the bank and finance executives whose institutions already have benefited from taxpayer capital infusions. The same executives who nearly brought the world's financial system to its knees will remain at the controls of their now-defunct banks.
Naturally, the banks have lined the coffers of both the Obama administration and all members of congress with campaign contributions, so there will be no opposition from any government official - elected or otherwise - to this plan whatsoever.
The stress test and Geithner financial band-aid plan should be recognized for exactly what it is: further denial of the root of the crisis and a sure recipe for disaster.
Wednesday, February 25, 2009
Stress and Confusion on Wall Street
Is this Wall Street's week of reckoning?
Monday, stocks slid near 12-year lows. Tuesday's snap back rally offered some relief, but it was back to selling for most of the session on Wednesday. There isn't a trader alive who can tell where stocks will go Thursday and Friday.
Paramount among the issues yet to be resolved is the fate of the nation's 19 or 20 largest banks (The press and the government can't even agree on a number, that's how confused the condition is.) as the government commits them to various and sundry "stress tests."
According to what's been gleaned from two days of congressional testimony by Fed Chairman Ben Bernanke and the infrequent mutterings from Treasury Secretary Tim Geithner, government authorities will go into banks this week armed with accountants, number-crunchers and statistical models in an attempt to determine the general health of these mega-banks (over $100 billion in assets; are there any left?) and their ability to function normally under severe economic conditions.
Once these stress tests are completed, the government then should have a clearer understanding of what's needed to fix them, or whether they should be taken over by regulators, broken up, forced into bankruptcy or left alone. All of this has left Wall Street in a very confused condition, and the very thing the market appreciates least is uncertainty.
Stocks took on water early on, retracing most of Monday's decline by the noon hour. After that, there were a number of rallies, all of which eventually failed, despite stocks peeking into positive for about half an hour near the close. By 3:40 pm, however, the charade was over, and stocks sold off in a decided fashion.
Dow 7,270.89, -80.05 (1.09%)
Nasdaq 1,425.43, -16.40 (1.14%)
S&P 500 764.90, -8.24 (1.07%)
NYSE Composite 4,753.17, -68.57 (1.42%)
Other factors entered into the decision-making of investors, not the least of which was the report from the National Association of Realtors on January Existing Home Sales, which showed continuing deterioration in the real estate market with both the number of sales and the median price falling - a continuation of trends which have persisted for 14 months.
Granted, the general economy is not pretty, but the global economy is still standing. The questions posed by investors are precisely how well the economy is functioning and how well it will be in the near future. Nobody has yet offered solid answers to those important queries, and that's exactly what's causing investors to flee from stocks.
When the government does finally provide some further clarity, it should cause some soothing, though prospects will still remain mostly uncertain. It's what the government actually plans to do with the banks that will have the most impact, though the field is pretty well split on that judgment as well.
So, get used to wild trading swings, directionless markets, interpretations of news and then interpretations of the interpretations, punditry, thin analysis, politics and more nonsense about how to "fix" things than the market can bear.
Eventually, there will be resolution, but most humans being impatient when it comes to their financial futures, the waiting part is the hardest. And we are waiting. Get ready for at least six to nine more months of this before the market finds a floor (nice word for bottom), washes out the weak hands and moves ahead. Unless the government stimuli are completely worthless, at some point the market will simply revert back to fundamentals and investing can revert to something approaching normalcy.
For now, however, US and world markets are about as far removed from normal as they can be.
On the day, losers outdid gainers, 4193-2341, while new lows finished ahead of new highs, 489-13. Volume was on the high end, owing to the frenetic nature of the trading.
NYSE Volume 1,800,731,000
Nasdaq Volume 2,404,619,000
Oil priced higher by $2.54 a barrel, closing at $42.50. Gold continued to suffer from profit-taking, losing $3.30, to $966.20. Silver presented itself as a buy, losing 12 cents, to $13.91. Other commodities finished mixed, in keeping with the overall tone of the day, which was confused.
If you are in this market, you are on your own. I continue to only buy silver sporadically, on dips, and, despite mentioning that one could not be faulted for venturing into equities at this juncture, I am in no way advising anybody to do so. It's still a very dangerous, still bottomless, environment.
Monday, stocks slid near 12-year lows. Tuesday's snap back rally offered some relief, but it was back to selling for most of the session on Wednesday. There isn't a trader alive who can tell where stocks will go Thursday and Friday.
Paramount among the issues yet to be resolved is the fate of the nation's 19 or 20 largest banks (The press and the government can't even agree on a number, that's how confused the condition is.) as the government commits them to various and sundry "stress tests."
According to what's been gleaned from two days of congressional testimony by Fed Chairman Ben Bernanke and the infrequent mutterings from Treasury Secretary Tim Geithner, government authorities will go into banks this week armed with accountants, number-crunchers and statistical models in an attempt to determine the general health of these mega-banks (over $100 billion in assets; are there any left?) and their ability to function normally under severe economic conditions.
Once these stress tests are completed, the government then should have a clearer understanding of what's needed to fix them, or whether they should be taken over by regulators, broken up, forced into bankruptcy or left alone. All of this has left Wall Street in a very confused condition, and the very thing the market appreciates least is uncertainty.
Stocks took on water early on, retracing most of Monday's decline by the noon hour. After that, there were a number of rallies, all of which eventually failed, despite stocks peeking into positive for about half an hour near the close. By 3:40 pm, however, the charade was over, and stocks sold off in a decided fashion.
Dow 7,270.89, -80.05 (1.09%)
Nasdaq 1,425.43, -16.40 (1.14%)
S&P 500 764.90, -8.24 (1.07%)
NYSE Composite 4,753.17, -68.57 (1.42%)
Other factors entered into the decision-making of investors, not the least of which was the report from the National Association of Realtors on January Existing Home Sales, which showed continuing deterioration in the real estate market with both the number of sales and the median price falling - a continuation of trends which have persisted for 14 months.
Granted, the general economy is not pretty, but the global economy is still standing. The questions posed by investors are precisely how well the economy is functioning and how well it will be in the near future. Nobody has yet offered solid answers to those important queries, and that's exactly what's causing investors to flee from stocks.
When the government does finally provide some further clarity, it should cause some soothing, though prospects will still remain mostly uncertain. It's what the government actually plans to do with the banks that will have the most impact, though the field is pretty well split on that judgment as well.
So, get used to wild trading swings, directionless markets, interpretations of news and then interpretations of the interpretations, punditry, thin analysis, politics and more nonsense about how to "fix" things than the market can bear.
Eventually, there will be resolution, but most humans being impatient when it comes to their financial futures, the waiting part is the hardest. And we are waiting. Get ready for at least six to nine more months of this before the market finds a floor (nice word for bottom), washes out the weak hands and moves ahead. Unless the government stimuli are completely worthless, at some point the market will simply revert back to fundamentals and investing can revert to something approaching normalcy.
For now, however, US and world markets are about as far removed from normal as they can be.
On the day, losers outdid gainers, 4193-2341, while new lows finished ahead of new highs, 489-13. Volume was on the high end, owing to the frenetic nature of the trading.
NYSE Volume 1,800,731,000
Nasdaq Volume 2,404,619,000
Oil priced higher by $2.54 a barrel, closing at $42.50. Gold continued to suffer from profit-taking, losing $3.30, to $966.20. Silver presented itself as a buy, losing 12 cents, to $13.91. Other commodities finished mixed, in keeping with the overall tone of the day, which was confused.
If you are in this market, you are on your own. I continue to only buy silver sporadically, on dips, and, despite mentioning that one could not be faulted for venturing into equities at this juncture, I am in no way advising anybody to do so. It's still a very dangerous, still bottomless, environment.
Wednesday, February 11, 2009
Wall Street Still Waiting on Washington
Markets were mildly optimistic on Wednesday, awaiting word from Washington on the proposed $800 billion stimulus bill in Senate-House negotiations, which appeared close to a deal.
Having investors focus on anything other than issues regarding US banking interests was likely preferable, following yesterday's massive sell-off on the heels of Treasury Secretary Timothy Geithner's sketchy bank plan announcement.
Following the initial shock, players in the financial field are beginning to flesh out possible scenarios, each of them fraught with peril as economists delve into the unknown. Preeminent are the individual balance sheets and books of the banks in question, primarily bank of America and Citigroup, the two which seem to be most at risk, though the books of Wells Fargo, JP Morgan Chase and others will surely require the close scrutiny of government fixers before any steps toward a working solution are attempted.
Like an alcoholic with serious addiction issues the major money center banks have not yet taken the serious step of actually disclosing the size of their losses and may never do so, publicly, as the sheer size of the numbers would panic most ordinary people. It's essential to any kind of recovery that the banks confess their shortfalls to the government, so that an appropriate solution can be delivered.
As for the bank plan being devised at Treasury and the Fed, there is some agreement, that, considering the broad outlines, banks will be merged and/or downsized in coming months.
Trading in very narrow ranges, all of the major indices finished on the upside, though only marginally. Much of the trade was tied to hope for quick passage of the stimulus bill or recovery from yesterday's drama. As for a dead cat bounce, today's action barely merited notice, though most traders seemed relieved that the markets didn't devolve into indiscriminate selling.
Dow 7,939.53, +50.65 (0.64%)
NASDAQ 1,530.50, +5.77 (0.38%)
S&P 500 833.74, +6.58 (0.80%)
NYSE Composite 5,252.65, +37.94 (0.73%)
Much of the bounce-back on the Dow was due to the financials, as Citigroup (C) and Bank of America (BAC) each rose by more than 7%, and JP Morgan, another Dow component, lifted to a 4% higher close.
Internally, the market sent a mixed message, one to which traders have become accustomed over the past 18 months. Advancing issues outnumbered decliners, 3669-2769, though new lows sailed past new lows, 232-14, increasing by both raw number and the overall divergence.
NYSE Volume 5,977,889,500
NASDAQ Volume 2,206,760,750
Crude futures took a severe hit after US inventories were reported to be close to 16-year highs. Oil for March delivery fell $1.61, to $35.94.
Gold finished with strong gains for the second straight day, as the flight to safety continues. Gold was up $30.50, to $944.50, with the magic $1000 mark clearly in sight. Silver also showed strong gains, picking up 39 cents to finish at $13.52 in New York.
In yet more good news for consumers, natural gas lost a penny and all food stock futures were lower. After Citigroup analysts downgraded supermarket chain operators Safeway (SWY) and Kroger (KR) on Tuesday, warning of a protracted "price war," shoppers should expect stable to lower prices on grocers' shelves over the near term.
Considering the dark cloud over the stock markets and the number of layoffs occurring in the past few months, cheaper food and fuel are providing the silver lining.
Having investors focus on anything other than issues regarding US banking interests was likely preferable, following yesterday's massive sell-off on the heels of Treasury Secretary Timothy Geithner's sketchy bank plan announcement.
Following the initial shock, players in the financial field are beginning to flesh out possible scenarios, each of them fraught with peril as economists delve into the unknown. Preeminent are the individual balance sheets and books of the banks in question, primarily bank of America and Citigroup, the two which seem to be most at risk, though the books of Wells Fargo, JP Morgan Chase and others will surely require the close scrutiny of government fixers before any steps toward a working solution are attempted.
Like an alcoholic with serious addiction issues the major money center banks have not yet taken the serious step of actually disclosing the size of their losses and may never do so, publicly, as the sheer size of the numbers would panic most ordinary people. It's essential to any kind of recovery that the banks confess their shortfalls to the government, so that an appropriate solution can be delivered.
As for the bank plan being devised at Treasury and the Fed, there is some agreement, that, considering the broad outlines, banks will be merged and/or downsized in coming months.
Trading in very narrow ranges, all of the major indices finished on the upside, though only marginally. Much of the trade was tied to hope for quick passage of the stimulus bill or recovery from yesterday's drama. As for a dead cat bounce, today's action barely merited notice, though most traders seemed relieved that the markets didn't devolve into indiscriminate selling.
Dow 7,939.53, +50.65 (0.64%)
NASDAQ 1,530.50, +5.77 (0.38%)
S&P 500 833.74, +6.58 (0.80%)
NYSE Composite 5,252.65, +37.94 (0.73%)
Much of the bounce-back on the Dow was due to the financials, as Citigroup (C) and Bank of America (BAC) each rose by more than 7%, and JP Morgan, another Dow component, lifted to a 4% higher close.
Internally, the market sent a mixed message, one to which traders have become accustomed over the past 18 months. Advancing issues outnumbered decliners, 3669-2769, though new lows sailed past new lows, 232-14, increasing by both raw number and the overall divergence.
NYSE Volume 5,977,889,500
NASDAQ Volume 2,206,760,750
Crude futures took a severe hit after US inventories were reported to be close to 16-year highs. Oil for March delivery fell $1.61, to $35.94.
Gold finished with strong gains for the second straight day, as the flight to safety continues. Gold was up $30.50, to $944.50, with the magic $1000 mark clearly in sight. Silver also showed strong gains, picking up 39 cents to finish at $13.52 in New York.
In yet more good news for consumers, natural gas lost a penny and all food stock futures were lower. After Citigroup analysts downgraded supermarket chain operators Safeway (SWY) and Kroger (KR) on Tuesday, warning of a protracted "price war," shoppers should expect stable to lower prices on grocers' shelves over the near term.
Considering the dark cloud over the stock markets and the number of layoffs occurring in the past few months, cheaper food and fuel are providing the silver lining.
Tuesday, February 10, 2009
Geithner's Wall Street Cram-Down
It was pretty evident that Wall Street didn't like what Treasury Secretary Timothy Geithner was telling them when he began outlining the details of TARP II, the $350 billion Obama administration's side of the original $700 billion plan approved in October of 2008.
Stocks were already trading lower when Geithner stepped to the mic, but they really tanked as he drilled out scant details of the government's plan. The Dow was down about 45 points when he started speaking at 11:00 am. By the time he was finished, just a half hour later, the blue chip index was off nearly 300. Matters proceeded to become materially worse from there. The Dow was down more than 400 points before a last-gasp rally trimmed the losses by about 40 points in the final 15 minutes.
Dow 7,888.88, -381.99 (4.62%)
NASDAQ 1,524.73, -66.83 (4.20%)
S&P 500 827.17, -42.72 (4.91%)
NYSE Composite 5,214.34, -265.54 (4.85%)
Some of the more vocal Wall Street banking crowd are complaining that Geithner's plan - which reportedly has provisions for the assumption of some of the banks' toxic assets by private investors - is short on specifics.
The truth of the matter is that it likely opens the banks in question to too much public scrutiny, as evidenced by the government's new web site, financialstability.gov.
For a glimpse of what's ahead for the Bailout Bunch, the site currently links to Treasury's own Emergency Economic Stabilization Act web site. drilling down just a page reveals, under "Systemically Significantly Failing Institutions" we find reams of info on Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, JP Morgan Chase, Wells Fargo & Co., Bank of New York Mellon, State Street, Merrill Lynch, AIG, plus Chrysler, General Motors and GMAC.
How appropriate and sweetly ironic that these banks and businesses are grouped under such a heading. Most, if not all, are already insolvent. Bloggers and economists should have a field day with all the fresh light shining on these cheaters, liars and scoundrels. There's a wealth of information there, much of it which will almost surely facilitate the demise of these failed firms.
Could the government actually be forcing the banks to confess to their excess and the extent of their failures? It sure looks that way, and, if so, it's a great step forward. Wall Street fails to see it that way, but, clue to the clueless, Wall Street isn't America and the fate of 300 million Americans is not inexorably tied to the ups and downs of the Dow Jones Industrials.
Main Street may finally be catching a break as the banks are forced to come clean, which means that a good number of them will be forced into bankruptcy and/or liquidation, the key step in ridding the market of malinvestments and failed institutions.
Could it be that Secretary Geithner, under the thumb of President Obama, has finally gotten religion and intends to actually correct the mess that he was already a party to? Could be. Obama's sincerity and forthrightness was on display just last night at his first press conference when he left the door a bit ajar in his response to a reporter's question about investigating former administration officials.
His response to a question about Senator Patrick Leahy's calling for a "truth commission" was decidedly grey-area, as the President said much to the affect that while he preferred to "look forward" he would not block investigative efforts. Between those comments and the Geithner cram-down on Wall Street, maybe real healing in America can begin.
This writer honestly hasn't felt this good about a serious market tumble since the dot-com bust, the key being Geithner's fairly obvious signal that the rules have changed and the hand-outs and free rides are now relics of the past.
Advancing issues were absolutely overwhelmed by decliners in the broadest selling since November. Losers led gainers, 5405-1145, a nearly 5-1 edge. New lows continued to strengthen ahead of new highs, 203-19. A major part of the story was volume, which was very strong, indicating that this bust was the real deal.
NYSE Volume 1,757,078,000
NASDAQ Volume 2,473,252,000
Financial stocks took a beating, especially the most egregious offenders. Bank of America (BAC) lost 1.33 to close at 5.56 (-19.30%). There was false hope recently as BofA rallied from below $4 to above $6, a level at which major funds could still participate. It now looks to fall below $5 again, signaling a continuance of the classic death spiral.
Ironically, this stock looks very much like Countrywide did in January of 2008, after Bank of America had assumed most of the company's assets. Countrywide eventually was fully assumed by Bank of America. Much of the same bad debt which killed that company are now crushing CEO Ken Lewis' company. Bank of America has been insolvent for quite some time and it will be interesting to watch the continuing saga of what was once America's largest banking interest.
Citigroup (C), another of the walking dead, was hammered 0.60, to 3.35 (-15.19). This company's future may be numbered in weeks rather than months.
Goldman Sachs (GS) was hard hit, dropping 7.49, to 90.40 (-7.65%). Morgan Stanley (MS)lost 2.82, to 20.79 (-11.95). JP Morgan Chase fell 2.66, to 24.62 (-9.75).
Commodities were mostly mixed with oil down substantially, losing 2.01, closing at $37.55, a three-week low. The metals were moving in the opposite directed, hurriedly. Gold shot up 21.40, to $914.20. Silver gained 30 cents, to 13.13.
The precious metals prices are signaling another flight to safety. Clearly, equities are not the place to be now, as they haven't been for the past 18 months, and they still won't be for some time even though today's decline could be interpreted as the beginning of the recovery. The dollar was up sharply against other currencies.
While our own corrupt bankers and wheedlers express themselves with outcries of fear and panic, smart money is on the greenback and gold, a combination that may not seem plausible at first, though it's better understood when seen in the light of a basic turnover of power. It's clear that the Obama administration is not going to tolerate much less than complete transparency. THAT is a very positive development.
Silver remains my #1 investment. On the other hand, opportunities may begin to emerge in black market tobacco and stinging race and sports fixers, the ultimate revenge play.
Today's losses were surely not the last, as the Dow closed at its lowest level since November 20 of last year and is also the first close since then below 7900. Wall Street is in serious jeopardy of breaking apart at the seams. Another precipitous move lower could be in the cards as the market must retest 7550 on the Dow, though that move actually seems a foregone conclusion after today.
It was a poor day for Wall Street, but a darned good one for the United States of America.
Stocks were already trading lower when Geithner stepped to the mic, but they really tanked as he drilled out scant details of the government's plan. The Dow was down about 45 points when he started speaking at 11:00 am. By the time he was finished, just a half hour later, the blue chip index was off nearly 300. Matters proceeded to become materially worse from there. The Dow was down more than 400 points before a last-gasp rally trimmed the losses by about 40 points in the final 15 minutes.
Dow 7,888.88, -381.99 (4.62%)
NASDAQ 1,524.73, -66.83 (4.20%)
S&P 500 827.17, -42.72 (4.91%)
NYSE Composite 5,214.34, -265.54 (4.85%)
Some of the more vocal Wall Street banking crowd are complaining that Geithner's plan - which reportedly has provisions for the assumption of some of the banks' toxic assets by private investors - is short on specifics.
The truth of the matter is that it likely opens the banks in question to too much public scrutiny, as evidenced by the government's new web site, financialstability.gov.
For a glimpse of what's ahead for the Bailout Bunch, the site currently links to Treasury's own Emergency Economic Stabilization Act web site. drilling down just a page reveals, under "Systemically Significantly Failing Institutions" we find reams of info on Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, JP Morgan Chase, Wells Fargo & Co., Bank of New York Mellon, State Street, Merrill Lynch, AIG, plus Chrysler, General Motors and GMAC.
How appropriate and sweetly ironic that these banks and businesses are grouped under such a heading. Most, if not all, are already insolvent. Bloggers and economists should have a field day with all the fresh light shining on these cheaters, liars and scoundrels. There's a wealth of information there, much of it which will almost surely facilitate the demise of these failed firms.
Could the government actually be forcing the banks to confess to their excess and the extent of their failures? It sure looks that way, and, if so, it's a great step forward. Wall Street fails to see it that way, but, clue to the clueless, Wall Street isn't America and the fate of 300 million Americans is not inexorably tied to the ups and downs of the Dow Jones Industrials.
Main Street may finally be catching a break as the banks are forced to come clean, which means that a good number of them will be forced into bankruptcy and/or liquidation, the key step in ridding the market of malinvestments and failed institutions.
Could it be that Secretary Geithner, under the thumb of President Obama, has finally gotten religion and intends to actually correct the mess that he was already a party to? Could be. Obama's sincerity and forthrightness was on display just last night at his first press conference when he left the door a bit ajar in his response to a reporter's question about investigating former administration officials.
His response to a question about Senator Patrick Leahy's calling for a "truth commission" was decidedly grey-area, as the President said much to the affect that while he preferred to "look forward" he would not block investigative efforts. Between those comments and the Geithner cram-down on Wall Street, maybe real healing in America can begin.
This writer honestly hasn't felt this good about a serious market tumble since the dot-com bust, the key being Geithner's fairly obvious signal that the rules have changed and the hand-outs and free rides are now relics of the past.
Advancing issues were absolutely overwhelmed by decliners in the broadest selling since November. Losers led gainers, 5405-1145, a nearly 5-1 edge. New lows continued to strengthen ahead of new highs, 203-19. A major part of the story was volume, which was very strong, indicating that this bust was the real deal.
NYSE Volume 1,757,078,000
NASDAQ Volume 2,473,252,000
Financial stocks took a beating, especially the most egregious offenders. Bank of America (BAC) lost 1.33 to close at 5.56 (-19.30%). There was false hope recently as BofA rallied from below $4 to above $6, a level at which major funds could still participate. It now looks to fall below $5 again, signaling a continuance of the classic death spiral.
Ironically, this stock looks very much like Countrywide did in January of 2008, after Bank of America had assumed most of the company's assets. Countrywide eventually was fully assumed by Bank of America. Much of the same bad debt which killed that company are now crushing CEO Ken Lewis' company. Bank of America has been insolvent for quite some time and it will be interesting to watch the continuing saga of what was once America's largest banking interest.
Citigroup (C), another of the walking dead, was hammered 0.60, to 3.35 (-15.19). This company's future may be numbered in weeks rather than months.
Goldman Sachs (GS) was hard hit, dropping 7.49, to 90.40 (-7.65%). Morgan Stanley (MS)lost 2.82, to 20.79 (-11.95). JP Morgan Chase fell 2.66, to 24.62 (-9.75).
Commodities were mostly mixed with oil down substantially, losing 2.01, closing at $37.55, a three-week low. The metals were moving in the opposite directed, hurriedly. Gold shot up 21.40, to $914.20. Silver gained 30 cents, to 13.13.
The precious metals prices are signaling another flight to safety. Clearly, equities are not the place to be now, as they haven't been for the past 18 months, and they still won't be for some time even though today's decline could be interpreted as the beginning of the recovery. The dollar was up sharply against other currencies.
While our own corrupt bankers and wheedlers express themselves with outcries of fear and panic, smart money is on the greenback and gold, a combination that may not seem plausible at first, though it's better understood when seen in the light of a basic turnover of power. It's clear that the Obama administration is not going to tolerate much less than complete transparency. THAT is a very positive development.
Silver remains my #1 investment. On the other hand, opportunities may begin to emerge in black market tobacco and stinging race and sports fixers, the ultimate revenge play.
Today's losses were surely not the last, as the Dow closed at its lowest level since November 20 of last year and is also the first close since then below 7900. Wall Street is in serious jeopardy of breaking apart at the seams. Another precipitous move lower could be in the cards as the market must retest 7550 on the Dow, though that move actually seems a foregone conclusion after today.
It was a poor day for Wall Street, but a darned good one for the United States of America.
Thursday, February 5, 2009
Bad News Rally? Really?
Once the opening bell rang, investors knew what to do after seeing the latest round of initial unemployment claims coming in at a record number, 626,000. All of the major indices dropped right out of the gate, building losses until right around 10:30 am, with the usual suspects, banks and related financial firms, leading the way.
Adding to the early Thursday thumping was the 4th quarter report from Cisco (CSCO), along with a very disappointing outlook for Q1 of 2009.
Additionally, a slew of retailers reported same-store sales falling in the range of 15-25% in January. Overall, there wasn't much good news about.
But, then word hit the street that “mark-to-market” accounting rules might be suspended to provide additional relief to banks and financial institutions. In other words, banks would be able to hide bad debts deep in the bowels of their books. Fine. Dandy. More phony accounting should be just the elixir to pull the nation out of its deflationary tailspin.
I have a word for what the government has been doing and continues to do regarding the banks. It's called "manipulation."
Massaging the bank's books aren't going to magically make the bad paper go away. Toxic CDO and MBS are bad, plain and simple. Allowing the banks to put them into a tier of liabilities or assets that doesn't realistically reflect their market value only delays the eventual reckoning. It was the suggested "mark to model" accounting, by which the banks were able to conceal their liabilities in the gobbledegook of their accounting which was largely responsible for the entire mess to begin with. Now, the "change agents" in the federal government believe that a return to those failed and false standards will somehow turn the tide.
Rubbish. Absolute garbage and trash. The government has no silver bullet. The answer is to allow the market to function by bankrupting all of the major players (Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, et. al.) who are INSOLVENT. Instead, the government and Wall Street is conspiring to continue the rape of the American taxpayer by propping up these failed institutions. They are plotting nothing less than the destruction of the United States of America.
So, the market soars on the news. The Dow, in particular, turned a 110-point loss at 10:30 am to a 150-point gain just after noon. The other indices registered similar moves and finished at or near the highs of the day. Not surprisingly, the banking sector was up sharply.
Dow 8,063.07, +106.41 (1.34%)
NASDAQ 1,546.24, +31.19 (2.06%)
S&P 500 845.85, +13.62 (1.64%)
NYSE Composite 5,326.01, +83.26 (1.59%)
So, there you have it. Bad news almost all around, but because the feds offer easier accounting rules, everything is magically worth more today than yesterday. Not only is our government completely off the rails, they are taking all of the money with them through the corrupt, failed banking system. If Americans ever understand the truth rather than accepting the pablum spoon-fed to them daily by the equally-complicit mainstream media, there would be marches and sit-ins in Washington which would make the record crowds at Obama's inauguration look like a high-school picnic - that is, if the American people somehow rediscover their spines.
Of course, most of the American population has been placated by either poverty, the media, handouts (welfare and extended unemployment benefits) or a noxious combination of all three. Largely, the American public is a brain-dead, limp and nearly lifeless non-entity. They don't have a voice in their politics and those who actually understand what's happening are marginalized as kooks or conspirators. Our rights have been gradually stripped away (and not restored by the current administration) to the point at which we barely matter. Congress and the president do as they please. Wall Street openly steals billions of dollars. Americans pay their bills, struggle to make ends meet, try to get by, hundreds of thousands of Kentuckians are still in the dark and cold, recalling images of hurricane Katrina and the aftermath of New Orleans. Sick. Sick Sick.
Tracking the day's trends, advancing issues beat back losers, 4155-1308, but, new lows continued to hold a large edge over new highs, 288-12. Volume was very high, especially at the open (down) and into the close (flat) as the powers at work threw everything they had into the market to prevent the dissipation of the day's gains. The bull-bear struggle from 3:30 to 4:00 pm was monumental, even though the indices barely budged.
NYSE Volume 1,627,892,000
NASDAQ Volume 2,563,955,000
Commodity markets responded as would be expected. Oil rose by 85 cents, to $41.17. Gold was up $12.00, to $914.20; silver advanced another 28 cents, to $12.75.
Naturally, all the efforts of the pumpers and pimps of the market could not overcome the monumental resistance line set up at 8149 on the Dow... not even coming close. Friday morning will prove to be quite interesting. The Bureau of Labor Statistics releases their non-farms payroll report for January at 8:30 am. The consensus is for another loss of 525,000 jobs. ADP has already (on Wednesday) released their independent figure for January at -522,000 jobs for January. Whichever way the BLS decides to massage their figures will decide the line of the day's trade. Anything significantly over their "consensus" figure should cause a decline. Anything at or below the figure will trigger a monster rally. Either way, its the sucker trade of the week, or year, or... well, there have been so many sucker moves lately that it may just fall in line with the rest of them.
Suck it up, America. The oligarchs cannot be inconvenienced.
Adding to the early Thursday thumping was the 4th quarter report from Cisco (CSCO), along with a very disappointing outlook for Q1 of 2009.
Additionally, a slew of retailers reported same-store sales falling in the range of 15-25% in January. Overall, there wasn't much good news about.
But, then word hit the street that “mark-to-market” accounting rules might be suspended to provide additional relief to banks and financial institutions. In other words, banks would be able to hide bad debts deep in the bowels of their books. Fine. Dandy. More phony accounting should be just the elixir to pull the nation out of its deflationary tailspin.
I have a word for what the government has been doing and continues to do regarding the banks. It's called "manipulation."
Massaging the bank's books aren't going to magically make the bad paper go away. Toxic CDO and MBS are bad, plain and simple. Allowing the banks to put them into a tier of liabilities or assets that doesn't realistically reflect their market value only delays the eventual reckoning. It was the suggested "mark to model" accounting, by which the banks were able to conceal their liabilities in the gobbledegook of their accounting which was largely responsible for the entire mess to begin with. Now, the "change agents" in the federal government believe that a return to those failed and false standards will somehow turn the tide.
Rubbish. Absolute garbage and trash. The government has no silver bullet. The answer is to allow the market to function by bankrupting all of the major players (Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, et. al.) who are INSOLVENT. Instead, the government and Wall Street is conspiring to continue the rape of the American taxpayer by propping up these failed institutions. They are plotting nothing less than the destruction of the United States of America.
So, the market soars on the news. The Dow, in particular, turned a 110-point loss at 10:30 am to a 150-point gain just after noon. The other indices registered similar moves and finished at or near the highs of the day. Not surprisingly, the banking sector was up sharply.
Dow 8,063.07, +106.41 (1.34%)
NASDAQ 1,546.24, +31.19 (2.06%)
S&P 500 845.85, +13.62 (1.64%)
NYSE Composite 5,326.01, +83.26 (1.59%)
So, there you have it. Bad news almost all around, but because the feds offer easier accounting rules, everything is magically worth more today than yesterday. Not only is our government completely off the rails, they are taking all of the money with them through the corrupt, failed banking system. If Americans ever understand the truth rather than accepting the pablum spoon-fed to them daily by the equally-complicit mainstream media, there would be marches and sit-ins in Washington which would make the record crowds at Obama's inauguration look like a high-school picnic - that is, if the American people somehow rediscover their spines.
Of course, most of the American population has been placated by either poverty, the media, handouts (welfare and extended unemployment benefits) or a noxious combination of all three. Largely, the American public is a brain-dead, limp and nearly lifeless non-entity. They don't have a voice in their politics and those who actually understand what's happening are marginalized as kooks or conspirators. Our rights have been gradually stripped away (and not restored by the current administration) to the point at which we barely matter. Congress and the president do as they please. Wall Street openly steals billions of dollars. Americans pay their bills, struggle to make ends meet, try to get by, hundreds of thousands of Kentuckians are still in the dark and cold, recalling images of hurricane Katrina and the aftermath of New Orleans. Sick. Sick Sick.
Tracking the day's trends, advancing issues beat back losers, 4155-1308, but, new lows continued to hold a large edge over new highs, 288-12. Volume was very high, especially at the open (down) and into the close (flat) as the powers at work threw everything they had into the market to prevent the dissipation of the day's gains. The bull-bear struggle from 3:30 to 4:00 pm was monumental, even though the indices barely budged.
NYSE Volume 1,627,892,000
NASDAQ Volume 2,563,955,000
Commodity markets responded as would be expected. Oil rose by 85 cents, to $41.17. Gold was up $12.00, to $914.20; silver advanced another 28 cents, to $12.75.
Naturally, all the efforts of the pumpers and pimps of the market could not overcome the monumental resistance line set up at 8149 on the Dow... not even coming close. Friday morning will prove to be quite interesting. The Bureau of Labor Statistics releases their non-farms payroll report for January at 8:30 am. The consensus is for another loss of 525,000 jobs. ADP has already (on Wednesday) released their independent figure for January at -522,000 jobs for January. Whichever way the BLS decides to massage their figures will decide the line of the day's trade. Anything significantly over their "consensus" figure should cause a decline. Anything at or below the figure will trigger a monster rally. Either way, its the sucker trade of the week, or year, or... well, there have been so many sucker moves lately that it may just fall in line with the rest of them.
Suck it up, America. The oligarchs cannot be inconvenienced.
Monday, June 2, 2008
June Swoon: Stocks Tank on Bank Boos
June began about as badly as any month could with the markets battered on all sides, but mostly in the finance/banking areas, as Standard & Poors downgraded the credit ratings of three giant brokerages - Lehman Brothers (LEH), Merrill Lynch (MER) and Morgan Stanley (MS).
Along the way, the ratings agency made sure to revise its ratings on Bank Of America (BAC) and JP Morgan Chase (JPM) to negative, thereby branding the two banks as damaged goods.
Additionally Washington Mutual (WM) and Wachovia (WB) each had their issues, resulting in changes of top management.
It was not a good day to be in the business of banking. Nor was it one to be holding stocks of almost any kind (something I've been repeating often since October of last year). Only frantic buying in the last half hour of trading saved the markets from a complete meltdown.
Dow 12,503.82 -134.50; NASDAQ 2,491.53 -31.13; S&P 500 1,385.67 -14.71; NYSE Composite 9,316.52 -84.56
The Dow, in particular, tested the lows of May 23 (12,479.63), but essentially put in what can only be seen as a double bottom on an intraday basis, at today's low of 12,427. Since the Dow is still below both its 50 and 200-day moving averages, all that can be said of last week's 4-day rally is that it was mostly a mirage. There's little upside to the market considering all the turbulence in the credit markets.
For a change, the commodities markets didn't have much of an impact on equity trading. Oil gained a marginal 41 cents, to 127.76, while gold added $5.50, to $897.00. Silver ended up 5 cents, to $16.91.
The highlight of economic releases was this morning's reading on April construction spending, which was down only 0.4% due to growth of commercial building and multi-housing units, which offset another horrid month in home building. The residential real estate market is still searching for a bottom which is likely to not be reached until sometime during the winter of '08-'09 - and that is still a long way off.
High gas and food prices, a seized-up credit market and continuing foreclosures and bank writedowns, there's really no catalyst for any upside market moves. Any rallies will be met with suspicion and pessimism as the US economy suffers through a deep and long recession, which, according to official figures, hasn't even begun.
The balance of this week is a little light on the economic news front until Friday's Non-Farm Payrolls data for May. Auto and truck sales for May roll out on Tuesday, as do April Factory Orders. After that, just a revision to first quarter productivity on Wednesday and the usual Thursday Unemployment Claims.
The Non-Farms Payroll figure for May should be interesting following the very suspect -20,000 reported for April. The expectations are for a loss of another 50,000 to 60,000 jobs - not what the market needs at this juncture. Even if the report is highly fudged, any rally caused by it will be short-lived as stocks are sure to retest the January and March bottoms.
Best advice is to take some profits here if you have any, and stay out of the markets this week. On Saturday, place a sizable bet on Big Brown to win the Belmont Stakes and complete racing's Triple Crown. He may be close to even money or even 4-5 by post time, but that's a much better return - with a lot less risk - than anything you'll find in US equity markets for now.
NYSE Volume 1,073,309,000
NASDAQ Volume 1,950,997,000
Along the way, the ratings agency made sure to revise its ratings on Bank Of America (BAC) and JP Morgan Chase (JPM) to negative, thereby branding the two banks as damaged goods.
Additionally Washington Mutual (WM) and Wachovia (WB) each had their issues, resulting in changes of top management.
It was not a good day to be in the business of banking. Nor was it one to be holding stocks of almost any kind (something I've been repeating often since October of last year). Only frantic buying in the last half hour of trading saved the markets from a complete meltdown.
Dow 12,503.82 -134.50; NASDAQ 2,491.53 -31.13; S&P 500 1,385.67 -14.71; NYSE Composite 9,316.52 -84.56
The Dow, in particular, tested the lows of May 23 (12,479.63), but essentially put in what can only be seen as a double bottom on an intraday basis, at today's low of 12,427. Since the Dow is still below both its 50 and 200-day moving averages, all that can be said of last week's 4-day rally is that it was mostly a mirage. There's little upside to the market considering all the turbulence in the credit markets.
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On the day, declining issues hammered advancers by a margin of more than 5-2. 4366 stocks were down, while only 1919 ended with gains. New lows finished ahead of new highs, 221-132, but the spread expanded significantly, signaling more losses for the markets ahead.The Path of Substantial Wealth and Riches: Your Parents' Influence on Your Finances
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For a change, the commodities markets didn't have much of an impact on equity trading. Oil gained a marginal 41 cents, to 127.76, while gold added $5.50, to $897.00. Silver ended up 5 cents, to $16.91.
The highlight of economic releases was this morning's reading on April construction spending, which was down only 0.4% due to growth of commercial building and multi-housing units, which offset another horrid month in home building. The residential real estate market is still searching for a bottom which is likely to not be reached until sometime during the winter of '08-'09 - and that is still a long way off.
High gas and food prices, a seized-up credit market and continuing foreclosures and bank writedowns, there's really no catalyst for any upside market moves. Any rallies will be met with suspicion and pessimism as the US economy suffers through a deep and long recession, which, according to official figures, hasn't even begun.
The balance of this week is a little light on the economic news front until Friday's Non-Farm Payrolls data for May. Auto and truck sales for May roll out on Tuesday, as do April Factory Orders. After that, just a revision to first quarter productivity on Wednesday and the usual Thursday Unemployment Claims.
The Non-Farms Payroll figure for May should be interesting following the very suspect -20,000 reported for April. The expectations are for a loss of another 50,000 to 60,000 jobs - not what the market needs at this juncture. Even if the report is highly fudged, any rally caused by it will be short-lived as stocks are sure to retest the January and March bottoms.
Best advice is to take some profits here if you have any, and stay out of the markets this week. On Saturday, place a sizable bet on Big Brown to win the Belmont Stakes and complete racing's Triple Crown. He may be close to even money or even 4-5 by post time, but that's a much better return - with a lot less risk - than anything you'll find in US equity markets for now.
NYSE Volume 1,073,309,000
NASDAQ Volume 1,950,997,000
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