Markets Down Without Cause; Bike Riding offers Solutions

The Markets

Stocks could not follow through - as expected - yesterday's momentum rally, despite there being a paucity of news - good or bad. The only actionable events were the pre-open release of weekly unemployment claims, which came in poorly again, at 414,000, up 2,000 from an upwardly-revised 412,000 in the prior week.

Other than that, the ECB and Bank of England kept key interest rates unchanged, so all there was to do was to sell those stocks which were profitable in yesterday's trading and sit in cash until after the president's 7:00 pm EDT speech in which he is supposed to unveil some sort of jobs program.

The Bernanke speech in Milwaukee was a disappointment to those who wished he would announce QE3 - it's not going to happen - and consisted mainly of the Fed chairman droning on about how weak the economy is and how the Fed stands vigilant to do whatever it can to fix it. The takeaway was that the fed really doesn't have much power any more, having used up all the bullets in their six-shooter. The speech, thus, was a big non-event.

While there's been a multitude of opinion surrounding what the president might say in his speech tonight, whatever his jobs program might be, it's proabably going to consist mainly of an extension of the payroll tax holiday, tax credits to businesses who hire new employees (a program that has great potential to be scammed heavily), some kind of infrastructure "bank" (read: borrow and spend, also great scam potential) to repair more highways, bridges and tunnels, and little else.

The president is relying on bad economic information, which he has since he took office. Mr. Obama neither understands the US economy nor the travails of the average American. If he truly wanted to fix things in this country, he'd force phone, cable and power companies to cut their exorbitant rates, put a nationwide cap of $3.00 per gallon on gasoline at retail, announce a larger and more-encompassing tax holiday, slash medicare and social security contributions and simultaneously cut the pay of every federal government employee by five to ten percent (the tax cuts would ease the pain completely), and repeal the monstrosity that is known as Obamacare.

That isn't going to happen, so expect the US economy to remain moribund for at least another year, probably 18 months, and quite possibly longer. Until the government gets it's act together and begins to understand that the problem is that there aren't enough real jobs in the country to re-employ the 14 million out of work and that borrowing more on band-aid programs aren't going to jump start anything any time soon. The time is right for fundamental changes to entitlements and the grotesque tax code. Whether there's the political will to make these changes is highly doubtful, especially when all the politicians are focused only on keeping their jobs and fighting for control of the White House. The election is still 14 months away, but that's all that occupies the minds of our beloved "leaders."

Dow 11,295.81, -119.05 (1.04%)
NASDAQ 2,529.14, -19.80 (0.78%)
S&P 500 1,185.90, -12.72 (1.06%)
NYSE Compos 7,257.36, -97.81 (1.33%)
NASDAQ Volume 1,951,654,250
NYSE Volume 4,277,785,000
Combined NYSE & NASDAQ Advance - Decline: 1603-4886
Combined NYSE & NASDAQ New highs - New lows: 58-56
WTI crude oil futures: 89.05, -0.29
Gold: 1865.80, +48.50
Silver: 42.34, +0.79

Idea: Ride a Bike Whenever Practical or Possible

It's been said that when you learn how to ride a bike, you never forget, and since most Americans grew up riding bikes as kids and teens, there's probably about 150-200,000 million of us who could get on one and ride without fear of falling off. For many, especially those whose diets have caused them to become grossly overweight or obese, a good, sturdy mountain bike and a two mile ride every day would go a long way toward reducing both their weight and future medical costs from everything from diabetes to heart disease.

The advantages of riding a bike are probably too numerous to mention, but beyond the obvious health benefits, bikes require no fuel at all, except that which comes from the furious pedaling of our little legs. With the price of gas hovering near $4.00 a gallon, every mile trekked on a bicycle is a savings in fuel use and expense. Not only does the savings accrue to the individual, but if enough people substituted driving their cars for trips of under two miles and instead rode a bike, it wouldn't be long before those ridiculous gas prices began coming down, providing a benefit to the whole country.

Economic change is usually accomplished at the fringes, and promoting bike riding as a health and financial benefit is right out there on the outer limits, where economists are generally blind.

A Wall Street Snoozer

Wall Street pretty much mailed this one in today, as there was no significant follow-up to yesterday's machine-driven rally. No surprise there, as all positions are squared up by the computers, with no place to go forward without positive economic news.

Stocks started lower and ended higher, with marginal gains, completely ignoring the three economic reports, which, in a less-controlled, more robust environment would have sent the Dow reeling to a 200-point decline, though in today's completely schizophrenic environment, data doesn't matter, especially if it's not good.

The Case-Shiller Home Index fell another 4.52% on a year-on-year basis, but marked the third straight month of increasing prices, with a 1.1% increase from May to June. The Index, which is cited by most economists but is greatly flawed and dated, does not factor into account many foreclosure and short sales.

Pending home sales fell by 1.3% in June, another lagging indicator, and the expectation is for further declines in July and August, which will be reported near the end of September and October, just in time to inform everybody of what they;ll already know by then, that the US economy is in serious decline. In the meantime, wall Street uses the flawed, late data to bolster its own "recovery" theme and keep stock prices high.

Something from which nobody can hide, however, was the government's own reading on consumer confidence which dove to 44.5, from 59.2 in July, its lowest level since April, 2009, which was pretty much at the end of the financial collapse of 2008.

Consumers aren't happy, but Wall Street continues to plug along, pushing the same corporations that laid off millions and haven't hired many back.

Dow 11,559.95, +20.70 (0.18%)
NASDAQ 2,576.11, +14.00 (0.55%)
S&P 500 1,212.92, +2.84 (0.23%)
NYSE Composite 7,464.00, +13.70 (0.18%)

Advancing issues beat losing ones, 3896-2581. There were 26 new highs on the NASDAQ, with 22 new lows. On the NYSE, new highs topped new lows, 41-4, putting the combined total at a moderately positive, 67-26, in favor of new highs. Volume was light.

NASDAQ Volume 1,846,172,625
NYSE Volume 4,543,808,500

Without any reason other than there's a big driving weekend coming up with Labor Day, oil galloped ahead $1.63, to $88.90 at the close. Gas prices have been reported as rising by about a nickel nationally, this, of course, prior to them coming down much at all when oil futures were hovering just above $80/barrel.

Countering the excesses of the oil cartel, gold gained $46.50, to $1835.00, erasing much of the losses from the previous six sessions and more or less thumbing its nose at the backers of debt-backed money. Silver managed to gain 43 cents, to $41.31 the ounce.

Advice for today: Buy a good, used bike. Many available, good exercise and the cost of fuel is zero.