Despite some favorable economic news during the course of the week, market participants mostly shunned equities as Europe's ongoing crisis and the lack of a deal by the congressional super-committee kept money mostly on the sidelines or taking profits (and losses).
Since the US stock market has become more akin to a day-trading casino than an investment culture, traders now routinely react swiftly to breaking news and events, preferring to stay out of the way or grab quick profits as the tableau of international economic falderal unfolds. The week was marked by more speculation than actual news, as Italian and Spanish 10-year notes criss-crossed the 7% yield threshold and Germany continues to balk at being the savior of the Southern nations, even as Chancellor Angela Merkel admitted that her country was ready to cede some degree of sovereignty in order to salvage what's left of the European monetary union.
Germany holds the key to whether the decade-old European Union will survive, being the largest and strongest economy in the region. While Merkel has made pronouncements pleasing to her neighbors to the West and South, she is losing a degree of favor at home, as many Germans don't exactly share her views and dislike the role of Germany as the bailout nation for weaker economies.
Funding for Greece, Italy, Portugal and Spain has become an issue so delicate and abstract that one solution offered was for the ECB to loan money to the IMF, which would then fund the ailing nations, though that kind of Ponzi scheme would only work to relieve the ECB of their presumptive role of being the "lender of last resort" such as the US Federal Reserve was during the 2008 crisis.
It's a touchy situation in Europe, with new governments in Italy and Greece, both tottering on the brink of default, though Greece's predicament - with no new funding coming soon - is degrees more perilous.
Here in the USA, congressional members have not exactly been forthright in their effort to reach a compromise on the roughly $1.2 trillion in budget cuts which was the mandated approach after the August debt ceiling debacle.
With the US public debt officially exceeding $15 trillion on Thursday and the prospects for another $1 trillion-plus deficit in the coming fiscal year, one would think that congress and their "super-committee" would have found some resolution before their November 23rd deadline, but, as usual, congressional members are deadlocked, mostly along party lines, with Republicans steadfastly refusing to approve anything which even smells like a tax hike and Democrats seemingly all too happy to allow the blame to accrue to their across-the-aisle counterparts.
With the deadline looming just five days ahead, members of the committee are pondering letting the deadline pass, which would trigger automatic spending-cuts, otherwise known as sequestration, though that approach is also riddled with question marks as some members have openly suggested that even those automatic cuts could be ripped asunder, primarily because of opposition to cuts to the Department of Defense.
The comedy of errors which began last Spring with the threatened shutdown of the federal government over budget issues threatens the US credit rating, already taken down a notch in August by Standard and Poor's. Failure to reach agreement might not engender another rating cut, though scuttling the previously agreed-to automatic cuts just might cause S&P to downgrade the US again.
Against this backdrop of a do-nothing congress without political will or wherewithal, and a fractured Europe an landscape, one can hardly blame traders for seeking the safety of cash or Treasuries. Volume on the stock exchanges this week has been dismal, exacerbated by a missing $600 million in investor funds courtesy of the recently-bankrupt MF Global. The fund, run by former Goldman Sachs CEO and New Jersey Governor Jon Corzine, made heavy bets on European debt and found themselves in too deep. The current thinking is that MF Global used client funds to shore up losing positions before going belly-up, a practice that is wholly criminal.
However, since nobody ever goes to trial or jail for financial follies in the US, regulators are being very tight-lipped about the matter, even though reputations have already been badly tarnished and over half a billion dollars is either unavailable or lost.
For the week, the Dow Jones Industrials took it on the chin to the tune of a 357-point decline. The S&P 500 fell 50 points during the week, the NASDAQ down 106 points and the NYSE Composite off by 294 points, hardly a ringing endorsement during a week that ended with options expiration, normally the forebear of a rally.
Maybe, with all the hurt, pain, fear and uncertainty, the big money went short.
Dow 11,796.16, +25.43 (0.22%)
NASDAQ 2,572.50, -15.49 (0.60%)
S&P 500 1,215.65, -0.48 (0.04%)
NYSE Composite 7,282.47, +8.32 (0.11%)
NASDAQ Volume 1,754,685,000
NYSE Volume 3,679,453,750
Combined NYSE & NASDAQ Advance - Decline: 3011-2563
Combined NYSE & NASDAQ New highs - New lows: 40-128
WTI crude oil: 97.41, -1.41
Gold: 1,725.10, +4.90
Silver: 32.42, +0.92
Showing posts with label debt limit. Show all posts
Showing posts with label debt limit. Show all posts
Friday, November 18, 2011
Monday, May 23, 2011
Euro Debt Crisis Exacting Heavy Toll on Global Markets
Make no mistake about it, today was the start of the great reckoning. The beginning of the end of easy money policies, of kicking the can down the road, of failing to come face-to-face with the reality of the global credit crisis that began in 2008 and never really ended.
Oddly enough, it comes on a day in which the US President, Mr. Obama, is headed to Europe for a meeting of the G-8, in which the globalist governors will mete out whatever they see fit for the peasantry of their populous nations. It's a little like playing Russian roulette with all the chambers loaded. You're going to get it no matter how lucky you are.
The interesting aspect of the day's trading happened not specifically today, but actually last Friday, when futures went limit down shortly after the US close. It was a weekend warning shot that the powers in control would be taking their various pounds of flash come Monday. And they did, sending markets around the planet down by one, two and three per cent.
Here in the USA, one-month lows were the order of the day, though that's hardly exciting news. The pertinent take-away is that the great unwind of asset values has begun - or resumed - as the major indices finished the session today less than 4% off their recent multi-year highs.
What was notable was the changing of the guard on the new highs - new lows indicator. For more than two years - with only slight variations - new highs have exceeded new lows on both the NYSE and the NASDAQ. Today, new lows outnumbered new highs on the NASDAQ and the gap narrowed on the NYSE. Even though this is not the first time this has happened recently, its frequency and narrow range makes it a particularly potent indicator at this point in time. Once this turns, it tends to remain in place for quite a while, periods between changes in leadership are measured in years.
Market movements are often subtle and difficult to pinpoint, though this one has been telegraphed for quite some time. The debt condition of Greece, Portugal, Belgium, Italy, Spain and Ireland are unsustainable situations as is the salve of QE2 and ZIRP here in the US. Japan, literally and figuratively, has been swept off the face of leading economic nations and uprisings across the Middle East and North Africa (called the MENA region, for short) threaten the global economy.
Even the leaders of the most powerful nations know that this little game of chicken, complete with artificial stimuli, bailouts, buybacks, swaps, jawboning and other gimmicks cannot proceed forever. Europe must get serious about its long-term structural deficiencies and the US must confront the debt limit and its own burgeoning solvency problem, and both must do so quickly. Thus, preparedness for financial armageddon is underway, and, if one listens closely to the pundits and analysts populating the airwaves and internet, most are calling upon investors to take a pause, pare back on stocks and raise cash, which is, in the parlance of Wall Street, like saying, "run for your life!"
There's an opportunity for the globalist agenda to sail through this period of austerity, consolidation and downgrading of the private sector fairly unscathed, but be assured that the plan is afoot and the stock indices will bear the brunt of what will amount to a massive global deflation. In a year or two, they will once again announce victory over the forces of debt and monetary destruction and proceed to blow the bubbles once more.
In this environment, no asset class is safe, though cash and equivalents, gold and silver, are good starting points. Growth will be minimal, as measured by GDP, if positive at all, and the opportunity for fresh recessions are abundant. Today was just another in a series of well-timed warning shots. Prepare or die.
Dow 12,381.26, -130.78 (1.05%)
NASDAQ 2,758.90, -44.42 (1.58%)
S&P 500 1,317.37, -15.90 (1.19%)
NYSE Composite 8,236.55, -120.98 (1.45%)
Losers soared over winners on the session, 5257-1342, a 4:1 ratio, though hardly a complete rout. It could have been much worse. On the NASDAQ, 37 new highs, but 86 new lows. The NYSE recorded 51 new highs and 44 new lows, the smallest gap in nearly two months. Taken together, the 88 new highs do not reach up to the 130 new lows, and that is the important set of figures to watch, the combined number. Continued weakness has been forecasting a more serious tumble for the past two months. Volume, despite the massive decline, remained at severely low levels. Once again, the major players have been unable to draw in the usually-gullible public, which is tapped out and wants no part of the Wall Street circus. Thus, they play amongst themselves, like a pack of starving wolves who will eventually turn upon each other.
NASDAQ Volume 1,806,104,625
NYSE Volume 3,761,192,500
Crude took another turn down, the front-end NYMEX contract for WTI losing $2.40, to $97.70. Gold managed a gain of $3.70, to $1517.20, while silver advanced by only a penny, to $35.07.
The major indices completed three straight weeks of negative results on Friday. Monday's opening gambit to the downside portends worse to come. March Durable Goods Orders data on Wednesday and the second 2nd quarter GDP estimate on Thursday will most likely add to the sense of pervasive desperation.
Oddly enough, it comes on a day in which the US President, Mr. Obama, is headed to Europe for a meeting of the G-8, in which the globalist governors will mete out whatever they see fit for the peasantry of their populous nations. It's a little like playing Russian roulette with all the chambers loaded. You're going to get it no matter how lucky you are.
The interesting aspect of the day's trading happened not specifically today, but actually last Friday, when futures went limit down shortly after the US close. It was a weekend warning shot that the powers in control would be taking their various pounds of flash come Monday. And they did, sending markets around the planet down by one, two and three per cent.
Here in the USA, one-month lows were the order of the day, though that's hardly exciting news. The pertinent take-away is that the great unwind of asset values has begun - or resumed - as the major indices finished the session today less than 4% off their recent multi-year highs.
What was notable was the changing of the guard on the new highs - new lows indicator. For more than two years - with only slight variations - new highs have exceeded new lows on both the NYSE and the NASDAQ. Today, new lows outnumbered new highs on the NASDAQ and the gap narrowed on the NYSE. Even though this is not the first time this has happened recently, its frequency and narrow range makes it a particularly potent indicator at this point in time. Once this turns, it tends to remain in place for quite a while, periods between changes in leadership are measured in years.
Market movements are often subtle and difficult to pinpoint, though this one has been telegraphed for quite some time. The debt condition of Greece, Portugal, Belgium, Italy, Spain and Ireland are unsustainable situations as is the salve of QE2 and ZIRP here in the US. Japan, literally and figuratively, has been swept off the face of leading economic nations and uprisings across the Middle East and North Africa (called the MENA region, for short) threaten the global economy.
Even the leaders of the most powerful nations know that this little game of chicken, complete with artificial stimuli, bailouts, buybacks, swaps, jawboning and other gimmicks cannot proceed forever. Europe must get serious about its long-term structural deficiencies and the US must confront the debt limit and its own burgeoning solvency problem, and both must do so quickly. Thus, preparedness for financial armageddon is underway, and, if one listens closely to the pundits and analysts populating the airwaves and internet, most are calling upon investors to take a pause, pare back on stocks and raise cash, which is, in the parlance of Wall Street, like saying, "run for your life!"
There's an opportunity for the globalist agenda to sail through this period of austerity, consolidation and downgrading of the private sector fairly unscathed, but be assured that the plan is afoot and the stock indices will bear the brunt of what will amount to a massive global deflation. In a year or two, they will once again announce victory over the forces of debt and monetary destruction and proceed to blow the bubbles once more.
In this environment, no asset class is safe, though cash and equivalents, gold and silver, are good starting points. Growth will be minimal, as measured by GDP, if positive at all, and the opportunity for fresh recessions are abundant. Today was just another in a series of well-timed warning shots. Prepare or die.
Dow 12,381.26, -130.78 (1.05%)
NASDAQ 2,758.90, -44.42 (1.58%)
S&P 500 1,317.37, -15.90 (1.19%)
NYSE Composite 8,236.55, -120.98 (1.45%)
Losers soared over winners on the session, 5257-1342, a 4:1 ratio, though hardly a complete rout. It could have been much worse. On the NASDAQ, 37 new highs, but 86 new lows. The NYSE recorded 51 new highs and 44 new lows, the smallest gap in nearly two months. Taken together, the 88 new highs do not reach up to the 130 new lows, and that is the important set of figures to watch, the combined number. Continued weakness has been forecasting a more serious tumble for the past two months. Volume, despite the massive decline, remained at severely low levels. Once again, the major players have been unable to draw in the usually-gullible public, which is tapped out and wants no part of the Wall Street circus. Thus, they play amongst themselves, like a pack of starving wolves who will eventually turn upon each other.
NASDAQ Volume 1,806,104,625
NYSE Volume 3,761,192,500
Crude took another turn down, the front-end NYMEX contract for WTI losing $2.40, to $97.70. Gold managed a gain of $3.70, to $1517.20, while silver advanced by only a penny, to $35.07.
The major indices completed three straight weeks of negative results on Friday. Monday's opening gambit to the downside portends worse to come. March Durable Goods Orders data on Wednesday and the second 2nd quarter GDP estimate on Thursday will most likely add to the sense of pervasive desperation.
Monday, May 16, 2011
Over the Debt Limit and Over the Edge
Just in case you are like about 98% of American's who will think that nothing of importance happened today, we duteously inform you that today, May 16, 2011, is a seminal date in American history, as it happens to be the day the US government purposely and willfully exceeded the statutory debt limit and began raiding the federal employees' pension fund, specifically, the Civil Service Retirement and Disability Fund (“CSRDF”), in order to keep the federal government operating.
It's all laid out in detail in this letter [PDF] from Treasury Secretary Timothy Geithner to Senate majority leader Harry Reid.
In a nutshell, since Treasury cannot issue any more debt by which to operate the hopelessly bankrupt government, they will take the funds from whatever government agencies have money, with a promise to repay once congress acts to increase the debt limit. In case they don't - and there's ample reason to believe that this current bunch of uneducated, deceptive and uncontrollable legislators may not - then too bad for all those federal employees who thought they had it made in the shade. The government will shaft you first. The rest of the public citizenry will be shafted in other ways, at a later date.
This is pretty serious stuff, and the end-run by Geithner around the debt limit gives the congress until August 2nd to sort things out. But, it's by no means a done deal or even close to it. The Republicans are calling for steep deficit reductions in the upcoming 2012 budget, while the Democrats are pushing for tax increases. In all seriousness, neither idea has any chance of passing, so the obvious alternative is to declare war and issue emergency powers.
What's that? We're already at war? In three different countries? Well, then, no problem-o! Spend at will.
Last week - and in measured ways over the last three years - this blog prepared its readers for calamity of varying degrees to be foisted upon the public, saying that chaos would prevail and with today's action by the Treasury, so it has.
Now we have rigged markets, a rogue government, spending completely out of control and borrowing beyond constitutional limits. The government has commenced paying back debt and paying bills with money collected from federal employees; money that was supposed to fund retirements and payments to disabled workers. And while no current retiree will be affected, future ones may well be. It's all in the hands of probably the worst congress (and that's saying something) ever to be seated. Well, good luck with that.
The stock markets took it in stride, first dipping into the red, then going positive, then the NASDAQ taking a nose-dive, and a final-hour smash-crash which took down the other indices. It was spooky, surreal and and absolutely frightening day.
On top of that, over the weekend, the head of the IMF, one Dominique Strauss-Kahn, was arrested in New York on a range on charges related to his alleged rape and sodomizing of a hotel maid. Since then, Mr. Strauss-Kahn has been denied bail and formally charged.
So, we now have a rogue congress, administration and the head of the world's most powerful and influential financial organization behind bars. Can it get any more ridiculous, any worse? Oh, yes, and it definitely will, shortly.
QE2 ends in a few more weeks, and with the free Fed money spigot about to be closed, expect the ruinous crowd on Wall Street to head for the hills, selling as many stock certificates as they can unload before peeling out the door. One problem may be that there will be no takers for their inordinately over-hyped investments, and they will have to sell them for much less than the levels at which they currently trade. If that occurs, we like to call such events a market crash, and there will be no bailing out this time, no savior from above, like the Fed, because they too are over-leveraged and tapped out. This time it will be for real, and it will not recover.
So, hang in there, buy more silver and gold and hope that your garden vegetables head for harvesting before the wheels fall completely off the federal fiasco and the world ends.
And, if you're scared, worried and/or confused by all this, take heart that you should be and that you are by no means alone. We all stand to lose everything if this doesn't go well.
Dow 12,548.37 47.38 (0.38%)
NASDAQ 2,782.31 46.16 (1.63%)
S&P 500 1,329.47 8.30 (0.62%)
NYSE Compos 8,336.59 35.08 (0.42%)
Declining issues took the measure of advancers, 4744-1843. Just in case more proof of the severity of this unannounced crisis was needed, the NASDAQ provided it in the form of flipping the new highs-new lows metric. Today, there were only 40 new highs and 67 new lows. The NYSE compressed, but did not flip (it will), with 104 new highs and 35 new lows. Volume was fairly pathetic, especially on the NYSE. In coming days and weeks, expect more and more stocks to begin selling off, first, in a somewhat orderly fashion, but as the end of QE2 approaches, in a real rush for the exits. Incidentally, banking stocks fell anywhere from 1/2 to 1% on the day. It's only fitting that the companies that led us into depression will be - again - the worst affected.
NASDAQ Volume 2,071,148,875
NYSE Volume 3,888,652,000
Commodities were a mixed bag. Crude oil slipped $2.28, to $97.37. What's of particular concern, however, is that while oil has slumped 14% over the past two weeks, the price of gasoline in the USA has fallen only ONE CENT PER GALLON. The rule of thumb used to be that the price of gas would rise or fall two to two-and-a-half cents for every dollar per barrel move in oil.
Apparently, now that the kleptocracy has gone full retard, that rule no longer applies. Gas will, from now on, cost whatever the oil cartel believes it can charge whether that price be fair, rational or based upon any measure of supply and demand.
Gold was higher earlier in the day, but now trades $5.40 lower, at $1489.80. Silver continues to be the bankers' favorite whipping boy, losing another $1.70, to trade at $33.60 [ON SALE, BUY MORE]. Under siege from HSBC and JP Morgan Chase, the world's biggest shorters of the commodity, silver should continue to experience weakness and erode down to the upper 20s in price. This is a unique buying opportunity in one of history's most manipulated and currently-undervalued pure forms of money.
It will get even more strange and perverse in global markets. Today was only the beginning.
It's all laid out in detail in this letter [PDF] from Treasury Secretary Timothy Geithner to Senate majority leader Harry Reid.
In a nutshell, since Treasury cannot issue any more debt by which to operate the hopelessly bankrupt government, they will take the funds from whatever government agencies have money, with a promise to repay once congress acts to increase the debt limit. In case they don't - and there's ample reason to believe that this current bunch of uneducated, deceptive and uncontrollable legislators may not - then too bad for all those federal employees who thought they had it made in the shade. The government will shaft you first. The rest of the public citizenry will be shafted in other ways, at a later date.
This is pretty serious stuff, and the end-run by Geithner around the debt limit gives the congress until August 2nd to sort things out. But, it's by no means a done deal or even close to it. The Republicans are calling for steep deficit reductions in the upcoming 2012 budget, while the Democrats are pushing for tax increases. In all seriousness, neither idea has any chance of passing, so the obvious alternative is to declare war and issue emergency powers.
What's that? We're already at war? In three different countries? Well, then, no problem-o! Spend at will.
Last week - and in measured ways over the last three years - this blog prepared its readers for calamity of varying degrees to be foisted upon the public, saying that chaos would prevail and with today's action by the Treasury, so it has.
Now we have rigged markets, a rogue government, spending completely out of control and borrowing beyond constitutional limits. The government has commenced paying back debt and paying bills with money collected from federal employees; money that was supposed to fund retirements and payments to disabled workers. And while no current retiree will be affected, future ones may well be. It's all in the hands of probably the worst congress (and that's saying something) ever to be seated. Well, good luck with that.
The stock markets took it in stride, first dipping into the red, then going positive, then the NASDAQ taking a nose-dive, and a final-hour smash-crash which took down the other indices. It was spooky, surreal and and absolutely frightening day.
On top of that, over the weekend, the head of the IMF, one Dominique Strauss-Kahn, was arrested in New York on a range on charges related to his alleged rape and sodomizing of a hotel maid. Since then, Mr. Strauss-Kahn has been denied bail and formally charged.
So, we now have a rogue congress, administration and the head of the world's most powerful and influential financial organization behind bars. Can it get any more ridiculous, any worse? Oh, yes, and it definitely will, shortly.
QE2 ends in a few more weeks, and with the free Fed money spigot about to be closed, expect the ruinous crowd on Wall Street to head for the hills, selling as many stock certificates as they can unload before peeling out the door. One problem may be that there will be no takers for their inordinately over-hyped investments, and they will have to sell them for much less than the levels at which they currently trade. If that occurs, we like to call such events a market crash, and there will be no bailing out this time, no savior from above, like the Fed, because they too are over-leveraged and tapped out. This time it will be for real, and it will not recover.
So, hang in there, buy more silver and gold and hope that your garden vegetables head for harvesting before the wheels fall completely off the federal fiasco and the world ends.
And, if you're scared, worried and/or confused by all this, take heart that you should be and that you are by no means alone. We all stand to lose everything if this doesn't go well.
Dow 12,548.37 47.38 (0.38%)
NASDAQ 2,782.31 46.16 (1.63%)
S&P 500 1,329.47 8.30 (0.62%)
NYSE Compos 8,336.59 35.08 (0.42%)
Declining issues took the measure of advancers, 4744-1843. Just in case more proof of the severity of this unannounced crisis was needed, the NASDAQ provided it in the form of flipping the new highs-new lows metric. Today, there were only 40 new highs and 67 new lows. The NYSE compressed, but did not flip (it will), with 104 new highs and 35 new lows. Volume was fairly pathetic, especially on the NYSE. In coming days and weeks, expect more and more stocks to begin selling off, first, in a somewhat orderly fashion, but as the end of QE2 approaches, in a real rush for the exits. Incidentally, banking stocks fell anywhere from 1/2 to 1% on the day. It's only fitting that the companies that led us into depression will be - again - the worst affected.
NASDAQ Volume 2,071,148,875
NYSE Volume 3,888,652,000
Commodities were a mixed bag. Crude oil slipped $2.28, to $97.37. What's of particular concern, however, is that while oil has slumped 14% over the past two weeks, the price of gasoline in the USA has fallen only ONE CENT PER GALLON. The rule of thumb used to be that the price of gas would rise or fall two to two-and-a-half cents for every dollar per barrel move in oil.
Apparently, now that the kleptocracy has gone full retard, that rule no longer applies. Gas will, from now on, cost whatever the oil cartel believes it can charge whether that price be fair, rational or based upon any measure of supply and demand.
Gold was higher earlier in the day, but now trades $5.40 lower, at $1489.80. Silver continues to be the bankers' favorite whipping boy, losing another $1.70, to trade at $33.60 [ON SALE, BUY MORE]. Under siege from HSBC and JP Morgan Chase, the world's biggest shorters of the commodity, silver should continue to experience weakness and erode down to the upper 20s in price. This is a unique buying opportunity in one of history's most manipulated and currently-undervalued pure forms of money.
It will get even more strange and perverse in global markets. Today was only the beginning.
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