Global Stock Rout Deepens; Dow Loses Another 500 Points; NASDAQ Down 16.7% Since August

The pain is spreading, and it doesn't seem to be about to abate any time soon.

According to Dow Jones Market Data, the S&P 500 closed at its lowest level since October of 2017, the NASDAQ finished at its lowest since November of 2017, while the Dow closed at lowest level since March 23. Only a rally in the final 15 minutes of trading kept the Dow from closing at its lowest level of the year.

The Dow had plunged as low as 23,456.8 with just minutes to the closing bell, but short-covering boosted the industrials more than 100 points in the final minutes of trading. Not that it matters very much, but the closing low for the year was 23,533.20. Prior to that, the Dow closed at a low of 23,271.28 on November 15, 2017.

Both of those levels are likely to be subsumed, as the stock rout about to be hit with another dose of reality. Trumping anticipation, the Fed meeting which ends Wednesday afternoon at 2:00 pm ET, is almost certain to include a 25 basis point raise to the federal funds rate. On Friday, the federal government, unable to reach a suitable compromise on President Trump's border wall, will go into a partial shutdown.

Neither event - especially the federal shutdown - is of the earth-shattering variety, but they come at a very inopportune time for the market, which is struggling to find any good news upon which to hang a rally.

Europe is either in flames (France), in a bear market (Germany), or about to enter a recession thanks to the end of the ECB's brand of QE. Beyond that, there's the uncertainty of an orderly departure from the EU by Great Britain. The official date for Britain to separate itself from the EU is March, but there have been rumblings of an extension and more than just a little unrest from the island nation to the continent concerning what effect a member country departing will have on the solidarity of remaining members.

In China and Japan, an economic slowdown is already well underway, so it appears that the sellers have reason enough to move away from stocks, and rapidly. There are just too many negatives floating around geopolitical and financial circles for all of them to be resolved in the near term. Rather, these worries turn into realities which the market doesn't appreciate, such as the actual imposition of tariffs rather than mere rumors and threats of them. The same goes for the Fed's upcoming rate hike and the government shutdown. It's become a market that's twisted the old saw into "sell the rumor, sell the news." Everything is on sale and buyers have been heading to the sidelines beginning in February. Since October, the pace has picked up noticeably, but December threatens to be the worst month of the year for the Dow, at least.

For perspective, February's loss on the Dow was 1120.19 points.

March saw a decline of 926.09.

In October the Dow lost 1341.55 points.

So far this month, the Dow is lower by 1945.58 points, making the October through December (November's gain was 426.12 points) period worse than the February-March spasm.

The NASDAQ is down 16.7% since August 29. WTI Crude was seen at $49.45 per barrel, the lowest price since September, 2017.

Throughout the years of experimental financial chicanery of QE and ZIRP, and NIRP (negative interest rate policy) by the Federal Reserve and fellow central bankers following the Great Financial Crisis (GFC) of 2007-09, the question was always, "how is this all going to end?"

Now, we have the answer, firsthand, and, as many predicted, it's not pretty and likely to get worse.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58

At the Close, Monday, December 17, 2018:
Dow Jones Industrial Average: 23,592.98, -507.53 (-2.11%)
NASDAQ: 6,753.73, -156.93 (-2.27%)
S&P 500: 2,545.94, -54.01 (-2.08%)
NYSE Composite: 11,532.12, -223.27 (-1.90%)

Stocks Slide Again; Is Market Anticipating A Trump Victory Or Government Shutdown?

Stocks fell for the second straight session, extending losses from Friday to open the new week.

Causes for the two-day selling spree are questionable, but Monday's New Home Sales release by the Commerce Department may be a good place to start. After surging in July, new home sales fell 7.6% nationally, following a July surge.

Perhaps even more troubling is that the median price of a new home sold in August was down 3.1% from July and down 5.3% from a year earlier.

That's a real problem because the home-selling business has been anything but brisk, though price increases were a good sign for the Federal Reserve, which is dying to find any hint of inflation (they love it; consumers hate it). Thus, if new homes are selling at a discount from the year earlier, one could probably safely assume that existing homes are seeing price pressure to the downside as well.

Extrapolating from what is normally regarded as the biggest single purchase in a person's life, the cost of a home (or rent) going lower is going to put the brakes on inflation in a very large way, perhaps in a way that many people looking to sell are not going to appreciate. Recall that the last housing bust was a scant eight years ago. There are still underwater homeowners in various stages of despair, though the numbers have eased significantly over the years.

A downturn in housing prices, while great for new buyers, are overall anathema for the economy. How that squares with Wall Street's ongoing love-hate affair with the Fed and the call for higher interest rates is as yet unknown, but, after last week's stall on raising rates there's the distinct possibility that the Fed has called the market's bluff for the final time.

A FOMC meeting is sceduled for the first week in November, just prior to the election, so there's almost zero probability that the Fed would raise rates at that point, upsetting not just the market but the political class as well. That leaves December as the last chance for the Fed to raise rates, and looking back at their last December hike (a market disaster), there's some thinking that the almighty Fed may not want to repeat that particular episode.

One other potentiality for the sudden downturn in stocks is that inside money is looking seriously at a Donald Trump victory in November. Tonight's first debate (of three) between the Donald and Hillary Clinton may be a watershed moment in US political history. The most recent polls have the two candidates nearly even, as Mr. Trump has eviscerated Clinton's large post-convention lead, especially in some key battleground states such as Ohio, Pennsylvania, and Florida.

Why large investors may be nervous about a Trump victory is the gnawing, belly-aching suspicion that Trump may be good for small business but bad for big business. His platform is not well-formed, but, he has used the words "crony capitalism" to his populist advantage. It's code for "no more business as usual" which means many of the larger firms (think S&P 500) that have benefited from decades of competition-crushing regulations and legislation may be looking at a more level playing field which puts small businesses on a better footing, something with which they have no relevant experience. That opens up new possibilities that favor smaller competitors taking market share from larger ones, to the ultimate detriment of the US stock market, but probably to the betterment of the overall economy.

Not withstanding any other reasons to fear a Trump presidency, the elitists on Wall Street and in the nation's capitol simply do not know what to expect. That's why they're the status quo and Donald Trump spells big danger.

Another rationale for a market downturn is the continuing drama over keeping the federal government operating past this coming Friday. The president and congress are doing their usual dance of death surrounding a continuing resolution rater than an actual budget to avoid a government shutdown and the Friday deadline is looming large.

Lastly, this being the last week of September, maybe the marketeers are gearing up for an October to remember, as has occurred on numerous occasions in the past. Market crashes and corrections always seem to pop up in the harvest month, and this one offers even more uncertainty than usual.

Blue Monday:
Dow Jones Industrial Average
18,094.83, -166.62 (-0.91%)

NASDAQ
5,257.49, -48.26 (-0.91%)

S&P 500
2,146.10, -18.59 (-0.86%)

NYSE Composite
10,624.88, -93.11 (-0.87%)

OK, Back to Work, Slaves! S&P Hits All-Time High

Grateful that the shutdown is behind us, President Disingenuous could help but take a victory lap with a press conference this morning (Why is he always late? Very annoying.) reminding all the faithful citizens that those overpaid, barely-stressed government workers are patriot and essential. Funny, we thought they furloughed the non-essential ones. And, yes, they're all getting paid for the two weeks they didn't work.

Oh, well.

People better get straight with this and quick. The debt limit was NOT increased, it was SUSPENDED, the President now having authority to issue as much debt as he pleases, unless congress disapproves via a joint resolution - which the president would veto - and the congress would need a 2/3rds majority to override, which, with the current makeup on congress, is all but impossible.

So, essentially, there is no debt limit any more, thanks to provisions in the bill supported by Mitch McConnell (that's right, numbskulls, there's no Red team or Blue team, just one team) and signed into law by the supine congress on Wednesday, October 16, 2013.

That explains why the president, when asked last night if we'll be doing this all over again in three months, quickly turned on his heels while heading for the exit after his presser, and replied simply, "No."

This also explains quite a bit about how things actually operate in the capitol. They scare us to bejeezus, and then, in the dead of the night, right before their artificial deadline, when everybody is zoned out from boredom or anxiety, throw in language that subverts and changes the way they do business.

From here on out, the president can just run the tab up as high as he likes, and congress won't make a peep about it, because, as they'll surely tell us, they can't muster the votes to override a veto. Essentially, the United States no longer has a debt limit or debt ceiling, call it what you like. It has been suspended.

Read the actual bill: http://www.cnn.com/interactive/2013/10/politics/senate-shutdown-deal/index.html

Nice job, for government work.

PS: We're screwed.

On the other hand, we all might take this advice: Why I Stopped Worrying and Learned to Love the Currency Collapse

Dow 15,371.65, -2.18 (0.01%)
Nasdaq 3,863.15, +23.71 (0.62%)
S&P 500 1,733.15, +11.61 (0.67%)
10-Yr Bond 2.59%, -0.08
NYSE Volume 3,433,423,500
Nasdaq Volume 1,931,481,625
Combined NYSE & NASDAQ Advance - Decline: 4282-1351
Combined NYSE & NASDAQ New highs - New lows: 554-41
WTI crude oil: 100.67, -1.62
Gold: 1,323.00, +40.70
Silver: 21.95, +0.582
Corn: 443.00, +0.25

Government Shutdown Day 16: This Time It May Actually Be Over

Within hours, the Senate, and then, the House of Representatives will vote on a measure to end the 15-day partial government shutdown, and raise the debt ceiling. Passage vy both houses of congress and signing by the president prior to midnight tonight, in order to beat the self-imposed, phony "deadline" is all but certain. Purportedly, the measure will keep the government operating through January 15, 2014 and increase the borrowing authority of the United States through February 7, 2014, which, for all intents and purposes won't conflict with the NFL schedule, as Super Bowl XLVIII is on February 2nd, so keep eating your Cheetos and watching the games. Panem et circenses.

Apparently, it's over. A great deal has been learned form the experience and from other readings. More will be exposed explained in subsequent posts.

Knowledge is power. Never, ever forget that.

Here's an excellent video from the Hidden Secrets of Money series that explains some of what you need to know about why the government and the Federal Reserve are acting unconstitutionally and stealing from Americans every second of every day, and, maybe, most importantly, why the debt ceiling must always be raised, lest the entire fraudulent, debt-based monetary system collapse:



Dow 15,373.83, +205.82 (1.36%)
Nasdaq 3,839.43, +45.42 (1.20%)
S&P 500 1,721.54, +23.48 (1.38%)
10-Yr Bond 2.67%, -0.05
NYSE Volume 3,546,334,750
Nasdaq Volume 1,683,306,375
Combined NYSE & NASDAQ Advance - Decline: 4304-1343
Combined NYSE & NASDAQ New highs - New lows: 482-61
WTI crude oil: 102.29, +1.08
Gold: 1,282.30, +9.10
Silver: 21.36, +0.174
Corn: 442.75, -0.75

Government Shutdown Day 15: Obama Rejects House Proposal Before Hearing It; D-Day Approaches

October has always such a great time for a market crash, why not now?

Markets didn't seem to like the antics down in DC, closing at the lows of the day. More of that may be coming into focus soon.

Obama rejected a House proposal before the Republicans even announced what it was, a sure "jump the shark (and the snark)" moment for the worst-ever US president, and that's saying quite a bit, since there have been some notoriously bad ones.

Supposedly, the nation goes over the Default Deadline (it's total BS, like everything else coming out from inside the Beltway, after midnight tomorrow. While that's not exactly a true deadline, those in or near urban centers may have a few weeks to escape to the hinterlands before all hell breaks loose, which seems to be at the heart of the government's intent.

The Obamacare rollout has to be the worst ever in the history of government programs, again, saying quite a bit, since government work is usually quite shoddy.

Here's a quote that really nails it:

Let me get this straight. We've been "gifted" with a health care plan we are forced to purchase and "taxed" if we don't, written by a committee whose chairman says he doesn't understand it, declared deficit neutral by a CBO that only underestimated SS and medicare costs by about 100 trillion dollars, give or take a few trillion, passed by a Congress that hasn't read it but exempts themselves from it, gaveled into law by a Speaker who states we have to pass the damnthing to find out what's in it, signed into law by a President who smokes, supported by a first diet guru with a derriere the size of a battleship beam, exclaimed to be a big friggindeal by a sleepy VP with Attention Deficit Disorder and a really bad plug job, considered to be such a great plan by the unions that hundreds of them supported it, then promptly applied for and were granted exemptions from it, enforced by an Attorney General with a terrible case of amnesia, policed by 16,000 new IRS agents who are "here to help you", with funding administered by a Treasury Secretary who "forgot" to pay his taxes, overseen by a Surgeon General who's obese, and financed by a country that's broke. What could possibly go wrong?

--posted as FoxNews comment by madashe11

Awesome video which explains the differences in economic philosophies of John Maynard Keynes and F.A. Hayek with a rap theme:


Dow 15,168.01, -133.25 (0.87%)
Nasdaq 3,794.01, -21.26 (0.56%)
S&P 500 1,698.06, -12.08 (0.71%)
10-Yr Bond 2.72%, +0.03
NYSE Volume 3,312,423,250
Nasdaq Volume 1,694,419,125
Combined NYSE & NASDAQ Advance - Decline: 1445-4147
Combined NYSE & NASDAQ New highs - New lows: 299-71
WTI crude oil: 101.21, -1.20
Gold: 1,273.20, -3.40
Silver: 21.19, -0.163
Corn: 443.50, +6.50

Government Shutdown Day 14: Excuse Me, But These People Are Idiots; I Withdraw My Consent

I, along with likely millions of other Americans, have had it with the sloths in Washington.

THEY DO NOT GOVERN ME.

They are, by far, the most incompetent assemblage of buffoons masquerading as political, cultural and economic leaders as has ever been encountered in hundreds of years of parliamentary-style government.

They do not have the consent of the people, as the majority of Americans able to vote have not voted for them. They are, therefore, illegitimate, and the sooner the American people awaken to this fact, the better off we shall be as a nation.

They have not come to any kind of agreement on either a continuing resolution or a raising of the debt ceiling, both of which are merely stop-gap measures, designed only to keep the status quo intact.

As far as I am concerned, they can take their deliberations and negotiations and shove them up their collective arses. They are not worthy of governing me, you or anybody on the planet.

I will no longer engage in the dubious practice of analyzing their moves, their motivations, their duplicitous machinations of public policy. The current senators, representatives in the house, the president and the supreme court, have shown, by their actions, to be incapable of carrying out their most basic duty, that being the upholding and defense of the constitution.

I will no longer abide by any federal laws nor be subject to fines or penalties in defiance of them.

I withdraw my consent.

I attest to these statements under clear mind and conscience, this fourteenth day of October, 2013.

Richard A. Gagliano
Freeman, New York

By the way, take a look at those volume figures. The system is grinding to a complete halt and there's nothing they or anybody else can do about it.

DEAL WITH IT.

Silver and corn is an excellent correlation pair trade, if you have the stomach for it.

Dow 15,301.26, +64.15 (0.42%)
Nasdaq 3,815.27, +23.40 (0.62%)
S&P 500 1,710.14, +6.94 (0.41%)
10-Yr Bond 2.69%, +0.01
NYSE Volume 2,582,783,750
Nasdaq Volume 1,451,667,000
Combined NYSE & NASDAQ Advance - Decline: 3269-2200
Combined NYSE & NASDAQ New highs - New lows: 393-51
WTI crude oil: 102.41, -0.39
Gold: 1,276.60, +8.40
Silver: 21.35, +0.095
Corn: 437.00, +3.75

Government Shutdown Day 13: Senate Talks Break Down; Negotiations Back to Square One

Hard to believe that there could be more buffoonish characters in the world than those currently heading the US federal government, those self-important, distinguished leaders who can't agree on a budget and prefer to keep sinkng the nation further and further into debt servitude rather than address the pressing problems facing the nation.

On Sunday, both sides seemed relaxed about taking a day off, the negotiations between Senate leaders McConnell and Reid having completely broken down with absolutely nothing resolved.

While the partial government shutdown (86% of the government is still on the job, but NOT getting paid) proceeds into a two-week ordeal on Monday (Columbus Day, an official holiday, BTW), Republicans and Democrats are possibly further apart than they were at the beginning of the latest fiasco.

More to come when financial markets open on Monday, which, on Wall Street, at least, is not a holiday.

Government Shutdown Day 12: Wait a Minute... Obama Rejects Republican Proposals

The stock market added more than 500 points off its Wednesday lows through the end of the week, believing that the pols in Washington had gotten their collective acts together enough to begin talking about a deal that would re-open the government and avoid a debt ceiling impasse. Most media outlets (including Money Daily) had expected a deal to be worked out by Monday.

That seems to be seriously in doubt, now.

As of Saturday afternoon, Speaker of the House, John Boehner, told his Republican caucus that the president has rejected all of his proposals.

The Washington Post reports that senate leaders Mitch McConnell (R) and Harry Reid (D) are beginning talks aimed at ending the stalemate over the government closure and raising the debt ceiling.

Even though nearly 70% of Americans (proven wrong, time and again) blame the Republican Party for shutting down the government, Thomas Sowell correctly points out that the Democrats are chiefly to blame.

So far, nothing "catastrophic" - as promised - has occurred, but, we're still only less than two weeks into this mess, which should have been handled months ago. We technically breached the debt ceiling in May, but treasury secretary Jack Lew has been raiding federal pension funds and using other "extraordinary measures" since.

The government hasn't had an actual budget since 2007, passing only continuing resolutions since then.

It's NOT over. Stay tuned.

Government Shutdown Day 11: It's Over

As usual, the Republican leadership folded like a cheap suit.

The status quo will remain.

Sorry to have gotten all worked up about it the past few weeks. It's obvious that neither party wishes to change anything.

In 1492, Christopher Columbus discovered what would be known as the "New World." Turns out, it's been so plundered and beaten and exploited that now it looks just like the Old World, a feudal socialistic state which benefits old money and the oligarchy atop the human pyramid.

Good luck with that.

Dow 15,237.11. +111.04 (0.73%)
Nasdaq 3,791.87, +31.13 (0.83%)
S&P 500 1,703.20, +10.64 (0.63%)
10-Yr Bond 2.68% 0.00
NYSE Volume 2,942,500,500
Nasdaq Volume 1,721,708,875
Combined NYSE & NASDAQ Advance - Decline: 4125-1472
Combined NYSE & NASDAQ New highs - New lows: 343-43
WTI crude oil: 102.02, -0.99
Gold: 1,268.20, -28.70
Silver: 21.26, -0.637
Corn: 433.25, -5.00

Government Shutdown Day 10: Boehner, Republicans Cave to Scare Pressure?; Stocks Rally

After Treasury Secretary Jack Lew scared the begeezus out of congress and the public this morning in his congressional testimony, Speaker of the house, John Boehner went back to his caucus and outlined a compromise to be presented to senate Democrats and the president.

It goes something like this: Republicans will agree to an extension (raise) of the debt limit for six weeks. whether or not the government re-opens is still an open question. Republican leaders meet at the White House at 4:30 pm EDT (note: after markets are closed).

Essentially, the Republicans will propose a six-week extension of the debt ceiling, in order to avoid "default," which is nothing but a scarecrow argument since the US government never was and probably never will be anywhere close to defaulting on any of its outstanding debt, otherwise known as treasury obligations, bonds. bills and notes, because the government takes in 10 times the amount of money that it owes in interest. Paying down the principal may be another thing altogether, but that's not part and parcel of the "default" argument.

Stocks had their second-best session of the year, eclipsing the gains from the first full session of 2013, on January 2nd, but, these gains were based on speculation that the politicians would reach a compromise solution on the debt ceiling and a cntinuing resolution to fund the government. At this writing, neither condition has been met.

Why the timing of today's meeting at the White House is important is because If John Boehner emerges with a scowl and says that they still have differences to iron out, stocks could erase some, all or more of today's gains on Friday. So, the various balls being juggled by the House, Senate and the White House are still very up in the air, which is why playing stocks is sometimes called "investing," and more often defined as "speculation." Today is all speculation.

This brief summary of a portion of Goethe's Faust underscores the nature of today's Western government dilemma:

Accompanied by Mephistopheles, Faust attends the court of a ruler whose empire is facing financial ruin because of profligate government spending. Rather than urging the emperor to be more fiscally responsible, Mephistopheles—disguised, revealingly, as a court jester—suggests a different approach, one with disturbing parallels to our own age.

Noting that the empire’s currency is gold, Mephistopheles maintains there is surely plenty of undiscovered gold underneath the earth belonging to the emperor. Thus, he argues, the emperor can issue promissory notes for the value of this yet-to-be-found gold, thereby generating fresh monetary resources for the government and solving its debt problems.

Not surprisingly, the emperor and his treasurer are delighted with this idea. It means the monarch can avoid making hard economic choices while simultaneously providing the empire with desperately needed currency. Mephistopheles subsequently deluges the court with paper money, and Faust is praised by emperor and commoner alike.

The results, however, are not what are expected. First, the issuance of paper money does not solve the emperor’s spending problems. Instead the ruler and his court become even more extravagant, knowing they can always print more paper money to cover their ever-growing expenses. Second, the devil has subtly but fundamentally changed the basis of the empire’s currency. Instead of being rooted in the solidity offered by a tangible and valued asset, the currency is now based on flimsy paper promises. Thus long-term monetary stability and powerful restraints on extravagant government spending are sacrificed for short-term gain.

Goethe finished writing the second part of Faust in 1832.

In other, national security, news, this report, "$2 Billion NSA Spy Center is Going Up in Flames," caught our attention. Maybe there is a god that punishes evil-doers. Or, maybe karma has a nasty cumulative side=effect?

Dow 15,126.07, +323.09 (2.18%)
Nasdaq 3,760.75, +82.97 (2.26%)
S&P 500 1,692.56, +36.16 (2.18%)
10-Yr Bond 2.69%, +0.04
NYSE Volume 3,368,936,000
Nasdaq Volume 1,814,198,000
Combined NYSE & NASDAQ Advance - Decline: 4773-857
Combined NYSE & NASDAQ New highs - New lows: 204-34
WTI crude oil: 103.01, +1.40
Gold: 1,296.90, -10.30
Silver: 21.90, +0.005
Corn: 438.25, -5.25

Government Shutdown Day 9: Wall Street Still Skeptical or In Denial

As is usually the case with the Wall Street racketeers traders, they continue to play their stock and options games despite the shenanigans going about in Washington DC.

One can hardly blame them, because if the government were to actually shut down or default on debt obligations (a very low probability of that ever happening, despite scare tactics by liberal news outlets), the businesses they routinely trade in and around would become even less-encumbered by laws and regulations and gain even more outsized market share than many already have.

It's the oddity of the Wall Street/Washington connection: The crooks on wall Street don't really need the criminals in Washington; they more or less use them, via campaign contributions, to enact legislation that either enhances their market/tax/competitive position or cripples others who might think about competing with them. Washington politicians have become so overly dependent upon Wall Street and their highly-paid K Street lobbyists for campaign and other favoritism money and gifts that they will do just about anything to please them, including shutting the entire federal government down, thus removing themselves from their vaunted positions of power. As foolish as that may sound, that's exactly what the politicians in Washington are doing at the present time.

They probably don't need to worry, however. The elections are bought and sold by the power brokers on Wall Street, the results easily manufactured to produce any outcome they desire via their control over the electronic voting machines.

If all of this sounds like the stuff of conspiracy, well, that's because it is. Big business, the media and the federal government have been in bed with each other so long, it's almost incestuous. Politicians have long ago given up on the idea of representing their geographically-assigned constituents; they are aligned with special interests and businesses who best line their pockets.

And that is why nothing much happened today in Washington or on Wall Street, though behind the scenes, bond markets are beginning to look a little worried, stretched, and, in some cases, like at the low end of the yield curve, inverted, which, as anyone with historical knowledge will readily affirm, is a 100% sure sign of an oncoming recession.

That's somewhat of a bad joke, since many people believe we're already in a recession, having never recovered from the financial tsunami that came about in the fall of 2008. There's a distinct term for what heppens when a recession occurs within an ongoing recession.

It's called a depression, and ours is just about to get started.

Not to be overlooked, President Obama officially nominated Janet Yellen - known as the most dovish of the dove-laden Federal Reserve board of governors - to be the next Chairwoman of the Federal Reserve. Good riddance to Ben Bernanke, and thanks for fu--ing up our country.

And, yes, the number of new highs was eclipsed by new lows for the second straight session. Hold onto your hats, ladies and gentlemen. This is going to be one wild ride!

Dow 14,802.98, +26.45 (0.18%)
Nasdaq 3,677.78, -17.06 (0.46%)
S&P 500 1,656.40, +0.95 (0.06%)
10-Yr Bond 2.65%, +0.01
NYSE Volume 3,566,030,500
Nasdaq Volume 2,159,485,000
Combined NYSE & NASDAQ Advance - Decline: 2541-2985
Combined NYSE & NASDAQ New highs - New lows: 60-137
WTI crude oil: 101.61, -1.88
Gold: 1,307.20, -17.40
Silver: 21.89, -0.552
Corn: 443.50, +1.75

Government Shutdown Day 8: Overcoming Fears and Tears

Are average Americans ready for the fight of their lives, one which could, quite literally be for their lives?

Surely, many are unprepared. Most have little or no savings, don't have basic survival skills, wouldn't know a dandelion (good food) from a jimson (poisonous) and many rely heavily on the federal government as their lifeline.

THE WELFARE STATE OF THE USA IS ABOUT TO END.

Read that again, you disability recipients, welfare check hoarders, farm subsidy leeches, overpaid government employees, social security dependents, corporate tax cheaters, food stamps suckers, members of the House of Representatives, Senators and Mr. President.

Friends, Romans, countrymen, lend me your ears. I come not to bury Obama, but to praise him.

Clear out the biases already developed over his illegitimacy, stupidity, narcissism, etc., for a moment and hear me out. Mr. President is doing the best thing that we, holders of gold and silver with stores of guns, ammo and food, could have ever hoped for by refusing to negotiate over either the shutdown or the debt ceiling, holding the strawman Obamacare over everyone's heads.

Isn't a severe downsizing of the US government and destruction of the Federal Reserve what we have longed for these past five, six years? Obama is bringing it to us, albeit in a haphazard manner, although one might suspect that such earth-shaking events don't happen neatly, anyway.

By refusing to negotiate on anything, in addition to having unblinking adversaries in the House of Representatives (our beloved Tea Partiers), the president, with an assist from congress, has already partially shut down the government and has paved the way for a no-win condition over the debt ceiling. The genii in the White House (aka Jack Lew and his buddies) and at the Fed have no doubt already figured out the next moves. When the debt ceiling debate fails to produce a responsible result, the government will begin to prioritize spending, paying off creditors first (interest on the debt), and probably Social Security and military pay (not necessarily in that order) next, and so on down the line.

The US federal government can, and will, proceed in this manner for quite some time, slimming down, shutting agencies, cutting budgets by blunt force and actually becoming somewhat fiscally responsible. During this period, there will be considerable chaos, available to be exploited by none other than those of us smart enough to do so. Price discovery, for everything from real estate to peaches, will be a matter of making the best deal available, and many of us are adept at deal-making. Government employees may be furloughed, laid off or permanently disenfranchised, their pensions slashed, and other government programs (can you spell FARM SUBSIDIES?) will have to be eliminated in order to cut wasteful spending and/or increase revenue.

At the same time, the government will become more and more dysfunctional, having lost its most basic trapping of power, the consent of the governed, in many places, particularly large urban centers and deep rural communities. If martial law becomes the norm, how long and how well will that be enforced in a country chock-full of gun-toting, liberty-loving individualistic patriots and their new-to-the-party brethren?

There will be chaos. But eventually, there will be peace and a new understanding that the federal government is powerless over the needs of individual states, and even counties and other municipalities. A new form of feudalism or tribalism may be the result, but the bottom line is that the federal government will be a shadow of its former self, individuals and communities will forge new leaderships, apart and away from government, which will (and in many cases, already is) be viewed as not the solution, but the problem.

People will become more self-reliant, industrious and unburdened by regulations and authority. A new America will emerge, one that is less-centralized, more progressive (I know that's a dirty word to some), less encumbered by regulation and overall, more free, and freedom is what America is all about.

Let's get behind our president. NO NEGOTIATIONS. Keep chanting. Keep the government closed. Begin the process of downsizing and prioritizing spending. Stop borrowing. How will the Fed issue new debt-money if the Treasury can't borrow? There will be progress against the Federal Reserve, but not victory, until we rise up and smite them, refuse their fiat and return to a gold standard or gold/silver standard.

Real money. And all because the politicians played a game of chicken which neither can win.

We all have reasons to doubt or criticize the president, but, maybe, just maybe, he's willing to risk his reputation and his life in order to be the transformational figure he promised. I know it's a stretch, but maybe he's a wickedly wise politician and playing the banksters for all they're worth, willing to shut down the government and destroy the economy in order to save it all. What comes out the other side is largely up to him, but also well within our grasp.

THIS is OUR MOMENT. Carpe Diem!

Both Obama and House Speaker Boehner took to the podium today and made courtesy remarks, but still haven't met. Short-attention span theater continues. The markets began to worry in earnest, the major indices closing at the lows of the session. The A-D line continued to deteriorate, with losers outpacing gainers by a 9-2 margin and new lows exceeded new highs for the first time since mid-August.

The market is beginning to roll over. The phony leaders are running out of time. The world won't end, but the obtrusive, invasive, bloated, absurd federal government is creaking, cracking and about to fall over.

Good times, indeed.

Dow 14,776.53, -159.71 (1.07%)
Nasdaq 3,694.83, -75.54 (2.00%)
S&P 500 1,655.45, -20.67 (1.23%)
10-Yr Bond 2.64% 0.00
NYSE Volume 3,546,719,000
Nasdaq Volume 2,037,821,875
Combined NYSE & NASDAQ Advance - Decline: 1085-4474
Combined NYSE & NASDAQ New highs - New lows: 95-101
WTI crude oil: 103.49, +0.46
Gold: 1,324.60, 0.50
Silver: 22.44, +0.057
Corn: 441.75, -7.50

Government Shutdown Day 7: Debt Ceiling Begins to Take Precedence; Silver-Corn Trade Plummets

Remember a few weeks ago, when everybody (including Money Daily) was saying that the government wouldn't shut down? And then, when it did, all the pundits and "important" people saying it would only last a day or two?

Well, those predictions were all wrong. Now, what we're hearing is that the shutdown (which isn't really a shutdown, because 83% of the federal government is up and running) will meld into the debt ceiling deadline, which is October 17, but, but, but, some of the same predictors from before are now saying that there's no chance the politicians won't have a deal on the debt ceiling, or that the government won't go into default.

Wrong, wrong, wrong. The two sides are as far apart, ideologically, as they were a week ago, two weeks ago, two months ago, plus they have the added kicker of ObamaCare, the federal heath insurance program this is largely a fiasco of proportions only the federal government could accomplish, the main website for signing up only partially-functional, replete with glitches, shutdowns, "waiting rooms," and other assorted disasters. It is undeniably the worst rollout of any federal program in living memory (*some of our editors are pretty old, but don't predate WWII).

Imagine if this government were in charge of planning and executing D-Day, the invasion of Normandy which eventually resulted in ending World War II? Hitler would have won, after having laughed his tail off at our incompetence.

So, think that the US government won't violate its citizens again by exceeding the deadline for raising the debt limit? Think again. They've already done so. Treasury Secretary Jack Lew has been employing "extraordinary measures" - that's Wahington-speak for raiding the pension funds of federal employees - since mid-August and those funds are running out fast.

If the government doesn't raise the debt limit by October 17, nobody will notice at first, except maybe some of those future federal pensioners, whose trust funds would remain empty and funded only at the behest of congressional appropriation prioritization. In other words, federal employees might end up without pensions - or with greatly reduced pensions - should the US decide that their funding is not a top priority. Suppose there's a war, a natural disaster, or other unforeseen event that would require quick funding by the government? What might happen to those unfunded pensions?

Of course, most people see that condition as far-fetched, but, in reality, it is closer than one would want to believe. The various federal employee trust funds have already been drained, just like Social Security and Medicare, each of which poses an even more serious, existential problem than the current government funding issues.

So, eventually, all of this will be resolved, either by wise political will or abject bungling and failure, which is what we have now. Anyone even remotely believing that our current crop of grade B politicians will do anything more than apply remedial, short-term fixes to long-term problems is kidding themselves and not approaching the situation with the required seriousness.

The US government, because of 100 years of debt servitude to the Federal Reserve, willful neglect of fiscal prudence and outright incompetence has been pushed to the brink of disaster, a disaster which took decades to create, but which can come crashing down in a matter of days, and those days are numbered.

Despite the various voices in the media - especially on CNBC - who publicly appear to be not at all concerned about the government shutdown and debt ceiling issues, are privately fearful that the politicians are either inept and incapable of fixing the mess they've created or have planed the entire charade all along.

We will find out soon enough.

As for the public markets of the financial world, a state of semi-paralysis has taken hold. The usual buy-on-the-dip screamers have been silenced, now merely whispering about possibly buying a few selected stocks, as volume - already at lowered levels - has cratered, the result of relentless stock buybacks over the past four years and a market juiced by the funny money of QE and ZIRP from the Federal Reserve. There's less stock available to purchase, and most of it is overpriced, with average P/E ratios in the 16-17 range, a touch high for an economy embroiled in a severe recession or possible depression.

Since the government shutdown began officially on Tuesday, October 1, the Dow is down 194 points, most of that accounted for just today, and, bear in mind that the Dow kicked out three losing companies and replaced them with high-fliers Goldman Sachs, Nike and Visa just two weeks ago. The usually-ebullient NASDAQ is off by just 1.10 points and the S&P has shed a little more than 15 points, again, most of that being gnawed off today.

What's more worrying for stock junkies is that the A-D line took a severe downturn today, with losers outpacing gainers by a 7-2 margin and the gap between stocks making new 52-week highs and lows was the slightest since mid-August.

Market internals are indicating a degree of concern, but the mouthpieces for financial firms aren't openly expressing of it, yet.

For those taking a more esoteric view, consider the relationship of silver to corn. According to no less an authority as Adam Smith (yes, the one who wrote The Wealth of Nations in 1776), a decline in the real price of corn, expressed in silver (i.e., one could buy more corn for the same amount of silver or could buy the same amount of corn for less silver), is a certain sign of deflation, and that particular metric has been bleeding all summer, as the price of corn has declined while silver - even though its price is substantially manipulated to the downside - has remained stuck in a range of $21-23/ounce.

The reality is that without central banks and their agents stomping down on the price of silver and gold, the deflationists would have an irrefutable argument that the economy of the United States is close to, if not already in, a severe depression.

Dow 14,936.24, -136.34 (0.90%)
Nasdaq 3,770.38, -37.38 (0.98%)
S&P 500 1,676.12, -14.38 (0.85%)
10-Yr Bond 2.63%, -0.02
NYSE Volume 2,676,265,500
Nasdaq Volume 1,452,687,750
Combined NYSE & NASDAQ Advance - Decline: 1321-4288
Combined NYSE & NASDAQ New highs - New lows: 135-67
WTI crude oil: 103.03, -0.81
Gold: 1,325.10, +15.20
Silver: 22.39, +0.634
Corn: 449.25, +6.00

Government Shutdown Day 6: More Questions Than Answers

This post is essentially a placeholder, since the bogus (like everything else this government does) shutdown is now in its sixth day.

According to published reports, Defense Secretary Chuck Hagel has found some loophole in the law that will allow for some 400,000 Pentagon employees to go back to work on Monday. Also, the House unanimously passed a bill saying that all furloughed workers would receive full pay for the days they were off.

So, essentially, since the Fed creates money out of thin air and the Treasury can issue bonds to fund anything they want because the Fed will buy them, the government can continue on indefinitely, with or without proper funding.

That is, until they can't. It won't be long. The collapse - a mathematical certainty - of the US economy is proceeding along the proper path. It may not end next week. It should have ended in 2008, but, be assured, end it will.

Au revoir.

Government Shutdown Day 5: No Progress, $1.5 Billion Gone from GDP

The markets are closed, as usual, but not so usual, the federal government is still a dysfunctional mess of political miscalculation on a massive scale.

Costing something on the order of $300 million a day, the five-day closure now amounts to $1.5 billion, and is beginning to infect the private sector, as expected.

As the Chicago Tribune reports, Lockheed Martin announced layoffs of 3000 employees and noted that there could be more to come if the government doesn't get up and running soon.

Not widely reported are defections from the military, with active service men and women refusing to show up for weekend assignments due to the government withholding pay. Republicans in the House offered a bill that would have funded the military, but the Senate would not even consider what some are calling "piecemeal efforts" to keep some of the plates spinning.

In Washington, there were no efforts to reach any kind of compromise or to even discuss getting the federal government back to being a functioning government (truth is, it hasn't been functioning very well for some time now).

The shutdown looks like it will easily extend through the middle of next week and probably into the weekend. With the debt ceiling looming and the government running out of cash, the politicians have done the unthinkable: take themselves out of their own cushy jobs, if only temporarily.

Americans have been polled, and, by a margin of roughly 3-to-1 want the government to get back to work.

Too bad so many don't see the upside.

This has been a special report from Money Daily on the government shutdown. Now, back to football.

Government Shutdown Day 4: Wal Street Puts on Happy Face

Why bother?

If Wall Street is going to bid up equities and sell off bonds, as it did today, when the government is at least partially shut down (and completely dysfunctional) then what is the point of even trying to explain all this nonsense.

Get your money (federal reserve notes: actually debt instruments) out of banks and into your own hands, buy some gold or silver if you haven't lately, gas up, buy lots of non-perishable food, get firewood ready, and hunker down.

The storm is coming and the elitists in finance and government don't want you to know about it.

After all, the CEOs of major banks were at the White House the other day and these banks are increasing the amount of cash in ATM machines, anticipating such a run, so you don't want to be shut out when the magic money machine runs out of cash, do you?

With the government intent upon remaining somewhat closed up, the debt ceiling approaching in a hurry and the morons on CNBC chanting, "this is a great buying opportunity," can a nationwide bank holiday be far behind?

One wonders whether PayPal will still work. In the meantime, we're taking the rest of the day off to polish our gold, silver and guns and, oh, yeah, withdraw all our money from the bank. Don't want to leave it all sitting there collecting dust over the weekend. Now, if it were collecting interest, maybe that would be different.

It's the American way, after all.

And, just in case you haven't been paying attention, today's trading volume was among the lowest of the year.

This just isn't good, folks.

Don't worry. Carry on.

Dow 15,072.58, +76.10 (0.51%)
Nasdaq 3,807.75, +33.41 (0.89%)
S&P 500 1,690.50, +11.84 (0.71%)
10-Yr Bond 2.65%, +0.05
NYSE Volume 2,793,792,500
Nasdaq Volume 1,518,519,250
Combined NYSE & NASDAQ Advance - Decline: 3738-1824
Combined NYSE & NASDAQ New highs - New lows: 273-51
WTI crude oil: 103.84, +0.53
Gold: 1,309.90, -7.70
Silver: 21.75, -0.034

Government Shutdown Day 3: Wall Street Still Doesn't Get It

As the federal government shutdown slid into its third day, evidence that people are beginning to get a little nervous over not only the continuing budget/continuing resolution/ObamaCare impasse, but also with the looming deadline on the debt ceiling, has begun to emerge.

Beginning with Warren Buffet's declaration this morning on CNBC, that the debt ceiling issue was nothing worrisome (meaning: he's really concerned and selling select shares of select companies), word around Wall Street and in Washington continued to forecast a longer and longer government shutdown, possibly extending through two weeks.

The problem is that the politicians have backed themselves into corners from which they cannot escape, especially the president, who steadfastly is sticking with his pledge that he won't negotiate over ObamaCare.

The Republicans and Democrats will not move from their well-staked-out positions, so America suffers.

Here's hoping that they forget how to start it back up again.

Consequently, stocks took a hit for the second straight session; bonds caught a bit of a bid.

Somewhat of a correction from yesterday's post, where Money Daily stated the government was losing $100 million a day for each day of the shutdown. Make that, more like $300,000. As for productivity, well, it's government work, so it's actually not productive at all.

Dow 14,996.48, -136.66 (0.90%)
Nasdaq 3,774.34, -40.68 (1.07%)
S&P 500 1,678.66, -15.21 (0.90%)
10-Yr Note 2.61%, -0.02
NYSE Volume 3,224,199,000
Nasdaq Volume 1,825,629,875
Combined NYSE & NASDAQ Advance - Decline: 1310-4257
Combined NYSE & NASDAQ New highs - New lows: 217-63
WTI crude oil: 103.31, -0.79
Gold: 1,317.60, -3.10
Silver: 21.79, -0.111

Government Shutdown Day 2: A Little More of a Serious Mood

Yesterday, Money Daily closed its post with the thought that bad things happen when people are complacent.

Today, some of those bad things may have already begun and the complacency of yesterday has turned to concern, today.

Over the previous weekend and into Monday and Tuesday, conventional thinking (the kind that usually amounts to being dead, 100% incorrect) was that the shutdown would last a day or two. Today, there's a growing consensus that the US government shutdown will linger at least until the end of this week, probably through next week and quite possibly meld right into the debt ceiling deadline of October 17, as Treasury Secretary Jack Lew has pegged that date at which time the US will have to start picking and choosing which bills to pay, emergency measures exhausted.

It's estimated that the US economy is losing $100 million per day for each day the government shutdown - partial as it may be - continues. There's another school of thought that believes the number is higher and the cumulative effect will bring the total to much more damage than $100 million a day, as the prolonged furloughs of non-essential government employees drags on and uncertainty over the economy in general grows deeper, mistrust of the government extends and decision begin to be made with the thought of a govern-less world a possibility.

Businesses will become more and more reluctant to spend, individuals will be frightened (which is probably the intention of this entire charade, anyhow), systems will begin to break down and the fabric of society will unravel even further than it has over the last five years of crisis management.

It appears that the politicians are steadfast in their beliefs and unbudging, so this could get a bit more serious every day.

Hang on to cash, gold, silver, gasoline, extra stores of food, water and shelter.

Good luck. (There may be a bank holiday coming your way.)

Dow 15,133.14, -58.56 (0.39%)
Nasdaq 3,815.02, -2.96 (0.08%)
S&P 500 1,693.87, -1.13 (0.07%)
10-Yr Note 2.63%, -0.02
NYSE Volume 3,173,658,500
Nasdaq Volume 1,710,665,875
Combined NYSE & NASDAQ Advance - Decline: 2314-3232
Combined NYSE & NASDAQ New highs - New lows: 280-55
WTI crude oil: 104.10, +2.06
Gold: 1,320.70, +34.60
Silver: 21.90, +0.722

Government Shutdown Day One: Who Cares?

Believing that the federal government shutdown - which began at 12:00:01 EDT Tuesday - would have no ill effects on the economy in general or stocks in particular, investors piled into high-risk assets, with the NASDAQ marking one of its best daily gains of the year.

Alternatively and somewhat counter-intuitively, precious metals sold off dramatically, with gold and silver monkey-hammered back down in an effort by the controlling cartel of central bankers to assure the world that all was safe, despite the globe's biggest and most important economy beset by problems stemming from its politicians.

The overall tone from the pols in the nation's capital is so unambiguously passe as to create some doubt that the impasse over the continuing resolution and the poorly-executed launch of state-by-state health insurance marketplaces for ObamaCare are anything but passing glitches that will soon be amended, such as Wall Street would like to believe.

However, every day that the government is shut down creates less-favorable conditions for the continued success of the world's reserve currency, the US Dollar, which fell modestly, according to the Dollar Index (DXY). Confidence in the leadership in Washington has hit an all-time low, not just from the general population but in foreign capitals as well.

Theatrics aside, Republicans and Democrats appear very far apart ideologically, though the perception one gets from idea leaders in the media is that the shutdown will last only a very few days, which is somewhat hard to believe, considering that the two sides aren't even communicating with each other, everybody in Washington seemingly on an unexpected holiday.

This farce of politics and money will not end well for those in power. The American public has had just about enough from Washington politicians, whose hubris knows no bounds and who operate without any sense of decency, wishing only to score political points in order to cripple the opposition.

With any luck, the politicians will not find a way out of the morass of deceit and despair they have wrought. And now, the countdown to the upcoming debt ceiling deadline can begin. October 17, the day upon which the government will supposedly run out of money, is not far off.

When people become complacent, trouble usually comes looking.

Dow 15,191.70, +62.03 (0.41%)
Nasdaq 3,817.98, +46.50 (1.23%)
S&P 500 1,695.00, +13.45 (0.80%)
10-Yr Bond 2.65%, +0.03
NYSE Volume 3,181,675,250
Nasdaq Volume 1,749,596,125
Combined NYSE & NASDAQ Advance - Decline: 3998-1566
Combined NYSE & NASDAQ New highs - New lows: 416-41
WTI crude oil: 102.04, -0.29
Gold: 1,286.10, -40.90
Silver: 21.18, -0.533

Front-running the Government Shutdown... from Behind

In keeping with the spirit of the day, the staff and writers of Money Daily took most of Monday off, but will be back with a better-than-bare-bones edition on Tuesday, probably.

Since the government shutdown of all "non-essential" services (and there you have it in a nutshell, if some government services are non-essential, why have them at all? A good place to start cutting.) is part farce and part fantasy, we shall endeavor to not overly satirize the proceedings.

Mail will still be delivered, planes will fly (and land, we hope), and welfare checks and food stamps will continue to supply the Free Sh-T Army.

Nothing much will change in any large way, unless the shutdown lasts for more than a few weeks and bumps up against the semi-artificial deadline set by Treasury Secretary Jack Lew of October 17, the date at which the government will run out of money and not be able to borrow more.

Then it may be time to break out the MREs and bottled water.

Monday's Results (pre-shutdown)
Dow 15,129.67, -128.57 (0.84%)
Nasdaq 3,771.48, -10.12 (0.27%)
S&P 500 1,681.55, -10.20 (0.60%)
10-Yr Bond 2.6150%, -0.0040
WTI crude oil: 102.33, -0.54
Gold: 1,327.00, -12.20
Silver: 21.71, -0.123