Showing posts with label fiscal cliff. Show all posts
Showing posts with label fiscal cliff. Show all posts

Monday, January 7, 2013

Something is Broken

Ever get that nagging feeling that something isn't quite right, you don't know what it is, but you're sure something important is broken, and it's going to cause problems?

That seemed to be the sense of things today. This marking the first day of the first full week of trading, and, after that spectacular, fiscal-cliff-solution-induced-rally last Wednesday, stocks have been just spinning their wheels.

Maybe it's the end of the holidays and getting back to reality, or, for those of us up in the North country, the dreary, dank, dark and depressing days of winter (only 73 mare days until Spring!), but there's a problem out there lurking that's bigger than the upcoming debt ceiling fight, the next unemployment report or whether we dip back into a recession.

It's the kind of feeling that pervaded Germany during the rise of Naziism, in which people didn't trust each other any more, everybody was on guard against some unseen, invisible, but just under the surface threat.

To put one's finger on it exactly would be a stroke of luck - or genius - but let's take a stab at it.

The house of cards the US has built up after the fall of the TBTF banks back in 2008 seems to be crumbling, and, like a house of cards, it starts at the top, where those on the bottom or even in the middle, can't see the collapse coming.

After the nonsensical debate and drawn-out rhetoric over the so-called "fiscal cliff," congress delivered a solution that was only half a solution, that being the taxation part. The hard part, cutting spending, is still ahead, and anybody who knows anything about how Washington has worked for the past thirty years knows that the congress and the president aren't willing or able to cut programs in any meaningful way.

So, the political structure at the top of the pyramidical structure called our society isn't working, and that's going to cause problems down below. The bankers, politicians and corporations currently at the top of the food chain don't seem to have adequate answers, only mildly appeasing artical solutions and glad=handing all around while the suppress and repress the rest of society. Eventually, one little slip up, one mistake, one good blow of wind from out of the blue takes the top cards off the structure and down tumbles everything into a massive, wrecked heap.

How long can the nation survive with clowns twirling dishes on stoks and juggling balls in the air at the top of the structure? So far, about four years, but it hasn't been pretty. There's just this feeling that it's all going to get worse.

Maybe if we turned Dow theory on its head, and noticed that the transportation average had moved to a technical, secular bear market back in July and August of 2011, and hasn't recovered to exceed the previous highs, and the Industrials since then have made a concerted, upside move based on nothing but short-covering rallies, asset inflation thanks to continual pumping by the Federal Reserve, that would give us all a clue to where things are going.

Or, maybe the Federal Reserve, the OCC and Fannie Mae all settling up with the banks on the first Monday of the New Year is a what? Coincidence? And nobody is concerned?

Maybe it's the breakdown of the relationship between the A-D line and the new highs vs. new lows. Maybe it's the flu. Maybe it's gold being constantly hammered down, or silver stuck in perpetuity at $30/ounce. And, maybe those are just symptoms.

Something is broken, for sure. Nobody is sure exactly what it is, but it could be everything.

Dow 13,384.29, -50.92 (0.38%)
NASDAQ 3,098.81, -2.85 (0.09%)
S&P 500 1,461.89, -4.58 (0.31%)
NYSE Composite 8,636.91, -30.77 (0.35%)
NASDAQ Volume 1,702,506,875
NYSE Volume 3,513,878,500
Combined NYSE & NASDAQ Advance - Decline: 2852-3657
Combined NYSE & NASDAQ New highs - New lows: 286-15
WTI crude oil: 93.19, +0.10
Gold: 1,646.30, -2.60
Silver: 30.08, +0.136

Wednesday, January 2, 2013

Washington Comes Alive Past Last Minute; Fiscal Cliff Averted... for Now; Wall Street Rejoices

Well, Money Daily was right. There was no fiscal cliff deal by midnight, December 31, 2012, but, those wily congress-critters once again outfoxed everyone by playing past the deadline and passing a bill that was, by and large, a deal, though it certainly didn't address any long-term issues, nor did it include any meaningful spending cuts.

Congress and the president - now back in Hawaii, playing golf, presumably - made sure that all the handouts would continue being handed out, extending unemployment benefits and keeping the Bush tax cuts in place for individuals earning less than $400,000 per year ($450,000 for couples), while raising the tax on those making more than that from 35% to 39.6%, which is a pretty big bite.

The "deal" also raised capital gains taxes from 15% to 20%, but only on those earning more than $400,000, a bit of relief for the 99% gang.

Scoring by the Congressional Budget Office and others put the cost of this deal at an increase of some $4 trillion to be added to the national debt over the next ten years. Nice job, boys.

Everybody's taxes will go up, however, because the deal did not extend the 2% tax holiday on Social Security payroll deductions, which was cut from 6.2% to 4.2% last year and will go back up to 6.2% this year. So, if you make $1000 a week, the feds will be taking an extra $20 out of every paycheck.

Foreclosures and short sales will continue to prosper in 2013, as the deal extended the 2007 Mortgage Forgiveness Debt Relief Act, which allows homeowners who experience a debt reduction through mortgage principal forgiveness or a short sale are exempt from being taxed on the forgiven amount.

Yippie! Our "Free houses for everyone!" motto lives on.

Wall Street was enthralled by the deal, sending stocks rocketing to their biggest gains of the year (Money Daily expects this will be the largest one-day gain for stocks in 2013, so bookmark this page now!).

The major indices made back all of the losses they took in the final ten trading days of 2012, and then some in just the first trading day of the new year.

At issue is how long the rally will last, whether this is just a one-day wonder or whether stocks can still remain the darlings of investors with 4th quarter earnings season on the horizon and the new congress (and same old president) having to deal with sequestration, deficit reduction and a debt limit increase within 60 days.

Since, according to Treasury Secretary Tim Geithner, we've already exceeded the debt limit, the feds will be borrowing from government pension funds to fund the government in the interim. A huge fight is ensured in February, as congress, if the latest fiasco offers any clue, won't want to deal with these issues until late in the game.

For now, though, roll with it. The Federal Reserve has the government's back, standing at the ready to print billions more in greenbacks at the hint of any troublesome developments.

Along with equities, expect everything else to keep getting pricier because there's really no easy way out of the monetary fix we're in. Next week, when life returns somewhat to normal, the angst will reemerge.

BTW: Money Daily was actually correct in predicting that everybody's taxes would go up under any kind of deal. They did. Check your paycheck in coming weeks for proof.

Dow 13,412.55, +308.41 (2.35%)
NASDAQ 3,112.26, +92.75 (3.07%)
S&P 500 1,462.42, +36.23 (2.54%)
NYSE Composite 8,631.18, +187.67 (2.22%)
NASDAQ Volume 2,071,100,625
NYSE Volume 4,634,567,000
Combined NYSE & NASDAQ Advance - Decline: 5798-863 (wOW!)
Combined NYSE & NASDAQ New highs - New lows: 679-21 (WOW! again)
WTI crude oil: 93.12, +1.30
Gold: 1,688.80, +13.00
Silver: 31.01, +0.78

Friday, December 28, 2012

America, Land of the Handout, Home of the Loser, by the Millions

Face it Americans, you've been suckered.

There's not going to be any "grand bargain," that's for sure, and any deal that gets done either over the weekend or on Monday, December 31, at the last possible minute, is going to fall well short of even the most pessimistic possible outcomes.

Money Daily has been saying all along that the deal always was to have no deal. The President, John Boehner, and all the other "leaders" in congress have been acting through this entire sickening tableau.

When and if some kind of resolution is arrived at, there will be very few happy about it. Almost everybody's taxes are going to rise, along with the 2% contribution to Social Security that was conveniently "excused" in 2012.

Washington is a complete clown show. If the American public had any kind of guts, the protests would surround the entirety of the mall, the thieves would be summarily kicked down the steps of the capitol and bankers would be hung from the nearest lampposts.

But that's not going to happen. Americans are too easily bought off (the number of people collecting food stamps, social security and other entitlements are numb and only want the checks and freebies to keep rolling in. Some day, those will stop because the government - at the behest of the international cartel of bankers (central and otherwise) - holds all the cards.

This is a sorry way to end the week. Wall Street has only begun to express their displeasure and discontent, with markets selling off for the fourth consecutive session, today's being the largest, after President Obama met with congressional leaders at the White House and once again did NOTHING.


If this is what you want, you've gotten it, in spades, and deservedly so, especially the baby boomers, some of whom fought the establishment in the 60s, more of whom stood idly by and did nothing, other than joining the status quo as adults.These are the fruits of apathy and "let the other guy do it" mentality.

2013 will be the year of every man, woman and child to fend for oneself.

Dow 12,938.11, -158.20 (1.21%)
NASDAQ 2,960.31, -25.60 (0.86%)
S&P 500 1,402.43, -15.67 (1.10%)
NYSE Composite 8,316.17, -83.66 (1.00%)
NASDAQ Volume 1,120,378,875
NYSE Volume 2,407,416,000
Combined NYSE & NASDAQ Advance - Decline: 1794-3750
Combined NYSE & NASDAQ New highs - New lows: 63-51
WTI crude oil: 90.80, -0.07
Gold: 1,655.90, -7.80
Silver: 29.98, -0.265

Thursday, December 27, 2012

Market Drops, Rallies on Fiscal Cliff Fears, Hopes

OK, now, this is getting interesting.

Stocks sold off severely in the early going, as Wall Street seems to be getting a little bit tired of waiting for the politicians to come to some kind of deal - any kind of deal - on the fiscal cliff issues.

Taking center stage today were Senate majority leader, Harry Reid, and minority leader, Mitch McConnell.

Reid made some noises about the House not even being in session, and, late in the day, McConnell made comments about how the Republicans have been waiting months for the Democrats to meet with them, without success.

During the session, stocks were hit hard to the downside, with the Dow off by as many as 150 points, but, about 2:30 pm ET, when news broke that John Boehner was calling the House back into session on Sunday, stocks miraculously starting gaining ground, with all of the major indices eventually reaching positive territory before giving back a bit to close slightly negative, though the NYSE Composite ended with a gain of four points.

There was other news that may have caught the attention of traders, particularly, the Conference Board's Consumer Confidence reading, which registered a disappointing 65.1, after last month's overly optimistic 73.7 was revised down to 71.5.

The number caught everyone off guard and triggered the initial sell-off.

As for negotiations on the fiscal cliff, there aren't any. Both sides have resorted to name-calling and jawboning precisely at a time both sides should be reaching compromise.

Having the House in session on Sunday, December 30, is a hopeful sign that there is some progress behind the scenes, even though nobody's reporting any.

The saga continues...

Dow 13,096.31, -18.28 (0.14%)
NASDAQ 2,985.91, -4.25 (0.14%)
S&P 500 1,418.09, -1.74 (0.12%)
NYSE Composite 8,399.84, -4.36 (0.05%)
NASDAQ Volume 1,314,243,625
NYSE Volume 2,816,814,750
Combined NYSE & NASDAQ Advance - Decline: 2473-3032
Combined NYSE & NASDAQ New highs - New lows: 74-61
WTI crude oil: 90.87, -0.11
Gold: 1,663.70, +3.00
Silver: 30.24, +0.205

Wednesday, December 26, 2012

Fiscal Cliff: Wall Street Waits While Washington Waffles

Everybody knew that the politicians in the nation's capitol wouldn't get a deal on taxes and spending until the very last possible minute, right?

That certainly seems to be the case, as there are now only five days left in 2012, and most of congress is out of town, though President Obama has made arrangements to return to the White House from Hawaii on Thursday.

Whether or not there will be anyone for him to negotiate with in another question. And what exactly will they be discussing? A very, very, short term deal, most likely extending unemployment benefits and maybe keeping the Bush tax cuts intact for those earning under $250,000, for maybe a couple of months.

The real problem which is beginning to emerge is the upcoming vote on raising the debt ceiling (again), and the Tea Party Republicans in the house still seem hell-bent on making that an issue by which they can twist the president's arm.

The debt ceiling will need to be raised before March, at the very latest, or the federal government will shut down, which, at this juncture, seems to be the best option. Just do away with all of it and let chaos reign. Why not? The solutions being bantered about by the half-crazed Republicans and Democrats aren't going to solve anything except to dole out a few more Obama bucks to those already with their hands out and keep marginal rates in pretty much the same range without meaningful changes to spending or structural reform to entitlement programs or defense.

Wall Street has displayed iron nerves throughout this entire fiscal fiasco, with stocks up for the month of December. The bankster criminals on the Street are probably in on what already is looking like the biggest tax increase in American history, so they're likely well-positioned to benefit from a market decline.

If they aren't, they soon will be, if that's how this is going to go down.

It's gotten well past ridiculous, especially in light of the report from Mastercard Advisors Spending Pulse today that saw retail sales up just 0.7% versus 2011. The report tracked sales from October 28 to December 24.

Happy Holidays. Not.

Dow 13,114.59, -24.49 (0.19%)
NASDAQ 2,990.16, -22.44 (0.74%)
S&P 500 1,419.83, -6.83 (0.48%)
NYSE Composite 8,395.49, -25.06 (0.30%)
NASDAQ Volume 1,059,561,875
NYSE Volume 2,273,327,500
Combined NYSE & NASDAQ Advance - Decline: 1959-3537
Combined NYSE & NASDAQ New highs - New lows: 96-40
WTI crude oil: 90.98, +2.37
Gold: 1,660.70, +1.20
Silver: 30.04, +0.138

Wednesday, December 19, 2012

Tip-toeing Along the Edge of the Fiscal Cliff (a melodrama)

This fiscal cliff nonsense is getting a little thick.

Just yesterday, it appeared that the president and John Boehner were coming together on a deal. Today, Boehner steps up to a mic in the Capitol and blurts out something about the president needing to get serious, which is exactly what he said two weeks ago.

Money Daily continues to cling to its creepy, cynical prediction that there will be no deal, never was going to be one, because the parties had already agreed to raise taxes on everybody (why not?) and blame each other.

At this point, all signals should be indicating that there will be no deal prior to the official deadline of midnight on December 31, and beginning with the first tick of the clock in 2013, we begin to slowly dip over the cliff.

The effect of going over the cliff will not be a sudden, recognizable event, but rather a series of widely distributed government outreaches directed straight at the wallets of American citizens. It's a horrible policy decision, but, seriously, could we have expected less from this particular gang of clowns.

Regular wage earners will be hardest hit, as both regular income tax rates will increase, but the government will put pack the 1/3 of the trust fund deductions (SSI) that they so generously didn't deduct from everyone's paychecks in 2012, which was part of last year.

This inconsistency in tax policy, government bickering and annual changes in rates, deductions, spending cuts and increases, et. al., is not anything any stable nation would entertain, the USA having proven to be anything other than stable the past four or five or twelve years as concerns fiscal and monetary policy, though the FED has been trying (ZIRP and QE1, 2, 3, infinity, 4, and likely, beyond... yessh, good luck).

Congress will be departing for the holidays en masse tomorrow and Friday, so who really among us still believes anybody in the Capitol is serious about making a deal, finding common ground (remember that quaint concept of "common good?") and relieving the American people from so much uncertainty, doubt and outright confusion.

These are questionable times with a questionable cast of characters, something along the line of the soap operas, but without doctors who return from the dead or schmaltzy, scheming middle-aged marionettes living in some alternate universe, even though Washington seems to be spinning in an orbit all its own.

So, if there's no deal by tomorrow, because the individual members in the congress have to read whatever bill is presented, no? And then they have to vote on it, pass it or turn it down. If its passed, the President's signature is a quick finish and on to more misadventures.

Whether the congress and the president agree to anything before New Year's Eve becomes New Year's Day is probably immaterial at this point. If they miss any deadlines, they'll just claim the law to be retroactive and everything will be fine. But a couple of things are virtual slam dunks. Whatever they come up with it will not be enough to revive the economy, which, after all, is the point of this exercise. Also, somebody's - and possibly everybody's - taxes will be going up and some government programs will not be funded or appropriated for as generously as before.

The Dow was off nearly 100 points today, which isn't much, in light of recent moves higher. A deal on the fiscal cliff has been priced into stocks. Today's action was a little bit of recognition that all may not be well in deal-land.

Denial. It's what's for New Year.

Dow 13,251.97, -98.99 (0.74%)
NASDAQ 3,044.36, -10.17 (0.33%)
S&P 500 1,435.81, -10.98 (0.76%)
NYSE Composite 8,463.82, -35.53 (0.42%)
NASDAQ Volume 1,938,485,625
NYSE Volume 3,838,595,000
Combined NYSE & NASDAQ Advance - Decline: 2752-2748
Combined NYSE & NASDAQ New highs - New lows: 278-39
WTI crude oil: 89.51, +1.58
Gold: 1,667.70, -3.00
Silver: 31.12, -0.553

Tuesday, December 18, 2012

Boehner, Obama Closer on Fiscal Cliff Negotiations, Prompting Exultant Wall Street Rally

In a piece of somewhat shocking news, considering the participants are both career politicians of the highest grade, it appeared today that President Obama and House Speaker, John Boehner, were getting much closer to reaching a compromise to end the fears of going over the fiscal cliff on January 1, 2013.

Essentially, Boehner has agreed to some tax cuts for wealthier individuals while Obama is making headway in spending cuts, bringing the two sides closer to an agreement that would, at the very least, provide a level of certainty about tax and spending policies for the near future.

While the roughly $1 trillion in tax increases and another $1 trillion in spending cuts is phased over 10 years, it represents some easing of the tense gridlock between the two parties that have plagued Washington for years.

Compromise being the key to negotiation on these issues, it appears both sides are ready to give a little as the December 31 deadline approaches.

Cynics might say that the politicians are closing in on a deal only because their party members don't want to stay in Washington or have to return to the capitol between Christmas and New Year to hammer out details of a deal.

Most indications are that the President and the Speaker are within a few hundred billion dollars of each other's targets and a bill could be brought to the House and Senate by Thursday, allowing time for votes, a few minor changes and all escaping back to their districts (and families) in plenty of time for the holidays.

What was for certain was Wall Street's enthusiastic response, sending stocks sharply higher on strong volume. The rally - despite fears stemming from the fiscal debate - over the past four-and-a-half weeks has been nothing short of remarkable with the Dow Jones Industrials advancing more than 800 points since the closing low on November 15 (15,542.38) and the S&P tacking on 94 points over the same time span.

Whether or not the politicians arrive at a compromise deal, shorting this market - coincident with the real potential for a blow-off Santa Claus rally - before year's end would not be a wise move right about now.

The Wall Street crowd can best be compared to college kids on Spring Break, where just about anything is ample cause for a party.

Dow 13,350.96, +115.57(0.87%)
NASDAQ 3,054.53, +43.93(1.46%)
S&P 500 1,446.79, +16.43(1.15%)
NYSE Composite 8,499.35, +92.34(1.10%)
NASDAQ Volume 2,017,737,875
NYSE Volume 4,116,356,750
Combined NYSE & NASDAQ Advance - Decline: 4078-1520
Combined NYSE & NASDAQ New highs - New lows: 284-41
WTI crude oil: 87.93, +0.73
Gold: 1,670.70, -27.50
Silver: 31.67, -0.611

Friday, December 14, 2012

Up, Down? How About Sideways Equilibrium?

A relatively favorable set of numbers weere released today as Industrial Production for November rose at the robust rate of 1.1% after falling 0.7% in October (revised from -0.4) and Capacity Utilization shot up to a healthy 78.4% (October 77.7%), but what may have spooked markets was the fall in CPI of 0.3%, a deflationary indicator, which is the bogey man that central bankers and governments worldwide like awake at night fearing.

Deflation implies stagnation and decline, anathema for the "growth" economies, though in nature, it's a natural part of the cycle. And that is part - though not all - of the reason that economies (especially ones built on a fiat foundation) are all built to fail. They are unnatural creations and they eventually cannot compete with natural cycles, physics and math.

So, stocks fell today, despite some good news. On the other hand, the "lawmakers" (an obtuse term presently, as the congress-critter and the president haven't done much in the way of actual writing of legislation for about a year and a half) in Washington aren't actually there at the moment, many having already headed home to their respective districts, the regular house session actually having ended yesterday, though it is scheduled to resume on December 19 (five-day weekends... must be nice). Consequently, there was no business concerning the ongoing "fiscal cliff" negotiations.

Stocks have reached a level resembling a sort of equilibrium (just look at the A-D line or new highs-new lows), which is a nice way of saying that it's a bad time to be either a bull or a bear, because nothing's moving, though one might expect some fireworks as the year draws to a close and it becomes more and more apparent that whatever fix is applied to the nation's fiscal woes - if any - it will be a patchwork, quick-fix and probably insufficient.

Nothing could happen, though, with two straight losing sessions, the direction of the market could have subtly changed.

The markets should react, but they don't have to. What happens over the next two weeks is anybody's guess. There are just nine full trading days until year's end. The exchanges are closed on the 25th and the 24th is a half-session, closing at 1:00 pm ET.

Something's got to give, or maybe not. After all, we've been muddling through for four years and most of the sleep-walking sheeple haven't a clue what's going on and the people in charge don't seem to care, and that's not a new phenomenon.

Well, it's Friday, and it's Happy Hour somewhere.

Free houses (and $billion a month from the Fed) for everyone!

Dow 13,135.01, -35.71 (0.27%)
NASDAQ 2,971.33, -20.83 (0.70%)
S&P 500 1,413.58, -5.87 (0.41%)
NYSE Composite 8,333.74, -4.58 (0.05%)
NASDAQ Volume 1,806,388,500
NYSE Volume 3,177,329,750
Combined NYSE & NASDAQ Advance - Decline: 2627-2840
Combined NYSE & NASDAQ New highs - New lows: 88-64
WTI crude oil: 86.73, +0.84
Gold: 1,697.00, +0.20
Silver: 32.30, -0.056

Thursday, December 13, 2012

Stocks Slide on Fiscal Cliff Stalemate, Fed Confusion

As they've done after the occasion of every recent FOMC meeting, traders sold off on the news, though today's slide was exacerbated at least a little by angst over the ongoing stalemate in Washington over fiscal cliff issues.

John Boehner, Speaker of the House, went before the microphones this morning, followed by Senate leader Harry Reid, and the two of them managed to give Wall Street a dose of temporary depression, sending stocks lower throughout the session.

The major indices slid into the final hour, but rebounded off their lows of the day when news leaked that President Obama and Boehner were to meet at the White House late this afternoon. While it will probably amount to nothing, as have their previous talks, the markets viewed it as slightly positive.

Traders are still mulling over yesterday's FOMC announcement, in which Chairman Bernanke tied raising interest rates to the unemployment rate and inflation. It's something of a crude cobbling of numbers that may or may not make sense, but, in the best counterintuitive spirit, lower unemployment and a recovering economy wiht low inflation (all good) would probably send stocks screeching into the abyss because interest rates would be on the rise.

Whatever the case and however it eventually plays out, it's a scenario unlikely to arrive any time soon, probably not for at least another 12 months, but it still has investors somewhat spooked.

Some good news for the economy came in the form of lower initial unemployment claims dropped to 343K in the most recent reporting period, on expectations of 375K. Retial sales, however, were a little disappointing, up just 0.3% in November, though that was better than the -0.3% from October.

The PPI was downright deflationary, posting a decline of 0.8% in November. Tomorrow's CPI reading will give an indication of price pressure or the lack thereof at the consumer level.

Dow 13,170.72, -74.73 (0.56%)
NASDAQ 2,992.16, -21.65 (0.72%)
S&P 500 1,419.45, -9.03 (0.63%)
NYSE Composite 8,338.62, -42.26 (0.50%)
NASDAQ Volume 1,800,313,250
NYSE Volume 3,299,683,250
Combined NYSE & NASDAQ Advance - Decline: 1847-3671
Combined NYSE & NASDAQ New highs - New lows: 85-58
WTI crude oil: 85.89, -0.88
Gold: 1,696.80, -21.10
Silver: 32.36, -1.427

Wednesday, December 12, 2012

Bernanke Drops Unemployment Bomb; Markets Get Cranky

After John Boehner chastised President Obama again from the floor of the House of Representatives in the morning, the markets got what they were so eagerly anticipating and pricing in for the last two weeks: Ben Bernanke's unveiling of QE4, the promise by the Federal Reserve to purchase an additional $45 billion in long-dated treasuries each month, commencing with the wind-down of a similar program known as "Operation Twist."

This new monetizing of government debt is in addition to the fed's commitment to continued purchasing agency mortgage-backed securities at a pace of $40 billion per month for the foreseeable future, which translates roughly into "forever, or until the fiat monetary system collapses."

What the market didn't expect was the Fed's statement tying interest rates to the unemployment rate. In the FOMC statement issued shortly after noon and prior to Bernanke's 2:00 pm ET press conference, the Fed announced, "the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored."

With inflation fairly tame and trending toward dis-inflation on the retail level, the Fed has finally embarked upon a robotic-like exit strategy, though with existential caveats and various loopholes and escape clauses.

After digesting the news, stocks were initially bought up, but, during the press conference, began to slip, finally ending the day with no gains.

While on the one hand the Fed is keeping the monetary floodgates wide open, they are anticipating economic recovery, though even the most ardent bulls don't see the official unemployment rate (U3) falling below 6.5% for at least another year. It currently stands at 7.7%, though that figure is largely due to the decline in the labor participation rate.

With baby boomers retiring at an estimated rate of 10,000 per day - many taking the offer of smaller benefits at age 62 - the labor market is in a state of generational flux unlike any seen in modern times, so there's literally no telling when unemployment might fall below the Fed's threshold level, if at all.

One thing's for certain: if the economy suddenly finds its legs and springs into a real recovery with job creation and rising GDP, Wall Street will be offended because the free money spigots will be turned off or borrowing costs will be significantly increased.

It's a double-edged sword of competitiveness vs. financial repression being played by Wall Street bankers against the population at large. Higher interest rates would tamp down rampant speculation and reverse the galloping higher market trends. In fact, the mere hint from the Fed that interest rates might rise already has seen some effect.

Withe the final Fed meeting of the year out of the way, all eyes will be on the Speaker and the President as they race against time to find a solution to their wide differences to solving the fiscal mess they've created (with ample assistance from Wall Street and the 2008 crash).

Time is running short on the politicians and Wall Street may not be so easily amused over the next few weeks.

Dow 13,245.45, -2.99 (0.02%)
NASDAQ 3,013.81, -8.49 (0.28%)
S&P 500 1,428.48, +0.64 (0.04%)
NYSE Composite 8,380.88, +14.40 (0.17%)
NASDAQ Volume 1,755,775,625
NYSE Volume 3,678,721,000
Combined NYSE & NASDAQ Advance - Decline: 2467-3083
Combined NYSE & NASDAQ New highs - New lows: 204-45
WTI crude oil: 86.77, +0.98
Gold: 1,717.90, +8.30
Silver: 33.78, +0.765

Monday, December 10, 2012

Over the Cliff We Go, but Where Is the Fear?

America has finally been dumbed down enough so that the ruling elite can run roughshod over the nation unfettered by neither rule of law or unfortunate facts.

About a month ago, (first person singular here, so pay attention) I made a point (don't know whether or not I made the point in any blog posting or not) that my belief was that a deal on the Bush tax cuts' expiration and other "fiscal cliff" issues had already been cut. Today, I still hold to that belief and even more strongly than before.

Take, for instance, the measured pace of both the Washington politicians and the Wal Street traders. The politicians have done nothing, are no closer to a deal than they were a month ago and don't seem to be in a big hurry to resolve these "pressing" issues.

Wall Street, after a hissy fit bout of selling over "their man" Romney losing the election, have recouped most of the decline and keep gradually pushing stocks higher and higher, apparently oblivious to the threat of the entire nation falling (or being pushed) over said fiscal cliff come January 1, 2013.

The simple reason for believing that the politicians won't make a deal before January 1, 2013, are so obvious as to not even be worth mentioning and that is the exploding federal government deficit and ever-expanding national debt, due to surpass its limits within another month or so.

The government needs money. Let me say that again, with emphasis:

OK, maybe that was a little harsh on the eyes, but there's no doubting the veracity of that statement. And, since the government needs money, and, since the politicians express this nagging sentiment that they are two parties poles apart on ideology and methodology, when in fact they are one and the same party when it comes to self-survival, the best way to get more money is to raise taxes on everybody and blame each other, which, in the long run, means nobody gets blamed, nobody has to worry about torches, pitchforks and being run out of town on a rail, and everybody gets re-elected, eventually.

For Wall Street, it means more money for corporations, which can and do break every law imaginable in pursuit of profit, and largely get away with it. Or, the traders are just ramping up stocks on the backs of their muppet clients, while quietly cashing out and putting their money into tangible assets like gold, silver, real estate, or stashing it away in the Cayman Islands or some other off-shore tax haven.

Think, for a moment. According to recently released statistics, and demonstrated by this article, in August and September, over three times as many foodstamp recipients (over one million) were added to the economy as jobs (324,000). So, where's the recovery? For everybody who gets a low-wage, no-benefit, glorified part-time job, three people apply for and receive food stamps and become a burden on the working class.

Like so many other concepts and programs in these United States, this is unsustainable, yet the media keeps rminding us that all is well, and that we sould go out and buy the latest iWidget or iGadget for Christmas to keep the economy humming along. Really?

Take a look at the S&P Retail Index (^RLX), which, after a double bottom in late October and early November, has headed south again in the first six days of December.

This, my friends, is the Christmas season, the buying season, the make-or-break season for retailers. If everything is so honkey-dorey, then why is this index rolling over, right at the height of what should be its strongest season.

Maybe the market is just being counter-intuitive, but, more likely, the retailers are being slaughtered. Holiday buying is down, as some luxury retailers have recently expressed, like Tiffany and Nordstrom's, and Kohl's, a mainstream retailer, reported horrifying same-store sales last week. Cannibalization. Zombification. Call it what you will, but, if everybody - not just the rich, but, everybody - is going to pay more in taxes next year, because THE GOVERNMENT NEEDS MONEY, how then does the economy look going forward.

Happy Holidays my sweet, firm buns. We're heading over the fiscal cliff by design and the aftermath of crashing billions of dollars below is not going to be very pretty.

I may be completely wrong, but, believe what you like. By all appearances, the deal has already been struck, the politicians are just play-acting, and the deal is that there is no deal. Welcome to the next fork on the road to serfdom.

Am I the only one seeing this for what it is? Where's the fear of the economy rolling over into a recession in the first half of 2013, which the OMB has already expressed would happen were the Bush tax cuts to expire, unemployment benefits be allowed to expire, the reduced take out of Social Security be allowed to expire, and cuts in defense and other programs (the so-called "sequestration") occur all at once?

The congress is set to recess for the holidays on Friday, December 14, four days from now. There simply isn't time enough to craft a substantive deal before then, since nothing at all has been done.

Obama and the Democrats will blame House leader John Boehner and the Republicans, who will blame Obama and the Democrats, and the American people will be left holding the bag, once again, with less in it than before. Tax the rich, tax the poor, tax everybody in between and blame each other. What a plan! Absolutely brilliant!

Market Update at 4:50 pm ET...

Stuck on stupid is about the only way to describe today's market (non)activity. Narrow range (seriously, the Dow was between up 20 and 30 points for almost the entire session) on low volume with the full range of just 55 points was ugly. Totally dead money.

Dow 13,169.88, +14.75 (0.11%)
Nasdaq 2,986.96, +8.92 (0.30%)
S&P 500 1,418.55, +0.48 (0.03%)
NYSE Composite 8,322.68, +8.39(0.10%)
NYSE Volume 2,975,303,000
Nasdaq Volume 1,528,722,750
Combined NYSE & NASDAQ Advance - Decline: 3095-2408
Combined NYSE & NASDAQ New highs - New lows: 139-61
WTI crude oil: 85.56, -0.37
Gold: 1,714.40, +8.90
Silver: 33.38, +0.246

Tuesday, December 4, 2012

Markets Stall as Fiscal Cliff Negotiations Are a Nullity

Talk about tight trading ranges, the major averages barely budged off the flat line today, and, considering the backdrop of the fiscal cliff non-negotiating stances of the warring parties, it's actually quite remarkable.

The NASDAQ was the most volatile of the majors, trading in negative territory the entire session, trading in a narrow band of 22 points. The S&P, top to bottom, moved an entire nine points and change, finishing ever-so-slightly in the red.

By comparison, the Dow's movement was phenomenal, covering an entire 82 points throughout the day. However, after giving up an initial thrust higher of some 53 points, the Dow's trading range from 11:00 am ET until the close was a mere 46 points. Just in case anybody is keeping tack, the Dow crossed over the unchanged line 27 times.

There was no economic data released, but the president did take to the airwaves in his first one-on-one interview since the election, exclusively on Bloomberg (take THAT CNBC!).

Basically reiterating that he would not budge from his position the the Bush tax breaks for the highest two percent earners (making over $250,000 per annum) must be allowed to expire before he and his democratic counterparts would seriously consider any proposal.

That did not inspire any reaction in either direction from the markets. It could be early onset of "cliff fatigue," since the two sides have engaged mostly in verbal sparring and little else. Wall Streeters may be getting a bit worn out, playing the waiting game for the past four weeks.

Without any movement in negotiations, the investment community will look to a crush of economic data releases beginning with the ADP Employment Change index for November, at 8:15 tomorrow, followed in close order by Q3 productivity revision and unit labor costs, factory orders, ISM services and crude oil inventories.

At the least, the ADP figure will give the non-farm payroll junkies a little to chew on until Friday when the BLS makes its monthly estimate of job growth in the nation.

Between now and then, don't look for a quick resolution to the fiscal cliff issues, as both sides appear to take the fight to the very last minute, if not beyond. Most of the politicians are planning on heading home for the holidays on the 14th of December, but, staying in the nation's capitol to iron out an agreement might be preferable to dealing with angry constituents back home, so the chance that congress might delay their holiday by a week is a distinct possibility.

While there are many voices expressing that the politicians will prevent the economy from going "over the cliff" more and more analysts are predicting that neither side sees any gain from negotiating a settlement and appearing weak in the eyes of constituents, especially from the Republican point of view, which is, has been and likely will be, completely intractable.

Things could get interesting at any time, though it appears more and more likely that the politicians will stall, posture and delay, to the ultimate detriment of everyone.

One can hardly blame the president for sticking to his guns on wanting to raise taxes on the rich. It's a no-brainer and long overdue. Besides, he did win re-election largely on the idea that the rich should pay more. How much more is the most cogent question, though the Republicans continue to appear myopic and standing in defense of their campaign contributors, not the people of America.

If the politicians don't come to agreement, blame will fall squarely on the shoulders of the Republican party, primarily the out-of-touch tea partiers in the House.

Dow 12,951.78, -13.82 (0.11%)
NASDAQ 2,996.69, -5.51 (0.18%)
S&P 500 1,407.05, -2.41 (0.17%)
NYSE Composite 8,223.87, +0.33 (0.00%)
NASDAQ Volume 1,746,404,375
NYSE Volume 3,218,542,500
Combined NYSE & NASDAQ Advance - Decline: 2638-2837
Combined NYSE & NASDAQ New highs - New lows: 94-55
WTI crude oil: 88.50, -0.59
Gold: 1,695.80, -25.30
Silver: 32.81, -0.951

Monday, December 3, 2012

"Cliff" Negotiations Going Nowhere; Wall Street Begins to Get the Message

Anybody who took the time to watch any of the Sunday morning comedy shows, otherwise known as "Meet the Press", "This Week" or "face the Nation could come to no other conclusion than the Democrats and Republicans were still miles apart on solutions to fixing issues pertaining to the "fiscal cliff" that has become the cause celebre in Washington, on Wall Street and just about everywhere else in America.

Alternating between Treasury Secretary Timothy Geithner, House majority leader, John Boehner and a parade of politicians, pundits and philosophers (notably, Grover Norquist), there was widespread agreement on one thing: that there was no middle ground upon which anybody was seen standing. The Democrats and Republicans are so far apart that the idea that there might not be a deal in time for all the Bush tax cuts to expire, sequestration of mandatory budget cuts would take place and the US economy - and with it the world - would fall into recession early in 2013.

It took Wall Street most of the day to figure out that a deal might not be forthcoming by the clowns they purchased in the last election cycle, a thought so pregnant with dire consequences that many in the (cough, cough) investment community might just be in denial on the topic.

By late afternoon, President Obama took his case to the Twitter-world, answering questions from his point of view. A little later, there was a counter-offer from Boehner's office, though it was much like the president's original proposal: having no chance of acceptance and merely a bargaining salvo, testing the waters, so to speak.

By the end of the day, there was some damage done, though it was nothing like what may occur should Wall Street types begin embracing the idea of actually plunging over the "cliff."

Incidentally, the Dow pooped out right at its 200-day moving average, especially in light of the somewhat stunning November ISM index, which drooped into contraction territory with a 49.5 reading, on expectations of 51.2. Naturally, hurricane Sandy was blamed for the bad read, though a number of analysts did not agree with that assessment, believing that Sandy might be responsible for 0.3 to 0.5 of the shortfall, which would still render a reading of 50, at best.

Spain requested a 39.5 billion euro bailout for its ailing banks, but fell short of making an official request for a sovereign bailout. In the best counterintuitive fashion, European stocks rallied and bond yields fell. Talk about denial! The Euros have that market cornered.

As the cliff diving enters a critical phase this week - because the politicians plan on making their escape from DC on the 14th of December, naturally, taking an extra week off on the taxpayer's dime - expect markets to get ever more jittery. Adding to the unusual noise, Friday's non-farm payroll report for November might rattle a few cages as well.

Dow 12,965.60, -59.98 (0.46%)
NASDAQ 3,002.20, -8.04 (0.27%)
S&P 500 1,409.46, -6.72 (0.47%)
NYSE Composite 8,223.54, -36.90 (0.45%)
NASDAQ Volume 1,666,248,500
NYSE Volume 3,060,504,000
Combined NYSE & NASDAQ Advance - Decline: 2307-3205
Combined NYSE & NASDAQ New highs - New lows: 213-44
WTI crude oil: 89.09, +0.18
Gold: 1,721.10, +8.40
Silver: 33.76, +0.48

Thursday, November 29, 2012

Wall Street to Washington, the Clown Show Continues

OK, it's finally gotten officially stupid to invest any money at all in stocks, though judging by the massive outflows from stock-related mutual funds to bond funds, it seems that may be preaching to the choir as far as retail investors are concerned.

Today saw more ridiculous posturing and pontification by various US public office-holders, first by House Speaker John Boehner (who seems to relish in the publicity and his new-found super-power, capable of moving stock indices with a single phrase) who, after meeting with the president's chief negotiator - Treasury Secretary Timothy Geithner - said that there had been no substantive progress on the fiscal cliff issues in two weeks (no kidding!) and that the president needs to put his cards on the table.

Apparently, Geithner is stone-walling for Obama, insisting on allowing the Bush tax cuts to expire on the wealthiest taxpayers - those earning over $250,000 - while allowing them to remain in place for everyone else, but Boehner is likely still insisting on concrete spending cuts. Both have good ideas, though the probability of a realistic compromise appears to be still a ways off.

So, Boehner steps to the microphone a few minutes after 11:30 am ET, says a few words and the Dow loses 50 points in about a minute. A little while later, Senate Leader Harry Reid takes his turn and stocks recover a bit. Maybe Harry has a gentler touch? But stocks went up even more when NY Senator Chuck (I represent Israel) Schumer took to the podium and said a deal was almost a certainty by Christmas, once again, overstating the obvious. Senator Schumer probably had an options straddle working, needed a few extra points on the SPY and he got them.

Nancy Pelosi threatened to speak nearing the close, but held off until after the final bell. Apparently, Mrs. Pelosi plays the futures markets. It's all so absurd, the great Saul Bellow could not have penned a more abstract, obtuse script.

Other than the fiscal cliff bad theater, existing home sales in October were reported to have increased by 5.2% percent over the previous month, third quarter GDP was revised upward from 2.0% to 2.7%, which the market had expected, though most of the gains came from government spending, inventory additions and hedonic adjustments.

Retail Sales for November were reported by a number of chain stores, showing an overall gain of 1.7%, well below the happy forecast of a 4-5% jump. Naturally, Hurricane Sandy was blamed for much of the shortfall, though actual sales declines at Kohl's (down 5.6%), Macy's and Nordstom's were more likely due to a combination of competition, poor marketing and overall sluggish demand by consumers, who can only buy so many 42-inch flat screens, iPods and clothes on limited budgets.

Also, this graphic caught some attention. It shows how former Goldman Sachs executives are now the central bankers of most of Europe. No wonder they're doing so well over there.

Gold was up sharply, as was oil and silver, a day after being belted down by unseen forces. Silver, in particular, is at a two-month high, and looks like its about to break out, though that's been said and seen before, with no follow-through, thanks to the suppressive work constantly being done at JP Morgan.

The big tent will open for the circus promptly at 9:30 am ET tomorrow.

Dow 13,021.82, +36.71 (0.28%)
NASDAQ 3,012.03, +20.25 (0.68%)
S&P 500 1,415.95, +6.02 (0.43%)
NYSE Composite, 8,256.07, +48.71 (0.59%)
NASDAQ Volume 1,758,355,875.00
NYSE Volume 3,337,720,000
Combined NYSE & NASDAQ Advance - Decline: 3963-1531
Combined NYSE & NASDAQ New highs - New lows: 233-30
WTI crude oil: 88.07, +1.58
Gold: 1,727.20, +10.70
Silver: 34.35, +0.664

Tuesday, November 27, 2012

Washington Gets Back to Work (Kinda); Stocks Slump Despite (Kinda) Positive Data

Tuesday began with a flurry of good news.

First, over in Bizzarro-world(aka Europe), EU ministers were glad-handing and slapping each other's backs for another successful bailout of Greece (really, is this the third, fourth or fifth? Who's counting?), then, at 8:30 am ET, durable goods orders came in better than expected.

At 9:00 am ET, the September Case-Shiller Housing Index showed another in a series of positive gains for housing. Better yet, consumer confidence hit a four-and-a-half-year high, reported at 10:00 am ET.

So, why were the markets in such a sour mood, why did they end lower, and why were they not even lower than where they finished?

Ah, grasshopper, so many questions...

First, that somewhat refreshing zero print on durables was, in fact, pretty ugly, once one ventured to peek under the hood. As Zero Hedge reports, a continued collapse in durable goods new orders virtually guarantees that we're already in a recession, fiscal cliff or not (more on that canard later).

The Case-Shiller data, which showed the average price of a home purchase up by 3.6% nationally, has to be faded a little, only because housing is not stocks, and, even though home-buying is a relevant statistic, it matters little in the broader scheme of things, especially when the banks are keeping massive numbers of homes off the market in what's known as "foreclosure stuffing." Those in the know, really, really do know.

As far as the consumer confidence number, well, anybody who allows themselves to be branded a consumer for purposes of a survey can't be all that bright, after all.

In the case of the nth installment of the Greek bailout, there were scant details, the IMF hasn't signed off on it yet, the "deal" has to be approved by each member (17) country, so, the Euro sold off, anathema to US markets.

And then, about 2:30 pm ET, US lawmakers (that's a joke, son) emerged from talks over the fiscal cliff (that's not a pun, son) and did what everyone thought they'd do, since their track record is so plain and clear on this point: point fingers at the other side for not playing fairly.

Senate majority leader Harry Reid: "...little progress with Republicans..."

Senate minority leader Mitch McConnell: "...some difficulty turning off the campaign..."

Is it any surprise to anybody that working out a deal in DC was going to be a difficult, if not impossible, issue? After all, this whole "fiscal cliff" miasma started more than a year ago when the two sides failed to reach conciliatory postures on increasing the debt limit, and that puny increase of roughly $1.2 trillion is about to run out.

So, with no deal even remotely being discussed, the Titans of Wall Street started selling in earnest and continued selling into the close. They will probably still be selling when the opening bell rings on Wednesday and maybe even beyond that, because depending on Washington politicians to reach a concord on any matter of even insignificant importance is like getting cats and frogs to behave well together. It's just not going to happen.

Further, indispensable reading from the Wall Street Journal comes in the form of an editorial by Chris Cox and Bill Archer - respectively, former chairman of the House Republican Policy Committee and the Securities and Exchange Commission and former chairman of the House Ways & Means Committee - explaining why the fiscal cliff of $600 billion is merely a puff of smoke compared to the conflagration that is the real unfunded liabilities of Medicare and Social Security, refreshingly written in language even a protesting Wal-Mart worker could comprehend.

The saga continues to unfold tomorrow. Oh, by the way, so many people did their holiday shopping on Thanksgiving, Black Friday, Small Business Saturday and online on Cyber Monday this year, and, considering that since Turkey Day was so early this year that there's an extra week in the holiday shopping season, retail sales are going to be very slow for the one, two, three, four next weeks, until the last Saturday before Christmas (the 25th is a Tuesday), so, Happy Holidays! Free houses, Greek bailouts, durable goods and fiscal cliff-diving for everyone... including consumers!

Dow 12,878.13, -89.24 (0.69%)
Nasdaq 2,967.79, -8.99 (0.30%)
S&P 500 1,398.94, -7.35 (0.52%)
10-Yr Bond 1.65% -0.02
NYSE Volume 3,294,930,000
Nasdaq Volume 1,762,521,750
Combined NYSE & NASDAQ Advance - Decline: 2462-3041
Combined NYSE & NASDAQ New highs - New lows: 154-40
WTI crude oil: 87.18, -0.56
Gold: 1,742.30, -7.30
Silver: 33.98, -0.156

Monday, November 26, 2012

Early Case of Holiday Blahs for Equities

Trading was sluggish and mostly to the downside in the morning session - likely on quick profit-taking from the Black Friday rally - but capital was re-allocated in the afternoon, as stocks rallied into the close.

Concerns over resolution to US fiscal issues and Europe's finalizing yet another round of financing for Greece kept stocks in the red for almost the entire day, except for the NASDAQ, which was boosted largely on trades in Apple (AAPL), which was up more than three percent on the day.

There was little in the way of economic data or corporate news to move markets, as trading volumes were at low levels.

Simply put, there wasn't even a left-over turkey leg to Friday's rally as traders were quick to pul the sell lever with so many issues overhanging the markets.

The Dow, down as much as 109 points before noon, rallied to close near the best level of the day, which, of course, means nothing.

Things should get more interesting as news of talks between Republicans and Democrats on the "fiscal cliff" issue begin to circulate throughout the week.

Dow 12,967.37, -42.31 (0.33%)
Nasdaq 2,976.78, +9.93 (0.33%)
S&P 500 1,406.29, -2.86 (0.20%)
NYSE Composite 8,197.48, -28.02(0.34%)
NYSE Volume 2,833,759,250
Nasdaq Volume 1,559,037,750
Combined NYSE & NASDAQ Advance - Decline: 2636-2880
Combined NYSE & NASDAQ New highs - New lows: 124-40
WTI crude oil: 87.74, -0.54
Gold: 1,749.60, -1.80
Silver: 34.14, +0.021

Friday, November 23, 2012

Dumbest. Rally. Ever.

Will markets never learn?

Every year, on the half-day session that is Black Friday, stocks get a giddy bounce over the prospects of rabid holiday shopping frenzy and a warm, cozy, holiday feeling about consumer spending.

This year's half-day wonder was no exception. In fact, it was exceptional, as stocks soared at the open and added to outsize gains on extreme low volume. The gains were among the top five, point-wise, for the major averages this year, surging through overhead resistance, especially on the S&P 500, which broke above its 200-day moving averages. It was a sucker's rally to beat all suckers.

Priced into the advances were widespread, solid rumors that third quarter GDP would be revised upward from 2% to 2.8 or maybe even 3% next week.

These signs of exuberance may be tempered once the politicians get back into the mix. Republicans and Democrats are reportedly far apart on negotiations to solve fiscal cliff issues, with Republicans still demanding that Bush-era tax cuts on the rich remain in place, while Democrats wish to raise rates on earners over $250,000 per annum while keeping in place lower rates for the rest of American taxpayers.

Rest up and get some exercise to work off those additional pounds socked away on Thanksgiving. Everyone will be in need of extra energy to keep up with developments next week.

And just in case anybody thought the truce in the Middle East was one of lasting quality, Israelites and Palestinians barely took a break in killing each other. In response, silver tallied the biggest percentage gain of the day (2.23%) and gold rose by more than $23.00. So much for stability.

Black Friday Special: Free houses with zero down leases with no payments until the Fed raises interest rates, on new Cadillacs for everybody!

Dow 13,009.68, +172.79 (1.35%)
Nasdaq 2,966.85, +40.30 (1.38%)
S&P 500 1,409.15, +18.12 (1.30%)
NYSE Composite 8,220.31, 108.13(1.33%)
NYSE Volume 1,423,529,125
Nasdaq Volume 743,239,875
Combined NYSE & NASDAQ Advance - Decline: 4192-1058
Combined NYSE & NASDAQ New highs - New lows: 135-37
WTI crude oil: 88.00, +0.62
Gold: 1,752.10, +23.90
Silver: 34.10, +0.745

Monday, November 19, 2012

Washington Goes Home, Wall Street Throws a Party

President Obama is in the Far East on a multi-nation god-will tour. The rest of the politicians in Washington, the congress, have mostly gone back to their districts for a holiday break (that's why we love our "leaders" so much - while we get a four-day weekend, they take the whole week off.

With nobody around to moan and bemoan the national crisis known as the fiscal cliff, Wall Street took the opportunity to buy everything in sight - even before Black Friday, as sentiment has shifted from worrisome to ebullient and a majority of traders think that congress and the president will come to some kind of deal prior to the January 1 deadline.

While such optimism may be well-founded, it also may not be. There's still no deal to speak of, and the politicos won't get to work on one until next Monday at the earliest. One would think that people as smart as those on Wall Street would know better than to trust the words of politicians, especially this current bunch, which has a track record of disagreeing on just about everything, but the bulls took command on Monday and sent stocks soaring into the stratosphere.

It should figure. There are a full five weeks until the next payday, otherwise known as options expiration, on Friday, December 21, and plenty of time for stocks to rise or fall. Also, all the inside money made all the best moves, as stocks went skyward right at the open, locking out the less nimble and less-connected retail investors.

There was more good news on housing, as existing home sales rose 2.1% month-over-month and the homebuilders' index catapulted to levels not seen since the giddy, boom days of 2006.

So, all of a sudden, everything is rosy again. Until it's not, that is, which should be tomorrow or maybe some time next week.

It pays to pay attention to this attention-deficit market, though it may not pay to actually participate in it.

The show continues tomorrow...

Meanwhile, in the basement of the Federal Reserve, is Ben Bernanke quietly printing a gazillion dollars on his HP Officejet 4620 Wireless Multifunction Printer - Wireless Printers (Google Affiliate Ad)?

Dow 12,795.96, +207.65(1.65%)
NASDAQ 2,916.07, +62.94(2.21%)
S&P 500 1,386.89, +27.01(1.99%)
NYSE Composite 8,080.29, +148.74(1.88%)
NASDAQ Volume 1,766,584,880
NYSE Volume 3,335,809,500
Combined NYSE & NASDAQ Advance - Decline: 4681-872
Combined NYSE & NASDAQ New highs - New lows: 75-85
WTI crude oil: 89.28, +2.36
Gold: 1,734.40, +19.70
Silver: 33.19, +0.819

Friday, November 16, 2012

John Boehner Rescues Markets... for Today

Stocks were slip-sliding away again on Friday until Speaker of the House, Republican John Boehner, emerged from a meeting with the president sounding very conciliatory and committed to a deal on the fiscal cliff issues facing the federal government.

Boehner spoke to the press just before noon, as stocks reached their lows of the day. Following his remarks that there was a "framework" in the negotiations - which include fellow Republican Mitch McConnell, Nancy Peolsi and Senate majority leader Harry Reid - stocks took off on a tear, with all the major indices quickly erasing losses and turing positive, where they remained, for the most part, into the close.

The Dow, which had been sporting a loss of 71 points, rallied 120 points in a matter of twenty minutes.

Boehner has a tricky path to navigate, between playing hard ball with Democrats while keeping his fellow Republicans - especially those of the Tea Party denomination - from mutiny and potentially blowing up negotiations, but for today, at least, he played the part of a Wall Street superhero.

A couple of other salient points on which to close out the week:

October industrial production dropped 0.4% and capacity utilization fell from 78.2 to 77.8, a significant decline, suggesting that the economy may not be just limping along, but actually slipping.

The advance-decline line was positive for the first time this week, though new lows were once again ahead of new highs, for the eighth consecutive session, or, for those cynics in our midst, since the re-election of President Obama.

It was a real downer of a week for the bulls, especially being options expiry on Friday, a day usually reserved for back-slapping and rounds of drinks over big scores. There was probably more crying into beers late this afternoon than glad-handing fellow insiders.

That's a wrap, and don't expect much next week, as the market faces a short week with a half-day session on Black Friday, the day after Thanksgiving. Additionally, President Obama will be visiting the Far East during the week, so no meaningful negotiations are likely until his return and after the weekend, leaving the politicians just about four weeks before Christmas to work things out.

Good luck with that.

Dow 12,588.31, +45.93 (0.37%)
NASDAQ 2,853.13, +16.19 (0.57%)
S&P 500 1,359.88, +6.55 (0.48%)
NYSE Composite 7,931.55, +34.67 (0.44%)
NASDAQ Volume 2,191,482,500
NYSE Volume 3,991,566,750
Combined NYSE & NASDAQ Advance - Decline: 3638-1796
Combined NYSE & NASDAQ New highs - New lows: 28-329
WTI crude oil: 86.67, +1.22
Gold: 1,714.70, +0.90
Silver: 32.37, -0.304

Wednesday, November 14, 2012

Stocks Take Another Beating; Dow Off 185, NASDAQ in Correction

All the issues and problems facing the US and global economies are coming home to roost in a perfect storm of excessive debt, fiscal intransigence, monetary experimentation, overpriced equities, general distrust of leadership, lack of growth, geopolitical tension and poor earnings prospects for corporations.

The selloff today was a continuation of what's been occurring since before the election, but has accelerated dramatically since. Wall Street is quite unhappy with prospects that President Obama will not budge from his position to eliminate the Bush tax cuts on the wealthiest two percent of Americans, as emphatically spelled out in an early afternoon press conference.

The president was cool, calm and collected, fielding questions on a variety of topics, but, even though he mentioned compromise frequently, he did not waver in his commitment to tax the wealthy at more than their current rates, including gains on investments, particularly - Wall Street fears - regular income and dividends.

Taking their cue from the president's message, stocks, which opened briefly higher, but quickly fell deep into the red, made new lows nearing the end of his remarks and continued lower into the close, the Dow suffering a 185-point loss and the NASDAQ reaching levels 10% below their recent highs, crashing into correction territory.

With all of the major indices, including even the Russell 2000 of mostly small cap stocks, continuing their descent below their respective 200-day moving averages, bottoms were sought out, though none could be found.

The massive run-up which began in March of 2009 is being unwound, with most of the blame being laid upon the politicians in Washington, DC, though there are more than a few more scapegoats, notably the greed and feed crowd that started the entire mess - the irresponsible banking community and their masters of control, the Federal Reserve.

With the dual policies of ZIRP and massive monetization, the Fed enabled much of Wall Street's excess and continues to do so even today. The neo-Keynesian policies of Ben Bernanke and his predecessor, Alan Greenspan, has spawned a debt bubble deflation crisis that they cannot - as much as they try - spend their way out of.

Most individual investors have been fleeing the market or have already taken their seats on the sidelines, so the damage being done to stocks is going to impact the middle and upper classes the most, with 401k, investment and pension plans taking the brunt of the declines.

In particular, Dow stocks, seen by many as representing the core of American industrialism, have lost more than 1100 points since their highs in early October, erasing most of the gains made throughout the year.

While Washington politicians dither over negotiations to avoid massive tax increases and huge budget cuts (which some say are needed), investors are worried that whatever solution they arrive at will be too little, too late and more of a can-kicking exercise than real reform.

With the holidays fast approaching, Americans are not in a mood for more business as usual from either Wall Street or Washington, and the anger is growing, even on Main Street, where small businesses continue to suffer or skirt taxation completely.

The next few days and weeks could easily turn into a crisis more severe than that of 2008, since none of the improprieties produced by that financial peer into the abyss have yet to be resolved, and now there are fewer measures the Fed or the Treasury can employ to keep the economy afloat.

If anyone thought that the crisis in America was over - to say nothing of the even worse conditions in Europe - they should pay close attention to what happens over the next sixty to ninety days, because they will surely be replete with wild market swings, irony and recriminations from all sides against each other.

Surviving into and beyond 2013 will be a major test of not only the American spirit but of Americans' willingness to accept leadership. President Obama's election to a second term was probably the correct choice, but he alone cannot fix the mess others created.

After today, the bankers and the wizard genii of Wall Street should be running for cover they should have sought out years ago.

Today was a truly dark day, though, from the looks of things, there are many more to come.

Grow some crops if you can, stay close to home and loved ones, and remember our motto: FREE HOUSES FOR EVERYONE!

Dow 12,570.95, -185.23 (1.45%)
NASDAQ 2,846.81, -37.08 (1.29%)
S&P 500 1,355.49, -19.04 (1.39%)
NYSE Composite 7,903.42, -119.81 (1.49%)
NASDAQ Volume 2,103,531,000
NYSE Volume 4,062,878,250
Combined NYSE & NASDAQ Advance - Decline: 822-4741
Combined NYSE & NASDAQ New highs - New lows: 39-333 (WoW!)
WTI crude oil: 86.32, +0.94
Gold: 1,730.10, +5.30
Silver: 32.88, +0.393