April's Fools: Stocks Continue Slide

As noted yesterday, something is not quite right about the US equity markets, and, whatever it is, it's starting to get the attention of the investor class, or, at least the computer algos that make the trades for the investor class.

Stocks continued the slide begun on Tuesday, which already sent the Dow Industrials to negative on the year and is threateneing to do the same for the NASDAQ and S&P 500.

Main among culprits leading to displeasure with stocks is the disconnect between the real economy and the Wall Street economy. In the real economy, people have to make choices, every day, hour by hour, minute by minute, and those choices, magnified by the 300+ million Americans become what are known as statistics. These statistics are not, and have not, jibed with the "recovery" mantra so popular with the government and Wall Street crowd, the one which claims everybody is working and nobody is hurting, when in fact, major segments of the population are suffering from the strains of a controlled and contrived economy that favors only a small slice of very wealthy individuals.

By age group, it goes something like this: teens and college-age individuals can't find decent jobs in many places, and, while college students, generally, as a group, are not working, teens and those in their early 20s are finding the pickings pretty slim and opportunity for advancement a challenge. Wages are low, the work is monotonous or dreary, the bosses are boot-licking jack-asses and the fringe benefits are - in general terms - nil, as in, NONE.

College students, once they graduate, if they are fortunate enough to find gainful employment, are often up to their ears in student loan debt, the average being $27,000 for a four-year degree. Many are not finding work that pays well enough to pay off the loans, rent an apartment and live like a normal human, so many of these twenty-somethings are habitating in parents' basements, smoking herb and playing video games in between their postings on insta-chat or twitter-face or whatever the app du jour happens to be.

Then there are those who used to be known as middle class, the folks in their 30s, 40s and early 50s, with or without kids at home or away or actually grown, drowned in debt from auto loans, living in underwater homes they cannot sell, and denied any upward mobility because they are linked to the national ball-and-chain known as a credit score. Some are doing OK, but the hours are long, the taxes never stop and keep going higher, and maintaining an outward appearance of peace and civility is becoming harder and harder.

Following after them are the soon-to-be-retired baby boomers, who hope that the stock market doesn't crash, who long to be soon done with working seemingly forever for less then they're worth, who are told to spend rather than save, and who don't see the point of saving since interest rates are so low, it's simply not worth the effort. Every day, something else annoys them a little bit. A higher price for a staple item, or, what's even more common, less of the same item for the same price. Or a new tax, a new law, some absurd thing like "freedom of religion" or "anti-this-or-that" legislation.

Seniors, those above and beyond the age of 65, are trying to hang on, if at all, with social security and a medical plan they neither appreciate nor understand. Co-pays keep rising, the quality of care declines. Their savings are stuck in neutral, thanks to the Fed's wisdom of keeping interest rates at zero for the past seven years. They're slowly bleeding to death from places they didn't know they had.

Amidst all of the age groups are sub-groups, like small business owners, buried under government paperwork and besiged by regulations and onerous taxes, and, what's become known as the FSA (Free S--t Army), the legions of welfare and disability sufferers who live beneath the general strata of society, seeking nothing more than a monthly rent check, food stamps, an Obamaphone and free health care. Those, and a flat-screen TV covers the extent of their pretty-much worthless lives.

Of course, we have the useful idiots who work for government and its myriad levels: teachers, police, paper-shufflers or all kinds, getting fat on the public expense account, oblivious to the plight of their fellow citizens in the real world economy. These types retire after 20 or 30 years of wasteful spending of taxpayer money, just to waste even more with their lavish pensions.

Striding atop all of these folks are the politicians and financiers of Washington and Wall Street, and state capitols and in municipal government positions.

And they're no longer laughing. At least some of them aren't. They know, that but for the grace of these hordes of individuals suffering under tax slavery and monetary repression, they and their ilk would be hung, burned or somehow disenfranchised. They can only hope to keep the game going another day, another week, another year, another election, because when it ends, they have no skills by which they could fend for themselves. They would be set adrift into a seas of unhappiness and misery, like the rest of the population.

If they're not worried, they should be, because this system is ripping and tearing at the seams, because it is unsustainable. There's only so much fraud and so much money out of thin air that can cover up the obvious defects.

But, give the oligarchs, politicians and financial whiz-kids their due. They've kept the system alive longer than anyone could have expected them to, all the time since March of 2009. Six years is not a long time, but 10 is, and 15 is longer, and there's little doubt there will be changes - for which we all are mutually unprepared - to come.

Dow 17,698.18, -77.94 (-0.44%)
S&P 500 2,059.69, -8.20 (-0.40%)
NASDAQ 4,880.23, -20.66 (-0.42%)

Dow Down 6th Straight Session; Bummer for 5% of Population

Consider this salient factoid (and question its validity): Five percent of the US population owns 82% of all common stock.

So, with that in mind, who - besides the employees of the major corporate entities in this country (a big number) - cares?

It might be worth suggesting that a 5-10-15-20% pullback in stocks would be a healthy development, bringing down the elite to more moderate levels.

This is sophistry, of course. A diminution in the relative income or net worth of the wealthiest amongst us would surely trickle down to those not quite rich, the middle class and eventually the bottom income levels.

Yes. Those nearest the gutter would be dragged down into it and die. Others would take their places. Those in the middle would become less fortunate (say goodbye to paying U of Michigan $52,000 a year for tuition, room and board). Those in the upper tiers would eat strip steaks instead of filet mignon and the top five percent would drive their Mercedes or Lexus or Maserati a little less often.

This is all very relative; the deciding factors being, most prominently, not how much you're worth or how much you make, but what you can be productive with, what your knowledge and skills are and how much you spend.

Wall Street is a very cockeyed place, full of people who think they know better how to manage other people's money than those people themselves. For an alternative perspective, go to a farm, where a person's value is derived from utility, rather than fantasy.

Dow 14,897.55, -105.44 (0.70%)
NASDAQ 3,599.79, -13.80 (0.38%)
S&P 500 1,642.80, -9.55 (0.58%)
NYSE Composite 9,339.37, -82.19 (0.87%)
NASDAQ Volume 1,401,692,625
NYSE Volume 3,306,747,750
Combined NYSE & NASDAQ Advance - Decline: 1871-4677
Combined NYSE & NASDAQ New highs - New lows: 83-178
WTI crude oil: 103.85, -1.26
Gold: 1,370.10, -2.50
Silver: 22.96, -0.108