Stocks worldwide were up sharply Wednesday on the news that the Federal Reserve, in conjunction with the Central Banks of Canada, England, Japan, Switzerland and the European Central Bank (ECB) agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points.
It was an early Christmas gift that sparked a speculative rally and kept Europe from unraveling, again.
What we've repeatedly heard is that the current calamities of the Euro-zone are nothing like those encountered on American soil in 2008.
The plain fact that banks in Europe are under dire stress and in need of liquidity not only reprises 2008, but adds a crescendo affect that's akin to adding the NY Philharmonic, the Ohio State marching band and the Mormon Tabernacle Choir to the efforts of the Boston Pops.
Stresses on European banks, especially those in France, Belgium and Italy, have been exacerbating on a near-daily basis, with the potential for global contagion even greater than when Lehman Bros. was allowed to flail and fail.
Thus, as some unknown Europe-based bank was about to go under - rumors say $265 million in overnight borrowings from the ECB was the tip-off - the global elitist Central Bankers conspired to lift liquidity by lowering the borrowing rates on US Dollar swap arrangements by 50 basis points (1/2 percent).
Magically, not only was the global Ponzi financial system saved for the day, week or month, but the added benefit of having global equity markets spike 3-4% higher came along as an intended consequence. Yes, the globalists know what they're doing. Too bad for them that it doesn't work long term, as we know so well from recent history, circa September, 2008.
Here's a post, by none other than some character calling himself John Galt, that has both the 2008 and current Federal Reserve press releases. The similarities are striking, but also magnificent was the 2008 aftermath, the worst financial crisis of the last 70 or so years, and the resultant crash of the equity markets.
So, Santa came to town (Europe) dressed as Ben Bernanke, with his trusty elf, Tim Geithner, in tow, passing off presents to the good (and bad) bankers across the continent. While this constitutes Christmas and a Santa Claus Rally about a month prematurely, what can Europe and the global economy expect when the holiday actually arrives on December 25, lumps of coal, or perhaps soaring gold and silver prices?
The actual timing of the eventual collapse is still unknown, though this desperation move seems to indicate that the global financial structure is crumbling faster than the "unseen hands" of the central banks can prop it up. A dive in equities may not coincide with Christmas - that would be a shame - but rather sometime in early 2012, likely in the first quarter and quite possibly in January as profits are taken early in the year on stocks pumped to unwieldy heights in December. The net results being a relatively weaker dollar and higher prices for just about anything one consumes or needs. When the crash comes, of course, the Euro will descend and the dollar will rise, though the effect is probably short-term, until the Easter Bunny fills up those empty bank liquidity baskets again.
As the adage implies, this massive liquidity gift may indeed have a silver lining, encrusted with much-higher-priced gold.
Prior to the Fed's announcement, the People's Bank of China cut bank reserve requirements for the first time in three years, by 0.5%, amid signs that the Chinese economy is slowing due to slack demand for China's exports, particularly from Europe.
After the announcement, with futures up dramatically, ADP released its November Employment Change results, showing the creation of 206,000 private sector jobs during the month. The private survey is a regular precursor to Friday's BLS non-farm payroll data.
Third quarter productivity was measured as up 2.3%, while unit labor costs fell 2.5% as companies hunker down, doing more with fewer employees.
Fifteen minutes into the trading session, Chicago PMI reported a big jump, from 58.4 in October to 62.6 in November. It was an unnecessary boost to a market which had already spiked higher at the open.
There was no fade in this one-day rally, coming conveniently on the last day of the month, traditionally the day reserved for "window dressing" by fund managers. Stocks were up monstrously on the open and continued along a high, flat line for the rest of the session, until a final short-covering episode in the final fifteen minutes pushed indices even higher.
Just speculating, but it had to be one of the best market moves of the year, if not the best. Volume was sufficient, though not overwhelming. The late-day surge may be indicating that even more easy money will flow from the Fed to the hampered Eurozone.
As to whether the moves in stocks are sustainable and the even more important question of whether or not Europe is "fixed," the answers will only be known at some future date. The most cogent commentaries on Europe suggest that today's coordinated central bank motivation only covers over a dire condition in the European banking sector and is nothing more than a liquidity band-aid on a solvency open gash. Europe's funding problems remain unresolved, though any mention of default or collapse has probably been delayed by a few weeks or a month.
And just in case you're worried about food shortages or another recession, the Obama administration and congress actually did accomplish something, recently having lifted the five-year-old ban on slaughtering horses in America. Not to worry, though. Americans won't be eating Little Red Pony or Trigger any time soon (we hope). The meat will likely be shipped to Japan or Europe. However, if this is a trend-setter, cans of Lassie, Rin Tin Tin or Boo Boo Kitty may be in supermarkets soon. Dog food and cat food may take on newer, twisted meanings.
Dow 12,045.68, +490.05 (4.24%)
NASDAQ 2,620.34, +104.83 (4.17%)
S&P 500 1,246.96, +51.77 (4.33%)
NYSE Composite 7,484.49, +334.78 (4.68%)
NASDAQ Volume 2,386,048,000
NYSE Volume 5,808,163,500
Combined NYSE & NASDAQ Advance - Decline: 4913-861
Combined NYSE & NASDAQ New highs - New lows: 161-68 (this has rolled over)
WTI crude oil: 100.36. +0.56
Gold: 1,745.50, +32.10
Silver: 32.73, +0.88
Wednesday, November 30, 2011
Tuesday, November 29, 2011
American Airlines Goes Belly Up; Housing Slides, but Confidence is Up?
AMR, parent company of American Airlines, filed for Chapter 11 bankruptcy protection Tuesday morning in federal bankruptcy court in the Southern district of New York.
While it seems an inappropriate time for an airline to file for bankruptcy, the timing could prove beneficial to the airline, the last of the major carriers to undergo reorganization. The company, while it has over $4 bllion in unrestricted cash, has $9 to $12 billion in debts.
The company announced that flights would not be disrupted and no immediate layoffs were announced. AMR lost $162 million in the third quarter and has posted losses in 14 of the last 16 quarters.
A pre-packaged bankruptcy such as this sure sounds all bright and cheery on the surface, but these things have ripple effects, as some vendors and creditors are surely to get stiffed or be forced to take pennies or dimes on their dollars. American Airlines will survive, but unseen companies will be hurt down the line and many employees will likely lose their jobs. The American recovery lives on, but why didn't the government bail out AMR like they did General Motors? Maybe they've lost interest in business.
The current S&P/Case-Shiller 10-and-20-city indices both fell month-to-month and year-over-year, as housing continues to deteriorate Despite the lowest mortgage rates in decades, potential homeowners are largely shut out of the market by stringent underwriting standards and, more importantly, the lack of jobs needed to finance and support the payments on a home purchase.
Declining by 3.9% in the third quarter, the index showed a bit of relief from the second quarter's 5.8% decline, though there wasn't much hope in the report, which tracked sales through September. Only Detroit and Washington, DC reported gains during the period, of 3.7 and 1 percent, respectively. Home prices have fallen back to 2003 levels nationally.
Wall Street shrugged off the bad housing data and focused instead on the Conference Board's index of consumer confidence which rocketed up to 56 in October, from a revised 40.9 in September. It was the largest monthly gain in confidence since April 2003, though the current reading comes off a two-year low for the gauge.
Meanwhile, over in Euro-land, finance ministers kicked off a two-day summit designed to define a framework for the various entities - countries, the ECB and the ESFS - to deal with the ongoing debt crisis. Some of the ideas being floated around this time involve countries trading a bit of sovereignty for more bailout funding, and leveraging the ESFS roughly 2.5 times, to provide funding for stressed economies, mostly in the Southern part of the continent.
As usual, nothing concrete has - or will - come from these meetings, as European leaders inch closer to a complete currency collapse, which now, along with the breakup of the Euro currency partners, is rated by top economists as a 50/50 chance.
Here in America, the few traders still not completely scared away pushed stocks higher for a second straight day on the Dow and S&P, though the NASDAQ finished in the red. Trading volume was extremely thin. If there is to be a so-called Santa Claus Rally, it's not likely to awaken any sleeping children and will probably be sold off in a session or two, as the choppiness and extreme volatility is not likely to abate before the European crisis either is resolved or blows up completely.
Dow 11,555.63, +32.62 (0.28%)
NASDAQ 2,515.51, -11.83 (0.47%)
S&P 500 1,195.19, -2.64 (0.22%)
NYSE Composite 7,149.71, +29.16 (+0.41%)
NASDAQ Volume 1,621,070,500
NYSE Volume 3,951,292,750
Combined NYSE & NASDAQ Advance - Decline: 2486-3131
Combined NYSE & NASDAQ New highs - New lows: 65-166
WTI crude oil: 99.79, +1.58
Gold: 1,713.40, +2.60
Silver: 31.85, -0.31
While it seems an inappropriate time for an airline to file for bankruptcy, the timing could prove beneficial to the airline, the last of the major carriers to undergo reorganization. The company, while it has over $4 bllion in unrestricted cash, has $9 to $12 billion in debts.
The company announced that flights would not be disrupted and no immediate layoffs were announced. AMR lost $162 million in the third quarter and has posted losses in 14 of the last 16 quarters.
A pre-packaged bankruptcy such as this sure sounds all bright and cheery on the surface, but these things have ripple effects, as some vendors and creditors are surely to get stiffed or be forced to take pennies or dimes on their dollars. American Airlines will survive, but unseen companies will be hurt down the line and many employees will likely lose their jobs. The American recovery lives on, but why didn't the government bail out AMR like they did General Motors? Maybe they've lost interest in business.
The current S&P/Case-Shiller 10-and-20-city indices both fell month-to-month and year-over-year, as housing continues to deteriorate Despite the lowest mortgage rates in decades, potential homeowners are largely shut out of the market by stringent underwriting standards and, more importantly, the lack of jobs needed to finance and support the payments on a home purchase.
Declining by 3.9% in the third quarter, the index showed a bit of relief from the second quarter's 5.8% decline, though there wasn't much hope in the report, which tracked sales through September. Only Detroit and Washington, DC reported gains during the period, of 3.7 and 1 percent, respectively. Home prices have fallen back to 2003 levels nationally.
Wall Street shrugged off the bad housing data and focused instead on the Conference Board's index of consumer confidence which rocketed up to 56 in October, from a revised 40.9 in September. It was the largest monthly gain in confidence since April 2003, though the current reading comes off a two-year low for the gauge.
Meanwhile, over in Euro-land, finance ministers kicked off a two-day summit designed to define a framework for the various entities - countries, the ECB and the ESFS - to deal with the ongoing debt crisis. Some of the ideas being floated around this time involve countries trading a bit of sovereignty for more bailout funding, and leveraging the ESFS roughly 2.5 times, to provide funding for stressed economies, mostly in the Southern part of the continent.
As usual, nothing concrete has - or will - come from these meetings, as European leaders inch closer to a complete currency collapse, which now, along with the breakup of the Euro currency partners, is rated by top economists as a 50/50 chance.
Here in America, the few traders still not completely scared away pushed stocks higher for a second straight day on the Dow and S&P, though the NASDAQ finished in the red. Trading volume was extremely thin. If there is to be a so-called Santa Claus Rally, it's not likely to awaken any sleeping children and will probably be sold off in a session or two, as the choppiness and extreme volatility is not likely to abate before the European crisis either is resolved or blows up completely.
Dow 11,555.63, +32.62 (0.28%)
NASDAQ 2,515.51, -11.83 (0.47%)
S&P 500 1,195.19, -2.64 (0.22%)
NYSE Composite 7,149.71, +29.16 (+0.41%)
NASDAQ Volume 1,621,070,500
NYSE Volume 3,951,292,750
Combined NYSE & NASDAQ Advance - Decline: 2486-3131
Combined NYSE & NASDAQ New highs - New lows: 65-166
WTI crude oil: 99.79, +1.58
Gold: 1,713.40, +2.60
Silver: 31.85, -0.31
Monday, November 28, 2011
CYBER MONDAY DEALS
Contribution by Saul Martin
This morning I checked my e-mail using my CLEAR Denver Federal Center connection. I have been getting e-mails all week about Cyber Monday deals and Black FridayDeals. Some of the deals seem too good to be true, but not that good that I am going to get out in the thirty degree weather and sit outside of Best Buy, only to try and push other people down to get the one hundred and ninety-nine dollar forty-two inch flat screen television. I have gotten e-mails about deals that are good enough on Cyber Monday that I will wake up at five o’clock in the morning, sit on the couch, drink my coffee, and do my Christmas shopping. Amazon.com has a great deal, that if you spend fifty dollars that you get a choice a free gift. The best gift that they have to offer is a pair of pearl earrings! They are a gift in itself! Also, I am going to go to Toys-R-Us’ website. I was planning on buying my niece an Apple iTouch for Christmas. With the iTouch, they give you a fifty dollar gift card. I just can’t forget to set my alarm!
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