The Big Reset Has Begun; Prepare Accordingly; Stocks Skid to 2-Month Lows

Coincidence?

Try these events from the past three days:

Kerry meets with Putin, says Assad can stay as ruler of Syria. US policy neutered.

Biden calls off Turkey, tells them to stop violating Iraq's borders. US policy neutered.

Fed raised Fed funds rate, banks raise prime rate.

Putin publicly backs Trump.

Ukraine defaults on Russian debt. While this may appear bad for Russia, it's worse for Ukraine, and even worse for US policy.

Today, the plug will be pulled on over a trillion$ in SPY options. Winners and losers, lots of both.

The world has changed radically in the past week. Trump is now the de facto US President. Obama can go to Hawaii and stay there for all the world leaders care. Kerry had no power; now he has even less, if that's possible.

Just watch: terrorism will be a non-starter for 2016. US intel has been found out (by Putin) and he's putting an end to it all.

Will truth and justice return to America? Just like bankruptcy, gradually, then all of a sudden.

h/t to Ernest Hemingway

Then, there's this cryptic note - citing Jim Willie's Hat Trick Letter - found in the comments section on a Zero Hedge article.

GLOBAL RESET HAS BEEN TRIGGERED, THE PROCESS BEGUN, THE VOICE FINALLY WARNS... THE EVENTS HAVE BEGUN, AND THE USFED RATE HIKE MIGHT HAVE BEEN PART OF THE GLOBAL DECISION. $$$

The Voice gives an urgent warning that finally the breakdown is accelerating, the damage profound, the effects unmistakable, the plug pulled. The officials have not undertaken any remedy for several years. His message is clear and stark, the first time such a communication has been given to the Jackass and colleagues. It was given just a few days before the USFed rate hike decision was made. "Guys, the plug has been pulled. Let the show begin. Our organization has been alerted accordingly to that effect this morning at 4am, that the deed is done. The battle trigger code has been chosen. It will get incredibly ugly, as real casualties will result. The annihilation of entire groups of people within the corrupt and criminal systems will be unimaginable to normal humanoids. These systems will be totally dismembered and crushed, never to be resurrected. The cabal is being caught in a grand dragnet, with the outcome certain to be their extermination, along with all their agents and collaborators. [1] The effects of this event driven scenario will become visible to the ordinary people in early 2016 and forward. Once the dust settles, it is clear to me that the human population will be noticeably lower, with fewer people roaming this planet." The Voice is referring to the Satanist Bank Cabal groups. We mere mortals hope that reason prevails, that remedy is agreed upon, that transition is orderly, so that a billion people do not needlessly perish. But the Anglo-Americans have their favorite nuclear and virus toys. We have seen ample evidence of their chemical plant explosions as a warm-up to main events.

Our organization has been alerted accordingly...

At 11:00 am ET, the S&P already dumped 2030 and 2020. Getting closer to the magic mark of 2000.

Don't actually think it matters if it happens today, tomorrow, next week or next year. The crash has been underway since late May, the last time the NAZ, S&P and Dow all set new all time highs.

The trash is being taken to the dumpster. Watch terrorism disappear as a major story. The meme for 2016 will be economic security, and Trump will win easily.

In fact, since Putin's endorsement yesterday, some would wager that in the minds of most world leaders, Trump is already the US de facto president. Obummer is so over. Hillary is a non-starter. Change is good; best to be out in front of it. The elections will be all for show, since Trump is self-financed. The money machine(s) is/are grinding to a halt.

Americans are going to see the fruits of what the Fed and the federal government, state governments, and local governments have sewn: TRASH. Loads of TRASH, piled high, heaped upon more loads of TRASH.

Bankruptcies should absolutely soar in 2016. Corporate failures and bond defaults will accelerate. Pensions will default on payments. The US will slowly, painfully, resort to honest money. GOLD AND SILVER WILL SOAR.

A BIG THANK YOU TO JANET and THE FOMC. THANKS, YOU NITWITS.

David Stockman really nailed it in his post at Contra Corner Blog.

And, while the economy slowly crumbles, congress (which obviously didn't get the memo that they're fired) conveniently passed a $1.15 trillion omnibus budget bill with the notorious CISA government spying act included.

At the end of the week (the last full week of 2015), the figures for the major averages look pretty stupid.

The Dow was smacked down a whipping 367 points, closing at 17,128.59, the lowest closing price since mid-October. For the week, the DJI was off nearly one percent, down 136.62 points.

The S&P nearly got to the 2000 mark, closing down 36.43, at 2005.46 on the day, but lost just 6.95 for the week. On the NASDAQ, it was a 1.59% loss, down 79.47, at 4973.08. On a weekly basis, it doesn't look bad on the surface, as the NAZ lost a mere 10 points.

However, Monday, Tuesday and Wednesday were all up days for the major indices. Thursday and Friday were down, and down big, erasing all of the early-week gains. From the highs after the FOMC meeting, on Wednesday's close, the losses portend further losses next week. a cleansing of bad assets is well underway, and there are plenty of bad ones in all markets.

Also, the entire treasury curve flattened. The 10-year yield, in particular, dropped 10 basis points from 2:00 pm ET on Wednesday, the moment of the FMOC rate hike announcement, ending the week at 2.20%. If the Fed's master plan was working, shouldn't all bond yields - especially those of shorter durations - have gone up? This is a classic example of the market rejecting the Fed, with more to come, as the Fed thinks it's going to raise rates four more times in 2016, a recipe for economic cataclysm.

Lastly, keep a close eye on the banks (JPM, BAC, C, GS, WFC, MS) as they were all lower by 2-3% on the day.

David Bowie's Changes should suffice as an appropriate song for a truly epic week:

Yellen's Rate Hike Timing Might Be A Little Off... Like Five, Six Or Seven Years

Now that the Fed has restored its own venerable credibility, the markets seem to think, "well, yeah, the fed is credible, but still wrong." Fed Chairwoman, Janet Yellen, will go down in history as the worst chairperson in the 102-year history of the Federal Reserve, followed closely by her predecessor, Ben Bernanke.

Hiking the federal funds rate even a measly 1/4%, as they did on Wednesday, seems to be anathema to all kinds of markets, except maybe the dollar index, which, unlike just about everything else, rallied today.

Stocks erased all of yesterday's gains and then some, sending the Dow Jones Industrials and S&P 500 into the red for the year. For investors of all stripes (and most importantly, hedge fund managers, who have gotten murdered this year), what's worse is that the year is almost over and there doesn't seem to be a catalyst available to overcome what damage the Fed has done with its unmistakable policy error.

Anybody with brain cells saw this coming well in advance. The global economy is virtually on its knees and the Fed thought it was time for a hike in interest rates. The hike amounted to the political equivalent of a punt. There was nowhere else to go, so they went through the only door open. Bad mistake, especially since that door had been open since 2009.

What were they thinking? Maybe the question should be "what were they not thinking?" because they ignored the obvious signs of slowing, not only in emerging markets, but in commodities, high yield bonds, corporate profits, sales, housing, and a plethora of other indicators that were signaling recession ahead rather than recovery accomplished.

The Federal Reserve is comprised of some of the worst thinkers on the planet, whose sole interest is in keeping their credibility intact, and they are quickly losing control over that. They've managed, in the short span of seven years - thanks to their dual policies of zero interest rate policy (ZIRP) and quantitative easing (QE) to completely dismantle the fabric of capitalism, enriching only the upper, upper crust of wealthy individuals while dashing the hopes and savings of millions of would-be retirees.

With any luck, the Fed's failed policies will lead to outright rejection of the currency, not just around the world, but right here in the United States as well. These are control freaks, and they've lost control, implying simply that worse decisions are already in the making.

In case anybody's paying attention, the Federal Reserve is busy wrecking what's left of the global economy by bringing the US economy into line with the rest of the world, which, if one would like to take a look at Argentina, Brazil, and Mexico, is already suffering deeply.

Global depression and a debt jubilee are on the plate for 2016. You can have it served directly or order it to go. Zombie banks, which should have gone out of business in 2008, don't deserve to be repaid again, as they've already stolen so much taxpayer money that they've bankrupted the US government.

It's a good thing there's only a few weeks left in the year, because the losses for 2015 will stop suddenly on December 31.

Sadly, those losses will resume promptly, when markets reopen on January 4, 2016.

In advance, Happy New Year (if we make it).

Fed's FOMC Announces 0.25% Rate Hike, Stocks Soar On The News, Banks Raise Prime Rate

As expected, the FOMC (Federal Open Markets Committee) raised the interest rate on federal funds (the rate for overnight loans from one financial institution to another from funds held at the Federal Reserve) from a range of 0.00-0.25 to 0.25 to 0.50.

Full release here.

On the surface, this seems much ado about nothing, or, almost nothing, but the Fed's long-awaited rate increase will have ramifications across the investing and business world.

For instance, the first salvo will be to any and all loans tied to the Prime Rate, which include most credit card, revolving debt and home equity loans and lines of credit.

Shortly after the Fed's rate announcement, major banks began announcing that they were raising their prime lending rate from 3.25 percent to 3.50 percent. Wells Fargo was the first bank to announce the rate hike, followed in rapid pace by Chase, Citibank and Bank of America. The increases are effective immediately.

What that means is if you've been paying 4% (not unusual) on a home equity loan, your new rate will be 4.25%. In real terms, on $250,000, that's an additional $37 per month. Not much, one might think, but, considering that the Fed plans on continuing to increase their base FF rate - which will green light the banks to up the prime rate - the cost of borrowing will simply continue to increase.

Many analysts have shied away from calling the Fed's move ill-timed, though an equal number has called it "too late." What it certainly is not is "too little." Insofar as it is the smallest rate hike imaginable, its effects will be far reaching.

In larger, banking terms, try this: A billion dollars borrowed over seven years at 1/4% would cost $12,010,470 per monthly payment. At 1/2%, it's $12,116,790, an increase of $106,000 a month. That same billion, borrowed for just one year at 1/4% interest requires a monthly payment of $83,446,220. At 1/2%, it's 83,559,200, an increase of $112,980 per month.

With numbers like these being thrown around routinely - and daily - by the largest financial institutions, hedge funds, brokerages and their ilk, something is bound to blow up sooner, rather than later. Already we've witnessed carnage in the junk bond markets, which have been pounded in anticipation of today's Fed announcement and there will surely be more to come.

On wall Street, stocks appeared to love the move, with the Dow up 224 points, the S&P gaining 29.66, and the NASDAQ ahead by 75.77. This looks all well and good right out of the box, but there's a quadruple witching day coming up Friday on options, and year end is now within spitting distance.

It might be wise to square up one's positions - if one has any - before the end of 2015 to take advantage of tax breaks for losses and/or long term gains. Precious metals moved rather sharply throughout the day and did not pull back after the Fed announcement, despite the dollar remaining strong, which is the obvious outcome.

For now, the strong dollar will continue to stoke deflation, as imports will become cheaper. To anybody who's been Christmas shopping, the price structure is obviously on the low end this season and will likely be bargain basement after the holiday shopping ends.

Most Americans will find bargains in stores, if they have any money with which to purchase them after paying what are sure to be higher credit card bills.

According to the Federal Reserve, the US economy is supposed to be strong enough now to absorb this rate increase and the associated nuances. At this juncture, it's far too early to tell.

We shall see in coming weeks and months. As Ernest Hemingway so eloquently put it in The Sun Also Rises: "How did you go bankrupt?"

"Two ways. Gradually, then suddenly."

Pre-FED-Hike Notes for the Truly Deranged and/or Excited

As of 12:30 pm ET, amazingly, the Dow, NAZ and S&P are all right at (or pretty damn close) both their 40 and 200-day MAs.

In other words, the entire market will be essentially flat going into the FOMC announcement. No clues for anyone, except that move up in PMs this morning.

Putting on my best guessing hat - which stragely resembles a dunce cap - I'd say the 0.25% rate hike is all but a done deal. The Fed has gone too far and they know it.

This is really a now-or-never condition, and they must go with NOW, because NEVER doesn't really mean never. It means they will have to do this at some point. There will be significant pain ahead, but only for those who are highly leveraged, over-indebted or just plain stupid.

Everyone has had seven years to prepare for this moment. If you haven't gotten a whiff of what's coming, you are not to be pitied. You will be dismembered and disposed of by the gnarly beast of deflation.

That's my take.

Final note: Yesterday, over at ZeroHedge, I reiterated my call from about two years ago that silver would see $12. Another poster said $8.25 was the target, or bottom. I'm fine with that. Will be buying at $12 and buying even more if and when it ever gets to $8.

90 minutes to lift-off. Good luck to all.

Last Dance Before Yellen's Rate Hike; Stocks at the High End... with Tom Petty Video

In tribute to today's madcap stock rally in the face of tomorrow's FOMC policy rate decision, we present Tom Petty and the Heartbreakers classic, "Mary Jane's Last Dance."

Picture Mary Jane as Wall Street, High Yield Bonds, the global economy, or all three. Tom Petty is the Federal Reserve. That's all for today. Tomorrow's a big one.

Is a Global Recession Just Ahead, or, A Global Depression?

Gas prices at the pump haven't been this low since 2009, though the prices back then maintained for a very brief time, as oil plummeted during the financial crisis (remember that?), but quickly rebounded as the Fed and other central banks added extreme amounts of liquidity to markets globally and before long, crude oil was back in the $90-100/barrel range.

Last year, the price of a barrel of crude - both Brent and WTI - began a precipitous decline, cutting in half the traded price. As 2014 turned to 2015 and many culprits were blamed (Saudi Arabia, US frackers, Russia(?), the price continued to hover in the $45-65 range. By late summer, all bets were off as the price of a barrel of crude fell into the low-$40 range, and then this month declined into the 30s.

While gas at $2/gallon and lower is a boon for drivers, especially in the US, where commuters and businesses were burdened with gas above $3.00 and sometimes over $4/gallon for years, it's not such a great deal for oil producers, especially the aforementioned frackers, whose marginal profitable price per barrel was estimated at somewhere between $45 and $75 per barrel.

Plenty of rigs have gone idle, but debt has to be serviced, and most of these drillers are on the hook for millions, borrowed from banks when the getting was good, now having to pay back the costs of exploration, drilling and extraction while operating at a loss.

The oil patch is just one element of the global liquidity crunch which may be about to enter a new, more dangerous phase, when, in two days time, the FOMC of the Federal Reserve is supposed to raise the federal funds rate for the first time in more than seven years.

The Fed plans to set the rate at 0.25% for money banks can borrow from the Fed, and, while that may not sound like a big deal to most, it certainly is to banks and corporations, which have been borrowing and spending at record paces since mid-2009.

With the FOMC rate policy decision now less than 48 hours away, there's a growing nervousness on Wall Street over this unprecedented move by the Fed. It's unprecedented because there's a vast amount of evidence that the bubble the Fed has blown is about to be not only pricked, but popped and blown wide open. Simply put, the party is about to end, and the drunks on the dance floor will be looking for a ride home, but nobody will be available for a safe trip, because not just the investment and corporate community, but the Fed itself, is staggering and woozy.

It may be a big, bad boogey man, like the 2000 scare, or the Mayan calendar, or those pesky asteroids which dare to come within 100,000 miles of dear planet earth. Or, it could be the real thing.

Nothing lasts forever, and, from the looks of the bond, commodity, and emerging markets, the long "recovery" and stock market rally seems to have run out of steam. Global trade is down, global GDP keeps being revised lower, US manufacturing is fading, China is becoming a basket case. It all points to reduced growth, or, in proper recession terms, negative growth.

If you're in the market, there's still a day and a half to get out, and probably more, if you can handle small losses. If you're not in the market, but still have to drive, eat, and breath, good news. In recessions and, especially, depressions, everything (except debt) is cheaper.

Hedge, buy, or sell accordingly.

--FR

Climate Change Agreement: The Farce Is Strong in This One

Editor's Note: OK, this is a blog called Money Daily, which means that there should at least be a post every day. That sounds reasonable enough, but, as a writer, editor and publisher for many years (spanning the decades from the 1980s to the present), I'm old enough and wise enough to realize that - unless I'm serially unemployed (not yet, but working on it) or have no other obligations in life (sadly, I do) - writing something coherent and reasonable and, yes, maybe even stimulating and/or thought-provoking every day is a tall order.

Nevertheless, I've taken a long hiatus of about one year due to moving (twice), running another business (badly), managing a five acre property (working) and sawing and chopping lots and lots of wood to burn this winter (working on that too), and that is now at an end, mainly because I have found more free time, a renewed interest in money, economics and politics and because something inside me tells me I can long longer be silent on a growing number of issues.

To that end, I'll endeavor to put something on this blog every weekday (come on, everyone needs a weekend) and sometimes on weekends. I will do my best to write posts that are entertaining, enlightening, interesting and provocative. And, I'll go back to using my most significant and enduring signature. --FR

In Paris, France, recently, two weeks were spent by highly-paid representatives from nearly 200 countries to reach an agreement that is not binding on any of the participants, includes goals and suggestions that individual countries can choose to either accept or reject, and a vast array of proposals that are unenforceable.

This is the cumulation of the global climate change summit just ended in Paris over the weekend. It also marks the beginning of the end of the absurd notions of the "climate change" proponents. No nation would agree to a mandated agreement, particularly the United States of America, because it would have required approval from our congress, which was a dubious outcome at best.

Not to belabor the issue, the climate change agreement - hailed by Secretary of State John Kerry as "significant" on FoxNews Sunday, today - is yet another glowing example of the failed leadership in the global community. Thousands of delegates gather together to plan, prepare, eat, drink, party and come up with an agreement that is null and void from the start.

In other words, the entire exercise was a complete waste of time, energy and (using the term very, very loosely) talent. The delegates, for wasting so much time and TAXPAYER MONEY, should be docked two weeks pay. Further, the people responsible for this latest craziness - a non-binding agreement to not raise the global temperature by another degree by 2050 - should simply resign, if for only the paramount reason that they have no real clue of what they're supposed to be doing, other than possibly enriching themselves and their close business allies.

Climate change is real. The climate is always changing. There's no doubt about that. But, thinking that humans are actually causing the climate to change in any significant way, or, the ultimate hubris of thinking that they can actually do anything to fix it, is just plain stupid.

The climate change agreement is a farce. A total disgrace. Let's just be happy that the issue won't be addressed again for - from what I'm hearing - another eight years - 2023. Well, at least that's good news.

--FR

Barack Obama: Gun Salesman of the Year

Just had to link to this article and post the photo.

Thanks Obama: Smith & Wesson And Sturm, Ruger Are Soaring

A Message to Honest Ann

Ann, you already have the answers. I know that from previous posts of yours.

As I mentioned earlier, your own survival is paramount. Start there and move forward.

Be guided by history and the wisdom of those who have come before you.

The neocons and banksters are not your immediate concern, until you make them that.

I cannot make my point any more straightforward than to suggest you strengthen your own position and improve your immediate surroundings. You alone, nor even all of the ZH loyalists, do not have the power to dethrone the current power structure.

Aim for your own structure, your own economy. Others are doing so, though not many. Consider yourself the vanguard of a new age, because THAT will set freedom in motion.

I can only ask that you ignore the PTB. We are all ultimately responsible for our own actions.

Act responsibly.

As an aside, I have found great wisdom and guidance from reading the works of people such as John Stuart Mill, Aristotle, and recently Sun Tzu's Art of War. There are copies online of the latter. I'd suggest Adam Smith's The Wealth of Nations, but I'm stuck at page 624. Seriously, nobody should entertain to discuss anything economical unless they've read the whole thing, so there it is. I, like you, are inadequate. There's nothing stopping us, save our own human frailties, from becomeing whole.

Wonder: Getting Past Greece, the Euro, Varoufakis, Travie McCoy and My Best Friends (BFFs)

Wonder.

It's a beautiful word. Maybe not as beautiful a word as White or Bird (It's a Wonderful Day... it's all right, go ahead and listen), but one should always be in wonder at the world -- if only because we DO NOT KNOW.

Events of recent weeks have left some - not many, and certainly not all - bewildered, confused, and wondering what is next to come. Life in Greece has become complicated because of their commitment to debt, and that is the only reason. Not politics, not currency, but only debt has enslaved the peoples of the southern European archipelago, and only because they continue to accept it as a constant, as a commitment, a purpose, an underlying principle of existence.

Long ago, in the days of Aristotle, Plato, Pythagoras and Socrates, Greece became the cradle of Western civilization and democracy. Culture flourished with fresh ideas. Freedom of speech, freedom of identity, freedom of thought found roots, grew, and prospered.

The secret of happiness is freedom. The secret of freedom is courage.

-- Thucydides

Today, as the European Central Bank (ECB) and the IMF divvy up the remnants of a once-great culture and country, there is no secret, no happiness, no freedom. The Greeks are slaves to money, to the Euro, to the US dollar, and that condition will not change because the Greeks themselves - and all of Europe - have lost their ways, their wills, their collective courage. The 20th and 21st centuries have been witness to the willful slavery of entire populations, a kind of "Stockholm Syndrome", in which vast swaths of people are overwhelmed by money, power, greed, corruption and debauchery. It has happened before - in Rome, in London, Berlin, Tokyo - but never before has it happened as quietly and easily as today.

Without will, people have nothing. The people of Greece have no will. Even their "courageous" vote to reject the demands of their creditors a week ago was directed, will-less and rhetorical. As we have seen since then, voting meant exactly nothing, as it always has, when the choices are bad, or worse. Greece chose "bad." By decree of the technocrats and debt-holders of the EU, they are to receive "worse."

Greece Matters.

Greece matters because it is our fate, our shared existence, our future. Anyone believing that "it can't happen here," or "Greece is contained" is a dunderhead, a dolt, a fool, or a psychopath bent on escapism. The woes of Greece will visit every shore. First Europe, then South America, Australia and New Zealand, Asia, and eventually, North America. Canadians may be spared the worst of it, especially those in the hinterlands, but come it must, devour assets it must, devalue life it must. Greece is coming home to you, and me, and yours.

Not wanting to sound depressing or disheartening, but only realistic, this prose offers comfort to those who take heed. Not all is evil. There is good in the world. Life in the United States of America, for instance, has neve been more prosperous, full and enjoyable. If not for odious debt, the USA would be paradise on earth. But it is the odious debt, all $18 trillion on the official books and the countless billions in loose, unfunded liabilities such as Social Security and Medicare, that threatens with slavery of the masses. The rich will escape, virtually unharmed, The middle class will be skimmed, as always, without protection. The poor will suffer.

Central banks, which control the capital, have offered solutions. BUY STOCKS. WITH BOTH HANDS. Since March of 2009, Money Daily has been right to some degree, but wrong on a large account, decrying stocks as risky, unsound, unfair, unfulfilling, and dangerous.

Stocks, verily, the riskiest of them all, have never been more wildly valued, but they also have never been more protected than today. An article by John Hussman, here, spells out the current conditions for investment opportunities in lurid detail. While Greece may, and likely, will, get a haircut proportional to that of former Finance Minister Yanis Varoufakis (a complete sellout and traitor to the people of Greece), the remainder of the world does not have to suffer a similar fate.

One only has to play along with the monetary authorities and the central banks for a time, and then... release. Such an investment strategy will require a heavy doses of discipline, and certain timing, which is why most will not even try, and many of those who do will try and fail, and fail, and fail.

The lucky, the daring, the living, and the brave will survive, and prosper, but only if they act boldly, with the conviction in their heart that all is fleeting, money is worthless, and hard assets are still worth having. The single most important asset one can hold, now, and generally, throughout history, is LAND. Real Estate. It's called that because it is REAL and it is an ESTATE asset. The only liability to owning real estate is taxation, which is why the choice of purchase should be well considered, and, beyond living quarters, consist of raw acreage.

Silver and gold one can hold in one's hand, but they cannot produce a single carrot, potato, bean or spinach.

It would also be wise to have good friendships, and to nurture them, cherish them, and honor them. Good friendships will outlast all manners of currency or money, bring more joy and happiness than blood relationships, and sponsor more spiritual wealth than all the gold that even King Midas could conjure.

Good friendship is why I write, why I live, why I try to spread some wisdom, if there is any to be spread.

I have three friends. Two are dogs. The other... I leave to the imagination of the reader.

Go now. Buy stocks, and prosper. Even better, play options or bet on horses. Use massive leverage if it is available. If you lose, you can blame me, because I don't actually care. I will only be here a short while. Besides, there are countless methods for recovery. The central bankers have made it as easy as a day at the beach.

I urge everyone to become self-sufficient. Some solar power and a garden are requisite to peace and happiness.

The Buy More, Pay More Non-Economy of Oversupply

Rampant stupidity.

Cars and trucks are not the only commodity that is in oversupply.

Went to the local grocery the other day and wanted one of those "salad in a bag" deals. Sign said, "Buy 1 get 2 free." Since I am single, and camping for the summer, one bag is all I needed and the other two would likely go bad within days. Price for the "deal" was $3.89. These bags normally go for $1.25-1.50 each, so no big deal.

Went to the manager and complained. Ended up buying one bag for $1.30, but, but, but, I had to sign a non-disclosure statement and produce my driver's license. Additionally, I was banned from ever shopping in the store ever again upon threat of death or incarceration.

OK, everything after the $1.30 in that last sentence is there for pure entertainment value, but I did have to check out at the customer service desk and received an undeniable, disparaging glare from the store manager (owner). The twithead didn't even have the cajones to introduce himself or talk to me; just a mean stare, as if to say, "you're not supposed to be smart or question our pricing policies."

My take is that the new brand of "Shure-fine" salad bags which replaced the "Dole" bags are in severe oversupply and the store is wishing to unload them ASAP because they don't keep longer than a few days before spoiling. Trouble is, we're deep in farm country here and every other house has a garden and probably are producing more than enough of their own lettuce and vegetables.

So, oversupply from the good folks at Monsnto, Cargill, et. al., and "no salad for you" unless you buy lots of it.

Oversupply is "the" problem of the 2010s. We are in year six or eight of a 15-18-year depression and it's likely to get worse before it gets better.

In 2012, I said I'd wait until silver hit $17 to buy more. Acutally waited until it hit $15. My next purchase will be at $12, then maybe $6, when the bottom falls completely out of the oversupplied commodity market.

In Ameri-whoopie-i-o-yah-Ka, at least, we have too much of everything except common sense (h/t to Mencken).

The soon-to-be-rammed-down-our-throats-job-killing TPP will accelerate the process of bringing American wages in line with the rest of the planet. Cops, politicians, bankers and schoolteachers will be wealthy in coming years, but as many begin to retire, the defaults on pensions will also accelerate.

Can't fix stupid and can't beat math. A rigid dichotomy, for sure.

All the best. Eat well, live well, die hard.

Editor's Note: Fearless Rick has been and continues to spend the summer months camping at a secret location (Sodus, NY) and will be posting irregular snippets about life in farm country.

At Belmont, American Pharoah Faces Serious Challenges in Quest for Triple Crown

American Pharoah looks a likely winner in the Belmont Stakes on Saturday, but he’s impossible to bet flat at 3-to-5 odds.

Main challenges come from a trio of horses he has met and defeated in the past. The Baffert trainee will be hard-pressed and jockey Victor Espinosa will have to use all the guile and skills of his exceptional riding career to win the first triple crown of American racing in 37 years.

The eight-horse field consists of six who contended in the Kentucky Derby, won by American Pharoah with a stalking trip and furious stretch run to defeat Firing Line, whose handlers chose to pass on the Belmont after being thoroughly thrashed in the washed-out slop that was the Preakness, finishing half the stretch back, seventh in the eight-horse field.

Of Saturday’s contending field, only Tale of Verve (a deep-closing second in the Preakness, but never a threat to front-running Pharoah) and Madefromlucky were not in the Derby. Tale of Verve’s stunning second was likely doe to the sloppy track and the futile running styles of the other entrants. He should not be close in the Belmont and is not considered a strong contender. Fourth place could be in the cards for him, but no better. Tale of Verve is also the only horse other than American Pharaoh to emerge from the Preakness, suggesting that the connections of the other ponies from that race feel overmatched here.

The other non-Derby entrant, Madefromlucky, has a shot at defeating American Pharoah, though the latter bettered him twice at Oaklawn Park. Pharaoh won the Rebel Stakes and Arkansas Derby in succession. Madefromlucky was a close second in the Rebel, and followed with a fourth-place finish in the Arkansas Derby.

However, Madefromlucky skipped the first two legs of the Triple Crown races, opting for the Peter Pan on May 9th. He won that race in a five-horse field, sitting off the pace and finishing in a gallop to win by a driving length. Incidentally, Madefromlucky earned a Beyer speed figure of 94, the sixth-straight improving Beyer in his racing campaign. The horse needs a good pace scenario, but is maturing gradually, and should be at the top of his game with nearly a month off since his last encounter on the track. Additionally, he owns a win over the surface (the Peter Pan), which suggests that trainer Todd Pletcher has had him pointed for just this upset scenario.

Another horse that should be of concern to American Pharaoh’s quest for the Triple Crown is Frosted, the Kiaran McLaughlin trained stallion that finished fourth in the Derby, but was closing with a flourish. Frosted skipped the Preakness, giving him extra time off to relish the extra distance of the 1 1/2 mile Belmont Stakes. His breeding - by Tapit from Fast Cookie - suggests he will devour the distance and pose a major threat to American Pharoah, himself no slouch in the breeding department, especially with the presence of the grand sire, Pioneer of the Nile on the stud side.

Another possibility arises in Materiality, who will break from the outermost post, often an advantage to an early speed type such as he is. Materiality finished a disappointing sixth in the Derby, skipped the Preakness and shows up here as a main pace threat. Considering that he too is trained by Pletcher, expect jockey John Velazquez to press Pharoah early, setting up a hard stretch rally from Madefromlucky.

Pletcher, who is about as consistent a winner as can be found in the training ranks on the New York circuit. has his two main riders in Velazquez and Javier Castellano, who will be aboard Madeforlucky. Considering that Castellano has been Pletcher’s go-to guy the past few seasons, the tactics are about as obvious as they can get. Press Pharoah early and beat him late with a perfectly-coordinated pair that might as well be racing as an entry. Seeing both of them in the top three would be a fantastic finish, but Madefromlucky finishing a nose, a head, or even a few lengths ahead of American Pharaoh is a distinct possibility.

Of course, man’s best-laid plans after result in surprises from other sources, which is why Frosted looms a large threat here.

The 147th running of the Belmont Stakes should be an exciting event, whether American Pharoah ends the Triple Crown drought (last achieved by the great Affirmed in 1978 - I was there) or another hopeful fails in the ultimate test for three-year-olds.

The play is pretty straightforward, using American Pharoah on all exotic tickets except for radical savers in the unlikely event he is thoroughly trashed by a wicked pace or some other riding misfortune.

Here are the suggestions with running numbers:

Madefromlucky (3)

American Pharoah (5)

Frosted (6)

Materiality (8)

Exacta:

5 over 3, 6, 8

3, 6, 8 over 5

3, 6, 8 boxed.

Trifecta:

Wheel

5 / 3, 6, 8 / 3, 6, 8

3, 6, 8 / 5 / 3, 6, 8

3, 6, 8 / 3, 6, 8 / 5

Box

3, 6, 8

I don’t like to spread it out too far in small fields and a few of those in the field, notably (1) Mubtaahij, (4) Frammento, and (7) Keen Ice appear outclassed by the remainder of the field.

My advice, as always, is, win or lose, live it up. Spend more on booze and fun than you bet on the race. At least that way you’ve got something to remember (or forget… or regret) other than a handful of torn up tickets and a hole indoor wallet.

FOMC (in)Action Does Nothing for Wall Street; 1Q GDP Weak

Apologies again for the brevity of this missive. We are currently under severe time restraints, though the thought of a more regular schedule appears for next week. -Editor

The week can be summed up as "much ado about nothing," as the FOMC again held the federal fund rate at near-zero and stocks were more or less unresponsive over the course of the week.

A preliminary reading of first quarter GDP showed the economy nearly slipping into recession, growing at a rate of just 0.2% for the first three months of 2015. The outlier was a three percent inventory build, without which the number would have been negative. Naturally, naysayers on the economy contend that the recession for the US economy never ended after 2009, and that the United States has been mired in a deep depression since the implosion of the financial system back in the fall of 2008 and that only extreme dosages of liquidity supplied by the central bankers of the world have saves us all from misery.

Wall Street continues to hum along with record amounts of stock buybacks buoying share prices for many firms, with growth and capital expenditures now becoming things of the past.

The first three days of trading were somewhat lackluster, followed by a huge downdraft on Thursday and a dead-cat monster bounce-back on Friday, which kept the major indices from outright implosion. Analysts are keeping a keen eye on the German DAX, which is coming close to correction territory.

The NASDAQ was the worst-performer, dropping nearly two percent as biotechs imploded and speculative money was coming off the table at a rapid rate.

For the week ending May 1:

Dow: 18.024.06, -56.08 (-0.31)
S&P 500: 2,108.29, -9.40 (-0.44)
NASDAQ: 5,005.39, -86.69 (-1.70)

NASDAQ Breaks Out in w/e April 24, 2015

Not much to report in terms of market activity, except that all the major averages were higher for the week, though remaining in a very tight range that has persisted since the first week of February.

The Dow Jones Industrials have vacillated between roughly 17,600 and the high of 18,288 (about a 700-point spread) for 11 weeks running, generating plenty of noise, but nothing substantial upon which to base future market-turning events.

Thus, the ongoing view is rather cool and contained, the bulls mostly winning the war, what with the Fed's continued blabbering over interest rates. Current outlook is for the Fed to keep rates at the zero-bound for as far as the eye can see, which would be until next year, maybe.

Sustained weakness in the US and global economies has kept a lid on any proposed rate hikes. Meanwhile, most of the stronger economies of Europe (an oxymoron if ever there was one) have fallen prey to negative rates and renewed fears of either a Greek exit from the EU (Grexit) and/or fears and outright signs of deflation.

Oil prices ramped back up to their highest levels in four months, dragging fuel prices at the gas pump higher, all occurring amid a record growth of reserves. The oil market is not - like most markets around the world - free from price-fixing and mauling by major manipulators.

For the week, the Dow gained 253.84 (1.42%); the S&P added 36.51 (1.75%); and, the NASDAQ popped 160.27 points (3.25%), breaking through to new closing highs not seen in 15 years (5092.08). Clearly, the real money is being made in momentum plays and the NAZ is where they are.

Irrational? We give you exuberance and euphoria.

Financial Recap for w/e 4/17/15: Friday's China Fears Stun Markets

The week can be summarized succinctly as four normal days followed by a bummer of a Friday, which took back all of the week's gains and then some when it became obvious to anyone and everyone that China might not be the raging dynamo of capitalism once thought.

With a drop on the Dow of nearly 300 points, Friday's whiplash took the DJIA back to break-even for the year and ended the week with the Industrials off 231.35 (1.28%). The remainder of the week was mostly mundane, with the average down Monday, up Tuesday and finally into positive territory on Wednesday. Thursday was flat.

Following a pattern similar to that of the Dow, the S&P 500 also lost steam, down 20.88 (0.99) for the week, a loss not nearly as dramatic as the Blue Chips. However, the S&P ended up less than one percent on the year, a condition which central planners and fund managers are finding unpleasant and unprofitable.

Nearly four full months into the new year, investors are still searching for a catalyst beyond the usual dramatics from the Federal Reserve to move markets higher. Considering the poor performance out of China and the rest of the EM, the catastrophic condition that is the European Union, and the general negative tone of US macro data, in deference to the usual "recovery" noise, a very good argument for profit-taking has appeared.

The NASDAQ suffered a similar fate, gapping lower on Friday to post a massive 76-point decline for the day. On the week, the NASDAQ was lower by 64.25 points (1.28%), equaling the DJIA as the worst percentage performer.

Beyond the aforementioned wall of worries, what has markets particularly off-balance are comments from a variety of Federal Reserve officials, some which are for a rate increase ASAP, while others seem to have reversed course and favor the wait-and-see approach, which is wearing thin on all fronts. Clarity does not serve the Federal Reserve well at this juncture - indeed, maybe not at any time - as market reaction is exceedingly swift to judge.

The constant din of jawboning from current and former Fed officials has provided market participants with a kind of backstop mechanism, one which has successfully prevented an outright bubble in stocks (a debatable point) and, at the same time, limiting any downside action to less-than-correction levels.

As stocks have not seen a significant retreat since the summer of 2011 - and even that was mild and short-lived - the argument for a correction of ten percent or more has its followers, though bearish thoughts have been effectively eviscerated by the Fed and its hyperactive role in the market.

With a June rate increase now seen as nearly off the table, the view is that September will be the most opportune time for the Fed to act to raise the federal fund rate off the zero bound, though many voices are already saying that 2016 or beyond will be the date at which the "renormalization" process takes flight.

With central banks and, especially, the Fed, so deeply ingrained in equity and bond markets, it has become difficult, if not entirely impossible, to accurately predict future market movements.

Perhaps this is a condition with which markets should be desirous. Complacency and indecision might turn out to be the best weapons against deflation and outright recession. Lessons learned from past experience are no longer helpful as the global economy has never been so utterly and consistently commanded, contrived and controlled. Eventually, one would suspect a shakeout. As usual, getting the timing right is a paramount consideration, though the recent activities of markets and central banks has left all participants scratching for solutions.

Weekly Recap for W/E April 10, 2015: Economy Weak, Stocks Leap

Stocks and bonds have gotten to a point which indicate there won't be a rate increase to the Federal Reserve's most basic federal funds rate until at least September of this year and quite probably, beyond that.

Dependent upon data flows to determine whether the economy (or more specifically, the stock market and the 1% of the population that owns them) is strong and durable enough to withstand raising rates from the zero-bound to something higher, say, 0.25 percent or, as some have cynically put forth, 0.125 percent.

Data has been daunting to the Fed. Industrial production, durable goods and advance figures on first quarter GDP have all been short of expectations, adding to the pain which last week's March non-farm payroll figures presented. Of course, stocks, which have become the only game in town, loved the weak numbers, because it puts any thought of a rate increase on a semi-permanent hold, meaning free-or-nearly-free money and credit, with which it is an easy task to invest and make money.

So, we have the twisted dynamic of bad news on the economy being nothing but champagne and rose for players of stocks, and that was well reflected in this week's trading, with all the indices heading back toward all-time highs. This followed a brief respite in March, as speculators nervously sold out of equities, thinking that the Fed might increase rates in June.

The NFP data crushed that line of thinking, and sent stocks off like rockets this week, concluding with Friday's nifty rise, sending the Dow back over 18,000 once again and the NASDAQ within shouting distance of the magical 5,000 mark. The final day of trading for the week was bolstered by an announcement from General Electric (GE), stating that the company would sell nearly all of its GE Capital financing unit and real estate holdings (about $23 billion) to Blackstone and Wells-Fargo, two companies, which over the past seven years since the housing bust, have become the nation's new landlords. GE put forward a plan to repurchase some $50 billion worth of its own shares over the next three years.

Timing of the deal isn't very curious at all. GE has been stock in a range for the past fifteen years, and, with interest rates such a challenge by which to make profits, CEO Jeff Imelt and his executive team probably felt it was due time to return to its industrial roots. It does set precedent, however, by selling such a large chunk of real estate and real estate financing assets to companies that are already heavily entrenched in the sector, putting an exclamation point at the end of the boom-gone-bust that is damning to capitalism and competition.

GE's buyback provisions will not be put to scrutiny. Wall Street loves dilution, making shares more valuable to the fewer who hold them. With a market cap of nearly $298 billion, GE had room to maneuver, but the key question remains, by lopping off more than a quarter of its asset base, is the company going to generate better returns?

It's already at nosebleed levels, with a P/E of 19 and an annual divided of 0.92, meaning it will take the plunger who invests in the stock today nearly 31 years to double his/her money on the dividend alone. That's a long time, and, with arduous risk implanted.

Nonetheless, stock junkies loved the deal, boosting shares of GE by nearly 11% on the day and making the Dow the percentage winner among major indices.

For the week the Dow Industrials jumped 294.41 points (1.66%); the S&P added 35.10 (1.70%) and the NASDAQ was the big winner for the week, gaining 109.04 points (2.23%).

On the day:
Dow 18,057.65, +98.92 (0.55%)
S&P 500 2,102.06, +10.88 (0.52%)
NASDAQ 4,995.98, +21.41 (0.43%)

Editor's note: Due to unforeseen circumstances and largely, common sense, Money Daily will soon be converting to a weekly format - with the occasional daily post thrown in on major news developments - to present a more robust and well-reasoned approach to our readers. The daily noise and rigid schedule has made it difficult to offer a cogent, thought-provoking view, which is our purpose. In coming weeks, readers should be advised to seek out the weekly recaps, published on Friday evenings, or, more likely, Saturday afternoons.

Turnaround Tuesday Displays Classic Bear Market Pattern

Up strong at the open and down on the day was how all the major indices took in Tuesday, a massive reversal beginning around 2:45 sent the Dow, NASDAQ and S&P into negative territory, calling into play one of the more obvious chart patterns, based mostly on rumors and fear.

The idea that WTI crude can continue to levitate above $50 per barrel for long is a rigger's pipe-dream and the kind of speculative plays that have been in play on the crude front seem ill-advised and doomed for failure.

In the dim afterglow of Friday's non-farm payroll disaster and the general under-performance of macro data for most of the year so far, stocks aren't looking exactly like the sure bet they've been the past six years running. The pattern, seen today, of a high rise at the open only to be finished off with unbridled selling pressure into the close would lead even the most bullish players searching for answers.

If the US economy is really on its knees - a view taking on more and more supporters - there is no turning back for most of the gamblers and speculators who have driven equities close to all-time highs. What may be even more puzzling, or troubling, is the fact that the major indices have fallen and flat-lined since their record closes in late February, and April hasn't provided any catalysts to send stocks back to those lofty levels.

That there is a creeping sentiment of FUD (fear, uncertainty, doubt) in the market should not come as a surprise. Most of the S&P 500 has been treading water in terms of real earnings, their EPS growth fueled by massive buybacks instead of capital investments, growth and taking market share, except in exceptional circumstances.

Today's action could be nothing more than advanced day-trading by pure speculators. Then again, we've been saying something is seriously wrong for months now, and yet, the markets have maintained an aura of invincibility.

Exceedingly Poor Jobs Data Sends Stocks Soaring (the new normal)

Sometimes, it's just all too predictable.

When I saw the March jobs number on Friday, and the futures plunging, because, you know, 135,000 net new jobs in the US was about half of what was expected from the goal-seeking BLS.

Revisions to January and February cast an even more dismal pallor over the market, which, gratefully, was closed on Friday.

By Monday morning, stock futures were still in the doldrums and the Dow opened to an immediate loss of over 100 points, but the decline was soon to be erased by the "bad news is good news" crowd and voices from the Fed singing in united, dovish tones, to the tune of ZIRP 4 EVA.

Yep, like I had thought on Friday, a winning day for stocks. Meanwhile the US economy collapses like a house of cards in a wind storm.

Is there no end to this nightmare of a centrally-planned global economy? (Please, don't answer that.)

Dow 17,880.85, +117.61 (0.66%)
S&P 500 2,080.62, +13.66 (0.66%)
NASDAQ 4,917.32, +30.38 (0.62%)

Stock Indices Displaying the New Minimalism

If not for the power of levitating algos, stocks would have ended the week with losses.

As it is, the major indices end the week (markets closed on Good Friday) with minuscule gains on puny volume, except for the NASDAQ, which actually finished negative for the fourth week in the past five.

Here's how the week shook out:

Dow Ind. +50.58 (0.29)
S&P 500 +5.94 (0.29)
NASDAQ -4.28 (0.09)

... and on the day:
Dow 17,763.24. +65.06 (0.37%)
S&P 500 2,066.96, +7.27 (0.35%)
NASDAQ 4,886.94, +6.71 (0.14%)

For this, we need not one (CNBC), not two (Bloomberg TV), but three (Fox Business) cable networks devoted to stocks?

It would be worthwhile, one supposes, if even one of them told the truth about Wall Street half the time.

These public markets and the networks devoted to coverage of them, are epic fails. The world is rapidly moving beyond their facile facades of importance and heft. Most of the world's population does not own stocks and has no use for massive, unfair, unfeeling corporations and their oligarch-like executives.

Indeed, would half of the Fortune 500 companies in the world fail, markets would clear and more entrepreneurs would take up the slack, having the chance to make an honest living.

Corporations, like the governments which support them, are leeches which prey upon the blood of individuals and communities. The sooner people wake up to the fact that they are strip-mining operations of productive capacity, the better.

Peace. Out.

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%)

Stocks Erase Most of Monday's Gains; Dow Closes Down for the Quarter, Year

Well, that escalated quickly...

After booming on Monday, Tuesday's players must have had a case of buyer's regret, selling back 2/3rds of what was bid up just a day earlier, very odd, considering that the last trading day of the month usually ends up positive, due to "window dressing" by fund managers.

That did not happen today. In fact, the markets reversed course right at the open, but really accelerated the selling in the final hour of trading.

Reasons? The Fed? Mountains upon mountains of un-payable debt? Iran? Yellen? Bueller?

Tracking the foibles and fantasies of the Wall Street crowd on a daily basis can be a thankless task, especially under the conditions which are currently reigning over the market. Levels of uncertainty are reaching a fever pitch, between various conditions in Europe (Draghi's failing QE, Ukraine, Turkey tuning totalitarian, Greece), the Middle East (ISIS, Syria, Iran) or the troubles bourn at home in the US, ranging from gay upset in Indiana, crumbing infrastructure, fracking drillers facing bankruptcy, insolvency of college grads with high student debt loads (a catastrophe waiting to happen), chronic underemployment or a host of other nagging circumstances which don't add up to recovery after six years of waiting.

The good news is that the credit spigots are wide open, though many individuals, having been burned by financial institutions or failed investments in the past have been wary to expend much energy spending money they don't have on things they don't need. Credit card companies have been unduly generous of late, the number of 0% interest cards offered having swelled in recent months.

Additionally, auto loans and leases are becoming as easy to obtain as water from a faucet, but default rates are also rising as consumers continue to be tapped out on the road.

Gas prices are low, sings of Spring are everywhere, but somehow, the major indices - at least for today - are not feeling the love.

Something is wrong, but we're not going to wait around to find out what it is. Anyone who hasn't divorced his/herself, at least in some part, from the credit-debt-tax-cycle-slave-system is missing the proverbial boat, which may sail off into the horizon at any time.

Americans, especially older ones, are becoming more detached from the system as the system disappoints and disillusions many who have played and paid and are seeing their paltry incomes stagnate and savings threatened by seven years of a low-interest regime engineered by the Federal Reserve.

And, with markets closed on Friday, who exactly will be able to react to the March non-farm payroll data? At least tomorrow, ADP will issue their March jobs report, which mirrors the NFP report to a degree.

Making matters worse, the Dow Industrials closed the quarter lower than at the start of the year, the S&P and NASDAQ posting fractional gains (less than one percent) for the quarter and the year so far.

So much to ponder and so little time. Tax day is April 15. What fun!

Dow 17,776.12, -200.19 (-1.11%)
S&P 500 2,067.89, -18.35 (-0.88%)
NASDAQ 4,900.88, -46.56 (-0.94%)

Everything Is Coming Up Roses...If You Live on Wall Street

Today's Markets:

Dow 17,976.31, +263.65 (1.49%)
S&P 500 2,086.24, +25.22 (1.22%)
NASDAQ 4,947.44, +56.22 (1.15%)

The results of trading today in New York (and just about everywhere else in the world) show that if a trend gets started for no good reason, people will follow along blindly.

There's no good reason for stocks to go up like they did today, especially in the face of weak economic data in the US and in many countries around the world. However, this is the normal conclusion to the debasing of currencies. If money is free to obtain, then it is not regarded as anything of value.

Worse, when markets and morals are manipulated (see gold and silver, primarily) or goosed by computer algorithms which actually do the bulk of the trading, this is what happens.

Should one take the time to research the companies that are being traded these days to higher and higher valuations, one may find an odd, but, nevertheless, disturbing trend among them: that earnings per share are being led higher by stock buybacks, which reduce the number of shares outstanding, so that the same, or even lower, earnings result in the same or higher, EPS. Or, one might discover that many of these same companies' earnings are actually falling, yet, in a complete break with logic and core investing principles, investors are willing to pay more per share for them.

This kind of trading, based on nothing but vapidness and the delusion of crowds, was once thought to be able to continue only for a short while, because, as investors discovered the reality of assets without any basis in reality, they would bail out, sell, and cause a wicked market correction or crash. That hasn't happened in six years of this kind of activity.

While the future is unknown, it can be assumed that whatever is guiding stocks to new high after new high will some day end. The trick is getting the timing right. For most, that would be impossible. For some it will be dumb luck, but, for the many, they will be stuck with stocks without any value.

On Friday, the BLS will release the non-farm payroll report for March, and everyone will happily accept the fiction that 250, 000 - 300,000 net new jobs were created during the month, or, failing that, some excuse, like "weather" will be invented, but stocks will soar to new highs again.

Some things, you can bank on them.

Stocks Finish Friday with Gains, but Down More Than Two Percent for the Week

Stocks finished up for the day, but down for the week, with the Dow Industrials retracing all of its gains from the prior week, losing 414.99 points, a 2.29% decline.

The S&P 500 lost 47.08 points, 2.23%, roughly the same as the Dow. Both indices are trading below their 50-day simple moving average.

The NASDAQ had the best gains of the past two days, but still finished the week down 135.20 points, and 2.69%. It is still hovering just above the 50-DMA.

Other than the third revision to 4th quarter GDP, there was little in the way of economic news on the session, which made for a dull time, except for the final thirty minutes, in which most of the gains were made. The revision was not revised at all, finalizing the fourth quarter GDP at 2.2% and the year at a squeamish 2.42%, not much to write home about or encourage rate hike hawks on the Fed.

There was a notable lack of volume in the final session of the week. With two trading days left in March, the focus will be on the Monday and Tuesday sessions, to see if the quarter can end positively. While the NASDAQ is clearly in the green for the year, the Dow and S&P are about even. Small losses on either or both days could tip them into the red.

If you held gold or silver for the week, you're way ahead of the stock-picking crowd.

Dow 17,712.66, +34.43 (0.19%)
S&P 500 2,061.02, +4.87 (0.24%)
NASDAQ 4,891.22, +27.86 (0.57%)

Individual Investors Should Not Be Confused About Volatility and Market Noise

Famously, John Pierpont (J.P.) Morgan, financier, banker, philanthropist and art collector who dominated corporate finance and industrial consolidation, when asked what the market would do, wistfully answered, "It will fluctuate," and that is the kind of sage advice by which individual investors should be guided.

Markets, whether they be stocks, bonds, commodities or baseball cards are continually in a condition of fluctuation, buffeted about by popular opinion, spin doctors, general sentiment, analyst opinions and the prevailing economic conditions of the time, and this time, like any other, is subject to the same market forces.

Volatility in markets generally is of benefit only to a small, elite group of active traders who are rabid in their pursuit of true value propositions and correct assumptions of price discovery. While the current regime of Fed-induced interest rate and bubble-manic equity markets might be confusing to some, they need not be to the astute, patient and prudent individual investor.

Today's events were dominated by turmoil in the Arabian peninsula - specifically, the fall of order in Yemen and subsequent armed invasion by the Saudis and Egyptians - which first sent stocks down, then up, then down again, etc., and the price of oil up, and only up. However, these knee-jerk reactions are meaningless in the larger scheme of things. A two-dollar rise in the price of WTI crude oil isn't going to affect the purchasing habits of millions of motorists, just as a one or two percent move in major averages like the Dow Jones Industrials or S&P 500 will influence investment decisions.

Military action today will likely be replaced by peace tomorrow, or, at some later date, and prices and markets will return to some semblance of normalcy. Enthusiastic journalists and commentators on CNBC and/or Bloomberg TV might have panic in their voice and fear in their eyes, but they are largely for entertainment purposes only and should never be considered when actual money and investment decisions are at hand.

In a world far away and long ago, that being prior to televised financial nonsense and noise, stocks were relatively calm and decent places in which to park excess cash. Today's monumental stupidity caused by too many people paying attention to talking heads on television and exacerbated by headline-scanning algorithms employed by HFT firms makes for markets that are irrational in the short term and less-than-reliable on a short-term basis, but, when viewed from a six-month or longer perspective, all the bumps and grinds of fast money (and yes, that is a swipe at CNBC's show by the same name) get smoothed out and wrung dry of volatility.

Unless and until there is a major market-moving event like the liquidity and solvency melt-down in 2008 and 2009, or the housing boom and bust that preceded it and extended beyond it, markets will behave in somewhat of a normal fashion. Looking at stocks over the past six years, starting with the bottom in March 2009, they've done nothing but perform brilliantly, and anyone who had simply bought and held the major indices correctly would have handsome profits today.

Oil and other commodities have behaved rather radically over the same time period, but what can be said about some may be applied to all. They are more volatile and subject to price swings. And, when one considers currency - because, honestly, parking all your cash in a single currency could be a bad idea - diversity is the key, though anyone considering a safe play might want to take a serious look at gold, and an even deeper peerage into the value of silver.

Both of the popular precious metals are really nothing more than alternative currencies, and, though they may not be quite as liquid as a stock of $100 bills, they also bear no counter-party risk and have been relatively stable over the near term, residing mostly near bottoms. That both gold and silver are bouncing around low levels is worthy of further consideration, because, beyond being currency, they can also be collateral and they may even offer some gain in terms of rising price. At the worst, either metal may suffer a small decline from current levels of maybe 10-15%, but in no way will they ever be worthless.

They are useful hedges and alternative currencies and not nearly enough investors and individuals have taken advantage of their purposefulness, though the fact that they are tightly held may be a part of their charm.

Overall, days like today and weeks and months in which one has to be subject to the whims and fantasies of speculators, newscasters, pundits, analysts and fools, aren't worth wasting one's time upon. It's far easier to make a few strident choices and be done with it. Life is indeed too short to worry about money, or even about the value of it. The world today seems preoccupied with it, though it should be remembered that it is only a means to an end, and not the end itself.

Dow 17,678.23, -40.31 (-0.23%)
S&P 500 2,056.15, -4.90 (-0.24%)
NASDAQ 4,863.36, -13.16 (-0.27%)

P.S.: If you did absolutely nothing today, i.e., made no trades, you out-performed 70% of the day-or-day-to-day-traders. Give yourself a pat on the back.

Warren Buffet Really Gets Under Your Skin; Big Market Decline Probably Means Nothing

Warrenn Buffett bears a
striking resemblance to the Wizard of Oz.

Announced today, the merger of Kraft and Heinz creates the fifth largest food company in the world and the third-largest in North America.

At the center of this mega-merger is none other than America's cuddliest billionaire, Warren Buffett and his squid-like Berkshire-Hathaway corporation. With this, Buffett now touches nearly all aspects of the average American's daily life, and, most essentially his or her food consumption.

Buffett, it was pointed out by a wily poster on a popular financial website, needs only to buy a significant interest in Monsanto or ADM and Newcomer Funeral Homes and he would have his had firmly in a "cradle to grave" solution for every man and woman in the United States, growing GMO-laced food products which deny nutrition and selling them nationally, slowly killing humans, and then taking a share of their post-breathing lives with embalming, burying or cremation.

Thus, Mr. Buffett has finally gotten under the skin of the average American consumer, and not in a good way. The combination of Heinz (John Kerry's wife, Theresa Heinz is a major owner) and Kraft would have been subject to severe scrutiny by regulators under an effective anti-trust regime, but the antiquated notion of competition has been slowly squeezed from the national conscience long ago.

In our new dystopian world, we will have but a few providers of every necessary service. Reference the merger of Charter Communications and Time Warner Cable, Staples and Office Depot, et. al. Fewer choices, fewer decisions to make. What a wonderful world.

As far as the massive market declines on the day are concerned, they are probably about the same as the last dozen or twenty or so that have occurred since March of 2009, when the current bull market began when the FASB abandoned all reason and did away with mark-to-market accounting. Since then it's been all fraud, all the time, with no end in sight.

Today's big dips in stocks are nothing more than a continuum of the controlled demolition of the global economy, led by the United States stock markets. Sell-offs are nothing more than profit-taking efforts by the controlling interests and their whiz-bang computers, to be followed, in short order, by concentrated buying and new all-time highs.

Nothing new under the sun. And nothing to see here. Move along, now.

Meanwhile, the Atlanta Fed predicts the first quarter 2015 GDP growth at 0.2%, WTI crude oil futures were up 3% on the day in the face of a string of the largest crude stockpile supply growth ever, but likely the cause/result of a falling dollar. Durable goods for February were down for the second straight month.

Some of this actually makes sense, but only on a selected basis.

Dow 17,718.54, -292.60 (-1.62%)
S&P 500 2,061.05, -30.45 (-1.46%)
NASDAQ 4,876.52, -118.21 (-2.37%)

What China is Making, the World Isn't Taking

With not much in the way of company news or economic data to spur stocks in any particular direction, stocks - if you believe there is still a viable market out there - may have taken their queues today from China, where manufacturing slipped to its lowest level in nearly a year.

HSBC's purchasing manager's initial survey for March fell to 49.2, signaling contraction, from January's reading of 50.7, the worst reading in 11 months. The survey is designed so that numbers above 50 indicate expansion, under 50, contraction.

This should not have been a surprise to anyone on Wall Street, because they know how China's dumplings are boiled. They're reliant on exports of manufactured goods, primarily to the United States and Europe.

Therefore, if those two consumer groups are not buying, China isn't selling. And that's exactly what has been going on for months now, if not years. Economic numbers in all areas of the world are slightly skewed by regional and political preference, but when China, widely regarded as the world's engine of growth in the 21st century, actually shows manufacturing in decline, it's likely much worse than reported.

There isn't much about boosting manufacturing that the central banks of the world haven't already tried and found to not work, so it's likely, at this point, up to individuals to get out and spend.

Not. Gonna. Happen.

Europe is bankrupt. The USA has gone, in sixty short years, from being a creditor nation, to debtor nation, to where we are today, on the cusp of becoming a deadbeat nation.

In popular parlance, a deadbeat is somebody who borrows and doesn't pay back its debts. Well, the good, old USA can do attitude hasn't been getting it done for a long, long time. Which is why we have a federal debt of over $16 Trillion. The government doesn't pay off its debts; it rolls them over into new debt, something that, if you or I or your neighbor tried to do, we'd be laughed all the way to the nearest courthouse.

The US government has seemingly been intent upon destroying the country, the currency, and the popular notion of being the "land of the free." The failure of politicians to even attempt to fix the various parts of our fiscal condition that are broken is at the bottom of not only the Fed's Zero Interest Rate Policy (ZIRP) but also is tearing away at the fabric of the nation, and people are beginning, at last, to notice, and worse, they're doing something about it.

They're not buying. They're not buying Chinese products. They're not buying politicians' promises. They're not buying Wall Street's scams. They're not buying government statistics because people in America don't consider themselves statistics. They consider themselves people.

People matter. Governments come and go. It may be getting close to the time that some of the bigger ones get up and leave.

But, they'll probably need a little push... over the cliff.

Dow 18,011.14, -104.90 (-0.58%)
S&P 500 2,091.50, -12.92 (-0.61%)
NASDAQ 4,994.73, -16.25 (-0.32%)

19 CENT CHEESEBURGERS, Ted Cruz and a Dow Mystery

We have a bad monetary system. A shaky one at the very least, but, probably just plain bad.

McDonald's menu, circa 1965

It would take a tome longer than Adam Smith's The Wealth of Nations to explain why. However, in today's world, we have technology, which is, by most accounts, an improvement to the general welfare and happiness of the people of the world, or so we think.

This technology allows us to share images such as the one shown in this simple blog posting.

The point, or points, as there are many diverse levels to this discussion, is that our monetary system is based upon, in no particular order, debt currency, inflation and death.

Ponder, if you will, the fact that the Dow Jones Industrial Average fell roughly 50 points in the final minutes of trading today, and the price of a cheeseburger, roughly 50 years ago, was 19 cents. The question is why did the Dow fall so precipitously at the close and what does that have to do with the price of cheeseburgers?

Yes, 19 cents. Your editor ate many of them, as there was a McDonald's and competing burger joints near his high school.

19 cents, people. Grow up.

Dow 18,116.04, -11.61 (-0.06%)
S&P 500 2,104.42, -3.68 (-0.17%)
NASDAQ 5,010.97, -15.44 (-0.31%)

Sub-note: Consider this: today Ted Cruz, a first term senator from Texas, announced his candidacy for president, officially kicking off the campaign season for the 2016 presidential election. This election is, as of today, 19 months away. In't it time we put limits on when politicians can campaign? Isn't 19 months prior to an election just a tad too early to start thinking about who will be the next president? Mind you, a presidential term lasts four years. Must we spend half of one president's term deciding who should be his or her replacement?

Today, sadly, we have more questions than answers. If we had the answers, assumably, we would probably not be spending time asking questions on a blog.

Weekend Thinking: After Friday's Stock Ramp-fest, Nothing About Which to Worry

Editor's Note: Apologies for the late post. An unrelenting schedule is causing disruption to the usual appointed tasks. This condition may persist for a few months and posts on Money Daily may not - for a while - be as timely and/or detailed.

Friday's trade was all about getting back to the preferred narrative following the "prudent" nature of the latest FOMC release and Fed news conference, that of everything being just peachy, rosy and wonderful in the land of fairy tale economics, where flying unicorns discharge fiat from rainbow skies.

Reality may beg to differ with the ongoing assessment of the national and global economies, but, for the time being, the clowns, gamblers, skimmers and scammers are in control. What will wrest away domination of the markets from the hands of the manipulators is at best uncertain, at worst unknown, but all are aware that adam Smith's "invisible hand" is lurking, ready to snatch back sanity and price discovery to a state of natural order.

What is understandable at present is that Fed policy will remain neatly tucked into its quasi-accommodative commode for at least another six months and very likely longer. It is, in fact, beyond seven years since the past rate increase, and, as has been proven by other central banks, negative yields remain an unexplored horizon. Like the discovery of a new world, the Fed may be eyeing the current 10-year note yield of two percent as merely the shoreline, with untold riches and possibilities lying within the lower bound.

A socialist fantasy dream, bond yields that would cost savers and benefit spenders could be a panacea that eventually turns economic theory completely upon its head and ushers in a new world order of wealth redistribution under some mystical, benevolent oligarchy.

The future may well be one which attempts to disregard the past. And that new world would be brave indeed.

Dow 18,127.65, +168.62 (0.94%)
S&P 500 2,108.10, +18.83 (0.90%)
NASDAQ 5,026.42, +34.04 (0.68%)

Stocks Give Back Some Gains

We took a personal day today, but did notice that the crooks gave back some of the money they stole yesterday, a la the old pump and dump routine.

Most of us had to work, but who could blame anyone for taking some time off to check out NCAA tournament early games.

Oil fell back to earth simply because there was no fundamental reason for oil to gain in price yesterday, as interest rates have about as much to do with the price of oil as saddle soap has to do with masochism (don't get any ideas).

Bottom line is that rich guys who play with other people's money (your pension fund) skimmed and scammed their way to a new car or maybe a year's tuition for their "special" princess.

Whatever. Week ends tomorrow, full report.

Dow 17,959.03, -117.16 (-0.65%)
S&P 500 2,089.27, -10.23 (-0.49%)
NASDAQ 4,992.38, +9.55 (0.19%)

Fed's Yellen, FOMC Spark Enormous Rally on Dow, Nearly 380+ Points, Oil Up Too

Seriously, this is just plain nonsense.

Print money out of thin air, issue it as debt, give some to the nation's biggest banks and return 1/2% to them on Billions of dollar in excess reserves, constipate the entire lending transmission function, make minute, detailed changes to your statement every month or so, trot out your Chairwoman - who looks like your grandmother - every three months, keep the federal funds rate at ZERO and continuing raping the wealth and resources of your country, forcing everybody into stocks (mostly), bonds and commodities.

It's absolutely brilliant. The banks don't have to pay interest on savings (whatever that old, quaint concept happens to be), and everybody except the general population goes home happy.

The Fed won't raise the federal funds rate for at least six more months, and probably not until 2017. Seriously. It's broken. Grag some gold, guns and land and head for the hills, unless you are a welfare (FSA) mooch, then, live in a city slum, or a suburban slum, which are popping up all over the country.

What a monstrously sad joke is being played on the American public. Too bad it's not funny.

Whether you're old or young, you're getting taken to the cleaners and it's not about to change any time soon.

The Dow Jones Industrials were off by more than 130 points just prior to the FOMC statement at 2:00 pm EDT. It closed up 227.

WTI Crude oil - of which there is an historic oversupply - was under $42/barrel in the morning. By the end of the trading session it was approaching $47/barrel. Supply and demand, my BEHIND.

Dow 18,076.19, +227.11 (1.27%)
S&P 500 2,099.42, +25.14 (1.21%)
NASDAQ 4,982.83, +45.39 (0.92%)

Stocks Confused in Advance of Yellen, Fed Rates; A Glimpse into the Collapse of Upstate New York

Shockingly, the Dow industrials were lower on the day while the momentum-chasing NASDAQ stocks finished with a gain on the day before Janet Yellen and the FOMC issue a rate announcement.

Obviously, rates are not going to move at this meeting, but, what most market observers will be glued to come 2:00 pm EDT on Wednesday is the wording of the FOMC statement, specifically, the use of the "patient" in terms of how the Federal Reserve is viewing their pre-announced rate increase.

The Fed has been careful not to give an exact date or attach any hard figures to any proposed rate increase, only to remain in a prudent position of non-committed bliss.

That they prefer to be shrouded in this kind of monetary mystery has been more than a little disturbing to markets. Many operators would prefer the good old days of endless QE and ZIRP without any mention of a dreadful, future rate increase. However, the Federal Reserve has itself backed into a corner in which it will damage the equity markets with a rate increase and potentially upset the delicate bond-balancing act which has kept rates too low for too long.

It is self-evident that the Fed must do something. The only questions remaining to be answered are what will they do and when will they do it. Traders, speculators, and gamblers of all stripes are hoping to glean some knowledge from the Fed's statement tomorrow.

In the meantime, many are saying this prayer:

The FED is my shepherd, I shall not want.
They maketh me to lie down in fields of digital plenty; they leadeth me to financial liquidity;
They safeguard my portfolio; they leadeth me in paths of security for their financial sake.
Yea though I walk through the valley of the shadow of default, I shall fear no Credit Default Swaps,
For they art with me; their words and actions comfort me.
They have prepared a table of ZIRP and QE before me, in the presence of China and Russia; they have annointed me with POMO; my balances runneth over.
Surely, the American reserve currency shall follow me all the days of my life, and I will dwell in the House of the Almighty Dollar forever and ever.

...and hoping for the best.

A Glimpse Into the Collapsing Nature of Upstate New York

Up here in Rochester, NY, there's a 1/2 hour show every Sunday by the area's largest real estate firm, called the "Nothnagle Gallery of Homes."

It's a good idea to catch it every week, because it provides a fascinating insight into a market that predominantly is a shuffling from one generation to another, without growth, and nearing death thoes due to a variety of economic ad social forces.

At the start of the show are the nice, expensive, executive homes, all over $400,000, some of them pretty decent with acreage, about half of them vacant. As the show continues, they display the moderately-priced category, 135k-250k. Not so good, smaller lots, older houses, more than half vacant, but, this week, a twist. They showed two houses under construction. Really, with the Tyvek™ showing and all. Priced over 200K.

Dead stop. Builders around here are nailed to a cross with with steel. Population is declining, there's a glut of bank REO that's been sitting and deteriorating for years and about 20-30% of everybody in the metro area is either in foreclosure, pre-foreclosure, about to be, underwater, or owes back taxes of two years or more. A massive implosion is coming to upstate NY (Syracuse and Rochester; Buffalo already in the proverbial pooper) which will take down not only the real estate market but the city governments and some of the older suburbs (hopefully state .gov too, but that's another story). Population decline and aging, lack of jobs, crumbling infrastructure, huge municipal pension costs and ineffective (and that's being nice) local governments are feeding the descent into chaos. Rochester, Syracuse and Buffalo's inner cities are crime-ridden, FSA (welfare) strongholds. The city school districts are a complete and utter disaster. High wages for teachers, low graduation rates, scandals, union vs. administration fights are common, as are fights, stabbings, gun confiscations, etc. TPTB are trying to ship some of the little minority cretins out to the suburbs in what they call something like "city-county partnership opportunity" or employing some other liberal wonderland imagery, but the voters in more than a few suburbs have shot down the school board recommendations, saying, in effect, "keep my schools white."

Trouble is brewing here, where the property taxes are the highest in the nation. Shocked was a fellow from South Carolina last week when told that a 30-year mortgage on a $100,000 house here would cost less monthly than the taxes.

That's the truth from an area of the country that's been stripped bare of manufacturing over the years and suffers from too many social programs, sponsored by too few - and becoming fewer every week - taxpayers.

Dow 17,849.08, -128.34 (-0.71%)
S&P 500 2,074.28, -6.91 (-0.33%)
NASDAQ 4,937.44, +7.93 (0.16%)