Stocks rallied on Wall Street Monday after the Bush administration - via the Treasury Dept. - decided to take over troubled mortgage financiers Fannie Mae and Freddie Mac, though informed opinion sees the bailout not as the end of the credit crisis, but rather as just another, potentially more dangerous, chapter in the saga. (note: in the opinion article referenced, this phrase: "That is because these two banks are responsible for $5.3 billion (3.7 billion euros) of America's $12 billion (8.4 billion euro) total mortgage debt. That corresponds to one third of America's gross domestic product." is incorrect. "billions" should be "trillions".)
All assumptions aside, Fannie and Freddie had to be bailed out to avert what would have amounted to a worldwide credit implosion or meltdown of the entire financial system, and that simply could not be allowed to happen. In the end, the takeover by the government amounts to nothing more than thinly-veiled socialism by a government run by people who condemn the very mention of the word.
Surely, the maneuver to salvage what's left of our banking institutions is a noble one, although its likely to be clumsy in execution. If nothing else, the administration can be seen clearly for what it really is: a proxy and shoulder for the failures and overreach of Wall Street greed. These people are hypocrites of the highest order. Sadly, they are the very people entrusted with our nation's highest leadership positions.
Still, the stock market took the news with the same aplomb that a thirsty baby greets the warm nipple of a milk bottle. Markets worldwide rallied on the news.
Dow 11,510.74 +290.43; NASDAQ 2,269.76 +13.88; S&P 500 1,267.79 +25.48; NYSE Composite 8,168.62 +134.86
In other words, to paraphrase a joke told by the Republican VP presidential candidate, Sarah Palin, the lipstick was applied liberally to this pig. This was a highly politically-timed move by Republicans desperate to elect John McCain and salvage an already-Democratically-controlled congress.
While the headline numbers were impressive, the rally was not as broad-based as many may assume. The NASDAQ actually fell into negative territory during the session, and advancers were not dominant over decliners, leading by less than a 2-1 margin, 3913-2334. New lows raced ahead of new highs, 284-134.
Commodities moved in an unimpressive fashion. Oil gained 11 cents to $106.34. Gold lost 30 cents to close in New York at $802.50. Silver lost 26 cents, at $12.07 the ounce, perilously close to a key support and emotional price level.
The bailout of the mortgage market is by no means an end, but rather a necessary step by a desperate, entrenched government about to lose power. If there is any sanity left in this country, Republicans will be shown the door by voters in November.
NYSE Volume 1,768,852,000
NASDAQ Volume 2,600,347,000
Monday, September 8, 2008
Friday, September 5, 2008
Government Bailout (or, The PPT Rides Again)
Just when the whole world thought everything was going to hell in a handbasket, the manipulative meddlers of the financial underworld changed the tune.
Friday morning at 8:30 am, the Labor Department reported that US Non-farm payrolls shrunk by another 84,000 jobs, and the unemployment rate shot up to 6.1%, a five year high.
The news stories keep using the word "unexpectedly" when referring to the data, as though nobody thought that the economy would lose jobs for the 8th straight month or that the unemployment rate was rising. It's amazing that the mainstream media still considers most of the reading and viewing public stupid.
News flash for the AP, Reuters and the networks. We're not all stupid and some of us refuse to be fooled by innuendo, polls, charts, propaganda and other nefarious methods of fascist propaganda. Go tell it to someone who doesn't know any better. Oh, right, you do... worldwide.
In any case, it was another setback for stocks, or so it would seem as all of the major indices dropped into negative territory as soon as the opening bell sounded at 9:30. By 11:00 am, the Dow, S&P and NASDAQ had all shed more than 1% in value. It was beginning to look like another in the continuing saga of the slumping US stock market.
Of course, what with the incredible rock star status achieved by vice presidential candidate Sarah Palin over the past few days at the RNC, the government gurus simply could not have that, so up went stocks, thanks to our friends at the President's Working Group on Financial Markets (aka, the PPT, Plunge Protection Team) and their proxies in the market: Goldman Sachs, Merrill Lynch, et. al.
By 1:00, all was well. The indices sporting just minor losses or gains, the stage was set to send every pinstriped suit-wearing, fundamentals-are-sound-speaking, broker and dealer on the street home happy as a lark.
By 2:40, all of the indices were into positive ground. The Dow, just before 3:00, was actually up 40 points. All that nonsense about lost jobs, a worsening housing condition and a profit warning from Nokia was put on the back burner. We've got a president to elect, and Wall Street want the McCain/Palin ticket, no doubt about it.
To get those two elected, the markets cannot sell off. They must maintain their positive posture and maybe even spark off a rally or two before November. Happy days... they're here again, folks.
At 3:10 pm: Dow 11,220.96 +32.73; NASDAQ 2,255.88 -3.16; S&P 500 1,242.31 +5.48; NYSE Composite 8,033.76 +25.51
It's rather disheartening and discouraging to those who believe in things like the constitution, rule of law, free market economics and honest elections to see such shenanigans continuing, but we, the American people, have been and will continue to be bought and sold by and for corporate interests, first, last and at every moment in between.
Unless we stand up and demand change.
For the day, losers beat out gainers, 3202-2977. New lows expanded their gap over new highs, to 479-47. That last figure is significant. The new lows have been growing by the day all week, while new highs are at extremmely depressed levels. Despite Friday's somewhat neutral headlline numbers, the internals are indicative of a market poised for further deteroration.
Volume continued at levels just slightly better than last week's anemic performance. The outright lack of trading interest is a collateral outcome of the credit crisis and does not seem to have any opportunity to abate.
Commodities continued to reinforce the defation argument. Oil lost another $1.66, to $106.23. Gold fell 40 cents, to $802.80, while silver lost 62 cents, closing at a multi-month low of $12.33.
NYSE Volume 1,199,665,000
NASDAQ Volume 2,263,084,000
Friday morning at 8:30 am, the Labor Department reported that US Non-farm payrolls shrunk by another 84,000 jobs, and the unemployment rate shot up to 6.1%, a five year high.
The news stories keep using the word "unexpectedly" when referring to the data, as though nobody thought that the economy would lose jobs for the 8th straight month or that the unemployment rate was rising. It's amazing that the mainstream media still considers most of the reading and viewing public stupid.
News flash for the AP, Reuters and the networks. We're not all stupid and some of us refuse to be fooled by innuendo, polls, charts, propaganda and other nefarious methods of fascist propaganda. Go tell it to someone who doesn't know any better. Oh, right, you do... worldwide.
In any case, it was another setback for stocks, or so it would seem as all of the major indices dropped into negative territory as soon as the opening bell sounded at 9:30. By 11:00 am, the Dow, S&P and NASDAQ had all shed more than 1% in value. It was beginning to look like another in the continuing saga of the slumping US stock market.
Of course, what with the incredible rock star status achieved by vice presidential candidate Sarah Palin over the past few days at the RNC, the government gurus simply could not have that, so up went stocks, thanks to our friends at the President's Working Group on Financial Markets (aka, the PPT, Plunge Protection Team) and their proxies in the market: Goldman Sachs, Merrill Lynch, et. al.
By 1:00, all was well. The indices sporting just minor losses or gains, the stage was set to send every pinstriped suit-wearing, fundamentals-are-sound-speaking, broker and dealer on the street home happy as a lark.
By 2:40, all of the indices were into positive ground. The Dow, just before 3:00, was actually up 40 points. All that nonsense about lost jobs, a worsening housing condition and a profit warning from Nokia was put on the back burner. We've got a president to elect, and Wall Street want the McCain/Palin ticket, no doubt about it.
To get those two elected, the markets cannot sell off. They must maintain their positive posture and maybe even spark off a rally or two before November. Happy days... they're here again, folks.
At 3:10 pm: Dow 11,220.96 +32.73; NASDAQ 2,255.88 -3.16; S&P 500 1,242.31 +5.48; NYSE Composite 8,033.76 +25.51
It's rather disheartening and discouraging to those who believe in things like the constitution, rule of law, free market economics and honest elections to see such shenanigans continuing, but we, the American people, have been and will continue to be bought and sold by and for corporate interests, first, last and at every moment in between.
Unless we stand up and demand change.
For the day, losers beat out gainers, 3202-2977. New lows expanded their gap over new highs, to 479-47. That last figure is significant. The new lows have been growing by the day all week, while new highs are at extremmely depressed levels. Despite Friday's somewhat neutral headlline numbers, the internals are indicative of a market poised for further deteroration.
Volume continued at levels just slightly better than last week's anemic performance. The outright lack of trading interest is a collateral outcome of the credit crisis and does not seem to have any opportunity to abate.
Commodities continued to reinforce the defation argument. Oil lost another $1.66, to $106.23. Gold fell 40 cents, to $802.80, while silver lost 62 cents, closing at a multi-month low of $12.33.
NYSE Volume 1,199,665,000
NASDAQ Volume 2,263,084,000
Thursday, September 4, 2008
Major Pain on Wall Street
Stocks took one of their worst losses of the year on Thursday, as more economic news showed the US and world economy slowing to a crawl and new unemployment filings up sharply. Retailers also reported sluggish back-to-school sales at a time when investors are desperate for some cheerful news.
Dow 11,188.23 -344.65; NASDAQ 2,259.04 -74.69; S&P 500 1,236.82 -38.16; NYSE Composite 8,008.25 -261.00
Adding to the already dire circumstances and dour news was a note from PIMCO's Bill Gross, manager of the world's largest bond fund, saying that the government needed to do more to shore up not only financial markets, but mom and pops who are suffering under heavy mortgage debt.
According to Gross,
Gross points out that financial firms have been dumping assets in an effort to maintain liquidity in the absence of a stable lending environment. With credit markets close to a a state of seizure, financing has become almost non-existent in corporate and capital markets.
Interestingly, those same points have been made right here on this blog for many weeks and months. What Gross sees is nothing more than worldwide asset deflation and massive wealth destruction, the same circumstances that held sway during the Great Depression.
Gross' comments are interesting in that he is urging even more government interaction. These kinds of suggestions from a person of his stature suggest that a full-blown economic crisis is at hand. While the government can assist in many ways, others are suggesting a "laissie faire" or "hands off" policy to allow the excesses to be worked off by the markets.
Naturally, neither policy alone is correct. The government, through the Fed and Treasury, is acting as well as one could expect under such extreme pressure. Having a lame duck president and a congress focused on nothing more than the upcoming elections isn't helping matters, and it's unlikely that Americans, investors and financiers will see any relief from falling asset prices any time soon.
It will be January before a new president and congress is sworn in and another 60 days - at the very least - before any meaningful legislative action would take place. Expectations for a very slow 4th quarter and 1st quarter of 2009 cannot be underestimated. It will be something of a miracle if stocks don't decline another 10 to 20% by then.
Whichever candidate succeeds in taking over the White House - be it Obama or McCain - he will inherit the worst set of economic circumstances since FDR. Burgeoning federal debt (nearing $10 Trillion), extreme deficits, continuing job losses and an economy limping toward collapse await the winner. Godspeed to whomever it may be.
On the day, declining stocks overwhelmed advancers, 5108-1144, nearly a 5-1 ratio. New lows dominated new highs, 401-54. What's amazing is that any stocks reached new 52-week highs.
Volume, though better than the past two weeks, is still on the light side. Investors and large funds are holding back as best they can, seeking to avoid an all-out panic, though today's activity bordered on a crash with losses on the major indices right at 3%.
Deflating commodity prices continued without pause. Oil dropped another $1.46, to $107.89. Gold fell $5.00, to $803.20. Silver slipped a penny to $12.94. Further slippage in the metals may produce a rout, as much of the buying in gold and silver was speculative and near the top. With most of those gains already wiped out, investors in losing positions may soon capitulate if some stability is not brought to bear. Without any support apparent, gold could easily fall to $600 and silver under $10. At those points, speculators may become much more interested, though by no means would those levels constitute bottoms.
Speaking of bottoms, the Dow is now within 200 points of the July lows. The NASDAQ is also less than 100 points from its March 10 low of 2169.34, while the S&P 500 is dangerously close to its most recent bottom of 1214.91 at the close on July 15.
Since no bottom has yet to be put in place, expect these levels to fail, and soon. Tomorrow's Non-farm employment report is likely to show another 60-80,000 jobs lost in the month of August, triggering more selling. Today's action may be seen as prologue to the 8:30 am release of the employment data.
NYSE Volume 1,301,593,000
NASDAQ Volume 2,360,495,000
Dow 11,188.23 -344.65; NASDAQ 2,259.04 -74.69; S&P 500 1,236.82 -38.16; NYSE Composite 8,008.25 -261.00
Adding to the already dire circumstances and dour news was a note from PIMCO's Bill Gross, manager of the world's largest bond fund, saying that the government needed to do more to shore up not only financial markets, but mom and pops who are suffering under heavy mortgage debt.
According to Gross,
"Liquidity is drying up; risk appetites are anorexic; asset prices, despite a temporarily resurgent stock market, are mainly going down; now even oil and commodity prices are drowning."
Gross points out that financial firms have been dumping assets in an effort to maintain liquidity in the absence of a stable lending environment. With credit markets close to a a state of seizure, financing has become almost non-existent in corporate and capital markets.
Interestingly, those same points have been made right here on this blog for many weeks and months. What Gross sees is nothing more than worldwide asset deflation and massive wealth destruction, the same circumstances that held sway during the Great Depression.
Gross' comments are interesting in that he is urging even more government interaction. These kinds of suggestions from a person of his stature suggest that a full-blown economic crisis is at hand. While the government can assist in many ways, others are suggesting a "laissie faire" or "hands off" policy to allow the excesses to be worked off by the markets.
Naturally, neither policy alone is correct. The government, through the Fed and Treasury, is acting as well as one could expect under such extreme pressure. Having a lame duck president and a congress focused on nothing more than the upcoming elections isn't helping matters, and it's unlikely that Americans, investors and financiers will see any relief from falling asset prices any time soon.
It will be January before a new president and congress is sworn in and another 60 days - at the very least - before any meaningful legislative action would take place. Expectations for a very slow 4th quarter and 1st quarter of 2009 cannot be underestimated. It will be something of a miracle if stocks don't decline another 10 to 20% by then.
Whichever candidate succeeds in taking over the White House - be it Obama or McCain - he will inherit the worst set of economic circumstances since FDR. Burgeoning federal debt (nearing $10 Trillion), extreme deficits, continuing job losses and an economy limping toward collapse await the winner. Godspeed to whomever it may be.
On the day, declining stocks overwhelmed advancers, 5108-1144, nearly a 5-1 ratio. New lows dominated new highs, 401-54. What's amazing is that any stocks reached new 52-week highs.
Volume, though better than the past two weeks, is still on the light side. Investors and large funds are holding back as best they can, seeking to avoid an all-out panic, though today's activity bordered on a crash with losses on the major indices right at 3%.
Deflating commodity prices continued without pause. Oil dropped another $1.46, to $107.89. Gold fell $5.00, to $803.20. Silver slipped a penny to $12.94. Further slippage in the metals may produce a rout, as much of the buying in gold and silver was speculative and near the top. With most of those gains already wiped out, investors in losing positions may soon capitulate if some stability is not brought to bear. Without any support apparent, gold could easily fall to $600 and silver under $10. At those points, speculators may become much more interested, though by no means would those levels constitute bottoms.
Speaking of bottoms, the Dow is now within 200 points of the July lows. The NASDAQ is also less than 100 points from its March 10 low of 2169.34, while the S&P 500 is dangerously close to its most recent bottom of 1214.91 at the close on July 15.
Since no bottom has yet to be put in place, expect these levels to fail, and soon. Tomorrow's Non-farm employment report is likely to show another 60-80,000 jobs lost in the month of August, triggering more selling. Today's action may be seen as prologue to the 8:30 am release of the employment data.
NYSE Volume 1,301,593,000
NASDAQ Volume 2,360,495,000
Wednesday, September 3, 2008
Wall Street: Dazed and Confused
Things are still getting back to normal on Wall Street, where investors and traders are beginning to come to grips with the realities of the 21st century economy.
America isn't what it used to be. At least not what it was just ten years ago, when jobs were plentiful, profits were soaring and dotcoms were popping up all over the place. It was a wonderful time, the 90s. So much has changed since then.
On this day in 1998, the Dow closed at 7682.22, the NASDAQ at 1571.86. The explosive and final phase of the bubble was still more than a year away. Just 18 months later, both indices would peak and subsequently collapse, with the NASDAQ, the home of the "new economy" stocks, taking the brunt of investors' wrath.
Here we are, though, 10 years out, and things just don't seem that much better. Take a look at where we closed today.
Dow 11,532.88 +15.96; NASDAQ 2,333.73 +15.51; S&P 500 1,274.98 -2.59; NYSE Composite 8,269.25 -27.72
Are Dow and NASDAQ stocks really worth nearly 50% more than they were in 1998? Probably not. Their earnings certainly don't justify that kind of valuation. They are priced that way for a number of reasons, none of them simple, but two of them obvious. The value of the dollar in relation to other currencies has fallen dramatically since then and inflation has shrunk the value of the dollar in the US by as much as 30% during that time. You can still buy a lot of good things for a buck in the US. A McDonald's double cheeseburger, and all the things you can find in the thousands of "dollar stores" which dot strip malls across the country.
But stocks? No. A dollar will not buy you a share of any "good" company. Not those listed on the NASDAQ and certainly not one of the Dow's blue chips.
But all that is about to change. $100 will buy you 100 double cheeseburgers, enough to feed a family of four for more than a week. With that same $100, you can buy more than a share of any Dow stock, except one: IBM, currently in the $118 range. Now a share or two or three of stock won't feed anybody for any length of time, but it may be worth more in the future.
Ah, the future. That's the ticket. IBM was selling for $121 per share 10 years ago, and it split 2-for-1 in 1999, so it's worth a little more, but you have twice as much of it and you would have raked in 10 years of dividends to boot. A good deal, I guess. How about Citigroup? On this day in 1998 it closed at $41.13. Today it ended at 19.61. But it split twice, 3 for 2 and 4 for 3. So you have almost twice as much, even though it's worth more than half less. Not so good.
Coca-cola? No splits, but in 1998, it was at $61.80 per share. Today, 51.66. Less, despite the dividends. There are many more just like that and worse.
The point is that the averages and indices aren't telling the whole story. As a country, we are worse off than ten years ago, in many ways, but especially financially. Wall Street just continues to exist in denial, but soon, almost all stocks will be worth less than they were ten years ago. Adjusted for inflation, it will be even worse. It's economic reality.
And McDonald's will sell triple cheeseburgers for a buck.
On the day, advancing issues led decliners slightly, 3209-2975. New lows expanded their edge over new highs, 234-107. This is a bit of a sign that another deep plunge is on the way. We'll know more tomorrow and even more on Friday. In fact, Friday is shaping up to be one of those ugly 250-point loss days.
Oil continued to slide, losing 36 cents to $109.35. The metals continue to do their part to contribute to the burgeoning worldwide deflation. Gold lost another $2.30, to $808.20. Silver fell 20 cents, to $12.95. Both should be markedly lower in coming months.
Of course, as oil continues to dip, motorists are getting a little relief at the pumps. The average price of a gallon of gas was $3.68 as of Sept. 1, off from its peak of $4.12 in July. Now, since oil was $145 then and a shade under $110 now, how much should a gallon of gas cost. Using the ratio of 2.5 cents per gallon of gas for every $1 in the price of a barrel of crude, gas should cost $3.25 per gallon, or 87 cents less. It's not even close. How come?
Well, even if oil drops below $90 per barrel, gas will still cost more than it should because the oil companies have to keep making obscene profits.
John McCain promised.
NYSE Volume 1,208,861,000
NASDAQ Volume 2,115,416,000
America isn't what it used to be. At least not what it was just ten years ago, when jobs were plentiful, profits were soaring and dotcoms were popping up all over the place. It was a wonderful time, the 90s. So much has changed since then.
On this day in 1998, the Dow closed at 7682.22, the NASDAQ at 1571.86. The explosive and final phase of the bubble was still more than a year away. Just 18 months later, both indices would peak and subsequently collapse, with the NASDAQ, the home of the "new economy" stocks, taking the brunt of investors' wrath.
Here we are, though, 10 years out, and things just don't seem that much better. Take a look at where we closed today.
Dow 11,532.88 +15.96; NASDAQ 2,333.73 +15.51; S&P 500 1,274.98 -2.59; NYSE Composite 8,269.25 -27.72
Are Dow and NASDAQ stocks really worth nearly 50% more than they were in 1998? Probably not. Their earnings certainly don't justify that kind of valuation. They are priced that way for a number of reasons, none of them simple, but two of them obvious. The value of the dollar in relation to other currencies has fallen dramatically since then and inflation has shrunk the value of the dollar in the US by as much as 30% during that time. You can still buy a lot of good things for a buck in the US. A McDonald's double cheeseburger, and all the things you can find in the thousands of "dollar stores" which dot strip malls across the country.
But stocks? No. A dollar will not buy you a share of any "good" company. Not those listed on the NASDAQ and certainly not one of the Dow's blue chips.
But all that is about to change. $100 will buy you 100 double cheeseburgers, enough to feed a family of four for more than a week. With that same $100, you can buy more than a share of any Dow stock, except one: IBM, currently in the $118 range. Now a share or two or three of stock won't feed anybody for any length of time, but it may be worth more in the future.
Ah, the future. That's the ticket. IBM was selling for $121 per share 10 years ago, and it split 2-for-1 in 1999, so it's worth a little more, but you have twice as much of it and you would have raked in 10 years of dividends to boot. A good deal, I guess. How about Citigroup? On this day in 1998 it closed at $41.13. Today it ended at 19.61. But it split twice, 3 for 2 and 4 for 3. So you have almost twice as much, even though it's worth more than half less. Not so good.
Coca-cola? No splits, but in 1998, it was at $61.80 per share. Today, 51.66. Less, despite the dividends. There are many more just like that and worse.
The point is that the averages and indices aren't telling the whole story. As a country, we are worse off than ten years ago, in many ways, but especially financially. Wall Street just continues to exist in denial, but soon, almost all stocks will be worth less than they were ten years ago. Adjusted for inflation, it will be even worse. It's economic reality.
And McDonald's will sell triple cheeseburgers for a buck.
On the day, advancing issues led decliners slightly, 3209-2975. New lows expanded their edge over new highs, 234-107. This is a bit of a sign that another deep plunge is on the way. We'll know more tomorrow and even more on Friday. In fact, Friday is shaping up to be one of those ugly 250-point loss days.
Oil continued to slide, losing 36 cents to $109.35. The metals continue to do their part to contribute to the burgeoning worldwide deflation. Gold lost another $2.30, to $808.20. Silver fell 20 cents, to $12.95. Both should be markedly lower in coming months.
Of course, as oil continues to dip, motorists are getting a little relief at the pumps. The average price of a gallon of gas was $3.68 as of Sept. 1, off from its peak of $4.12 in July. Now, since oil was $145 then and a shade under $110 now, how much should a gallon of gas cost. Using the ratio of 2.5 cents per gallon of gas for every $1 in the price of a barrel of crude, gas should cost $3.25 per gallon, or 87 cents less. It's not even close. How come?
Well, even if oil drops below $90 per barrel, gas will still cost more than it should because the oil companies have to keep making obscene profits.
John McCain promised.
NYSE Volume 1,208,861,000
NASDAQ Volume 2,115,416,000
Tuesday, September 2, 2008
Traders Return, but Result is Not Cheerful
Many investors returned to trading on Tuesday after a lengthy summer hiatus which included some of the lowest-volume sessions of the year, occurring in the final two weeks of August.
Right out of the gate, stocks were soaring, mostly due to the uneventful passing of Hurricane Gustav and the consequent drop in oil prices (down more than $4/barrel on Monday). The Dow was up nearly 250 point in the first 20 minutes of the session.
However, the exhilaration soon faded as economic realities reared their ugly heads. Stocks continued to slide all day, with all major indices eventually ending with losses.
Dow 11,516.92 -26.63; NASDAQ 2,349.24 -18.28; S&P 500 1,277.57 -5.26; NYSE Composite 8,296.97 -85.11
With the rise and fall of the markets came increased volume, though the markets could easily still be characterized as "sluggish."
Market internals were mixed. Advancing issues led decliners, 3211-3053, though new lows remained above new highs, 168-137.
What did stocks in on the first unofficial day of fall were economic reports from various agencies. Construction spending in July reportedly fell 0.6%, following a gain of 0.3% in June.
A reading from the Institute for Supply Management (ISM), which tracks overall manufacturing activity, was perhaps the most dour news of the day. The index fell to 49.9 in August after a reading of 50 in July. Any number below 50 shows a contraction, and, while the figure is barely negative, it is not what investors are seeking.
To complicate matters further, in the same report, inflation was seen to be slowing. The August reading of 77 was a far cry from June's 91.5, mostly related to the price of oil. The survey showed commodity prices falling many areas, including copper, corn, fuel oil, natural gas and soybean oil.
This is simply more evidence of a growing worldwide slowdown, which will take down all prices and affect all asset classes, from real estate, to commodities, to collectibles. Between the steep declines in real estate and the continuing diminution of credit, this is a scenario which only numb skulls and dunces could not have seen coming... but, after all, isn't that why we have the Fed... and CNBC?
Oil traded lower by $5.75, to $109.71, while the metals turned in another clunker as well. Gold fell $24.70, to $810.50. Silver was off 56 cents, to $13.15.
The coming global recession is going to be a crusher, especially for over-leveraged companies which have high debt ratios, low profit margins and nowhere to turn. Without financing, a good number of household name-types are going to be on the auction block within the next 6-12 months.
The bright side to the equation is that fear of home heating oil and natural gas breaking the budgets of many consumers this winter are probably unfounded. The giant utilities will have to make due with their already grossly inflated profits. The summer was cool by recent standards, and if the winter is not devastatingly cold, consumers will "weather the storm" as there simply won't be enough demand to hike prices.
As I've said before, everything is going to be a lot cheaper down the road. The trick is to have enough cash on hand with which to afford any or all of it. That's because the failed policies of the Republican-Wall St. junta have left Americans with fewer jobs and those that are available are lower-paying ones.
It will probably take the country four to six years to recover from the damage done by the current administration over the last eight years. Friday's Non-farm employment report will once again show losses of 60-80,000 jobs, continuing a trend that began in December of last year, and that should be more than enough data to convince Americans that four more years of Republican leadership will devastate the economy and the country.
If Obama beats McCain in the fall, the healing could begin by the second quarter of '09. If McCain is elected, expect nothing more than an outright economic and social depression.
NYSE Volume 1,146,155,000
NASDAQ Volume 2,045,446,000
Right out of the gate, stocks were soaring, mostly due to the uneventful passing of Hurricane Gustav and the consequent drop in oil prices (down more than $4/barrel on Monday). The Dow was up nearly 250 point in the first 20 minutes of the session.
However, the exhilaration soon faded as economic realities reared their ugly heads. Stocks continued to slide all day, with all major indices eventually ending with losses.
Dow 11,516.92 -26.63; NASDAQ 2,349.24 -18.28; S&P 500 1,277.57 -5.26; NYSE Composite 8,296.97 -85.11
With the rise and fall of the markets came increased volume, though the markets could easily still be characterized as "sluggish."
Market internals were mixed. Advancing issues led decliners, 3211-3053, though new lows remained above new highs, 168-137.
What did stocks in on the first unofficial day of fall were economic reports from various agencies. Construction spending in July reportedly fell 0.6%, following a gain of 0.3% in June.
A reading from the Institute for Supply Management (ISM), which tracks overall manufacturing activity, was perhaps the most dour news of the day. The index fell to 49.9 in August after a reading of 50 in July. Any number below 50 shows a contraction, and, while the figure is barely negative, it is not what investors are seeking.
To complicate matters further, in the same report, inflation was seen to be slowing. The August reading of 77 was a far cry from June's 91.5, mostly related to the price of oil. The survey showed commodity prices falling many areas, including copper, corn, fuel oil, natural gas and soybean oil.
This is simply more evidence of a growing worldwide slowdown, which will take down all prices and affect all asset classes, from real estate, to commodities, to collectibles. Between the steep declines in real estate and the continuing diminution of credit, this is a scenario which only numb skulls and dunces could not have seen coming... but, after all, isn't that why we have the Fed... and CNBC?
Oil traded lower by $5.75, to $109.71, while the metals turned in another clunker as well. Gold fell $24.70, to $810.50. Silver was off 56 cents, to $13.15.
The coming global recession is going to be a crusher, especially for over-leveraged companies which have high debt ratios, low profit margins and nowhere to turn. Without financing, a good number of household name-types are going to be on the auction block within the next 6-12 months.
The bright side to the equation is that fear of home heating oil and natural gas breaking the budgets of many consumers this winter are probably unfounded. The giant utilities will have to make due with their already grossly inflated profits. The summer was cool by recent standards, and if the winter is not devastatingly cold, consumers will "weather the storm" as there simply won't be enough demand to hike prices.
As I've said before, everything is going to be a lot cheaper down the road. The trick is to have enough cash on hand with which to afford any or all of it. That's because the failed policies of the Republican-Wall St. junta have left Americans with fewer jobs and those that are available are lower-paying ones.
It will probably take the country four to six years to recover from the damage done by the current administration over the last eight years. Friday's Non-farm employment report will once again show losses of 60-80,000 jobs, continuing a trend that began in December of last year, and that should be more than enough data to convince Americans that four more years of Republican leadership will devastate the economy and the country.
If Obama beats McCain in the fall, the healing could begin by the second quarter of '09. If McCain is elected, expect nothing more than an outright economic and social depression.
NYSE Volume 1,146,155,000
NASDAQ Volume 2,045,446,000
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