On Tuesday, stocks took a bit of a breather from their wild zig-zagging, with the major indices ending with the smallest point changes in weeks.
Dow 8,479.47 +36.08; NASDAQ 1,464.73 -7.29; S&P 500 857.39 +5.58; NYSE Composite 5,375.36 +61.60
While the NASDAQ ended the session on the downside, the other indices were all on the uptick as the government announced a massive plan to boost consumer spending and credit.
The $800 billion plan, approved by Fed head Ben Bernank and eannounced today by outgoing (and not a moment too soon) Treasury Secretary Hank Paulson, targets buyouts of debt-backed securities, specifically, $200 billion for credit card backed securities and $600 billion to buy up mortgage-backed securities held by Fannie Mae and Freddie Mac along with mortgages issued by those firms.
Sounds like more of the same kind of nonsense that got us into the mess in the first place. The government is simply churning all kinds of money through major institutions while the people who are doing the real suffering, the American taxpayer, are getting nothing in return. $800 billion is indeed a tidy sum. It amounts to more than $2500 for every US citizen. It still seems that simply doling out that kind of cash directly to individuals and families would make a whole lot more sense and actually get the economy moving in a big way forward.
However, we have numbskulls continuing to run the USA into the ground in their final two months in office. Bush and Paulson have practically bankrupted the entire nation in just the past two years. They obviously are not through spending money that won't likely be repaid for a generation, if at all.
On the day, advancing issues outperformed decliners, 4102-2450. There were 305 new lows and 13 new highs. Volume was moderate, slightly to the heavy side.
NYSE Volume 1,871,699,000
NASDAQ Volume 2,440,636,000
Oil gained 15 cents, to $50.92. Gold fell $2.20, to $818.30. Silver lost a penny to $10.30.
The government also reported that the third quarter was poorer in performance than their earlier estimate, revising their GDP estimate from a -0.3 to -0.5.
Wednesday marks the last full day of trading for November. With the Thanksgiving holiday Thursday, a half-session is planned for Friday.
Tuesday, November 25, 2008
Monday, November 24, 2008
Citigroup Bailout Boosts Stocks
For the second consecutive session, stocks rallied as the federal government made steps toward stabilizing the fragile US economy. On Friday, it was the leaked announcement of Timothy Geithner to head up President-elect Obama's Treasury Department that caused a late-day rally. Monday's moves were attributed to Obama's transition team making Geithner and other appointments official, plus word that beleaguered Citigroup would receive additional financing to help weather the economic storm from bad loans and equally bad quarterly reports.
The bank has shown substantial losses in each of the last four quarters as its stock price sank below $5 per share, a point at which many institutions could not - under their charters - continue to be holders of the security. Shares of Citigroup (C) closed 57% to the good, at 5.95, still far below their value of just months ago.
Dow 8,443.39 +396.97 (4.93%); NASDAQ 1,472.02 +87.67; S&P 500 851.81 +51.78 (6.47%); NYSE Composite 5,313.76 +353.97 (7.14%)
Market internals continued their alignment to headline numbers. Advancing issues overwhelmed decliners, 5472-1213. There was also a major drawdown in the number of new lows, which had reached historic proportions last week. While there were just 5 recorded new highs, the number of new lows shank considerably from Thursday and Friday's figures, down to 418, as compared to the more than 2000 new lows on Friday. Volume was on the high side, another positive development.
NYSE Volume 2,034,090,000
NASDAQ Volume 2,590,952,000
Commodities staged a rally all their own. Crude oil jumped $4.14 to $54.07. Gold added $29.00, to $821.40, marking the first time gold has been over $800 in a number of weeks. Silver gained by more than 10%, up $1.00, to finish at $10.51 per ounce.
While these numbers in commodities and the general stock market all look good today and are signs of confidence in the new administration, there are still rough patches through which the US economy must travel. Though the days of bank bailouts may be behind us for now, there still are underlying issues in mainstream companies, notably, lower earnings and coming layoffs. These are bound to follow on shortly and carry through into the first quarter of 2009.
The bank has shown substantial losses in each of the last four quarters as its stock price sank below $5 per share, a point at which many institutions could not - under their charters - continue to be holders of the security. Shares of Citigroup (C) closed 57% to the good, at 5.95, still far below their value of just months ago.
Dow 8,443.39 +396.97 (4.93%); NASDAQ 1,472.02 +87.67; S&P 500 851.81 +51.78 (6.47%); NYSE Composite 5,313.76 +353.97 (7.14%)
Market internals continued their alignment to headline numbers. Advancing issues overwhelmed decliners, 5472-1213. There was also a major drawdown in the number of new lows, which had reached historic proportions last week. While there were just 5 recorded new highs, the number of new lows shank considerably from Thursday and Friday's figures, down to 418, as compared to the more than 2000 new lows on Friday. Volume was on the high side, another positive development.
NYSE Volume 2,034,090,000
NASDAQ Volume 2,590,952,000
Commodities staged a rally all their own. Crude oil jumped $4.14 to $54.07. Gold added $29.00, to $821.40, marking the first time gold has been over $800 in a number of weeks. Silver gained by more than 10%, up $1.00, to finish at $10.51 per ounce.
While these numbers in commodities and the general stock market all look good today and are signs of confidence in the new administration, there are still rough patches through which the US economy must travel. Though the days of bank bailouts may be behind us for now, there still are underlying issues in mainstream companies, notably, lower earnings and coming layoffs. These are bound to follow on shortly and carry through into the first quarter of 2009.
Friday, November 21, 2008
Geithner Appointment Boosts Stocks in Final Hour
I used to call this kind of activity "proof" of the existence of the PPT (Plunge Protection Team), though such wild trading swings have become so commonplace that one has to question exactly what is going on.
There seems to be such a high level of concentrated insider trading on Wall Street that major moves - both up and down - have to be viewed with a large dose of skepticism.
Surely, stocks are down in a major way from a year ago, but the evidence that there is a global recession in progress has yet to manifest itself in major ways. Maybe that is only my perception, and to a large degree it must be, though there are some indications that the economic downturn is still affecting only peripherally.
Most people still have jobs and are not in any immediate jeopardy of losing them. Gas prices are much lower than just months ago, and half what they were a year ago. The only visible signs of any crisis are evident only on Wall Street and in Washington, D.C. The tail is wagging the dog.
Today's final hour boost was credited to a news leak of President-Elect Barack Obama's imminent appointment of Timothy Geithner as Treasury Secretary. Anonymous sources were credited by various news outlets, also mentioning that Lawrence Summers would become a senior advisor and New Mexico Governor Bill Richardson would be appointed Commerce Secretary on Monday, November 24.
Dow 8,046.42 +494.13 (6.54%); NASDAQ 1,384.35 +68.23 (5.18%); S&P 500 800.03 +47.59 (6.32%); NYSE Composite 4,959.79 +308.58 (6.63%)
The day's trade generally vacillated along the break-even line until the 3:00 hour, and at that point began a wicked ascent which wiped away the losses incurred on Thursday on the Dow. Significant advances were made on the other major indices. Advancing issues surpassed declining ones, 4157-2514. New lows overwhelmed new highs 2575-46. Nearly 40% off all listed securities on the NASDAQ and NYSE fell to fresh lows today on significant volume.
NYSE Volume 2,372,786,000
NASDAQ Volume 3,128,916,000
Commodities all gained. Oil was higher by 51 cents, to $49.93. Gold was up a massive $43.10, to $791.80. Silver advanced 46 cents, to $9.51.
The average investor has to be confused with recent market volatility, and with good cause. It is unprecedented.
Have we seen the bottom? Who knows?
There seems to be such a high level of concentrated insider trading on Wall Street that major moves - both up and down - have to be viewed with a large dose of skepticism.
Surely, stocks are down in a major way from a year ago, but the evidence that there is a global recession in progress has yet to manifest itself in major ways. Maybe that is only my perception, and to a large degree it must be, though there are some indications that the economic downturn is still affecting only peripherally.
Most people still have jobs and are not in any immediate jeopardy of losing them. Gas prices are much lower than just months ago, and half what they were a year ago. The only visible signs of any crisis are evident only on Wall Street and in Washington, D.C. The tail is wagging the dog.
Today's final hour boost was credited to a news leak of President-Elect Barack Obama's imminent appointment of Timothy Geithner as Treasury Secretary. Anonymous sources were credited by various news outlets, also mentioning that Lawrence Summers would become a senior advisor and New Mexico Governor Bill Richardson would be appointed Commerce Secretary on Monday, November 24.
Dow 8,046.42 +494.13 (6.54%); NASDAQ 1,384.35 +68.23 (5.18%); S&P 500 800.03 +47.59 (6.32%); NYSE Composite 4,959.79 +308.58 (6.63%)
The day's trade generally vacillated along the break-even line until the 3:00 hour, and at that point began a wicked ascent which wiped away the losses incurred on Thursday on the Dow. Significant advances were made on the other major indices. Advancing issues surpassed declining ones, 4157-2514. New lows overwhelmed new highs 2575-46. Nearly 40% off all listed securities on the NASDAQ and NYSE fell to fresh lows today on significant volume.
NYSE Volume 2,372,786,000
NASDAQ Volume 3,128,916,000
Commodities all gained. Oil was higher by 51 cents, to $49.93. Gold was up a massive $43.10, to $791.80. Silver advanced 46 cents, to $9.51.
The average investor has to be confused with recent market volatility, and with good cause. It is unprecedented.
Have we seen the bottom? Who knows?
Thursday, November 20, 2008
America 40-60% Off; Detroit's Real Problem
Congressional leaders said today that there would be no bailout money for Detroit's Big Three automakers - Ford, GM and Chrysler - until the companies offer some kind of business plan outlining how they would use the money to make their businesses more competitive. Auto executives have been in Washington the past two days begging for $25 billion in immediate funding.
At long last, congress has come up with an idea that makes sense: require companies to submit detailed spending plans before granting or loaning them massive amounts of money. The move, largely the idea of congressional Democrats, may be more of a stall than anything else, keeping the bailout ball in the air until President-Elect Obama and a fresh congress are put officially in charge come January. As it now stands, both houses of congress plan to go into recess for the Thanksgiving holiday this Friday and return on December 2. (Yes, congress gets a week off for Thanksgiving.)
Even if that is the case, it's certainly better than just handing over $25 billion to another bunch of whining corporate executives who are now begging the government to help them out of a tight spot. Truth is a troublesome thing, but the auto industry has been in deep trouble for years. US manufacturers kept insisting on building cars that guzzled gas, or that most Americans could not afford. Producing a low-priced economical car was never in the plans of any Detroit-based automaker as they misjudged the market completely.
The reason Ford, GM and Chrysler need cash from taxpayers is simple: American automobiles are too expensive. Everything in America is now 40-60% off or will soon be. Stocks, real estate, food, clothing, almost everything is dropping in price or soon will be forced lower for the simple reason that people will not buy because they don't have the money. Simple supply and demand economics will change life in America and deflate prices back to 1970s levels in pretty short order, maybe two to three years.
So, the dynamic for the next five years for smart entrepreneurs and business operatives should include lower production costs, fixed costs and labor costs resulting in products which will produce profit margins at lower price points. Detroit, pay attention.
In response to congress telling the auto CEOs to basically take a hike, investors panicked once again, supposedly on the belief that what the CEOs have been saying may be true, that if they didn't get their $25 billion pound of flesh from the US taxpayer immediately, that the economy would sink into a grave depression. Too bad. More people lost more money today on false assumptions. America, and Detroit, and the hundreds of thousands of auto workers will muddle through until January. Don't worry, be happy. You may be able to buy that Cadillac for about $20,000 less next year, or maybe next month.
Stocks went a long way toward finding a bottom on Thursday. In addition to the auto executives getting the stiff job by congress, unemployment figures released prior to the market open were shocking. For the week ended 11/15, there were 542,000 new unemployment claims. Nobody should be shocked, however. The truly large layoffs haven't even begun. By January, we're likely to see 650,000 new claims in a given week.
In any case, by the end of the day, the Dow took another major one-day loss. On a percentage basis, it was the smallest of the major indices.
Dow 7,553.56 -443.72 (5.27%); NASDAQ 1,316.12 -70.30 (5.07%) S&P 500 752.45 -54.13 (6.71%); NYSE Composite 4,651.26 -360.73 (7.20%)
Market internals were roughly as bad or worse than yesterday's horrific numbers. Declining issues outnumbered advancers, 5940-760. New lows reached a truly historic number of 2956 on the session. Interestingly, new highs were up again, to 47 today, from 22 yesterday. This is a phenomenon to which one should pay attention. The new highs are likely being made by companies that were battered in 2007 and are now in the process of recovery. This could provide somewhat of a clue to where stocks will find a real bottom. We're certainly getting closer to it, no matter what.
NYSE Volume 2,222,210,000
NASDAQ Volume 3,175,616,000
Volume was extremely high, indicating the level of panic in the markets. It's a shame, really. All of these people selling now could have done so months ago. Now they've lost all hope, usually a sign of a bottoming out or the bottom falling out. If it's the latter, forget 6500-7200 which I mentioned as the bottom yesterday. We'd more likely be looking at 3000.
Commodities were mixed again. Oil fell by more than 8% as slack demand continues to drive prices down. Crude for January delivery fell $4.45, to $49.65. Gold bugs see opportunity in the yellow metal, driving the price up $12.70, to $748.70 an ounce. Silver fell again, losing 29 cents to $9.05. The metals, in comparison to other commodities, are probably 20-25% overvalued still.
I leave you today with a string of two-worded advisories: Remain calm; don't panic; spend frugally; save daily; promote discounts.
At long last, congress has come up with an idea that makes sense: require companies to submit detailed spending plans before granting or loaning them massive amounts of money. The move, largely the idea of congressional Democrats, may be more of a stall than anything else, keeping the bailout ball in the air until President-Elect Obama and a fresh congress are put officially in charge come January. As it now stands, both houses of congress plan to go into recess for the Thanksgiving holiday this Friday and return on December 2. (Yes, congress gets a week off for Thanksgiving.)
Even if that is the case, it's certainly better than just handing over $25 billion to another bunch of whining corporate executives who are now begging the government to help them out of a tight spot. Truth is a troublesome thing, but the auto industry has been in deep trouble for years. US manufacturers kept insisting on building cars that guzzled gas, or that most Americans could not afford. Producing a low-priced economical car was never in the plans of any Detroit-based automaker as they misjudged the market completely.
The reason Ford, GM and Chrysler need cash from taxpayers is simple: American automobiles are too expensive. Everything in America is now 40-60% off or will soon be. Stocks, real estate, food, clothing, almost everything is dropping in price or soon will be forced lower for the simple reason that people will not buy because they don't have the money. Simple supply and demand economics will change life in America and deflate prices back to 1970s levels in pretty short order, maybe two to three years.
So, the dynamic for the next five years for smart entrepreneurs and business operatives should include lower production costs, fixed costs and labor costs resulting in products which will produce profit margins at lower price points. Detroit, pay attention.
In response to congress telling the auto CEOs to basically take a hike, investors panicked once again, supposedly on the belief that what the CEOs have been saying may be true, that if they didn't get their $25 billion pound of flesh from the US taxpayer immediately, that the economy would sink into a grave depression. Too bad. More people lost more money today on false assumptions. America, and Detroit, and the hundreds of thousands of auto workers will muddle through until January. Don't worry, be happy. You may be able to buy that Cadillac for about $20,000 less next year, or maybe next month.
Stocks went a long way toward finding a bottom on Thursday. In addition to the auto executives getting the stiff job by congress, unemployment figures released prior to the market open were shocking. For the week ended 11/15, there were 542,000 new unemployment claims. Nobody should be shocked, however. The truly large layoffs haven't even begun. By January, we're likely to see 650,000 new claims in a given week.
In any case, by the end of the day, the Dow took another major one-day loss. On a percentage basis, it was the smallest of the major indices.
Dow 7,553.56 -443.72 (5.27%); NASDAQ 1,316.12 -70.30 (5.07%) S&P 500 752.45 -54.13 (6.71%); NYSE Composite 4,651.26 -360.73 (7.20%)
Market internals were roughly as bad or worse than yesterday's horrific numbers. Declining issues outnumbered advancers, 5940-760. New lows reached a truly historic number of 2956 on the session. Interestingly, new highs were up again, to 47 today, from 22 yesterday. This is a phenomenon to which one should pay attention. The new highs are likely being made by companies that were battered in 2007 and are now in the process of recovery. This could provide somewhat of a clue to where stocks will find a real bottom. We're certainly getting closer to it, no matter what.
NYSE Volume 2,222,210,000
NASDAQ Volume 3,175,616,000
Volume was extremely high, indicating the level of panic in the markets. It's a shame, really. All of these people selling now could have done so months ago. Now they've lost all hope, usually a sign of a bottoming out or the bottom falling out. If it's the latter, forget 6500-7200 which I mentioned as the bottom yesterday. We'd more likely be looking at 3000.
Commodities were mixed again. Oil fell by more than 8% as slack demand continues to drive prices down. Crude for January delivery fell $4.45, to $49.65. Gold bugs see opportunity in the yellow metal, driving the price up $12.70, to $748.70 an ounce. Silver fell again, losing 29 cents to $9.05. The metals, in comparison to other commodities, are probably 20-25% overvalued still.
I leave you today with a string of two-worded advisories: Remain calm; don't panic; spend frugally; save daily; promote discounts.
Wednesday, November 19, 2008
Stocks Fall to New 5-Year Lows
The inevitable finally occurred on Wednesday as fearful investors pulled more money out of US stocks and dropped major indices to new lows.
Damage was widespread, with all sectors showing losses and the blue chip Dow Industrials recording one of its worst sessions on record, a blistering 427-point, panic-induced drubbing.
Dow 7,997.28 -427.47; NASDAQ 1,386.42 -96.85; S&P 500 806.58 -52.54; NYSE Composite 5,011.99 -353.67
While the CEOs of Detroit's Big Three automakers (Ford, GM and Chrysler) flew in private jets to Washington, where they begged for government assistance, the unheard small investor prayed silently for relief.
Huge companies may fall in this most wicked of all financial storms, but the real tragedies are being felt hardest by honest working men and women who are seeing years of painstaking investing and planning spill down a drain of deceit and despair as the value of stocks continues descending to points unknown.
The massive $6 trillion hole drilled into the world financial system by the subprime mortgage thievery - and then exacerbated by the same parties taking out insurance against the very loans they knew would fail - will not be repaired soon, if ever.
The day began with CPI figures for October showing a 1% decline in October and ended with more fear and doubt than ever in recent days. By shattering the lows set just weeks ago, on October 27, investors are awe struck by the sheer size of the continuing declines. Comparisons to the crash of 1929 are not exaggerated. Stocks have lost nearly half of their value in just one year's time. Nobody has been able to divine a way to stem the worsening economic conditions.
But it's not all bad news. Many people still have jobs, many of them well-paying ones. Unemployment has not yet reached 10%, though that is according to government figures. What the feds fail to take into account are the large sums of monies earned by labor which go routinely unaccounted for and the determination of the American people as a force for right and reason.
Out in the vast access of America are god people who will make the best of the situation. As all asset classes come tumbling down, some people, particularly those at the traditional bottom, will actually find themselves comparatively better off than before. Those who did not own stock and who have no savings will feel the least pain of all.
It's a new world, just 50-70% poorer and cheaper.
Market internals on the day were along the lines most often seen in major bear market corrections. Declining issues beat down advancers, 5958-639. New lows expanded to 1871 - nearly one out of every three stocks on the major exchanges. There were 22 stocks making new 52-week highs. Volume was high, yet another indication that the markets are again in the midst of a major sell-off.
NYSE Volume 1,546,734,000
NASDAQ Volume 2,424,409,750
The worst fears will be realized some time between now and late January. Two major events will collide on and around January 20. A newly-elected government will take the reigns of the nation and 4th quarter earnings reports will roll out from corporate offices to shareholders, investors, traders, brokers and analysts. The earnings reports are almost certain to be horrific. There's some hope that the newly-minted government will bring improvements. Nothing, however, is certain, as always.
Commodities mostly continued their downward trek. Oil dipped another 66 cents, to $54.10. Gold gained marginally, up $3.30, to $736.00. Silver fell 24 cents, to $9.31.
Damage was widespread, with all sectors showing losses and the blue chip Dow Industrials recording one of its worst sessions on record, a blistering 427-point, panic-induced drubbing.
Dow 7,997.28 -427.47; NASDAQ 1,386.42 -96.85; S&P 500 806.58 -52.54; NYSE Composite 5,011.99 -353.67
While the CEOs of Detroit's Big Three automakers (Ford, GM and Chrysler) flew in private jets to Washington, where they begged for government assistance, the unheard small investor prayed silently for relief.
Huge companies may fall in this most wicked of all financial storms, but the real tragedies are being felt hardest by honest working men and women who are seeing years of painstaking investing and planning spill down a drain of deceit and despair as the value of stocks continues descending to points unknown.
The massive $6 trillion hole drilled into the world financial system by the subprime mortgage thievery - and then exacerbated by the same parties taking out insurance against the very loans they knew would fail - will not be repaired soon, if ever.
The day began with CPI figures for October showing a 1% decline in October and ended with more fear and doubt than ever in recent days. By shattering the lows set just weeks ago, on October 27, investors are awe struck by the sheer size of the continuing declines. Comparisons to the crash of 1929 are not exaggerated. Stocks have lost nearly half of their value in just one year's time. Nobody has been able to divine a way to stem the worsening economic conditions.
But it's not all bad news. Many people still have jobs, many of them well-paying ones. Unemployment has not yet reached 10%, though that is according to government figures. What the feds fail to take into account are the large sums of monies earned by labor which go routinely unaccounted for and the determination of the American people as a force for right and reason.
Out in the vast access of America are god people who will make the best of the situation. As all asset classes come tumbling down, some people, particularly those at the traditional bottom, will actually find themselves comparatively better off than before. Those who did not own stock and who have no savings will feel the least pain of all.
It's a new world, just 50-70% poorer and cheaper.
Market internals on the day were along the lines most often seen in major bear market corrections. Declining issues beat down advancers, 5958-639. New lows expanded to 1871 - nearly one out of every three stocks on the major exchanges. There were 22 stocks making new 52-week highs. Volume was high, yet another indication that the markets are again in the midst of a major sell-off.
NYSE Volume 1,546,734,000
NASDAQ Volume 2,424,409,750
The worst fears will be realized some time between now and late January. Two major events will collide on and around January 20. A newly-elected government will take the reigns of the nation and 4th quarter earnings reports will roll out from corporate offices to shareholders, investors, traders, brokers and analysts. The earnings reports are almost certain to be horrific. There's some hope that the newly-minted government will bring improvements. Nothing, however, is certain, as always.
Commodities mostly continued their downward trek. Oil dipped another 66 cents, to $54.10. Gold gained marginally, up $3.30, to $736.00. Silver fell 24 cents, to $9.31.
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