Unless you are an idiot or simply a "contrarian," you probably don't have much money invested in stocks at this juncture. Of course, you could be fabulously wealthy and still own stocks, but you are now a little less fabulous and a lot less wealthy. So, why do I write a piece of market recap and rehash every day? Eventually, there will be bargains and there will also be a time to begin investing again and until that time, it pays to stay informed, because...
The destruction of the US economic system continues apace. On Thursday, the Labor Department reported that there were more people on unemployment insurance than at any time since 1992.
Manufacturing slowed once more in October. Factory orders fell for the third month in a row, down by 5.1%, according to the latest government statistics.
There is one sliver of truth in government figures. One can safely assume that after the head-bobbers and number-crunchers get their mitts on raw data, it's been so heavily massaged that it wants nothing more than a hot shower and a nap. The numbers released by various government agencies have a common thread: They are always wrong. If it's good news, they usually make it sound better than it is, and the same goes for bad news. In other words, if the government were to report that, say, 300 people died in turkey fires over the Thanksgiving holiday, the real number would likely be 20-30% higher.
Thus, today's report that factory orders declined by 5.1% should more accurately be noted as 6.2%. It truly is becoming worse than "they" say it is.
People are losing jobs at a rapid clip. Those in the public sector, by the middle of next year, will be the last ones standing. Expect unemployment to reach at least 10%, according to the feds, because the real figures are already approaching that and may shoot as high as 15-17% before this economic disaster is fully played out. Not only are jobs being surrendered, people are not finding new work.
Retailers announced massive year-over-year declines, mostly in the teens, but that's hardly a surprise to anyone paying attention.
By the time Mr. Obama takes office in January, there may not be much of an economy left to rescue. He'll surely step into a world of problems, none of which were his creation, but which he will be blamed for and charged with the responsibility to fix. The poor man didn't realize what a mess would be handed to him. He'll need the help of every American to bring our country back from the brink of economic doomsday and it will take much longer than anyone currently anticipates.
Stocks did on Thursday what they do best, they went down some more. The selling was in response to some of the economic news, but, being that the bulk of the losses occurred in the last hour much of the trading was geared toward Friday's pre-opening non-farms payroll report for November, which is likely to record another 200,000+ job losses and send stocks spiraling down even more.
Dow 8,376.24, -215.45 (2.51%)
NASDAQ 1,445.56, -46.82 (3.14%)
S&P 500 845.22, -25.52 (2.93%)
NYSE Composite 5,232.26, -173.29 (3.21%
As expected, losers outpaced gainers, 4792-1914. New lows surpassed new highs, 340-31. Ho-hum. Nothing new there. Volume was moderate.
NYSE Volume 1,469,269,000
NASDAQ Volume 2,063,347,000
Oil declined to its lowest price level in four years, losing $3.12, to $43.67 a barrel. Gold lost $5.00, to $765.50. Silver slipped another 7 cents to close at $9.52 per ounce. The commodities continue to follow the deflationary course.
So, what is one to do if the US economy really is worse than it appears (and that's pretty bad, as it is)?
If you have any stocks, sell them now. The cash will come in handy and there won't be a rebound to levels seen earlier this year for many equities for a number of years, like five, or ten, or longer. Some of the companies in which you may already be invested will not even be listed at this time a year or two from now. There will be massive layoffs, followed by bankruptcies in all sectors. Nothing will be spared.
Also, if the banks haven't already severed your lines of credit and you are a little short on cash, take the cash from your credit line, or buy things you can quickly convert to cash. Banks are pulling lines of credit all over the map. If you've got a 5% home equity line of credit, take a large lump sum in cash. The bank will likely balk, and afterwards close down your credit line, but you will have the cash and it will be better than credit.
Save. Put money aside. Put off that trip to the mall; buy less expensive gifts; cut back on unnecessary expenses.
And, most of all, don't panic. There will be plenty of that going on without you joining the chorus of screams and rants. Besides, if you're prudent and wise, you will be able to snatch up valuable assets at a fraction of their true value. And in the long run, you will emerge far ahead of the pack.
Thursday, December 4, 2008
Wednesday, December 3, 2008
Afternoon Surge Results in Winning Wednesday
US stock indices recorded another positive day - the second in a row - as investors shook off dismal job projections and focused on what seem to be bargains all over the markets. stocks have been so severely hit in recent days that speculators have little choice but to jump in, though more cautious types continue to resist the temptation to dive into equities as the year enters its final month.
Trading wasn't as broad-based as yesterday's action, and the results were a bit less inspiring, but the major indices have regained 70-80% of what was lost on Monday as fear of a continued recession shook markets to their core, sending the Dow Jones Industrials to its 4th-worst point loss in history.
The past two days have seen the now-normal volatility, with indices and individual stocks making wild swings over the course of the session. Today's ride on the Dow was a 390-point swing from the lows to the highs. The Dow ended near the highs of the day, which were achieved in the final ten minutes of trading.
While congress dithers over what to do about the Big Three automakers, Wall Street is busy doing its own handiwork, though the trading recently has devolved into what looks more like insider churning or day-trading, with no real establishment of positions and quick exits from both profitable and losing positions. Traders are certainly on their toes as we wend our way to the conclusion of 2008, one of the worst ever for the stock markets.
Dow 8,591.69, +172.60 (2.05%)
NASDAQ 1,492.38, +42.58 (2.94%)
S&P 500 870.74, +21.93 (2.58%)
NYSE Composite 5,405.55, +96.60 (1.82%)
Things got off to a dreadful start when ADP - a private firm which tracks employment - said their November report showed that the economy shed 250,000 jobs, the worst one-month number since 1991.
Stocks quickly recovered from that somewhat expected news and spent most of the remaining session after 10:00 am in positive territory.
Advancing issues outperformed decliners for a second straight day, though the margin was not overwhelming, at less than 2-1: 4280-2414. New lows were greater in number than new highs, 273-36. While this has been a persistent indicator for 13 months now, we are beginning to see a small increase in the daily number of new highs. Though the numbers are tiny, they are heading in the right direction, but it must be cautioned that some of the companies making new highs are those recovering from the first wave of declines near the end of December, 2007. An increasing number of stocks making new highs should not be seen, in and of itself, as an indication of anything other than the mere fact that some beaten-down stocks are beginning to recover.
The markets remain highly bearish and will remain so for what appears now to be a very long time. There is little hope that the US economy can begin to pull itself out of recession before the middle of 2009, at the very earliest. Severe damage has been done to the very structure of the system, and thus far, efforts to repair it have been inconsequential or ineffective. The condition of the economy since September of this year and August of 2007 has continued to deteriorate. There is no indication that this erosion is coming to an end.
Volume was on the high side, but it should be with the year coming to an end. There are a plethora of reasons to sell at this time, and not many good ones to induce buying, but there is still some speculation, despite dire warnings all around.
NYSE Volume 1,551,506,000
NASDAQ Volume 2,279,699,000
One area which continues to trend lower is in commodities of all kinds. Lower prices for all manner of raw materials eventually is going to wend its way through the supply chain and into finished products. There is going to be a prolonged period of price uncertainty and outright deflation, which could last through 2009, 2010 and beyond. Ability to adjust pricing on-the-fly, so to speak, will be critical to success at almost any level. This kind of pricing flexibility favors smaller companies with established expertise in technology, which is why internet retailers are not suffering as much as their brick and mortar counterparts during the holiday season.
Oil closed at or near multi-year lows, down 8 cents, to $46.88. Gold tumbled another $8.50, to $774.80, while silver gained 2 cents to $9.63.
The equity markets remain somewhat in suspended animation, awaiting the inauguration of President-Elect Barack Obama on January 20th. A new congress will be sworn in days earlier, but the hope that somehow government, the creature responsible for much of the current catastrophe, will come around with a quick fix is looking more and more like a pipe dream.
The economy has suffered more than a couple of body blows over the past two years. The damages was the result of many more years previously in which the Fed and government allowed loose credit, fiscal and monetary policy to cause structural damage to the underpinnings of the system. The kind of damage inflicted is not going to be repaired in short order. There is going to be a long period of transfusion, rest and recovery, because the "patient" nearly died on the operating table.
If you were not prepared for the long haul, you would do well to relocate outside the US for the next few years, but choose carefully. This economic disaster has spread around the globe.
Trading wasn't as broad-based as yesterday's action, and the results were a bit less inspiring, but the major indices have regained 70-80% of what was lost on Monday as fear of a continued recession shook markets to their core, sending the Dow Jones Industrials to its 4th-worst point loss in history.
The past two days have seen the now-normal volatility, with indices and individual stocks making wild swings over the course of the session. Today's ride on the Dow was a 390-point swing from the lows to the highs. The Dow ended near the highs of the day, which were achieved in the final ten minutes of trading.
While congress dithers over what to do about the Big Three automakers, Wall Street is busy doing its own handiwork, though the trading recently has devolved into what looks more like insider churning or day-trading, with no real establishment of positions and quick exits from both profitable and losing positions. Traders are certainly on their toes as we wend our way to the conclusion of 2008, one of the worst ever for the stock markets.
Dow 8,591.69, +172.60 (2.05%)
NASDAQ 1,492.38, +42.58 (2.94%)
S&P 500 870.74, +21.93 (2.58%)
NYSE Composite 5,405.55, +96.60 (1.82%)
Things got off to a dreadful start when ADP - a private firm which tracks employment - said their November report showed that the economy shed 250,000 jobs, the worst one-month number since 1991.
Stocks quickly recovered from that somewhat expected news and spent most of the remaining session after 10:00 am in positive territory.
Advancing issues outperformed decliners for a second straight day, though the margin was not overwhelming, at less than 2-1: 4280-2414. New lows were greater in number than new highs, 273-36. While this has been a persistent indicator for 13 months now, we are beginning to see a small increase in the daily number of new highs. Though the numbers are tiny, they are heading in the right direction, but it must be cautioned that some of the companies making new highs are those recovering from the first wave of declines near the end of December, 2007. An increasing number of stocks making new highs should not be seen, in and of itself, as an indication of anything other than the mere fact that some beaten-down stocks are beginning to recover.
The markets remain highly bearish and will remain so for what appears now to be a very long time. There is little hope that the US economy can begin to pull itself out of recession before the middle of 2009, at the very earliest. Severe damage has been done to the very structure of the system, and thus far, efforts to repair it have been inconsequential or ineffective. The condition of the economy since September of this year and August of 2007 has continued to deteriorate. There is no indication that this erosion is coming to an end.
Volume was on the high side, but it should be with the year coming to an end. There are a plethora of reasons to sell at this time, and not many good ones to induce buying, but there is still some speculation, despite dire warnings all around.
NYSE Volume 1,551,506,000
NASDAQ Volume 2,279,699,000
One area which continues to trend lower is in commodities of all kinds. Lower prices for all manner of raw materials eventually is going to wend its way through the supply chain and into finished products. There is going to be a prolonged period of price uncertainty and outright deflation, which could last through 2009, 2010 and beyond. Ability to adjust pricing on-the-fly, so to speak, will be critical to success at almost any level. This kind of pricing flexibility favors smaller companies with established expertise in technology, which is why internet retailers are not suffering as much as their brick and mortar counterparts during the holiday season.
Oil closed at or near multi-year lows, down 8 cents, to $46.88. Gold tumbled another $8.50, to $774.80, while silver gained 2 cents to $9.63.
The equity markets remain somewhat in suspended animation, awaiting the inauguration of President-Elect Barack Obama on January 20th. A new congress will be sworn in days earlier, but the hope that somehow government, the creature responsible for much of the current catastrophe, will come around with a quick fix is looking more and more like a pipe dream.
The economy has suffered more than a couple of body blows over the past two years. The damages was the result of many more years previously in which the Fed and government allowed loose credit, fiscal and monetary policy to cause structural damage to the underpinnings of the system. The kind of damage inflicted is not going to be repaired in short order. There is going to be a long period of transfusion, rest and recovery, because the "patient" nearly died on the operating table.
If you were not prepared for the long haul, you would do well to relocate outside the US for the next few years, but choose carefully. This economic disaster has spread around the globe.
Tuesday, December 2, 2008
We Are In a Recession, Maybe?
Stocks spent the entire Tuesday session making up for Monday's mess, finishing at their highs of the day. The gains were equivalent to roughly 40% of yesterday's losses, when the government - to the surprise of a limited few - admitted that the economy has been in a recession since the 4th quarter of 2007.
That revelation begs the obvious question: if a recession is defined as two consecutive quarters of negative growth in the GDP, can we assume that the government figures from the first two quarters of this year were slightly fudged?
The first and second quarters of '08 were "officially" gainers, so we were not in a recession then, were we? Or were we?
That's the problem when the government is made up of all variety of scoundrels and thieves, more intent on lining the pockets of themselves and their friends than actually working in the best interest of the citizenry: Numbers get abused, the populace becomes confused and everyone loses.
Last week's rally and the action today is somewhat of a suggestion that people believe the final days of the worst administration in US history will be quiet and uneventful. We can only hope and pray that there's still an economy worth saving by the time President Obama takes over the Oval Office.
Those sentiments are merely window dressing to the real churning that currently plagues Wall Street and the millions of Americans who dread opening their pension or retirement fund statements. There's some thinking that every decline is an opportunity to buy low, but, at the same time, an equally large number of traders is still looking for a bottom.
For the record, the lows of October 27 were tested, retested, and broken down in late November. The current low-water mark is now 7552.29 on the Dow, the closing price November 20. That number came about after the October 27 low of 8175.77 failed to hold. So, we can safely assume -- since we are in a recession, after all -- that stocks will sag through most of December, unless one believes that the bottom is already in (Please, don't make me laugh so hard.). until that low point has been thoroughly tested, bounced off and fleshed out.
Dow 8,419.09, +270.00 (3.31%)
NASDAQ 1,449.80, +51.73 (3.70%)
S&P 500 848.81, +32.60 (3.99%)
NYSE Composite 5,308.95, +216.29 (4.25%)
Today was a classic relief rally, with advancing issues outdoing decliners, 4882-1820, though new lows surpassed new highs by a score of 270-26. Volume was on the heavy side, and all this as automakers planned to return to Washington - this time with actual plans in hand - to cajole the head-nodders in congress for more money.
Those industrial giants will get their money, no doubt, and spend it like drunken sailors. All of this bailout money is going the way all things earned without effort go, quickly down a black hole. The US economy has a lot more worsening to do before it begins to get better, and throwing more money at it isn't a novel idea, nor is it likely to induce a lasting solution.
NYSE Volume 1,611,136,000
NASDAQ Volume 2,104,266,000
In the commodities markets, oil took another turn to the downside, off $1.66, to $47.62, while the metals advanced marginally. Gold gained $6.00, to $782.80, while silver added 18 cents, to end at $9.56 the ounce.
Gold bugs are insistent that the yellow metal should be trading in the range of $1500-2000 per ounce, though the current pricing seems to suggest that they too are overly optimistic. What the current crop of gold-lovers - like their counterparts in the equity markets - fail to understand is the devastating effect of deflation on all asset classes.
The global economy is likely to remain in a deflationary spiral for at least the next two years, probably longer. This is simply a sober assessment of what the subprime-credit-banking mess has wrought. Not only have trillions of dollars of wealth already been vaporized, there is still a limited amount of confidence in the markets. Nobody really has a taste for any of this bitter deflation pill, but it is one we all must swallow, like it or not. The consequences are neither simple nor pleasant, though, in a nutshell, it can be safely assumed that people at the top of the income and wealth ladders will be most severely affected, while those at the bottom will have alternately hard times or grand times, depending on how one plays the game.
Those who are frugal and opportunistic will prosper. Those tied to the economics of the last dozen years or so, will feel more pain than they'd like.
That revelation begs the obvious question: if a recession is defined as two consecutive quarters of negative growth in the GDP, can we assume that the government figures from the first two quarters of this year were slightly fudged?
The first and second quarters of '08 were "officially" gainers, so we were not in a recession then, were we? Or were we?
That's the problem when the government is made up of all variety of scoundrels and thieves, more intent on lining the pockets of themselves and their friends than actually working in the best interest of the citizenry: Numbers get abused, the populace becomes confused and everyone loses.
Last week's rally and the action today is somewhat of a suggestion that people believe the final days of the worst administration in US history will be quiet and uneventful. We can only hope and pray that there's still an economy worth saving by the time President Obama takes over the Oval Office.
Those sentiments are merely window dressing to the real churning that currently plagues Wall Street and the millions of Americans who dread opening their pension or retirement fund statements. There's some thinking that every decline is an opportunity to buy low, but, at the same time, an equally large number of traders is still looking for a bottom.
For the record, the lows of October 27 were tested, retested, and broken down in late November. The current low-water mark is now 7552.29 on the Dow, the closing price November 20. That number came about after the October 27 low of 8175.77 failed to hold. So, we can safely assume -- since we are in a recession, after all -- that stocks will sag through most of December, unless one believes that the bottom is already in (Please, don't make me laugh so hard.). until that low point has been thoroughly tested, bounced off and fleshed out.
Dow 8,419.09, +270.00 (3.31%)
NASDAQ 1,449.80, +51.73 (3.70%)
S&P 500 848.81, +32.60 (3.99%)
NYSE Composite 5,308.95, +216.29 (4.25%)
Today was a classic relief rally, with advancing issues outdoing decliners, 4882-1820, though new lows surpassed new highs by a score of 270-26. Volume was on the heavy side, and all this as automakers planned to return to Washington - this time with actual plans in hand - to cajole the head-nodders in congress for more money.
Those industrial giants will get their money, no doubt, and spend it like drunken sailors. All of this bailout money is going the way all things earned without effort go, quickly down a black hole. The US economy has a lot more worsening to do before it begins to get better, and throwing more money at it isn't a novel idea, nor is it likely to induce a lasting solution.
NYSE Volume 1,611,136,000
NASDAQ Volume 2,104,266,000
In the commodities markets, oil took another turn to the downside, off $1.66, to $47.62, while the metals advanced marginally. Gold gained $6.00, to $782.80, while silver added 18 cents, to end at $9.56 the ounce.
Gold bugs are insistent that the yellow metal should be trading in the range of $1500-2000 per ounce, though the current pricing seems to suggest that they too are overly optimistic. What the current crop of gold-lovers - like their counterparts in the equity markets - fail to understand is the devastating effect of deflation on all asset classes.
The global economy is likely to remain in a deflationary spiral for at least the next two years, probably longer. This is simply a sober assessment of what the subprime-credit-banking mess has wrought. Not only have trillions of dollars of wealth already been vaporized, there is still a limited amount of confidence in the markets. Nobody really has a taste for any of this bitter deflation pill, but it is one we all must swallow, like it or not. The consequences are neither simple nor pleasant, though, in a nutshell, it can be safely assumed that people at the top of the income and wealth ladders will be most severely affected, while those at the bottom will have alternately hard times or grand times, depending on how one plays the game.
Those who are frugal and opportunistic will prosper. Those tied to the economics of the last dozen years or so, will feel more pain than they'd like.
Monday, December 1, 2008
US Banking Industry: Ship of Fools
It's not surprising that after spending most of my day dealing with a consumer credit transaction in a courtroom that I would return to the cyber world and see this Reuters headline: Credit-card industry may cut $2 trillion lines: analyst.
My point - iterated over and over and over again in previous blog postings - is that the credit and banking industry is run by either idiots or thieves, or a dreadful combination of the two. My particular circumstance offers but a glimpse of the absurdity that is banking in the US today. Five years ago, the geniuses who allowed me to run up credit card debt to a mind-boggling $1200, decided that the 14.9% interest rate they were drilling me with was insufficient, and even though I had always made payments on time and had never missed payment, that hiking it to 29.9% and tripling my annual fee would be in their best interests (and, I suppose, somehow, mine).
It was at that time that I picked up the phone and revealed to my creditors that such an arrangement would result in my defaulting on the credit already established unless they would agree to go back to the original terms.
"No deal," said they, and that is what they got. I never paid back a single cent, and, even though I told them that they would end up with nothing repeatedly, over many months, they, nor I, never relented. The bright bankers did get something for their effort, having sold the debt to what is known as a "debt farm" for somewhere in the range of .05 to .20 cents on the dollar and taken their write-off with the government. So, it is the debt farm and their ravenous attorney from whom my legal challenge comes. They too, are finding out how difficult it will be to squeeze a penny out of yours truly.
Regardless of my circumstances, the banking system in the US and beyond is broken beyond repair. I explained to my father yesterday, and now to you, that there is nothing the government can do to prevent the economy from collapsing at this point. Plainly, the bankers see a similar picture and are reigning in their horns, calling in their loans.
This is what we are bailing out, folks. a merciless, belligerent, corrupt system of tribute financing that threatens to overthrow the entire nation's credit, from mortgages, to credit cards, to lines of credit to business to auto financing. The entire concept is as bellicose as would be a Spencerian melodrama: The bankers create credit devices to entice the unsuspecting hoard, then, through their own devious and clever devices, change terms, increase rates, cut off lines and generally self-implode the entire system.
Sadly, it is exactly what has happened.
Word of the looming catastrophe reached Wall Street some time ago, but today's trading indicates that the finality of it all seems to have at last reached all corners. Stocks, after a bright half-session Friday, christened December with another in a spectacular series of sell-offs, this one to the tune of nearly 680 points on the Dow.
SYMBOL LAST CHANGE
Dow 8,149.09 -679.95 (7.70%)
NASDAQ 1,398.07 -137.50 (8.95%)
S&P 500 816.21 - 80.03 (8.93%)
NYSE Composite 5,092.6602 -506.6396 (9.05%)
Those holding to the belief that the bottom was reached on November 20, when the Dow sank to 7552.29 at the close, are surely kidding themselves. The idea that there will be an escape from this malaise by Main Street, which to this point has held together remarkably well, misses the thrust of the bankers' intents. They wish to own all through foreclosure and deceit, to reduce America to a land of indentured servants (we're almost there now). The legal system has glibly played along to this point. How much further strain a flood of new debt collections can be sustained by the courts remains to be seen.
Stocks are headed much lower.
On the day, declining issues pummeled advancers, 5774-968. The ratio of new lows to new highs was rather tame, 251-19, though the number of new lows will almost certainly swell before year's end. The real kicker will be in late January and early February, when companies report 4th quarter earnings. They are almost certain to be negative over a broad swath of industries.
Over the long haul, the joke is on the bankers. They will eventually be removed and replaced by more efficient, honest and reliable means of financing. The transitory time between the self-inflicted, planned collapse of the financial system will be painful for many, misery for some, and instructive to all.
In the interim, expect deflation to be the word du jour for many days through the next 18-24 months, just as they were in the commodity pits on Monday.
Oil slipped once again, lower by $5.15, to $49.28. Gold gave back nearly all of its recent gains, sliding $42.20, to $776.80. Silver declined 85 cents to $9.38. expect more ragged trade in the metals and a false floor around $40 for oil, which will almost surely not hold that level come spring.
NYSE Volume 1,625,792,000
NASDAQ Volume 1,936,715,000
For the foreseeable future, however, there's money in cash.
My point - iterated over and over and over again in previous blog postings - is that the credit and banking industry is run by either idiots or thieves, or a dreadful combination of the two. My particular circumstance offers but a glimpse of the absurdity that is banking in the US today. Five years ago, the geniuses who allowed me to run up credit card debt to a mind-boggling $1200, decided that the 14.9% interest rate they were drilling me with was insufficient, and even though I had always made payments on time and had never missed payment, that hiking it to 29.9% and tripling my annual fee would be in their best interests (and, I suppose, somehow, mine).
It was at that time that I picked up the phone and revealed to my creditors that such an arrangement would result in my defaulting on the credit already established unless they would agree to go back to the original terms.
"No deal," said they, and that is what they got. I never paid back a single cent, and, even though I told them that they would end up with nothing repeatedly, over many months, they, nor I, never relented. The bright bankers did get something for their effort, having sold the debt to what is known as a "debt farm" for somewhere in the range of .05 to .20 cents on the dollar and taken their write-off with the government. So, it is the debt farm and their ravenous attorney from whom my legal challenge comes. They too, are finding out how difficult it will be to squeeze a penny out of yours truly.
Regardless of my circumstances, the banking system in the US and beyond is broken beyond repair. I explained to my father yesterday, and now to you, that there is nothing the government can do to prevent the economy from collapsing at this point. Plainly, the bankers see a similar picture and are reigning in their horns, calling in their loans.
This is what we are bailing out, folks. a merciless, belligerent, corrupt system of tribute financing that threatens to overthrow the entire nation's credit, from mortgages, to credit cards, to lines of credit to business to auto financing. The entire concept is as bellicose as would be a Spencerian melodrama: The bankers create credit devices to entice the unsuspecting hoard, then, through their own devious and clever devices, change terms, increase rates, cut off lines and generally self-implode the entire system.
Sadly, it is exactly what has happened.
Word of the looming catastrophe reached Wall Street some time ago, but today's trading indicates that the finality of it all seems to have at last reached all corners. Stocks, after a bright half-session Friday, christened December with another in a spectacular series of sell-offs, this one to the tune of nearly 680 points on the Dow.
SYMBOL LAST CHANGE
Dow 8,149.09 -679.95 (7.70%)
NASDAQ 1,398.07 -137.50 (8.95%)
S&P 500 816.21 - 80.03 (8.93%)
NYSE Composite 5,092.6602 -506.6396 (9.05%)
Those holding to the belief that the bottom was reached on November 20, when the Dow sank to 7552.29 at the close, are surely kidding themselves. The idea that there will be an escape from this malaise by Main Street, which to this point has held together remarkably well, misses the thrust of the bankers' intents. They wish to own all through foreclosure and deceit, to reduce America to a land of indentured servants (we're almost there now). The legal system has glibly played along to this point. How much further strain a flood of new debt collections can be sustained by the courts remains to be seen.
Stocks are headed much lower.
On the day, declining issues pummeled advancers, 5774-968. The ratio of new lows to new highs was rather tame, 251-19, though the number of new lows will almost certainly swell before year's end. The real kicker will be in late January and early February, when companies report 4th quarter earnings. They are almost certain to be negative over a broad swath of industries.
Over the long haul, the joke is on the bankers. They will eventually be removed and replaced by more efficient, honest and reliable means of financing. The transitory time between the self-inflicted, planned collapse of the financial system will be painful for many, misery for some, and instructive to all.
In the interim, expect deflation to be the word du jour for many days through the next 18-24 months, just as they were in the commodity pits on Monday.
Oil slipped once again, lower by $5.15, to $49.28. Gold gave back nearly all of its recent gains, sliding $42.20, to $776.80. Silver declined 85 cents to $9.38. expect more ragged trade in the metals and a false floor around $40 for oil, which will almost surely not hold that level come spring.
NYSE Volume 1,625,792,000
NASDAQ Volume 1,936,715,000
For the foreseeable future, however, there's money in cash.
Wednesday, November 26, 2008
Markets Continue Recovery
With only a half-session scheduled for Friday, investors took note of some economic news that was not all bad for a change and threw some more money at stocks on Wednesday, in anticipation of better days ahead.
By the time the session had ended, all major indices were sporting healthy gains, with the Dow and S&P 500 up for the fourth straight session, the first time that had happened on the S&P - since May.
Investors were a little less hesitant after yesterday's consumer confidence numbers turned up better than expected - at 44.9 after October's dismal 38.1 reading. Of course, this was the first survey taken since the election, and probably was influenced by a preponderance of opinion that we were about to replace one of America's worst presidents with one who could not possibly do any worse. Naturally, some were of the opinion that Mr. Obama would be a far better president than Mr. Bush, whose policies have turned out to be verifiable disasters.
On top of that, the most recent new filings for unemployment were down from the previous week, though still abnormally high, at 529,000 for the week ended 11/22. That was about it for positive news. The rest of the day's data was pretty dour, but expected to be so.
While personal income rose 0.3% in October, personal spending was down a full 1%. What's this? Americans earning more and spending less, resulting in net saving? Frugality seems to be back in style. On that fashion note, however, comes the caveat that saving money instead of spending it is bad for business. It's effects on the economy at-large, in the longer term, though, are positive. More money in savings means there's just more money around. Economists and business school graduates call it pent-up demand, but what do they really know?
To the casual observer, the events of the past 3-12 months may have looked rather normal. To economists and stock market gurus, they were anything but. The near-collapse of the worldwide banking system, replete with governments throwing wads of cash at the $8-14 trillion problem caused by subprime loans, was more like a revisit from the ghosts of 1929, when the market actually did crash and a worldwide economic depression ensued. The actions by central banks and treasuries around the globe may have prevented nothing more than a serious recession. We are, nonetheless, now saddled with all the trappings of government bailouts, fixes, patches, interest rate game and assorted nonsense because GDP is sliding instead of advancing.
On the surface, modern economics is ludicrous. If there is ever a hint of stability - that the normal swings of the supply-demand dynamic seem to be headed for a perfectly-natural downturn - our leaders rush around making dubious fixes in the middle of the night and over weekends, shoring up those stalwart idiots who run banks, insurance companies and other financial, non-work companies. We will be paying for the excessive under-and-over-regulation and care for generations, but, worry not, today will be fine and the holiday season will be full of mirth, merriment and plenty of credit card charges.
So, our GDP decreases by 2%, if that, and the leaders of the world act like the whole shooting match is about to go down in flames. Idiots, every one of them.
The continued not-so-bad news delivered to Wall Street included a pair of business surveys and both the Chicago PMI and the Michigan consumer sentiment data were lower. The PMI fell to 33.8, from 37.8, which the consumer sentiment index dropped to 55.3, from 57.9. Not everyone is convinced, it seems.
The general feeling is that while we will soon be turning a corner when Mr. Obama and the Democrats take control of the White House and both chambers of congress come January 20, we are not quite there yet. There's still Christmas and the doleful doubts that will be raised by slow spending at retailers. If that is all we have to worry about - that Nordstrom's sales are off 12%, or that J.C. Penny sells a little less than last year - we've really got little reason to be concerned. The average working stiff will still be getting a paycheck at regular intervals and the government will still confiscate a large portion of that pay. Life will proceed with little change for the majority of folks. Those at the very top of the income and wealth scale have already taken huge losses, but those can be recouped. It's not like any billionaires are starving. We shall all be fine, just fine, when the next boom begins and the wizards of Wall Street can go about finding ways to muck it all up again.
Dow 8,726.61, +247.14
NASDAQ 1,532.10, +67.37
S&P 500 887.68, +30.29
NYSE Composite 5,547.38, +172.02
For the day, advancing issues beat decliners by a wide margin, 5373-1176. New lows continued to dominate new highs, 220-24, though the number of new lows has diminished greatly over the past week. Volume was relatively relaxed, though stable.
NYSE Volume 1,423,623,000
NASDAQ Volume 2,003,840,000
All of this good, or not-so-bad news was reflected in commodity pricing, which is bad for the consumer overall. A lid should be put on commodities so that inflation does not creep back into the picture. The last thing we need is companies boosting their prices. They are just fine were they are, and could even fall a bit more without everyone not wanting to bail out miners, oil riggers and cattlemen. Some price deflation would be welcome relief, as we've all seen with gasoline prices. A reduction in the size of winter heating bills would free up more money for real, discretionary purposes.
But the commodity markets didn't see it that way on Wednesday, as oil gained $3.93, to close at $54.70. The metal were more restrained, with gold losing $6.20, to $8.14, and silver up just 4 cents, to $10.34. Precious metals investors have been the least damaged by recent market turmoil. Gold is only down some 20%, though silver is off by 50%. The yellow metal should decline back into the $630-690 area early next year as the prospects for catastrophe diminish.
As John McLaughlin might say, gobble, gobble. Enjoy the holiday.
By the time the session had ended, all major indices were sporting healthy gains, with the Dow and S&P 500 up for the fourth straight session, the first time that had happened on the S&P - since May.
Investors were a little less hesitant after yesterday's consumer confidence numbers turned up better than expected - at 44.9 after October's dismal 38.1 reading. Of course, this was the first survey taken since the election, and probably was influenced by a preponderance of opinion that we were about to replace one of America's worst presidents with one who could not possibly do any worse. Naturally, some were of the opinion that Mr. Obama would be a far better president than Mr. Bush, whose policies have turned out to be verifiable disasters.
On top of that, the most recent new filings for unemployment were down from the previous week, though still abnormally high, at 529,000 for the week ended 11/22. That was about it for positive news. The rest of the day's data was pretty dour, but expected to be so.
While personal income rose 0.3% in October, personal spending was down a full 1%. What's this? Americans earning more and spending less, resulting in net saving? Frugality seems to be back in style. On that fashion note, however, comes the caveat that saving money instead of spending it is bad for business. It's effects on the economy at-large, in the longer term, though, are positive. More money in savings means there's just more money around. Economists and business school graduates call it pent-up demand, but what do they really know?
To the casual observer, the events of the past 3-12 months may have looked rather normal. To economists and stock market gurus, they were anything but. The near-collapse of the worldwide banking system, replete with governments throwing wads of cash at the $8-14 trillion problem caused by subprime loans, was more like a revisit from the ghosts of 1929, when the market actually did crash and a worldwide economic depression ensued. The actions by central banks and treasuries around the globe may have prevented nothing more than a serious recession. We are, nonetheless, now saddled with all the trappings of government bailouts, fixes, patches, interest rate game and assorted nonsense because GDP is sliding instead of advancing.
On the surface, modern economics is ludicrous. If there is ever a hint of stability - that the normal swings of the supply-demand dynamic seem to be headed for a perfectly-natural downturn - our leaders rush around making dubious fixes in the middle of the night and over weekends, shoring up those stalwart idiots who run banks, insurance companies and other financial, non-work companies. We will be paying for the excessive under-and-over-regulation and care for generations, but, worry not, today will be fine and the holiday season will be full of mirth, merriment and plenty of credit card charges.
So, our GDP decreases by 2%, if that, and the leaders of the world act like the whole shooting match is about to go down in flames. Idiots, every one of them.
The continued not-so-bad news delivered to Wall Street included a pair of business surveys and both the Chicago PMI and the Michigan consumer sentiment data were lower. The PMI fell to 33.8, from 37.8, which the consumer sentiment index dropped to 55.3, from 57.9. Not everyone is convinced, it seems.
The general feeling is that while we will soon be turning a corner when Mr. Obama and the Democrats take control of the White House and both chambers of congress come January 20, we are not quite there yet. There's still Christmas and the doleful doubts that will be raised by slow spending at retailers. If that is all we have to worry about - that Nordstrom's sales are off 12%, or that J.C. Penny sells a little less than last year - we've really got little reason to be concerned. The average working stiff will still be getting a paycheck at regular intervals and the government will still confiscate a large portion of that pay. Life will proceed with little change for the majority of folks. Those at the very top of the income and wealth scale have already taken huge losses, but those can be recouped. It's not like any billionaires are starving. We shall all be fine, just fine, when the next boom begins and the wizards of Wall Street can go about finding ways to muck it all up again.
Dow 8,726.61, +247.14
NASDAQ 1,532.10, +67.37
S&P 500 887.68, +30.29
NYSE Composite 5,547.38, +172.02
For the day, advancing issues beat decliners by a wide margin, 5373-1176. New lows continued to dominate new highs, 220-24, though the number of new lows has diminished greatly over the past week. Volume was relatively relaxed, though stable.
NYSE Volume 1,423,623,000
NASDAQ Volume 2,003,840,000
All of this good, or not-so-bad news was reflected in commodity pricing, which is bad for the consumer overall. A lid should be put on commodities so that inflation does not creep back into the picture. The last thing we need is companies boosting their prices. They are just fine were they are, and could even fall a bit more without everyone not wanting to bail out miners, oil riggers and cattlemen. Some price deflation would be welcome relief, as we've all seen with gasoline prices. A reduction in the size of winter heating bills would free up more money for real, discretionary purposes.
But the commodity markets didn't see it that way on Wednesday, as oil gained $3.93, to close at $54.70. The metal were more restrained, with gold losing $6.20, to $8.14, and silver up just 4 cents, to $10.34. Precious metals investors have been the least damaged by recent market turmoil. Gold is only down some 20%, though silver is off by 50%. The yellow metal should decline back into the $630-690 area early next year as the prospects for catastrophe diminish.
As John McLaughlin might say, gobble, gobble. Enjoy the holiday.
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