Maybe I could just re-post yesterday's scribble about "trading sideways... or down", but that would be redundant. Still, just what was that market doing today? Where was the volatility, the movement, the fear factor, the monumental moves attributed to the "recovery" or earnings reports?
Today may have been the dullest day for trading stocks in many years, though it wasn't that much different than the past two. After an initial dip to 7950 - a loss of 70 points on the Dow - it quickly recovered and spent the rest of the day vacillating over and under the break even line and in between 8005 and 8090. It was a big, fat yawning festival.
While investors await either first quarter GDP (tomorrow) or more insight into the spread of swine flu (spreading fast: by this time next week, expect it to be a full blown pandemic with outbreaks in no less than 30 countries and deaths in 12), investors were pretty much stuck with what they'd bid up over the past 7 weeks, so, good luck to them. Meanwhile, there's no indication that the US and global economies are in any better condition than they were 6 months ago despite trillions of dollars n stimulus and bailouts and assorted programs.
Dow 8,016.95, -8.05 (0.10%)
NASDAQ 1,673.81, -5.60 (0.33%)
S&P 500 855.16, -2.35 (0.27%)
NYSE Composite 5,369.85, -19.98 (0.37%)
On the day, advancing issues beat out decliners, 3449-2949, and new lows surpassed new highs, 69-32. Most importantly, today was the second straight session in which volume was subdued, well below levels seen over the past few weeks of furious buying activity. We are now poised for a sell-off of major proportions. The trickle of selling the past two days will quickly turn to a raging torrent on any bad news. Investors are seeking reasons to take profits and disbelieve the "recovery" claptrap.
NYSE Volume 1,251,073,000
NASDAQ Volume 2,103,607,000
The somnambulant nature of the equity markets did not translate into commodities, where there were wild and wide price swings. Crude oil fell 22 cents, to $49.58, but bigger hits were taken in gold, down $14.60, to $893.60, silver, off 56 cents, to $12.43, lean hogs, down $2.35, to $66.30, and pork bellies, which fell $3.00, to $77.80. The falls in hogs and bellies were almost exclusively tied to swine flu paranoia, though there is absolutely no evidence that consumption of pork can lead to obtaining the flu virus.
Since markets are emotional by nature, expect what happened to pork bellies and the price of pork to occur in various other investment strata, including equities of all kinds. The argument that travel restrictions to some countries may hamper the earnings of some airlines, hotels and cruise lines may be plausible, but extending the argument - that overall swine flu fear might keep more people in their homes and away from large gatherings - takes a leap of faith.
Of course, one could blame the swine flu for further deterioration in the economy instead of admitting that the government's plans so far have failed. That's an easy one, and likely to be coming to a headline near you soon.
By 8:30 am tomorrow, when the Commerce Department releases its advance estimate on 1st quarter GDP, we should have a relatively good understanding of where we sit and how far stocks will need to be sold off. As corporate earnings dissipate from the scene, the market will be looking for other signals.
Deaths from swine flu will become a leading indicator of worldwide distress. You heard it here first.
Tuesday, April 28, 2009
Monday, April 27, 2009
Nowhere to Go But Sideways... or Down
Since April 3, the first time the Dow closed above 8000 since February 9, the Dow has traded in a range - using closing prices - of 342, from a low of 7789 (April 9) to 8131 (April 17). This is a span of 15 trading sessions, most of which occurred during the height of earnings season.
More than 3/5ths of companies having already reported, the decision is out on the first quarter. It wasn't horrible, but it wasn't very good either. Later this week - Wednesday, to be exact - the government will issue forth their proclamation of how much the economy downsized in the first quarter of 2009 with the release of an initial GDP estimate. Estimates run mostly in the 4.2 to 4.8% range, following a 6.3% decline in the 4th quarter of 2008.
If these guesses are accurate, some will call the first quarter the bottoming of the recession, while others, like yours truly, will point out that the second consecutive quarterly decline in GDP merely affirms that we are in a real recession, and it's a deep one with no real end in sight.
Unemployment figures are still extraordinarily high, housing prices continue to fall and the credit contraction is as bad, if not worse, than it was in the September-November period of last year. The banking stress tests, like most of what else the government has mismanaged, are a complete fraud for estimating economic conditions much rosier than what may actually occur. The US and global economies face more strong headwinds in the months and years ahead.
There are, however, some bargains in the stock market. You just have to know where to look. And you have to have some faith in the system and hope that there are others out there like you. It's a lot for which to hope.
On the other hand, now might not be the best time to be seeking bargain stocks. Many of today's cheapies were even cheaper a month or two ago. Stocks are stuck in a range; further upside may be - will be - difficult to accomplish.
Dow 8,025.00, -51.29 (0.64%)
NASDAQ 1,679.41, -14.88 (0.88%)
S&P 500 857.50, -8.73 (1.01%)
NYSE Composite 5,389.82, -78.59 (1.44%)
On the day, the mood was negative, with advancing issues beaten down by decliners, 4339-2145. New lows led new highs, 68-29. Volume, which was lower by a wide margin from last week, is sending mixed signals, but mostly that there is a lack of buying interest at this time. All of this leaves stocks with little to do except wait and wallow, or head lower. Were stocks to go any higher, they would only become even more overbought that they have been for at least three weeks. It is a condition which cannot persist.
NYSE Volume 1,402,328,000
NASDAQ Volume 2,225,050,000
Commodities were all lower, returning to the deflation scenario, which hasn't actually been played out and has years in which to run, instead of months, as the government and financial pundits would have you believe. Some people are actually talking about inflation's quick return in the form of higher prices. That's an appearance I would not count on for at least another 9-12 months, but more properly, prices will be under pressure for at least the next two years and probably longer.
Oil for June delivery was down $1.41, to $50.13. Gold dipped $5.90, to $908.20. Silver notched a 4 cent gain to close at $12.99 in New York. The rest of the popularly-traded commodities were down, including foodstuffs.
As for the swine flu hysteria, that's strictly a sideshow to the real story. It's all about your money, and how the government and/or banking/insurance/investment complex screws you out of yours.
There are other options, like physical gold, silver, other commodities, actual saving, smart budgeting, and owning your own business, just for openers.
More than 3/5ths of companies having already reported, the decision is out on the first quarter. It wasn't horrible, but it wasn't very good either. Later this week - Wednesday, to be exact - the government will issue forth their proclamation of how much the economy downsized in the first quarter of 2009 with the release of an initial GDP estimate. Estimates run mostly in the 4.2 to 4.8% range, following a 6.3% decline in the 4th quarter of 2008.
If these guesses are accurate, some will call the first quarter the bottoming of the recession, while others, like yours truly, will point out that the second consecutive quarterly decline in GDP merely affirms that we are in a real recession, and it's a deep one with no real end in sight.
Unemployment figures are still extraordinarily high, housing prices continue to fall and the credit contraction is as bad, if not worse, than it was in the September-November period of last year. The banking stress tests, like most of what else the government has mismanaged, are a complete fraud for estimating economic conditions much rosier than what may actually occur. The US and global economies face more strong headwinds in the months and years ahead.
There are, however, some bargains in the stock market. You just have to know where to look. And you have to have some faith in the system and hope that there are others out there like you. It's a lot for which to hope.
On the other hand, now might not be the best time to be seeking bargain stocks. Many of today's cheapies were even cheaper a month or two ago. Stocks are stuck in a range; further upside may be - will be - difficult to accomplish.
Dow 8,025.00, -51.29 (0.64%)
NASDAQ 1,679.41, -14.88 (0.88%)
S&P 500 857.50, -8.73 (1.01%)
NYSE Composite 5,389.82, -78.59 (1.44%)
On the day, the mood was negative, with advancing issues beaten down by decliners, 4339-2145. New lows led new highs, 68-29. Volume, which was lower by a wide margin from last week, is sending mixed signals, but mostly that there is a lack of buying interest at this time. All of this leaves stocks with little to do except wait and wallow, or head lower. Were stocks to go any higher, they would only become even more overbought that they have been for at least three weeks. It is a condition which cannot persist.
NYSE Volume 1,402,328,000
NASDAQ Volume 2,225,050,000
Commodities were all lower, returning to the deflation scenario, which hasn't actually been played out and has years in which to run, instead of months, as the government and financial pundits would have you believe. Some people are actually talking about inflation's quick return in the form of higher prices. That's an appearance I would not count on for at least another 9-12 months, but more properly, prices will be under pressure for at least the next two years and probably longer.
Oil for June delivery was down $1.41, to $50.13. Gold dipped $5.90, to $908.20. Silver notched a 4 cent gain to close at $12.99 in New York. The rest of the popularly-traded commodities were down, including foodstuffs.
As for the swine flu hysteria, that's strictly a sideshow to the real story. It's all about your money, and how the government and/or banking/insurance/investment complex screws you out of yours.
There are other options, like physical gold, silver, other commodities, actual saving, smart budgeting, and owning your own business, just for openers.
Friday, April 24, 2009
NASDAQ Ends Week With Overall Gain, Dow, S&P End Streak
The markets roared into positive ground again on Friday, with all major indices finishing off the week on a positive note. However, only the NASDAQ continued the string of weekly gains, as the S&P and the Dow both could not overcome severe losses from Monday.
Dow 8,076.29, +119.23 (1.50%)
NASDAQ 1,694.29, +42.08 (2.55%)
S&P 500 866.23, +14.31 (1.68%)
NYSE Composite 5,468.41, +96.31 (1.79%)
Overlaying the entire trading complex was the release of a government report which outlined the methodology of the banks' "stress tests." While the government will keep everybody on the edge of their seats until May 4, when the results of the tests on 19 of the nation's largest banks are released, today's report did little to tip their hand.
For the most part, nobody has a clue as to which banks will pass or fail, though various sources keep suggesting that none of the banks will actually fail.
With that lack of information in hand, investors continued bidding share prices higher, giving somewhat of an indication that the stress tests will probably amount to much ado about nothing. May 4 will come and go, and the government will continue to maintain that banks like Citigroup, Bank of America and JP Morgan Chase are "sufficiently capitalized" to weather any financial storm. In general, waiting for the stress test results is like watching paint dry - boring and anticlimactic.
On the day, advancing issues pummeled decliners, 4814-1652. New lows outnumbered new highs, 85-24. Volume was strong, as it has been all week, though Monday's was by far the highest volume of the week.
NYSE Volume 1,733,499,000
NASDAQ Volume 2,592,196,000
Oil gained $2.69 to $51.54. Gold was up $7.50, to $914.10. Silver finished up 17 cents, to $12.95 per ounce. Foodstuffs were mostly down, and natural gas has bottomed out at $3.40 per 1000 btu.
Aside from Monday's post-option expiration scare, the markets enjoyed another solid week. The NASDAQ stretched its winning streak to 7 straight, though the Dow and S&P are at or approaching solid resistance points.
Dow 8,076.29, +119.23 (1.50%)
NASDAQ 1,694.29, +42.08 (2.55%)
S&P 500 866.23, +14.31 (1.68%)
NYSE Composite 5,468.41, +96.31 (1.79%)
Overlaying the entire trading complex was the release of a government report which outlined the methodology of the banks' "stress tests." While the government will keep everybody on the edge of their seats until May 4, when the results of the tests on 19 of the nation's largest banks are released, today's report did little to tip their hand.
For the most part, nobody has a clue as to which banks will pass or fail, though various sources keep suggesting that none of the banks will actually fail.
With that lack of information in hand, investors continued bidding share prices higher, giving somewhat of an indication that the stress tests will probably amount to much ado about nothing. May 4 will come and go, and the government will continue to maintain that banks like Citigroup, Bank of America and JP Morgan Chase are "sufficiently capitalized" to weather any financial storm. In general, waiting for the stress test results is like watching paint dry - boring and anticlimactic.
On the day, advancing issues pummeled decliners, 4814-1652. New lows outnumbered new highs, 85-24. Volume was strong, as it has been all week, though Monday's was by far the highest volume of the week.
NYSE Volume 1,733,499,000
NASDAQ Volume 2,592,196,000
Oil gained $2.69 to $51.54. Gold was up $7.50, to $914.10. Silver finished up 17 cents, to $12.95 per ounce. Foodstuffs were mostly down, and natural gas has bottomed out at $3.40 per 1000 btu.
Aside from Monday's post-option expiration scare, the markets enjoyed another solid week. The NASDAQ stretched its winning streak to 7 straight, though the Dow and S&P are at or approaching solid resistance points.
Thursday, April 23, 2009
Stocks Head Higher on Earnings News, Banking
It's a truly magical time to be trading in this market if you are one of the blissfully ignorant who merrily parade into stocks without regard to the past, present or future. Truth be told, I wish I were one of them, able to ignore unemployment claims which continue to rise unabated, blind to the tortuous machinations of the capital markets and with a positive, "can do" attitude about the American 21st century.
Had I been able to overlook the obvious strains on the national economy, I might have participated in this current rally. Instead, I have been either wrong or out of the market for the better part of the last two months, as, after plummeting by more than 50% in the past 18 months, stocks have rebounded positively and with no end in sight.
I suppose the minute I decide to go long, is when the markets will reverse course, thus I am staying on the sidelines for the time being.
Stocks were up moderately on all major indices, though the Dow seems stuck in place while the S&P and NASDAQ continue to lead the way. Apple (AAPL) and eBay (EBAY) led advances on the NASDAQ, though Microsoft reported after the bell the first quarterly decline in sales on a year-over-year basis in the company's 34-year history. Still, the company earned 39 cents per share after charges, which met analyst estimates and the stock traded 3% higher in the after-hours.
Dow 7,957.06, +70.49 (0.89%)
NASDAQ 1,652.21, +6.09 (0.37%)
S&P 500 851.92, +8.37 (0.99%)
NYSE Composite 5,372.10, +81.49 (1.54%)
As stocks continued their ascent, market internals did not conform to the headline numbers. Overall, advancing issues barely nudged past decliners, 3267-3143, with the bulk of the losers on the NASDAQ. Once again, there were more new lows than new highs, 62-20, continuing the long-standing bias in that indicator. Volume was solid, in line with recent days.
NYSE Volume 1,566,731,000
NASDAQ Volume 2,485,417,000
The session was somewhat volatile, though in a narrow range. All of the indices spent some time in the red, and most of the day's gains were posted in the final half-hour. It's a day-trader's market, and all of the money is being made on the buy side.
Over in commodities, oil gained 65 cents, to $49.50, while other energy components - such as natural gas - finished with losses. Foodstuffs were moderately lower overall, while the precious metals continued to advance. Gold finished the day up $14.10, to $906.60 and silver was even more sought-after, gaining 45 cents, to $12.76.
The unabated market advance has now lasted 32 sessions, of which 14 have been to the downside, though a good number of them - 8 - have been minor, five of those being marginal losses of less than 50 points on the Dow. The 18 sessions which showed gains were far more robust, though many of those occurred in the early stages of the rally, in mid-March, when the Dow galloped ahead 1350 points in a span of ten sessions. The past 22 sessions have seen a top (just 290 points higher) and retreat on the Dow, putting the widely-watched index, as of today, just 182 points above the high-water mark of 7775 reached on March 23.
Noting the slowdown in the advance, a breakout to the upside is about as plausible now as a downturn. About 10 days ago, I mentioned that stocks would trade in a sideways manner, which is essentially what's going on, though there have been notable gains in technology, banking and other sectors during recent days.
All of the major indices are actually exhibiting the same pattern, although the NASDAQ has outperformed them all. The NASDAQ charts are somewhat troubling, however, as the appearance of multiple trading gaps have been a feature. The index has been boosted both higher and lower off previous day's closes, but gaps are significant signs of volatility and uncertainty, and sooner or later, all of them get filled. Just how long that process will take depends to a large extent on economic conditions, and reaction to them. Some say investors making money today are in denial of reality, while bulls - ever positive - point to various "signs" of improvement, and the notion that the banking crisis is not as severe as some believe.
Who is eventually proven right will likely take some time, though it certainly appears that there are good arguments on both the bullish and bearish side. One feature that's been particularly interesting - I'm afraid to call it anything other than that - is how many stocks are reporting lower overall revenues and declining growth but still meeting lowered expectations and being bid higher. Is the confidence in these companies misplaced, or are buyers stepping in at lowered valuations, seeing real bargains? It's probably a little bit of each, taken on a case-by-case basis.
Tomorrow's trade is likely to be indecisive, but the last week of April and the first one of May should produce some idea of direction. Chrysler's deadline is less than a week away, GM's future continues to be cloudy, the results of the bank stress tests are due May 4, April employment figures will provide more insight and the government's initial estimate of first quarter GDP are all on the table over the coming fortnight. It figures to be quite the wild ride.
Had I been able to overlook the obvious strains on the national economy, I might have participated in this current rally. Instead, I have been either wrong or out of the market for the better part of the last two months, as, after plummeting by more than 50% in the past 18 months, stocks have rebounded positively and with no end in sight.
I suppose the minute I decide to go long, is when the markets will reverse course, thus I am staying on the sidelines for the time being.
Stocks were up moderately on all major indices, though the Dow seems stuck in place while the S&P and NASDAQ continue to lead the way. Apple (AAPL) and eBay (EBAY) led advances on the NASDAQ, though Microsoft reported after the bell the first quarterly decline in sales on a year-over-year basis in the company's 34-year history. Still, the company earned 39 cents per share after charges, which met analyst estimates and the stock traded 3% higher in the after-hours.
Dow 7,957.06, +70.49 (0.89%)
NASDAQ 1,652.21, +6.09 (0.37%)
S&P 500 851.92, +8.37 (0.99%)
NYSE Composite 5,372.10, +81.49 (1.54%)
As stocks continued their ascent, market internals did not conform to the headline numbers. Overall, advancing issues barely nudged past decliners, 3267-3143, with the bulk of the losers on the NASDAQ. Once again, there were more new lows than new highs, 62-20, continuing the long-standing bias in that indicator. Volume was solid, in line with recent days.
NYSE Volume 1,566,731,000
NASDAQ Volume 2,485,417,000
The session was somewhat volatile, though in a narrow range. All of the indices spent some time in the red, and most of the day's gains were posted in the final half-hour. It's a day-trader's market, and all of the money is being made on the buy side.
Over in commodities, oil gained 65 cents, to $49.50, while other energy components - such as natural gas - finished with losses. Foodstuffs were moderately lower overall, while the precious metals continued to advance. Gold finished the day up $14.10, to $906.60 and silver was even more sought-after, gaining 45 cents, to $12.76.
The unabated market advance has now lasted 32 sessions, of which 14 have been to the downside, though a good number of them - 8 - have been minor, five of those being marginal losses of less than 50 points on the Dow. The 18 sessions which showed gains were far more robust, though many of those occurred in the early stages of the rally, in mid-March, when the Dow galloped ahead 1350 points in a span of ten sessions. The past 22 sessions have seen a top (just 290 points higher) and retreat on the Dow, putting the widely-watched index, as of today, just 182 points above the high-water mark of 7775 reached on March 23.
Noting the slowdown in the advance, a breakout to the upside is about as plausible now as a downturn. About 10 days ago, I mentioned that stocks would trade in a sideways manner, which is essentially what's going on, though there have been notable gains in technology, banking and other sectors during recent days.
All of the major indices are actually exhibiting the same pattern, although the NASDAQ has outperformed them all. The NASDAQ charts are somewhat troubling, however, as the appearance of multiple trading gaps have been a feature. The index has been boosted both higher and lower off previous day's closes, but gaps are significant signs of volatility and uncertainty, and sooner or later, all of them get filled. Just how long that process will take depends to a large extent on economic conditions, and reaction to them. Some say investors making money today are in denial of reality, while bulls - ever positive - point to various "signs" of improvement, and the notion that the banking crisis is not as severe as some believe.
Who is eventually proven right will likely take some time, though it certainly appears that there are good arguments on both the bullish and bearish side. One feature that's been particularly interesting - I'm afraid to call it anything other than that - is how many stocks are reporting lower overall revenues and declining growth but still meeting lowered expectations and being bid higher. Is the confidence in these companies misplaced, or are buyers stepping in at lowered valuations, seeing real bargains? It's probably a little bit of each, taken on a case-by-case basis.
Tomorrow's trade is likely to be indecisive, but the last week of April and the first one of May should produce some idea of direction. Chrysler's deadline is less than a week away, GM's future continues to be cloudy, the results of the bank stress tests are due May 4, April employment figures will provide more insight and the government's initial estimate of first quarter GDP are all on the table over the coming fortnight. It figures to be quite the wild ride.
Wednesday, April 22, 2009
Economic Realities Ignored by Propagandist Media
The media is doing a very nice job of covering up the real issues involving the US economy, the banks, TARP and Treasury's role in the massive fraud being foisted on the nation's public.
Yesterday, Tim Geithner's comments that the "vast majority" of US banks had sufficient capital were largely credited for pumping an afternoon market rally led by the financial sector. That tidbit was so widely reported that it brought back memories of Republican "talking points" to media outlets, all of which parroted the party line during the Bush years.
It now seems apparent that the press corps is still being led by nose rings pulled by the PR machine of the federal government. Much of the news that the government doesn't want the public to know about is widely dispensed by newspapers - which nobody reads anymore - and online, increasingly becoming the true fourth estate. Case in point is that at the very same time Treasury Secretary Tim Geithner was testifying that government programs were working, TARP Inspector General Neil Barofsky issued a scorching 250-page report detailing "staggering" fraud and waste inherent in the program, citing the more than 20 separate criminal investigations involving TARP, while criticizing the program's size as unwieldy and prone to abuse.
The controlled propaganda from D.C., the major TV networks and cable outlets is probably not going to be able to stem the tide of negatives which eventually will flood the secondary news media, on the internet, radio, financial newsletters and magazines. There is simply too much bad news for the mainstream media to blunt all of it. Just this morning, prior to the markets' opening, more bad news from the banking complex overwhelmed the investing community as Morgan Stanley (MS) reported a 1st quarter loss far in excess of analyst expectations. The company posted a loss of 57 cents a share ($177 million), swinging completely around from the profit of $1.41 billion, or $1.26 a share, generated in the first three months of 2008.
Analysts were looking for a loss of 8 cents a share in the quarter. This was a massive miss that everyone should notice, not just the investment community.
As it was, the Dow opened with a loss of just 75 points, with other indices responding in similar ho-hum fashion, no doubt due to excess upside pressure being exerted by the brokerages which control most of the trading. By 10:00 am, the Dow, S&P and NASDAQ had already turned positive and headed higher, begging the question of just how much bad news will it take to make the markets respond in anything close to realism?
While control issues of the media and the markets become more apparent, maybe the Machiavellian nature of this episode in American history will become more apparent with today's apparent suicide of acting chief financial officer of troubled mortgage giant Freddie Mac.
According to reports, 41-year-old David Kellerman was a lifer at Freddie, having worked his way up from his analyst position in 1992 all the way to the executive suite. His death brings into play many questions, because he - of all people - was a man who may have known too much. Did Kellerman kill himself because he was being set up for a fall, or was the suicide another "black op" designed to silence him from going public on matters that might expose key politicians or people on their staffs?
Either case is damning to the government, as they attempt to plug every leak in their quickly-sinking ship of state. Fannie Mae and Freddie Mac are linchpins in the entire financial meltdown that have yet to be adequately exposed. They are both severely undercapitalized and without enormous injections of government money, would be insolvent. Even with the massive funding from the government, they are already deeply underwater.
Also being represented on the national airwaves, Chrysler and GM's dire straits. Both companies continue to inch closer to bankruptcy. In Chrysler's case, such a scenario would mean liquidation. GM might be able to restructure in an orderly proceeding, though tens of thousands of jobs would be lost. Chrysler faces a May 1 deadline to reach a merger agreement with Italian automaker Fiat, itself under severe strain from declining auto sales.
Separately, General Motors announced late Wednesday that they may close some plants for up to 9 weeks this summer to save money. The automaker, once the pride of US industrial might, faces a government-imposed June 1 deadline to craft a workable plan to receive more federal aid. The alternative is bankruptcy, though even those closest to negotiations are unclear as to how such a plan would be structured.
Meanwhile, on Wall Street Wednesday, stocks were up early and down late, as the drumbeat of bad economic news is offset by a smattering of reasonable earnings reports from major firms.
Dow 7,886.57, -82.99 (1.04%)
NASDAQ 1,646.12, +2.27 (0.14%)
S&P 500 843.55, -6.53 (0.77%)
NYSE Composite 5,290.61, -48.98 (0.92%)
Despite the negative slant to the markets on the day, advancers actually outperformed declining issues, 3440-3006. There were 83 reported new lows to 34 new highs. Volume was again on the high side.
NYSE Volume 1,770,590,000
NASDAQ Volume 2,662,538,000
Commodities continued to limp along, dealing with slack demand in many industries. Crude oil for June delivery (new contract) gained just 30 cents, closing at $48.85. Foodstuffs were marginally lower. Precious metals continued to show some strength, with gold higher by $9.80, to $892.50. Silver finished the day in New York up 25 cents, at $12.31.
First time unemployment claims will greet market players on Thursday morning before the open. Experts are hoping for a continuation of last week's slight surprise of lower claims, though overall, unemployment remains abnormally high an a chief concern for millions of Americans and their families. More corporate reports will flow to market, though expectations are now so low that a good number may beat the Street but still be seen as vulnerable investments.
Sooner or later, the bad news catches up to everyone. While the government and media outlets try to paint a brighter picture than that which exists, issues such as trust and confidence are being severely tested.
Yesterday, Tim Geithner's comments that the "vast majority" of US banks had sufficient capital were largely credited for pumping an afternoon market rally led by the financial sector. That tidbit was so widely reported that it brought back memories of Republican "talking points" to media outlets, all of which parroted the party line during the Bush years.
It now seems apparent that the press corps is still being led by nose rings pulled by the PR machine of the federal government. Much of the news that the government doesn't want the public to know about is widely dispensed by newspapers - which nobody reads anymore - and online, increasingly becoming the true fourth estate. Case in point is that at the very same time Treasury Secretary Tim Geithner was testifying that government programs were working, TARP Inspector General Neil Barofsky issued a scorching 250-page report detailing "staggering" fraud and waste inherent in the program, citing the more than 20 separate criminal investigations involving TARP, while criticizing the program's size as unwieldy and prone to abuse.
The controlled propaganda from D.C., the major TV networks and cable outlets is probably not going to be able to stem the tide of negatives which eventually will flood the secondary news media, on the internet, radio, financial newsletters and magazines. There is simply too much bad news for the mainstream media to blunt all of it. Just this morning, prior to the markets' opening, more bad news from the banking complex overwhelmed the investing community as Morgan Stanley (MS) reported a 1st quarter loss far in excess of analyst expectations. The company posted a loss of 57 cents a share ($177 million), swinging completely around from the profit of $1.41 billion, or $1.26 a share, generated in the first three months of 2008.
Analysts were looking for a loss of 8 cents a share in the quarter. This was a massive miss that everyone should notice, not just the investment community.
As it was, the Dow opened with a loss of just 75 points, with other indices responding in similar ho-hum fashion, no doubt due to excess upside pressure being exerted by the brokerages which control most of the trading. By 10:00 am, the Dow, S&P and NASDAQ had already turned positive and headed higher, begging the question of just how much bad news will it take to make the markets respond in anything close to realism?
While control issues of the media and the markets become more apparent, maybe the Machiavellian nature of this episode in American history will become more apparent with today's apparent suicide of acting chief financial officer of troubled mortgage giant Freddie Mac.
According to reports, 41-year-old David Kellerman was a lifer at Freddie, having worked his way up from his analyst position in 1992 all the way to the executive suite. His death brings into play many questions, because he - of all people - was a man who may have known too much. Did Kellerman kill himself because he was being set up for a fall, or was the suicide another "black op" designed to silence him from going public on matters that might expose key politicians or people on their staffs?
Either case is damning to the government, as they attempt to plug every leak in their quickly-sinking ship of state. Fannie Mae and Freddie Mac are linchpins in the entire financial meltdown that have yet to be adequately exposed. They are both severely undercapitalized and without enormous injections of government money, would be insolvent. Even with the massive funding from the government, they are already deeply underwater.
Also being represented on the national airwaves, Chrysler and GM's dire straits. Both companies continue to inch closer to bankruptcy. In Chrysler's case, such a scenario would mean liquidation. GM might be able to restructure in an orderly proceeding, though tens of thousands of jobs would be lost. Chrysler faces a May 1 deadline to reach a merger agreement with Italian automaker Fiat, itself under severe strain from declining auto sales.
Separately, General Motors announced late Wednesday that they may close some plants for up to 9 weeks this summer to save money. The automaker, once the pride of US industrial might, faces a government-imposed June 1 deadline to craft a workable plan to receive more federal aid. The alternative is bankruptcy, though even those closest to negotiations are unclear as to how such a plan would be structured.
Meanwhile, on Wall Street Wednesday, stocks were up early and down late, as the drumbeat of bad economic news is offset by a smattering of reasonable earnings reports from major firms.
Dow 7,886.57, -82.99 (1.04%)
NASDAQ 1,646.12, +2.27 (0.14%)
S&P 500 843.55, -6.53 (0.77%)
NYSE Composite 5,290.61, -48.98 (0.92%)
Despite the negative slant to the markets on the day, advancers actually outperformed declining issues, 3440-3006. There were 83 reported new lows to 34 new highs. Volume was again on the high side.
NYSE Volume 1,770,590,000
NASDAQ Volume 2,662,538,000
Commodities continued to limp along, dealing with slack demand in many industries. Crude oil for June delivery (new contract) gained just 30 cents, closing at $48.85. Foodstuffs were marginally lower. Precious metals continued to show some strength, with gold higher by $9.80, to $892.50. Silver finished the day in New York up 25 cents, at $12.31.
First time unemployment claims will greet market players on Thursday morning before the open. Experts are hoping for a continuation of last week's slight surprise of lower claims, though overall, unemployment remains abnormally high an a chief concern for millions of Americans and their families. More corporate reports will flow to market, though expectations are now so low that a good number may beat the Street but still be seen as vulnerable investments.
Sooner or later, the bad news catches up to everyone. While the government and media outlets try to paint a brighter picture than that which exists, issues such as trust and confidence are being severely tested.
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