There's a problem with the government borrowing trillions of dollars to finance its various bailouts, stimuli, military and domestic operations. All that money has to come from somewhere and somebody, and the buyers will undeniably demand higher yields.
That became evident today as the government auctioned off $35 billion worth of 5-year notes. Stocks traded in a narrow range, with the Dow consistently below the unchanged mark and the NASDAQ trading marginally in the green, up anywhere from 5 to 12 points in the morning and early afternoon. At 1:30 pm, however, the bid fell off on all exchanges as the Treasury auction wrapped up. While the Wednesday auction was well-received, speculation was widespread that an oversupply of US government debt would have deleterious effects on any kind of recovery. Treasury is selling $26 billion of 7-year notes on Thursday.
The Dow dropped more than 150 points from 1:30 pm to the close of the session.
Dow 8,300.02, -173.47 (2.05%)
NASDAQ 1,731.08, -19.35 (1.11%)
S&P 500 893.06, -17.27 (1.90%)
NYSE Composite 5,823.56, -113.02 (1.90%)
As bond prices fall, yields rise, making bonds a more attractive alternative than stocks. The other effect of rising yields is that of making loans more expensive, especially for mortgages and autos. Higher interest rates threaten any recovery, whether one is in the cards for later this year or not. They are also by nature inflationary, adding cost at the producer of the supply chain.
In the short run, higher interest rates and inflation is exactly what the Federal Reserve and Treasury are after. Deathly afraid of the long-run effects of deflation, all of the various deficit-spending plans and aid to business and state governments have been designed to keep the bubble from bursting, to reflate the economy with massive infusions of currency and debt.
The problem for the best and brightest in Washington is that they can't have it both ways. The natural process of business failure, austerity and reallocation of assets - though inherently deflationary in the short turn - would have been painful, but swift and healthy long-term. The actions taken by the Fed and Treasury, designed to rescue failing institutions and keep government spending at current growth levels, have proven to only prolong the recession and threaten any incipient recovery with now-evident, profoundly inflationary aspects.
Another specter of massive government borrowing is the crowding out of private investment. Monied interests are likely to trend toward the safety of Treasuries rather than taking riskier positions on corporate issues. That also is an impediment to private sector growth, from which any recovery must spring.
Clearly, it is time to re-examine the efforts of the Fed and the Obama Administration. It's been four months since the inauguration, and, despite widely-reported "green shoots" and "positive signs" of the recession slowing, there is still no hard evidence that the economy will be in a recovery position later this year. All along, the American public has been told that the recession would be over by the third or fourth quarter of 2009, but, with those dates fast approaching there has been no job creation, no meaningful middle class tax break, and no stopping the continuing decline in home prices nor stemming the wave of foreclosures that has now become mainstream.
Government intervention in the economy has produced nothing except a temporary reprieve for insolvent banks and for the banking system as a whole, while adding mountains of debt to the already unserviceable load in place before the crisis. The federal government will eventually end up owning most of the largest banks, the auto companies and various other "too big to fail" industries. All of this is predicated on the notion of keeping the economy on a firm footing, meaning keeping hundreds of thousands of overpaid autoworkers at make-work jobs while nobody is buying autos, and bankers counting their billions without lending any to suffering small businesses.
The Federal Reserve has already bought up more than $160 billion of Treasury issuance. They've committed to buying a total of $300 billion, but there's no doubt that they'll have to pony up much more than that in order to keep the economy adrift. At some point, the wisdom of piling up even more massive debt has to be brought into question. That point may come sooner than anyone expects. Bond auctions in the UK and Germany have already failed, with a paucity of buyers for government debt instruments. The same could have already occurred in the US, had the Fed not engaged in its policy of quantitative easing. that is, buying up the debt with money created out of thin air.
It's a policy doomed to failure, as has been the case forever and ever, so be prepared for massive disconnects in the market, an absence of valuation rigor, inflation and deflation at the same time in different areas, and an overall failed economy which will finally bottom out sometime in 2011 or 2012, and not a moment sooner.
NYSE Volume 1,335,881,000
NASDAQ Volume 2,166,732,000
On the day, declining issues overwhelmed advancers, 4246-2227, wiping out most of Tuesday's illusory gains, and new lows maintained their long-standing edge over new highs, 68-62. Volume was only slightly better than yesterday's subdued level.
Oil gained $1.00, to $63.45. Gold gained a dime, to close at $955.20, while silver recorded the best showing of the metals, up 27 cents, to $14.87, an eight-month high.
General Motors executives announced that the offer to bondholders - to swap debt for common stock - met with an undue amount of resistance. This should have come as no surprise, since the company was offering bond-holders a mere 10% stake in the company, when the financiers were seeking an equity ownership position of between 50 and 60%. Instead, GM is likely to head down the same road as Chrysler, into bankruptcy, with the government ending up owning 60-70% of the company and the union picking up 15-17% of ownership. The government of Canada is expected to pick up less than 5% ownership.
in the end, the deal for GM is poorly designed, the goal only to keep from sending more than 200,000 UAW workers into the unemployment roles. There is no genuine plan to produce better autos, shave costs or limit benefits in an effort to become more competitive. General Motors will go down in history as the nation's largest bankruptcy, and the legacy will be that the US taxpayer will subsidize the jobs of hundreds of thousands of workers, in addition to paying lifetime health and pension benefits to millions more.
Existing home sales showed an increase for April, but the price of homes purchased was lower, affected by the thousands of foreclosed homes on the market. The stock of available housing continued to increase as well, another drag on home prices, which have fallen every month for the past two years running.
New home sales figures for April will be released on Thursday, along with continuing and new unemployment claims. The result of the $26 billion Treasury auction of 7-year notes will be closely monitored as well.
Today's sharp sell-off is the best evidence yet that the rally is over and stocks are set to fall and eventually retest March lows. The entire process could take as long as 6-9 months - or sooner - but the stage has been clearly set.
Wednesday, May 27, 2009
Tuesday, May 26, 2009
Consumer Confidence Soars, Stocks Follow Along
The Conference Board's consumer confidence index recorded its largest gain since 2003, spurring investors to bid up stocks on the first day back from a long holiday weekend.
The index rose to 54.9, up from 40.8 a month earlier. Perhaps the surge in stocks, alongside the government and media effort to talk up "signs of recovery" have Americans feeling a little better about the future. Convincing the millions out of work and those losing their homes in foreclosure actions might be a tougher task. Signs of a rebound in the US economy are hard to come by, though nobody can dispute that the pace of decline is slowing.
Therein lies the big issue. A slower decline is not the same as a rebound, but that didn't seem to matter on Wall Street, as stocks surged close to their highest levels of the past two weeks. The markets are at an interesting inflection point, approaching the interim high between the previous two lows, or a "neckline" spot on the S&P and the Dow. That interim high of 934.70 on the S&P compares to 9034.69 on the Dow, both achieved on January 6 of this year. Breaching that point would signal to Dow theorists a new bull market, though nobody is counting on that just yet. There are still too many issues facing the US economy, not the least among them falling home prices and continuing employment woes, for stocks to stage a continuing rally from this point.
On the housing front, the S&P/Case-Shiller Home Price Index appeared before the opening of the market, sparking an initial downturn on news that the nation's largest 20 metropolitan areas has suffered price declines of 18.7% in March, nearly matching February and just short of the record 19% decline against year-ago numbers in January.
Simple math tells us that unless recovery begins soon - measured by creation of 150,000 jobs per month as opposed to losing 500,000 - home foreclosures will continue to accelerate as more individuals lose their jobs and become unable to meet basic obligations. This is a far cry from the sub-prime issues of 2007-08. Rather, these are prime loans which are going to the courthouse steps in default actions.
Those looking for improvement in the employment section should note that there is no evidence of an improving employment picture and that hiring conditions today are vastly different from recessions of the 70s, 80s and 90s. So, to put matters into perspective, the usually well-off-the-mark general public envisions improvement, but the real data says that is just so much wishful thinking. By the end of this week, when GM either comes up with a viable plan to continue its business or heads to bankruptcy court, the real picture should become much more clear.
Dow 8,473.49, +196.17 (2.37%)
NASDAQ 1,750.43, +58.42 (3.45%)
S&P 500 910.33, +23.33 (2.63%)
NYSE Composite 5,936.58, +146.96 (2.54%)
Today's smashing gains were offset by low volume, suggesting that the broad advance may not have much real support. Advancers led decliners, 5135-1375, but new lows again beat back new highs, 66-57. Volume was moderate. Clearly, the major indices are headed for a critical trading spot. Another surge higher would defy most conventional logic, though this current 11-week-long rally - in which stocks have gained every week save two since mid-March - has already confounded many of the Street's most expert analysts.
NYSE Volume 1,377,798,000
NASDAQ Volume 2,079,289,000
Commodities traded in reaction to the outsize stock gains. oil edged 78 cents higher, to $62.45 per barrel for July delivery, though gas prices, recently surging past the $2.50 mark, are approaching the point at which Americans begin to conserve and tamp down demand. Gold fell $5.60, to $953.30, and silver traded 10 cents lower, at $14.60 per ounce, both of the metals taking a slight breather from their recent rallies.
Up next for the markets are existing home sales for April on Wednesday and new home sales for the same period on Thursday, along with the government's Durable Goods Orders for last month. Those figures are due out at 10:00 am on Thursday.
The index rose to 54.9, up from 40.8 a month earlier. Perhaps the surge in stocks, alongside the government and media effort to talk up "signs of recovery" have Americans feeling a little better about the future. Convincing the millions out of work and those losing their homes in foreclosure actions might be a tougher task. Signs of a rebound in the US economy are hard to come by, though nobody can dispute that the pace of decline is slowing.
Therein lies the big issue. A slower decline is not the same as a rebound, but that didn't seem to matter on Wall Street, as stocks surged close to their highest levels of the past two weeks. The markets are at an interesting inflection point, approaching the interim high between the previous two lows, or a "neckline" spot on the S&P and the Dow. That interim high of 934.70 on the S&P compares to 9034.69 on the Dow, both achieved on January 6 of this year. Breaching that point would signal to Dow theorists a new bull market, though nobody is counting on that just yet. There are still too many issues facing the US economy, not the least among them falling home prices and continuing employment woes, for stocks to stage a continuing rally from this point.
On the housing front, the S&P/Case-Shiller Home Price Index appeared before the opening of the market, sparking an initial downturn on news that the nation's largest 20 metropolitan areas has suffered price declines of 18.7% in March, nearly matching February and just short of the record 19% decline against year-ago numbers in January.
Simple math tells us that unless recovery begins soon - measured by creation of 150,000 jobs per month as opposed to losing 500,000 - home foreclosures will continue to accelerate as more individuals lose their jobs and become unable to meet basic obligations. This is a far cry from the sub-prime issues of 2007-08. Rather, these are prime loans which are going to the courthouse steps in default actions.
Those looking for improvement in the employment section should note that there is no evidence of an improving employment picture and that hiring conditions today are vastly different from recessions of the 70s, 80s and 90s. So, to put matters into perspective, the usually well-off-the-mark general public envisions improvement, but the real data says that is just so much wishful thinking. By the end of this week, when GM either comes up with a viable plan to continue its business or heads to bankruptcy court, the real picture should become much more clear.
Dow 8,473.49, +196.17 (2.37%)
NASDAQ 1,750.43, +58.42 (3.45%)
S&P 500 910.33, +23.33 (2.63%)
NYSE Composite 5,936.58, +146.96 (2.54%)
Today's smashing gains were offset by low volume, suggesting that the broad advance may not have much real support. Advancers led decliners, 5135-1375, but new lows again beat back new highs, 66-57. Volume was moderate. Clearly, the major indices are headed for a critical trading spot. Another surge higher would defy most conventional logic, though this current 11-week-long rally - in which stocks have gained every week save two since mid-March - has already confounded many of the Street's most expert analysts.
NYSE Volume 1,377,798,000
NASDAQ Volume 2,079,289,000
Commodities traded in reaction to the outsize stock gains. oil edged 78 cents higher, to $62.45 per barrel for July delivery, though gas prices, recently surging past the $2.50 mark, are approaching the point at which Americans begin to conserve and tamp down demand. Gold fell $5.60, to $953.30, and silver traded 10 cents lower, at $14.60 per ounce, both of the metals taking a slight breather from their recent rallies.
Up next for the markets are existing home sales for April on Wednesday and new home sales for the same period on Thursday, along with the government's Durable Goods Orders for last month. Those figures are due out at 10:00 am on Thursday.
Friday, May 22, 2009
Stocks Stall, Silver and Gold Gain
Friday's session was one of the slowest of the year, as investors and traders mostly went through the motions of squaring positions and getting out of town ahead of the long Memorial Day holiday weekend.
Only the NYSE Composite was higher on the final day of the week, with the other major indices falling apart late in the day. Stocks traded on the positive side of the ledger for most of the day, but only with marginal gains. Volume was the lowest in at least five months.
Dow 8,277.32, -14.81 (0.18%)
NASDAQ 1,692.01, -3.24 (0.19%)
S&P 500 887.00, -1.33 (0.15%)
NYSE Composite 5,789.62, +9.08 (0.16%)
It was a near-dead heat in the A-D line, with advancing issues edging decliners, 3195-3159. New lows again held sway over new lows, 55-42. While the relatively strong number of new highs is encouraging to the bulls, the bears can rest well in the knowledge that the bear market is still firmly in place, as the high-low indicator has yet to roll over and probably won't. The question remains: how long will it take stocks to retest the March 9 lows? Bets are down that it could be as long as six months as the market struggles to find any good news on which to rebuild a rally. The chances for further upside through the summer are nil.
NYSE Volume 1,058,107,000
NASDAQ Volume 1,628,006,000
The volume recorded today indicates just how controlled and manipulated the markets are currently. Many of the big players went to the sidelines, plotting their exit strategies as we head into the long, sluggish summer months.
Meanwhile, commodities were hopping. Oil, still overpriced, rose 62 cents to $61.67. The price of crude has risen only because the major oil companies need to stick it to unsuspecting consumers. Obviously, the Obama administration and the clueless congress has no interest in making life easier for the average consumer of gasoline, or they would be railing against the world's greatest cartel, led by Royal Dutch Shell, ExxonMobil, Chevron, British Petroleum and Conoco-Phillips. The so-called "five sisters" have a stranglehold on world supply and can manipulate the price, via futures, any time they please. The annual excuse that "Americans drive more in the summer" is their rationale for the current boost.
As for real investors, concerned with protecting wealth, the precious metals have been on a tear of late. On Friday, gold shot up another $7.70, to $958.90, within hailing distance of the magic $1000 mark. Once that level is breached, it's off to the races. Gold could find itself above $1200 by year's end. Silver is also gaining on a nearly daily basis. It was up another 25 cents on Friday, reaching $14.70 per ounce. Silver's gains have actually outpaced - on a percentage basis - those of gold over the past few weeks as the correction in the gold-silver ratio ensues. When gold reaches $1200, silver will be at or above $22 per ounce.
As mentioned here on numerous occasions, silver may prove to be the trade of 2009-2012. Some are already predicting its price at upwards of $60 before the bull run is over. That's basically a four-bagger from here, so it's not too late to get in on the bonanza. It is recommended to buy physical silver, in coins or bars, as it may become useful as a medium of exchange for those of us not able to afford the pricier yellow stuff. The lid has come off the precious metals trade and there's much more demand than supply right now. As conditions worsen, that demand will only increase.
Buy gold or silver and put it away in a safe place. The metals are investments which will not easily decline in value and have intrinsic worth, unlike stocks and bonds. There's no risk of default on actual, physical metal, as opposed to paper, and that includes currency. In the final crushing defeat of the fiat currencies, holders of gold and silver will be winners and holders of the greatest wealth.
Ponder that, and remember our veterans this Memorial Day weekend.
Only the NYSE Composite was higher on the final day of the week, with the other major indices falling apart late in the day. Stocks traded on the positive side of the ledger for most of the day, but only with marginal gains. Volume was the lowest in at least five months.
Dow 8,277.32, -14.81 (0.18%)
NASDAQ 1,692.01, -3.24 (0.19%)
S&P 500 887.00, -1.33 (0.15%)
NYSE Composite 5,789.62, +9.08 (0.16%)
It was a near-dead heat in the A-D line, with advancing issues edging decliners, 3195-3159. New lows again held sway over new lows, 55-42. While the relatively strong number of new highs is encouraging to the bulls, the bears can rest well in the knowledge that the bear market is still firmly in place, as the high-low indicator has yet to roll over and probably won't. The question remains: how long will it take stocks to retest the March 9 lows? Bets are down that it could be as long as six months as the market struggles to find any good news on which to rebuild a rally. The chances for further upside through the summer are nil.
NYSE Volume 1,058,107,000
NASDAQ Volume 1,628,006,000
The volume recorded today indicates just how controlled and manipulated the markets are currently. Many of the big players went to the sidelines, plotting their exit strategies as we head into the long, sluggish summer months.
Meanwhile, commodities were hopping. Oil, still overpriced, rose 62 cents to $61.67. The price of crude has risen only because the major oil companies need to stick it to unsuspecting consumers. Obviously, the Obama administration and the clueless congress has no interest in making life easier for the average consumer of gasoline, or they would be railing against the world's greatest cartel, led by Royal Dutch Shell, ExxonMobil, Chevron, British Petroleum and Conoco-Phillips. The so-called "five sisters" have a stranglehold on world supply and can manipulate the price, via futures, any time they please. The annual excuse that "Americans drive more in the summer" is their rationale for the current boost.
As for real investors, concerned with protecting wealth, the precious metals have been on a tear of late. On Friday, gold shot up another $7.70, to $958.90, within hailing distance of the magic $1000 mark. Once that level is breached, it's off to the races. Gold could find itself above $1200 by year's end. Silver is also gaining on a nearly daily basis. It was up another 25 cents on Friday, reaching $14.70 per ounce. Silver's gains have actually outpaced - on a percentage basis - those of gold over the past few weeks as the correction in the gold-silver ratio ensues. When gold reaches $1200, silver will be at or above $22 per ounce.
As mentioned here on numerous occasions, silver may prove to be the trade of 2009-2012. Some are already predicting its price at upwards of $60 before the bull run is over. That's basically a four-bagger from here, so it's not too late to get in on the bonanza. It is recommended to buy physical silver, in coins or bars, as it may become useful as a medium of exchange for those of us not able to afford the pricier yellow stuff. The lid has come off the precious metals trade and there's much more demand than supply right now. As conditions worsen, that demand will only increase.
Buy gold or silver and put it away in a safe place. The metals are investments which will not easily decline in value and have intrinsic worth, unlike stocks and bonds. There's no risk of default on actual, physical metal, as opposed to paper, and that includes currency. In the final crushing defeat of the fiat currencies, holders of gold and silver will be winners and holders of the greatest wealth.
Ponder that, and remember our veterans this Memorial Day weekend.
Thursday, May 21, 2009
Something Is Amiss In the UK, USA
What happened to stocks today was truly unusual. Despite the Conference Board's Leading Indicators Index rising by 1.0% - the first gain in ten months - investors were not in the mood to continue the 9-week-long rally any further. This is what happens when markets are rigged, when large institutions control the government, the media and the majority of the trading. Stocks will not do what people think they will. It's why the rally came off the lows in March like an uncaged lion, never pulled back at any point and now is so completely overbought that there is no opportunity for buying anymore.
The lone indicator which remained constant throughout - new highs to new lows - got even on Tuesday and backed into the red - favoring new lows - Wednesday, and dipped further Thursday. It clearly has been the most accurate predictor of stock movements, having favored the new highs every day for the last 19 months except on 5 or 6 occasions. Clearly, stocks are headed lower, interest rates higher, and the US economy into the abyss.
The decline was broad and could have been more pronounced, but that is a story for another day, when there is actual news to send the market reeling and investors seeking safe havens (in bonds and gold). No, this decline, back to the March lows some 1800 points on the Dow down below, is going to be a long, slow grind which may take as long as 6 to 9 months to complete. Along the way will be fits and starts, but the end game gets closer and closer, somewhere around the summer of 2010 or spring of 2011. The US economy is dead, killed by the bankers, the Fed and the government morons who were supposed to be in charge but rather deserve nothing short of a hangman's noose.
Dow 8,292.13, -129.91 (1.54%)
NASDAQ 1,695.25, -32.59 (1.89%)
S&P 500 888.33, -15.14 (1.68%)
NYSE Composite 5,780.54, -89.85 (1.53%)
Declining issues overtook advancers, 4656-1778. New lows outpaced new highs, 59-33. Expect that gap to grow steadily over time. Volume was typical of the slower summer months.
NYSE Volume 1,437,849,000
NASDAQ Volume 2,252,413,000
Meanwhile, commodities showed their true colors. Oil fell 99 cents, to $61.05 per barrel. It is still overpriced by at least $10 per barrel. Gold gained $13.80, to $951.20 per ounce. It is headed back above $1000, probably by the middle of June, if not sooner. Silver gained again, up 17 cents, to $14.45 per ounce. Silver may be the very best investment of 2009. It could hit $30 by year's end.
Bonds were hammered, pushing yields higher, as the US dollar was knocked down in vicious trading on the Forex markets. The beginning of the end of the greenback as the world's reserve currency is at hand. Within the next two years at least a dozen municipalities will default on their debt and three or more states - New York, California, New Jersey and maybe more - will default for failure to make necessary cuts in spending and staffing.
The world has noticed that the US is full of crap, financially, politically, socially and morally. And the world is not going to take it lying down. Revenge, by the countries the US has abused, misused, bombed, threatened, and tortured, will be complete within years. If you are one of the people out there keeping your government job, hoping for the best, or, worse, not even thinking about the state of our nation, you will be caught by surprise.
Preparing for the end of the short reign of the USA as the world's superpower is serious business. And most of us are unprepared, unable to see the light, see the obvious signs and take action. Our government has been off the rails for most of the past decade, the corruption rampant and moral turpitude complete. It's not a matter of left or right, Democrat or Republican. It's all of them, together, who have misused their positions, abrogated their authority and ignored or disobeyed the laws of the land. We, the people, have allowed it, and we, the people, will pay a heavy price for allowing our government to run amok and afoul of the constitution.
The end is coming. There is little time to prepare.
The lone indicator which remained constant throughout - new highs to new lows - got even on Tuesday and backed into the red - favoring new lows - Wednesday, and dipped further Thursday. It clearly has been the most accurate predictor of stock movements, having favored the new highs every day for the last 19 months except on 5 or 6 occasions. Clearly, stocks are headed lower, interest rates higher, and the US economy into the abyss.
The decline was broad and could have been more pronounced, but that is a story for another day, when there is actual news to send the market reeling and investors seeking safe havens (in bonds and gold). No, this decline, back to the March lows some 1800 points on the Dow down below, is going to be a long, slow grind which may take as long as 6 to 9 months to complete. Along the way will be fits and starts, but the end game gets closer and closer, somewhere around the summer of 2010 or spring of 2011. The US economy is dead, killed by the bankers, the Fed and the government morons who were supposed to be in charge but rather deserve nothing short of a hangman's noose.
Dow 8,292.13, -129.91 (1.54%)
NASDAQ 1,695.25, -32.59 (1.89%)
S&P 500 888.33, -15.14 (1.68%)
NYSE Composite 5,780.54, -89.85 (1.53%)
Declining issues overtook advancers, 4656-1778. New lows outpaced new highs, 59-33. Expect that gap to grow steadily over time. Volume was typical of the slower summer months.
NYSE Volume 1,437,849,000
NASDAQ Volume 2,252,413,000
Meanwhile, commodities showed their true colors. Oil fell 99 cents, to $61.05 per barrel. It is still overpriced by at least $10 per barrel. Gold gained $13.80, to $951.20 per ounce. It is headed back above $1000, probably by the middle of June, if not sooner. Silver gained again, up 17 cents, to $14.45 per ounce. Silver may be the very best investment of 2009. It could hit $30 by year's end.
Bonds were hammered, pushing yields higher, as the US dollar was knocked down in vicious trading on the Forex markets. The beginning of the end of the greenback as the world's reserve currency is at hand. Within the next two years at least a dozen municipalities will default on their debt and three or more states - New York, California, New Jersey and maybe more - will default for failure to make necessary cuts in spending and staffing.
The world has noticed that the US is full of crap, financially, politically, socially and morally. And the world is not going to take it lying down. Revenge, by the countries the US has abused, misused, bombed, threatened, and tortured, will be complete within years. If you are one of the people out there keeping your government job, hoping for the best, or, worse, not even thinking about the state of our nation, you will be caught by surprise.
Preparing for the end of the short reign of the USA as the world's superpower is serious business. And most of us are unprepared, unable to see the light, see the obvious signs and take action. Our government has been off the rails for most of the past decade, the corruption rampant and moral turpitude complete. It's not a matter of left or right, Democrat or Republican. It's all of them, together, who have misused their positions, abrogated their authority and ignored or disobeyed the laws of the land. We, the people, have allowed it, and we, the people, will pay a heavy price for allowing our government to run amok and afoul of the constitution.
The end is coming. There is little time to prepare.
Wednesday, May 20, 2009
Banks Raise Cash... Probably From Each Other
Even before the release of last month's Fed meeting minutes, stocks had been stumbling off earlier highs, but the word from the Fed did little to assuage fears that recovery may not be so swift or as robust as some had predicted.
After the 2:00 pm release of the Fed minutes, stocks vacillated before finally giving way in the final hour. Whether the decline has any meaning in the larger scheme of things remains to be seen. It was, however, the second straight losing day for the Dow, with Wednesday's loss larger than Tuesday's.
Two days do not make a trend, but there is evidence enough that stocks have reached at least a temporary apex, though that sentiment has been expressed - incorrectly - plenty of times during the course of this rally. Stocks could go anywhere, so long as the corrupted banksters are in charge. Having taken control of the federal government from the elected pols, the mighty of Goldman Sachs, JP Morgan Chase, et. al., have engineered the recent rally and have enough power to direct the stock market in any direction they choose.
The economy is a vastly different beast, controlled by real people in real cities and towns with real money, not the phony, borrowed, decrepit electronic dollars that populate the Wall Street world. That is why there has been such a dramatic disconnect between the stock market and the real economy. Wall Street has rallied 30% in recent months, while the economy continued to decline, or, at best, slowly deteriorate.
Stocks got something of a boost from news that Bank of America had raised some $13.5 billion over the past two weeks via sales of common stock. Naturally, selling 1.25 billion shares is going to be dilutive, so shares of BofA (BAC) have fallen from just over $15 per share to roughly $11.50 today. That part makes enough sense, but one really has to wonder just who it is buying all these shares. As with the TARP, TALF, and other government inspirations, word of self-dealing has never been raised, for obvious reasons. If Citi, BofA, Goldman, Morgan Stanley and JP Morgan all need to raise capital, what's preventing them from buying each other's stocks? Nothing, exactly, nothing, and in this environment, one has to assume that's what's occurring. Time will tell.
Dow 8,422.04, -52.81 (0.62%)
NASDAQ 1,727.84, -6.70 (0.39%)
S&P 500 903.47, -4.66 (0.51%)
NYSE Composite 5,870.39, -1.83 (0.03%)
On the day, advancing issues beat decliners, 3296-3179. New lows beat new highs, 76-68. Volume was once again muted.
NYSE Volume 1,651,344,000
NASDAQ Volume 2,308,490,000
Oil jumped another $1.94, to $62.04. Gold gained $10.70, to $937.40. Silver was up 16 cents to $14.28. The commodity rally may be underway, but it also may be a bit premature. In the case of oil, that's more than likely a manipulated price, since the market is so heavily controlled by the five major oil companies.
After the 2:00 pm release of the Fed minutes, stocks vacillated before finally giving way in the final hour. Whether the decline has any meaning in the larger scheme of things remains to be seen. It was, however, the second straight losing day for the Dow, with Wednesday's loss larger than Tuesday's.
Two days do not make a trend, but there is evidence enough that stocks have reached at least a temporary apex, though that sentiment has been expressed - incorrectly - plenty of times during the course of this rally. Stocks could go anywhere, so long as the corrupted banksters are in charge. Having taken control of the federal government from the elected pols, the mighty of Goldman Sachs, JP Morgan Chase, et. al., have engineered the recent rally and have enough power to direct the stock market in any direction they choose.
The economy is a vastly different beast, controlled by real people in real cities and towns with real money, not the phony, borrowed, decrepit electronic dollars that populate the Wall Street world. That is why there has been such a dramatic disconnect between the stock market and the real economy. Wall Street has rallied 30% in recent months, while the economy continued to decline, or, at best, slowly deteriorate.
Stocks got something of a boost from news that Bank of America had raised some $13.5 billion over the past two weeks via sales of common stock. Naturally, selling 1.25 billion shares is going to be dilutive, so shares of BofA (BAC) have fallen from just over $15 per share to roughly $11.50 today. That part makes enough sense, but one really has to wonder just who it is buying all these shares. As with the TARP, TALF, and other government inspirations, word of self-dealing has never been raised, for obvious reasons. If Citi, BofA, Goldman, Morgan Stanley and JP Morgan all need to raise capital, what's preventing them from buying each other's stocks? Nothing, exactly, nothing, and in this environment, one has to assume that's what's occurring. Time will tell.
Dow 8,422.04, -52.81 (0.62%)
NASDAQ 1,727.84, -6.70 (0.39%)
S&P 500 903.47, -4.66 (0.51%)
NYSE Composite 5,870.39, -1.83 (0.03%)
On the day, advancing issues beat decliners, 3296-3179. New lows beat new highs, 76-68. Volume was once again muted.
NYSE Volume 1,651,344,000
NASDAQ Volume 2,308,490,000
Oil jumped another $1.94, to $62.04. Gold gained $10.70, to $937.40. Silver was up 16 cents to $14.28. The commodity rally may be underway, but it also may be a bit premature. In the case of oil, that's more than likely a manipulated price, since the market is so heavily controlled by the five major oil companies.
Subscribe to:
Posts (Atom)
Posts
