If you're unfamiliar with the term "PPT," you haven't been reading about economic conditions very deeply. The Plunge protection Team (PPT) stems from a presidential order (Reagan) that gives the Treasury Secretary, Fed Chairman and others extraordinary powers to combat financial firestorms, one of which is direct intervention into capital and equity markets, and, presumably, any other market.
Stocks began the day trying to overcome the lingering effects of Thursday's drubbing, and, after January Non-farms payroll data turned out to be more confusing than anything else, began to sell off, until, by 2:00 pm, the Dow had sunk another 167 points, pounding resistance. The S&P, already shattered, was being likewise battered.
That, however, proved to be the bottom for the day, and the week. Stocks quickly re-gathered and regained momentum without any catalyst, a tell-tale sign of intervention, something the PPT has been doing with regularity since 2000. From 3:00 to 3:15 pm, the Dow gained 100 points, putting the index near unchanged. The rest of the session was spent by the underpinning PPT and their henchmen making sure the Dow finished above 10,000 (it did) and all fears would be soothed over the weekend.
Their work is a fool's gambit, always has been and always will be. The problem is that they can play it because nobody is auditing them or their activities. The banks and the superstructure above it are irresponsible because they've been allowed to be and they will continue to be irresponsible until they destroy the economic system (almost did) or are destroyed themselves. But don't start holding your breath. The powers that be are incredible entrenched. Prepare for the worst four years of your economic life.
Dow 10,012.23, +10.05 (0.10%)
NASDAQ 2,141.12, +15.69 (0.74%)
S&P 500 1,066.19, +3.08 (0.29%)
NYSE Composite 6,782.75, -5.11 (0.08%)
As more evidence of the manipulative element in today's trading, consider that decliners beat advancers handily, 3476-3039. 149 new lows beat 96 new highs. Both of those indicators are contrary to the headline numbers. Volume was magnificent, owing both the the depth of selling and to the amount of financial heft necessary to keep the market from collapsing. But make no mistake about it. The decline will continue. The markets put in new lows which must be tested before any meaningful advance can occur. Chances are, today's lows will be surpassed to the downside within short order. Todays' reprieve was only necessary to avert a panic and to give insiders more opportunity to profit from the next leg down.
NYSE Volume 7,762,321,000
NASDAQ Volume 2,836,146,250
Oil closed at $71.19, down $2.98, at its lowest price since mid-December. Gold finished down $9.50, at $1,053.50 and silver finished down 47 cents, at $14.88. The commodities were only benefitted after their New York closes, not quite as fortunate as the equity markets.
Friday, February 5, 2010
Thursday, February 4, 2010
Deflation Storm Raging Globally
Thursday, February 4, 2010, may be a date to mark down as a pivotal one in the global economic cycle. As companies, consumers and nations struggle to rebound and refocus from the financial catastrophe of 2008 (actually the end result of decades of loose credit), more and more negative signs point to continued deterioration in capital, labor, commodity and equity markets.
What set the wheels in motion for a disastrous trading day in almost every global stock market, was the failed bond auction in tiny Portugal on Wednesday. The country failed to sell an expected 500 million Euros worth of one-year notes, as participation yielded the sale of only 300 million.
Early in the morning on Thursday, Moody's downgraded the outlook on the government of another tiny Eurozone nation, Lithuania, to negative, citing increased pressure due to a long-lingering recession and high debt-to-GDP ratio.
The two nations join Greece on the European list of sick economies, with no relief in sight. The global credit crunch continues to hamper the governments of smaller countries to borrow and spend. Fewer and fewer participants in government bond functions is like a loud bell clanging the death knell of debt-financed capitalist nations. Despite efforts by the US media to paper over our own failures in the bond market, news is gradually emerging, primarily from sources such as Robert Prechter of Elliott Wave and Jim Willie of Golden Jackass, that the entire US bond-debt function is a colossal sham, with government bonds being purchased by primary dealers and then repurchased by the Fed within a week's time.
The Chinese have virtually ceased participation in anything but the shortest-duration auctions, and other foreigners have followed suit. The Fed's policy of "quantitative easing" (printing money with no backing) was supposed to have ended in November, and, according to the Fed, it has stopped outright purchases of Treasuries, but the quiet, behind-the-scenes purchases of bonds from primary dealers - who cannot sell what they bought - works out to being exactly the same thing in practice.
All of these events are part of the positive feedback loop caused by the over-extension of credit without controls or proper risk analysis. What began in 2007 as the sub-prime mortgage crisis has extended to prime loans, commercial loans, junk bonds, corporate bonds, and finally all the way up the food chain to government bonds. Both Prechter and Willie predict that US Treasury bond defaults are bound to occur, though not until significant damage is done to other nations, particularly in Europe, already well underway.
What our "best and brightest" economists fail to either understand or are unwilling to admit, is that all of this nasty unwinding of credit and economy is the natural outcome of failed credit policies. Everyone, from college students all the way to the federal government, borrowed too much and now servicing the interest and principle payments are killing them. Residential and commercial real estate defaults are continuing to rise, another natural outcome of a bloated (by easy credit), overextended, mythical real estate boom. Today's global events are just another symptom of the same sickness, only to a greater degree.
Barely noticed amid the pre-market futures meltdown caused by another horrific reading of initial jobless claims - 480K - were the postponment of a pair of IPOs that were supposed to have priced overnight and sold into the market today. FriendFinder Networks (FFN) and Imperial Capital Group Inc (ICG) both were supposed to have gone off this week, but, due to weak market demand, neither went ahead with their offerings. Meanwhile, Ironwood Pharmaceuticals priced its offering of 16.7 million shares for $11.25 after its offering at $14 to $16 per share had met with considerable resistance. At the lowered price, Ironwood raised only 75% of their expected amount.
IPOs are having a truly difficult time coming to market. Investors are already highly risk-averse, and new issuance is seen as too risky. This is yet another deflationary signal as assets of all variety are put under microscopes and downgraded.
Then there's the firestorm surrounding Toyota. Problems keep propping up for the world's leading automaker. First, sticking gas pedals have forced a gigantic recall, and now, the brakes on their premium "green" maching, the Prius, are under scrutiny after having been the proximate cause for at least four US crashes. It's interesting speculation, but worth noting in an age of skulldruggery at the highest levels, that these problems should be happening to a foreign automaker just as American car companies find themselves in severe economic conditions. Most of the accidents are occurring in the US, where, incidentally, the parts, and, to some extent, the entire vehicles, were manufactured.
The next case is commodities. Oil, gold and silver are being hammered yet again, though this should come as no surprise. Oil consumption continues to be driven down by slack demand, in addition to artificial overpricing, and, while gold and silver are fine hedges against inflation, they can't escape the inevitable vortex of deflation. Like any other asset, they will be devalued, especially gold, which has been on a tear to the upside for the past decade. All those companies which were advertising "cash for gold" are going to end up just like buyers of overpriced homes in Southern California, upside-down and hopelessly in debt, though some may fare better than others as the metals are at least a somewhat reliable store of value, better than beanie babies, stocks or lawn furniture, though neither, in their raw investment form, have any functional purpose.
All of this sent investors scrambling on Thursday in advance of Friday morning's Non-farm payroll data. Anyone with half a brain is getting out of the way today, selling shares in anticipation of yet another disappointment.
Here's another mention of Great Depression II, only this time, it's in the mainstream.
I sold all my gold today before it went any lower. I received a good price, all cash, and now will watch as its price erodes. Cash is KING!
On Wall Street, they're beginning to run scared. All the talk this AM on CNBC (pays to watch it so you know what NOT to do) was about retail sales, and how the major chain stores reported better-than-expected results for January. But, let's ask, better than what? Last January, which stuck to high heaven? Exactly, and nobody bothered to mention that people who are shopping at Kohl's, Macy's et.al. are idiots with free money from unemployment, SS, disability, etc. The real carnage came from unemployment and the Sovereign Debt crisis mentioned at the beginning of this post.
Here's how stocks looked at the end of the day:
Dow 10,002.18, -268.37 (2.61%)
NASDAQ 2,125.43, -65.48 (2.99%)
S&P 500 1,063.11, -34.17 (3.11%)
NYSE Composite 6,787.86, -254.76 (3.62%)
Those are some pug-ugly numbers, and the volume was elevated, meaning the rush for the exits has begun. You, and your silly 401k or retirement plan, are trapped. Get ready for another colossal blow to your dreams and aspirations, because it's coming and this time it has been telegraphed loud and clear. Declining issues trampled all over the few gainers, 5566-828, a huge 7-1 ratio. And, as I've been saying would happen the past few weeks, the new highs-new lows indicators finally rolled over. There were 117 new lows and just 96 new highs. Folks, it's OVER.
NYSE Volume 6,857,842,500
NASDAQ Volume 2,819,441,000
The Dow finished at its lowest level since November 4, 2009, almost exactly 3 months. The S&P broke through key support levels at 1071 and 1065 and appears doomed for a return to 960 in short order. The NASDAQ didn't do any better, finishing just above its November 6 close.
Commodities were savaged as investors sold to raise cash. Oil lost $4.01, to $72.97. Gold fell $48.00, to $1064 per ounce. Silver shed 99 cents - an enormous 7% decline - to finish at $15.33.
What's truly frightening this time around is that this is only the beginning. All talk of the V-shaped recovery is now being laughed right out of town. Owning anything - stocks, bonds, homes, commercial real estate, art, gold, silver, barrels of oil, sports cards, you name it - may prove fatal to your financial health.
Here's a tip: If you're buying anything today, look at the price, offer 25% less, and you just may get it. One caveat, it still may not be a good deal six months from now. Be careful.
READ THE POST BELOW
What set the wheels in motion for a disastrous trading day in almost every global stock market, was the failed bond auction in tiny Portugal on Wednesday. The country failed to sell an expected 500 million Euros worth of one-year notes, as participation yielded the sale of only 300 million.
Early in the morning on Thursday, Moody's downgraded the outlook on the government of another tiny Eurozone nation, Lithuania, to negative, citing increased pressure due to a long-lingering recession and high debt-to-GDP ratio.
The two nations join Greece on the European list of sick economies, with no relief in sight. The global credit crunch continues to hamper the governments of smaller countries to borrow and spend. Fewer and fewer participants in government bond functions is like a loud bell clanging the death knell of debt-financed capitalist nations. Despite efforts by the US media to paper over our own failures in the bond market, news is gradually emerging, primarily from sources such as Robert Prechter of Elliott Wave and Jim Willie of Golden Jackass, that the entire US bond-debt function is a colossal sham, with government bonds being purchased by primary dealers and then repurchased by the Fed within a week's time.
The Chinese have virtually ceased participation in anything but the shortest-duration auctions, and other foreigners have followed suit. The Fed's policy of "quantitative easing" (printing money with no backing) was supposed to have ended in November, and, according to the Fed, it has stopped outright purchases of Treasuries, but the quiet, behind-the-scenes purchases of bonds from primary dealers - who cannot sell what they bought - works out to being exactly the same thing in practice.
All of these events are part of the positive feedback loop caused by the over-extension of credit without controls or proper risk analysis. What began in 2007 as the sub-prime mortgage crisis has extended to prime loans, commercial loans, junk bonds, corporate bonds, and finally all the way up the food chain to government bonds. Both Prechter and Willie predict that US Treasury bond defaults are bound to occur, though not until significant damage is done to other nations, particularly in Europe, already well underway.
What our "best and brightest" economists fail to either understand or are unwilling to admit, is that all of this nasty unwinding of credit and economy is the natural outcome of failed credit policies. Everyone, from college students all the way to the federal government, borrowed too much and now servicing the interest and principle payments are killing them. Residential and commercial real estate defaults are continuing to rise, another natural outcome of a bloated (by easy credit), overextended, mythical real estate boom. Today's global events are just another symptom of the same sickness, only to a greater degree.
Barely noticed amid the pre-market futures meltdown caused by another horrific reading of initial jobless claims - 480K - were the postponment of a pair of IPOs that were supposed to have priced overnight and sold into the market today. FriendFinder Networks (FFN) and Imperial Capital Group Inc (ICG) both were supposed to have gone off this week, but, due to weak market demand, neither went ahead with their offerings. Meanwhile, Ironwood Pharmaceuticals priced its offering of 16.7 million shares for $11.25 after its offering at $14 to $16 per share had met with considerable resistance. At the lowered price, Ironwood raised only 75% of their expected amount.
IPOs are having a truly difficult time coming to market. Investors are already highly risk-averse, and new issuance is seen as too risky. This is yet another deflationary signal as assets of all variety are put under microscopes and downgraded.
Then there's the firestorm surrounding Toyota. Problems keep propping up for the world's leading automaker. First, sticking gas pedals have forced a gigantic recall, and now, the brakes on their premium "green" maching, the Prius, are under scrutiny after having been the proximate cause for at least four US crashes. It's interesting speculation, but worth noting in an age of skulldruggery at the highest levels, that these problems should be happening to a foreign automaker just as American car companies find themselves in severe economic conditions. Most of the accidents are occurring in the US, where, incidentally, the parts, and, to some extent, the entire vehicles, were manufactured.
The next case is commodities. Oil, gold and silver are being hammered yet again, though this should come as no surprise. Oil consumption continues to be driven down by slack demand, in addition to artificial overpricing, and, while gold and silver are fine hedges against inflation, they can't escape the inevitable vortex of deflation. Like any other asset, they will be devalued, especially gold, which has been on a tear to the upside for the past decade. All those companies which were advertising "cash for gold" are going to end up just like buyers of overpriced homes in Southern California, upside-down and hopelessly in debt, though some may fare better than others as the metals are at least a somewhat reliable store of value, better than beanie babies, stocks or lawn furniture, though neither, in their raw investment form, have any functional purpose.
All of this sent investors scrambling on Thursday in advance of Friday morning's Non-farm payroll data. Anyone with half a brain is getting out of the way today, selling shares in anticipation of yet another disappointment.
Here's another mention of Great Depression II, only this time, it's in the mainstream.
I sold all my gold today before it went any lower. I received a good price, all cash, and now will watch as its price erodes. Cash is KING!
On Wall Street, they're beginning to run scared. All the talk this AM on CNBC (pays to watch it so you know what NOT to do) was about retail sales, and how the major chain stores reported better-than-expected results for January. But, let's ask, better than what? Last January, which stuck to high heaven? Exactly, and nobody bothered to mention that people who are shopping at Kohl's, Macy's et.al. are idiots with free money from unemployment, SS, disability, etc. The real carnage came from unemployment and the Sovereign Debt crisis mentioned at the beginning of this post.
Here's how stocks looked at the end of the day:
Dow 10,002.18, -268.37 (2.61%)
NASDAQ 2,125.43, -65.48 (2.99%)
S&P 500 1,063.11, -34.17 (3.11%)
NYSE Composite 6,787.86, -254.76 (3.62%)
Those are some pug-ugly numbers, and the volume was elevated, meaning the rush for the exits has begun. You, and your silly 401k or retirement plan, are trapped. Get ready for another colossal blow to your dreams and aspirations, because it's coming and this time it has been telegraphed loud and clear. Declining issues trampled all over the few gainers, 5566-828, a huge 7-1 ratio. And, as I've been saying would happen the past few weeks, the new highs-new lows indicators finally rolled over. There were 117 new lows and just 96 new highs. Folks, it's OVER.
NYSE Volume 6,857,842,500
NASDAQ Volume 2,819,441,000
The Dow finished at its lowest level since November 4, 2009, almost exactly 3 months. The S&P broke through key support levels at 1071 and 1065 and appears doomed for a return to 960 in short order. The NASDAQ didn't do any better, finishing just above its November 6 close.
Commodities were savaged as investors sold to raise cash. Oil lost $4.01, to $72.97. Gold fell $48.00, to $1064 per ounce. Silver shed 99 cents - an enormous 7% decline - to finish at $15.33.
What's truly frightening this time around is that this is only the beginning. All talk of the V-shaped recovery is now being laughed right out of town. Owning anything - stocks, bonds, homes, commercial real estate, art, gold, silver, barrels of oil, sports cards, you name it - may prove fatal to your financial health.
Here's a tip: If you're buying anything today, look at the price, offer 25% less, and you just may get it. One caveat, it still may not be a good deal six months from now. Be careful.
READ THE POST BELOW
Wednesday, February 3, 2010
Signs of Stupidity, Deflation and Depression
We've all heard about how Ben Bernanke, Tim Geithner and Hank Paulson saved the world from imminent financial collapse. Oddly enough, there was a Time Magazine cover story from 1999 about a similar trio of swashbuckling economists - Alan Greenspan, Robert Rubin and Lawrence Summers - who were then called the "Committee to Save the World."
Hmmm... 1999. Do we all remember what happened after this bunch - as Time loudly proclaimed on their cover - prevented a global economic meltdown?
What are we, stupid? I guess so. How is it that just 10 years ago we hailed the Fed Chairman and two Treasury Secretaries as "saviors" just before the whole country went kaput, and are doing the exact same thing again right now? Americans, and probably the majority of the world's population has the word "STUPID" printed on their foreheads in invisible ink which only economists can see through the aid of their special contact lenses and eyeglasses. Thus, their ability to hoodwink us into trusting them and then to hail them as heroes is entirely of our own making. We are their enablers.
So, don't blame them for the problems we face. Blame yourself. Did you take out too many loans? Did you overspend? Did you run up non-payable credit card debt? Did you not save a nickel during all those "boom" years, first in the 90s and more recently, from 2003-2008?
Go ahead and cry, it's OK. I did it too. But, there's a happy ending to this story. Well, maybe not exactly "happy," but maybe not tragic either. Now that we're all broke and penniless, or soon to be so, we're all in it together, down here scratching for scraps of food and any kind of work. An old adage suggests that "misery loves company," and in this instance, it could not ring more truly. With the accumulated debt of the nation approaching $13 trillion (not including $4 trillion from Fannie Mae and Freddie Mac, or about $59 trillion from unfunded Social Security, Medicare or federal retirement benefits - or is it $107 trillion?), millions of our countrymen and women out of work, foreclosures continuing to rise and a federal government bent on nationalizing everything from banks to car manufacturing to health care, bells and buzzers should be going off all over the place, yet we, yes, we dopes with STUPID surreptitiously stamped upon our foreheads, continue to work and spend and pay and worry and buy and pay, invest and lose, leaving our money in the same hands of the same greedy bankers who took us down this path to ruin.
We all deserve to be lined up and summarily executed, along with the congress and every member of the administration (people we voted into office). That would leave just little kids with no understanding of debt, the ultimate solution. I pray that my little tirade of sarcasm hasn't scared you into thinking it might just turn out that way. It might. It shouldn't, but to think that the people we call our heroes, but are actually a lying bunch of hoodlums, scoundrels and crooks, would be plotting the decimation of the world's finest democracy doesn't take much of a stretch of credulity.
There are things you and I can do before the situation gets much worse. I'll be discussing them in future posts as we wend our way through this sad, messy chapter of American history. But, just for starters, two things that won't work are: 1. leaving the country; 2. Staying put in a job you hate that doesn't pay you what you're worth.
The first doesn't work because other countries are in just as bad, if not worse, conditions than ours, and the second doesn't make any sense, right from Jump Street. Why anyone would want to waste their time on the planet toiling for people they don't like in a job they hate is beyond me. It sounds so masochistic. For a real solution, try watching the movie "Fight Club" until you either puke from disgust or actually come to an understanding of the deeper, hidden message in that film. Or, if you just need a good regurgitation, read Camus' "Nausea." I've heard it's even better in French.
As for the markets, the place people go when they wish to flush money away, stocks were generally weak and going nowhere. The daily movements of the stock market really don't stack up to a hill of fried chicken anymore, so thick is the distrust of counter-parties. Nobody really wants to be left holding the bag, and some estimates suggest that 40% of all trading is done by insiders, with insiders, and most of them work at Goldman Sachs. Funny, they say the same thing about betting on horses. 40% of all the action is carried out by owners, trainers, jockeys, grooms and even stewards. So, how are you supposed to win at that game? You're not. Get it?
Dow 10,270.55, -26.30 (0.26%)
NASDAQ 2,190.91, +0.85 (0.04%)
S&P 500 1,097.28, -6.04 (0.55%)
NYSE Composite 7,042.62, -58.82 (0.83%)
Losers beat gainers, 3910-2504. New highs beat new lows, 172-57, mostly due to the fact that at this time last year, stocks were falling faster than meteors from 13 miles above ground. Volume? Well, it absolutely sucked, just as it has for most of this miracle rally period since last March. With insiders trading mostly with insiders, what do you expect? There are fewer and fewer people willing to put money at risk every day. If you ave a 401k or other retirement plan, they're playing with your money, too. Isn't that a thought that makes you sleep well at night? If you're getting the idea that I'm just a little bit soured on the stock market and the general economy, you're beginning to get the message. However, unlike you, I'm fighting back. I've done some things to protect myself and eventually prosper from the obvious deflation that's been in place since the latter months of 2007.
NYSE Volume 4,917,465,000
NASDAQ Volume 2,341,595,500
Commodities were also weak. Oil, gold and silver were all lower. All the quotes I'm getting are different, depending on the source, so, for now, I'm not quoting specific prices, which is just what the market makers want: confusion. Haven't you ever wondered why currencies are so difficult to figure? The quotes most commonly used are Dollar:Yen, Euro:Dollar, Pound:Dollar. The Euro and Pound prices are inverted from the Yen, making comparisons and the real value of the dollar difficult, if not impossible, to decipher. It's a very confusing breakdown, but nobody cares to fix it? Why? Because it is confusing. Precisely.
According to Robert Prechter of the Elliott Wave, "a deflationary crash is characterized in part by a persistent, sustained, deep, general decline in people's desire and ability to lend and borrow. A depression is characterized in part by a persistent, sustained, deep general decline in production." (Conquer the Crash, Chapter 9)
Both of those conditions have been in place and at work since August, 2007. Efforts by the Fed, Treasury and the brilliant geniuses who troll Wall Street looking for suckers with money to forestall the inevitable have only lengthened the duration of the decline, then and now. Conditions seem to change with each month, quarter, economic or jobs report, but not much. Government statistics are so mangled that they no longer make sense or can be used as a true yardstick of economic vitality or disease.
We are in the throes of the worst depression the country has ever seen, kept afloat by federal payments to states, states to cites and so on, and by unemployment benefits, medicare transfers, retirement benefits, Social Security payments, and other seamless, unseen transfers of money like TARP, TALF, HAMP and other Federal Reserve machinations. Unemployment keeps rising, people keep losing their homes and most of us just go about their business as if things were normal.
Things are far from normal.
Hmmm... 1999. Do we all remember what happened after this bunch - as Time loudly proclaimed on their cover - prevented a global economic meltdown?
What are we, stupid? I guess so. How is it that just 10 years ago we hailed the Fed Chairman and two Treasury Secretaries as "saviors" just before the whole country went kaput, and are doing the exact same thing again right now? Americans, and probably the majority of the world's population has the word "STUPID" printed on their foreheads in invisible ink which only economists can see through the aid of their special contact lenses and eyeglasses. Thus, their ability to hoodwink us into trusting them and then to hail them as heroes is entirely of our own making. We are their enablers.
So, don't blame them for the problems we face. Blame yourself. Did you take out too many loans? Did you overspend? Did you run up non-payable credit card debt? Did you not save a nickel during all those "boom" years, first in the 90s and more recently, from 2003-2008?
Go ahead and cry, it's OK. I did it too. But, there's a happy ending to this story. Well, maybe not exactly "happy," but maybe not tragic either. Now that we're all broke and penniless, or soon to be so, we're all in it together, down here scratching for scraps of food and any kind of work. An old adage suggests that "misery loves company," and in this instance, it could not ring more truly. With the accumulated debt of the nation approaching $13 trillion (not including $4 trillion from Fannie Mae and Freddie Mac, or about $59 trillion from unfunded Social Security, Medicare or federal retirement benefits - or is it $107 trillion?), millions of our countrymen and women out of work, foreclosures continuing to rise and a federal government bent on nationalizing everything from banks to car manufacturing to health care, bells and buzzers should be going off all over the place, yet we, yes, we dopes with STUPID surreptitiously stamped upon our foreheads, continue to work and spend and pay and worry and buy and pay, invest and lose, leaving our money in the same hands of the same greedy bankers who took us down this path to ruin.
We all deserve to be lined up and summarily executed, along with the congress and every member of the administration (people we voted into office). That would leave just little kids with no understanding of debt, the ultimate solution. I pray that my little tirade of sarcasm hasn't scared you into thinking it might just turn out that way. It might. It shouldn't, but to think that the people we call our heroes, but are actually a lying bunch of hoodlums, scoundrels and crooks, would be plotting the decimation of the world's finest democracy doesn't take much of a stretch of credulity.
There are things you and I can do before the situation gets much worse. I'll be discussing them in future posts as we wend our way through this sad, messy chapter of American history. But, just for starters, two things that won't work are: 1. leaving the country; 2. Staying put in a job you hate that doesn't pay you what you're worth.
The first doesn't work because other countries are in just as bad, if not worse, conditions than ours, and the second doesn't make any sense, right from Jump Street. Why anyone would want to waste their time on the planet toiling for people they don't like in a job they hate is beyond me. It sounds so masochistic. For a real solution, try watching the movie "Fight Club" until you either puke from disgust or actually come to an understanding of the deeper, hidden message in that film. Or, if you just need a good regurgitation, read Camus' "Nausea." I've heard it's even better in French.
As for the markets, the place people go when they wish to flush money away, stocks were generally weak and going nowhere. The daily movements of the stock market really don't stack up to a hill of fried chicken anymore, so thick is the distrust of counter-parties. Nobody really wants to be left holding the bag, and some estimates suggest that 40% of all trading is done by insiders, with insiders, and most of them work at Goldman Sachs. Funny, they say the same thing about betting on horses. 40% of all the action is carried out by owners, trainers, jockeys, grooms and even stewards. So, how are you supposed to win at that game? You're not. Get it?
Dow 10,270.55, -26.30 (0.26%)
NASDAQ 2,190.91, +0.85 (0.04%)
S&P 500 1,097.28, -6.04 (0.55%)
NYSE Composite 7,042.62, -58.82 (0.83%)
Losers beat gainers, 3910-2504. New highs beat new lows, 172-57, mostly due to the fact that at this time last year, stocks were falling faster than meteors from 13 miles above ground. Volume? Well, it absolutely sucked, just as it has for most of this miracle rally period since last March. With insiders trading mostly with insiders, what do you expect? There are fewer and fewer people willing to put money at risk every day. If you ave a 401k or other retirement plan, they're playing with your money, too. Isn't that a thought that makes you sleep well at night? If you're getting the idea that I'm just a little bit soured on the stock market and the general economy, you're beginning to get the message. However, unlike you, I'm fighting back. I've done some things to protect myself and eventually prosper from the obvious deflation that's been in place since the latter months of 2007.
NYSE Volume 4,917,465,000
NASDAQ Volume 2,341,595,500
Commodities were also weak. Oil, gold and silver were all lower. All the quotes I'm getting are different, depending on the source, so, for now, I'm not quoting specific prices, which is just what the market makers want: confusion. Haven't you ever wondered why currencies are so difficult to figure? The quotes most commonly used are Dollar:Yen, Euro:Dollar, Pound:Dollar. The Euro and Pound prices are inverted from the Yen, making comparisons and the real value of the dollar difficult, if not impossible, to decipher. It's a very confusing breakdown, but nobody cares to fix it? Why? Because it is confusing. Precisely.
According to Robert Prechter of the Elliott Wave, "a deflationary crash is characterized in part by a persistent, sustained, deep, general decline in people's desire and ability to lend and borrow. A depression is characterized in part by a persistent, sustained, deep general decline in production." (Conquer the Crash, Chapter 9)
Both of those conditions have been in place and at work since August, 2007. Efforts by the Fed, Treasury and the brilliant geniuses who troll Wall Street looking for suckers with money to forestall the inevitable have only lengthened the duration of the decline, then and now. Conditions seem to change with each month, quarter, economic or jobs report, but not much. Government statistics are so mangled that they no longer make sense or can be used as a true yardstick of economic vitality or disease.
We are in the throes of the worst depression the country has ever seen, kept afloat by federal payments to states, states to cites and so on, and by unemployment benefits, medicare transfers, retirement benefits, Social Security payments, and other seamless, unseen transfers of money like TARP, TALF, HAMP and other Federal Reserve machinations. Unemployment keeps rising, people keep losing their homes and most of us just go about their business as if things were normal.
Things are far from normal.
Tuesday, February 2, 2010
Earnings Check-up Spurs Stocks Higher
A big surprise from homebuilder D.R. Horton (DHI) pushed stocks higher on Tuesday, as optimism spread that the US economy was truly on the rebound. The company said it earned $192 million, or 56 cents per share, in its fiscal first quarter, after analysts' called for a loss of $62.6 million, or 13 cents per share. The gigantic improvement, however, was mostly due to a tax gain of $149 million, making the true earnings picture much cloudier. Shares of D.H. Horton rose nearly 11% on the day.
Additionally, Emerson Electric (EMR) beat estimates, posting a profit, though a smaller one than last year at the same time.
Dow Chemical (DOW) may have had the most sobering and honest report of the day, though. The company earned $87 million, or 8 cents per share, compared to a loss of $1.55 billion, or $1.68 a share, in the year-ago period. While becoming profitable again, Chairman and Chief Executive Andrew Liveris warned that growth in the US and Europe may lag and that the overall global economy remains uneven.
Investors took all of this in stride and bought stocks like they were going out of style, which, to some degree, they actually are. There's more and more investor skittishness stemming from the financial meltdown of '08 and the missteps and inconsistent signals from both the administration and congress aren't helping matters much. A ton of money is still parked in money market funds or headed into less-mainstream investments.
Stocks are below their recent highs, though not down far enough to encourage the kind of wide-eyed participation seen today.
With the January non-farms payroll data due out on Friday, and ADP's private employment survey hitting the wires prior to Wednesday's open, the two-day rally may be more of a bounce than a lasting event. Unemployment remains stubbornly high and any disappointment in the upcoming employment data may skewer those who rushed in yesterday and today.
Besides the worries over unemployment, price rises in stocks are pushing p/e ratios close to nosebleed territory even though many companies have not increased revenues to the point at which they are planning to hire.
Dow 10,296.85, +111.32 (1.09%)
NASDAQ 2,190.06, +18.86 (0.87%)
S&P 500 1,103.32, +14.14 (1.30%)
NYSE Composite 7,101.44, +93.21 (1.33%)
Advancing issues outpaced decliners by a healthy margin for the second straight day, 4470-2051. There were 157 new highs, to just 57 new lows. Volume was very good, though not out of the recent range.
NYSE Volume 5,502,060,000
NASDAQ Volume 2,508,011,500
Commodities advanced, with crude oil leading the charge, up $1.77, to $77.23. Gold rose $13.20, to 1,118.20. Silver gained 8 cents to $16.74.
The major indices fell through their 50-day moving averages last week, so a snap-back rally like this is not unconventional. Notably, the 50-day moving average for the Dow Jones Industrials has reversed course, pointing lower for the first time since July of last year. It's going to take more than a few company earnings reports to restore confidence and resume last year's miracle rally.
A more probable outcome is that stocks languish further after earnings dissipate from investors' minds and the focus shifts more toward economic reports, the government and outside events. Growth in the economy has returned, but the stock market gains were so overdone in '09 that there's little upside from here.
Adding to the confusion are housing and unemployment, which remain the bogey men in the closet. Nobody is going to sleep well until foreclosure data begins to subside and employment begins to perk up. For now, it's mostly empty rhetoric and cheerleading from major firms and the entrenched financial reporters who toil on Wall Street.
Real estate markets across the country are still reeling, government budgets are broken, especially in municipalities of more than 100,000, and jobs simply are not being created by the biggest companies. The stimulus package passed by congress last year only staved off a depression. Another round of stimuli - focused on Main Street and small business - is essential to sustain any momentum that's been garnered.
As for stocks, they're generally 20-30% below their 2007 highs, and while many investors are hoping for a return to those levels, that outcome is highly in doubt because stock prices were wildly over-inflated at that juncture. The collapse of the market was more a predestined event than a surprise, so bullish arguments for continuation of the rally - which seems to have fallen apart - ring hollow.
Additionally, Emerson Electric (EMR) beat estimates, posting a profit, though a smaller one than last year at the same time.
Dow Chemical (DOW) may have had the most sobering and honest report of the day, though. The company earned $87 million, or 8 cents per share, compared to a loss of $1.55 billion, or $1.68 a share, in the year-ago period. While becoming profitable again, Chairman and Chief Executive Andrew Liveris warned that growth in the US and Europe may lag and that the overall global economy remains uneven.
Investors took all of this in stride and bought stocks like they were going out of style, which, to some degree, they actually are. There's more and more investor skittishness stemming from the financial meltdown of '08 and the missteps and inconsistent signals from both the administration and congress aren't helping matters much. A ton of money is still parked in money market funds or headed into less-mainstream investments.
Stocks are below their recent highs, though not down far enough to encourage the kind of wide-eyed participation seen today.
With the January non-farms payroll data due out on Friday, and ADP's private employment survey hitting the wires prior to Wednesday's open, the two-day rally may be more of a bounce than a lasting event. Unemployment remains stubbornly high and any disappointment in the upcoming employment data may skewer those who rushed in yesterday and today.
Besides the worries over unemployment, price rises in stocks are pushing p/e ratios close to nosebleed territory even though many companies have not increased revenues to the point at which they are planning to hire.
Dow 10,296.85, +111.32 (1.09%)
NASDAQ 2,190.06, +18.86 (0.87%)
S&P 500 1,103.32, +14.14 (1.30%)
NYSE Composite 7,101.44, +93.21 (1.33%)
Advancing issues outpaced decliners by a healthy margin for the second straight day, 4470-2051. There were 157 new highs, to just 57 new lows. Volume was very good, though not out of the recent range.
NYSE Volume 5,502,060,000
NASDAQ Volume 2,508,011,500
Commodities advanced, with crude oil leading the charge, up $1.77, to $77.23. Gold rose $13.20, to 1,118.20. Silver gained 8 cents to $16.74.
The major indices fell through their 50-day moving averages last week, so a snap-back rally like this is not unconventional. Notably, the 50-day moving average for the Dow Jones Industrials has reversed course, pointing lower for the first time since July of last year. It's going to take more than a few company earnings reports to restore confidence and resume last year's miracle rally.
A more probable outcome is that stocks languish further after earnings dissipate from investors' minds and the focus shifts more toward economic reports, the government and outside events. Growth in the economy has returned, but the stock market gains were so overdone in '09 that there's little upside from here.
Adding to the confusion are housing and unemployment, which remain the bogey men in the closet. Nobody is going to sleep well until foreclosure data begins to subside and employment begins to perk up. For now, it's mostly empty rhetoric and cheerleading from major firms and the entrenched financial reporters who toil on Wall Street.
Real estate markets across the country are still reeling, government budgets are broken, especially in municipalities of more than 100,000, and jobs simply are not being created by the biggest companies. The stimulus package passed by congress last year only staved off a depression. Another round of stimuli - focused on Main Street and small business - is essential to sustain any momentum that's been garnered.
As for stocks, they're generally 20-30% below their 2007 highs, and while many investors are hoping for a return to those levels, that outcome is highly in doubt because stock prices were wildly over-inflated at that juncture. The collapse of the market was more a predestined event than a surprise, so bullish arguments for continuation of the rally - which seems to have fallen apart - ring hollow.
Monday, February 1, 2010
My Open Letter to Senator Charles Schumer
I've been trying (in vain) to find the bill which helped me in 1983-84 hire a young woman as an advertising sales executive for what was then my fledgling newspaper, Downtown Magazine.
I was able to determine that it must have been part of the 1983 Emergency Employment Act, but little else, so, upon hearing that Senator Schumer and others were going to propose another "tax credit" type bill in coming days, I decided to query New York's senior Senator. The text of my message appears below:
------------------------------
Dear Senator Schumer,
Please have somebody on your staff research the 1983 Emergency Employment Act. I ask that you do this because I believe I was an employer who received great benefit from the implementation of one of the programs.
I had started up a newspaper in Rochester, NY in 1982 and it was just beginning to turn a small profit in '83. I don't recall the specific agency, but, if my memory serves correct, the deal was that if I hired an unemployed person - and I did - the government (it may have been NY State or the US) agreed to pay half of the wages for a period of time - I believe it was six months.
This was a great program and allowed me to hire a young woman to sell advertising for my newspaper. She and I both benefitted. She got a job and I got half of my money back over the first six months of her employment.
It was a pretty nice, simple arrangement. All I had to do was pay her on time, submit proof of payment (and all taxes and withholding was paid by me) once a month, and the agency cut me a check for half of her gross pay.
Now, I believe that this kind of program would get people back to work in a hurry, especially if targeted at small businesses with less than 10 employees, or some other similar threshold. It worked for me, and, incidentally, the woman worked for me for a few more years after that initial six months, so the job was not "make work," but real, productive employment.
It is my firm conviction that the federal government has not done enough for small business during this financial downturn, and that a jobs bill that actually puts money into the hands of employers, rather than shadowy tax breaks or credits, offers the true path to recovery.
My belief is that small businesses, which create 75-90% of all jobs in this country, can do what Wall Street, the Fed, Treasury and congress have been unable to do, but, we need some help and some time in which to do so.
I trust that you and your staff will give this matter serious consideration. I am going to publish this entire communication on my blog,
http://moneydaily.blogspot.com
so, I expect a positive response. Please, stop the pandering and posturing and propose a jobs bill that works from the bottom up.
Thank you,
Rick Gagliano
Publisher, Downtown Magazine (dtmagazine.com)
Money Daily
I was able to determine that it must have been part of the 1983 Emergency Employment Act, but little else, so, upon hearing that Senator Schumer and others were going to propose another "tax credit" type bill in coming days, I decided to query New York's senior Senator. The text of my message appears below:
------------------------------
Dear Senator Schumer,
Please have somebody on your staff research the 1983 Emergency Employment Act. I ask that you do this because I believe I was an employer who received great benefit from the implementation of one of the programs.
I had started up a newspaper in Rochester, NY in 1982 and it was just beginning to turn a small profit in '83. I don't recall the specific agency, but, if my memory serves correct, the deal was that if I hired an unemployed person - and I did - the government (it may have been NY State or the US) agreed to pay half of the wages for a period of time - I believe it was six months.
This was a great program and allowed me to hire a young woman to sell advertising for my newspaper. She and I both benefitted. She got a job and I got half of my money back over the first six months of her employment.
It was a pretty nice, simple arrangement. All I had to do was pay her on time, submit proof of payment (and all taxes and withholding was paid by me) once a month, and the agency cut me a check for half of her gross pay.
Now, I believe that this kind of program would get people back to work in a hurry, especially if targeted at small businesses with less than 10 employees, or some other similar threshold. It worked for me, and, incidentally, the woman worked for me for a few more years after that initial six months, so the job was not "make work," but real, productive employment.
It is my firm conviction that the federal government has not done enough for small business during this financial downturn, and that a jobs bill that actually puts money into the hands of employers, rather than shadowy tax breaks or credits, offers the true path to recovery.
My belief is that small businesses, which create 75-90% of all jobs in this country, can do what Wall Street, the Fed, Treasury and congress have been unable to do, but, we need some help and some time in which to do so.
I trust that you and your staff will give this matter serious consideration. I am going to publish this entire communication on my blog,
http://moneydaily.blogspot.com
so, I expect a positive response. Please, stop the pandering and posturing and propose a jobs bill that works from the bottom up.
Thank you,
Rick Gagliano
Publisher, Downtown Magazine (dtmagazine.com)
Money Daily
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