There haven't been many slower trading days than today in the past 2-3 years, and stocks suffered from a near-total lack of interest on the session.
Maybe it's just a sign of the times, but everybody seems to be waiting for some reliable data points upon which to trade. Either that, or the markets are just stuck with a bad case of cabin fever, with traders itching to stretch out and move, though the weather isn't going to permit it any time soon.
As for reliable data points, there were two news releases, though neither could be considered reliable or tradable.
The National Association for Business Economics (NABE) predicted that the economy would grow by just over 3% in 2010 and 2011. They further detail that job growth would soon return for US business, offering predictions of average job growth of 50,000 per month in the 1st quarter of 2010 and 103,000 per month for the remainder of the year.
Those figures nearly match the ones released by the Obama administration just a week or two ago.
On Friday, the FDIC announced that four more banks had failed, bringing the total number of bank failures this year to 20. There were 140 bank closures in 2009, and the prediction is for 200 to go under in 2010.
Taken together, there's a real concern that the economic crisis that nearly crumbled the financial system in 2008 is still not fully functioning, though it is working well enough for business economists to make semi-rosy predictions. Predictions, like opinions, however, are not unique and the numbers tossed out by the NABE might be nothing more than educated guesses rather than appropriate measures of risk in the system and the realities of the day.
Dull markets are usually not playable, but, unless there's some movement to the upside, the bears may be emboldened by what appears to be widespread weakness across a wide swath of industries. The political standstill in Washington certainly isn't helping bulls any, either.
Dow 10,383.38, -18.97 (0.18%)
NASDAQ 2,242.03. -1.84 (0.08%)
S&P 500 1,108.01, -1.16 (0.10%)
NYSE Composite 7,078.53, -4.72 (0.07%)
Advancing issues beat decliners by a small margin, 3326-3179. There were 366 new highs and 31 new lows. Volume, as previously stated, was anemic.
NYSE Volume 4,244,704,000
NASDAQ Volume 1,818,306,000
Commodities were mixed, with oil up 39 cents, to $80.16, gold down $9.00, at $1,113.10, and silver off 18 cents, to $16.26. This persistent low-volume pattern might be a regular feature of trading until there's sufficient evidence to elicit moves one way or the other. Considering the prevailing economic and political landscape, there could be little movement in either direction for some time.
Monday, February 22, 2010
Friday, February 19, 2010
Fed Discount Hike No Issue
The Fed's decision to hike the discount rate (announced after the close on Thursday) created a bit of a stir in Japan's markets, but barely elicited a yawn in the US. Market participants shrugged off the Federal reserve's surprise announcement to hike the emergency rate at the discount window from half a percent to 3/4 percent (0.75) and dial back the repayment time from 30 days to 24 hours - the normal time period for what used to be known as "overnight" loans - and pulled markets into positive territory for the fourth straight session.
PIMCO's Bill Gross believes that the "surprise" Fed move was simply to appease inflation hawks on the Fed's Board of Governors, and that real rates would remain low.
Dow 10,402.35, +9.45 (0.09%)
NASDAQ 2,243.87, +2.16 (0.10%)
S&P 500 1,109.17, +2.42 (0.22%)
NYSE Composite 7,083.25, +2.87 (0.04%)
Despite the tame headline numbers, advancers pounded decliners, 3612-2828, and new highs soared past new lows, 290-30. Volume was a bit above normal, owing to February options expiration.
NYSE Volume 4,586,752,500
NASDAQ Volume 2,132,987,000
Oil continued its absurd price gains, picking up 93 cents, to $79.99. Analysts believe as much as $30-35 in the price of a barrel of crude is due to speculation. Demand has been slack for months and there has been ample supply as well. The control of the oil futures markets by a handful of participants has distorted the true pricing by quite a degree, to he dismay of many a driver.
Gold gained $3.30, to $1,122.00, and silver bumped higher by 35 cents, to $16.41.
If the Fed's action was a signal that inflation was on the horizon, January CPI data might argue otherwise. Consumer prices gained just 0.2% in the month, with core prices - excluding food and energy - fell 0.1. These figures came in stark contrast to yesterday's release of PPI, which were higher on a relative basis.
Since the Fed's discount window-dressing was more symbolism than actual rate-adjusting, the inflation-deflation debate is likely to rage onward for months. Eventually, the deflationists are probably more correct in their overall assessment of the current condition than the market-oriented inflationists.
PIMCO's Bill Gross believes that the "surprise" Fed move was simply to appease inflation hawks on the Fed's Board of Governors, and that real rates would remain low.
Dow 10,402.35, +9.45 (0.09%)
NASDAQ 2,243.87, +2.16 (0.10%)
S&P 500 1,109.17, +2.42 (0.22%)
NYSE Composite 7,083.25, +2.87 (0.04%)
Despite the tame headline numbers, advancers pounded decliners, 3612-2828, and new highs soared past new lows, 290-30. Volume was a bit above normal, owing to February options expiration.
NYSE Volume 4,586,752,500
NASDAQ Volume 2,132,987,000
Oil continued its absurd price gains, picking up 93 cents, to $79.99. Analysts believe as much as $30-35 in the price of a barrel of crude is due to speculation. Demand has been slack for months and there has been ample supply as well. The control of the oil futures markets by a handful of participants has distorted the true pricing by quite a degree, to he dismay of many a driver.
Gold gained $3.30, to $1,122.00, and silver bumped higher by 35 cents, to $16.41.
If the Fed's action was a signal that inflation was on the horizon, January CPI data might argue otherwise. Consumer prices gained just 0.2% in the month, with core prices - excluding food and energy - fell 0.1. These figures came in stark contrast to yesterday's release of PPI, which were higher on a relative basis.
Since the Fed's discount window-dressing was more symbolism than actual rate-adjusting, the inflation-deflation debate is likely to rage onward for months. Eventually, the deflationists are probably more correct in their overall assessment of the current condition than the market-oriented inflationists.
Thursday, February 18, 2010
Is Resistance Futile?
Chartists and technical analysts are fond of using the terms support and resistance when tracking trends in either individual stocks or indices. The terms are widely understood by the investing community, representing key levels for buying and/or selling.
The S&P is said to be close to resistance at 1108, though it appears very likely that this level could be taken out quite easily, if the market remains on its current trajectory. Seems like stocks are all the rage right now, the media having convinced enough people that the economy is on the mend and all will be good down the road of recovery.
Now, there's plenty of evidence to the contrary, especially the absurd notion that producer prices are rising at all. This was expressed in glaring terms by the PPI data from january, which showed a rise of 1.4% in annualized terms. That number had the inflationistas bellowing, though their howling was largely dinned by the shrieks from the initial unemployment claims figures, which, incidentally, were reported during a wicked snowstorm in the Northeast, though most of the reporting is actually done by phone or computer. The number of new unemployment filings was 473,000, a big jump from the 442,000 reported the week prior.
Normally, in a 3.5% GDP, 5% unemployment environment, those number would be about 200,000 or less, so the economy still appears to be bleeding jobs rather than creating them. We were all informed countless times by the financial literati that unemployment was a lagging indicator, though that's a suspect notion, so, we shouldn't be too concerned, should we?
Government and media sources also declared the recession over in the third quarter of last year, when Cash of Clunkers helped push the GDP to somewhere around 2.1% for the quarter. Since that, was, OK, September, we'll say, shouldn't the employment data be more robust, now that we are five months hence?
Of course none of this matters if you question the actual numbers that are routinely tossed about by the feds, states, media and other organizations which track such things. Jobs should not be lagging if US BUSINESSES are growing. Otherwise, it's just accounting gimmicks, cost-cutting and downsizing.
Nevertheless, those intrepid Wall Street investors continue to dive into equities, mostly on any decline in the US dollar, like today, and Tuesday. The bad, unsustainable and eventually self-destructive carry trade is still on, so they party on.
Dow 10,392.90, +83.66 (0.81%)
NASDAQ 2,241.71, +15.42 (0.69%)
S&P 500 1,106.75, +7.24 (0.66%)
NYSE Composite 7,080.38, +45.18 (0.64%)
Advancing issues led decliners, 4177-2270, while new highs beat new lows, 202-30. Once again, the new lows are being squashed by comparisons to last year's bottom. Realistically, there should be very few, and there are. Give this indicator wide latitude in your analysis because it is very skewed to the positive right now. After March 9, and especially by June, the numbers will be much more reliable. Volume was light. The NYSE recorded its third slowest trading day of the year. A good deal of positioning is taking place, and certainly, players are hedged to the max. News flows and data will be critical over the next 30-45 days for determining direction.
NYSE Volume 4,480,385,500
NASDAQ Volume 2,048,994,500
Crude oil continued its ridiculous path, gaining $1.12, to $78.45. Gold dropped $1.10, to $1,119.00. Silver fell 8 cents to $16.02.
Unless stocks really tank on Friday, this week will go down as the second straight gainer and third overall, against four losing weeks. Good luck.
The S&P is said to be close to resistance at 1108, though it appears very likely that this level could be taken out quite easily, if the market remains on its current trajectory. Seems like stocks are all the rage right now, the media having convinced enough people that the economy is on the mend and all will be good down the road of recovery.
Now, there's plenty of evidence to the contrary, especially the absurd notion that producer prices are rising at all. This was expressed in glaring terms by the PPI data from january, which showed a rise of 1.4% in annualized terms. That number had the inflationistas bellowing, though their howling was largely dinned by the shrieks from the initial unemployment claims figures, which, incidentally, were reported during a wicked snowstorm in the Northeast, though most of the reporting is actually done by phone or computer. The number of new unemployment filings was 473,000, a big jump from the 442,000 reported the week prior.
Normally, in a 3.5% GDP, 5% unemployment environment, those number would be about 200,000 or less, so the economy still appears to be bleeding jobs rather than creating them. We were all informed countless times by the financial literati that unemployment was a lagging indicator, though that's a suspect notion, so, we shouldn't be too concerned, should we?
Government and media sources also declared the recession over in the third quarter of last year, when Cash of Clunkers helped push the GDP to somewhere around 2.1% for the quarter. Since that, was, OK, September, we'll say, shouldn't the employment data be more robust, now that we are five months hence?
Of course none of this matters if you question the actual numbers that are routinely tossed about by the feds, states, media and other organizations which track such things. Jobs should not be lagging if US BUSINESSES are growing. Otherwise, it's just accounting gimmicks, cost-cutting and downsizing.
Nevertheless, those intrepid Wall Street investors continue to dive into equities, mostly on any decline in the US dollar, like today, and Tuesday. The bad, unsustainable and eventually self-destructive carry trade is still on, so they party on.
Dow 10,392.90, +83.66 (0.81%)
NASDAQ 2,241.71, +15.42 (0.69%)
S&P 500 1,106.75, +7.24 (0.66%)
NYSE Composite 7,080.38, +45.18 (0.64%)
Advancing issues led decliners, 4177-2270, while new highs beat new lows, 202-30. Once again, the new lows are being squashed by comparisons to last year's bottom. Realistically, there should be very few, and there are. Give this indicator wide latitude in your analysis because it is very skewed to the positive right now. After March 9, and especially by June, the numbers will be much more reliable. Volume was light. The NYSE recorded its third slowest trading day of the year. A good deal of positioning is taking place, and certainly, players are hedged to the max. News flows and data will be critical over the next 30-45 days for determining direction.
NYSE Volume 4,480,385,500
NASDAQ Volume 2,048,994,500
Crude oil continued its ridiculous path, gaining $1.12, to $78.45. Gold dropped $1.10, to $1,119.00. Silver fell 8 cents to $16.02.
Unless stocks really tank on Friday, this week will go down as the second straight gainer and third overall, against four losing weeks. Good luck.
Wednesday, February 17, 2010
Fannie and Freddie: America's Landlords?
After offering a fairly pessimistic viewpoint on what might occur should Fannie Mae and Freddie Mac become the de facto landlords of much of America, my thoughts continued to race on the topic. Being that the two troubled mortgage insurers are soon to embark upon buying up billions of dollars worth of defaulted residential mortgages by prepaying investors of packaged mortgage-backed securities (MBS), my research led to a couple of interesting observations.
First, whatever becomes of millions of defaulted mortgages, it appears that Fannie and Freddie won't be actually be issuing new mortgages - at least that's how the system is functioning at present. Fannie Mae's very own REO listings appear at a friendly-looking site called HomePath.com, where foreclosed-upon homes are listed for all parts of the country. In all instances, home are offered by local realtors and financing by banks, not the agency itself.
While this may be the case now, the future might be different. Fannie and Freddie, as unofficial branches of the federal government, might be able - in instances in which the current homeowner is offered a restructured payment regime and allowed to stay put - to forego the foreclosure process altogether by working with the affected parties through intermediaries or at their own pleasure.
This appears to be the prevailing direction of the feds, through programs such as Making Home Affordable and the Home Affordable Modification Program (HAMP). Through these programs, the banks which are servicing the loans work with the defaulted homeowner toward a solution, though the programs - celebrating their one-year anniversary today - have not, to date, been very successful.
Eventually, what would be a workable situation should Fannie and Freddie find themselves burdened with defaulted mortgages, would be to hire (Yes, I'm actually advocating the creation of more government jobs.) their own team of specialists to accelerate the process or, as suggested by the eminent economist and forecaster Jim Willie's December 30, 2009 article, Fannie Debt Merger Monetization, become landlords themselves.
The latter seems less likely, though one can hardly argue the logic of Willie's argument that rental income would be a vast new source of revenue for the feds and actually help to stabilize some conditions, not the least of which being the negative effects on neighborhoods resulting from neglected, vacant properties. That the two mortgage insurers are deeply indebted and soon to be much further in the red is a concern for another discussion, but in terms of laying the groundwork for more normalized economic conditions, the F&Fs have the potential to do some good.
So, my assumption in yesterday's post that the feds would be quick to evict might not be all that accurate. At least the current climate seems to suggest quite the opposite. In any case, the prepayments to investors will make more money available to investors (they're getting their principal back) and markets. What they do with the re-found wealth remains to be seen. Whether they might be willing to slide right back into the MBS market or invest elsewhere definitely is up to the investor, though with the now-implicit guarantee from F&F, they might well do that.
Generally, what's happening is more kicking the can down the road a bit further, although the new securities should actually be improved, with better lending standards in place to prevent defaults. The whole securitization process is still at the root of what caused much of the economic woes of recent years, and eventually there are liabilities galore for all parties, especially the US taxpayer, who has to bear the burden of more and more debt.
In a scenario in the F&F become the actual investors, the returns to the taxpayer might be even greater over time, though that argument is debatable as well. The long and short of it is that the government obviously needs to step in to relieve the Federal Reserve of its MBS holdings and the current plan seems aimed directly at that result.
While that's good for the Fed and the dollar, how it plays out in the real estate market remains to be seen. The government surely has the intention of keeping real estate prices at some realistic or sustainable level, but the intervention of Fannie and Freddie can only add to the weight of deflation in the market. Sapped homeowners and smart investors may catch sizable breaks.
The two mega-insurers are soon to be deploying billions, so there's likely to be a noticeable change all along the real estate food chain.
As far as investors in equities were concerned, today was a day for nibbling and rounding out positions. Stocks barely budged after a small, quick opening jump. The carry-through from Tuesday's big leap was moderate. Many doubts still remain for investors of all stripes.
Dow 10,309.24, +40.43 (0.39%)
NASDAQ 2,226.29, +12.10 (0.55%)
S&P 500 1,099.51, +4.64 (0.42%)
NYSE Composite 7,035.20, +21.85 (0.31%)
Advancing issues outpaced decliners, 4136-2326; new highs reached 154. There were just 20 new lows. Volume was a little better than yesterday, which brings up the possibility of repositioning on today's trade. The downtrend short term is still in play and short-timers could be readying for an early exit, as in this week, which seems to be the currently favored play.
NYSE Volume 4,887,593,500
NASDAQ Volume 2,069,575,625
Commodities barely budged. Crude oil gained 19 cents, to $77.33. Gold dropped 20 cents, to $1120.00, and silver slipped 8 cents, to $16.07. Interest in the metals seems to have waned a bit, but, as we well know, that could change overnight. Much of the current weakness is due to the strengthening US dollar, which was higher again today.
While my outlook for the housing sector may have been softened a bit concerning Fannie and Freddie, my general conclusion is that complete debt default by nations is only a matter of time. Though Greece and other Euro-zone nations may have slid off front pages, their horrific fiscal conditions remain and are a proxy for a wide swath of national economies and central banks worldwide, including the United States.
First, whatever becomes of millions of defaulted mortgages, it appears that Fannie and Freddie won't be actually be issuing new mortgages - at least that's how the system is functioning at present. Fannie Mae's very own REO listings appear at a friendly-looking site called HomePath.com, where foreclosed-upon homes are listed for all parts of the country. In all instances, home are offered by local realtors and financing by banks, not the agency itself.
While this may be the case now, the future might be different. Fannie and Freddie, as unofficial branches of the federal government, might be able - in instances in which the current homeowner is offered a restructured payment regime and allowed to stay put - to forego the foreclosure process altogether by working with the affected parties through intermediaries or at their own pleasure.
This appears to be the prevailing direction of the feds, through programs such as Making Home Affordable and the Home Affordable Modification Program (HAMP). Through these programs, the banks which are servicing the loans work with the defaulted homeowner toward a solution, though the programs - celebrating their one-year anniversary today - have not, to date, been very successful.
Eventually, what would be a workable situation should Fannie and Freddie find themselves burdened with defaulted mortgages, would be to hire (Yes, I'm actually advocating the creation of more government jobs.) their own team of specialists to accelerate the process or, as suggested by the eminent economist and forecaster Jim Willie's December 30, 2009 article, Fannie Debt Merger Monetization, become landlords themselves.
The latter seems less likely, though one can hardly argue the logic of Willie's argument that rental income would be a vast new source of revenue for the feds and actually help to stabilize some conditions, not the least of which being the negative effects on neighborhoods resulting from neglected, vacant properties. That the two mortgage insurers are deeply indebted and soon to be much further in the red is a concern for another discussion, but in terms of laying the groundwork for more normalized economic conditions, the F&Fs have the potential to do some good.
So, my assumption in yesterday's post that the feds would be quick to evict might not be all that accurate. At least the current climate seems to suggest quite the opposite. In any case, the prepayments to investors will make more money available to investors (they're getting their principal back) and markets. What they do with the re-found wealth remains to be seen. Whether they might be willing to slide right back into the MBS market or invest elsewhere definitely is up to the investor, though with the now-implicit guarantee from F&F, they might well do that.
Generally, what's happening is more kicking the can down the road a bit further, although the new securities should actually be improved, with better lending standards in place to prevent defaults. The whole securitization process is still at the root of what caused much of the economic woes of recent years, and eventually there are liabilities galore for all parties, especially the US taxpayer, who has to bear the burden of more and more debt.
In a scenario in the F&F become the actual investors, the returns to the taxpayer might be even greater over time, though that argument is debatable as well. The long and short of it is that the government obviously needs to step in to relieve the Federal Reserve of its MBS holdings and the current plan seems aimed directly at that result.
While that's good for the Fed and the dollar, how it plays out in the real estate market remains to be seen. The government surely has the intention of keeping real estate prices at some realistic or sustainable level, but the intervention of Fannie and Freddie can only add to the weight of deflation in the market. Sapped homeowners and smart investors may catch sizable breaks.
The two mega-insurers are soon to be deploying billions, so there's likely to be a noticeable change all along the real estate food chain.
As far as investors in equities were concerned, today was a day for nibbling and rounding out positions. Stocks barely budged after a small, quick opening jump. The carry-through from Tuesday's big leap was moderate. Many doubts still remain for investors of all stripes.
Dow 10,309.24, +40.43 (0.39%)
NASDAQ 2,226.29, +12.10 (0.55%)
S&P 500 1,099.51, +4.64 (0.42%)
NYSE Composite 7,035.20, +21.85 (0.31%)
Advancing issues outpaced decliners, 4136-2326; new highs reached 154. There were just 20 new lows. Volume was a little better than yesterday, which brings up the possibility of repositioning on today's trade. The downtrend short term is still in play and short-timers could be readying for an early exit, as in this week, which seems to be the currently favored play.
NYSE Volume 4,887,593,500
NASDAQ Volume 2,069,575,625
Commodities barely budged. Crude oil gained 19 cents, to $77.33. Gold dropped 20 cents, to $1120.00, and silver slipped 8 cents, to $16.07. Interest in the metals seems to have waned a bit, but, as we well know, that could change overnight. Much of the current weakness is due to the strengthening US dollar, which was higher again today.
While my outlook for the housing sector may have been softened a bit concerning Fannie and Freddie, my general conclusion is that complete debt default by nations is only a matter of time. Though Greece and other Euro-zone nations may have slid off front pages, their horrific fiscal conditions remain and are a proxy for a wide swath of national economies and central banks worldwide, including the United States.
Tuesday, February 16, 2010
Tough to be a Bear
Days like today, when one feels like a lonely whisper in the wilderness, test the courage of one's convictions.
After carefully weighing all the evidence, poring over tracts and texts from sources far-flung across the internet and the spheres of influence in global economics, one cannot escape the thinking that the entire structure of capitalism, the integrity of institutions so revered as the Federal Reserve and market disciplines such as balanced budgets have been flung out the window by nefarious forces which seek only to obfuscate and delay the inevitability of mass defaults on everything from sovereign debt to credit cards in the coming months and years.
On Wall Street, ready for business after a three-day holiday, everything was bright and cheery and on the way up. Market participants acted as though stocks were difficult to find and hold at decent prices. Right off the opening bell, the Dow gapped up roughly 70 points and continued on a day-long trek to higher ground.
Unease over credit issues in Greece, Portugal and Ireland were treated as though they were old news, even though nothing but words have passed between the Euro nations. Unemployment, forecast by the Obama administration to be officially above 8% though 2012 (though unofficial, and probably closer-to-the-truth estimates say it's currently about 18%) only received passing glances. The ungodly mess that is the US housing market continues to crater into a morass of default, foreclosure, clouded titles and ruined families. None of this made one bit of difference to the titans of finance who lord over the markets. Stocks would rise; the economy be damned!
It's tough to keep a smile or a straight face through days like today. All anyone can effuse over are a couple of corporate earnings reports from some marginal players and one or two major ones, Kraft and Merck, both of which released 4th quarter earnings befor the bell. Merck did better, Kraft about the same. Meanwhile, the fates of millions of Americans are blowing in the wind, as corporations show not the least bit of interest in creating new jobs by expanding their businesses. No, the status quo will have to suffice for what we are forced into believing is a recovery.
Meanwhile, banks continue hoarding vast sums of money instead of lending it, congress bickers, stalls and does nothing, and middle America is supposed to sit back, watch the olympics and be content. Welcome to the fascist oligarchy.
Almost completely unnoticed was the announcement last week that Fannie Mae and Freddie Mac are going to buy back delinquent mortgages from investors, in effect, making the note-holders whole. This should come as no surprise - and even less surprise that it's not being widely reported - as the entire real estate boom and bust runs full circle. The banks got their TARP money, now the investors in all that worthless paper known as mortgage-backed securities (MBS) are getting theirs, and a whole lot sooner than anticipated. Though the investors will not reap the benefits of compound interest over many years has the mortgages been maintained, they will get their principal back, and probably some small gain, thanks to the friendly folks at Fannie and Freddie, two wholly-owned branches of the federal government, financed by taxpayer debt.
It will likely take a decade for the government to work out all the details of foreclosing on millions of homeowners, or they will claim the homes under eminent domain or through some other underhanded scheme that only the most corrupt government in the history of the world can devise. Clouding the picture further for homeowners in default is the risk of foreclosure by the wrong party, namely the mortgage servicer - the Bank of Americas, Chases and Citigroups of the world. Since the investors have been paid, the servicing banks are essentially out of the loop, having no standing in a foreclosure proceeding.
The important point is that, for the majority of mortgages in default, the only proper party to entertain a foreclosure proceeding would be Fannie or Freddie. The two have underwritten - or insured and subsequently paid for - about 9 out of 10 mortgages in the United States over the past thirty years. When Fannie or Freddie come calling, homeowners should expect to be out of their homes in record time. The government will probably have little patience with loiterers. They'll also likely not forgive the balances, either, especially in states which allow for deficiency judgments. It should prove to be a lovely decade for housing in America.
Dow 10,268.81, +169.67 (1.68%)
NASDAQ 2,214.19, +30.66 (1.40%)
S&P 500 1,094.87, +19.36 (1.80%)
NYSE Composite 7,013.35, +138.79 (2.02%)
Advancing issued trampled decliners, 4994-1564. There were 250 new highs to 54 new lows, a gap that's likely to widen in coming days as we approach the one-year anniversary of the market bottom on March 9. Expect the new lows to take away the edge by June at the latest as the market gyrates up and down. Volume was about as pathetic as ever. There's no impetus for this rally and it is probably going to be a one or two-day event. Economic reality will make an appearance before the week is out, though it should be mentioned that the same pattern has been playing out fairly steadily for weeks: On Monday, the dollar drops, free money is put into stocks and then gradually withdrawn - at a profit - as the week unfold and the dollar gains. That's the current game: week-to-week, day-to-day, hand-to-mouth.
NYSE Volume 4,737,764,500
NASDAQ Volume 1,954,910,875
Commodities rose without any compelling stimulus. Crude oil shot up to $77.01. Gold struck $1,120.00, a gain of $30. Silver rose 64 cents, to $16.09.
Sell the rally. It won't last.
After carefully weighing all the evidence, poring over tracts and texts from sources far-flung across the internet and the spheres of influence in global economics, one cannot escape the thinking that the entire structure of capitalism, the integrity of institutions so revered as the Federal Reserve and market disciplines such as balanced budgets have been flung out the window by nefarious forces which seek only to obfuscate and delay the inevitability of mass defaults on everything from sovereign debt to credit cards in the coming months and years.
On Wall Street, ready for business after a three-day holiday, everything was bright and cheery and on the way up. Market participants acted as though stocks were difficult to find and hold at decent prices. Right off the opening bell, the Dow gapped up roughly 70 points and continued on a day-long trek to higher ground.
Unease over credit issues in Greece, Portugal and Ireland were treated as though they were old news, even though nothing but words have passed between the Euro nations. Unemployment, forecast by the Obama administration to be officially above 8% though 2012 (though unofficial, and probably closer-to-the-truth estimates say it's currently about 18%) only received passing glances. The ungodly mess that is the US housing market continues to crater into a morass of default, foreclosure, clouded titles and ruined families. None of this made one bit of difference to the titans of finance who lord over the markets. Stocks would rise; the economy be damned!
It's tough to keep a smile or a straight face through days like today. All anyone can effuse over are a couple of corporate earnings reports from some marginal players and one or two major ones, Kraft and Merck, both of which released 4th quarter earnings befor the bell. Merck did better, Kraft about the same. Meanwhile, the fates of millions of Americans are blowing in the wind, as corporations show not the least bit of interest in creating new jobs by expanding their businesses. No, the status quo will have to suffice for what we are forced into believing is a recovery.
Meanwhile, banks continue hoarding vast sums of money instead of lending it, congress bickers, stalls and does nothing, and middle America is supposed to sit back, watch the olympics and be content. Welcome to the fascist oligarchy.
Almost completely unnoticed was the announcement last week that Fannie Mae and Freddie Mac are going to buy back delinquent mortgages from investors, in effect, making the note-holders whole. This should come as no surprise - and even less surprise that it's not being widely reported - as the entire real estate boom and bust runs full circle. The banks got their TARP money, now the investors in all that worthless paper known as mortgage-backed securities (MBS) are getting theirs, and a whole lot sooner than anticipated. Though the investors will not reap the benefits of compound interest over many years has the mortgages been maintained, they will get their principal back, and probably some small gain, thanks to the friendly folks at Fannie and Freddie, two wholly-owned branches of the federal government, financed by taxpayer debt.
It will likely take a decade for the government to work out all the details of foreclosing on millions of homeowners, or they will claim the homes under eminent domain or through some other underhanded scheme that only the most corrupt government in the history of the world can devise. Clouding the picture further for homeowners in default is the risk of foreclosure by the wrong party, namely the mortgage servicer - the Bank of Americas, Chases and Citigroups of the world. Since the investors have been paid, the servicing banks are essentially out of the loop, having no standing in a foreclosure proceeding.
The important point is that, for the majority of mortgages in default, the only proper party to entertain a foreclosure proceeding would be Fannie or Freddie. The two have underwritten - or insured and subsequently paid for - about 9 out of 10 mortgages in the United States over the past thirty years. When Fannie or Freddie come calling, homeowners should expect to be out of their homes in record time. The government will probably have little patience with loiterers. They'll also likely not forgive the balances, either, especially in states which allow for deficiency judgments. It should prove to be a lovely decade for housing in America.
Dow 10,268.81, +169.67 (1.68%)
NASDAQ 2,214.19, +30.66 (1.40%)
S&P 500 1,094.87, +19.36 (1.80%)
NYSE Composite 7,013.35, +138.79 (2.02%)
Advancing issued trampled decliners, 4994-1564. There were 250 new highs to 54 new lows, a gap that's likely to widen in coming days as we approach the one-year anniversary of the market bottom on March 9. Expect the new lows to take away the edge by June at the latest as the market gyrates up and down. Volume was about as pathetic as ever. There's no impetus for this rally and it is probably going to be a one or two-day event. Economic reality will make an appearance before the week is out, though it should be mentioned that the same pattern has been playing out fairly steadily for weeks: On Monday, the dollar drops, free money is put into stocks and then gradually withdrawn - at a profit - as the week unfold and the dollar gains. That's the current game: week-to-week, day-to-day, hand-to-mouth.
NYSE Volume 4,737,764,500
NASDAQ Volume 1,954,910,875
Commodities rose without any compelling stimulus. Crude oil shot up to $77.01. Gold struck $1,120.00, a gain of $30. Silver rose 64 cents, to $16.09.
Sell the rally. It won't last.
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