Suckers Galore in Classic Pump and Dump

One has to wonder just how much bad news it will take to send stocks down for the count. Just this week, the Conference Board's measure of consumer confidence trundled down ten full points to 46, a level not seen since 1983. New home sales for January fell to 309,000, a figure more reminiscent of 1962 than 2010, and, just this morning, new filings for unemployment insurance claims reached 496,000, the third consecutive weekly rise in that number, signaling that instead of declining, unemployment may actually be on the rise again.

Adding to the difficult situation is word that Goldman Sachs - tops on everyone's most-hated company list - will soon be under investigation by the Federal Reserve (what a laugh!) for trading in Credit Default Swaps (CDS) related to the nation of Greece. The Fed would like to know if Goldman traders have been betting on a default of Greece's debt, and, anybody who knows the language of Wall Street would have to conclude that the Goldman traders are all over it.

Obviously, using these instruments in a way that intentionally destabilizes a company or a country is counterproductive. - Fed Chairman Ben Bernanke

Not that profiting from another country's missteps or outright demise is in any way illegal or unethical - though some may argue that the practice would be immoral - Goldman Sachs may be just the next victim lined up for the dog-and-pony show currently underway in congress. Once the congressional clowns are done with smearing Toyota, they might want to take aim at one of their country's own. Goldman Sachs makes a perfect whipping boy for the incompetent congress. Since they can't pass meaningful legislation, they have resorted to mealy-mouthed denunciations of the business community. The act takes some of the spotlight off their inept attempts at legislating and/or governing.

However, Wall Street being the biggest and most-corrupt casino on the planet, more bad news may only produce sideways trading. Perhaps half of California slipping into the Pacific might garner some support from the bulls, though such an event would likely be viewed with insidious sarcasm on Wall Street, something along the lines of, "well, there one more problem we'll not have to concern ourselves with any more."

On the day that the Dow was down 187 points by midday - a normal reaction - the index ends the session down just over 50 points - an abnormal trade. The question of whether US stocks are manipulated has already been answered over and over again, so since there's little point in beating a horse that's already dead, we can safely assume that the US economy is about to implode once again, and the insiders in DC and on Wall Street already know it. They're just waiting for the optimal moment - when they have as many suckers as possible fully invested in stocks - to sell everything and run for the hills, sending the markets into another spasmodic paroxysm of panic-induced crashing.

While my interpretation of market movements and political foreplay may sound to some like the last days of Cicero, it's about the best I a able to muster considering the abysmal trappings to which we are currently bound. The banking and credit system is broken and more prone to penalize borrowers than help them, real estate is a bad bet for anything other than arable land and the political process has largely ground to a complete halt. Nothing short of a major war is going to solve the debt problems of the developed world, especially Europe, Japan and the United States, a prospect which I do not wish to see, nor do I espouse. Wars only solve nations' problems - and not very well - at the expense of the lives of the general public.

However, as much as I'd like to wax positive on the current condition, I see only gloom and doom ahead for those who are not adequately prepared. Personally, I've divested all of my holdings in anything speculative and am completely in cash and productive investments: tools and seeds, for today; machines and vegetables, tomorrow.

Dow 10,321.03, -53.13 (0.51%)
NASDAQ 2,234.22, -1.68 (0.08%)
S&P 500 1,102.93, -2.31 (0.21%)
NYSE Composite 7,013.45, -17.22 (0.24%)

Not unexpectedly, declining issues beat advancers, though not by nearly the 3-1 margin seen earlier in the day, 3458-2969. New highs stood at 225. There were 45 new lows. Volume was at its best level of the week, owing, in part, to the incredibly heavy lifting done by those who eviscerated nearly 140 points from the downside.

NYSE Volume 5,247,205,000
NASDAQ Volume 2,268,341,000

Commodities were mixed again, though today was oil's day for decline. Crude was off $1.70, to $78.30. Gold gained $11.20, to $1,108.40, on rumors that the government of China was planning to buy up the remaining reserves of the IMF. Silver dipped 2 cents, to $15.94.

Tomorrow, being the final day of trading for the week and the month, ought to offer even more ammo for interested parties. The government issues the second estimate of 4th quarter '09 GDP, existing home sales for January are offered and the Chicago PMI and U of Michigan final February consumer sentiment gauge are all on tap.

10,400 is the magic number on the Dow. Closing above that would be the third straight weekly positive finish. For the year, the Dow's record for weekly closes stands at 2 up and 4 down.

Our National Disgrace: the United States Congress

Sorry to take time out here to vent, but, after watching less than ten minutes of DC delegate Eleanor Holmes Norton vain attempts to vilify Toyota executives in a hearing before the House Oversight and Government Reform Committee made me ponder the usefulness of this formerly-august body.

This is the gang of 535, with a national approval rating hovering around 20% that has taken as much money from lobbyists as legally-allowed (and probably more), sat back and watched as the banking interests took over and nearly destroyed the country's economy, and hasn't done much of anything useful or in the best interests of the American people since the early 50s, or, most of my lifetime.

Listening to the moronic Barney Frank drool his way through Fed Chairman Ben Bernanke's required testimony today was quite enough. Frank and his fellow goof-balls proved they have about the same working knowledge of financial matters as your average 3rd grader, and even that might give 3rd graders a bum rap.

But this Toyota nonsense is the ultimate disgrace of our country. I feel I must publicly apologize to the people of Japan for the actions of our congress and other government regulatory agencies. I'm sorry, Japan! I didn't vote for any of these fools, and they certainly don't represent me or my beliefs.

Dragging the head of Toyota and other executives before a congressional committee is just a continuance of the massive government smear campaign designed to make people stop thinking about our destroyed economy and throw blame on the "evil" Toyota executives.

It's the worst kind of race-baiting and every member of that committee should resign in disgrace. Toyota's problems may be serious, but they're surely not any worse than other carmakers faults. The timing of this entire sordid folly seems just about appropriate for the idiots who are supposed to be "serving the people." Just months ago, General Motors and Chrysler received - and haven't yet paid back - billions of dollars from taxpayers to salvage what was left of their disastrous businesses.

Soon thereafter came rumors of Toyota's "sudden acceleration" issues, and the game was on. Now congress, attempting to look serious, brings Toyota execs in to be chastised publicly. It's just one more sad day - piled upon hundreds if not thousands before it - of congress publicly displaying their absolute incompetence.

Is there any wonder why so many "tea parties" and splinter political groups have emerged over the past few years. Congress has abrogated their authority, shirked their responsibilities and now can only pander to the lowest, most base emotions of the public throng. They are a national disgrace and the sooner they are run out of office and out of town, the better.

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Down on Wall Street, markets got an unexpected bump up early in the day. Without any reason, the Dow jumped about 90 points in a span of about 20 minutes, right around 10:30 am. The other indices were also goosed higher, presumably by insiders or the notorious PPT, right during Bernanke's testimony.

These kinds of moves have gotten to be old hat by now, and accepted as normal by most market participants, but they are surely designed to keep stocks grinding along and not falling into the slop where many of them belong.

Yesterday, the news on two fronts - housing and consumer sentiment - sent the indices screeching into a hole. Today, without any catalyst, they practically erased all of Tuesday's losses, which is why I have been out of stocks mostly since 2007, and now, permanently. There's no rhyme nor reason to the equity markets currently, thus, there's no reason to be even one penny invested in stocks. There will be a fall this year, and it's likely to rival the collapse from September 2008 to March 2009, regardless of the efforts of big money players or government miscreants.

The only data release of any importance was negative: New home sales for January fell 11.2% month-over-month in their worst monthly downturn since January 2009. So, naturally, stocks should go up?

Dow 10,374.16, +91.75 (0.89%)
NASDAQ 2,235.90, +22.46 (1.01%)
S&P 500 1,105.24, +10.64 (0.97%)
NYSE Composite 7,030.67, +56.07 (0.80%)

Advancers slaughtered decliners, 4443-2038. New highs: 254; new lows: 59. Volume was moderate.

NYSE Volume 4,734,957,000
NASDAQ Volume 2,119,022,000

Commodities traded in different directions. Crude oil, even after the government reported that inventories rose by 3.03 million barrels, gained $1.24, to $80.21. To point up just how manipulated and corrupt the crude oil futures exchange is, here is an article expressing the opinion that crude rose because the dollar was weak. The article also points out that the American Petroleum Institute announced Tuesday that crude inventories had fallen by 3.1 million barrels.

Up, down, who cares? As long as the oil barons continue cashing their checks. No need to worry that persistently high fuel prices over the past seven years have helped cripple the US economy.

So, if the weak dollar caused oil prices to rise, why then, did gold lose $6.40, and drop to $1,096.80. Apparently, gold is no longer tracking the dollar and responding inversely to it. Or, maybe it's all just speculation, fun and games. Incidentally, silver was up 17 cents, at $15.98 per ounce.

And just so I know the world isn't completely off its axis (although close to spinning out of control), I see Fast Money is back on the air on CNBC. What, no curling? Maybe somebody actually took my impassioned plea from yesterday seriously.

Real Estate, Low Confidence Crush Stocks

It didn't take long for the market to re-establish some sense of direction after drifting sideways the past two sessions.

Hopes for an economic recovery were dashed with the release of two separate reports. First, at 9:00 am, the monthly S&P/Case-Shiller 20-city index showed an overall 3.2% decline from a year ago. While several cities - San Francisco, San Diego, Denver, Washington, DC and Dallas - showed home prices improving modestly, most of the cities in the survey displayed continued carnage, with the worst being Las Vegas (-20.6%), followed by Tampa (-11.0%), Detroit (-10.3%), Miami (-9.9%) and Seattle, Washington (-7.8%).

Widespread continuing weakness in the real estate market has been attributed to poor underwriting standards during the boom years, 2000-2006, though more and more declining property values are being cited as an effect of worsening unemployment conditions. Foreclosures keep rising without abating in most large cities and even more so in smaller communities which have a less-robust employer base. Even though delinquencies are reported, banks have been reluctant to foreclose, and there's widespread belief that a so-called "shadow inventory" of non-foreclosed and bank owned property still awaits to hit the market with a deadening thud.

Even a small addition of unsold properties reaching various markets over the next six to eighteen months would send real estate prices down even lower, but the quantities may be more of a torrent rather than a trickle. With Fannie Mae and Freddie Mac already in deep trouble, the residential real estate market is looking more and more like a wasteland and less like a "recovering" market.

That report alone was not enough to dampen spirits on Wall Street, as stocks, after opening slightly lower, were up steadily in the early going, until the second blast of negative news reached. When the Conference Board's Consumer Confidence Index for February came in at 46.0, down from 56.5 in January, all hope for a continuation of any rally was lost. Commentators on CNBC and elsewhere were aghast at the "unexpected" decline, mostly by the size of it. The one-month drop of more than 10 points was the most anyone could remember.

Ancillary indices, such as the present situation, also dropped sharply, from 25.2 to 19.4, its lowest level in 27 years. The expectations index declined to 63.8, from 77.3 in January. That was more than enough to send the Dow to a 100-point loss, with the other major indices in tow.

Those two reports brought the bears and bearish analysts out from the woodwork. The sheer number of people expressing negative viewpoints - on TV, radio, the internet and in print - was stunning.

Dow 10,282.41, -100.97 (0.97%)
NASDAQ 2,213.44, -28.59 (1.28%)
S&P 500 1,094.60, -13.41 (1.21%)
NYSE Composite 6,974.60, -103.93 (1.47%)

Declining issues took the edge over advancers, 4457-2057. New highs came back to earth at 202, with only 31 new lows, though, it must be pointed out that these figures are going to be skewed wildly by comparisons to stocks at market bottoms from last year. It won't be until late March or later that the high-low metric will offer much of a reliable glimpse. Volume was a bit better than yesterday's no-show, but there is now likely much more downside risk than in recent days.

NYSE Volume 4,971,602,500
NASDAQ Volume 2,139,569,750

Commodities took it on the chin as well. Crude oil for April delivery, in just the second day of the contract, fell $1.45, to $78.86. Gold lost $10.10, to close at $1,103.00. Silver fell 34 cents, to $15.91.

The onslaught of data today may be just the beginning of poor economic news heading to kill off the incipient rally in equities. While Wall Street may be reveling, most of Main Street is reeling. The persistent and deep declines in prices and markets will leave no asset class untouched, equities and commodities included.

Be aware that stocks could tumble off another cliff at any time without warning. The US and global markets have not made enough real, structural changes and are not yet strong enough to offset the overwhelming deflationary spiral that continues to plague economies from households to cities and states, to entire nations.

In the meantime, could somebody please tell the programming executives at CNBC that curling has to be the most uninteresting, boring, exasperatingly dull event to ever be afforded significant air time? Enough, already!

Stocks in Hold 'em Mode

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.

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.