Based on some rather dodgy assumptions, like growth in China and Australia, which have some limited impact on some multi-national listed firms, and a better-than-expected ISM Index reading for August, traders sent stocks soaring out of the gate and continued to float them high above Tuesday's closing levels on the first day of September.
The fact that a new month had dawned probably had more to do with the sudden appetite for stocks of all flavors than any foreign or domestic economic news. After a dismal August, buy-siders were looking for anything that might boost their prospects and supposedly, a measly 0.8 rise - from 55.5 in July to 56.3 currently - in the ISM Index was sufficient to get traders all excited about equities.
Of course, we've been warned about "irrational exuberance" before, but the Wall Street masters of the universe can't be expected to take a crumbling global economic system lying down, so they conveniently ignored all previous data, including the morning's most important number, a loss of 11,000 private sector jobs in August, according to ADP. Also unnoticed was the 1.0% drop in construction spending, also worse than estimated.
No, the stock jockeys had their horses all set up and ready to rock at the open this morning, and nothing short of nuclear war was going to keep them from bumping up all prices on the first day of the month. Let's not forget that monthly stock options expire in just eleven more trading days, that being where much of the profits are being generated these days.
Yes, things are going well in China and Australia, but that doesn't say much about prospects here in the land of the free ride and the home of the knave. We still have wicked structural imbalances, a cratering infrastructure, worsening unemployment and a real estate market that is an absolute disaster of the first order. So, let's go out and buy some more stocks, hang the valuations and damn the skeptics. This is America! Money rules!
What a bunch of absolute rubbish. The crooks are still in control and leading the masses, pied-piper-like, to the brink of insolvency. While they expect mutual funds, pension funds and individuals to follow their lead, they are hedging and shorting every gain. They know what's up. They are aware of the severity of the crisis from which we have not recovered, yet they continue to herd the masses into ovens burning with stock certificates on top of faulty mortgages and promissory notes.
March on, idiot sheeple! These one-day events are typical in bear markets, and we are in a bear market and have been since August 2007.
Dow 10,269.47, +254.75 (2.54%)
NASDAQ 2,176.84, +62.81 (2.97%)
S&P 500 1,080.29, +30.96 (2.95%)
NYSE Composite 6,910.98, +206.83 (3.09%)
As one would suspect, advancing issued danced all over decliners, 5340-1091. It was one of the most lopsided A-D lines of the year. New highs paraded past new lows, 376-75. Even volume was a bit better, with the best overall showing in three weeks, though still well below levels consistent with a healthy market.
NASDAQ Volume 2,160,659,000
NYSE Volume 5,142,812,000
Making sure that all the greedy bastards in the world got a piece of today's action, oil spiked $1.99, to $73.91, while gold was lower by $2.00, to $1,246.30 and silver down 4 cents, to $19.36.
Here's a note to remember. When stocks are up massively, like today, gold and silver would normally be down quite a bit. Today's trade shows that the rich and powerful can actually have their cake and eat it too, as they are now hoarding gold and silver while chumping everyone with stupid stock bets.
Word to the wise: equities are a racket controlled by an unregulated Wall Street mob which is hedging its bets, buying gold and silver with part of every dollar they skim off the uninformed investors. The only way to play this is as I've suggested in the past: hold cash, buy arable land, tools of trades, gold and silver and prepare for radical changes over the next five to seven years, as they are unavoidable.
Wednesday, September 1, 2010
Tuesday, August 31, 2010
The Train Wreck Keeps a-Rollin'
Keeping one eye on the US economy and the other on US equity markets is something like watching two train wrecks in slow motion, wondering which will fall completely off the rails first. On any given day, stocks seem like the sure-fire winner, destined to send a signal to the broader economy. And when that occurs, ka-boom! Everything goes at once.
Today's stock action was actually quite silly and pointless. Down at the open, with a quick-strike rally up to the release of the Chicago PMI (down sharply from 62.3 in July 56.7 in August) and the Consumer Confidence Index from the Conference Board (up to 53.5 in August after a reading of 51.0 in July). Both bits of data were buoyed by the pre-market announcement of the Case-Shiller 20-city Index, which showed a quite remarkable improvement of 4.23% in June.
Release of the August FOMC minutes at 2:00 pm apparently rattled the market, sending all indices lower after maintaining gains through most of the session. Odd, because most of what was contained in the minutes has already been hashed out and priced into stocks. Nothing in the report shed any new light on Fed policy or the health of the economy (which everyone, even the Fed, knows is bad).
What's really interesting about the movement of the stock market is that it spent the first half hour and the final 1 1/2 hours of trading in negative territory. Ongoing is a rather stout defense of three positions: 10,000 on the Dow, 2100 on the NASDAQ, and the furtive 1040 on the S&P 500, but today's action, and, the overall market dynamics of the past three weeks, having a dearth of upside momentum indicate that those levels will likely not hold, are mere temporary hope points for the ignorant, almost sure to be taken out by Wednesday morning's ADP private employment report for August and further downside when August non-farm payroll data is released on Friday.
Some unsightly buying in the final few minutes of trading brought the Dow and S&P back from the dead, but was not enough to move the NASDAQ above the unchanged mark. Imagine your entire net worth and future pension all riding on the market-closing whims of Wall Street robber barons who are interested only in perception of the market rather than reality. That's precisely the position most American workers find themselves in today, never questioning the soundness of their investments or the trustworthiness of the marketplace.
It shouldn't surprise anyone, as American workers subjected themselves to slavery long ago, by acceptance of the income and payroll tax system. A man or woman is paid wages for his or her work. Taxing that output is nothing more than state-sponsored slavery, unconstitutional and immoral, but accepted nationwide. The tax burden on Americans is the single most detrimental factor to prosperity. Add up "contributions" in the forms of Social Security, Medicare, payroll tax, state income tax, sales tax, hidden excise tax (gas, cigarettes, etc.) and real property tax and the burden is over 50% of earned income for many Americans.
The US stock market, like the government, is neither fair nor impartial. Those who toil for taxable wages and invest in unfathomable securities are bound to meet their rightful destiny at some point. For some, the stock market collapse of 2008 was enough, and they have exited the system. For every one of those, however, are 100 to 500 more who toil in utter ignorance and fear. Despite countless examples to the contrary, they still believe that state and federal governments and Wall Street can be trusted for their well-being and general welfare. And on welfare is where many of them will eventually retire.
The month of August turned out to be a bummer for holders of paper wealth in equities. The S&P led the way with a 6.80% decline, followed by the NASDAQ, with a 6.24% drop, and finally, the Dow, which shed a mere 4.32%. Ah, that $100,000 earmarked for retirement shrank to around $95,000, depending on your investment preferences. Lovely.
Dow 10,014.72, +4.99 (0.05%)
NASDAQ 2,114.03, -5.94 (0.28%)
S&P 500 1,049.33, +0.41 (0.04%)
NYSE Composite 6,704.15, +8.87 (0.13%)
Advancing issues held sway over decliners by a narrow margin, 3337-3027. New highs edged new lows, 256-254. Volume was a little better than the normal moribund average of the past four weeks.
NASDAQ Volume 1,839,803,500
NYSE Volume 5,044,525,000
Commodities told a much different story than the "no change" stance taken by stocks. Crude oil for October delivery fell by nearly 4%, losing $2.78, to close at $71.92. Precious metals, on the other hand, were priced substantially higher, as faith in fiat-based money continued to erode. Gold gained $11.20, to $1,248.30, and silver, which has been a star of late, gained 36 cents, to $19.40.
The world is not coming to an abrupt end, though American society is undergoing a radical transformation, from a spendthrift, credit-driven society to one concerned more with bare essentials. We have more today than ever before, but most of it is either mortgaged, financed or overvalued and those who fail to amend their profligate ways shall be burdened with unpayable debts and a life of squalor.
Our national condition may take years to unwind, but there's no doubt that more pain awaits us all. If avoidance of unpleasantness is the key to happiness, Americans have been forewarned. Partisan rhetoric notwithstanding, we face more uncertainty and calamity right now than at any time in the past 60 years.
Today's stock action was actually quite silly and pointless. Down at the open, with a quick-strike rally up to the release of the Chicago PMI (down sharply from 62.3 in July 56.7 in August) and the Consumer Confidence Index from the Conference Board (up to 53.5 in August after a reading of 51.0 in July). Both bits of data were buoyed by the pre-market announcement of the Case-Shiller 20-city Index, which showed a quite remarkable improvement of 4.23% in June.
Release of the August FOMC minutes at 2:00 pm apparently rattled the market, sending all indices lower after maintaining gains through most of the session. Odd, because most of what was contained in the minutes has already been hashed out and priced into stocks. Nothing in the report shed any new light on Fed policy or the health of the economy (which everyone, even the Fed, knows is bad).
What's really interesting about the movement of the stock market is that it spent the first half hour and the final 1 1/2 hours of trading in negative territory. Ongoing is a rather stout defense of three positions: 10,000 on the Dow, 2100 on the NASDAQ, and the furtive 1040 on the S&P 500, but today's action, and, the overall market dynamics of the past three weeks, having a dearth of upside momentum indicate that those levels will likely not hold, are mere temporary hope points for the ignorant, almost sure to be taken out by Wednesday morning's ADP private employment report for August and further downside when August non-farm payroll data is released on Friday.
Some unsightly buying in the final few minutes of trading brought the Dow and S&P back from the dead, but was not enough to move the NASDAQ above the unchanged mark. Imagine your entire net worth and future pension all riding on the market-closing whims of Wall Street robber barons who are interested only in perception of the market rather than reality. That's precisely the position most American workers find themselves in today, never questioning the soundness of their investments or the trustworthiness of the marketplace.
It shouldn't surprise anyone, as American workers subjected themselves to slavery long ago, by acceptance of the income and payroll tax system. A man or woman is paid wages for his or her work. Taxing that output is nothing more than state-sponsored slavery, unconstitutional and immoral, but accepted nationwide. The tax burden on Americans is the single most detrimental factor to prosperity. Add up "contributions" in the forms of Social Security, Medicare, payroll tax, state income tax, sales tax, hidden excise tax (gas, cigarettes, etc.) and real property tax and the burden is over 50% of earned income for many Americans.
The US stock market, like the government, is neither fair nor impartial. Those who toil for taxable wages and invest in unfathomable securities are bound to meet their rightful destiny at some point. For some, the stock market collapse of 2008 was enough, and they have exited the system. For every one of those, however, are 100 to 500 more who toil in utter ignorance and fear. Despite countless examples to the contrary, they still believe that state and federal governments and Wall Street can be trusted for their well-being and general welfare. And on welfare is where many of them will eventually retire.
The month of August turned out to be a bummer for holders of paper wealth in equities. The S&P led the way with a 6.80% decline, followed by the NASDAQ, with a 6.24% drop, and finally, the Dow, which shed a mere 4.32%. Ah, that $100,000 earmarked for retirement shrank to around $95,000, depending on your investment preferences. Lovely.
Dow 10,014.72, +4.99 (0.05%)
NASDAQ 2,114.03, -5.94 (0.28%)
S&P 500 1,049.33, +0.41 (0.04%)
NYSE Composite 6,704.15, +8.87 (0.13%)
Advancing issues held sway over decliners by a narrow margin, 3337-3027. New highs edged new lows, 256-254. Volume was a little better than the normal moribund average of the past four weeks.
NASDAQ Volume 1,839,803,500
NYSE Volume 5,044,525,000
Commodities told a much different story than the "no change" stance taken by stocks. Crude oil for October delivery fell by nearly 4%, losing $2.78, to close at $71.92. Precious metals, on the other hand, were priced substantially higher, as faith in fiat-based money continued to erode. Gold gained $11.20, to $1,248.30, and silver, which has been a star of late, gained 36 cents, to $19.40.
The world is not coming to an abrupt end, though American society is undergoing a radical transformation, from a spendthrift, credit-driven society to one concerned more with bare essentials. We have more today than ever before, but most of it is either mortgaged, financed or overvalued and those who fail to amend their profligate ways shall be burdened with unpayable debts and a life of squalor.
Our national condition may take years to unwind, but there's no doubt that more pain awaits us all. If avoidance of unpleasantness is the key to happiness, Americans have been forewarned. Partisan rhetoric notwithstanding, we face more uncertainty and calamity right now than at any time in the past 60 years.
Monday, August 30, 2010
Awful August Continues; September Worst Month for Stocks
Since topping out at 10,698.75 on August 9, stocks have been in a pretty steady decline, losing almost 700 points on the Dow over the past 15 sessions. And what used to be known as "mutual fund Monday" - because so many fund investors would pony up with fresh cash - have been losers the past three weeks.
According to Reuters, today was the lowest combined volume for the three major exchanges: AMEX, NYSE and NASDAQ. In the absence of any kind of market-moving news, investors took the path of least resistance and shed shares in favor or more likely candidates. Bonds, gold and cash were where money was being parked until some certainty over the future of the US economy is ascertained.
The general mood being dour and weary, traders have found nothing upon which to hang a trade and that's a serious problem, not only for investors, but for the companies whose stocks trade on the public dollar. Without ample support, a slew of companies will simply cease to exist, especially when borrowing has become somewhat of a nuisance.
Sure, corporate debt is at high levels, but companies are finding it more palatable to borrow at low rates than touch the bales of cash they are hoarding, symptomatic of a deflationary depression, upon which the nation has embarked, without doubt.
Stocks never made it into positive territory, and declines worsened throughout the session. The usual thought of month-ending "window dressing" has been replaced by a flight to safety and out of risky assets.
Dow 10,009.73, -140.92 (1.39%)
NASDAQ 2,119.97, -33.66 (1.56%)
S&P 500 1,048.92, -15.67 (1.47%)
NYSE Composite 6,695.28, -99.63 (1.47%)
Declining issues buried advancers, 4931-1489, though new highs managed to beat out new lows, 240-125, only because so many stocks have been delisted of late.
NASDAQ Volume 1,614,811,125
NYSE Volume 3,411,060,000
Commodities were also weak. oil lost 47 cents, falling to $74.70. Gold managed a tiny gain of $1.50, to $1,237.10. Silver was unchanged at $19.04.
As bad as August has been, September is historically the worst month to own stocks.
Bank of America (BAC) fell 2.5 percent to $12.32, as fears that the Fed may begin dumping all of its toxic paper (originally owned by BofA and others) back upon the beleaguered institution. Somebody has to take the fall and there probably is no better candidate than BofA.
According to Reuters, today was the lowest combined volume for the three major exchanges: AMEX, NYSE and NASDAQ. In the absence of any kind of market-moving news, investors took the path of least resistance and shed shares in favor or more likely candidates. Bonds, gold and cash were where money was being parked until some certainty over the future of the US economy is ascertained.
The general mood being dour and weary, traders have found nothing upon which to hang a trade and that's a serious problem, not only for investors, but for the companies whose stocks trade on the public dollar. Without ample support, a slew of companies will simply cease to exist, especially when borrowing has become somewhat of a nuisance.
Sure, corporate debt is at high levels, but companies are finding it more palatable to borrow at low rates than touch the bales of cash they are hoarding, symptomatic of a deflationary depression, upon which the nation has embarked, without doubt.
Stocks never made it into positive territory, and declines worsened throughout the session. The usual thought of month-ending "window dressing" has been replaced by a flight to safety and out of risky assets.
Dow 10,009.73, -140.92 (1.39%)
NASDAQ 2,119.97, -33.66 (1.56%)
S&P 500 1,048.92, -15.67 (1.47%)
NYSE Composite 6,695.28, -99.63 (1.47%)
Declining issues buried advancers, 4931-1489, though new highs managed to beat out new lows, 240-125, only because so many stocks have been delisted of late.
NASDAQ Volume 1,614,811,125
NYSE Volume 3,411,060,000
Commodities were also weak. oil lost 47 cents, falling to $74.70. Gold managed a tiny gain of $1.50, to $1,237.10. Silver was unchanged at $19.04.
As bad as August has been, September is historically the worst month to own stocks.
Bank of America (BAC) fell 2.5 percent to $12.32, as fears that the Fed may begin dumping all of its toxic paper (originally owned by BofA and others) back upon the beleaguered institution. Somebody has to take the fall and there probably is no better candidate than BofA.
Friday, August 27, 2010
Did Bernanke Speech Spark a Rally?
Fed Chair Ben Bernanke delivered a keynote address to the attendees at Jackson Hole, Wyoming, the annual con-fab of economic and political elitists who have gathered to discuss and dissect the global economy.
Stocks were up in the first half hour of trading as the revision to second quarter GDP had come in a little better than some had expected, down to only 1.6% growth, lopping off nearly a full percentage point from the initial 2.4% figure. Immediately upon reaching the podium, however, Bernanke's mere presence sent stocks into a tailspin, right at 10:00 am, odd, in that no words had left the chairman's lips, though text of the speech had been widely distributed by then.
Were insiders shocked at what was contained in the speech? Probably not. The dramatic move to the downside was probably the work of a few well-timed large sellers working in concert, which they have been known to do. Within minutes, stocks began thrusting forward, sparking a sizable rally that lasted the length of the session.
As to whether the move was a response to what Ben Bernanke told the assemblage of high muckety-mucks in the wilderness will probably be the story of the day, though it probably had about as much to do with stock movement as whether Drew Barrymore and Justin Long will remain a couple (odds say they're split up by the third week in September).
No, today's outstanding rally in equities was once again nothing more than pure unbridled market manipulation by large firms seeking quick turnaround profits. One can note with ease the smashing decline and quick rebound off the morning's V-shaped bottom as a sign that adept traders sent indices hard lower, loaded up and then bought incrementally, stringing along the sheepish followers.
In a day to two the same shrewd buyers at the bottom will be sellers at or near the top. Once their round-trip trade has concluded, it will be back to the usual down-up-down pattern that has persisted for the better part of the year. Bernanke said little in his speech to assuage fears and nothing to tip the hand for future Federal Reserve policy decisions.
The entire text of the chairman's mind-numbingly boring riposte can be found here.
Dow 10,150.65, +164.84 (1.65%)
NASDAQ 2,153.63, +34.94 (1.65%)
S&P 500 1,064.59, +17.37 (1.66%)
NYSE Composite 6,794.91, +129.65 (1.95%)
The result of the Wall Street's one-day wonder was for advancers to eclipse declining issues by a wide margin, 4876-877 and new highs to vault past new lows, 247-156, once more. Again on the light side, volume spoke loudest.
NASDAQ Volume 2,169,648,250
NYSE Volume 4,295,823,500
This is absolutely the most rigorous of trader's markets, or, putting it more succinctly, Wall Street has completely devolved into a casino in which the house (represented by the major insider brokerages and trading firms) makes up rules on the fly, the dice are loaded, decks stacked and the roulette wheel is built on an adjustable ramp.
Small investors and those outside the loop are certain to become fodder for the big feeders.
While stocks were soaring the precious metals were left to linger. Gold gained only 60 cents, closing at $1,236.00, while silver added 6 cents, to $19.04. As one might expect, crude oil was the big winner, ramping up $1.81, to $75.17, its highest price of the week.
One makes choices in his or her life, of whether to believe in systems which have proven to be easily manipulated and difficult to comprehend, or to trust what one sees and hears and judge for oneself. Anybody believing today's rally was significant and a sign of better days ahead surely belongs in that former camp.
The rest of us still aren't buying into the "happy days" argument.
Stocks were up in the first half hour of trading as the revision to second quarter GDP had come in a little better than some had expected, down to only 1.6% growth, lopping off nearly a full percentage point from the initial 2.4% figure. Immediately upon reaching the podium, however, Bernanke's mere presence sent stocks into a tailspin, right at 10:00 am, odd, in that no words had left the chairman's lips, though text of the speech had been widely distributed by then.
Were insiders shocked at what was contained in the speech? Probably not. The dramatic move to the downside was probably the work of a few well-timed large sellers working in concert, which they have been known to do. Within minutes, stocks began thrusting forward, sparking a sizable rally that lasted the length of the session.
As to whether the move was a response to what Ben Bernanke told the assemblage of high muckety-mucks in the wilderness will probably be the story of the day, though it probably had about as much to do with stock movement as whether Drew Barrymore and Justin Long will remain a couple (odds say they're split up by the third week in September).
No, today's outstanding rally in equities was once again nothing more than pure unbridled market manipulation by large firms seeking quick turnaround profits. One can note with ease the smashing decline and quick rebound off the morning's V-shaped bottom as a sign that adept traders sent indices hard lower, loaded up and then bought incrementally, stringing along the sheepish followers.
In a day to two the same shrewd buyers at the bottom will be sellers at or near the top. Once their round-trip trade has concluded, it will be back to the usual down-up-down pattern that has persisted for the better part of the year. Bernanke said little in his speech to assuage fears and nothing to tip the hand for future Federal Reserve policy decisions.
The entire text of the chairman's mind-numbingly boring riposte can be found here.
Dow 10,150.65, +164.84 (1.65%)
NASDAQ 2,153.63, +34.94 (1.65%)
S&P 500 1,064.59, +17.37 (1.66%)
NYSE Composite 6,794.91, +129.65 (1.95%)
The result of the Wall Street's one-day wonder was for advancers to eclipse declining issues by a wide margin, 4876-877 and new highs to vault past new lows, 247-156, once more. Again on the light side, volume spoke loudest.
NASDAQ Volume 2,169,648,250
NYSE Volume 4,295,823,500
This is absolutely the most rigorous of trader's markets, or, putting it more succinctly, Wall Street has completely devolved into a casino in which the house (represented by the major insider brokerages and trading firms) makes up rules on the fly, the dice are loaded, decks stacked and the roulette wheel is built on an adjustable ramp.
Small investors and those outside the loop are certain to become fodder for the big feeders.
While stocks were soaring the precious metals were left to linger. Gold gained only 60 cents, closing at $1,236.00, while silver added 6 cents, to $19.04. As one might expect, crude oil was the big winner, ramping up $1.81, to $75.17, its highest price of the week.
One makes choices in his or her life, of whether to believe in systems which have proven to be easily manipulated and difficult to comprehend, or to trust what one sees and hears and judge for oneself. Anybody believing today's rally was significant and a sign of better days ahead surely belongs in that former camp.
The rest of us still aren't buying into the "happy days" argument.
Thursday, August 26, 2010
Relentless Bear Market Continues; Dow Closes Under 10,000
After taking a day off on some short-covering, stocks continued their relentless selloff on Thursday, sending the Dow careening to a close below 10,000 for the first time since July 6, nearly two months ago. While the 10,000 mark is not an important line of support nor resistance, it is still a valuable psychological level which many traders and even more casual observers will note with unease.
Stocks are trading within a fairly tight range, though the bottom of that range now begins to come into focus. On the Dow, the close of 9686 should be viewed as short-term support. A break through that level, which now seems highly likely within the upcoming days and weeks, would send an even stronger signal than the one that's currently flashing that the stock market and, by inference, the US economy, is failing on many levels.
Bad news continued to berate Wall Street, the latest being new unemployment claims - slightly better than last week's, coming in at 473,000 - and more distress on the home front, with the Mortgage Bankers Association reporting that "after declining since the beginning of 2009, the rate of short-term delinquencies is going up and the increase in these short-term delinquencies may ultimately drive the foreclosure measures back up."
The MBA said that the percentage of homes either already in foreclosure or behind by at least one payment on their mortgage was 13.97 in the second quarter of 2010, a number only marginally better than the 14.01% reported in the first quarter of 2010.
This steady stream of dour economic news had, until recently, been offset by fairly positive earnings reports from publicly-traded companies. Now that the season for corporate quarterly reporting has passed, there's nothing to buoy up stocks and investors - those not already out of the market - are increasingly trimming exposure and heading to either the sidelines, cash, bonds or precious metals. Thursday's beat-down marked the 10th day in the last 12 that the Dow has finished the day lower. From the start of the year, the Dow is down 443 points, or about 4% from where it ended 2009. The NASDAQ is off 150 points, or 6.6% for the year, while the S&P has suffered losses so far this year of 68 points. or 6.1%.
With prospects for the second half of the year not offering much in the way of hope, chances are good that 2010 will go down as another bad year to own stocks. Analysts cite a growing raft of concerns, including the Fed being unable to kick-start the economy; upcoming elections creating confusion; continued disappointing readings on unemployment and housing; banks not lending, consumers not wanting to borrow; the end of he Bush tax cuts; potential sovereign defaults in Greece, Ireland, Spain and Portugal; federal budget deficits and lower tax receipts; strained state and municipal budgets; and a host of other related and intertwining issues which are keeping the US economy in a straight jacket.
Naturally, everybody is seeking a way out, a solution, to put the economy back on a positive growth path, but few have examined the demographic and social implications of 30+ years of stimulation, easy credit and an upward trajectory in population. With baby boomers closing in on retirement and much of the population saving rather than spending, the traditional growth patterns since the second World War are unlikely to be replicated, so expectations should be ratcheted down instead of holding to the quaint - but incorrect - notion that the economy will return to "normalcy" once certain issues are worked out.
The entire stance of the federal government and the Federal Reserve has been one of keeping the credit spigot open and has wasted valuable resources and time fighting for a sustained growth pattern that probably will nor re-emerge for many years. Asset values, from stocks to houses, were artificially inflated for years, but now that trend is in reverse and nothing - even massive stimulus spending, 0% interest and backstopping the too-large-to-fail banks - is going to stop the economy from wringing out all of the malinvestment of the previous epoch.
Prices of homes and shares of almost all stocks will continue to fall until some balance is restored between wages and affordability. A little common sense from our brain-dead leaders in congress would certainly help, though it appears that the United States is plunging headlong into a depression that will rival or exceed the Great Depression of the 1930s. A combination of poor choices by consumers, investors, business leaders and the government has brought us to the brink of economic extinction. Over the coming two to three years, major business failures will occur, with a solid 10 to 20% of publicly-traded corporations filing some form of bankruptcy or reorganization. The financial firms, especially Bank of America, which fell today to another 52-week low, should be at the top of the list for bankruptcy court. The toxic assets which were the catalyst for the general decline and that they continue to keep off their books due to lax accounting standards are tied around their collected necks, albatrosses that will weigh them down and keep the economy from functioning in a reasonable manner.
There are going to be hard choices ahead for most Americans. It is time our leaders in government begin making some real decisions instead of playing politics and continuing to kick the can of economic distress further down the road. Solutions are needed now and these elected officials will not make them for fear of losing power. Their risk is that they will lose power no matter what, either through the voting booths or other, more draconian, traditional means.
Dow 9,985.81, -74.25 (0.74%)
NASDAQ 2,118.69, -22.85 (1.07%)
S&P 500 1,047.22, -8.11 (0.77%)
NYSE Composite 6,665.26, -30.86 (0.46%)
Declining issues beat down advancers, 3770-1946, though new highs moved back ahead of new lows, 210-129, though the numbers seem oddly skewed. Volume remained at the same distressed levels as the previous two sessions, with little improvement.
NASDAQ Volume 1,824,585,375
NYSE Volume 3,913,177,000
Oil gained 84 cents to close at $73.36. Gold traded down $4.10, to $1,235.40 and silver slipped 4 cents, to $18.98.
Friday offers the first revision to second quarter GDP, which is really beginning to appear like an imaginary number. The illuminati of the financial world already expects the figure to be revised from 2.4% to 1.3%, though the reality is that the way GDP is expressed today anything less than 2% growth should likely be considered a decline in real terms. The government shades the figures on almost every important statistic to make the economy appear to be better than it is. That also isn't helping matters.
Stocks are trading within a fairly tight range, though the bottom of that range now begins to come into focus. On the Dow, the close of 9686 should be viewed as short-term support. A break through that level, which now seems highly likely within the upcoming days and weeks, would send an even stronger signal than the one that's currently flashing that the stock market and, by inference, the US economy, is failing on many levels.
Bad news continued to berate Wall Street, the latest being new unemployment claims - slightly better than last week's, coming in at 473,000 - and more distress on the home front, with the Mortgage Bankers Association reporting that "after declining since the beginning of 2009, the rate of short-term delinquencies is going up and the increase in these short-term delinquencies may ultimately drive the foreclosure measures back up."
The MBA said that the percentage of homes either already in foreclosure or behind by at least one payment on their mortgage was 13.97 in the second quarter of 2010, a number only marginally better than the 14.01% reported in the first quarter of 2010.
This steady stream of dour economic news had, until recently, been offset by fairly positive earnings reports from publicly-traded companies. Now that the season for corporate quarterly reporting has passed, there's nothing to buoy up stocks and investors - those not already out of the market - are increasingly trimming exposure and heading to either the sidelines, cash, bonds or precious metals. Thursday's beat-down marked the 10th day in the last 12 that the Dow has finished the day lower. From the start of the year, the Dow is down 443 points, or about 4% from where it ended 2009. The NASDAQ is off 150 points, or 6.6% for the year, while the S&P has suffered losses so far this year of 68 points. or 6.1%.
With prospects for the second half of the year not offering much in the way of hope, chances are good that 2010 will go down as another bad year to own stocks. Analysts cite a growing raft of concerns, including the Fed being unable to kick-start the economy; upcoming elections creating confusion; continued disappointing readings on unemployment and housing; banks not lending, consumers not wanting to borrow; the end of he Bush tax cuts; potential sovereign defaults in Greece, Ireland, Spain and Portugal; federal budget deficits and lower tax receipts; strained state and municipal budgets; and a host of other related and intertwining issues which are keeping the US economy in a straight jacket.
Naturally, everybody is seeking a way out, a solution, to put the economy back on a positive growth path, but few have examined the demographic and social implications of 30+ years of stimulation, easy credit and an upward trajectory in population. With baby boomers closing in on retirement and much of the population saving rather than spending, the traditional growth patterns since the second World War are unlikely to be replicated, so expectations should be ratcheted down instead of holding to the quaint - but incorrect - notion that the economy will return to "normalcy" once certain issues are worked out.
The entire stance of the federal government and the Federal Reserve has been one of keeping the credit spigot open and has wasted valuable resources and time fighting for a sustained growth pattern that probably will nor re-emerge for many years. Asset values, from stocks to houses, were artificially inflated for years, but now that trend is in reverse and nothing - even massive stimulus spending, 0% interest and backstopping the too-large-to-fail banks - is going to stop the economy from wringing out all of the malinvestment of the previous epoch.
Prices of homes and shares of almost all stocks will continue to fall until some balance is restored between wages and affordability. A little common sense from our brain-dead leaders in congress would certainly help, though it appears that the United States is plunging headlong into a depression that will rival or exceed the Great Depression of the 1930s. A combination of poor choices by consumers, investors, business leaders and the government has brought us to the brink of economic extinction. Over the coming two to three years, major business failures will occur, with a solid 10 to 20% of publicly-traded corporations filing some form of bankruptcy or reorganization. The financial firms, especially Bank of America, which fell today to another 52-week low, should be at the top of the list for bankruptcy court. The toxic assets which were the catalyst for the general decline and that they continue to keep off their books due to lax accounting standards are tied around their collected necks, albatrosses that will weigh them down and keep the economy from functioning in a reasonable manner.
There are going to be hard choices ahead for most Americans. It is time our leaders in government begin making some real decisions instead of playing politics and continuing to kick the can of economic distress further down the road. Solutions are needed now and these elected officials will not make them for fear of losing power. Their risk is that they will lose power no matter what, either through the voting booths or other, more draconian, traditional means.
Dow 9,985.81, -74.25 (0.74%)
NASDAQ 2,118.69, -22.85 (1.07%)
S&P 500 1,047.22, -8.11 (0.77%)
NYSE Composite 6,665.26, -30.86 (0.46%)
Declining issues beat down advancers, 3770-1946, though new highs moved back ahead of new lows, 210-129, though the numbers seem oddly skewed. Volume remained at the same distressed levels as the previous two sessions, with little improvement.
NASDAQ Volume 1,824,585,375
NYSE Volume 3,913,177,000
Oil gained 84 cents to close at $73.36. Gold traded down $4.10, to $1,235.40 and silver slipped 4 cents, to $18.98.
Friday offers the first revision to second quarter GDP, which is really beginning to appear like an imaginary number. The illuminati of the financial world already expects the figure to be revised from 2.4% to 1.3%, though the reality is that the way GDP is expressed today anything less than 2% growth should likely be considered a decline in real terms. The government shades the figures on almost every important statistic to make the economy appear to be better than it is. That also isn't helping matters.
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