Pumping another $7.9 billion into the coffers of the Primary Dealers (the usual crooks: JP Morgan, BofA, Goldman Sachs, et. al.) seems to be working wonders for... just about nobody, unless you were convinced it was such a bad idea you went short stocks, bonds and commodities all at the same time. Stocks were initially up, but took an abrupt about-face at 3:00, with the NASDAQ and S&P finishing marginally lower and the Dow closing with single digit gains.
If that's what we're getting for a mere $7.9 billion, what should we expect when the Fed's QE2 program runs its course and delivers the total blow of more than $800 billion? By June, the 10-year note, which was under 2.5% before the Fed commenced its dangerous liquidity action, and is over 2.94% now, will probably be running at 6-8%, and if that's not good enough, stocks will be off significantly, maybe the Dow in the range of 4-5000 strikes your fancy or the S&P toying with the 850 mark makes your day.
Our intrepid Captain Blowhard Bernanke, obviously a complete toady to powers well beyond his control, is attempting to stimulate the economy (or so he says) by pushing on a string. His relentless injections of capital into markets are already causing such extreme distortions in all capital markets that 23 high-level economists, strategists and analysts sent a letter requesting he curtail his actions.
Obviously, Bernanke isn't listening to anyone and the US public pays for it every passing day that he is allowed to pursue his reckless and possibly destructive policies. One would like to believe that congress would eventually exert some control, but that's not an option for at least another two months, as the current congress is of the lame duck variety and the new one won't get down to business until the third week of january, 2011.
So, we're stuck with probably about $200 billion going up in smoke on the wing and a prayer that it will somehow cause inflation that will stimulate the economy. While his rampant spending spree (just in time for Christmas) will almost certainly result in inflation, that's not considered a good thing by the vast majority of Americans. And even if we spend more because everything costs more, where's the gain?
Somebody needs to put an end to this madman's reign of financial terror. Perhaps the American people could find the will to protest at some point, though that seems about as good a possibility as Dallas winning the Super Bowl this season.
And, since no bad deed gets punished these days, the financial press will continue to place the blame on Ireland or Portugal or the first EU nation that officially defaults. The global financial condition continues to worsen by the day, thanks to the very people who are supposed to have a handle on such things.
Dow 11,201.97 9.39 (0.08%)
NASDAQ 2,513.82 4.39 (0.17%)
S&P 500 1,197.75 1.46 (0.12%)
NYSE Compos 7,617.51 5.73 (0.08%)
Losers edged out winners by a narrow margin, 3234-3187. New highs continued to shrink while new lows expanded again, with the tally at 183-95. If this indicator flips, its usually a sure sign that lower stock market prices are dead ahead and would continue for some time. What many are calling a "blip" may turn into a rout. Volume remained sluggish, if one can even call it that. Markets are so blatantly manipulated (as today's rise and sell-off would argue), the next round of theft may come in the form of another major correction to the downside.
NASDAQ Volume 1,866,283,250
NYSE Volume 4,075,506,000.00
The front end NYMEX light sweet crude oil contract finished unchanged again, at $84.88. Gold slid once more, this time to a one-month low of $1360.40, off $8.40. Silver dropped 56 cents, to $25.48. Who knows, maybe silver will come back to the low 20s or even the teens, making for a tantalizing entry point for renewed buying. A 50% retracement of the recent gains would bring it back to around $24.00, which should spur buying interest into the end of the year.
Monday, November 15, 2010
Friday, November 12, 2010
Bernanke Steers QE2 Over Cliff
All week pundits, economists and investors have been concerned about the effects of the great Federal Reserve experiment, Quantitative Easing, Round 2, A/K/A QE2, which got underway this morning with an $8 billion injection of fresh scads of cash delivered through repurchasing of Treasuries from Primary Dealers.
While for weeks and months the arguments have centered around how high the additional liquidity would take the stock markets and how low yields on bonds would go, today's efforts resulted in exactly the opposite. Stocks were hammered across the board and bond yields rose to multi-month highs. The Fed's expressed purpose was to lower bond yields to induce more house buying, using the completely flawed logical argument that lower rates would kick-start housing.
Just a few words for Mr. Bernanke (as opposed to the words Donald Trump would use: "you're fired"): people need money and jobs to buy houses. Even if interest rates were zero (oh, I'm sorry, they already are), they're not buying, because they can't afford to and the banks won't lend BECAUSE THEY HAVE NO JOBS AND NO MONEY.
Now, even a moron, a simpleton, a dunce could see this is the case in America, where real unemployment hovers around 18-22% nationally, and in some places, like most of California and Southern Florida, it's even worse. Without people earning paychecks, how, pray tell, are they going to buy homes?
No, I'm afraid that what I warned about yesterday, that if the stock market didn't make gains, that if bonds yields didn't go lower, that if gold and silver didn't rise, then all bets are off because this is just more of a massive fraud, the same one denied and overlooked by the Fed for years. The housing menage is what's fueling all of the madness and the money from QE2 is going directly into the coffers of Bank of America, JP Morgan Chase, Wells Fargo and Citigroup to cover up massive defaults and losses in mortgage backed securities.
The Justice Department - if we had one - should be investigating the banks and the Fed for malfeasance, fraud, securities fraud and treason, for they are surely the biggest national security risk on the planet, yet they go on their merry way, printing money to cover up their crimes while the rest of the world is supposed to just play along with them.
I say it's OVER! It's high time for the Congress to step in and shut down the Federal Reserve and all of the aforementioned banks. Obviously, Mr. Bernanke either doesn't have a clue as to what he's doing or he knows exactly what he's doing and is lying to the congress and the public. Or he's telling the congress and they're all lying to the public. And, in case somebody happens to know the whereabouts of of our invisible Attorney General, Eric Holder, please call 1-800-WAKE-THE-F--K-UP!
Let's see stocks lose more value next week when the Fed starts pumping more money on a daily basis into the primary dealers (those aforementioned banks again) and they invest it in repairing their bottom lines. Or maybe they'll make the stock market go up a little to quiet everyone down. Of course, they can always claim that it's those damn Europeans - the Irish, Italians, Spaniards and Portugese, to say nothing of the lay-about Greeks - or the Chinese, who won't devalue their currency and are running inflationary policies, that are causing all the dislocations in the market.
Ben Bernanke should be behind bars with Henry Paulson, Tim Geithner and the heads of all the largest banks. There's no good outcome to their policies, except to make life tougher for most Americans while covering up the crime of the century, the housing/mortgage/securitization/foreclose scam that's been at the heart of the US and global financial problems since 2007.
It's time to put down the trading tools and pick up the handcuffs. Unfortunately, nobody is home at DofJ and the other regulatory agencies are likely equally complicit. It's getting to the point at which some very drastic and draconian measures are going to need to be taken by the American people - if we can find a few with enough courage - to fix this mess before it goes any further.
The longer the Fed is allowed to print money out of thin air and cover up its own crimes and those of many of its member banks, the worse the solution will be. We don't have until 2012 to wait for the election of Ron Paul as President. We probably don't even have another six months before the United States of America is reduced to a pile of stinking rubble by a gang of criminals masquerading as bankers in suits. It's completely disgusting.
Market action needs few words. Here are the results for today:
Dow 11,192.58, -90.52 (0.80%)
NASDAQ 2,518.21, -37.31 (1.46%)
S&P 500 1,199.21, -14.33 (1.18%)
NYSE Composite 7,623.24, -100.00 (1.29%)
The headline numbers hardly tell the real damage show by the internals. Advancers were absolutely routed by declining issues, 5283-1193, a better-than 4:1 ratio. New highs continued to descend, but remained somehow ahead of new lows, 211-64. Volume was again a joke, hardly enough to entertain more than a small brokerage. The entire market is being manipulated by the Fed and primary dealers (the banks), down to the high-low figures. If, however, these turn around, with the lows overwhelming the highs, that would serve as a clear sell signal (for the three guys still trading in these absurd markets), but would also raise warning flags - as though there aren't enough of them already - about the US and global economy and the likelihood of a double dip, as soon as this quarter.
With the housing market about as screwed up as a an ADHD head-banger on ecstasy because of the foreclosure moratorium, which started in October and has not really ended, the drain on the economy will be evident in 4th quarter GDP. If the government claims anything better than 1% growth for the 4th quarter (we won't know until the end of January, which is likely to already be too late), it will be another statistical lie, like most of the others they produce.
Jobs aren't being created, incomes aren't rising, and the economy limps along on the back of transfer payments like social security, veteran's benefits, disability payments, welfare and food stamps. The private sector is reeling already and a poor Christmas season could be the final knife-thrust that makes the economy tilt over and die.
NASDAQ Volume 2,039,983,750
NYSE Volume 4,865,655,000
The good news is that oil was also slammed to the earth, losing $2.93 (3.34%), to $84.88. Most other commodities also suffered deep declines, such as cotton, live hogs, corn, wheat, soybeans and live cattle. It's almost as though the force of deflation came back with a vengeance in opposition to the policy missteps of the Federal Reserve. Real damage was seen in the precious metals, though these moves were more likely caused by JP Morgan meddling in silver and profit taking in gold. Silver was last quoted at $26.05, down $1.63, a huge move. Gold fell $40.30, to $1368.60.
If, on Monday, the sun rises in the East and the markets are open, we may be in for more downside, the result of decades of corruption and fraud coming home to roost. Or, the manipulators in charge could just manufacture a rally out of thin air.
They print money, don't they?
While for weeks and months the arguments have centered around how high the additional liquidity would take the stock markets and how low yields on bonds would go, today's efforts resulted in exactly the opposite. Stocks were hammered across the board and bond yields rose to multi-month highs. The Fed's expressed purpose was to lower bond yields to induce more house buying, using the completely flawed logical argument that lower rates would kick-start housing.
Just a few words for Mr. Bernanke (as opposed to the words Donald Trump would use: "you're fired"): people need money and jobs to buy houses. Even if interest rates were zero (oh, I'm sorry, they already are), they're not buying, because they can't afford to and the banks won't lend BECAUSE THEY HAVE NO JOBS AND NO MONEY.
Now, even a moron, a simpleton, a dunce could see this is the case in America, where real unemployment hovers around 18-22% nationally, and in some places, like most of California and Southern Florida, it's even worse. Without people earning paychecks, how, pray tell, are they going to buy homes?
No, I'm afraid that what I warned about yesterday, that if the stock market didn't make gains, that if bonds yields didn't go lower, that if gold and silver didn't rise, then all bets are off because this is just more of a massive fraud, the same one denied and overlooked by the Fed for years. The housing menage is what's fueling all of the madness and the money from QE2 is going directly into the coffers of Bank of America, JP Morgan Chase, Wells Fargo and Citigroup to cover up massive defaults and losses in mortgage backed securities.
The Justice Department - if we had one - should be investigating the banks and the Fed for malfeasance, fraud, securities fraud and treason, for they are surely the biggest national security risk on the planet, yet they go on their merry way, printing money to cover up their crimes while the rest of the world is supposed to just play along with them.
I say it's OVER! It's high time for the Congress to step in and shut down the Federal Reserve and all of the aforementioned banks. Obviously, Mr. Bernanke either doesn't have a clue as to what he's doing or he knows exactly what he's doing and is lying to the congress and the public. Or he's telling the congress and they're all lying to the public. And, in case somebody happens to know the whereabouts of of our invisible Attorney General, Eric Holder, please call 1-800-WAKE-THE-F--K-UP!
Let's see stocks lose more value next week when the Fed starts pumping more money on a daily basis into the primary dealers (those aforementioned banks again) and they invest it in repairing their bottom lines. Or maybe they'll make the stock market go up a little to quiet everyone down. Of course, they can always claim that it's those damn Europeans - the Irish, Italians, Spaniards and Portugese, to say nothing of the lay-about Greeks - or the Chinese, who won't devalue their currency and are running inflationary policies, that are causing all the dislocations in the market.
Ben Bernanke should be behind bars with Henry Paulson, Tim Geithner and the heads of all the largest banks. There's no good outcome to their policies, except to make life tougher for most Americans while covering up the crime of the century, the housing/mortgage/securitization/foreclose scam that's been at the heart of the US and global financial problems since 2007.
It's time to put down the trading tools and pick up the handcuffs. Unfortunately, nobody is home at DofJ and the other regulatory agencies are likely equally complicit. It's getting to the point at which some very drastic and draconian measures are going to need to be taken by the American people - if we can find a few with enough courage - to fix this mess before it goes any further.
The longer the Fed is allowed to print money out of thin air and cover up its own crimes and those of many of its member banks, the worse the solution will be. We don't have until 2012 to wait for the election of Ron Paul as President. We probably don't even have another six months before the United States of America is reduced to a pile of stinking rubble by a gang of criminals masquerading as bankers in suits. It's completely disgusting.
Market action needs few words. Here are the results for today:
Dow 11,192.58, -90.52 (0.80%)
NASDAQ 2,518.21, -37.31 (1.46%)
S&P 500 1,199.21, -14.33 (1.18%)
NYSE Composite 7,623.24, -100.00 (1.29%)
The headline numbers hardly tell the real damage show by the internals. Advancers were absolutely routed by declining issues, 5283-1193, a better-than 4:1 ratio. New highs continued to descend, but remained somehow ahead of new lows, 211-64. Volume was again a joke, hardly enough to entertain more than a small brokerage. The entire market is being manipulated by the Fed and primary dealers (the banks), down to the high-low figures. If, however, these turn around, with the lows overwhelming the highs, that would serve as a clear sell signal (for the three guys still trading in these absurd markets), but would also raise warning flags - as though there aren't enough of them already - about the US and global economy and the likelihood of a double dip, as soon as this quarter.
With the housing market about as screwed up as a an ADHD head-banger on ecstasy because of the foreclosure moratorium, which started in October and has not really ended, the drain on the economy will be evident in 4th quarter GDP. If the government claims anything better than 1% growth for the 4th quarter (we won't know until the end of January, which is likely to already be too late), it will be another statistical lie, like most of the others they produce.
Jobs aren't being created, incomes aren't rising, and the economy limps along on the back of transfer payments like social security, veteran's benefits, disability payments, welfare and food stamps. The private sector is reeling already and a poor Christmas season could be the final knife-thrust that makes the economy tilt over and die.
NASDAQ Volume 2,039,983,750
NYSE Volume 4,865,655,000
The good news is that oil was also slammed to the earth, losing $2.93 (3.34%), to $84.88. Most other commodities also suffered deep declines, such as cotton, live hogs, corn, wheat, soybeans and live cattle. It's almost as though the force of deflation came back with a vengeance in opposition to the policy missteps of the Federal Reserve. Real damage was seen in the precious metals, though these moves were more likely caused by JP Morgan meddling in silver and profit taking in gold. Silver was last quoted at $26.05, down $1.63, a huge move. Gold fell $40.30, to $1368.60.
If, on Monday, the sun rises in the East and the markets are open, we may be in for more downside, the result of decades of corruption and fraud coming home to roost. Or, the manipulators in charge could just manufacture a rally out of thin air.
They print money, don't they?
Thursday, November 11, 2010
Grantham Calls Fed Manipulator; Cisco Cramps Tech
Many of us in the business of watching and reporting on the markets and money make light of CNBC - and for good reason - but sometimes, as in Maria Bartiroma's interview below with Jeremy Grantham, they bring to light some of the more terrifying aspects of our world, such as, as Grantham sates, without prodding, "the Fed has spent most of the last fifteen, twenty years manipulating the stock market."
Wow! Now, if anybody has taken issue with my frequent claims that US stock markets are manipulated, I urge them to take it up with Sir Grantham, one of the world's brightest and most influential economic minds. Since my views - often called radical or conspiratorial - mirror his, then maybe it's time people begin paying just a little more attention to the dangers we face now, in the near term and in our long-term future.
Please, please, please, watch the video, at least the first ten minutes. We should all be protesting against the Fed and the do-nothing congress. Sadly, most of America is either too misinformed by our compromised mainstream media, or completely uninformed, or too busy trying to make ends meet in an economic climate that is crushing the middle and lower classes, to do anything.
Keeping up on the recurrent theme of "oligarchies versus the people," protests in Germany have driven police forces close to their breaking point. The German people are fed up with government and media lies. Americans would be well-advised to keep up with events in Europe as a precursor to what will - when it's already too late - eventually happen here.
German people in unprecedented rebellion against government: 1000 injured in protests in nuclear protests: police at breaking point
As for the markets, the crooks were in early today, snatching up shares as the market opened at session lows. This is surely a sign of manipulation, as trapped sellers were forced out of stocks while the organized crime gang quietly bought at reduced prices. The NASDAQ, as a case n point, was down 44 points within the first seven minutes, but gradually gained ground all day.
The poor open was due largely to Cisco (CSCO), which reported earnings after the close on Wednesday, and had a generally good quarter, but CEO John Chambers drastically cut forecasts which sent the stock to 17-month lows, closing down 16% for the day at 20.52. The volume - 10 times normal - accounted for much of the high volume figure on the NASDAQ. It was an absolute tech bloodbath and Chambers' remarks a full repudiation of the markets and all discussion of US economic recovery.
The closing prices marked the third down day out of the past four, a condition not seen since August. Stocks are on track to post their first weekly loss in nine weeks, though with the first of many injections of liquidity by the Fed beginning tomorrow, nobody really can tell if stocks are headed lower or if the Fed intervention will save the day and the week.
The Fed's QE is such a mammoth distortion ($105 billion through December 9 just for openers) that it's difficult to tell traders that stocks are overvalued, some wildly so. It will have to be played out according to the whims and whirring of the computer algos which direct most (upwards of 70%) of the trading. The grand experiment begins in earnest tomorrow with a $6 billion injection of phony money, created at the press of a button at the Federal Reserve.
Dow 11,283.10, -73.94 (0.65%)
NASDAQ 2,555.52, -23.26 (0.90%)
S&P 500 1,213.54, -5.17 (0.42%)
NYSE Composite 7,723.24, -24.22 (0.31%)
Declining issues hammered advancers, 4191-2217, though it could have been much worse. Decliners led advancers by a margin greater than 3:1 in the early going before the machines caught onto the inherent buying opportunity. The gap between new highs and new lows continued to narrow, with 349 new highs and 73 new lows. Volume was poor on the NYSE, but, as mentioned above, higher on the NASDAQ due to the outlandish trading in Cisco.
NASDAQ Volume 2,467,640,250
NYSE Volume 4,389,113,000
Oil closed completely flat at $87.81, but the precious metals got back to their appreciative ways. Gold printed at $1409.90, a gain of $6.50, while silver posted a solid 62 cent gain, to $27.76. There is no holding back silver at this point. A price of $30 by year's end is almost baked in, with most experts in the market viewing $45-50 as a target for 2011. It's possibly the most misunderstood commodity on the planet and still trades at an enormous discount to gold, far outside historical norms of 15-17 times.
Today being Veteran's Day, bond markets were closed, so there may have been more of a focus on equities than normal. That said, if you haven't already done so, treat a veteran kindly today or remember those who have served and gone on to greener pastures. They sacrificed for the sake of their fellow man, a calling of which there is no higher honor.
Wow! Now, if anybody has taken issue with my frequent claims that US stock markets are manipulated, I urge them to take it up with Sir Grantham, one of the world's brightest and most influential economic minds. Since my views - often called radical or conspiratorial - mirror his, then maybe it's time people begin paying just a little more attention to the dangers we face now, in the near term and in our long-term future.
Please, please, please, watch the video, at least the first ten minutes. We should all be protesting against the Fed and the do-nothing congress. Sadly, most of America is either too misinformed by our compromised mainstream media, or completely uninformed, or too busy trying to make ends meet in an economic climate that is crushing the middle and lower classes, to do anything.
Keeping up on the recurrent theme of "oligarchies versus the people," protests in Germany have driven police forces close to their breaking point. The German people are fed up with government and media lies. Americans would be well-advised to keep up with events in Europe as a precursor to what will - when it's already too late - eventually happen here.
German people in unprecedented rebellion against government: 1000 injured in protests in nuclear protests: police at breaking point
As for the markets, the crooks were in early today, snatching up shares as the market opened at session lows. This is surely a sign of manipulation, as trapped sellers were forced out of stocks while the organized crime gang quietly bought at reduced prices. The NASDAQ, as a case n point, was down 44 points within the first seven minutes, but gradually gained ground all day.
The poor open was due largely to Cisco (CSCO), which reported earnings after the close on Wednesday, and had a generally good quarter, but CEO John Chambers drastically cut forecasts which sent the stock to 17-month lows, closing down 16% for the day at 20.52. The volume - 10 times normal - accounted for much of the high volume figure on the NASDAQ. It was an absolute tech bloodbath and Chambers' remarks a full repudiation of the markets and all discussion of US economic recovery.
The closing prices marked the third down day out of the past four, a condition not seen since August. Stocks are on track to post their first weekly loss in nine weeks, though with the first of many injections of liquidity by the Fed beginning tomorrow, nobody really can tell if stocks are headed lower or if the Fed intervention will save the day and the week.
The Fed's QE is such a mammoth distortion ($105 billion through December 9 just for openers) that it's difficult to tell traders that stocks are overvalued, some wildly so. It will have to be played out according to the whims and whirring of the computer algos which direct most (upwards of 70%) of the trading. The grand experiment begins in earnest tomorrow with a $6 billion injection of phony money, created at the press of a button at the Federal Reserve.
Dow 11,283.10, -73.94 (0.65%)
NASDAQ 2,555.52, -23.26 (0.90%)
S&P 500 1,213.54, -5.17 (0.42%)
NYSE Composite 7,723.24, -24.22 (0.31%)
Declining issues hammered advancers, 4191-2217, though it could have been much worse. Decliners led advancers by a margin greater than 3:1 in the early going before the machines caught onto the inherent buying opportunity. The gap between new highs and new lows continued to narrow, with 349 new highs and 73 new lows. Volume was poor on the NYSE, but, as mentioned above, higher on the NASDAQ due to the outlandish trading in Cisco.
NASDAQ Volume 2,467,640,250
NYSE Volume 4,389,113,000
Oil closed completely flat at $87.81, but the precious metals got back to their appreciative ways. Gold printed at $1409.90, a gain of $6.50, while silver posted a solid 62 cent gain, to $27.76. There is no holding back silver at this point. A price of $30 by year's end is almost baked in, with most experts in the market viewing $45-50 as a target for 2011. It's possibly the most misunderstood commodity on the planet and still trades at an enormous discount to gold, far outside historical norms of 15-17 times.
Today being Veteran's Day, bond markets were closed, so there may have been more of a focus on equities than normal. That said, if you haven't already done so, treat a veteran kindly today or remember those who have served and gone on to greener pastures. They sacrificed for the sake of their fellow man, a calling of which there is no higher honor.
Wednesday, November 10, 2010
Fed Plans Not Going So Smoothly; Harrisburg, PA on the Edge
Since the Federal Reserve announced last Wednesday that they would be injecting $600-900 billion into the monetary system through outright purchases of Treasury bond issuance, the cacophony of protest and derision has been boisterous and unrelenting. Chairman Ben Bernanke's purposeful nuking of the value of the world's reserve currency, the US Dollar, has raised eyebrows and voices from Shanghai to Sao Paulo as global finance leaders attempt to adjust their currencies to meet the expected influx of freshly-printed greenbacks.
Along with complaints from the global financial community, voices inside the United States have also weighed in, mostly condemning the action as unneeded, unwanted and eventually, inflationary.
What's worse, it doesn't seem to be working very well, as evidenced by today's 30-year bond auction, which saw lowered levels of participation and the highest yield in five months, exactly the opposite of what the liquidity tsunami was supposed to accomplish.
It's likely too early to tell, as the Fed has only today set down their Tentative Outright Treasury Operation Schedule, or TOTO, which as we all know, was the name of Dorothy's little dog in the movie, "The Wizard of Oz," an appropriate, if not slightly cynical metaphor for Mr. Bernanke standing behind a curtain pulling the levels and strings of the global economy.
Interested investors may want to print out the Fed's schedule as it should provide some guidance into which days would be better to buy or sell (warning: the Fed does not want you to sell) stocks. Those days with "operations" should be the prime selling days, and those without, opportunities to buy as the market will, no doubt, be on hold or falling. So much for free, fair and open markets. The Fed's interventionist policies have made Wall Street even more of a casino than it already was, and now they're using stocked decks and loaded die.
Things got off to another bad start for Bennie and his buddies this morning, as stocks backslid right out of the open, with the Dow falling 91 points, to its low of the day, shortly after 10:00 am. After that, however, with the banks holding firmly to the silver shorts which torpedoed a wicked rally in the precious metals late yesterday, it was once again off to the races, though the markets' pace more resembled that of a snail than a thoroughbred.
After two days of losses, the markets shrugged off middling new unemployment claims at 435,000 (below estimates, but sure to be revised higher next week), and, having convinced the sixteen suckers still trading via their e-trade accounts that the direction was negative, began the process of fleecing the sheep, all led to slaughter by the Fed-Wall Street money crunching machine.
Dow 11,357.04, +10.29 (0.09%)
NASDAQ 2,578.78, +15.80 (0.62%)
S&P 500 1,218.71, +5.31 (0.44%)
NYSE Composite 7,747.46, +45.15 (0.59%)
NASDAQ Volume 2,023,686,125
NYSE Volume 5,268,140,500
Advancing issues turned the tide on decliners, 4158-2329. New highs numbered only 362, a notable change from the kinds of numbers reported over the past three weeks. Only 49 stocks made new lows. Volume was right about average on a day in which the dollar was up against most other currencies.
So, the Fed may be getting what it wants when it turns on the money spigot on Friday with the first of 18 monetary injections. They'll keep at it every day except the days immediately before and after Thanksgiving, for a total of about $105 billion, through December 9. If that doesn't get stocks flying higher than a redneck on meth, nothing will, and that's just the Fed's point, to make asset values climb, staving off the dastardly deflation, a condition that would suit most Americans just fine. A big THANK YOU VERY MUCH to Mr. Bernanke from the middle class.
Most commodity prices are already much higher than they were just two months ago, when Bernanke first began to whisper loudly about the now-imminent liquidity push. Cotton, corn, wheat and almost all foodstuffs have been on a tear, so much so that the exchanges have been slapping on tighter margin requirements for many.
Crude oil was up $1.09 on the day, to a 2010 high of $87.81. Just in time for Christmas, the Fed's policies are about to send gas prices through the roof. Thanks again, Mr. Ben! After yesterday's drubbing, gold gained $10.70, to $1403.40 at last print. Silver also caught a bid, trading at $27.14, up 19 cents on the day.
Meanwhile in the aftermath of mortgage insurer Ambac's bankruptcy filing Monday (and delisting as of today),the city of Harrisburg, PA, the state capitol, hired the law firm of Cravath, Swaine & Moore to advise on a potential municipal bankruptcy, which has been rumored for many months. with the fall of Ambac, the dominoes may begin tumbling, first among other mortgage insurers, then to municipalities and into credit default swaps mostly in the hands of the nation's largest banks.
Considering the timing of the Fed's dramatic money creation scheme, might these funds be nothing more than a backdoor backstop to the banks again? They certainly were aware of Ambac's condition and that of the handful of other illiquid mortgage insurers. If this were the case, then all bets are off concerning market gains, as the money will never see the light of day. It will be parceled out among the nation's greatest criminals to cover their corrosive and rapidly depreciating swaps and guarantees between each other.
While Ambac's portfolio may be only a few billion short, the forward effect is to cause other defaults along the chain, and once the genie gets out of the unregulated CDS bottle, there's likely no putting her back in. The cascading effect of illiquid assets turning enterprises wholly insolvent could happen within split seconds, without warning, and it's already apparent that the band-aids applied to the insolvent banks thus far have not proved remedial.
Higher interest rates on Treasuries going forward will be a sure sign that the financial structure is about to topple, with over $600 TRILLION of notional exposure ready to come crashing down. This is the conditions under which we watch our financial markets these final days of 2010. If Bernanke's plan does not cause stocks to rise, interest rates to fall and general inflation (bad enough), it's a safe bet that financial reckoning day may come sooner rather than later.
Tracing out the scenario, the Fed would probably not allow everything to simply collapse in a heap. After a few days of severe declines in the stock markets, highlighted by drops in financial stocks, the president would likely call a bank holiday stretching anywhere from a week to a month in an effort toward calmness. Unfortunately, the effect of that would be wide-eyed panic, as most people would be without cash and maybe denied access to credit cards as well.
After that, who knows? Emergency powers? Martial law? A complete overhaul of the Fed and Treasury? The ripples would be worldwide.
It's the nightmare scenario, but in the current climate, the possibility of a massive failure is possible and palpable.
Along with complaints from the global financial community, voices inside the United States have also weighed in, mostly condemning the action as unneeded, unwanted and eventually, inflationary.
What's worse, it doesn't seem to be working very well, as evidenced by today's 30-year bond auction, which saw lowered levels of participation and the highest yield in five months, exactly the opposite of what the liquidity tsunami was supposed to accomplish.
It's likely too early to tell, as the Fed has only today set down their Tentative Outright Treasury Operation Schedule, or TOTO, which as we all know, was the name of Dorothy's little dog in the movie, "The Wizard of Oz," an appropriate, if not slightly cynical metaphor for Mr. Bernanke standing behind a curtain pulling the levels and strings of the global economy.
Interested investors may want to print out the Fed's schedule as it should provide some guidance into which days would be better to buy or sell (warning: the Fed does not want you to sell) stocks. Those days with "operations" should be the prime selling days, and those without, opportunities to buy as the market will, no doubt, be on hold or falling. So much for free, fair and open markets. The Fed's interventionist policies have made Wall Street even more of a casino than it already was, and now they're using stocked decks and loaded die.
Things got off to another bad start for Bennie and his buddies this morning, as stocks backslid right out of the open, with the Dow falling 91 points, to its low of the day, shortly after 10:00 am. After that, however, with the banks holding firmly to the silver shorts which torpedoed a wicked rally in the precious metals late yesterday, it was once again off to the races, though the markets' pace more resembled that of a snail than a thoroughbred.
After two days of losses, the markets shrugged off middling new unemployment claims at 435,000 (below estimates, but sure to be revised higher next week), and, having convinced the sixteen suckers still trading via their e-trade accounts that the direction was negative, began the process of fleecing the sheep, all led to slaughter by the Fed-Wall Street money crunching machine.
Dow 11,357.04, +10.29 (0.09%)
NASDAQ 2,578.78, +15.80 (0.62%)
S&P 500 1,218.71, +5.31 (0.44%)
NYSE Composite 7,747.46, +45.15 (0.59%)
NASDAQ Volume 2,023,686,125
NYSE Volume 5,268,140,500
Advancing issues turned the tide on decliners, 4158-2329. New highs numbered only 362, a notable change from the kinds of numbers reported over the past three weeks. Only 49 stocks made new lows. Volume was right about average on a day in which the dollar was up against most other currencies.
So, the Fed may be getting what it wants when it turns on the money spigot on Friday with the first of 18 monetary injections. They'll keep at it every day except the days immediately before and after Thanksgiving, for a total of about $105 billion, through December 9. If that doesn't get stocks flying higher than a redneck on meth, nothing will, and that's just the Fed's point, to make asset values climb, staving off the dastardly deflation, a condition that would suit most Americans just fine. A big THANK YOU VERY MUCH to Mr. Bernanke from the middle class.
Most commodity prices are already much higher than they were just two months ago, when Bernanke first began to whisper loudly about the now-imminent liquidity push. Cotton, corn, wheat and almost all foodstuffs have been on a tear, so much so that the exchanges have been slapping on tighter margin requirements for many.
Crude oil was up $1.09 on the day, to a 2010 high of $87.81. Just in time for Christmas, the Fed's policies are about to send gas prices through the roof. Thanks again, Mr. Ben! After yesterday's drubbing, gold gained $10.70, to $1403.40 at last print. Silver also caught a bid, trading at $27.14, up 19 cents on the day.
Meanwhile in the aftermath of mortgage insurer Ambac's bankruptcy filing Monday (and delisting as of today),the city of Harrisburg, PA, the state capitol, hired the law firm of Cravath, Swaine & Moore to advise on a potential municipal bankruptcy, which has been rumored for many months. with the fall of Ambac, the dominoes may begin tumbling, first among other mortgage insurers, then to municipalities and into credit default swaps mostly in the hands of the nation's largest banks.
Considering the timing of the Fed's dramatic money creation scheme, might these funds be nothing more than a backdoor backstop to the banks again? They certainly were aware of Ambac's condition and that of the handful of other illiquid mortgage insurers. If this were the case, then all bets are off concerning market gains, as the money will never see the light of day. It will be parceled out among the nation's greatest criminals to cover their corrosive and rapidly depreciating swaps and guarantees between each other.
While Ambac's portfolio may be only a few billion short, the forward effect is to cause other defaults along the chain, and once the genie gets out of the unregulated CDS bottle, there's likely no putting her back in. The cascading effect of illiquid assets turning enterprises wholly insolvent could happen within split seconds, without warning, and it's already apparent that the band-aids applied to the insolvent banks thus far have not proved remedial.
Higher interest rates on Treasuries going forward will be a sure sign that the financial structure is about to topple, with over $600 TRILLION of notional exposure ready to come crashing down. This is the conditions under which we watch our financial markets these final days of 2010. If Bernanke's plan does not cause stocks to rise, interest rates to fall and general inflation (bad enough), it's a safe bet that financial reckoning day may come sooner rather than later.
Tracing out the scenario, the Fed would probably not allow everything to simply collapse in a heap. After a few days of severe declines in the stock markets, highlighted by drops in financial stocks, the president would likely call a bank holiday stretching anywhere from a week to a month in an effort toward calmness. Unfortunately, the effect of that would be wide-eyed panic, as most people would be without cash and maybe denied access to credit cards as well.
After that, who knows? Emergency powers? Martial law? A complete overhaul of the Fed and Treasury? The ripples would be worldwide.
It's the nightmare scenario, but in the current climate, the possibility of a massive failure is possible and palpable.
Tuesday, November 9, 2010
There's Something Very Wrong and the Tea Party Knows It
Stocks were down for the second straight session, as criticism of the Federal Reserve's recently-announced QE2 has ramped up and is nearing a fever pitch. While the Fed seeks to embark on another round of handing easy money to criminals on Wall Street, the rest of the world is not exactly enamored with Chairman Ben Bernanke.
Europe is beset with its own problems, stemming from unstable, out-of-control government spending in the PIIGS countries, but particularly Ireland and Portugal, which have gone from bad to mush worse over the past six months. That has kept the US dollar from appreciating against the Euro to any great degree, only because money seeks its safest refuge, and in currency markets, the US still appears to be a safer bet than most of Europe.
The Chinese expressed their displeasure by having their ratings agency, Dagong Global Credit Rating Co. Ltd cut the U.S. local and foreign currency long-term sovereign credit rating to A-plus from AA.
Throughout the day, stocks were sent lower as gold and silver, especially, caromed ever higher, with gold spiking to $1425.50 and silver hitting $29.38. By the end of the day, however, the fiat money-makers had had enough and the CME announced an increase in margin requirements to buy silver from $5000 per contract to $6500 (silver is traded in 5000 oz. increments).
That may have been cover for some serious naked shorting of both gold and silver, because while it may explain the late day selloff in silver, it would have had little effect on gold, which also crashed late in the day (see chart at right). At the moment, the bid on gold is $1393.00, and silver has been smashed down to $26.95. The obvious take-away is that the Bernanke put - his $600-900 billion in USSS created right out of thin air, is receiving some serious competition from real money, that being gold and silver, and the Fed, through their proxies on the trading floors had to do something.
They're likely to try to tamp down gold and silver prices in order to garner more bids on their beloved US stock markets, though it's unclear at this time whether anything they do can stem the tide rising against them. In the long run, though most people will never notice, gold and silver are going to become the basis for currency, not Federal Reserve Notes (FRNs) and debt. Sides are being drawn and this battle will end with few winners. Most of the losers will be stockholders and owners of paper currencies. Gold and silver - as they have over thousands of years - will prevail.
Dow 11,346.75, -60.09 (0.53%)
NASDAQ 2,562.98, -17.07 (0.66%)
S&P 500 1,213.40, -9.85 (0.81%)
NYSE Composite 7,702.31, -79.89 (1.03%)
NASDAQ Volume 2,204,733,500
NYSE Volume 5,605,771,500
Declining issues rocked advancers, 4709-1789. There were still 777 new highs to a paltry 82 new lows, but volume was much higher than yesterday's session and better than most days during the run-up of the past two months, a discouraging sign for stock investors, but probably the best news for the long-term, in which the stock market becomes a game of last-man standing.
Oil even came down for a change, dropping 34 cents, to $86.72, and if the stock market continues to slide, expect oil to diverge from gold and silver, following stocks down the deflationary path. Bernanke's big money bet notwithstanding, the next few weeks and into the end of the year may be very hazardous times for trading in anything.
With a pickup of sixty seats in the House, the Republican party has taken control, spurred onward by the success of anywhere from 30-40 Tea Party candidates. In the wide-ranging report from PBS below, some of the nuances are Rand Paul's hint that he may cut federal employee paychecks by 10%, Utah Senator Mike Lee pondering a constitutional amendment to balance the budget, cut the Department of Education and voting NO on raising the debt ceiling, a vote that is likely to come up early in the next term (March-May, 2011).
Europe is beset with its own problems, stemming from unstable, out-of-control government spending in the PIIGS countries, but particularly Ireland and Portugal, which have gone from bad to mush worse over the past six months. That has kept the US dollar from appreciating against the Euro to any great degree, only because money seeks its safest refuge, and in currency markets, the US still appears to be a safer bet than most of Europe.
The Chinese expressed their displeasure by having their ratings agency, Dagong Global Credit Rating Co. Ltd cut the U.S. local and foreign currency long-term sovereign credit rating to A-plus from AA.
Throughout the day, stocks were sent lower as gold and silver, especially, caromed ever higher, with gold spiking to $1425.50 and silver hitting $29.38. By the end of the day, however, the fiat money-makers had had enough and the CME announced an increase in margin requirements to buy silver from $5000 per contract to $6500 (silver is traded in 5000 oz. increments).
They're likely to try to tamp down gold and silver prices in order to garner more bids on their beloved US stock markets, though it's unclear at this time whether anything they do can stem the tide rising against them. In the long run, though most people will never notice, gold and silver are going to become the basis for currency, not Federal Reserve Notes (FRNs) and debt. Sides are being drawn and this battle will end with few winners. Most of the losers will be stockholders and owners of paper currencies. Gold and silver - as they have over thousands of years - will prevail.
Dow 11,346.75, -60.09 (0.53%)
NASDAQ 2,562.98, -17.07 (0.66%)
S&P 500 1,213.40, -9.85 (0.81%)
NYSE Composite 7,702.31, -79.89 (1.03%)
NASDAQ Volume 2,204,733,500
NYSE Volume 5,605,771,500
Declining issues rocked advancers, 4709-1789. There were still 777 new highs to a paltry 82 new lows, but volume was much higher than yesterday's session and better than most days during the run-up of the past two months, a discouraging sign for stock investors, but probably the best news for the long-term, in which the stock market becomes a game of last-man standing.
Oil even came down for a change, dropping 34 cents, to $86.72, and if the stock market continues to slide, expect oil to diverge from gold and silver, following stocks down the deflationary path. Bernanke's big money bet notwithstanding, the next few weeks and into the end of the year may be very hazardous times for trading in anything.
With a pickup of sixty seats in the House, the Republican party has taken control, spurred onward by the success of anywhere from 30-40 Tea Party candidates. In the wide-ranging report from PBS below, some of the nuances are Rand Paul's hint that he may cut federal employee paychecks by 10%, Utah Senator Mike Lee pondering a constitutional amendment to balance the budget, cut the Department of Education and voting NO on raising the debt ceiling, a vote that is likely to come up early in the next term (March-May, 2011).
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