In the current environment, market participants will rationalize anything bad into something good.
A case in point was the big miss of expectations by FedEx (FDX) on their fiscal second quarter results. Consensus estimates of 1.31 per share was greeted this morning - prior to the opening bell - with an announcement of 1.16 per share. The company also narrowly missed on revenue, but that was not the issue.
Normally, a miss like this (-12%) would send a stock price reeling, but in today's POMO-led, funny-money, can't-go-down-before-options-expire pirate market, FedEx actually opened lower, hitting what were to be the absolute lows of the day within minutes, but then exploded to the upside. Within fifteen of the opening bell, FedEx was trading up by more than 1.5 points and finished the day with a gain of 1.83.
Now, the rationalization is that the miss was caused by onerous things like employee compensation, and the company restated full-year projections much higher to offset the blow, but, the fact that everybody trading in the stock was pleased is without doubt part of a rigged system that cannot be trusted. Logic has been thrown out the window repeatedly, yet keeps finding its way back in, only to be tossed away again and again. This one is egregious to the extreme.
So, stocks shrugged off the bad news and went with their gut, incidentally tied to cashing out huge on options expiration tomorrow and then calling it quits for the year - all conveniently planned in advance.
Dow 11,499.25, +41.78 (0.36%)
NASDAQ 2,637.31, +20.09 (0.77%)
S&P 500 1,242.87, +7.64 (0.62%)
NYSE Composite 7,840.24, +41.46 (0.53%)
Advancing issues reversed the prior two days of embarrassment, drubbing decliners, 4406-2105. NASDAQ New Highs: 172; Lows: 24; NYSE New Highs: 118; Lows: 25. This puts two days of Hindenberg Omen calculus (appearance and confirmation) to rest for now, though the next 40 days remain in focus. Volume was sloppily low again, as usual, even more so, considering the closeness to options expiration (tomorrow).
NASDAQ Volume 1,750,373,125
NYSE Volume 4,863,573,500
Commodities oddly took it on the chin, with oil continuing a slow death march, down another 92 cents, to $87.70, though still well above average for 2010. However, since it is the holidays and people aren't driving all over the place to buy gifts they don't need for people they don't like, the oil barons have to make money somehow, don't they? So, they've done what every hard-knuckled oil baron would do in distressing times, bump the price up a notch or two. Watch how it comes down in January, like clockwork.
Precious metals were hammered down mercilessly for the better part of the day, but recovered as the stock market headed for the close (no coincidence there). Gold is currently down $9.90, at $1369.50, and silver was beaten until just after noon, now trading at $28.88, a gain of 8 cents.
Friday is a quadruple witching day, though the focus will be on stocks, buttressing the bonuses of wall Street's elite traders. After that, anybody's guess, but the market sure looks rich now, since it looked rich three months, six months and nine months ago as well.
One after-hours note: The Federal Reserve, as part of the Dodd-Frank legislation, proposed slashing interbank fees (fees charged to retailers on debit card transactions) from the current average of 44 cents (they charge 1.2 - 1/5% currently) to a structure which caps fees at 12 cents per transaction. The proposal is embraced by consumers and retailers, though Visa and Mastercard shares were smacked down on the news. What a shame!
Thursday, December 16, 2010
Wednesday, December 15, 2010
Dead Money
Dow 11,457.47, -19.07 (0.17%)
NASDAQ 2,617.22, -10.50 (0.40%)
S&P 500 1,235.23, -6.36 (0.51%)
NYSE Composite 7,798.78, -56.44 (0.72%)
NASDAQ Volume 1,876,932,000
NYSE Volume 5,043,671,500
The numbers tell just about the whole story of today's uneventful trading. With just two weeks left in the year and Christmas now just ten days off, traders seem reluctant to take on new positions. Stocks are trading in a narrow range and for the third consecutive day, have sold off into the close, not a very encouraging sign.
Declining issues outpaced advancers, 4197-2299. On the NASDAQ, new highs bettered new lows, 167-32 and on the NYSE, 156-89, as convergence continues, especially on the NYSE. Volume was actually a little better than the low, low normal, and, with options expiring on Friday, the suspicion is that the smart money has already exited the trading area.
There simply is no catalyst for stocks besides the Fed's relentless pumping (another $6.8 billion today) and even that isn't enough to keep stocks positive. It raises the question of extending the Bush tax cuts and adding further stimulus by the congress. If conditions were so rosy, why the need for more easing on the fiscal side. Obviously, something is amiss.
One guess will be that the Christmas shopping season will be a minor disappointment, as will December jobs numbers, revealed the first week of January. Then there's the issue of corporate profits nearing the middle to end of the month. If they're not perfectly great, selling could become de rigeur.
Even commodities weren't moving today. Oil made a modest gain, up 34 cents, to $88.62. Gold fell sharply, losing $18.40, to $1,386.20. Silver slipped back another 54 cents, to $29.25.
It all looks very much like locking in year-end profits.
NASDAQ 2,617.22, -10.50 (0.40%)
S&P 500 1,235.23, -6.36 (0.51%)
NYSE Composite 7,798.78, -56.44 (0.72%)
NASDAQ Volume 1,876,932,000
NYSE Volume 5,043,671,500
The numbers tell just about the whole story of today's uneventful trading. With just two weeks left in the year and Christmas now just ten days off, traders seem reluctant to take on new positions. Stocks are trading in a narrow range and for the third consecutive day, have sold off into the close, not a very encouraging sign.
Declining issues outpaced advancers, 4197-2299. On the NASDAQ, new highs bettered new lows, 167-32 and on the NYSE, 156-89, as convergence continues, especially on the NYSE. Volume was actually a little better than the low, low normal, and, with options expiring on Friday, the suspicion is that the smart money has already exited the trading area.
There simply is no catalyst for stocks besides the Fed's relentless pumping (another $6.8 billion today) and even that isn't enough to keep stocks positive. It raises the question of extending the Bush tax cuts and adding further stimulus by the congress. If conditions were so rosy, why the need for more easing on the fiscal side. Obviously, something is amiss.
One guess will be that the Christmas shopping season will be a minor disappointment, as will December jobs numbers, revealed the first week of January. Then there's the issue of corporate profits nearing the middle to end of the month. If they're not perfectly great, selling could become de rigeur.
Even commodities weren't moving today. Oil made a modest gain, up 34 cents, to $88.62. Gold fell sharply, losing $18.40, to $1,386.20. Silver slipped back another 54 cents, to $29.25.
It all looks very much like locking in year-end profits.
Tuesday, December 14, 2010
Fed, ZIRP, QE2 Pumps Dow to Highest Close in 27 Months
Since the economy is still looking like something out of a B-grade horror flick, the Fed can take credit for one thing, at least, pumping stocks to levels not since they were going down, two years ago. The Dow Jones Industrials closed at its highest point since September 8 of 2008, when it closed at 11,510.74, on it's way to its eventual bottom on March 8, 2009, of 6547.05.
Today's close of 11,476.54 represents an overall 21-month gain from the bottom, of 75%, one of the most tremendous performances by the stock market in history. However, as we learned in 2008, these gains are largely transitory, on paper, unreal, and can be wiped out in a matter or weeks or months. Further, they have been fostered by trillions of dollars in bailouts, stimulus, fraud and deception on top of an economy that can't seem to move off square one, never mind creating any jobs for real, working Americans.
If it all seems somehow out of whack, it's largely because it is. Between TARP, QE, QE2 and two stimulus plans, the government - and the Fed - has gone deeply into debt and the burden pushed onto the taxpayer in the form of an overgrown public debt and federal budget deficits of over a trillion dollars a year for as far as the eye can see.
Meanwhile, the housing and manufacturing sectors of the economy have been shattered. Home prices are down 25-30% since 2006 on a national basis, with some areas - particularly Nevada, California, Florida and Michigan - experiencing deeper declines. Manufacturing has shed nearly 500,000 businesses since the early 2000s, along with more than 10 million jobs.
Unemployment, even narrowly defined by the BLS, is approaching 10%, though true measures of employment in America put the number closer to 20%, with some estimates ranging as high as 27%. In effect, about one in four able-bodied American under the age of 65 is not gainfully employed full time. This is a condition which cannot continue. High unemployment renders us a welfare state, complete with all the nasty side-effects: high crime rates, rising death rates, lower educational standards and a permanent underclass which now is beginning to occupy the outskirts of major cities across the country and especially in the South and Southwest. Homeless people tend to gather where it's warm enough to sleep out-of-doors, and the numbers are beginning to become staggering statistics.
The FOMC voted today to keep interest rates at ZERO to .25% for the 27th month in a row, neatly matching up with the collapse of the stock market, so, while the Fed has failed on multiple fronts, they get a big round of applause from Wall Street, as the only group seemingly doing just fine are bailed-out bankers and the corporate crack in which they traffic.
The only other measurable group doing well would be coin and bullion dealers and collectors, as gold and silver coins and bullion have appreciated at rates dwarfing stock market gains since 2000. Essentially, both precious metals have quadrupled in price over the past decade and silver, in particular, seems to be just getting started on a lengthy bull run. So long as the Fed keeps monetizing the debt and the banks fail to record and write down their losses, the metals will outperform all other asset classes.
Today's gains were once again truncated by late-day selling, after the FOMC announcement. There's little faith left in equities, as they nervously approach levels which are unsustainable in the current environment. Traders are counting the hours down to the year's end, after which they can make adjustments in January, but we're not quite there yet.
Dow 11,476.54, +47.98 (0.42%)
NASDAQ 2,627.72, +2.81 (0.11%)
S&P 500 1,241.59, +1.13 (0.09%)
NYSE Composite 7,855.22, +5.20 (0.07%)
NASDAQ Volume 1,767,595,125
NYSE Volume 4,579,517,500
Advancing issues trailer decliners, 3067-3346. New highs/lows on the NASDAQ were 158-23 and 176-113 on the NYSE. The high-lows are converging in a hurry, signaling that a major dell-off could occur within days. Volume remained weak. No news there.
Oil pulled back a little on the day, shedding 33 cents, to $88.28, though still close to 2-year highs. Gold was up most of the day, but barely hung onto a $1.40 gain, at $1395.90. Silver was also higher, but is now printing down 4 cents, at $29.51. This, after JP Morgan, in a terse statement, said they had trimmed their exposure to the silver market, the one they are accused of rigging for years and now the subject of a criminal class action suit.
Anecdotal evidence that the holiday shopping season is not at all robust got a kick of reality as Best Buy missed estimates by a wide margin, causing other electronics retailers and related industries to tumble.
Today's close of 11,476.54 represents an overall 21-month gain from the bottom, of 75%, one of the most tremendous performances by the stock market in history. However, as we learned in 2008, these gains are largely transitory, on paper, unreal, and can be wiped out in a matter or weeks or months. Further, they have been fostered by trillions of dollars in bailouts, stimulus, fraud and deception on top of an economy that can't seem to move off square one, never mind creating any jobs for real, working Americans.
If it all seems somehow out of whack, it's largely because it is. Between TARP, QE, QE2 and two stimulus plans, the government - and the Fed - has gone deeply into debt and the burden pushed onto the taxpayer in the form of an overgrown public debt and federal budget deficits of over a trillion dollars a year for as far as the eye can see.
Meanwhile, the housing and manufacturing sectors of the economy have been shattered. Home prices are down 25-30% since 2006 on a national basis, with some areas - particularly Nevada, California, Florida and Michigan - experiencing deeper declines. Manufacturing has shed nearly 500,000 businesses since the early 2000s, along with more than 10 million jobs.
Unemployment, even narrowly defined by the BLS, is approaching 10%, though true measures of employment in America put the number closer to 20%, with some estimates ranging as high as 27%. In effect, about one in four able-bodied American under the age of 65 is not gainfully employed full time. This is a condition which cannot continue. High unemployment renders us a welfare state, complete with all the nasty side-effects: high crime rates, rising death rates, lower educational standards and a permanent underclass which now is beginning to occupy the outskirts of major cities across the country and especially in the South and Southwest. Homeless people tend to gather where it's warm enough to sleep out-of-doors, and the numbers are beginning to become staggering statistics.
The FOMC voted today to keep interest rates at ZERO to .25% for the 27th month in a row, neatly matching up with the collapse of the stock market, so, while the Fed has failed on multiple fronts, they get a big round of applause from Wall Street, as the only group seemingly doing just fine are bailed-out bankers and the corporate crack in which they traffic.
The only other measurable group doing well would be coin and bullion dealers and collectors, as gold and silver coins and bullion have appreciated at rates dwarfing stock market gains since 2000. Essentially, both precious metals have quadrupled in price over the past decade and silver, in particular, seems to be just getting started on a lengthy bull run. So long as the Fed keeps monetizing the debt and the banks fail to record and write down their losses, the metals will outperform all other asset classes.
Today's gains were once again truncated by late-day selling, after the FOMC announcement. There's little faith left in equities, as they nervously approach levels which are unsustainable in the current environment. Traders are counting the hours down to the year's end, after which they can make adjustments in January, but we're not quite there yet.
Dow 11,476.54, +47.98 (0.42%)
NASDAQ 2,627.72, +2.81 (0.11%)
S&P 500 1,241.59, +1.13 (0.09%)
NYSE Composite 7,855.22, +5.20 (0.07%)
NASDAQ Volume 1,767,595,125
NYSE Volume 4,579,517,500
Advancing issues trailer decliners, 3067-3346. New highs/lows on the NASDAQ were 158-23 and 176-113 on the NYSE. The high-lows are converging in a hurry, signaling that a major dell-off could occur within days. Volume remained weak. No news there.
Oil pulled back a little on the day, shedding 33 cents, to $88.28, though still close to 2-year highs. Gold was up most of the day, but barely hung onto a $1.40 gain, at $1395.90. Silver was also higher, but is now printing down 4 cents, at $29.51. This, after JP Morgan, in a terse statement, said they had trimmed their exposure to the silver market, the one they are accused of rigging for years and now the subject of a criminal class action suit.
Anecdotal evidence that the holiday shopping season is not at all robust got a kick of reality as Best Buy missed estimates by a wide margin, causing other electronics retailers and related industries to tumble.
Monday, December 13, 2010
Twelve Days Until Retailers Call It a Day
If this weren't the most over-hyped Christmas season in the past six years, one would be wondering where all the ads are on TV. Retailers continue to proclaim that this year will be better than last year (which was pretty bad, in itself), that same-store sales are showing solid improvement and all the rest of the nonsense they banter about to shareholders and keepers of the materialist Christmas buying season creed.
But, with just twelve days to go before everybody stops shopping and actually opens the presents, there are some indications that this holiday season is going to be quite awful for many a retailer.
Here's a few reasons why:
Harder hit will be smaller, "mom-and-pop" type retailers, who generally have less room for error, tight - if any - lines of credit and no tolerance for losses. Retailing has been hit hard since the market collapse of 2008, and many small businesses fall into the retail category.
A little bit of good news is that some of these retailers may close their Main Street or mall shops, only to re-emerge online with business being run out of a home or less-expensive location. The trend from brick-and-mortar to online continues to grow and has actually been pushed by tight margins and high rents which plague many a retailer.
Still, when the country wakes up on December 26 and again in early January, only to find that the economy is still as sluggish as ever, there will be repercussions and more casualties.
Some of that sentiment may have been reflected in today's trading on the stock markets, which broke higher in the morning, peaked just before 3:00 pm and sold off hard into the close. It was an unexpected start to the week and may be offering a clue about tomorrow's 8:30 am retal sales release.
The Dow, NYSE and S&P registered marginal gains, closing at or near the lows of the session, while the NASDAQ broke an eight-day winning streak.
Dow 11,428.56, +18.24 (0.16%)
NASDAQ 2,624.91, -12.63 (0.48%)
S&P 500 1,240.46, +0.06 (0.00%)
NYSE Composite 7,850.02, +26.72 (0.34%)
Decliners beat advancers, 3459-3059. NASDAQ New Highs: 279; Lows: 19; NYSE New Highs: 271; Lows: 87. Volume was dull, as per usual.
NASDAQ Volume 1,853,841,375
NYSE Volume 4,861,153,000
The real action today was in the commodity space, which heated up once again with the Fed injecting $8.9 billion in fresh cash to the Primary Dealers through Treasury purchases. Oil advanced 82 cents, to $88.61. Prices for non-leaded regular gas are now over $3.00 per gallon in most of the United States. The most recent gold price was $1394.50, up $8.90. Silver had a huge rally, up 87 cents, to $29.55, and should break through the magic $30 mark this week if trends outlined by Turd Ferguson play out with resistance at 29.50 broken by today's close.
But, with just twelve days to go before everybody stops shopping and actually opens the presents, there are some indications that this holiday season is going to be quite awful for many a retailer.
Here's a few reasons why:
- "Same-store sales" are always measured against stores open a year or longer. Most of the larger retailers have already closed many non-or-under-performing stores, so the comparisons look better, even though there is less volume.
- November non-farm payrolls actually showed a decrease in November retail hiring, at a time which retailers are normally hiring more staff for the "Christmas rush." This is a troubling sign that there is no rush this year.
- Inflation has pushed up prices for many gift items, especially clothes, which are primarily made of cotton, which price went nearly exponential this year. Higher prices will result in high same-store sales, though buying the same sweater this year rather than last will cost 5-10% more, making it look like there were more sales when in fact there were not.
- On Friday, December 10, TJX Cos., the parent company of TJ Maxx, Marshall's and HomeGoods, announced the closing of 71 A. J. Wright stores and the conversion of 91 others into TJ Maxx or Marchall's stores, and permanent job cuts of 4400 nationwide.
- According to a BDO survey, 63% of retailers are spending what they did last year on advertising and marketing; 20% are spending less, and just 17% have increased their budgets over 2009.
- Retail sales for October were up 1.2% (ex-auto, 0.4), but November, the start of the holiday shopping season, is expected to show a gain of only 0.5%. The figures are due out on Tuesday, and anything less than that may cause investors to reconsider retailers in their investment strategies.
Harder hit will be smaller, "mom-and-pop" type retailers, who generally have less room for error, tight - if any - lines of credit and no tolerance for losses. Retailing has been hit hard since the market collapse of 2008, and many small businesses fall into the retail category.
A little bit of good news is that some of these retailers may close their Main Street or mall shops, only to re-emerge online with business being run out of a home or less-expensive location. The trend from brick-and-mortar to online continues to grow and has actually been pushed by tight margins and high rents which plague many a retailer.
Still, when the country wakes up on December 26 and again in early January, only to find that the economy is still as sluggish as ever, there will be repercussions and more casualties.
Some of that sentiment may have been reflected in today's trading on the stock markets, which broke higher in the morning, peaked just before 3:00 pm and sold off hard into the close. It was an unexpected start to the week and may be offering a clue about tomorrow's 8:30 am retal sales release.
The Dow, NYSE and S&P registered marginal gains, closing at or near the lows of the session, while the NASDAQ broke an eight-day winning streak.
Dow 11,428.56, +18.24 (0.16%)
NASDAQ 2,624.91, -12.63 (0.48%)
S&P 500 1,240.46, +0.06 (0.00%)
NYSE Composite 7,850.02, +26.72 (0.34%)
Decliners beat advancers, 3459-3059. NASDAQ New Highs: 279; Lows: 19; NYSE New Highs: 271; Lows: 87. Volume was dull, as per usual.
NASDAQ Volume 1,853,841,375
NYSE Volume 4,861,153,000
The real action today was in the commodity space, which heated up once again with the Fed injecting $8.9 billion in fresh cash to the Primary Dealers through Treasury purchases. Oil advanced 82 cents, to $88.61. Prices for non-leaded regular gas are now over $3.00 per gallon in most of the United States. The most recent gold price was $1394.50, up $8.90. Silver had a huge rally, up 87 cents, to $29.55, and should break through the magic $30 mark this week if trends outlined by Turd Ferguson play out with resistance at 29.50 broken by today's close.
Friday, December 10, 2010
As the World Turns... or, As the Fed Turns the World Into Trash
You really have to hand it to our genius Chairman of the Federal Reserve, Ben Bernanke. He's so smart, he managed to lose a couple billion dollars on his recent bond purchases. Not a problem for him, really, he's just another hired hand, but he's now openly adding to the national debt load, which, in case this needs repeating, is completely unpayable and out of control.
How did Uncle Benji lose $2.4 billion in a month, you ask? Maybe announcing the timing of his "buying spree" otherwise known as QE2, in advance, gave the Primary Dealers (those from whom he was purchasing) the opportunity to ramp up interest rates to their benefit (and the public's detriment). Would they do that? would execs at Goldman Sachs, Morgan Stanley or Merrill Lynch steal your grandmother's purse in broad daylight if she accidentally left it unguarded?
It's exactly what happened. Otherwise, why did interest rates spike the moment the Fed announced their POMO schedule? It's open theft on the American public. May the Fed and all member banks rot in the very worst of hells for eternity.
Making matters even more absurd and detrimental to the health of the US economy, the Fed today announced its latest schedule of market "operations," by which they will monetize another $105 billion of Treasury debt and thus fund the bankrupt banks with more easy money.
Equity markets responded as they should to easy money flows, with gains across the board in the major indices.
Dow 11,410.32, +40.26 (0.35%)
NASDAQ 2,637.54, +20.87 (0.80%)
S&P 500 1,240.40, +7.40 (0.60%)
NYSE Composite 7,823.30, +41.16 (0.53%)
Advancing issues overwhelmed decliners, 4334-2199. NASDAQ New Highs: 243; Lows: 28; NYSE New Highs: 203; Lows: 47. Unfortunately, many of the NYSE New Lows were bond funds, many the repositories of municipal pensions. As these lose money, debt crises in the various states continues to grow. In New York, California and Illinois, state budget deficits have reached crisis stage. Volume, overall, was miserable, as normal.
NASDAQ Volume 1,754,129,500.00
NYSE Volume 4,996,264,500
In the commodities space, a bit of a breather. Oil, thankfully, has backed off a bit after flirting with the $90 level, losing another 58 cents today, closing the week at $87.79. Gold's last print was at $1385.80, down $1.20. Silver was also relatively quiet, spending the entire day in the red, though down only 8 cents, at $28.68.
Finishing off a ho-hum kind of week (though admittedly, the Fed has us on the edge of our seats), the following animated video helps explain why JP Morgan Chase is rich, though maybe not for long, and why you should own as much physical silver as you can afford.
Hilarious video of how JP Morgan is up to its neck in short silver contracts with no good way out.
How did Uncle Benji lose $2.4 billion in a month, you ask? Maybe announcing the timing of his "buying spree" otherwise known as QE2, in advance, gave the Primary Dealers (those from whom he was purchasing) the opportunity to ramp up interest rates to their benefit (and the public's detriment). Would they do that? would execs at Goldman Sachs, Morgan Stanley or Merrill Lynch steal your grandmother's purse in broad daylight if she accidentally left it unguarded?
It's exactly what happened. Otherwise, why did interest rates spike the moment the Fed announced their POMO schedule? It's open theft on the American public. May the Fed and all member banks rot in the very worst of hells for eternity.
Making matters even more absurd and detrimental to the health of the US economy, the Fed today announced its latest schedule of market "operations," by which they will monetize another $105 billion of Treasury debt and thus fund the bankrupt banks with more easy money.
Equity markets responded as they should to easy money flows, with gains across the board in the major indices.
Dow 11,410.32, +40.26 (0.35%)
NASDAQ 2,637.54, +20.87 (0.80%)
S&P 500 1,240.40, +7.40 (0.60%)
NYSE Composite 7,823.30, +41.16 (0.53%)
Advancing issues overwhelmed decliners, 4334-2199. NASDAQ New Highs: 243; Lows: 28; NYSE New Highs: 203; Lows: 47. Unfortunately, many of the NYSE New Lows were bond funds, many the repositories of municipal pensions. As these lose money, debt crises in the various states continues to grow. In New York, California and Illinois, state budget deficits have reached crisis stage. Volume, overall, was miserable, as normal.
NASDAQ Volume 1,754,129,500.00
NYSE Volume 4,996,264,500
In the commodities space, a bit of a breather. Oil, thankfully, has backed off a bit after flirting with the $90 level, losing another 58 cents today, closing the week at $87.79. Gold's last print was at $1385.80, down $1.20. Silver was also relatively quiet, spending the entire day in the red, though down only 8 cents, at $28.68.
Finishing off a ho-hum kind of week (though admittedly, the Fed has us on the edge of our seats), the following animated video helps explain why JP Morgan Chase is rich, though maybe not for long, and why you should own as much physical silver as you can afford.
Hilarious video of how JP Morgan is up to its neck in short silver contracts with no good way out.
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