Just in case anybody thinks that Bernanke's QE2 program isn't working perfectly (in other words, shoveling billions of dollars to the nation's largest banks), a quick recap of today's headlines and the resultant market moves should suffice to argue that US stock markets have permanently divorced themselves from reality.
Initial jobless claims came in at 454,000 in the most recent week. The market was looking for 400,000. Oops! The official reason for the rise from last week's reported 403,000, and the highest number since October was snow. OK, we're officially not buying that.
Durable orders for December declined by 2.5%. Analysts were expecting a gain of 1.5%. After all, Christmas falls in December, and everybody got a Lexus, right?
As tensions mount in Egypt in advance of tomorrow's largest protest to date - led by former IAEA chief Mohamed ElBaradei - the US State Department has advised president Hosni Mubarak to remain calm, though the days of the strongman leader seem to be numbered. In the aftermath of the Tunesian revolution, Algeria and Yemen, along with Egypt, appear to be on the brink of revolt.
Apparently, this spate of less-than-encouraging news was insufficient for equity investors to seek investments with less risk. Maybe they - or the computers controlling the trading - are standing pat, awaiting the first announcement of 4th quarter GDP tomorrow at 8:30 am. The official estimate is that the US economy grew at a 3.8% annualized rate, after the third quarter came in at 2.6%. Those hoping for a strong GDP number may wish to recall that residential real estate nearly ground to a halt in the 4th quarter, due to the fruadclosure scandal and that's not a big positive. The number ought to be interesting, just to see how far the government will go to convince everyone that the recovery is real and continuing, when the facts say the recession never actually ended and the only place in the country feeling particularly good about things in in lower Manhattan.
Dow 11,989.83, +4.39 (0.04%)
NASDAQ 2,755.28, +15.78 (0.58%)
S&P 500 1,299.54, +2.91 (0.22%)
NYSE Composite 8,207.06, +13.42 (0.16%)
Major indices were all marginally higher on the day, though the psychological barriers at Dow 12,000 and S&P 1300 remained difficult to breach. Both indices briefly advanced into the beyond, but generally flatlined below those levels for the bulk of the session. Internals suggest an unconvinced market sentiment, with 3454 stocks advancing and 2964 declining.
There were 159 new highs and 14 new lows on the NASDAQ, while on the NYSE new highs led new lows, 252-9. Volume was slight, as usual.
NASDAQ Volume 2,033,972,000
NYSE Volume 4,773,436,000
Commodities were mostly beaten down, as NYMEX crude dipped another $1.69, continuing the recent trend, to $85.64. Gold also remained under pressure, dropping another $14.60, to $1,318.40, back to October, 2010 levels. Silver dropped 10 cents, to $27.03, well off the December highs of $31.
The disconnect between the markets and reality is palpable. The wheels came off a long time ago, but the sputtering US economy has yet to be reflected by the Fed-fueled stock markets. Something's got to give, and when it does, it should be big.
After hours, Amazon (AMZN) released 4th quarter earnings and investors were not amused, sending the stock down to 166.74 a loss of 17.71 (-9.60%) at 5:00 pm EDT.
Thursday, January 27, 2011
Wednesday, January 26, 2011
27 Months of ZIRP
For those not in the know, ZIRP stands for Zero Interest Rate Policy, the policy which the FOMC of the Federal Reserve reiterated again today, ensuring that the federal funds rate will remain at zero at least until March 15, the date of their next meeting, unless some exogenous event - unlikely - forces their hand in the interim.
The zero per cent federal funds rate obviously applies to banks only, those borrowing from the Federal Reserve. Sadly, you and I cannot receive such largesse. Were that the case, the conditions under which most Americans suffer - high debt and high rates - would be greatly alleviated.
Alas, that is not the mandate of the Fed, however. Their goal is - despite what they or their slaves in congress might tell us - to nuke the toxic assets and malinvestments made by the big national banks into some far away wasteland, never to be heard of or seen again. The problem is that the banks are not happy with the condition. They wish to have their cake and eat it too. Not only have they been made whole for their subprime scandals and toxic mortgage mistakes by the Fed, but they continue to hold onto these assets as though they are magic candy, sending out delinquency notices and foreclosing on families who cannot meet their demands for payment.
Would the banks simply stop playing their charade on the American public and just take the losses as they should, our economy could get moving again and interest rates would rise to some acceptable level - maybe three to four per cent - where everybody would be happy. Of course, that would necessitate some degree of pain to the likes of Citigroup, JP Morgan Chase and the rotten Bank of America (could they please change their name? It makes all of us US citizens look bad.) and that would simply not be acceptable.
This two-year old Fed policy of zero per cent interest on federal funds has been a complete failure. The economy continues to limp along, though money flows freely to Wall Street and the banks, on a daily, regular basis. Meanwhile, real unemployment remains at 18-20% (Great Depression levels), the federal government continues to run extraordinary deficits ($1.5 trillion for fiscal 2011), and homes remain unaffordable to the majority of Americans. If the banks would write down and write off their bad loans, the real estate market would crash, making homes more affordable than ever.
But it won't happen. Not with a nitwit in the White House and a gaggle of othr equally worthless politicians demanding the status quo remain in play. No banks go down, which means no growth in the economy.
So be it.
We've had ZIRP since December 2008, and will have it for the rest of his year, probably. The Fed has long ago run out of good ideas with which to fix a broken economy. Now would be a good time to abolish it.
Dow 11,985.44, +8.25 (0.07%)
NASDAQ 2,739.50, +20.25 (0.74%)
S&P 500 1,296.63, +5.45 (0.42%)
NYSE Composite 8,193.64, +52.51 (0.64%)
Advancers finished well ahead of declining issues, 4128-1605. On the NASDAQ, there were 160 new highs and just 13 new lows. The numbers on the NYSE were similar, 241-11. Volume was just a tad better on the NASDAQ. The NYSE might just as well have been closed. The Dow punctured the 12,000 mark, but couldn't hold it; party hats were deferred until another day.
NASDAQ Volume 2,047,729,500
NYSE Volume 4,812,036,000
The new March front end oil contract got bid up $1.14, to $87.33, a price that is largely unsustainable. NYMEX crude should be sitting at $70 or less per barrel. Anything above that acts as a tax on consumers and slows the economy further. Gold was actually higher, though only by 70 cents, to $1,333.00. Silver gained 32 cents, to $27.13, and seems to be stabilizing along with gold at these levels.
The Fed says there's no inflation (except for food and fuel). Obviously, they live in a different world than ours, where one neither has to eat, stay warm or drive a car. No wonder they're keeping interest rates at ZERO. It matches their collective IQ.
The zero per cent federal funds rate obviously applies to banks only, those borrowing from the Federal Reserve. Sadly, you and I cannot receive such largesse. Were that the case, the conditions under which most Americans suffer - high debt and high rates - would be greatly alleviated.
Alas, that is not the mandate of the Fed, however. Their goal is - despite what they or their slaves in congress might tell us - to nuke the toxic assets and malinvestments made by the big national banks into some far away wasteland, never to be heard of or seen again. The problem is that the banks are not happy with the condition. They wish to have their cake and eat it too. Not only have they been made whole for their subprime scandals and toxic mortgage mistakes by the Fed, but they continue to hold onto these assets as though they are magic candy, sending out delinquency notices and foreclosing on families who cannot meet their demands for payment.
Would the banks simply stop playing their charade on the American public and just take the losses as they should, our economy could get moving again and interest rates would rise to some acceptable level - maybe three to four per cent - where everybody would be happy. Of course, that would necessitate some degree of pain to the likes of Citigroup, JP Morgan Chase and the rotten Bank of America (could they please change their name? It makes all of us US citizens look bad.) and that would simply not be acceptable.
This two-year old Fed policy of zero per cent interest on federal funds has been a complete failure. The economy continues to limp along, though money flows freely to Wall Street and the banks, on a daily, regular basis. Meanwhile, real unemployment remains at 18-20% (Great Depression levels), the federal government continues to run extraordinary deficits ($1.5 trillion for fiscal 2011), and homes remain unaffordable to the majority of Americans. If the banks would write down and write off their bad loans, the real estate market would crash, making homes more affordable than ever.
But it won't happen. Not with a nitwit in the White House and a gaggle of othr equally worthless politicians demanding the status quo remain in play. No banks go down, which means no growth in the economy.
So be it.
We've had ZIRP since December 2008, and will have it for the rest of his year, probably. The Fed has long ago run out of good ideas with which to fix a broken economy. Now would be a good time to abolish it.
Dow 11,985.44, +8.25 (0.07%)
NASDAQ 2,739.50, +20.25 (0.74%)
S&P 500 1,296.63, +5.45 (0.42%)
NYSE Composite 8,193.64, +52.51 (0.64%)
Advancers finished well ahead of declining issues, 4128-1605. On the NASDAQ, there were 160 new highs and just 13 new lows. The numbers on the NYSE were similar, 241-11. Volume was just a tad better on the NASDAQ. The NYSE might just as well have been closed. The Dow punctured the 12,000 mark, but couldn't hold it; party hats were deferred until another day.
NASDAQ Volume 2,047,729,500
NYSE Volume 4,812,036,000
The new March front end oil contract got bid up $1.14, to $87.33, a price that is largely unsustainable. NYMEX crude should be sitting at $70 or less per barrel. Anything above that acts as a tax on consumers and slows the economy further. Gold was actually higher, though only by 70 cents, to $1,333.00. Silver gained 32 cents, to $27.13, and seems to be stabilizing along with gold at these levels.
The Fed says there's no inflation (except for food and fuel). Obviously, they live in a different world than ours, where one neither has to eat, stay warm or drive a car. No wonder they're keeping interest rates at ZERO. It matches their collective IQ.
Tuesday, January 25, 2011
Stick Save, and a Beauty!
The US stock markets are such a massive fraud. Not that other stock markets aren't, I simply don't know them well enough, though I can take a measured guess that there's some degree of flipidation or flamenomics in play. After all, these stock marketeers are all tied in with the TBTF banks in their own countries.
So what if the entire global banking system is just a huge fraud played upon the middle and lower classes by an elite upper class? Well, we would expect high prices, shoddy service, broken promises, an unsustainable drain from the most productive class element, working people. Were that not enough, the banks in America have brought us much more, as in blatant fraud, bailouts with taxpayer money, record bonuses for executives, voodoo accounting by which they artificially inflate their own earnings, all the time while they are technically insolvent.
Well, then what?
That would be a government overthrown in Tunesia, the nation of Iceland already defaulted, riots in Egypt and Ireland about to go ballistic, insurance companies suing banks, banks walking away from houses they don't want to own, states and municipalities suffering from reduced tax revenues, investigations into pension funds (though like all investigations conducted by government agencies, the result is usually negligible and never is any individual held civilly or criminally culpable), outlandish, never-before-seen federal deficits, an interest rate permanently plugged at ZERO, and a myriad of other social developments such as tent cities, rising bank robberies, wider social distress and general disagreement with government policies.
There isn't room in the blogosphere to represent the kind of damage being done by the Federal Reserve and Chinese central bank's endless money and credit creation (same thing), but the stock markets, supposedly acting as a barometer measuring corporate strength - while falsely implying that America is somehow better for this - are absurdly manipulated, controlled and corrupted.
Today's action is a pure case of intraday manipulation. Let's forget the past two paragraphs for a moment. They're there, they're real, but they apparently don't matter to stocks, because, if they did, stocks would not have staged the dramatic recovery it did today, most of it in the last fifteen minutes of trading.
Just for the record, at the lows for the day, the Dow was down more than 80 points, the S&P was off 10, the NASDAQ down 23. Now, look at the close. The only things that changed were the prices of these "securities." The lows of the day were met around 2:30 - 3:00 pm. In the final hour of trading, stocks went straight up.
The news of the day, in fact, was largely negative. The Case-Shiller index of residential home prices fell for the fifth consecutive month.
Dow 11,977.19, -3.33 (0.03%)
NASDAQ 2,719.25, +1.70 (0.06%)
S&P 500 1,291.18, +0.34 (0.03%)
NYSE Composite 8,141.13, -16.29 (0.20%)
3308 stocks fell; 3193 gained. On the NASDAQ, there were 63 new highs and 23 new lows, the gap compressing once again. The NYSE had 103 new highs; 18 new lows. Volume... well, same old story.
NASDAQ Volume 1,949,290,625.00
NYSE Volume 5,169,361,500
Commodities really complete the story. Consider all that's been reported here in the last few paragraphs. It's all real. Would anyone in their right mind believe that this is an environment ripe for inflation. There are 15 million working-age Americans out of work. 43 million Americans are on food stamps. The Fed will have to print maybe another $10 trillion, maybe more, over the next three years to keep the carousel turning. It's simply not going to happen, or, if it does, will end in disaster.
But the commodity trade over the past week has been flashing those same old deflationary signals again, all on the backs of oversupply and slack demand. Americans, and to a large extent, the populations of other nations, are being squeezed, and their ability to continue to grease the skids of commerce is waning.
Crude was off again, down $1.68, to $86.19, a two-month low. Gold continued what is now a full-blown exodus, losing $12.20, to $1,332.30. Silver fell 52 cents, to $26.80. energy and food also fell, nearly across the board. There's more than enough of everything. So why are we paying through the nose for it?
Everything will follow home prices. Everything, because if the value of a roof over one's head is discounted, then what, really what, has any value?
Price discovery will eventually set free all assets to their rightful holders.
So what if the entire global banking system is just a huge fraud played upon the middle and lower classes by an elite upper class? Well, we would expect high prices, shoddy service, broken promises, an unsustainable drain from the most productive class element, working people. Were that not enough, the banks in America have brought us much more, as in blatant fraud, bailouts with taxpayer money, record bonuses for executives, voodoo accounting by which they artificially inflate their own earnings, all the time while they are technically insolvent.
Well, then what?
That would be a government overthrown in Tunesia, the nation of Iceland already defaulted, riots in Egypt and Ireland about to go ballistic, insurance companies suing banks, banks walking away from houses they don't want to own, states and municipalities suffering from reduced tax revenues, investigations into pension funds (though like all investigations conducted by government agencies, the result is usually negligible and never is any individual held civilly or criminally culpable), outlandish, never-before-seen federal deficits, an interest rate permanently plugged at ZERO, and a myriad of other social developments such as tent cities, rising bank robberies, wider social distress and general disagreement with government policies.
There isn't room in the blogosphere to represent the kind of damage being done by the Federal Reserve and Chinese central bank's endless money and credit creation (same thing), but the stock markets, supposedly acting as a barometer measuring corporate strength - while falsely implying that America is somehow better for this - are absurdly manipulated, controlled and corrupted.
Today's action is a pure case of intraday manipulation. Let's forget the past two paragraphs for a moment. They're there, they're real, but they apparently don't matter to stocks, because, if they did, stocks would not have staged the dramatic recovery it did today, most of it in the last fifteen minutes of trading.
Just for the record, at the lows for the day, the Dow was down more than 80 points, the S&P was off 10, the NASDAQ down 23. Now, look at the close. The only things that changed were the prices of these "securities." The lows of the day were met around 2:30 - 3:00 pm. In the final hour of trading, stocks went straight up.
The news of the day, in fact, was largely negative. The Case-Shiller index of residential home prices fell for the fifth consecutive month.
Dow 11,977.19, -3.33 (0.03%)
NASDAQ 2,719.25, +1.70 (0.06%)
S&P 500 1,291.18, +0.34 (0.03%)
NYSE Composite 8,141.13, -16.29 (0.20%)
3308 stocks fell; 3193 gained. On the NASDAQ, there were 63 new highs and 23 new lows, the gap compressing once again. The NYSE had 103 new highs; 18 new lows. Volume... well, same old story.
NASDAQ Volume 1,949,290,625.00
NYSE Volume 5,169,361,500
Commodities really complete the story. Consider all that's been reported here in the last few paragraphs. It's all real. Would anyone in their right mind believe that this is an environment ripe for inflation. There are 15 million working-age Americans out of work. 43 million Americans are on food stamps. The Fed will have to print maybe another $10 trillion, maybe more, over the next three years to keep the carousel turning. It's simply not going to happen, or, if it does, will end in disaster.
But the commodity trade over the past week has been flashing those same old deflationary signals again, all on the backs of oversupply and slack demand. Americans, and to a large extent, the populations of other nations, are being squeezed, and their ability to continue to grease the skids of commerce is waning.
Crude was off again, down $1.68, to $86.19, a two-month low. Gold continued what is now a full-blown exodus, losing $12.20, to $1,332.30. Silver fell 52 cents, to $26.80. energy and food also fell, nearly across the board. There's more than enough of everything. So why are we paying through the nose for it?
Everything will follow home prices. Everything, because if the value of a roof over one's head is discounted, then what, really what, has any value?
Price discovery will eventually set free all assets to their rightful holders.
Monday, January 24, 2011
Being Wrong for so Long Might Be Right
Just as the financial sentiment seemed to be turning, the Fed POMO'd another $8.8 billion today (who's counting, anyway?) to launch the markets off into the stratosphere.
There will be no correction for the time being, as I've been calling for, as this is not a rational market. Nor is this a free market, or a trusted market; it is a Ponzi market, underwritten by taxpayer dollars via the Federal Reserve, which buys bonds from the Treasury.
I've been out of stocks since July of 2007. I missed the collapse and am now missing the huge comeback, but I'm not concerned. There are other, safer places to hide/invest than in semi-worthless pieces of paper.
For those not yet convinced, today was a bright one. Equities were up smartly at the open and continued to pile on gains throughout the day. All the big money was putting down markers, via options, for the next ramp up, due before February 18. Then they will stage a sell-off, rinse and repeat. It's how things work when a few insiders control 90% of the 70% of trades done by machines and the Fed keeps handing them monopoly money to facilitate more trading.
So be it. Or not (my Murphy's Law sense tells me that the moment I relent, the collapse will occur).
Dow 11,980.52 108.68 (0.92%)
NASDAQ 2,717.55 28.01 (1.04%)
S&P 500 1,290.84 7.49 (0.58%)
NYSE Compos 8,157.42 51.67 (0.64%)
Advancers decimated decliners, 4454-2089. On the NASDAQ, there were 81 new highs and 18 new lows. On the NYSE, 130 new highs and 17 new lows. Despite the apparent panic buying of equities, volume was again mysteriously missing, as were avid day-traders (the approach now being pushed by none other than nationally-syndicated political talk-show host and self-appointed "Great American," Bill Cunningham. I rest my case.
NASDAQ Volume 1,926,345,875
NYSE Volume 4,484,331,500
Amazingly, crude oil didn't pop off another couple of bucks along with the market. Instead, crude futures were sold off by $1.24, to finish at $87.87, the lowest price since early December. Gold also had no luck catching much of a bid, as stories of a gold bubble are rampant within the mainstream media. Gold did finish marginally higher, up $3.50, to $1,344.50, though there's a feeling that the selling isn't over with just yet.
On a brighter note for gold-bugs, there is growing concern that there's far too much "paper" gold in vehicles like the GLD and other derivatives, which far outstrip the actual metal on hand and deliveries are being delayed or bought out at premium. The same, to a lesser extent, applies to silver, which fell another 11 cents, to $27.32, though it was much lower midday.
That's all for now.
There will be no correction for the time being, as I've been calling for, as this is not a rational market. Nor is this a free market, or a trusted market; it is a Ponzi market, underwritten by taxpayer dollars via the Federal Reserve, which buys bonds from the Treasury.
I've been out of stocks since July of 2007. I missed the collapse and am now missing the huge comeback, but I'm not concerned. There are other, safer places to hide/invest than in semi-worthless pieces of paper.
For those not yet convinced, today was a bright one. Equities were up smartly at the open and continued to pile on gains throughout the day. All the big money was putting down markers, via options, for the next ramp up, due before February 18. Then they will stage a sell-off, rinse and repeat. It's how things work when a few insiders control 90% of the 70% of trades done by machines and the Fed keeps handing them monopoly money to facilitate more trading.
So be it. Or not (my Murphy's Law sense tells me that the moment I relent, the collapse will occur).
Dow 11,980.52 108.68 (0.92%)
NASDAQ 2,717.55 28.01 (1.04%)
S&P 500 1,290.84 7.49 (0.58%)
NYSE Compos 8,157.42 51.67 (0.64%)
Advancers decimated decliners, 4454-2089. On the NASDAQ, there were 81 new highs and 18 new lows. On the NYSE, 130 new highs and 17 new lows. Despite the apparent panic buying of equities, volume was again mysteriously missing, as were avid day-traders (the approach now being pushed by none other than nationally-syndicated political talk-show host and self-appointed "Great American," Bill Cunningham. I rest my case.
NASDAQ Volume 1,926,345,875
NYSE Volume 4,484,331,500
Amazingly, crude oil didn't pop off another couple of bucks along with the market. Instead, crude futures were sold off by $1.24, to finish at $87.87, the lowest price since early December. Gold also had no luck catching much of a bid, as stories of a gold bubble are rampant within the mainstream media. Gold did finish marginally higher, up $3.50, to $1,344.50, though there's a feeling that the selling isn't over with just yet.
On a brighter note for gold-bugs, there is growing concern that there's far too much "paper" gold in vehicles like the GLD and other derivatives, which far outstrip the actual metal on hand and deliveries are being delayed or bought out at premium. The same, to a lesser extent, applies to silver, which fell another 11 cents, to $27.32, though it was much lower midday.
That's all for now.
Friday, January 21, 2011
A Day of Little Consequence
Besides GE beating 4th quarter estimates soundly and Bank of America missing badly (though the mainstream media call the earnings nember "confusing"), it was a pretty dull session.
Dow 11,871.84, +49.04 (0.41%)
NASDAQ 2,689.54, -14.75 (0.55%)
S&P 500 1,283.35, +3.09 (0.24%)
NYSE Composite 8,105.75, +29.03 (0.36%)
NASDAQ Volume 1,936,012,000.00
NYSE Volume 5,191,208,500
Declining issues held a 3321-3166 advantage over advancers. NASDAQ, the only major index to finish lower, recorded 53 new highs and 23 new lows. The numbers were 77 and 12 on the NYSE, respectively.
Oil dropped 48 cents, to $89.11. Gold continued an extended decline, losing $5.50, to $1,341.00. Silver fell 5 cents, to $27.43. All trends seem to remain in place for a top and correction, soon.
Americans continue to decline in education, living standards and general decency. These trends can be reversed, though it takes work, another thing seemingly in decline in the USA.
Dow 11,871.84, +49.04 (0.41%)
NASDAQ 2,689.54, -14.75 (0.55%)
S&P 500 1,283.35, +3.09 (0.24%)
NYSE Composite 8,105.75, +29.03 (0.36%)
NASDAQ Volume 1,936,012,000.00
NYSE Volume 5,191,208,500
Declining issues held a 3321-3166 advantage over advancers. NASDAQ, the only major index to finish lower, recorded 53 new highs and 23 new lows. The numbers were 77 and 12 on the NYSE, respectively.
Oil dropped 48 cents, to $89.11. Gold continued an extended decline, losing $5.50, to $1,341.00. Silver fell 5 cents, to $27.43. All trends seem to remain in place for a top and correction, soon.
Americans continue to decline in education, living standards and general decency. These trends can be reversed, though it takes work, another thing seemingly in decline in the USA.
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