To anyone who follows capital markets and the world of high finance closely, the material deficiencies in the US and global "growth" stories are glaring and have been for many months. While the financial press - CNBC, the Wall Street Journal, Bloomberg - and the spokespeople for the various central governments around the world continue to feed the public the "recovery" fable, the facts, now beginning to see the light of day, contend that the global economy is still, two-and-a-half years after the grand cascading crash of 2008, in precarious straits.
Five separate stories sealed the fate for global markets today, beginning with China's announcement late Wednesday night (in America) that their trade balance was negative for the month of February.
About the same time, RealtyTrac delivered news that foreclosures had come to nearly a halt in the United States, with their numbers for February dropping 14 percent from the previous month and a 27 percent decrease from February 2010. Normally, that would be good news, but in the current environment of illegal and unethical actions by large, foreclosing banks, it meant that the mess that began in October, 2010 with the robo-signing scandal, was keeping banks from courthouses and clogging up the real estate market in a worsening manner.
Prior to the market opening, two more news items spooked the investment community. First, Moody's downgraded Spain's debt (about time for that!) to Aa2 and then, at 8:30 am on the East coast, the double whammy of new unemployment claims (397,000) and the US trade deficit, which expanded to -$46.3 billion in January.
Then, in mid-afternoon, as if the market had not received enough bad news, a story out of Saudi Arabia said that protesters had been fired upon by government troops.
That final bit of news sent the major indices - which had recovered somewhat off the day's lows - down once more, and stocks finished the session breaking into new depths.
The Dow and S&P broke through various levels of support, with the Dow finishing under the 12,000 mark for the first time in two months and the S&P crashing through it's 55-DMA. The NASDAQ and NYSE Composite each suffered similar pain.
It's becoming plain and clear to everybody living in the real world - not the fantasy land of fund managers, politicians and central bankers - that things are not going so well. Housing is an absolute catastrophe, global trade is grinding down due to higher imput costs and soaring energy prices, Europe is a full-blown basket case on the brink of dissolving, and US stocks are so wickedly overvalued that the path of least resistance is to sell them all, hurriedly, on the first sign of negative news, and there certainly was plenty of that to go around today.
Dow 11,984.61, -228.48 (1.87%)
NASDAQ 2,701.02, -50.70 (1.84%)
S&P 500 1,295.11, -24.91 (1.89%)
NYSE Composite 8,200.07, -179.37 (2.14%)
Declining issues led advancers, 5501-1072, a ratio of better than 5:1. New highs on the NASDAQ were just 33, overtaken by 68 new lows. On the NYSE, just 27 new highs and 31 new lows. This is a critical juncture for the markets, because if the number of new lows remain higher than new highs on a daily basis for long, say, six to eight trading days, it would confirm a hard change of direction, which has been in the cards since the double-engulfing session last Tuesday.
Volume was elevated as is the usual case when sellers outnumber buyers.
NASDAQ Volume 2,374,073,000
NYSE Volume 5,320,324,500
Commodities also took it on the chin, though in not such a dramatic fashion as stocks. Crude oil futures on the NYMEX fell $1.68, to $102.70, due to massive oversupply in the US of unrefined crude. Gold slipped $17.10, but remained below the psychologically-important $1400 level, ending the day at $1,412.50. Silver also was sold off, losing $98 cents, to finish at $35.07, though it should be noted that on days of hard reversals, a lot of precious metals are liquidated by speculators to cover margin calls.
A final note should not be ignored. Bill Gross' PIMCO, the world's largest fixed income family of funds, has slashed its holdings of Treasuries to ZERO. This news, first reported by the avant garde financial blog, zerohedge.com, holds unknown, but potentially damaging conditions. Gross and PIMCO have more or less registered a vote of "no confidence" on the policies of the US government and the Federal Reserve Corporation.
With stocks hammered down repeatedly over the past two weeks, the highs of February 18 look like specs on the horizon and the truth about the real conditions in the global and US markets is finally coming out. The cataclysm begun by the Wall Street banks in 2003-2006 and accelerated by then-Treasury Secretary's $700 billion holdup of the US mint in October, 2008, has many more acts still to be played out.
The rush for the exits began a week ago and the passageway out is beginning to get quite crowded.
Thursday, March 10, 2011
Wednesday, March 9, 2011
No Follow-Through in Sluggish Equity Trading
After Tuesday's excellent ramp-up, traders took a break and squared up (or down) positions as the major indices all finished marginally lower on a day marked by extremely sluggish trading.
Following an early sell-off across the board, stocks regained their footing, hitting highs at midday, but sputtering all afternoon with a squeamish close.
Dow 12,213.09, -1.29 (0.01%)
NASDAQ 2,751.72, -14.05 (0.51%)
S&P 500 1,320.02, -1.80 (0.14%)
NYSE Composite 8,379.44, -14.60 (0.17%)
Declining issues finished ahead of gainers, 3567-2915. There were 92 new highs on the NASDAQ, versus 33 new lows. The NYSE saw 157 stocks hit new highs, with 10 registering new lows. Volume was in the dumpster again, as there seems to be little commitment by traders to take positions or hold them for periods longer than a few days, preferring instead to lock in profits when they appear. With options expiration a little over a week away, a move to the upside would normally be in the cards, but there's a ceiling of resistance about 1-1 1/2% above where the averages sit, so this may be a very quiet period with no major firms reporting quarterly results (that's next month) and scant economic data.
NASDAQ Volume 1,980,708,625
NYSE Volume 4,144,978,250
West Texas Intermediate on the NYMEX traded lower by 64 cents, as conditions in Libya and the Middle East did not change materially, finishing the session at $104.38. Gold gained $2.40, to $1,429.60, while silver was up nicely, gaining 39 cents to $36.05, another new 31-year high.
This kind of choppy trading should continue near-term, or at least until conditions in Libya and elsewhere show signs of stabilizing or going further out of control. In the interim, gold, silver and other hard assets still appear to be the best investments.
Following an early sell-off across the board, stocks regained their footing, hitting highs at midday, but sputtering all afternoon with a squeamish close.
Dow 12,213.09, -1.29 (0.01%)
NASDAQ 2,751.72, -14.05 (0.51%)
S&P 500 1,320.02, -1.80 (0.14%)
NYSE Composite 8,379.44, -14.60 (0.17%)
Declining issues finished ahead of gainers, 3567-2915. There were 92 new highs on the NASDAQ, versus 33 new lows. The NYSE saw 157 stocks hit new highs, with 10 registering new lows. Volume was in the dumpster again, as there seems to be little commitment by traders to take positions or hold them for periods longer than a few days, preferring instead to lock in profits when they appear. With options expiration a little over a week away, a move to the upside would normally be in the cards, but there's a ceiling of resistance about 1-1 1/2% above where the averages sit, so this may be a very quiet period with no major firms reporting quarterly results (that's next month) and scant economic data.
NASDAQ Volume 1,980,708,625
NYSE Volume 4,144,978,250
West Texas Intermediate on the NYMEX traded lower by 64 cents, as conditions in Libya and the Middle East did not change materially, finishing the session at $104.38. Gold gained $2.40, to $1,429.60, while silver was up nicely, gaining 39 cents to $36.05, another new 31-year high.
This kind of choppy trading should continue near-term, or at least until conditions in Libya and elsewhere show signs of stabilizing or going further out of control. In the interim, gold, silver and other hard assets still appear to be the best investments.
Tuesday, March 8, 2011
Don't Fight the Fed
Today's overgrown gains on the US stock indices stand as an object lesson of how Fed monetization of US debt trumps everything.
While oil took a brief respite, thanks, without doubt to pressure on traders to "cool it", the Fed flipped back to the Primary Dealers some $7.657 billion, more than half of it in the form of repurchasing notes just auctioned off two weeks ago.
That money went straight into stocks, which, by the way, were already overpriced.
Dow 12,214.38, +124.35 (1.03%)
NASDAQ 2,765.77, +20.14 (0.73%)
S&P 500 1,321.82, +11.69 (0.89%)
NYSE Composite 8,394.04, +57.02 (0.68%)
Advancers took the high road over declining issues, 4225-1491. There were 95 new highs and 34 new lows on the NASDAQ, while on the NYSE, 149 new highs to a mere 10 new lows. Volume, as expected, was very light. The move was not liquid.
NASDAQ Volume 1,869,438,750
NYSE Volume 4,451,904,000
NYMEX crude oil front-month futures eased 52 cents, to $105.02. Gold shed $7.30, to $1,427.20. Silver lost 21 cents, to close in NY at $35.66. The small downside in the precious metals and oil should be examined more closely, as they are just profit-taking and natural rotation on a "risk on" day for the casino gamblers.
The trend remains in place for commodities over the short, medium and long term along with significant downside risk for equities short term and longer. The major indices are treading water carelessly on seas of free money. With QE2 due to expire by the end of June, expect a pullback in equities unless the Fed announces further quantitative easing and the indices remain below their February 18 highs.
In the meantime, it's a good moment to snatch up precious metals.
While oil took a brief respite, thanks, without doubt to pressure on traders to "cool it", the Fed flipped back to the Primary Dealers some $7.657 billion, more than half of it in the form of repurchasing notes just auctioned off two weeks ago.
That money went straight into stocks, which, by the way, were already overpriced.
Dow 12,214.38, +124.35 (1.03%)
NASDAQ 2,765.77, +20.14 (0.73%)
S&P 500 1,321.82, +11.69 (0.89%)
NYSE Composite 8,394.04, +57.02 (0.68%)
Advancers took the high road over declining issues, 4225-1491. There were 95 new highs and 34 new lows on the NASDAQ, while on the NYSE, 149 new highs to a mere 10 new lows. Volume, as expected, was very light. The move was not liquid.
NASDAQ Volume 1,869,438,750
NYSE Volume 4,451,904,000
NYMEX crude oil front-month futures eased 52 cents, to $105.02. Gold shed $7.30, to $1,427.20. Silver lost 21 cents, to close in NY at $35.66. The small downside in the precious metals and oil should be examined more closely, as they are just profit-taking and natural rotation on a "risk on" day for the casino gamblers.
The trend remains in place for commodities over the short, medium and long term along with significant downside risk for equities short term and longer. The major indices are treading water carelessly on seas of free money. With QE2 due to expire by the end of June, expect a pullback in equities unless the Fed announces further quantitative easing and the indices remain below their February 18 highs.
In the meantime, it's a good moment to snatch up precious metals.
Monday, March 7, 2011
Slip Sliding Away
With all due apologies to Paul Simon, the stock markets the past 10 days have been playing the tune that says, in part, "the nearer your destination, the more you're slip sliding away."
With stocks making a new peak on February 18 and attempting a run at all-time highs via the Fed's easy money policy (Here's a couple billion. Don't blow it all at once.), the bump in the road has been met and it seems to have come in the familiar form of high oil and gasoline prices.
Everybody knows that when you spend more on gas to get where you're going, you have less money to spend on what you went there for, despite your original intentions. Gas has run up so high, so fast, some people (like me) are considering not driving at all.
Consider the things you can't do while driving: drinking, talking on a cell phone (in most states), texting, and I've heard that most police officers frown on any sexual activity while behind the wheel. So, since they've taken all the fun out of driving and it's really expensive, why not just give it up altogether?
One may note that eating is still allowed while driving, and that's obviously due to the huge sums of money the fast food giants give to political campaigns. Seriously, eating a Mac-Double and fries while at the wheel is at least as dangerous as talking on a cell phone, and not quite as healthy. But, it's still allowed. We wouldn't want to close down all those drive-thru windows, now would we?
Getting back to stocks, with today's close, the major indices have been down six of the last ten sessions, and the Dow is off by 300 points, or about 2 1/2%. Apparently, all the money pumped into the markets by the Fed's QE2 program has caused some unintended outcomes, those being, primarily, massive increases in everything people need to live: food and fuel, among other things.
Making matters worse, Fed Chairman Bernanke seems to believe a little inflation is not a bad thing and also doesn't think the Fed is responsible for commodity price increases, food prices spiking and now oil going through the roof.
Well, Mr. Bernanke is either profoundly stupid or a very, very bad liar, and neither of those conditions are very good. It's quite obvious, and economics 101 teaches us that increasing the supply of money will lead to higher prices for the same goods, or, inflation. The Fed has pumped about $400 billion of their promised $600 billion into the markets and this is the result so far. I, for one, can't wait to see what the next $250 billion of free cash for the bankers will do. How bout gas at $4.25 and a permanent 10% increase in your weekly grocery bill.
It's not completely Bernanke's fault for being a stubborn fool, since he was appointed by a president freely elected by the stupid masses (me and you) and the Fed's been doing this kind of thing since 1913. Amazingly, this is only the second Great Depression they've caused, but hopefully, it will be their last.
Movements are afoot in at least 11 states to make gold and silver (it's what the constitution of the United States of America calls money) legal tender, in direct competition to Federal Reserve Notes, which, in reality, are nothing more than debt instruments. Given time, we'll return to a gold standard, though we'll have to lay waste to the Federal Reserve and all of their too big to fail banks like Bank of America, Wells-Fargo, Citigroup, JP Morgan Chase and maybe even Goldman Sachs. It is with hope that the banks and the Fed go quietly, because we really don't want to go through another tumultuous period like the Civil War.
So, all is not lost, and we sincerely hope the Fed keeps making the US dollar worth less and less. Maybe gas prices over $6 or $7 a gallon will rile up enough people to start looking at the Federal Reserve as the real enemy, not the great benefactor of OUR money they like us to believe they are.
Dow 12,090.03, -79.85 (0.66%)
NASDAQ 2,745.63, -39.04 (1.40%)
S&P 500 1,310.13, -11.02 (0.83%)
NYSE Composite 8,337.02, -76.03 (0.90%)
Declining issues outpaced advancers, 4980-1583. On the NASDAQ, there were 107 new highs and 38 new lows. On the NYSE, 159 new highs and 22 new lows. These numbers continue to converge and there's probably less than two weeks left before the new lows begin to overtake new highs on a daily basis. There may be a time of sideways trading, but, as traders always like to look ahead, if the Fed is really going to cease it's QE activities at the end of June, it might be better to get out of the way before the carnage in stocks begins, because once they pull away the artificial stimulus, the economy will head right back into the tank, just as it did briefly last summer.
Mr. Bernanke and his friends at the Fed have painted themselves into a dark and ever-shrinking corner and they have found no way out. Their dual mandate of stable prices and full employment is nothing but a very bad joke. The sooner the American people wake up to the fact that the Fed, with congress and the administration as their willing accomplices, are ruining the country, the sooner we the people can stand up and start fixing it.
NASDAQ Volume 2,203,664,500.00
NYSE Volume 4,595,122,500
It was another thrilling day for commodities. Crude was up another $1.05 at the close, at $105.44, though it traded well over $106 early in the day. Gold tacked on a gain of $5.90, to $1,434.50 at the close, though it too traded much higher, the top being $1445.90. So too silver, which was as high as $36.79, but finished up a mere 54 cents, at $35.86.
As for the mighty US dollar, the daily chart of the Dollar Index shows the dip to 76.12 prior to US markets opening and the day-long ramp up. Buying the dollar (another Fed plaything?) caused oil, gold and silver to lose their early momentum, but it's a losing battle for fiat money and it's coming to a head, soon.
With stocks making a new peak on February 18 and attempting a run at all-time highs via the Fed's easy money policy (Here's a couple billion. Don't blow it all at once.), the bump in the road has been met and it seems to have come in the familiar form of high oil and gasoline prices.
Everybody knows that when you spend more on gas to get where you're going, you have less money to spend on what you went there for, despite your original intentions. Gas has run up so high, so fast, some people (like me) are considering not driving at all.
Consider the things you can't do while driving: drinking, talking on a cell phone (in most states), texting, and I've heard that most police officers frown on any sexual activity while behind the wheel. So, since they've taken all the fun out of driving and it's really expensive, why not just give it up altogether?
One may note that eating is still allowed while driving, and that's obviously due to the huge sums of money the fast food giants give to political campaigns. Seriously, eating a Mac-Double and fries while at the wheel is at least as dangerous as talking on a cell phone, and not quite as healthy. But, it's still allowed. We wouldn't want to close down all those drive-thru windows, now would we?
Getting back to stocks, with today's close, the major indices have been down six of the last ten sessions, and the Dow is off by 300 points, or about 2 1/2%. Apparently, all the money pumped into the markets by the Fed's QE2 program has caused some unintended outcomes, those being, primarily, massive increases in everything people need to live: food and fuel, among other things.
Making matters worse, Fed Chairman Bernanke seems to believe a little inflation is not a bad thing and also doesn't think the Fed is responsible for commodity price increases, food prices spiking and now oil going through the roof.
Well, Mr. Bernanke is either profoundly stupid or a very, very bad liar, and neither of those conditions are very good. It's quite obvious, and economics 101 teaches us that increasing the supply of money will lead to higher prices for the same goods, or, inflation. The Fed has pumped about $400 billion of their promised $600 billion into the markets and this is the result so far. I, for one, can't wait to see what the next $250 billion of free cash for the bankers will do. How bout gas at $4.25 and a permanent 10% increase in your weekly grocery bill.
It's not completely Bernanke's fault for being a stubborn fool, since he was appointed by a president freely elected by the stupid masses (me and you) and the Fed's been doing this kind of thing since 1913. Amazingly, this is only the second Great Depression they've caused, but hopefully, it will be their last.
Movements are afoot in at least 11 states to make gold and silver (it's what the constitution of the United States of America calls money) legal tender, in direct competition to Federal Reserve Notes, which, in reality, are nothing more than debt instruments. Given time, we'll return to a gold standard, though we'll have to lay waste to the Federal Reserve and all of their too big to fail banks like Bank of America, Wells-Fargo, Citigroup, JP Morgan Chase and maybe even Goldman Sachs. It is with hope that the banks and the Fed go quietly, because we really don't want to go through another tumultuous period like the Civil War.
So, all is not lost, and we sincerely hope the Fed keeps making the US dollar worth less and less. Maybe gas prices over $6 or $7 a gallon will rile up enough people to start looking at the Federal Reserve as the real enemy, not the great benefactor of OUR money they like us to believe they are.
Dow 12,090.03, -79.85 (0.66%)
NASDAQ 2,745.63, -39.04 (1.40%)
S&P 500 1,310.13, -11.02 (0.83%)
NYSE Composite 8,337.02, -76.03 (0.90%)
Declining issues outpaced advancers, 4980-1583. On the NASDAQ, there were 107 new highs and 38 new lows. On the NYSE, 159 new highs and 22 new lows. These numbers continue to converge and there's probably less than two weeks left before the new lows begin to overtake new highs on a daily basis. There may be a time of sideways trading, but, as traders always like to look ahead, if the Fed is really going to cease it's QE activities at the end of June, it might be better to get out of the way before the carnage in stocks begins, because once they pull away the artificial stimulus, the economy will head right back into the tank, just as it did briefly last summer.
Mr. Bernanke and his friends at the Fed have painted themselves into a dark and ever-shrinking corner and they have found no way out. Their dual mandate of stable prices and full employment is nothing but a very bad joke. The sooner the American people wake up to the fact that the Fed, with congress and the administration as their willing accomplices, are ruining the country, the sooner we the people can stand up and start fixing it.
NASDAQ Volume 2,203,664,500.00
NYSE Volume 4,595,122,500
It was another thrilling day for commodities. Crude was up another $1.05 at the close, at $105.44, though it traded well over $106 early in the day. Gold tacked on a gain of $5.90, to $1,434.50 at the close, though it too traded much higher, the top being $1445.90. So too silver, which was as high as $36.79, but finished up a mere 54 cents, at $35.86.
As for the mighty US dollar, the daily chart of the Dollar Index shows the dip to 76.12 prior to US markets opening and the day-long ramp up. Buying the dollar (another Fed plaything?) caused oil, gold and silver to lose their early momentum, but it's a losing battle for fiat money and it's coming to a head, soon.
Saturday, March 5, 2011
Price Discovery is Difficult, but Silver is Grossly Undervalued
Very simple. Buy gold and silver.
In 1950, money in circulation (M3) was $135 Billion. In 2012, M3 will be approximately (the government stopped publishing the figure because they don't like pornography) $15 trillion.
That's a ratio of 111.11~ to 1.
In 1950, a dime was a dime, worth roughly what the 90% silver content was worth, 10 cents.
Using our 111.11-1 ratio, we find pre-1965 coins, including dimes, to be grossly undervalued. They are, according to conflation.com, worth $2.58, nearly 26x their face value.
This is with silver at $35.67 per ounce.
Using our 111.11-1 ratio again, and 2012 M3 at $15 trillion, in 2012, a pre-1965 dime should be worth $11.11, and an ounce of silver should be $153.60.
I don't know that much about gold, but the silver calculations are pure.
Of course, nothing's perfect, but I've been trying to find a reasonable way to calculate the true value of silver, though in this current ponzified regime of constant money printing, manipulation of markets and obfuscation of monetary reality, this is the best formula I've yet to devise.
Silver is grossly undervalued, and most of the people who have been accumulating it are doing so because they know it will almost certainly rise in value in the face of our current debt/finance structure and that the end of the fiat money regime is also near.
Buy silver, as much as you can reasonably afford, quietly, without attracting the attention of too many, and in future years, you'll be happy you read this comment.
In 1950, money in circulation (M3) was $135 Billion. In 2012, M3 will be approximately (the government stopped publishing the figure because they don't like pornography) $15 trillion.
That's a ratio of 111.11~ to 1.
In 1950, a dime was a dime, worth roughly what the 90% silver content was worth, 10 cents.
Using our 111.11-1 ratio, we find pre-1965 coins, including dimes, to be grossly undervalued. They are, according to conflation.com, worth $2.58, nearly 26x their face value.
This is with silver at $35.67 per ounce.
Using our 111.11-1 ratio again, and 2012 M3 at $15 trillion, in 2012, a pre-1965 dime should be worth $11.11, and an ounce of silver should be $153.60.
I don't know that much about gold, but the silver calculations are pure.
Of course, nothing's perfect, but I've been trying to find a reasonable way to calculate the true value of silver, though in this current ponzified regime of constant money printing, manipulation of markets and obfuscation of monetary reality, this is the best formula I've yet to devise.
Silver is grossly undervalued, and most of the people who have been accumulating it are doing so because they know it will almost certainly rise in value in the face of our current debt/finance structure and that the end of the fiat money regime is also near.
Buy silver, as much as you can reasonably afford, quietly, without attracting the attention of too many, and in future years, you'll be happy you read this comment.
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