Just in case you are like about 98% of American's who will think that nothing of importance happened today, we duteously inform you that today, May 16, 2011, is a seminal date in American history, as it happens to be the day the US government purposely and willfully exceeded the statutory debt limit and began raiding the federal employees' pension fund, specifically, the Civil Service Retirement and Disability Fund (“CSRDF”), in order to keep the federal government operating.
It's all laid out in detail in this letter [PDF] from Treasury Secretary Timothy Geithner to Senate majority leader Harry Reid.
In a nutshell, since Treasury cannot issue any more debt by which to operate the hopelessly bankrupt government, they will take the funds from whatever government agencies have money, with a promise to repay once congress acts to increase the debt limit. In case they don't - and there's ample reason to believe that this current bunch of uneducated, deceptive and uncontrollable legislators may not - then too bad for all those federal employees who thought they had it made in the shade. The government will shaft you first. The rest of the public citizenry will be shafted in other ways, at a later date.
This is pretty serious stuff, and the end-run by Geithner around the debt limit gives the congress until August 2nd to sort things out. But, it's by no means a done deal or even close to it. The Republicans are calling for steep deficit reductions in the upcoming 2012 budget, while the Democrats are pushing for tax increases. In all seriousness, neither idea has any chance of passing, so the obvious alternative is to declare war and issue emergency powers.
What's that? We're already at war? In three different countries? Well, then, no problem-o! Spend at will.
Last week - and in measured ways over the last three years - this blog prepared its readers for calamity of varying degrees to be foisted upon the public, saying that chaos would prevail and with today's action by the Treasury, so it has.
Now we have rigged markets, a rogue government, spending completely out of control and borrowing beyond constitutional limits. The government has commenced paying back debt and paying bills with money collected from federal employees; money that was supposed to fund retirements and payments to disabled workers. And while no current retiree will be affected, future ones may well be. It's all in the hands of probably the worst congress (and that's saying something) ever to be seated. Well, good luck with that.
The stock markets took it in stride, first dipping into the red, then going positive, then the NASDAQ taking a nose-dive, and a final-hour smash-crash which took down the other indices. It was spooky, surreal and and absolutely frightening day.
On top of that, over the weekend, the head of the IMF, one Dominique Strauss-Kahn, was arrested in New York on a range on charges related to his alleged rape and sodomizing of a hotel maid. Since then, Mr. Strauss-Kahn has been denied bail and formally charged.
So, we now have a rogue congress, administration and the head of the world's most powerful and influential financial organization behind bars. Can it get any more ridiculous, any worse? Oh, yes, and it definitely will, shortly.
QE2 ends in a few more weeks, and with the free Fed money spigot about to be closed, expect the ruinous crowd on Wall Street to head for the hills, selling as many stock certificates as they can unload before peeling out the door. One problem may be that there will be no takers for their inordinately over-hyped investments, and they will have to sell them for much less than the levels at which they currently trade. If that occurs, we like to call such events a market crash, and there will be no bailing out this time, no savior from above, like the Fed, because they too are over-leveraged and tapped out. This time it will be for real, and it will not recover.
So, hang in there, buy more silver and gold and hope that your garden vegetables head for harvesting before the wheels fall completely off the federal fiasco and the world ends.
And, if you're scared, worried and/or confused by all this, take heart that you should be and that you are by no means alone. We all stand to lose everything if this doesn't go well.
Dow 12,548.37 47.38 (0.38%)
NASDAQ 2,782.31 46.16 (1.63%)
S&P 500 1,329.47 8.30 (0.62%)
NYSE Compos 8,336.59 35.08 (0.42%)
Declining issues took the measure of advancers, 4744-1843. Just in case more proof of the severity of this unannounced crisis was needed, the NASDAQ provided it in the form of flipping the new highs-new lows metric. Today, there were only 40 new highs and 67 new lows. The NYSE compressed, but did not flip (it will), with 104 new highs and 35 new lows. Volume was fairly pathetic, especially on the NYSE. In coming days and weeks, expect more and more stocks to begin selling off, first, in a somewhat orderly fashion, but as the end of QE2 approaches, in a real rush for the exits. Incidentally, banking stocks fell anywhere from 1/2 to 1% on the day. It's only fitting that the companies that led us into depression will be - again - the worst affected.
NASDAQ Volume 2,071,148,875
NYSE Volume 3,888,652,000
Commodities were a mixed bag. Crude oil slipped $2.28, to $97.37. What's of particular concern, however, is that while oil has slumped 14% over the past two weeks, the price of gasoline in the USA has fallen only ONE CENT PER GALLON. The rule of thumb used to be that the price of gas would rise or fall two to two-and-a-half cents for every dollar per barrel move in oil.
Apparently, now that the kleptocracy has gone full retard, that rule no longer applies. Gas will, from now on, cost whatever the oil cartel believes it can charge whether that price be fair, rational or based upon any measure of supply and demand.
Gold was higher earlier in the day, but now trades $5.40 lower, at $1489.80. Silver continues to be the bankers' favorite whipping boy, losing another $1.70, to trade at $33.60 [ON SALE, BUY MORE]. Under siege from HSBC and JP Morgan Chase, the world's biggest shorters of the commodity, silver should continue to experience weakness and erode down to the upper 20s in price. This is a unique buying opportunity in one of history's most manipulated and currently-undervalued pure forms of money.
It will get even more strange and perverse in global markets. Today was only the beginning.
Monday, May 16, 2011
Friday, May 13, 2011
Correlation Trade: Dollar Up, Stocks Down
After a roller coaster type of week, the major indices and commodities ended fairly flat, but that's how the skimmers of Wall Street make their dough: bidding prices up and selling out underneath momentum buyers. This is a fun game for them, not so nice for individual investors, but eventually all the trades will go in one direction and it won't be good for anyone except committed short sellers.
Stocks really got off to a piddling start, but accelerated mid-day, with the Dow down as much as 150 points. While the Dow rallied into the close a bit, the NASDAQ stayed down at finished at its low point of the session.
April CPI was a non-event, coming in at expectations of 0.4% gain for April. Michigan Consumer Sentiment showed a small rise, to 72.4, from 69.8 in March. Despite the steep drops on the averages, it was, all tolled, a pretty dull session. The major trade consisted of shedding stocks (risk) as the dollar advanced, closing at 75.793, up 0.60 as measured by the Dollar Index. It's become the most reliable correlation trade: dollar up, stocks down.
Dow 12,595.75, -100.17 (0.79%)
NASDAQ 2,828.47, -34.57 (1.21%)
S&P 500 1,337.77, -10.88 (0.81%)
NYSE Composite 8,371.67, -84.51 (1.00%)
Declining issues roared past advancers, 4790-1789. On the NASDAQ, the gap tightened with 97 new highs and 51 new lows. A similar situation prevailed on the NYSE with 182 new highs topping 22 new lows. Volume was back in the doldrums, signaling the beginning of the summer season, with traders taking off early and heading for the hills, the Hamptons, or Hades.
NASDAQ Volume 1,885,009,375
NYSE Volume 3,921,132,750
Commodities put in an equally lackluster performance, though most were trending lower through much of the day. WTI crude oil on the NYMEX, down most of the session, caught a bid late in the day, finishing up 68 cents, at $99.65. Gold was swamped today, losing $13.10, to $1493.80, while silver managed to eek out a small, 64 cent gain, at $35.26.
There was a lot of posturing and positioning, but no real commitment on the buy side. Sellers won the day and the week as we inch ever closer to the end of QE2.
Finally, financial stocks took the brunt of the selling, with Bank of America (BAC) down 27 cents, to 11.93, Citigroup (C) shedding 89 cents, to $41.53 despite declaring a .01 annual dividend. Apparently, investors were not impressed. JP Morgan Chase (JPM) lost 94 cents, to $43.15 and Goldman Sachs (GS) dipping 1.29 to 141.46.
Continued pressure on the banking sector is symptomatic of the sluggish economy and may portend another round of trouble for the mega-banks. Couldn't happen to a nicer bunch.
Stocks really got off to a piddling start, but accelerated mid-day, with the Dow down as much as 150 points. While the Dow rallied into the close a bit, the NASDAQ stayed down at finished at its low point of the session.
April CPI was a non-event, coming in at expectations of 0.4% gain for April. Michigan Consumer Sentiment showed a small rise, to 72.4, from 69.8 in March. Despite the steep drops on the averages, it was, all tolled, a pretty dull session. The major trade consisted of shedding stocks (risk) as the dollar advanced, closing at 75.793, up 0.60 as measured by the Dollar Index. It's become the most reliable correlation trade: dollar up, stocks down.
Dow 12,595.75, -100.17 (0.79%)
NASDAQ 2,828.47, -34.57 (1.21%)
S&P 500 1,337.77, -10.88 (0.81%)
NYSE Composite 8,371.67, -84.51 (1.00%)
Declining issues roared past advancers, 4790-1789. On the NASDAQ, the gap tightened with 97 new highs and 51 new lows. A similar situation prevailed on the NYSE with 182 new highs topping 22 new lows. Volume was back in the doldrums, signaling the beginning of the summer season, with traders taking off early and heading for the hills, the Hamptons, or Hades.
NASDAQ Volume 1,885,009,375
NYSE Volume 3,921,132,750
Commodities put in an equally lackluster performance, though most were trending lower through much of the day. WTI crude oil on the NYMEX, down most of the session, caught a bid late in the day, finishing up 68 cents, at $99.65. Gold was swamped today, losing $13.10, to $1493.80, while silver managed to eek out a small, 64 cent gain, at $35.26.
There was a lot of posturing and positioning, but no real commitment on the buy side. Sellers won the day and the week as we inch ever closer to the end of QE2.
Finally, financial stocks took the brunt of the selling, with Bank of America (BAC) down 27 cents, to 11.93, Citigroup (C) shedding 89 cents, to $41.53 despite declaring a .01 annual dividend. Apparently, investors were not impressed. JP Morgan Chase (JPM) lost 94 cents, to $43.15 and Goldman Sachs (GS) dipping 1.29 to 141.46.
Continued pressure on the banking sector is symptomatic of the sluggish economy and may portend another round of trouble for the mega-banks. Couldn't happen to a nicer bunch.
Massive Disconnect in Markets
Apologies for the tardiness of this posting. At press time, Blogger - the system we love and use for posting this blog - was down for unexpected maintenance, at 3:30 pm EDT, on Thursday, May 12. We also note that Blogger lost our post from May 11, 2011, and, since it was created completely upon their system, cannot say with any level of assuredness whether or not it will be restored. At this point, it is permanently gone. Our regular post for Friday, May 13, will (God and Blogger willing) be posted shortly after close of trading, about 4:45 pm EDT.
More of the same from the people who brought you "Financial Suicide 101" (2008) and "How to Jack Economies Worldwide" (2009-11), the genii of Wall Street and their willing government henchmen today took a look at unmistakenly miserable data from fresh unemployment claims filings (434,000) and turned a market that was selling off into another miracle rally.
On top of that April PPI came in at 0.8%, highly inflationary and retail sales disappointed, registering a gain of 0.5% when the estimate was for 0.6%, revised lower from 0.7%. Truthfully, most of the 1/2 per cent of retail gains were due to nothing more than higher prices. There is no growth in the US economy and hasn't been for a while.
The games and maneuvers of these criminal elite which operate on Wall Street are truly breath-taking and never ending. When the Dow was down 90 points and the NASDAQ off 27, shortly after the opening bell, these guileless bastards just began pumping fresh POMO money into the dead carcass that is the US stock market, as though the economy were performing just dandily and those new jobless claims were merely a tick to be brushed aside with a swat of the hand.
What we have here is a massive disconnect which has prevailed since well before the financial catastrophe of 2008 between Wall Street and the rest of the world. In reality, the world would have been a far better place had Osoma bin Laden done a better job and eradicated more of the sniveling, greedy, sociopathic slime that has infested our markets and destroyed not only the US economy, but that of Europe and a handful of other nations.
The egregious crimes committed before during and after the sub-prime meltdown that exploded into a full blown $700 billion heist known as TARP still have not been addressed, no one has answered for this disaster, and to this day, banks such as Bank of America, Citigroup, JP Morgan Chase and Wells-Fargo have continued to conceal their losses behind corrupt, dubious accounting rules, off-balance sheet transactions and trillions of Fed-pumped dollars to boost their bottom lines and hike up momentum stocks to unbelievable, unsustainable valuations.
The biggest banks still cannot lend, cannot process foreclosures without falsifying documents and are routinely charging credit-worthy customers usury rates on credit cards. Even still, they whine and complain after having been bailed out by the government (read: taxpayers) about every little detail that might make their miserable existence even the tiniest bit more fair toward consumers.
Make no doubt about it. These cretins who sit in the executive suites atop the largest financial institutions in the world are still in the process of raping and pillaging one "investor", one "consumer" at a time. If they had it their way, they'd just have their flunkies in congress pass new laws that mandate that all Americans submit all of their money to them, while in many ways, they already have, through control of investment trusts, pension and retirement funds, municipal bonds and a variety of other means - like JP Morgan Chase's easy money scam for administering the SNAP (food stamp) program nationwide.
Today's market action and many other days before it - and surely more to come - is just another example of how ludicrous is their game of "chicken" with markets that are essentially dead and have been for nearly three years. If there was a way to remove the parasitical banks, insurance companies, and other so-called "facilitators" from the scene, our markets would once again return to health and there is a small chance that we might even survive the long-term, generational damage they have bestowed on us and citizens across the globe.
Continual goosing of the stock markets with funny money from the Fed will no doubt leave a legacy of destruction in its aftermath. Because the American economy is so tightly wound around the major financial institutions, extrication from the iron fist of Wall Street and Washington is going to be a painful and unsteady process, but it begins with Americans who have stopped believing and are getting out of stocks, 401k plans, college funds, retirement funds, and all manner of paper investments. Sadly, there is fresh money from new sheep to be sheared, so the game continues and we sink, as a society and as a nation, further and further down the past to insolvency, destitution and eventual destruction of all the principles, laws and common decency that made us a great nation.
America is either already dead or dying a slow, agonizing death. Indictments and criminal prosecutions should have happened two or three years ago, but they can still happen, if people demand that they do.
Write to your congressman or woman. Take your money out of the big, national banks. Liquidate your IRAs, 401ks and other investment vehicles. Leave them for dead, because, in reality, they already are.
Dow 12,695.92, +65.89 (0.52%)
NASDAQ 2,863.04, +17.98 (0.63%)
S&P 500 1,348.65, +6.57 (0.49%)
NYSE Composite 8,456.18, +28.09 (0.33%)
Advancing issues swamped decliners, 4199-2408. NASDAQ new highs: 113; new lows: 55. NYSE new highs: 172; new lows: 36. Make note that new lows have been rising or steady in recent weeks. There are fewer than 30 trading days remaining before the planned end of QE2 and the rats are jumping off the stock market ship. Volume was higher today as it takes more stock trades to save a market from imminent collapse.
NASDAQ Volume 2,233,589,000
NYSE Volume 4,241,912,500
Commodities were whipsawed once again. Crude oil futures finished up 78 cents, at $98.97, but not before some uncertainty in the morning which had futures down 10 cents.
Gold finished up $6.00, at $1506.90 and silver lost 45 cents, to $34.62, but was down briefly below $33 per ounce.
Thankfully, tomorrow ends another week, and the University of Michigan presents its monthly consumer sentiment survey, plus April CPI. It is Friday the 13th, however, so expect more than the usual wild swings, lies and obfuscation.
More of the same from the people who brought you "Financial Suicide 101" (2008) and "How to Jack Economies Worldwide" (2009-11), the genii of Wall Street and their willing government henchmen today took a look at unmistakenly miserable data from fresh unemployment claims filings (434,000) and turned a market that was selling off into another miracle rally.
On top of that April PPI came in at 0.8%, highly inflationary and retail sales disappointed, registering a gain of 0.5% when the estimate was for 0.6%, revised lower from 0.7%. Truthfully, most of the 1/2 per cent of retail gains were due to nothing more than higher prices. There is no growth in the US economy and hasn't been for a while.
The games and maneuvers of these criminal elite which operate on Wall Street are truly breath-taking and never ending. When the Dow was down 90 points and the NASDAQ off 27, shortly after the opening bell, these guileless bastards just began pumping fresh POMO money into the dead carcass that is the US stock market, as though the economy were performing just dandily and those new jobless claims were merely a tick to be brushed aside with a swat of the hand.
What we have here is a massive disconnect which has prevailed since well before the financial catastrophe of 2008 between Wall Street and the rest of the world. In reality, the world would have been a far better place had Osoma bin Laden done a better job and eradicated more of the sniveling, greedy, sociopathic slime that has infested our markets and destroyed not only the US economy, but that of Europe and a handful of other nations.
The egregious crimes committed before during and after the sub-prime meltdown that exploded into a full blown $700 billion heist known as TARP still have not been addressed, no one has answered for this disaster, and to this day, banks such as Bank of America, Citigroup, JP Morgan Chase and Wells-Fargo have continued to conceal their losses behind corrupt, dubious accounting rules, off-balance sheet transactions and trillions of Fed-pumped dollars to boost their bottom lines and hike up momentum stocks to unbelievable, unsustainable valuations.
The biggest banks still cannot lend, cannot process foreclosures without falsifying documents and are routinely charging credit-worthy customers usury rates on credit cards. Even still, they whine and complain after having been bailed out by the government (read: taxpayers) about every little detail that might make their miserable existence even the tiniest bit more fair toward consumers.
Make no doubt about it. These cretins who sit in the executive suites atop the largest financial institutions in the world are still in the process of raping and pillaging one "investor", one "consumer" at a time. If they had it their way, they'd just have their flunkies in congress pass new laws that mandate that all Americans submit all of their money to them, while in many ways, they already have, through control of investment trusts, pension and retirement funds, municipal bonds and a variety of other means - like JP Morgan Chase's easy money scam for administering the SNAP (food stamp) program nationwide.
Today's market action and many other days before it - and surely more to come - is just another example of how ludicrous is their game of "chicken" with markets that are essentially dead and have been for nearly three years. If there was a way to remove the parasitical banks, insurance companies, and other so-called "facilitators" from the scene, our markets would once again return to health and there is a small chance that we might even survive the long-term, generational damage they have bestowed on us and citizens across the globe.
Continual goosing of the stock markets with funny money from the Fed will no doubt leave a legacy of destruction in its aftermath. Because the American economy is so tightly wound around the major financial institutions, extrication from the iron fist of Wall Street and Washington is going to be a painful and unsteady process, but it begins with Americans who have stopped believing and are getting out of stocks, 401k plans, college funds, retirement funds, and all manner of paper investments. Sadly, there is fresh money from new sheep to be sheared, so the game continues and we sink, as a society and as a nation, further and further down the past to insolvency, destitution and eventual destruction of all the principles, laws and common decency that made us a great nation.
America is either already dead or dying a slow, agonizing death. Indictments and criminal prosecutions should have happened two or three years ago, but they can still happen, if people demand that they do.
Write to your congressman or woman. Take your money out of the big, national banks. Liquidate your IRAs, 401ks and other investment vehicles. Leave them for dead, because, in reality, they already are.
Dow 12,695.92, +65.89 (0.52%)
NASDAQ 2,863.04, +17.98 (0.63%)
S&P 500 1,348.65, +6.57 (0.49%)
NYSE Composite 8,456.18, +28.09 (0.33%)
Advancing issues swamped decliners, 4199-2408. NASDAQ new highs: 113; new lows: 55. NYSE new highs: 172; new lows: 36. Make note that new lows have been rising or steady in recent weeks. There are fewer than 30 trading days remaining before the planned end of QE2 and the rats are jumping off the stock market ship. Volume was higher today as it takes more stock trades to save a market from imminent collapse.
NASDAQ Volume 2,233,589,000
NYSE Volume 4,241,912,500
Commodities were whipsawed once again. Crude oil futures finished up 78 cents, at $98.97, but not before some uncertainty in the morning which had futures down 10 cents.
Gold finished up $6.00, at $1506.90 and silver lost 45 cents, to $34.62, but was down briefly below $33 per ounce.
Thankfully, tomorrow ends another week, and the University of Michigan presents its monthly consumer sentiment survey, plus April CPI. It is Friday the 13th, however, so expect more than the usual wild swings, lies and obfuscation.
Wednesday, May 11, 2011
Dollar Wins; Stocks, Commodities Whacked Again as Chaos Commences
Whatever one thinks about the policies of the Federal Reserve, one has to respect their inside job ability to influence and move markets, thus, it should surprise nobody that everything went down today as the dollar rallied past 75 on the Dollar Index.
The dollar gained nearly one per cent today, closing at 75.29, its best level since April 18. That surge brought down stocks and with them, most commodities. No doubt the Fed has responded to inflationary pressure and the stock junkies have expressed themselves by selling off riskier assets, such as stocks, though their commitment has been anything but binding.
A more cynical view might be expressing serious doubt about the trustworthiness of all markets, as rule changes, manipulation and front-running make price discovery more an abstract art than a defined science. The movement in stocks seems to be suggesting that "buying the dips" may have become out of favor in recent days, and a prolonged correction is at hand. With the Fed ending QE2 this would be an opportune time to begin shedding positions in many overpriced stocks.
That's the flavor of the day, and maybe of the month. Stocks finished well off their lows, but still took a significant drubbing, a scenario that seems to be repeating itself with increasng frequency.
Dow 12,630.03, -130.33 (1.02%)
NASDAQ 2,845.06, -26.83 (0.93%)
S&P 500 1,342.08, -15.08 (1.11%)
NYSE Composite 8,428.09, -122.40 (1.43%)
Declining issues hammered advancers, 4955-1719. New highs totaled 89 on the NASDAQ, offset by 46 new lows. On the NYSE, there were 133 new highs to just 22 new lows. Volume was up to decent levels, indicating that the selling, which began in earnest just over a week ago, has resumed.
NASDAQ Volume 2,229,573,750
NYSE Volume 4,265,927,000
Crude oil took another steep loss, dropping $5.67, to $98.21 at the close on oversupply issues and a dampening of China's economy. The Energy Information Administration reported that demand for gas has fallen for seven consecutive weeks and today reported a 2.4% decline in demand. This prompted the CME to halt trading in gas futures for five minutes as the price plummeted 25 cents, triggering the automatic trading suspension.
Additionally, OPEC reported that member nations were only 65% in compliance with production quotas, and 17 senators, led by Oregon's Ron Wyden, sent a letter to the CFTC, urging them to impose position limits on oil futures trading.
If anything is for certain, it's that the world's driving population has been taken over a barrel recently by the oil cartel and Wall Street traders. While it's encouraging to see a bi-partisan group of senators calling for change in how oil and gas are priced, one should not get too excited until we see oil back to some reasonable level - under $75/barrel - and gas back to $3.00 a gallon or lower. As usual, the price hikes at the pump had little to nothing to do with basic supply/demand fundamentals, but certainly, the demand destruction caused by gas rising to over $4/gallon in much of the United States should serve as ample evidence that high oil and gas prices are a major contributor to economic stagnation or even recession.
Elsewhere, gold dipped $15.90, to $1500.90 and silver took another beating, losing $3.34, to $35.11, after rising for three straight sessions. It certainly appears that the banking oligarchs are not yet through punishing those who would speculate in potentially competing forms of money, such as precious metals. Silver traders have been particularly whipsawed in recent days, though true believers, who buy, hold and do not sell, are looking at any drops with gleeful anticipation of more accumulation.
Strength in the dollar is almost certain to be - to use one of Chairman Bernanke's favorite terms - transitory, which means the collapse in silver and any declines in the price of gold will only lead to more enthusiastic buying.
The true measure of the strength of the decade-long precious metal bull market lies in the ability of gold and silver bugs to hold until the government gives up supression measures completely. That may turn out to be a long time frame, as the printing presses at the Fed will be turned on full throttle and efforts to manage or mangle gold and silver price advances will be well-funded.
Unusual movements and increased volatility in prices of all goods and services are signatures of an economy on its knees, with price discovery completely blown away and manipulation rampant. And while there are major camps of support on Wall Street and in Washington to keep money flows into bonds and equities, the battle may already have been lost. There is simply too much debt and more being piled on every day, to expect an orderly unwinding.
Chaos will become common.
The dollar gained nearly one per cent today, closing at 75.29, its best level since April 18. That surge brought down stocks and with them, most commodities. No doubt the Fed has responded to inflationary pressure and the stock junkies have expressed themselves by selling off riskier assets, such as stocks, though their commitment has been anything but binding.
A more cynical view might be expressing serious doubt about the trustworthiness of all markets, as rule changes, manipulation and front-running make price discovery more an abstract art than a defined science. The movement in stocks seems to be suggesting that "buying the dips" may have become out of favor in recent days, and a prolonged correction is at hand. With the Fed ending QE2 this would be an opportune time to begin shedding positions in many overpriced stocks.
That's the flavor of the day, and maybe of the month. Stocks finished well off their lows, but still took a significant drubbing, a scenario that seems to be repeating itself with increasng frequency.
Dow 12,630.03, -130.33 (1.02%)
NASDAQ 2,845.06, -26.83 (0.93%)
S&P 500 1,342.08, -15.08 (1.11%)
NYSE Composite 8,428.09, -122.40 (1.43%)
Declining issues hammered advancers, 4955-1719. New highs totaled 89 on the NASDAQ, offset by 46 new lows. On the NYSE, there were 133 new highs to just 22 new lows. Volume was up to decent levels, indicating that the selling, which began in earnest just over a week ago, has resumed.
NASDAQ Volume 2,229,573,750
NYSE Volume 4,265,927,000
Crude oil took another steep loss, dropping $5.67, to $98.21 at the close on oversupply issues and a dampening of China's economy. The Energy Information Administration reported that demand for gas has fallen for seven consecutive weeks and today reported a 2.4% decline in demand. This prompted the CME to halt trading in gas futures for five minutes as the price plummeted 25 cents, triggering the automatic trading suspension.
Additionally, OPEC reported that member nations were only 65% in compliance with production quotas, and 17 senators, led by Oregon's Ron Wyden, sent a letter to the CFTC, urging them to impose position limits on oil futures trading.
If anything is for certain, it's that the world's driving population has been taken over a barrel recently by the oil cartel and Wall Street traders. While it's encouraging to see a bi-partisan group of senators calling for change in how oil and gas are priced, one should not get too excited until we see oil back to some reasonable level - under $75/barrel - and gas back to $3.00 a gallon or lower. As usual, the price hikes at the pump had little to nothing to do with basic supply/demand fundamentals, but certainly, the demand destruction caused by gas rising to over $4/gallon in much of the United States should serve as ample evidence that high oil and gas prices are a major contributor to economic stagnation or even recession.
Elsewhere, gold dipped $15.90, to $1500.90 and silver took another beating, losing $3.34, to $35.11, after rising for three straight sessions. It certainly appears that the banking oligarchs are not yet through punishing those who would speculate in potentially competing forms of money, such as precious metals. Silver traders have been particularly whipsawed in recent days, though true believers, who buy, hold and do not sell, are looking at any drops with gleeful anticipation of more accumulation.
Strength in the dollar is almost certain to be - to use one of Chairman Bernanke's favorite terms - transitory, which means the collapse in silver and any declines in the price of gold will only lead to more enthusiastic buying.
The true measure of the strength of the decade-long precious metal bull market lies in the ability of gold and silver bugs to hold until the government gives up supression measures completely. That may turn out to be a long time frame, as the printing presses at the Fed will be turned on full throttle and efforts to manage or mangle gold and silver price advances will be well-funded.
Unusual movements and increased volatility in prices of all goods and services are signatures of an economy on its knees, with price discovery completely blown away and manipulation rampant. And while there are major camps of support on Wall Street and in Washington to keep money flows into bonds and equities, the battle may already have been lost. There is simply too much debt and more being piled on every day, to expect an orderly unwinding.
Chaos will become common.
Tuesday, May 10, 2011
More POMO Equals More Momo; Less for Your Dollar
For the uninitiated, POMO stands for Permanent Open Market Operations, which, well, really doesn't explain anything, but let's just say this is how the Federal Reserve has been handing money over to primary dealers for the past 6 1/2 months, through various coupon pass-throughs and bond-repurchases.
So why POMO causes MOMO (slang for "momentum") is that these primary dealers have to do something with their newly-minted free Fed paper money, so they thrust it into the stock market and goose up shares of Apple (AAPL), Netflix (NFLX), Chipolte Mexican Grill (CMG) and other darlings of the "Fast Money" crowd.
The Fed is furiously throwing money around these days, attempting to keep the Ponzi market afloat before John Boehner decides to cram it all back to the Fed by insisting on budget cuts. Mr. Boehner best watch what he says or soon enough there will be calls for him to step down as Majority Leader in the House. Treasury Timmy and Bingo Bernanke don't like cuts in spending as it really diminishes the impact of their unilateral pumping of all things financial.
Of course, Mr. Boehner's calls for $2 trillion in budget cuts is laughable and will never happen. Even he knows that, but he must maintain the posture of a "conservative" even though he and his Republican members (except a brave few - very few - Tea Partiers) are as quick to spend a buck as their Democratic counterparts. There will be a few trifling spending cuts announced as part of some kind of compromise, but it won't matter. The government is about as desperate and broken as the stock markets, and that takes some doing.
So, today, on the back of a ramp job yesterday, we have more momentum playing, goosing stocks back towards the highs they scored a few weeks back. There are about 30 more POMO days before the Fed cuts the cord in late June, so expect the equity indices to be heading for higher highs before then. As long as the mainstream media can keep the public convinced inflation is marginal, transitory or immaterial, and that $4 or $5 gas is now acceptable, there will be no turning back the tidal wave of Federal Reserve Notes banging prices higher around the world.
Quoting Diane Keaton in her role as Annie Hall, from the Woody Allen movie by the same name, "la dee da." Welcome to the centrally planned economy.
Dow 12,760.36, +75.68 (0.60%)
NASDAQ 2,871.89, +28.64 (1.01%)
S&P 500 1,357.16, +10.87 (0.81%)
NYSE Composite 8,550.49, +72.30 (0.85%)
Advancing issues far outpaced decliners, 5077-1471, so one could call today's ramp-up, POMO-induced rally, broad-based, if one so chooses. Most of it are just calling it "nowhere to hide the devalued dollars." On the NASDAQ, there were 142 new highs and 34 new lows. Over on the NYSE big board, new highs were well ahead of new lows, 240-16. This is, in fact, easy to accomplish with free money, no restraint and near-record low volume - again.
NASDAQ Volume 1,996,086,625.00
NYSE Volume 3,778,728,750
Crude oil, despite an announced 25% margin hike which takes effect tomorrow, gained $1.33, to close at $103.88. And now, since oil has been sufficiently beaten down, we hear that numerous refineries are partially shut down, just in time for the nicer weather. Welcome to $4.00 and $4.50 gas coming to a fueling station near you.
Gold continued to strike back against the empire of debt, gaining $3.20, to $1516.30 up to the minute. Silver added 76 cents, at $38.47. The precious metals now have added momentum to meet and exceed previous all-time and multi-year highs before the end of June.
The government reported today that import prices (almost everything that US consumers purchase) rose 2.2% in April, on the heels of a 2.6% rise in March. Year-over-year, the increase was 11.1%
Keep printing, Mr. Bernanke. We will continue to buy silver and gold, POMO and MOMO notwithstanding.
So why POMO causes MOMO (slang for "momentum") is that these primary dealers have to do something with their newly-minted free Fed paper money, so they thrust it into the stock market and goose up shares of Apple (AAPL), Netflix (NFLX), Chipolte Mexican Grill (CMG) and other darlings of the "Fast Money" crowd.
The Fed is furiously throwing money around these days, attempting to keep the Ponzi market afloat before John Boehner decides to cram it all back to the Fed by insisting on budget cuts. Mr. Boehner best watch what he says or soon enough there will be calls for him to step down as Majority Leader in the House. Treasury Timmy and Bingo Bernanke don't like cuts in spending as it really diminishes the impact of their unilateral pumping of all things financial.
Of course, Mr. Boehner's calls for $2 trillion in budget cuts is laughable and will never happen. Even he knows that, but he must maintain the posture of a "conservative" even though he and his Republican members (except a brave few - very few - Tea Partiers) are as quick to spend a buck as their Democratic counterparts. There will be a few trifling spending cuts announced as part of some kind of compromise, but it won't matter. The government is about as desperate and broken as the stock markets, and that takes some doing.
So, today, on the back of a ramp job yesterday, we have more momentum playing, goosing stocks back towards the highs they scored a few weeks back. There are about 30 more POMO days before the Fed cuts the cord in late June, so expect the equity indices to be heading for higher highs before then. As long as the mainstream media can keep the public convinced inflation is marginal, transitory or immaterial, and that $4 or $5 gas is now acceptable, there will be no turning back the tidal wave of Federal Reserve Notes banging prices higher around the world.
Quoting Diane Keaton in her role as Annie Hall, from the Woody Allen movie by the same name, "la dee da." Welcome to the centrally planned economy.
Dow 12,760.36, +75.68 (0.60%)
NASDAQ 2,871.89, +28.64 (1.01%)
S&P 500 1,357.16, +10.87 (0.81%)
NYSE Composite 8,550.49, +72.30 (0.85%)
Advancing issues far outpaced decliners, 5077-1471, so one could call today's ramp-up, POMO-induced rally, broad-based, if one so chooses. Most of it are just calling it "nowhere to hide the devalued dollars." On the NASDAQ, there were 142 new highs and 34 new lows. Over on the NYSE big board, new highs were well ahead of new lows, 240-16. This is, in fact, easy to accomplish with free money, no restraint and near-record low volume - again.
NASDAQ Volume 1,996,086,625.00
NYSE Volume 3,778,728,750
Crude oil, despite an announced 25% margin hike which takes effect tomorrow, gained $1.33, to close at $103.88. And now, since oil has been sufficiently beaten down, we hear that numerous refineries are partially shut down, just in time for the nicer weather. Welcome to $4.00 and $4.50 gas coming to a fueling station near you.
Gold continued to strike back against the empire of debt, gaining $3.20, to $1516.30 up to the minute. Silver added 76 cents, at $38.47. The precious metals now have added momentum to meet and exceed previous all-time and multi-year highs before the end of June.
The government reported today that import prices (almost everything that US consumers purchase) rose 2.2% in April, on the heels of a 2.6% rise in March. Year-over-year, the increase was 11.1%
The 12-month advance in April was the largest year-over-year increase since an 11.2 percent gain between April 2009 and April 2010.So, no, there's no inflation, just record import prices two years running.
Keep printing, Mr. Bernanke. We will continue to buy silver and gold, POMO and MOMO notwithstanding.
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