There's probably no good reason for the wild ride taken by stocks on Friday other than people are confused about what's really happening in Europe and in the United States.
The best guess is that the Euro is still a dead currency walking and the US has issues ranging from housing to jobs to ineptitude in government. Ditto that last bit for Europe as well.
The font of endless fiat money is beginning to run dry and useless because every nation is seemingly engaging in a race to devalue their currency in order to remain "competitive."
What may substitute for the truth is that sovereign nations are failing and the global banking system is decrepit and defunct. Time for a grand reset is upon us, though it could be years off before the reign of money backed by "good faith and credit" - two commodities in very short supply - is ended for good and some form of gold/silver standard is established.
In the meantime, citizens of most of the world's developed nations will suffer through recessions, inflation, deflation and depression as the financial engines of the world run off the rails, run by a vacuous leadership.
Friday's non-farm payroll report in the US set the stage for a strong opening rally, with the Dow up more than 170 points within the first five minutes of trading, making the high of the day. Within 20 minutes all of the major indices were negative and by noon the dow sported a loss of more than 240 points. By 2:00 pm EDT, the Dow was back up, close to the highs, eventually settling for a minor gain, with all three other majors closing in the red.
Dow 11,444.61, +60.93 (0.54%)
NASDAQ 2,532.41, -23.98 (0.94%)
S&P 500 1,199.38, -0.69 (0.06%)
NYSE Composite 7,419.07, -9.33 (0.13%)
Declining issues led advancers by a wide margin, 4812-1952, as investors scrambled into Treasuries and blue chips. NASDAQ new highs were 7, with 436 new lows. On the NYSE, there were all of 6 new highs and 828 new lows, blowing out the gap in the combined total to 13 new highs and 1264 new lows. This side margin indicates that a long, deep, sustained bear market is underway, and the next 6-12 months could be pure equity hell.
Volume was again substantial; the gains on the Dow Industrials nearly meaningless, as they will be wiped away in the next round of selling, which is more than likely to begin in earnest on Monday.
NASDAQ Volume 3,775,836,000
NYSE Volume 9,798,826,000
Oil gained a mere 25 cents on the day, to $86.88. Gold lost $7.20, to $1,651.80, and silver was down $1.22, to $38.21. These are true deflationary signs and nothing - yet - to stop them. Of course, the Fed will likely announce some new form of QE, since the Jackson Hole conference is just weeks away.
It was a remarkable week for stocks and bonds, with the major indices taking their worst beatings since early 2009.
There is simply more downside risk ahead, and no bailouts coming this time around... we hope.
Friday, August 5, 2011
Thursday, August 4, 2011
Correction Confirmed; Bear Market, Recession, Deflation to Follow
Technically, a stock index correction is defined as a 10% decline from a recent high.
If one takes a look back just three-four months ago, the highs were put in place in late April, just around the time of the Japan earthquake, tsunami and the Fukushima nuclear disaster (still worsening).
The closing highs for the individual indices, all made on April 29, were:
Dow Industrials: 12,810
S&P 500: 1363
NASDAQ: 2873
NYSE Composite: 8671
The numbers needed for a 10% decline - a correction - are:
Dow Industrials: 11,529
S&P 500: 1226
NASDAQ: 2585
NYSE Composite: 7803
By today's close all of those numbers had been exceeded to the downside, easily.
The reasons for markets being down nine of the last ten (the Dow) or 8 of the last 9 (S&P) sessions are various, but interrelated. Most obvious among them is the absoute fact that Europe is suffering through a financial crisis which rivals that of the US in 2008. In many ways, Europe and the United States have never recovered from the disastrous events of the housing bubble and subsequent deep recession. The time to pay the piper is past due.
Along with woes in the Eurozone, the United States faces its own hard times, in many ways similar to the Great Depression of the 1930s. Joblessness, millions on food stamps, homelessness and a housing crisis deeper than most people living today have ever witnessed have led to the worst three years of non-growth in the US economy since World War II.
Whatever has been done to cure the ills that plague us - $700 billion for TARP, two rounds of quantitative easing (money printing) and a failed $780 billion stimulus program - have been for naught because the nation's leaders failed to do what any free market economy should have done: allow the decrepit and deceitful large banking institutions to fail, reorganize them and shed the underlying bad debt.
That course was not taken because, simply, Wall Street controls Washington, and the politicians had the gun of losing elections pointed squarely at their heads by Wall Street's banking elite, headed up by then-Treasury Secretary Hank Paulson and still-Fed Chaiman Ben Bernanke.
Today's final figures are a chilling reminder of what happens when leaders are not actually men of principle, but rather are guided by greed. They make bad decisions and continue to do so. The cascading declines of Thursday, August 4, are the worst tumbles in the markets since the dreadful Fall of 2008 and Winter of Discontent in 2009.
Dow 11,383.68, -512.76 (4.31%)
NASDAQ 2,556.39, -136.68 (5.08%)
S&P 500 1,200.07, -60.27 (4.78%)
NYSE Composite 7,428.41, -424.79 (5.41%)
Advancers were decimated by decliners, with losing stocks outpacing winners 6233-574, a ratio of 12:1 losers to winners. On the NASDAQ there were only 13 new highs, but 237 new lows. The NYSE was a disaster area, with 7 new highs and 366 new lows. The combined total of 20 new highs and 603 new lows is the widest gap since early 2009. The most reliable indicator - new highs vs. new lows - has once again proven infallible in predicting market turns. The Bears are growling and hungry for more equity meat.
Volume was easily the highest of the year. Quite possibly, today was the highest volume day since March of 2009.
NASDAQ Volume 3,223,976,000
NYSE Volume 8,432,305,000
One consolation from all of this is that crude oil has been taking a beating and took a serious one today, losing $5.30, to a 2011 low of $86.63, a number not seen since last December.
Gold was pricing higher early in the day, as was silver, but margin calls and the need to raise cash quickly ended their brief moments in the sun. Gold fell $7.30, to $1,659.00, while silver tanked $2.32, to $39.43. The losses in the precious metals, though serious, are not as bad as what happened in equities; not by a long shot. Gold had been making new highs almost daily for the past few weeks. Silver had broken out of a range and was siting at 4-month highs before today.
Undeniably, this is not the end of stock market declines. Bracing for Friday's non-farm payroll report, stocks will be lucky to see even a glint of hope in that data. Consensus estimates are for gains of roughly 100,000 jobs from July, but after today's initial unemployment claims came in at 400,000, making the 18th straight week they have been 400,000 or worse, hope is a scarce commodity.
Today's climactic losses may be only presaging what's ahead for the global economy. With US GDP somewhere between ZERO and 1% growth for this year, the remainder of 2011 offers quite a challenge. And politics being what they are in an upcoming presidential year, with a Democratic president and all legislation held hostage by a Republican majority in the House of Representatives, 2012 might offer an even worse set of economic circumstances.
If one takes a look back just three-four months ago, the highs were put in place in late April, just around the time of the Japan earthquake, tsunami and the Fukushima nuclear disaster (still worsening).
The closing highs for the individual indices, all made on April 29, were:
Dow Industrials: 12,810
S&P 500: 1363
NASDAQ: 2873
NYSE Composite: 8671
The numbers needed for a 10% decline - a correction - are:
Dow Industrials: 11,529
S&P 500: 1226
NASDAQ: 2585
NYSE Composite: 7803
By today's close all of those numbers had been exceeded to the downside, easily.
The reasons for markets being down nine of the last ten (the Dow) or 8 of the last 9 (S&P) sessions are various, but interrelated. Most obvious among them is the absoute fact that Europe is suffering through a financial crisis which rivals that of the US in 2008. In many ways, Europe and the United States have never recovered from the disastrous events of the housing bubble and subsequent deep recession. The time to pay the piper is past due.
Along with woes in the Eurozone, the United States faces its own hard times, in many ways similar to the Great Depression of the 1930s. Joblessness, millions on food stamps, homelessness and a housing crisis deeper than most people living today have ever witnessed have led to the worst three years of non-growth in the US economy since World War II.
Whatever has been done to cure the ills that plague us - $700 billion for TARP, two rounds of quantitative easing (money printing) and a failed $780 billion stimulus program - have been for naught because the nation's leaders failed to do what any free market economy should have done: allow the decrepit and deceitful large banking institutions to fail, reorganize them and shed the underlying bad debt.
That course was not taken because, simply, Wall Street controls Washington, and the politicians had the gun of losing elections pointed squarely at their heads by Wall Street's banking elite, headed up by then-Treasury Secretary Hank Paulson and still-Fed Chaiman Ben Bernanke.
Today's final figures are a chilling reminder of what happens when leaders are not actually men of principle, but rather are guided by greed. They make bad decisions and continue to do so. The cascading declines of Thursday, August 4, are the worst tumbles in the markets since the dreadful Fall of 2008 and Winter of Discontent in 2009.
Dow 11,383.68, -512.76 (4.31%)
NASDAQ 2,556.39, -136.68 (5.08%)
S&P 500 1,200.07, -60.27 (4.78%)
NYSE Composite 7,428.41, -424.79 (5.41%)
Advancers were decimated by decliners, with losing stocks outpacing winners 6233-574, a ratio of 12:1 losers to winners. On the NASDAQ there were only 13 new highs, but 237 new lows. The NYSE was a disaster area, with 7 new highs and 366 new lows. The combined total of 20 new highs and 603 new lows is the widest gap since early 2009. The most reliable indicator - new highs vs. new lows - has once again proven infallible in predicting market turns. The Bears are growling and hungry for more equity meat.
Volume was easily the highest of the year. Quite possibly, today was the highest volume day since March of 2009.
NASDAQ Volume 3,223,976,000
NYSE Volume 8,432,305,000
One consolation from all of this is that crude oil has been taking a beating and took a serious one today, losing $5.30, to a 2011 low of $86.63, a number not seen since last December.
Gold was pricing higher early in the day, as was silver, but margin calls and the need to raise cash quickly ended their brief moments in the sun. Gold fell $7.30, to $1,659.00, while silver tanked $2.32, to $39.43. The losses in the precious metals, though serious, are not as bad as what happened in equities; not by a long shot. Gold had been making new highs almost daily for the past few weeks. Silver had broken out of a range and was siting at 4-month highs before today.
Undeniably, this is not the end of stock market declines. Bracing for Friday's non-farm payroll report, stocks will be lucky to see even a glint of hope in that data. Consensus estimates are for gains of roughly 100,000 jobs from July, but after today's initial unemployment claims came in at 400,000, making the 18th straight week they have been 400,000 or worse, hope is a scarce commodity.
Today's climactic losses may be only presaging what's ahead for the global economy. With US GDP somewhere between ZERO and 1% growth for this year, the remainder of 2011 offers quite a challenge. And politics being what they are in an upcoming presidential year, with a Democratic president and all legislation held hostage by a Republican majority in the House of Representatives, 2012 might offer an even worse set of economic circumstances.
Wednesday, August 3, 2011
Stocks Finally Post Gains After 7-8 Days of Losses
Sooner or later there was going to be some kind of rally and today was it, even though it wasn't anything to write home about.
After the Dow had been down for eight straight sessions and the S&P down seven in a row, the early morning trade looked to be more of the same with the major indices dropping to session lows around 10:45 am EDT. The Dow was down more than 160 points, officially touching down at 11,700, when the turnaround began. The S&P was sporting losses of nearly 20 points before heading higher and closing at the highs of the day.
It's not as though anything had changed at all. Italy is on the brink of default, following in the footsteps of neighboring EU nations, Ireland, Portugal and Greece. European-based banks are supposedly frozen with terror having exceeded all prudent boundaries for lending to highly-indebted nations.
And, here in the US, no change will come to the current jobs or housing situation as the congress has already embarked on a month-long vacation, after, of course, taking a few victory laps for their last-minute daring-do on raising the debt ceiling and putting forth a measure that cuts somewhere between $20 and $25 billion from the budget in 2012, less than 1/10th of one per cent of the entire budget, or, quite literally, a drop in the budget bucket.
The only thing moving stocks today - besides the obvious influence of the PPT - was the extremely oversold condition of the markets. The Dow is down 828 points since just July 21, exactly 10 trading sessions. There's a very realistic chance that this was only a knee-jerk reaction rally, based entirely upon the notion that stocks are cheap relative to where they were trading two weeks ago.
Dow 11,896.44, -29.82 (0.25%)
NASDAQ 2,693.07, -23.83 (0.89%)
S&P 500 1,260.34, -6.29 (0.50%)
NYSE Composite 7,853.20, -21.22 (0.27%)
Advancing issues finally took the edge over losers, 3737-2897. The NASDAQ posted 28 new highs, against 204 new lows, while the NYSE had just 14 new highs and 275 new lows, blowing the combined total up to 42 new highs and 479 new lows. This high gap indicates that stocks are on the verge of a severe, long-term breakdown, despite today's small gains. Volume was strong, but the buying seemed to be out of desperation and directed at short-term profit rather than long-term investment.
NASDAQ Volume 2,637,190,000
NYSE Volume 6,487,507,000
Two pieces of jobs-related data showed that the jobs market is still in quite the dodgy condition. The firm of Challenger, Gray and Christmas released their monthly survey of planned layoffs, which showed employers announcing 66,414 planned job cuts in July, up 60.3 percent from 41,432 in June. Meanwhile, the ADP monthly private payroll survey surged to 114,000 added jobs in July, a positive sign for Friday's non-farm payroll numbers from the BLS.
Commodities continued along their bifurcated path, with oil down $1.86, to $91.93, while gold surged to another record at $1,666.30, up a whopping $21.80 on the day. Silver rose $1.67, a gain of more than 4%, to $41.76, the highest close since May.
All of this sets up for an exciting end to the week. Thursday's initial unemployment claims will show the way on Thursday, while the non-farm payroll report - expected to show a gain of 100,000 jobs for July - should set the tone on Friday.
After the Dow had been down for eight straight sessions and the S&P down seven in a row, the early morning trade looked to be more of the same with the major indices dropping to session lows around 10:45 am EDT. The Dow was down more than 160 points, officially touching down at 11,700, when the turnaround began. The S&P was sporting losses of nearly 20 points before heading higher and closing at the highs of the day.
It's not as though anything had changed at all. Italy is on the brink of default, following in the footsteps of neighboring EU nations, Ireland, Portugal and Greece. European-based banks are supposedly frozen with terror having exceeded all prudent boundaries for lending to highly-indebted nations.
And, here in the US, no change will come to the current jobs or housing situation as the congress has already embarked on a month-long vacation, after, of course, taking a few victory laps for their last-minute daring-do on raising the debt ceiling and putting forth a measure that cuts somewhere between $20 and $25 billion from the budget in 2012, less than 1/10th of one per cent of the entire budget, or, quite literally, a drop in the budget bucket.
The only thing moving stocks today - besides the obvious influence of the PPT - was the extremely oversold condition of the markets. The Dow is down 828 points since just July 21, exactly 10 trading sessions. There's a very realistic chance that this was only a knee-jerk reaction rally, based entirely upon the notion that stocks are cheap relative to where they were trading two weeks ago.
Dow 11,896.44, -29.82 (0.25%)
NASDAQ 2,693.07, -23.83 (0.89%)
S&P 500 1,260.34, -6.29 (0.50%)
NYSE Composite 7,853.20, -21.22 (0.27%)
Advancing issues finally took the edge over losers, 3737-2897. The NASDAQ posted 28 new highs, against 204 new lows, while the NYSE had just 14 new highs and 275 new lows, blowing the combined total up to 42 new highs and 479 new lows. This high gap indicates that stocks are on the verge of a severe, long-term breakdown, despite today's small gains. Volume was strong, but the buying seemed to be out of desperation and directed at short-term profit rather than long-term investment.
NASDAQ Volume 2,637,190,000
NYSE Volume 6,487,507,000
Two pieces of jobs-related data showed that the jobs market is still in quite the dodgy condition. The firm of Challenger, Gray and Christmas released their monthly survey of planned layoffs, which showed employers announcing 66,414 planned job cuts in July, up 60.3 percent from 41,432 in June. Meanwhile, the ADP monthly private payroll survey surged to 114,000 added jobs in July, a positive sign for Friday's non-farm payroll numbers from the BLS.
Commodities continued along their bifurcated path, with oil down $1.86, to $91.93, while gold surged to another record at $1,666.30, up a whopping $21.80 on the day. Silver rose $1.67, a gain of more than 4%, to $41.76, the highest close since May.
All of this sets up for an exciting end to the week. Thursday's initial unemployment claims will show the way on Thursday, while the non-farm payroll report - expected to show a gain of 100,000 jobs for July - should set the tone on Friday.
Tuesday, August 2, 2011
Congress Passes, President Signs Debt Ceiling Increase; Markets Tank
Passing with a bi-partisan majority of 74-26 in the Senate, the debt ceiling increase and associated debt reduction elements became law today as the President signed the bill this afternoon.
The bill, laden with policies and procedures for further debt reductions from an all-star panel of twelve senators and house members - not yet announced - has been panned by economists as well as by the same politicians who voted for or against the measure, saying the proposed cuts are too small and don't begin to take effect until 2013.
Once again, as congress heads off for a month-long vacation, the deficit and debt issues, along with Medicare, Medicade and Social Security reforms, have been kicked clear down the road until Thanksgiving, when the select panel will present its recommendations.
Wall Street, meanwhile, has other concerns, namely the continuing deterioration of the the US and global economies. Stocks were especially hard-hit at the end of the day, with losses cascading into the closing lows of the day, a more calamitous condition than has been seen in markets in nearly three years.
One would have thought that with the passage of the debt ceiling increase, stocks would rally, but the opposite turns out to be the case as economic data suggests the US is heading into another recession.
The S&P lost ground for the seventh straight session; the Dow made it eight down days in a row. Eash of those situations has not occurred since the disastrous month of October, 2008.
At the other end of the spectrum, gold and silver holders had a field day, with precious metals up sharply in response to a debt reduction bill that more or less satisfies the status quo, while doing little to address the structural issues presented.
Dow 11,866.62, -265.87 (2.19%)
NASDAQ 2,669.24, -75.37 (2.75%)
S&P 500 1,254.05, -32.89 (2.56%)
NYSE Composite 7,831.98, -208.95 (2.60%)
Declining issues buried advancers, 5276-1367. On the NASDAQ, 31 new highs were overwhelmed by 140 new lows. On the NYSE, only 20 stocks made new highs, while 160 reached new 52-week lows. The combined total of 51 new highs and 300 new lows puts further emphasis on the importance of the high-low indicator, which has been presaging a deep pull-back for weeks and is now sending out the strongest sell signal of all, with expanding numbers of stocks making new lows.
Volume was quite strong, yet another indicator that the trouble for equity investors is only beginning.
NASDAQ Volume 2,411,239,500
NYSE Volume 5,976,464,500
Crude oil finished to the downside as well, losing $1.10, to $93.79, the lowest price in over a month. As mentioned above, gold was a stellar performer, picking up $22.80, to a new record high of $1,644.50. Silver was also favored, gaining 78 cents, to $40.09 and higher in the after-hours.
An advance look at Friday's non-farm payroll for July will be made available Wednesday morning at 8:15 am, when ADP releases its monthly Employment Change report.
The bill, laden with policies and procedures for further debt reductions from an all-star panel of twelve senators and house members - not yet announced - has been panned by economists as well as by the same politicians who voted for or against the measure, saying the proposed cuts are too small and don't begin to take effect until 2013.
Once again, as congress heads off for a month-long vacation, the deficit and debt issues, along with Medicare, Medicade and Social Security reforms, have been kicked clear down the road until Thanksgiving, when the select panel will present its recommendations.
Wall Street, meanwhile, has other concerns, namely the continuing deterioration of the the US and global economies. Stocks were especially hard-hit at the end of the day, with losses cascading into the closing lows of the day, a more calamitous condition than has been seen in markets in nearly three years.
One would have thought that with the passage of the debt ceiling increase, stocks would rally, but the opposite turns out to be the case as economic data suggests the US is heading into another recession.
The S&P lost ground for the seventh straight session; the Dow made it eight down days in a row. Eash of those situations has not occurred since the disastrous month of October, 2008.
At the other end of the spectrum, gold and silver holders had a field day, with precious metals up sharply in response to a debt reduction bill that more or less satisfies the status quo, while doing little to address the structural issues presented.
Dow 11,866.62, -265.87 (2.19%)
NASDAQ 2,669.24, -75.37 (2.75%)
S&P 500 1,254.05, -32.89 (2.56%)
NYSE Composite 7,831.98, -208.95 (2.60%)
Declining issues buried advancers, 5276-1367. On the NASDAQ, 31 new highs were overwhelmed by 140 new lows. On the NYSE, only 20 stocks made new highs, while 160 reached new 52-week lows. The combined total of 51 new highs and 300 new lows puts further emphasis on the importance of the high-low indicator, which has been presaging a deep pull-back for weeks and is now sending out the strongest sell signal of all, with expanding numbers of stocks making new lows.
Volume was quite strong, yet another indicator that the trouble for equity investors is only beginning.
NASDAQ Volume 2,411,239,500
NYSE Volume 5,976,464,500
Crude oil finished to the downside as well, losing $1.10, to $93.79, the lowest price in over a month. As mentioned above, gold was a stellar performer, picking up $22.80, to a new record high of $1,644.50. Silver was also favored, gaining 78 cents, to $40.09 and higher in the after-hours.
An advance look at Friday's non-farm payroll for July will be made available Wednesday morning at 8:15 am, when ADP releases its monthly Employment Change report.
Getting By Without a Checking Account
According to a survey by the FDIC, roughly 7.7%, or 9 million adults in the United States do not have bank accounts, or, as the report states, are "unbanked."
The highest percentage is among Afro-Americans and Hispanics, at 21.7% and 19.3%, respectively, with Whites at the lower end of the unbanked population at a mere 3.3%.
Naturally, paying bills and doing everyday shopping is difficult these days without a debit or credit card, much less a checking account.
Into the fray jumps Green Dot Corporation, which provides retail based financial services for this largely underserved community with offerings such as My Green Dot, providing reloadable prepaid MasterCard or Visa cards that people can use for paying bills, shopping and other day-to-day needs or financial transactions.
My Green Dot is a web-based application site which can be accessed from any computer or mobile phone, where customers can check balances, add funds or have government checks directly deposited into their accounts.
Green Dot Corporation also operates domestic cash-acceptance networks that offer prepaid card reloading among other services to individuals, banks and financial service companies.
The company was founded in 1999 and is based in Monrovia, California.
Now, getting by without a checking account has become less of a chore and more of a technologically-driven benefit to those who opt for a less-traditional route.
The highest percentage is among Afro-Americans and Hispanics, at 21.7% and 19.3%, respectively, with Whites at the lower end of the unbanked population at a mere 3.3%.
Naturally, paying bills and doing everyday shopping is difficult these days without a debit or credit card, much less a checking account.
Into the fray jumps Green Dot Corporation, which provides retail based financial services for this largely underserved community with offerings such as My Green Dot, providing reloadable prepaid MasterCard or Visa cards that people can use for paying bills, shopping and other day-to-day needs or financial transactions.
My Green Dot is a web-based application site which can be accessed from any computer or mobile phone, where customers can check balances, add funds or have government checks directly deposited into their accounts.
Green Dot Corporation also operates domestic cash-acceptance networks that offer prepaid card reloading among other services to individuals, banks and financial service companies.
The company was founded in 1999 and is based in Monrovia, California.
Now, getting by without a checking account has become less of a chore and more of a technologically-driven benefit to those who opt for a less-traditional route.
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