As has been noted here recently, the correlation between the Euro and US stocks is operating in perfect harmony. Today, with the Italian 10-year note dipping below the magic 7% yield line, the euro gained in strength against other currencies, most notably the US dollar, which sent - as it always does - US stocks upward.
There's really no further analysis to the US stock market needed, so long as Europe remains in crisis and the unannounced policy of the Fed and Treasury is to keep the US dollar weak. Whenever the Euro is rising, so too US stocks, and when the Euro is down, so are equities across the pond. It's a losing strategy in the big picture view, but that doesn't prevent Wall Street's masters of the universe from making bank on both sides of the trade.
One could suggest that the entire global economy is now tied to the fates of Greece and Italy, though in reality, it's the Fed and the major US banks that are pulling most of the strings. Just as fundamentals no longer matter for stock-picking, so too the daily drumbeat of Euro-craziness that manifests itself in speeches, statements and the occasional turnover of a sovereign government.
Keeping the dollar week and the Euro strong is all that matters, even though the Euro should, realistically, be trading at par with the dollar or lower. Eventually, this is a failing policy that will flatten everything: stocks, currencies, politicians and their weakened governments.
The correlation is not perfect, however, as our New highs - New lows indicator below demonstrates in perfect fashion. Today was a "risk on" event, though more of a momentum play than a true rally.
On the domestic front, Jefferson County, Alabama, filed for Chapter 9 bankruptcy protection on Wednesday after defaulting on a sewer project that plagued the county for nearly two decades. The county, which is home to Alabama's largest city, Birmingham, filed for $4 billion, making it the largest municipal bankruptcy filing in US history.
The story behind the bankruptcy is a pantheon of the the ills plaguing the once-great United States, involving the EPA - which ordered the county to upgrade its sewer system - corrupt local officials, who were offered and took sweetheart deals from - you guessed it - Wall Street speculators. There's blame and shame aplenty to go around, as 22 local officials were indicted and convicted for their roles in the corruption.
The federal government has bailed out banks, insurance companies and automakers, but when it comes to cites where Americans actually live and work, no dice. The county goes belly-up, leaving creditors holding worthless paper. It's an American tragedy brought to you by the crony capitalists spanning the nation.
Also making domestic headlines, RealtyTrac reported that foreclosure filings rose seven percent in October from the previous month, as lenders got back to work after the robo-signing scandal had derailed their efforts for a year. While Nevada remained atop the foreclosure rate for the 58th straight month, California took over as the top dog for October with a 17% spike in default notices. The top ten states for foreclosure activity (these are the places worth considering moving to in the next 3-5 years because housing prices will be ridiculously low) are Nevada, California, Arizona, Florida, Michigan, Georgia, Illinois, Idaho, Oregon and Colorado.
God bless America. We've been in a depression for three years but nobody will admit it. It's a shame, because this is a good country with some very wonderful people, but our political leaders and Wall Street bankers have bastardized the entire financial system.
Tomorrow being Veteran's Day, be sure to honor our living and fallen military men and women, and, maybe, save a little bit of wrath for those who made them fight, and die, for causes that benefitted a few at the expense of the many.
Dow 11,893.86, +112.92 (0.96%)
NASDAQ 2,625.15, +3.50 (0.13%)
S&P 500 1,239.70, +10.60 (0.86%)
NYSE Composite 7,423.64, +70.19 (0.95%)
NASDAQ Volume 1,908,959,750
NYSE Volume 4,015,058,500
Combined NYSE & NASDAQ Advance - Decline: 3629-1866
Combined NYSE & NASDAQ New highs - New lows: 36-104
WTI crude oil: 97.78, +2.04 (WTI is becoming WTF. Oil up more than $20 in the past six weeks.)
Gold: 1,759.60, -32.00
Silver: 34.11, -0.26
Thursday, November 10, 2011
Financing Your Personal Injury Claim
We've all seen the ads for personal injury lawyers on TV, promising to fight for your rights and help you obtain a settlement from an insurance company.
It's big business and personal injury settlements or awards by courts can run into the tens or hundreds of thousands of dollars, and, in severe or exceptional cases, even more. The lawyers at most high-quality personal injury firms are battle-tested and necessary for claimants fighting insurance companies, all of which have their own legal teams of highly qualified attorneys.
While getting a lawyer to handle your case is usually as easy as making a phone call - because most will work on a percentage fee basis with minimal up-front costs - waiting to get paid on your claim can be stressful, since many times, the personal injury sufferer will be out of work while the slow court process proceeds.
Because of the long time between an accident and an award, there are companies which provide lawsuit cash advances to bridge the income gap and offer personal injury claimants money to make ends meet while their lawsuit commences.
Terms are fairly straightforward and the money can be repaid upon receipt of the personal injury award. Leave it to the legal profession to come up with a solution to what can be a serious situation.
It's big business and personal injury settlements or awards by courts can run into the tens or hundreds of thousands of dollars, and, in severe or exceptional cases, even more. The lawyers at most high-quality personal injury firms are battle-tested and necessary for claimants fighting insurance companies, all of which have their own legal teams of highly qualified attorneys.
While getting a lawyer to handle your case is usually as easy as making a phone call - because most will work on a percentage fee basis with minimal up-front costs - waiting to get paid on your claim can be stressful, since many times, the personal injury sufferer will be out of work while the slow court process proceeds.
Because of the long time between an accident and an award, there are companies which provide lawsuit cash advances to bridge the income gap and offer personal injury claimants money to make ends meet while their lawsuit commences.
Terms are fairly straightforward and the money can be repaid upon receipt of the personal injury award. Leave it to the legal profession to come up with a solution to what can be a serious situation.
Wednesday, November 9, 2011
Stocks Whacked as Italian Bonds Blow Out, Euro Dives
Today was all about Italy, in the aftermath of Tuesday's tumultuous parliamentary session, Italian Prime Minister Silvio Berlusconi announced that he would resign after parliament passes economic reforms demanded by the European Union. He also promised not to run in Italy's next election.
While the initial market response to Berlusconi's departure was mildly positive, in the belief that a new government might make a difference, the bond markets broadly disagreed, sending yields on Italy's 10-year note to over 7%, a level broadly believed to be one at which Italy would not be able to finance itself. The country has built up a mammoth debt load of €1.9 trillion, and financial experts agree that at 7% on the 10-year and an even higher rate on the five-year, Italy will be unable to avoid either default or a bailout by EU authorities.
With the bond markets were facing up to Italy's demise, the Euro traded lower against other currencies, including the US dollar, which, in turn caused a collapse in US equity prices, culminating in a mammoth decline on the Dow of nearly 400 points or 3.2%, with the other major indices dropping by even larger percentages.
The conditions in Europe continue to deteriorate by the day, and the Italian problems could bring on an even more calamitous situation than has prevailed prior to this most recent debt catastrophe because Italy is simply too large for a bailout. There simply is not enough money available to the ECB or the recently-enlarged EFSF.
All other economic data and financial news paled by comparison to the realization that Italy would follow Ireland, Greece and Portugal down the debt-hole.
Every market sector was lower, led by financial stocks, conglomerates and basic materials, each of which registered a decline of more than 4.5 percent.
It was a dismal day for stocks, but one the market had been anticipating, though hoping it would never come. A default by a country the size of Italy may cause the Euro to become vastly devalued (and maybe even doom it as a viable currency), pushing up the US dollar, exactly the opposite of what the Wall Street insiders prefer. It's another seminal moment in the financial crisis that will not end.
Dow 11,780.94, -389.24 (3.20%)
NASDAQ 2,621.65, -105.84 (3.88%)
S&P 500 1,229.11, -46.81 (3.67%)
NYSE Composite 7,357.91, -314.00 (4.09%)
NASDAQ Volume 2,107,168,250
NYSE Volume 4,639,047,500
Combined NYSE & NASDAQ Advance - Decline: 634-5048
Combined NYSE & NASDAQ New highs - New lows: 39-97
WTI crude oil: 95.74, -1.06
Gold: 1,791.60, -7.60
Silver: 34.36, -0.79
While the initial market response to Berlusconi's departure was mildly positive, in the belief that a new government might make a difference, the bond markets broadly disagreed, sending yields on Italy's 10-year note to over 7%, a level broadly believed to be one at which Italy would not be able to finance itself. The country has built up a mammoth debt load of €1.9 trillion, and financial experts agree that at 7% on the 10-year and an even higher rate on the five-year, Italy will be unable to avoid either default or a bailout by EU authorities.
With the bond markets were facing up to Italy's demise, the Euro traded lower against other currencies, including the US dollar, which, in turn caused a collapse in US equity prices, culminating in a mammoth decline on the Dow of nearly 400 points or 3.2%, with the other major indices dropping by even larger percentages.
The conditions in Europe continue to deteriorate by the day, and the Italian problems could bring on an even more calamitous situation than has prevailed prior to this most recent debt catastrophe because Italy is simply too large for a bailout. There simply is not enough money available to the ECB or the recently-enlarged EFSF.
All other economic data and financial news paled by comparison to the realization that Italy would follow Ireland, Greece and Portugal down the debt-hole.
Every market sector was lower, led by financial stocks, conglomerates and basic materials, each of which registered a decline of more than 4.5 percent.
It was a dismal day for stocks, but one the market had been anticipating, though hoping it would never come. A default by a country the size of Italy may cause the Euro to become vastly devalued (and maybe even doom it as a viable currency), pushing up the US dollar, exactly the opposite of what the Wall Street insiders prefer. It's another seminal moment in the financial crisis that will not end.
Dow 11,780.94, -389.24 (3.20%)
NASDAQ 2,621.65, -105.84 (3.88%)
S&P 500 1,229.11, -46.81 (3.67%)
NYSE Composite 7,357.91, -314.00 (4.09%)
NASDAQ Volume 2,107,168,250
NYSE Volume 4,639,047,500
Combined NYSE & NASDAQ Advance - Decline: 634-5048
Combined NYSE & NASDAQ New highs - New lows: 39-97
WTI crude oil: 95.74, -1.06
Gold: 1,791.60, -7.60
Silver: 34.36, -0.79
Tuesday, November 8, 2011
Stronger Euro, Oil, US Stocks Make Wall Street a Winner
Whatever it is these Wall Street geniuses are smoking, they should be encouraged to pass some along to the rest of America, because, as Main Street struggles with high unemployment, stagnant wages, underwater housing and simply making ends meet, stocks just continue to run higher, as they did today.
Besides Italian President Silvio Berlusconi preparing to step down amid his country's burgeoning debt crisis, there wasn't much news on the European front, and even less news here in the USA, but traders saw fit to add to positions, or at least goose stocks a touch higher though still in the same range that's persisted since the end of July.
Almost all asset classes were marked up as the Euro gathered strength, pushing down the value of the dollar. That's all you need to know. Wall Street has this game figured out, like it or not, and they're not deviating from the game plan. Stocks are king no matter what happens in the rest of the world, until they're not, and we all know what happens then.
Meanwhile, the next crisis looming comes from - you guessed it - Washington, where lawmakers (yeah, that's a good term, like they make any that matter) were busy fighting with each other, as they normally do, just two weeks from the November 23 deadline for the "Super-committee" to come up with something along the lines of $2-4 trillion in budget cuts. Time is running out on the paid monkeys in congress and progress has been slow to nil.
If a deal is not reached by the deadline, some supposedly automatic cuts will take place, though it's almost a certainty that the wily legislators will find their ways around that boondoggle as well, leaving America in just about the same shape it was in before all the nonsense began over the debt limit. The free-spenders (all of them except Ron Paul and few others) got what they wanted in August: more money, and they will allow the rest of the country to burn rather than reach consensus and compromise.
They should all be kicked out of office, or, barring that, mostly ignored. As John Bogle said last evening on CBS news, "America is losing the ability to govern itself." Maybe that will be a better outcome.
Dow 12,170.18, +101.79 (0.84%)
NASDAQ 2,727.49, +32.24 (1.20%)
S&P 500 1,275.92, +14.80 (1.17%)
NYSE Composite 7,671.91, +81.48 (1.07%)
NASDAQ Volume 1,862,988,625
NYSE Volume 3,908,488,000
Combined NYSE & NASDAQ Advance - Decline: 4134-1511
Combined NYSE & NASDAQ New highs - New lows: 124-66
WTI crude oil: 96.80, +1.28
Gold: 1,799.20, +8.20
Silver: 35.15, +0.33
Besides Italian President Silvio Berlusconi preparing to step down amid his country's burgeoning debt crisis, there wasn't much news on the European front, and even less news here in the USA, but traders saw fit to add to positions, or at least goose stocks a touch higher though still in the same range that's persisted since the end of July.
Almost all asset classes were marked up as the Euro gathered strength, pushing down the value of the dollar. That's all you need to know. Wall Street has this game figured out, like it or not, and they're not deviating from the game plan. Stocks are king no matter what happens in the rest of the world, until they're not, and we all know what happens then.
Meanwhile, the next crisis looming comes from - you guessed it - Washington, where lawmakers (yeah, that's a good term, like they make any that matter) were busy fighting with each other, as they normally do, just two weeks from the November 23 deadline for the "Super-committee" to come up with something along the lines of $2-4 trillion in budget cuts. Time is running out on the paid monkeys in congress and progress has been slow to nil.
If a deal is not reached by the deadline, some supposedly automatic cuts will take place, though it's almost a certainty that the wily legislators will find their ways around that boondoggle as well, leaving America in just about the same shape it was in before all the nonsense began over the debt limit. The free-spenders (all of them except Ron Paul and few others) got what they wanted in August: more money, and they will allow the rest of the country to burn rather than reach consensus and compromise.
They should all be kicked out of office, or, barring that, mostly ignored. As John Bogle said last evening on CBS news, "America is losing the ability to govern itself." Maybe that will be a better outcome.
Dow 12,170.18, +101.79 (0.84%)
NASDAQ 2,727.49, +32.24 (1.20%)
S&P 500 1,275.92, +14.80 (1.17%)
NYSE Composite 7,671.91, +81.48 (1.07%)
NASDAQ Volume 1,862,988,625
NYSE Volume 3,908,488,000
Combined NYSE & NASDAQ Advance - Decline: 4134-1511
Combined NYSE & NASDAQ New highs - New lows: 124-66
WTI crude oil: 96.80, +1.28
Gold: 1,799.20, +8.20
Silver: 35.15, +0.33
Monday, November 7, 2011
Euro Leads Stocks Lower, Then Higher; Income Disparity Hits Young Hardest
There are plenty of correlation trades that make plenty of sense, but perhaps the only one worth watching - from a macro perspective - is the Euro-Dollar trade because of its unique correlation to the US stock market.
Today was a prime example of how that trade controls markets, from weak hands to strong, from dead to money to risk-be-damned, full speed ahead.
As trading opened for the week, the Euro was under a great deal of stress, not only from the continuing crisis, but by way of the dual southern European national plight being waged in Greece and Italy, where both leaders - George Papandreou of Greece and Silvio Berlusconi of Italy - were rumored to be ready to step down at the drop of a falafel or calzone, so precarious their countries' dilemmas.
While Papandreou finally agreed today to step down from his post as Prime Minister in an effort for the country to form a unity government (whatever that may mean in a nation on the brink of dissolution), Berlusconi seems locked into a similar fate, given the debt issues facing his country. Bond yields have risen dramatically on Italy's benchmark 10-year bonds over recent weeks and the spread between the Italian 10-year and the 10-year German Bund hit 490 basis points today.
Also weighing on the Euro was the nearly failed auction of Euro 3 billion in bonds by the EFSF, the entity created to save European banks from catastrophe. The auction was lightly subscribed and only 2.5 billion of the bonds were sold - at a price 171 basis points over the Bund - the rest going back to the issuers at a hefty premium. The EFSF does not have enough heft to buy Italy's bonds, putting Berlusconi and his government in a very precarious position.
As the Euro sagged in the morning so did stocks in the US, as every hedge fund manager worth his or her salt is short the US dollar, a trade that provides cheap dollar liquidity to US markets but is also inherently ruinous to the long-term survivability of the world's reserve currency. As the day wore on in Europe and issues began to straighten themselves out, especially in the case of Greece, the Euro began to rise, taking the dollar down and US stocks up. Simple, Easy. A piece of cake.
The real problem with this trade - as it has been all along - is that the US is probably in better shape than Europe, which has been on the brink of a currency collapse for months, making the premise for being short the US dollar somewhat specious, or perhaps totally false, a straw man trade designed only to make the impression that all's well in the USA and keeping stocks trending higher.
Therein lies the fatal deceit of the short dollar trade. If somehow the Euro must be kept propped up - when it's true value is somewhere closer to parity with the dollar than the current 1.38:1 ratio of dollars to Euros - then the inevitability of the failure of the Euro as a currency, the EU as a common trading bloc and a massive decline in US stocks must occur. This is, without a doubt, how tightly intertwined markets now are, dangerously so, and the heads of most US banking, trading and political entities are well aware of this situation.
When the Euro blows, which it almost certainly will, US stocks will follow, and isn't that a nice, pleasant note upon which to start off your week? Of course, it gets worse. Because when stocks drop, what the middle class is going to do will make the continuing "Occupy" protests look like a kindergarten cookies and milk party. Nothing riles up a people than having their wealth pulled out from under them, and, while the bankers and politicians have thus far succeeded in keeping complete collapse a fringe argument, Europe's failings could quickly become an American nightmare.
It was revealed today just how badly broken the American system has become. Pew Research Center reported that the wealth disparity between young and old has reached its highest level ever, with "Households headed by a person 65 or older have a median net worth 47 times greater than households headed by a person under 35."
Unarguable as that fact may be, it exposes the soft underbelly of American life, wherein the elderly, otherwise known as collectors of entitlements, such as Social Security are prospering at the expense of the young, who must work hard and pay bills, debt and support their elder countrymen. It's as unfair a situation as the top 1% holding 40% of the nation's wealth, and perhaps worth fixing, with means testing, rather than turning our nation into an armed camp of elderly versus youth.
In between are the Baby Boomer generation, the first post-WWII generation to begin reaching retirement age. Some have saved, others not so much, but, as a whole, the largest segment - those born between 1950 and 1960 - are still years away from collecting a Social Security check. If one were to take a bet on just how much a person 55 to 60 years old today should expect as a monthly stipend at age 65 or 67, it would probably be wise to cut that number down by 25-45% from current expectations.
If one is inclined to believe the situation is tough right now, imagine another 50 million expecting to receive Social Security checks in coming years. The math simply does not add up unless those paying into the system are going to be taxed at 80% of their wages. It's just the truth, we're headed for even harder times ahead.
Dow 12,068.39, +85.15 (0.71%)
NASDAQ 2,695.25, +9.10 (0.34%)
S&P 500 1,261.12, +7.89 (0.63%)
NYSE Composite 7,590.43, +38.20 (0.51%)
NASDAQ Volume 1,735,945,625.00
NYSE Volume 3,629,465,250
Combined NYSE & NASDAQ Advance - Decline: 2773-2795
Combined NYSE & NASDAQ New highs - New lows: 88-64
WTI crude oil: 95.52, +1.26
Gold: 1,791.10, +35.00
Silver: 34.83, +0.74
Today was a prime example of how that trade controls markets, from weak hands to strong, from dead to money to risk-be-damned, full speed ahead.
As trading opened for the week, the Euro was under a great deal of stress, not only from the continuing crisis, but by way of the dual southern European national plight being waged in Greece and Italy, where both leaders - George Papandreou of Greece and Silvio Berlusconi of Italy - were rumored to be ready to step down at the drop of a falafel or calzone, so precarious their countries' dilemmas.
While Papandreou finally agreed today to step down from his post as Prime Minister in an effort for the country to form a unity government (whatever that may mean in a nation on the brink of dissolution), Berlusconi seems locked into a similar fate, given the debt issues facing his country. Bond yields have risen dramatically on Italy's benchmark 10-year bonds over recent weeks and the spread between the Italian 10-year and the 10-year German Bund hit 490 basis points today.
Also weighing on the Euro was the nearly failed auction of Euro 3 billion in bonds by the EFSF, the entity created to save European banks from catastrophe. The auction was lightly subscribed and only 2.5 billion of the bonds were sold - at a price 171 basis points over the Bund - the rest going back to the issuers at a hefty premium. The EFSF does not have enough heft to buy Italy's bonds, putting Berlusconi and his government in a very precarious position.
As the Euro sagged in the morning so did stocks in the US, as every hedge fund manager worth his or her salt is short the US dollar, a trade that provides cheap dollar liquidity to US markets but is also inherently ruinous to the long-term survivability of the world's reserve currency. As the day wore on in Europe and issues began to straighten themselves out, especially in the case of Greece, the Euro began to rise, taking the dollar down and US stocks up. Simple, Easy. A piece of cake.
The real problem with this trade - as it has been all along - is that the US is probably in better shape than Europe, which has been on the brink of a currency collapse for months, making the premise for being short the US dollar somewhat specious, or perhaps totally false, a straw man trade designed only to make the impression that all's well in the USA and keeping stocks trending higher.
Therein lies the fatal deceit of the short dollar trade. If somehow the Euro must be kept propped up - when it's true value is somewhere closer to parity with the dollar than the current 1.38:1 ratio of dollars to Euros - then the inevitability of the failure of the Euro as a currency, the EU as a common trading bloc and a massive decline in US stocks must occur. This is, without a doubt, how tightly intertwined markets now are, dangerously so, and the heads of most US banking, trading and political entities are well aware of this situation.
When the Euro blows, which it almost certainly will, US stocks will follow, and isn't that a nice, pleasant note upon which to start off your week? Of course, it gets worse. Because when stocks drop, what the middle class is going to do will make the continuing "Occupy" protests look like a kindergarten cookies and milk party. Nothing riles up a people than having their wealth pulled out from under them, and, while the bankers and politicians have thus far succeeded in keeping complete collapse a fringe argument, Europe's failings could quickly become an American nightmare.
It was revealed today just how badly broken the American system has become. Pew Research Center reported that the wealth disparity between young and old has reached its highest level ever, with "Households headed by a person 65 or older have a median net worth 47 times greater than households headed by a person under 35."
Unarguable as that fact may be, it exposes the soft underbelly of American life, wherein the elderly, otherwise known as collectors of entitlements, such as Social Security are prospering at the expense of the young, who must work hard and pay bills, debt and support their elder countrymen. It's as unfair a situation as the top 1% holding 40% of the nation's wealth, and perhaps worth fixing, with means testing, rather than turning our nation into an armed camp of elderly versus youth.
In between are the Baby Boomer generation, the first post-WWII generation to begin reaching retirement age. Some have saved, others not so much, but, as a whole, the largest segment - those born between 1950 and 1960 - are still years away from collecting a Social Security check. If one were to take a bet on just how much a person 55 to 60 years old today should expect as a monthly stipend at age 65 or 67, it would probably be wise to cut that number down by 25-45% from current expectations.
If one is inclined to believe the situation is tough right now, imagine another 50 million expecting to receive Social Security checks in coming years. The math simply does not add up unless those paying into the system are going to be taxed at 80% of their wages. It's just the truth, we're headed for even harder times ahead.
Dow 12,068.39, +85.15 (0.71%)
NASDAQ 2,695.25, +9.10 (0.34%)
S&P 500 1,261.12, +7.89 (0.63%)
NYSE Composite 7,590.43, +38.20 (0.51%)
NASDAQ Volume 1,735,945,625.00
NYSE Volume 3,629,465,250
Combined NYSE & NASDAQ Advance - Decline: 2773-2795
Combined NYSE & NASDAQ New highs - New lows: 88-64
WTI crude oil: 95.52, +1.26
Gold: 1,791.10, +35.00
Silver: 34.83, +0.74
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