Fitch Report on US Bank Exposure to Europe Crushes Stocks

Stocks were just trundling along on low volume Wednesday, until about 2:30 pm ET, when things took a turn for the worse. Nothing overly dramatic, but stocks began to slide from break-even into the red and accelerated at 3:30 - just 1/2 hour from the closing bell, when Fitch Ratings put out a report that focused attention on US bank exposure to Europe, saying that, though hedged, the top five US banks - Bank of America, JP Morgan Chase, Citi, Goldman Sach and Morgan Stanley (supposedly, those are the big five) - could suffer severely if the European debt crisis spirals out of control.

While there was nothing really new in the report, traders took it quite seriously, sending the Dow - already down about 75 points when the report surfaced - another 100 points lower into the close.

Gross exposures to large European countries was at the heart of the report, with US banks exposed to more than $400 billion of loans to France, the UK and banks in those countries. Despite steadfastly denying any outsized exposure to Europe, a half trillion dollars, as expressed by the Fitch report, isn't just chicken feed.

As to the sudden shift prior to the report going public, there was probably some degree of front-running by those with advance knowledge, generally the very same banks named in the report.

Earlier in the day, CPI was reported to be down 0.1% in October, industrial production improved by 0.7% and capacity utilization stood at 77.8%, up 0.5% from September.

By the end of the session, all sectors were lower, led by financials, especially Bank of America (BAC), which closed down 23 cents, to 5.90, its lowest close since October 7. Citigroup (C) was off 1.16, to 26.86, and Goldman Sachs (GS) fell 4.15, to 95.60.

Trade in crude oil was higher, though unusually focused on a plan to change the direction of crude oil flows on the Seaway pipeline, to enable it to transport oil from Cushing, Oklahoma to the U.S. Gulf Coast. The dense argument, which would, if oil were traded in a truly free and not-manipulated market, cause oil prices to fall, produced the opposite effect, with WTI crude rocketing above the $100 mark, as the gap between WTI and Brent crude continued to contract.

What seems to be in play is an overt effort to square the prices of the two grades worldwide. US oil has been creap for decades, but the price of crude in the US seems destined to rival that of Europe even though supplies in Canada, which has direct access to US markets, are high and could easily outstrip oil imports from the Middle East and elsewhere.

After President Obama shut down the proposed Keystone pipeline - which would have taken oil from the Alberta oil sands directly to Gulf Coast refineries - on regulatory and environmental grounds until at least after his supposed re-election, the only conclusion to be drawn is that it's not only the banks, the AMA and big pharma that have their tentacles around US politicians, but big oil as well, though that is hardly a revelation.

The news flow, from Europe and the US, continues to suggest that politicians and financial concerns know an economic downturn is just ahead, the only question being whether it's from natural economic forces or planned by the elitist elements in government, business and finance. Skeptics will call that "conspiracy theory" but since the politicians in the US (and probably in Europe) haven't done a thing to benefit the general population in two decades, why would they change their stripes now?

Dow 11,905.59 190.57 (1.58%)
NASDAQ 2,639.61 46.59 (1.73%)
S&P 500 1,236.91 20.90 (1.66%)
NYSE Compos 7,392.03 117.02 (1.56%)
NASDAQ Volume 1,940,961,000.00
NYSE Volume 4,034,991,750
Combined NYSE & NASDAQ Advance - Decline: 1427-4226
Combined NYSE & NASDAQ New highs - New lows: 74-105
WTI crude oil: 102.59, 3.22
Gold: 1,774.30, -7.90
Silver: 33.82, -0.63

Low Volume Melt-up Ends Flattish; OWS Protesters in Limbo; Oil Nears $100

Another sluggish, low-volume day on Wall Street started on the downside, melted up during the midday hours and ended nearly flat - with the exception of the NASDAQ momentum stocks - as traders ignored a Euro sell-off that normally pounds stocks in the same direction and Italian 10-year bond yields tearing back above seven percent that ignited a 400-point decline just a week ago.

So, unless one has a crystal ball with special powers, predicting the direction of trading based on correlations has become a true guessing game once again.

The morning's economic data was strong, offsetting the effects of Italy's bond yield rise. PPI declined by 0.3% in October, a signal that inflation might be still controllable, though one month's data does not make a trend. Retail sales posted a solid 0.5% in October, a third straight increase.

Maybe more consoling than anything was the New York manufacturing index, which popped slightly into the positive, at 0.61, after a string of months in the red.

Also making morning headlines was word that Occupy Wall Street (OWS) protesters were removed from Zuccotti Park by New York City police in riot gear in the pre-dawn hours.

As the day progressed protesters awaited word on a ruling from state Supreme Court that would bar the city from enforcing evictions and the dismantling of tents. According to unconfirmed reports, after trading closed, the court decision said the protesters could return to the park, but could not bring in sleeping bags or erect tents.

The continuing climb of crude oil has some people concerned and speculators ebullient as the price of WTI crude oil approached the $100 mark. Gas prices have recently declined as oil sold below $80 a barrel in September, before bouncing back to current levels. With the holiday shopping season approaching, retailers are concerned that high gasoline prices will crimp travel and spending on gifts.

Being loosely tied to supply-demand mechanisms, oil prices seem more inclined to rise to unsustainable levels than reach equilibrium, despite lower demand.

Within all of this, trading volume has slumped to summertime levels for the second straight session. What's holding back traders could be a variety of issues, ranging from the continuing, unresolved issues in Europe to the nearly stalled negotiations by the congressional super-committee that is supposed to recommend policy changes in the form of spending reductions and/or tax increases by November 23. The six Democrats and six Republicans on the committee are deadlocked, with no resolution in sight.

Tomorrow will bring a fresh set of economic data, most importantly Industrial Production and Capacity Utilization, two readings that often indicate the strength or weakness in the manufacturing sector.

Dow 12,096.16, +17.18 (0.14%)
NASDAQ 2,686.20, +28.98 (1.09%)
S&P 500 1,257.81, +6.03 (0.48%)
NYSE Composite 7,509.05, +15.75 (0.21%)
NASDAQ Volume 1,667,635,375
NYSE Volume 3,500,557,250
Combined NYSE & NASDAQ Advance - Decline: 3667-1946
Combined NYSE & NASDAQ New highs - New lows: 96-100
WTI crude oil: 99.37, +1.23
Gold: 1,782.20, +3.80
Silver: 34.46, +0.43

Wall Street Starts Week on Down Note, Sluggish Volume

There was no follow-up to last week's furious upside rallies on Monday, as traders sought catalysts for profit but found few. Oddly, given that the news over the weekend indicated something of a simmering in the ongoing European debt crisis, volume was at mid-summer levels or lower, marking one of the lowest trading volume days of the year.

Just as everything was up on Friday, just about all asset classes showed losses on Monday, including stocks of all flavors, led lower by shares of financial companies, including the world's favorites, Goldman Sachs (GS -2.37, 99.29), Citigroup (C -0.95, 28.38) and Bank of America (BAC -0.16, 6.05), which just can't seem to get out of the six-dollar range, to the chagrin of Warren Buffett and countless speculators who believe that bank stocks are a bargain (like uber-bank-bull, Dick Bove).

All sectors finished in the red, with consumer cyclicals showing the smallest loss (-0.31%).

Still, the most pronounced factor of the session was the sheer lack of velocity, as though some of the big brokerages had turned off the HFT computers and handed the trading back to humans. The trading marked the third-lowest volume of the year.

It would be nice if that actually happened, but one can hope and dream. Meanwhile, there just doesn't seem to be much interest in buying or selling much of anything, at least for today.

Dow 12,079.44, -74.24 (0.61%)
NASDAQ 2,657.22, -21.53 (0.80%)
S&P 500 1,251.88, -11.97 (0.95%)
NYSE Composite 7,496.71, -79.47 (1.05%)
NASDAQ Volume 1,401,417,000
NYSE Volume 3,075,054,250
Combined NYSE & NASDAQ Advance - Decline: 1384-4266
Combined NYSE & NASDAQ New highs - New lows: 81-82
WTI crude oil: 98.14, -0.85
Gold: 1,778.40, -9.70
Silver: 34.02, -0.66

Online Bookkeeping and Accounting for Small Businesses

Anyone who's ever been in business for him/herself knows that half the battle is keeping up with the endless paperwork, from government agencies, invoices from suppliers, and the steady flow of bills, receipts and information overload with which just about every business - brick or mortar or online - has to contend.

Here were are in the second decade of the 21st century and computers still haven't solved the paperwork dilemma.

There are solutions, some better than others, to at least handle the business end of the business, with online accounting leading the way to a more streamlined, better-organized future.

One such service is Outright.com, a handy website that involves online accounting and bookkeeping software, with special focus on users of online marketplaces like eBay or Etsy.

Budding entrepreneurs and veteran businesspeople will appreciate the fact that a simple account is free, and singup takes less than a minute. The system allows you to link and import from your eBay account and also to PayPal, to track sales, sales tax, shipping fees and income.

Other accounts can be added later and upgrades are available for only $9.95 per month. If you're struggling under a deluge of paperwork and spreadsheets, this handy tool is a step in the right direction.

Identity Theft, Employment and the Reporting Agencies

Identity theft is a major life difficulty that can affect your family, credit score or even your job prospects. Many employers are and have been looking into the credit histories of prospective employees as a way to differentiate the deluge of job applications during these difficult times.

Some say that checking credit scores of job applicants is hitting below the belt against individuals who, for better or worse, could not meet their obligations due to job loss, divorce, illness or the sluggish economy. Employers, on the other hand, are already skeptical of the current economy and are doing everything within their power to employ people while keeping their business intact and operating smoothly. They feel that identifying poor credit risk individuals is within their rights to hire the employees the consider the most fit for the job and the culture of the company.

Like it or not, that's why it's important to keep track of one's credit score. There are many sites at which one can access a free credit score to check for discrepancies, mistakes or fraud, the signature of identity theft.

Sites offering FreeScore provideof credit scores, reports and consumer credit information, along with identity theft protection services. An effective deterrent against identity theft and all sorts of other social maladies, getting the information from the three major credit reporting companies - Equifax, TransUnion and Experian.

Discrepancies on any, from those of the other reporting services, or transactions or information of which you are unaware, should alert you to the possibility of foul play.

It is important that as soon as you become aware of mistakes or errors in any of your credit history, that you contact the reporting agency, preferably in writing, for an explanation. Also advisable is contacting the financial institution upon which the error is recorded, be it a credit card company, bank of other financial institution.