AMR, parent company of American Airlines, filed for Chapter 11 bankruptcy protection Tuesday morning in federal bankruptcy court in the Southern district of New York.
While it seems an inappropriate time for an airline to file for bankruptcy, the timing could prove beneficial to the airline, the last of the major carriers to undergo reorganization. The company, while it has over $4 bllion in unrestricted cash, has $9 to $12 billion in debts.
The company announced that flights would not be disrupted and no immediate layoffs were announced. AMR lost $162 million in the third quarter and has posted losses in 14 of the last 16 quarters.
A pre-packaged bankruptcy such as this sure sounds all bright and cheery on the surface, but these things have ripple effects, as some vendors and creditors are surely to get stiffed or be forced to take pennies or dimes on their dollars. American Airlines will survive, but unseen companies will be hurt down the line and many employees will likely lose their jobs. The American recovery lives on, but why didn't the government bail out AMR like they did General Motors? Maybe they've lost interest in business.
The current S&P/Case-Shiller 10-and-20-city indices both fell month-to-month and year-over-year, as housing continues to deteriorate Despite the lowest mortgage rates in decades, potential homeowners are largely shut out of the market by stringent underwriting standards and, more importantly, the lack of jobs needed to finance and support the payments on a home purchase.
Declining by 3.9% in the third quarter, the index showed a bit of relief from the second quarter's 5.8% decline, though there wasn't much hope in the report, which tracked sales through September. Only Detroit and Washington, DC reported gains during the period, of 3.7 and 1 percent, respectively. Home prices have fallen back to 2003 levels nationally.
Wall Street shrugged off the bad housing data and focused instead on the Conference Board's index of consumer confidence which rocketed up to 56 in October, from a revised 40.9 in September. It was the largest monthly gain in confidence since April 2003, though the current reading comes off a two-year low for the gauge.
Meanwhile, over in Euro-land, finance ministers kicked off a two-day summit designed to define a framework for the various entities - countries, the ECB and the ESFS - to deal with the ongoing debt crisis. Some of the ideas being floated around this time involve countries trading a bit of sovereignty for more bailout funding, and leveraging the ESFS roughly 2.5 times, to provide funding for stressed economies, mostly in the Southern part of the continent.
As usual, nothing concrete has - or will - come from these meetings, as European leaders inch closer to a complete currency collapse, which now, along with the breakup of the Euro currency partners, is rated by top economists as a 50/50 chance.
Here in America, the few traders still not completely scared away pushed stocks higher for a second straight day on the Dow and S&P, though the NASDAQ finished in the red. Trading volume was extremely thin. If there is to be a so-called Santa Claus Rally, it's not likely to awaken any sleeping children and will probably be sold off in a session or two, as the choppiness and extreme volatility is not likely to abate before the European crisis either is resolved or blows up completely.
Dow 11,555.63, +32.62 (0.28%)
NASDAQ 2,515.51, -11.83 (0.47%)
S&P 500 1,195.19, -2.64 (0.22%)
NYSE Composite 7,149.71, +29.16 (+0.41%)
NASDAQ Volume 1,621,070,500
NYSE Volume 3,951,292,750
Combined NYSE & NASDAQ Advance - Decline: 2486-3131
Combined NYSE & NASDAQ New highs - New lows: 65-166
WTI crude oil: 99.79, +1.58
Gold: 1,713.40, +2.60
Silver: 31.85, -0.31
Tuesday, November 29, 2011
Monday, November 28, 2011
CYBER MONDAY DEALS
Contribution by Saul Martin
This morning I checked my e-mail using my CLEAR Denver Federal Center connection. I have been getting e-mails all week about Cyber Monday deals and Black FridayDeals. Some of the deals seem too good to be true, but not that good that I am going to get out in the thirty degree weather and sit outside of Best Buy, only to try and push other people down to get the one hundred and ninety-nine dollar forty-two inch flat screen television. I have gotten e-mails about deals that are good enough on Cyber Monday that I will wake up at five o’clock in the morning, sit on the couch, drink my coffee, and do my Christmas shopping. Amazon.com has a great deal, that if you spend fifty dollars that you get a choice a free gift. The best gift that they have to offer is a pair of pearl earrings! They are a gift in itself! Also, I am going to go to Toys-R-Us’ website. I was planning on buying my niece an Apple iTouch for Christmas. With the iTouch, they give you a fifty dollar gift card. I just can’t forget to set my alarm!
Following Friday's Flop, a Monday Pop; The Crisis Hasn't Ended
After Black Friday's classic pop and flop (the Dow was up 123 points, only to close down 26, and that was all in a half-session which lasted just 3 1/2 hours), stocks stormed back on rumors of a European fix-up engineered by the IMF and maybe the influence of the German economy, or maybe the Fed, or maybe... well, you get the point, it's all rumors and shadows, now that the extent of Europe's problems have been put to the light of day.
Estimates range to as high as $30 trillion dollars to fix what ails Europe, which is, after all, the same problems facing the United States, though in a longer timeline: un-payable debt brought on by years of overspending by governments, underfunded pension plans (think Social Security), flatlining government revenue and economies that cannot grow without artificial stimulus.
On Wall Street, the focus was on all the crazed morons shopping on Black Friday, which has been touted as one of the most successful single retail days ever. While that may be so, underlying the massive volumes of shoppers and sales the day after Thanksgiving are slim margins and now a three-week lull until the final week before Christmas, in which, traditionally, 40% of all holiday shopping takes place.
But Wall Street - and indeed, markets worldwide - celebrated Black Friday's success as if Gerald Ford had single-handedly beat inflation with his WIN (Whip Inflation Now) buttons. The truth - something seldom seen in the mainstream media these days - about Black Friday and how it translates into higher profits for the more than 5000 companies listed on the US stock markets is simply that it doesn't matter.
Warm weather across most of the country may have sent shoppers out in droves, but bottom lines are what's supposed to matter on Wall Street, and the results of the Christmas shopping season won't fully be known for another month-and-a-half.
As the markets have demonstrated quite convincingly over the past four months running, today's gains are tomorrow's profits taken or, for the long term holders (overnight, as opposed to outright day-trading), losses sustained. So, hold off on making any bold projections about Santa Claus rallies or long-term growth prospects until the remainder of the week and the month play out.
Not to pooh-pooh a solid ramp job on abysmally-low volume, but the charts are telling us that the circus of a crisis in Europe is simply the back end of what happened in America from 2007-2009. A good portion of the toxic debt bundled into MBS was sold into Europe, exacerbating an already bad situation. Unless the IMF, the Fed and the leaders of Europe really can fart flying unicorns on demand, the fix to the global economy is not going to happen this year, and probably not next.
The "recovery" which was supposed to have begun in 2009 is now more than 2 1/2 years old and unemployment is still "officially" over nine percent, though real economists put actual joblessness somewhere between 16 and 23%. The income gaps between rich and poor, elderly and young and across the spectrum of races and colors continue to expand. Congress continues to diddle over politics while only eight percent of the country believes they are doing a good job, proving that yes, you can fool some of the people some of the time.
National governments are imploding at an accelerating rate as financial instability threatens to topple the ruling elite. The crisis, begun in 2007 with the pop of the sub-prime bubble, is still in mid-flight (or descent, as the case may be). Europe's problems, while they may not be ours in America, sure have a familiar look to them and it may take some time, but they'll land here in America in due time, hopefully right about the time we're convinced Newt Gingrich (sounds a lot like Grinch, and that's not without irony) has the chops to save the nation.
Just for perspective, the Dow Jones Industrials peaked at 14,154 in November of 2007. Today they stand at 11,523, and, if a 20% decline defines a bear market, the current 18.6% drop from the peak had us right there in bear country over the past four months with a market - manipulated as it may be - that struggles with every gain, only to give it right back in a day or a week or so.
Confidence may be a fleeting emotion, but one necessary to keep a dynamic economy growing and strengthening. We don't have any, and there's little reason to believe there will be much coming around soon.
Dow 11,523.01, +291.23 (2.59%)
NASDAQ 2,527.34, +85.83 (3.52%)
S&P 500 1,192.55, +33.88 (2.92%)
NYSE Composite 7,120.55 +222.37 (3.22%)
NASDAQ Volume 1,623,548,125
NYSE Volume 3,839,968,500
Combined NYSE & NASDAQ Advance - Decline: 4783-968
Combined NYSE & NASDAQ New highs - New lows: 97-156
WTI crude oil: 98.21, +1.44
Gold: 1,710.80, +25.10
Silver: 32.16, 1.15
Estimates range to as high as $30 trillion dollars to fix what ails Europe, which is, after all, the same problems facing the United States, though in a longer timeline: un-payable debt brought on by years of overspending by governments, underfunded pension plans (think Social Security), flatlining government revenue and economies that cannot grow without artificial stimulus.
On Wall Street, the focus was on all the crazed morons shopping on Black Friday, which has been touted as one of the most successful single retail days ever. While that may be so, underlying the massive volumes of shoppers and sales the day after Thanksgiving are slim margins and now a three-week lull until the final week before Christmas, in which, traditionally, 40% of all holiday shopping takes place.
But Wall Street - and indeed, markets worldwide - celebrated Black Friday's success as if Gerald Ford had single-handedly beat inflation with his WIN (Whip Inflation Now) buttons. The truth - something seldom seen in the mainstream media these days - about Black Friday and how it translates into higher profits for the more than 5000 companies listed on the US stock markets is simply that it doesn't matter.
Warm weather across most of the country may have sent shoppers out in droves, but bottom lines are what's supposed to matter on Wall Street, and the results of the Christmas shopping season won't fully be known for another month-and-a-half.
As the markets have demonstrated quite convincingly over the past four months running, today's gains are tomorrow's profits taken or, for the long term holders (overnight, as opposed to outright day-trading), losses sustained. So, hold off on making any bold projections about Santa Claus rallies or long-term growth prospects until the remainder of the week and the month play out.
Not to pooh-pooh a solid ramp job on abysmally-low volume, but the charts are telling us that the circus of a crisis in Europe is simply the back end of what happened in America from 2007-2009. A good portion of the toxic debt bundled into MBS was sold into Europe, exacerbating an already bad situation. Unless the IMF, the Fed and the leaders of Europe really can fart flying unicorns on demand, the fix to the global economy is not going to happen this year, and probably not next.
The "recovery" which was supposed to have begun in 2009 is now more than 2 1/2 years old and unemployment is still "officially" over nine percent, though real economists put actual joblessness somewhere between 16 and 23%. The income gaps between rich and poor, elderly and young and across the spectrum of races and colors continue to expand. Congress continues to diddle over politics while only eight percent of the country believes they are doing a good job, proving that yes, you can fool some of the people some of the time.
National governments are imploding at an accelerating rate as financial instability threatens to topple the ruling elite. The crisis, begun in 2007 with the pop of the sub-prime bubble, is still in mid-flight (or descent, as the case may be). Europe's problems, while they may not be ours in America, sure have a familiar look to them and it may take some time, but they'll land here in America in due time, hopefully right about the time we're convinced Newt Gingrich (sounds a lot like Grinch, and that's not without irony) has the chops to save the nation.
Just for perspective, the Dow Jones Industrials peaked at 14,154 in November of 2007. Today they stand at 11,523, and, if a 20% decline defines a bear market, the current 18.6% drop from the peak had us right there in bear country over the past four months with a market - manipulated as it may be - that struggles with every gain, only to give it right back in a day or a week or so.
Confidence may be a fleeting emotion, but one necessary to keep a dynamic economy growing and strengthening. We don't have any, and there's little reason to believe there will be much coming around soon.
Dow 11,523.01, +291.23 (2.59%)
NASDAQ 2,527.34, +85.83 (3.52%)
S&P 500 1,192.55, +33.88 (2.92%)
NYSE Composite 7,120.55 +222.37 (3.22%)
NASDAQ Volume 1,623,548,125
NYSE Volume 3,839,968,500
Combined NYSE & NASDAQ Advance - Decline: 4783-968
Combined NYSE & NASDAQ New highs - New lows: 97-156
WTI crude oil: 98.21, +1.44
Gold: 1,710.80, +25.10
Silver: 32.16, 1.15
Wednesday, November 23, 2011
Failed German Bond Auction Sends Stocks Scurrying Lower
Germany, a tower of strength throughout the ongoing European debt crisis, got a taste of the bad medicine which has been doled out mostly across Southern European nations, as an auction for $8.1 billion in German Bunds was not well received, as bids covered only $5.9 billion of the offering.
Additionally, investors demanded a higher yield on the 10-year note, pushing the yield to a six-week high at 2.02%, higher than the corresponding 10-year note in US treasuries, which plummeted to as low as 1.88% during the course of the day.
Foremost on the minds of traders of all stripes, the question was simple, "If Europe's strongest nation cannot fund itself, what's next for the continent and for the rest of the planet?"
The news struck just prior to the opening of US markets. Along with unusual readings on US durable goods orders, personal income and personal spending, markets opened sharply lower and languished in the red all day.
Personal income for October showed a gain of 0.4%, while personal spending increased a mere 0.1%. Along with those figures, both below forecasts, the national savings rate fell to 4.1% in the third quarter compared to 5.1% in the second quarter, suggesting that Americans are dipping into savings or saving less in order to make ends meet, a scenario of which most lower and middle-income citizens are already well aware.
Durable goods orders, a key driver of broad economic growth, fell sharply, off 0.7% and yielded another odd number. Without transportation orders (autos, planes, etc.), durables were up 0.7%.
Spooking the market even more were poor results in the flash reading of China's PMI, which showed contraction, at 48.0, down from 51.0 in October. The flash reading generally captures about 85-90% of the businesses surveyed. The final reading will be released on December 1.
As US markets pause to give thanks (for what, nobody's exactly sure) on Thursday, economies and markets are gripped by turmoil, fear and trepidation over an imminent recession and possible currency collapse in Europe and elsewhere. With half of Europe likely already in recession, global growth seems to be stalling out in much the same fashion as it did in 2008. The Euro fell to its lowest level against the US dollar in six weeks, though still holding valiantly to the 1.33 level, though without relentless priming and pumping from the US Fed, the Euro seems doomed to fall to levels not seen since the Euro's earliest days.
That Europe can actually fund itself and fix the problems caused by decades of overspending appears more and more a fiction that only financial broadcasters and government officials mouth. Whether they actually believe what they're saying is a matter for speculators.
The Dow Jones Industrial Average fell for the fifth time in the last sixth sessions. The NASDAQ and S&P 500 fell for the sixth consecutive day. All of the major averages are now back below where they started the year and each has fallen below its 50-day moving average. The number of advances was at a three-month low and new 52-week lows outpaced 52-week highs by its highest margin since August.
All sectors were lower, led by energy, basic materials, technology and financials. Bank of America, possibly the most-hated financial institution in the world (though Goldman Sachs may garner even more angst) fell to 5.14 at the close, the lowest level since March of 2009, the bottom of the 2008-09 downturn. All 30 Dow stocks finished lower on the day.
Gobble, gobble, Happy Thanksgiving. See you on Black Friday.
Dow 11,257.55, -236.17 (2.05%)
NASDAQ 2,460.08, -61.20 (2.43%)
S&P 500 1,161.79, -26.25 (2.21%)
NYSE Composite 6,951.56, -143.33 (2.02%)
NASDAQ Volume 1,715,325,750
NYSE Volume 3,798,937,500
Combined NYSE & NASDAQ Advance - Decline: 767-4911
Combined NYSE & NASDAQ New highs - New lows: 39-371
WTI crude oil: 96.17, -1.84
Gold: 1,695.90, -6.50
Silver: 31.88, -1.07
Additionally, investors demanded a higher yield on the 10-year note, pushing the yield to a six-week high at 2.02%, higher than the corresponding 10-year note in US treasuries, which plummeted to as low as 1.88% during the course of the day.
Foremost on the minds of traders of all stripes, the question was simple, "If Europe's strongest nation cannot fund itself, what's next for the continent and for the rest of the planet?"
The news struck just prior to the opening of US markets. Along with unusual readings on US durable goods orders, personal income and personal spending, markets opened sharply lower and languished in the red all day.
Personal income for October showed a gain of 0.4%, while personal spending increased a mere 0.1%. Along with those figures, both below forecasts, the national savings rate fell to 4.1% in the third quarter compared to 5.1% in the second quarter, suggesting that Americans are dipping into savings or saving less in order to make ends meet, a scenario of which most lower and middle-income citizens are already well aware.
Durable goods orders, a key driver of broad economic growth, fell sharply, off 0.7% and yielded another odd number. Without transportation orders (autos, planes, etc.), durables were up 0.7%.
Spooking the market even more were poor results in the flash reading of China's PMI, which showed contraction, at 48.0, down from 51.0 in October. The flash reading generally captures about 85-90% of the businesses surveyed. The final reading will be released on December 1.
As US markets pause to give thanks (for what, nobody's exactly sure) on Thursday, economies and markets are gripped by turmoil, fear and trepidation over an imminent recession and possible currency collapse in Europe and elsewhere. With half of Europe likely already in recession, global growth seems to be stalling out in much the same fashion as it did in 2008. The Euro fell to its lowest level against the US dollar in six weeks, though still holding valiantly to the 1.33 level, though without relentless priming and pumping from the US Fed, the Euro seems doomed to fall to levels not seen since the Euro's earliest days.
That Europe can actually fund itself and fix the problems caused by decades of overspending appears more and more a fiction that only financial broadcasters and government officials mouth. Whether they actually believe what they're saying is a matter for speculators.
The Dow Jones Industrial Average fell for the fifth time in the last sixth sessions. The NASDAQ and S&P 500 fell for the sixth consecutive day. All of the major averages are now back below where they started the year and each has fallen below its 50-day moving average. The number of advances was at a three-month low and new 52-week lows outpaced 52-week highs by its highest margin since August.
All sectors were lower, led by energy, basic materials, technology and financials. Bank of America, possibly the most-hated financial institution in the world (though Goldman Sachs may garner even more angst) fell to 5.14 at the close, the lowest level since March of 2009, the bottom of the 2008-09 downturn. All 30 Dow stocks finished lower on the day.
Gobble, gobble, Happy Thanksgiving. See you on Black Friday.
Dow 11,257.55, -236.17 (2.05%)
NASDAQ 2,460.08, -61.20 (2.43%)
S&P 500 1,161.79, -26.25 (2.21%)
NYSE Composite 6,951.56, -143.33 (2.02%)
NASDAQ Volume 1,715,325,750
NYSE Volume 3,798,937,500
Combined NYSE & NASDAQ Advance - Decline: 767-4911
Combined NYSE & NASDAQ New highs - New lows: 39-371
WTI crude oil: 96.17, -1.84
Gold: 1,695.90, -6.50
Silver: 31.88, -1.07
Tuesday, November 22, 2011
Zombie Earth: IMF Steps Into Euro Fray; US 3Q Growth Lowered
The day was full of economic news that kept market participants awake and jumping at every byte of information that crossed the trading desks.
Morning began with the Commerce Department's second revision to third quarter GDP, originally quoted at 2.5%, but today lowered to 2.0%. The news sent some jitters across the futures trading complex, but, by the opening bell the effect on the major indices was minimal.
Still, stocks took a bit of a header in early trading, extending almost to the noon hour, when the IMF announced a couple of liquidity lending facilities which boosted stocks for a few hours, until everyone realized that 17% of the money would be coming from the US, in the form of money printed out of thin air and exported to Europe to keep the inflationary ball rolling.
The IMF foray is only a small step forward, another can-kicking exercise to get Europe through the holidays with a minimum of stress. It is in nobody's best interests to mess up the Christmas shopping season, so Christine Legarde and her IMF goon squad set the wheels in motion officially with about $80 billion available immediately, though, as we are all well aware, these numbers usually don't stop growing until the money outstanding has reached the trillions. Give it six months and the IMF will own most of what they don't already in Italy, Spain and Portugal. The Global Zombie Ponzi has reached epic and no-turning-back proportions.
Greece? Nobody really wants it. They'll be printing drachmas in six to eight months time and trading goats for Ouzo and other necessities.
After the market closed the session in the red, again, the Federal Reserve announced that 31 financial institutions, all with assets (that's a joke right?) of more than $50 billion, will undergo stress tests, with the six largest banks - JP Morgan, Bank of America, Citi, Wells-Fargo, Goldman Sachs and Morgan Stanley - having to undertake a more severe test, that of a “hypothetical global market shock,” based upon conditions from the Fall of 2008. Results of the stress tests (which every bank will surely pass with flying colors, as they always do) will be announced on January 9th, 2012. Happy New Year.
With all the macro-news making the rounds, it was no surprise that traders and speculators (the stock markets are now devoid of "investors" except for the suckers stuck with 401k plans or mutual funds) have trimmed their exposure significantly over the past few days. There are just too many headwinds and too much money being thrown at sovereign states for anyone to rationalize in an investment scenario.
The new world order of global kleptocratic Ponzi economics has the IMF (backed significantly by US suckers, i.e., taxpayers) at the top of the chain, filtering down to the oligarch families of Europe with all the people of the world underneath. And we thought Feudalism was dead?
Briefly, Bank of America made a new closing low at 5.37 (they're solvent, right?) and the 5-year note was sold at a record low of 0.937% as the Treasury sold $35 billion at auction today. Demand was 3.15 times the amount offered.
Here's how the chips fell:
Dow 11,493.72, -53.59 (0.46%)
NASDAQ 2,521.28, -1.86 (0.07%)
S&P 500 1,188.04, -4.94 (0.41%)
NYSE Composite 7,094.89, -39.58 (0.55%)
NASDAQ Volume 1,798,916,500
NYSE Volume 3,926,789,750
Combined NYSE & NASDAQ Advance - Decline: 2043-3490
Combined NYSE & NASDAQ New highs - New lows: 60-220
WTI crude oil: 98.01, +1.09
Gold: 1,702.40, +23.80
Silver: 32.95, +1.84
Morning began with the Commerce Department's second revision to third quarter GDP, originally quoted at 2.5%, but today lowered to 2.0%. The news sent some jitters across the futures trading complex, but, by the opening bell the effect on the major indices was minimal.
Still, stocks took a bit of a header in early trading, extending almost to the noon hour, when the IMF announced a couple of liquidity lending facilities which boosted stocks for a few hours, until everyone realized that 17% of the money would be coming from the US, in the form of money printed out of thin air and exported to Europe to keep the inflationary ball rolling.
The IMF foray is only a small step forward, another can-kicking exercise to get Europe through the holidays with a minimum of stress. It is in nobody's best interests to mess up the Christmas shopping season, so Christine Legarde and her IMF goon squad set the wheels in motion officially with about $80 billion available immediately, though, as we are all well aware, these numbers usually don't stop growing until the money outstanding has reached the trillions. Give it six months and the IMF will own most of what they don't already in Italy, Spain and Portugal. The Global Zombie Ponzi has reached epic and no-turning-back proportions.
Greece? Nobody really wants it. They'll be printing drachmas in six to eight months time and trading goats for Ouzo and other necessities.
After the market closed the session in the red, again, the Federal Reserve announced that 31 financial institutions, all with assets (that's a joke right?) of more than $50 billion, will undergo stress tests, with the six largest banks - JP Morgan, Bank of America, Citi, Wells-Fargo, Goldman Sachs and Morgan Stanley - having to undertake a more severe test, that of a “hypothetical global market shock,” based upon conditions from the Fall of 2008. Results of the stress tests (which every bank will surely pass with flying colors, as they always do) will be announced on January 9th, 2012. Happy New Year.
With all the macro-news making the rounds, it was no surprise that traders and speculators (the stock markets are now devoid of "investors" except for the suckers stuck with 401k plans or mutual funds) have trimmed their exposure significantly over the past few days. There are just too many headwinds and too much money being thrown at sovereign states for anyone to rationalize in an investment scenario.
The new world order of global kleptocratic Ponzi economics has the IMF (backed significantly by US suckers, i.e., taxpayers) at the top of the chain, filtering down to the oligarch families of Europe with all the people of the world underneath. And we thought Feudalism was dead?
Briefly, Bank of America made a new closing low at 5.37 (they're solvent, right?) and the 5-year note was sold at a record low of 0.937% as the Treasury sold $35 billion at auction today. Demand was 3.15 times the amount offered.
Here's how the chips fell:
Dow 11,493.72, -53.59 (0.46%)
NASDAQ 2,521.28, -1.86 (0.07%)
S&P 500 1,188.04, -4.94 (0.41%)
NYSE Composite 7,094.89, -39.58 (0.55%)
NASDAQ Volume 1,798,916,500
NYSE Volume 3,926,789,750
Combined NYSE & NASDAQ Advance - Decline: 2043-3490
Combined NYSE & NASDAQ New highs - New lows: 60-220
WTI crude oil: 98.01, +1.09
Gold: 1,702.40, +23.80
Silver: 32.95, +1.84
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