You might as well call this a down day for the US markets.
Stocks were up at the open on some positive economic data, but, thanks to Christine Legarde, head of the IMF, the fear of Europe sent traders scurrying for the sell buttons.
Hop-scotching the Headlines (trust, this will all tie together):
Initial unemployment claims reached a level not seen in 3 1/2 years, falling to 366,000, though, as expressed in a post a few days back, government numbers may not be the most trustworthy. Unadjusted figures totaled 433,287 in the week ending December 10, a decrease of 95,506 from the previous week, which implies that last week's numbers may have been abnormally LOW. Some people are paying attention to the unadjusted, non-politicized data.
PPI for November was up 0.3%. Core PPI was up 0.1%. No surprises there.
The NYS Manufacturing Index came in at 9.53 for December, a dramatic rise from November's reading of 0.61. Similarly, the Philadelphia Fed's index read at 10.3, a majestic rise from November's 3.60. Those were somewhat of a surprise, though the data is supplied by the Federal Reserve. Trust them? Maybe. Maybe not.
Industrial Production: -0.2%; Capacity Utilization was 77.8%. Both of those figures were fairly static.
So, the markets opened with healthy gains until Lagarde, on her megaphone from Europe, said that no country was immune from Europe's crisis and that the outlook for the world economy was "quite gloomy." Her words. She's not very funny, which, being French, partially explains why French people think Jerry Lewis is a comic genius.
(In a conversation with a postal employee today, I joked that maybe I was getting so many orders from Europe lately because they want to spend their Euros before they become worthless. I may be on to something.)
No matter what, Lagarde's comments put the markets into a tailspin, from which they did not recover. Stocks ended the day down about 60% from their highs. It was not pretty, nor exciting. Volume was, using CNBC's Bob Pisani's word, "anemic."
Morgan Stanley plans on cutting 1600 jobs, which is about 3% of their workforce. That's limited in comparison to other cuts in the finance business. Globally, more than 200,000 wheeler-dealers are going to be slashed, downsized and dumped.
Freddie Mac (the firm which paid Newt Gingrich over a million dollar in consulting fees) says that mortgage rates have hit all-time lows, with 30-year fixed loans at 3.94 and 15-year fixed at 3.21, but, nobody's buying.
Really, nobody. The National Association of Realtors is going to revise existing home sales for the past five years, dating back to 2007 (incidentally, when the real estate boom went bust) on Hanukkah, which is December 21. If that's just bad timing on their part, well, Happy Hanukkah! But, but, but, maybe we can't trust numbers supplied by realtors, either. Add them to bankers, accountants, government officials, meteorologists (yes, the National Hurricane Center said recently that their last 20 years of forecasting seasonal hurricanes was rubbish. Look it up. ON BING.), judges and lawyers. Oddly enough, all of these types wear ties when they're working. As far as can be told, none of them sleep naked, either. Very strange.
In a grossly under-reported story, OPEC ministers set a production ceiling of 30 million barrels a day, which begs the question about oil prices in the $90+ per barrel range. There's enough and demand is slack. It should be cheaper and it got cheaper today.
And just in case anyone hasn't noticed, tomorrow is December options expiry, which usually implies a massive ramp up in prices for stocks leading into it, but, but, but, stocks have been getting beaten down mercilessly for the past week. Is that bullish? Probably not.
Oh, and the CME group wants to know where that missing money from MF Global (Does the MF really stand for that vulgar ghetto slang term? Probably.) is. Top executives of the firm are suing Jon Corzine and other top executives of MF Global for undisclosed amounts and damages. They are seeking class action status. According to Business Insider, the brainchild of former Wall Street analyst Henry Blodget (who wears a tie, but can probably be trusted since he is barred from all Wall Street trading and "official" analysis and probably sleeps naked on occasion) the suit was filed a week ago, on December 8, and nobody noticed until today.
So, that's what moved US markets today, except that the level of fear on Wall Street is probably at a point so high that Charlie Sheen, even on his finest cocaine-and-liquor float, couldn't get up there.
Psst, wanna buy some stocks?
Dow 11,868.81, +45.33 (0.38%)
NASDAQ 2,541.01, +1.70 (0.07%)
S&P 500 1,215.75, +3.93 (0.32%)
NYSE Composite 7,217.12, +32.37 (0.45%)
NASDAQ Volume 1,750,499,375
NYSE Volume 3,767,349,000
Combined NYSE & NASDAQ Advance - Decline: 3399-2200
Combined NYSE & NASDAQ New highs - New lows: 72-179
WTI crude oil: 93.87, -1.08
Gold: 1,577.20, -9.70
Silver: 29.27, +0.34
Thursday, December 15, 2011
Wednesday, December 14, 2011
LIQUIDATION DAY: Stocks, Oil, Gold, Silver All Whacked
If one is expert at reading the market's tea leaves, today was an opportunity to test your skills on just what the massive, liquidation-style selling in commodities was foretelling.
Since there wasn't any news from Europe upon which to trade, perhaps it had something to do with yesterday's non-eventful Fed policy announcement. Many of the larger market participants were hoping the Fed would announce some new iteration of QE, and, since there was none, decided - as of yesterday at about 2:30 pm - to begin liquidating assets in as orderly a manner possible without spooking the markets.
If that was the case - and it's probably not - the markets got a bit spooky in today's trading, though the real action was in commodities, especially oil, gold and silver, which were pounded down so hard it seemed that some of the world's most valuable assets were quickly becoming worthless.
The reality of the matter is probably much simpler, though unseen to most casual observers. Since last week, when the ECB and EU met on the last two days of the week, stocks have been rending lower, and today came the margin calls for anybody long equities and stretched out. There's also the much larger matter of imminent danger in Europe, either in the form of a complete and final Greek default, a bailout of Germany's CommerzBank or perhaps the ultimate collapse of the Euro as a currency of any value, the continent's plaything falling below the critical 1.30 level against the US Dollar today.
Libor rates have been on the rise recently and spreads are also widening, exacerbating the already tense liquidity condition for Europe-based banks. China and India are seeing growth stall out, mostly due to the dire conditions in Europe, but also due to internal stresses.
Perhaps it's the combination of all these bad things happening at once, which is not coincidental in today's globally-connected financial universe. When tough times come to one of the major developed countries or regions, like the Euro-zone, the ripples are felt around the world, and surely, judging by the weight and depth of today's commodity rout, something very fundamentally wrong is about to commence, because massive outflows from gold, especially, usually signal a liquidation event. And liquidation events usually precede solvency events, which, for most of the Southern European nations, is at the heart of the matter.
Gold was down massively, but was easily outdone on a percentage basis by its fellow PM cousin, silver, which broke through support levels and finished in New York down nearly 7.5 percent. So much for safe harbors! Crude oil, about which just about anyone who drives a car wishes it were at $65 per barrel instead of $100, took a deep slide as put contracts at a $65 strike in latter 2012 continue to pile up, potentially pushing the commodity futures into backwardation as the world supply has quickly become a glut on soft demand.
As far as stocks are concerned, the sense is that a lot of traders are closing their books for the year, locking in whatever profits they might have and selling off losers, as the trend in new highs vs. new lows would indicate.
US indices are just about at break even for the year, which is quickly coming to an end, with just 12 trading sessions remaining in 2011. The Dow Jones Industrials, the most resilient of the US indices, is up less than 3% on the year, or 246 points. The S&P and NASDAQ are already in the red to the tune of a 3-4% decline on the year and NYSE Composite takes the cake, down 780 points since last December 31, a nearly 10% decline.
Sure enough, something very disturbing to financial markets is primed for implosion. It's probably Europe, and it's probably going to be very bad and not fixable. Meanwhile, back on Wall Street, the masters of the universe are searching the skies for a jolly fat man on a sleigh pulled by reindeer in hopes that the highly-anticipated and nearly-annual event of a Christmas rally will get them back somewhere close to even by year's end. As for the highs reached back in April, forget them. Those levels may not be seen again for another 10 to 20 years.
Special shout-out to DanK, who turns a youthful 59 today. Hey, another 1/2 year and Dan can start liquidating his IRA without penalty. There is a silver lining, even though silver ain't exactly what it used to be, say, eight months ago.
Dow 11,823.48, -131.46 (1.10%)
NASDAQ 2,539.31, -39.96 (1.55%)
S&P 500 1,211.82, -13.91 (1.13%)
NYSE Composite 7,184.75, -92.87 (1.28%)
NASDAQ Volume 1,794,074,500
NYSE Volume 4,233,398,500
Combined NYSE & NASDAQ Advance - Decline: 1784-3900
Combined NYSE & NASDAQ New highs - New lows: 72-256 (three straight days in the red, and widening)
WTI crude oil: 94.95, -5.19
Gold: 1,586.90, -76.20
Silver: 28.94, -2.33
Since there wasn't any news from Europe upon which to trade, perhaps it had something to do with yesterday's non-eventful Fed policy announcement. Many of the larger market participants were hoping the Fed would announce some new iteration of QE, and, since there was none, decided - as of yesterday at about 2:30 pm - to begin liquidating assets in as orderly a manner possible without spooking the markets.
If that was the case - and it's probably not - the markets got a bit spooky in today's trading, though the real action was in commodities, especially oil, gold and silver, which were pounded down so hard it seemed that some of the world's most valuable assets were quickly becoming worthless.
The reality of the matter is probably much simpler, though unseen to most casual observers. Since last week, when the ECB and EU met on the last two days of the week, stocks have been rending lower, and today came the margin calls for anybody long equities and stretched out. There's also the much larger matter of imminent danger in Europe, either in the form of a complete and final Greek default, a bailout of Germany's CommerzBank or perhaps the ultimate collapse of the Euro as a currency of any value, the continent's plaything falling below the critical 1.30 level against the US Dollar today.
Libor rates have been on the rise recently and spreads are also widening, exacerbating the already tense liquidity condition for Europe-based banks. China and India are seeing growth stall out, mostly due to the dire conditions in Europe, but also due to internal stresses.
Perhaps it's the combination of all these bad things happening at once, which is not coincidental in today's globally-connected financial universe. When tough times come to one of the major developed countries or regions, like the Euro-zone, the ripples are felt around the world, and surely, judging by the weight and depth of today's commodity rout, something very fundamentally wrong is about to commence, because massive outflows from gold, especially, usually signal a liquidation event. And liquidation events usually precede solvency events, which, for most of the Southern European nations, is at the heart of the matter.
Gold was down massively, but was easily outdone on a percentage basis by its fellow PM cousin, silver, which broke through support levels and finished in New York down nearly 7.5 percent. So much for safe harbors! Crude oil, about which just about anyone who drives a car wishes it were at $65 per barrel instead of $100, took a deep slide as put contracts at a $65 strike in latter 2012 continue to pile up, potentially pushing the commodity futures into backwardation as the world supply has quickly become a glut on soft demand.
As far as stocks are concerned, the sense is that a lot of traders are closing their books for the year, locking in whatever profits they might have and selling off losers, as the trend in new highs vs. new lows would indicate.
US indices are just about at break even for the year, which is quickly coming to an end, with just 12 trading sessions remaining in 2011. The Dow Jones Industrials, the most resilient of the US indices, is up less than 3% on the year, or 246 points. The S&P and NASDAQ are already in the red to the tune of a 3-4% decline on the year and NYSE Composite takes the cake, down 780 points since last December 31, a nearly 10% decline.
Sure enough, something very disturbing to financial markets is primed for implosion. It's probably Europe, and it's probably going to be very bad and not fixable. Meanwhile, back on Wall Street, the masters of the universe are searching the skies for a jolly fat man on a sleigh pulled by reindeer in hopes that the highly-anticipated and nearly-annual event of a Christmas rally will get them back somewhere close to even by year's end. As for the highs reached back in April, forget them. Those levels may not be seen again for another 10 to 20 years.
Special shout-out to DanK, who turns a youthful 59 today. Hey, another 1/2 year and Dan can start liquidating his IRA without penalty. There is a silver lining, even though silver ain't exactly what it used to be, say, eight months ago.
Dow 11,823.48, -131.46 (1.10%)
NASDAQ 2,539.31, -39.96 (1.55%)
S&P 500 1,211.82, -13.91 (1.13%)
NYSE Composite 7,184.75, -92.87 (1.28%)
NASDAQ Volume 1,794,074,500
NYSE Volume 4,233,398,500
Combined NYSE & NASDAQ Advance - Decline: 1784-3900
Combined NYSE & NASDAQ New highs - New lows: 72-256 (three straight days in the red, and widening)
WTI crude oil: 94.95, -5.19
Gold: 1,586.90, -76.20
Silver: 28.94, -2.33
Tuesday, December 13, 2011
Stocks Ripped Lower Again; More Questions than Answers
Since US stock markets are so delightfully linked t the fates of Europe, the same old story keeps repeating itself over and over, such as today, as the Euro fell sharply (1.00 EUR = 1.30348 USD) against major currencies and the Dollar Index closed at an eleven-month high (DXY:IND 80.273 0.708 0.89%).
While those dual developments are intertwined, the parties involved - from European, US and Chinese exporters to American and European consumers - will feel the effects in dramatically different manners.
Naturally, for most of Europe, a collapsing Euro is bad for consumers, making everything imported more expensive, but great for exporters, whose goods are cheaper by comparison in importing nations.
The opposite is true for the US, which is why stocks are usually down when the Euro dips and the dollar strengthens. Americans should welcome a stronger dollar, especially at this time of year, because all those trinkets and holiday goodies - mostly from China - will be cheaper, though probably not right away.
As has been a repeatedly-held view in this space, the Euro is headed for catastrophe, and it's going to occur sooner than anyone thinks, probably before the middle of 2012. German people are sick and tired of bailing out the Southern countries, Greece has already defaulted on some debt, Italy, Spain, Portugal, Ireland and Belgium are holding on for dear life and the ECB is going to be quickly as tapped out of funds as its leaders are of ideas.
The idea of printing more money, as has been the case in the US, with dubious effect, will only make matters worse when inflation rages and dissatisfied citizens stop paying taxes in deference to feeding their families. The trouble is that sovereign debt, ridiculously rated at AAA or beyond, is about to be downgraded across the Euro-zone and beyond.
For those unfamiliar, sovereign debt is the money governments borrow to fund everything from pensions to schools to war machines (like here in the US). Most of Europe should be rated no better than A or A+, a move that is coming soon from either S&P, Moody's or Fitch, because nations have shown over time that while they may always repay on time, they are profligate spenders and tax revenues are dropping, not expanding. Balance sheets (those things nobody likes to look at) of most governments are ridiculous when compared to that of an average American or European family, who don't get the benefit of positive credit ratings, pay higher interest rates than silly governments, yet most manage to pay bills on time and keep their households in relative sanity.
With all of the monstrous debt of Europe and the US overshadowing just about all other economic realities, there are more questions than answers these days, a few of them being:
Those are just teaser questions, without good answers from politicians, regulators, academics or economists. The tough ones await in the new year.
And, to those kids waiting for Santa Claus, you've got 11 days left to try being good. For the scoundrels on Wall Street, awaiting the famous, year-end Santa Claus Rally, you've been bad, so just coal (clean coal, for sure) for you, and, even if there is a rally, it will only get the indices back to where they were a week or a day or two ago, and 2011 will go down in the books as a year of near-zero (or less) returns. So much for owning stocks.
A couple of quick points on economic data. November retail sales figures were up 0.2%. There's one word to describe all the hoopla over Black Friday and the whole retail consumerism mantra. BULL---T.
The FOMC of the Fed had its last policy meeting of 2011 and did nothing. Thanks, for nothing.
Dow 11,954.94, -66.45 (0.55%)
NASDAQ 2,579.27, -32.99 (1.26%)
S&P 500 1,225.73, -10.74 (0.87%)
NYSE Composite 7,276.65, -86.84 (1.18%)
NASDAQ Volume 1,732,941,625
NYSE Volume 4,080,177,000
Combined NYSE & NASDAQ Advance - Decline: 1462-4165
Combined NYSE & NASDAQ New highs - New lows: 107-146 (more red)
WTI crude oil: 100.14, +2.37 (higher due to fears over Iran)
Gold: 1,663.10, -5.10
Silver: 31.26, +0.26
While those dual developments are intertwined, the parties involved - from European, US and Chinese exporters to American and European consumers - will feel the effects in dramatically different manners.
Naturally, for most of Europe, a collapsing Euro is bad for consumers, making everything imported more expensive, but great for exporters, whose goods are cheaper by comparison in importing nations.
The opposite is true for the US, which is why stocks are usually down when the Euro dips and the dollar strengthens. Americans should welcome a stronger dollar, especially at this time of year, because all those trinkets and holiday goodies - mostly from China - will be cheaper, though probably not right away.
As has been a repeatedly-held view in this space, the Euro is headed for catastrophe, and it's going to occur sooner than anyone thinks, probably before the middle of 2012. German people are sick and tired of bailing out the Southern countries, Greece has already defaulted on some debt, Italy, Spain, Portugal, Ireland and Belgium are holding on for dear life and the ECB is going to be quickly as tapped out of funds as its leaders are of ideas.
The idea of printing more money, as has been the case in the US, with dubious effect, will only make matters worse when inflation rages and dissatisfied citizens stop paying taxes in deference to feeding their families. The trouble is that sovereign debt, ridiculously rated at AAA or beyond, is about to be downgraded across the Euro-zone and beyond.
For those unfamiliar, sovereign debt is the money governments borrow to fund everything from pensions to schools to war machines (like here in the US). Most of Europe should be rated no better than A or A+, a move that is coming soon from either S&P, Moody's or Fitch, because nations have shown over time that while they may always repay on time, they are profligate spenders and tax revenues are dropping, not expanding. Balance sheets (those things nobody likes to look at) of most governments are ridiculous when compared to that of an average American or European family, who don't get the benefit of positive credit ratings, pay higher interest rates than silly governments, yet most manage to pay bills on time and keep their households in relative sanity.
With all of the monstrous debt of Europe and the US overshadowing just about all other economic realities, there are more questions than answers these days, a few of them being:
- Where's the money (over $1 billion) that MF Global took from investors?
- How soon will the ratings agencies lower the credit ratings of Italy, Spain, Portugal, France and the rest of the Euro-zone nations, and, how far down will they go?
- If US banks are borrowing at 0-0.25% from the Fed, why are credit card rates 8, 10, 15 and even 28% for US consumers who have solid track records of on-time payments?
- Can government statistics be trusted at all?
- Why would anyone under the age of 40 contribute to Social Security if not that it's automatically deducted from their paychecks?
- If the world is headed for global depression, won't all asset classes, including gold and silver, devalue?
- Why are government employees in the US paid 30-40% more than their private-industry counterparts and receive gold-plated health care and pensions, when the US population - who pays them - work for less, have fewer benefits and many have no guaranteed retirement plans?
- Why is the world's greatest criminal, Hank Paulson, still a free man?
- Where is Eric Holder, the Attorney General, and why hasn't he even investigated any of the banks or the prior administration?
- Why must Americans choose between Mitt Romney or Newt Gingrich as the Republican presidential nominee when Ron Paul and Michelle Bachmann have better positions and more consistent voting records?
- Why is President Obama opposed to the Keystone pipeline that would bring oil from Canada (our largest trading partner and a friendly one) and thousands of high-paying jobs?
- Why is 20% supposed to be a "fair" percentage one should pay in federal taxes when most people outside the middle class pay little to nothing?
Those are just teaser questions, without good answers from politicians, regulators, academics or economists. The tough ones await in the new year.
And, to those kids waiting for Santa Claus, you've got 11 days left to try being good. For the scoundrels on Wall Street, awaiting the famous, year-end Santa Claus Rally, you've been bad, so just coal (clean coal, for sure) for you, and, even if there is a rally, it will only get the indices back to where they were a week or a day or two ago, and 2011 will go down in the books as a year of near-zero (or less) returns. So much for owning stocks.
A couple of quick points on economic data. November retail sales figures were up 0.2%. There's one word to describe all the hoopla over Black Friday and the whole retail consumerism mantra. BULL---T.
The FOMC of the Fed had its last policy meeting of 2011 and did nothing. Thanks, for nothing.
Dow 11,954.94, -66.45 (0.55%)
NASDAQ 2,579.27, -32.99 (1.26%)
S&P 500 1,225.73, -10.74 (0.87%)
NYSE Composite 7,276.65, -86.84 (1.18%)
NASDAQ Volume 1,732,941,625
NYSE Volume 4,080,177,000
Combined NYSE & NASDAQ Advance - Decline: 1462-4165
Combined NYSE & NASDAQ New highs - New lows: 107-146 (more red)
WTI crude oil: 100.14, +2.37 (higher due to fears over Iran)
Gold: 1,663.10, -5.10
Silver: 31.26, +0.26
Monday, December 12, 2011
So Much for Europe Being Fixed; US Stocks Dashed over Persistent Fear of Euro Collapse
Let's face it. There's no easy way for europe to fix the mess they've created without a lot of pain, including bank failures, a massive, long-term deflationary depression, government overthrows and the near disintegration of the Euro-zone, those countries which exclusively use the Euro as currency.
After last week's up-and-down Thursday and Friday sessions, marked by trepidation over the ECB's interest rate cut and a demure stance on monetary policy by new ECB head, Mario Draghi, and Friday's euphoric rally on the umpteenth outline of a Euro solution, Monday turned just plain ugly for European bourses and US indices.
Anybody who understands the enormity of debt that's been built up by Europe and the US - not only in the government, but by the banks, financial institutions and households as well - sees no end to the crisis in Europe, and the distinct probability that their problems - being partly those of our own banks and our Federal Reserve - will become ours. The massive overhang of public debt, much of it owing to national pension funds like Social Security, has always been an albatross around the necks of European leaders and now it is quickly becoming one for whoever leads the US (Take your pick from Obama, the banks or the congress. None of them are doing a good job.).
And while Social Security is set to run in the red for another year (this being the first), what are congress and the president fighting over? Whether to cut the Social Security contribution paid by employees and/or add a tax on the wealthy. The fact that the latest boondoggle is being branded as "payroll tax" - a wholly incorrect moniker - tells exactly how deep and severe the US fiscal condition has become.
If the government big-wigs actually came clean on the issue and said they want to cut Social Security contributions so people can afford to buy food, gas and maybe the occasional iPad or plasma TV, the cat would be out of the bag, permanently.
As it stands today, Social Security is DOA. Current beneficiaries can expect payments though the next five years, maybe, but, eventually, there's not enough money going into the system to support the huge numbers of upcoming recipients from the Baby Boom generation, most of whom have less than $40,000 saved for retirement (Hint: that's not enough), and cutting contributions is going in exactly the wrong direction.
On Capitol Hill, most senior congress-people know that Social Security will have to be substantially changed in order to survive and the changes will have to be dramatic measures, like raising the retirement age to 70 or 72, means testing, so that people who don't need it won't get it, and raising the limit of contributions from the current first $106,800 of income to something more realistic, like the first $200,000 of income.
Making high-earners pay more would add more money to the SS coffers at the same time the government is cutting the percentage take from employees. Still, most of the measures even considered by congress and the White House are nothing more than stop-gap measures designed to satiate the masses until the next big election, in November, 2012.
In the meantime, the economy continues to struggle along, unless one is inclined to take their lead from the ruthless bankers on Wall Street and cheat like crazy, paying people off the books, under-reporting income and generally skirting the IRS at every turn. Hey, the big corporations do it, so why not everyone else.
At the bottom of all the financial malaise is the collapse of government, as we've witnessed in the Middle east and North Africa, is now spreading to Europe and Russia, and thanks to people actually taking change of their own lives and their own finances, is quickly gaining ground here in the USA.
There is one way to stem the crisis in the United States. Elect Ron Paul president. The mainstream media is currently dancing around Dr. Paul, whose positions have been consistent and poisonous to the status quo, but there's no doubt mainstream America is listening to the 76-year-old Texan, as he continue to gain ground in Iowa and elsewhere.
Compared to the current leaders, Newt Gingrich and Mitt Romney, a Ron Paul - Michelle Bachmann ticket is sure beginning to look like a winner.
When Americans ask themselves, "which of the Republican candidates are most like us?" the answer becomes obvious.
BTW: Volume was so low today that the markets could have closed at noon and hardly anyone would have noticed. Even fewer would have cared. That's what happens when trust flees markets. People, and money, follow out the door.
The Euro hit a two-month low against the US Dollar, below 1.32. The end of the Euro is coming, and sooner than anyone dares think.
Dow 12,021.39, -162.87 (1.34%)
NASDAQ 2,612.26, -34.59 (1.31%)
S&P 500 1,236.47, -18.72 (1.49%)
NYSE Composite 7,363.49, -139.39 (1.86%)
NASDAQ Volume 1,523,045,375
NYSE Volume 3,421,469,750
Combined NYSE & NASDAQ Advance - Decline: 1272-4386
Combined NYSE & NASDAQ New highs - New lows: 79-120 (flipped to red)
WTI crude oil: 97.77 -1.64 (head back to 80-85 range)
Gold: 1,668.20 -48.60 (deflation signal)
Silver: 31.00, -1.25
After last week's up-and-down Thursday and Friday sessions, marked by trepidation over the ECB's interest rate cut and a demure stance on monetary policy by new ECB head, Mario Draghi, and Friday's euphoric rally on the umpteenth outline of a Euro solution, Monday turned just plain ugly for European bourses and US indices.
Anybody who understands the enormity of debt that's been built up by Europe and the US - not only in the government, but by the banks, financial institutions and households as well - sees no end to the crisis in Europe, and the distinct probability that their problems - being partly those of our own banks and our Federal Reserve - will become ours. The massive overhang of public debt, much of it owing to national pension funds like Social Security, has always been an albatross around the necks of European leaders and now it is quickly becoming one for whoever leads the US (Take your pick from Obama, the banks or the congress. None of them are doing a good job.).
And while Social Security is set to run in the red for another year (this being the first), what are congress and the president fighting over? Whether to cut the Social Security contribution paid by employees and/or add a tax on the wealthy. The fact that the latest boondoggle is being branded as "payroll tax" - a wholly incorrect moniker - tells exactly how deep and severe the US fiscal condition has become.
If the government big-wigs actually came clean on the issue and said they want to cut Social Security contributions so people can afford to buy food, gas and maybe the occasional iPad or plasma TV, the cat would be out of the bag, permanently.
As it stands today, Social Security is DOA. Current beneficiaries can expect payments though the next five years, maybe, but, eventually, there's not enough money going into the system to support the huge numbers of upcoming recipients from the Baby Boom generation, most of whom have less than $40,000 saved for retirement (Hint: that's not enough), and cutting contributions is going in exactly the wrong direction.
On Capitol Hill, most senior congress-people know that Social Security will have to be substantially changed in order to survive and the changes will have to be dramatic measures, like raising the retirement age to 70 or 72, means testing, so that people who don't need it won't get it, and raising the limit of contributions from the current first $106,800 of income to something more realistic, like the first $200,000 of income.
Making high-earners pay more would add more money to the SS coffers at the same time the government is cutting the percentage take from employees. Still, most of the measures even considered by congress and the White House are nothing more than stop-gap measures designed to satiate the masses until the next big election, in November, 2012.
In the meantime, the economy continues to struggle along, unless one is inclined to take their lead from the ruthless bankers on Wall Street and cheat like crazy, paying people off the books, under-reporting income and generally skirting the IRS at every turn. Hey, the big corporations do it, so why not everyone else.
At the bottom of all the financial malaise is the collapse of government, as we've witnessed in the Middle east and North Africa, is now spreading to Europe and Russia, and thanks to people actually taking change of their own lives and their own finances, is quickly gaining ground here in the USA.
There is one way to stem the crisis in the United States. Elect Ron Paul president. The mainstream media is currently dancing around Dr. Paul, whose positions have been consistent and poisonous to the status quo, but there's no doubt mainstream America is listening to the 76-year-old Texan, as he continue to gain ground in Iowa and elsewhere.
Compared to the current leaders, Newt Gingrich and Mitt Romney, a Ron Paul - Michelle Bachmann ticket is sure beginning to look like a winner.
When Americans ask themselves, "which of the Republican candidates are most like us?" the answer becomes obvious.
BTW: Volume was so low today that the markets could have closed at noon and hardly anyone would have noticed. Even fewer would have cared. That's what happens when trust flees markets. People, and money, follow out the door.
The Euro hit a two-month low against the US Dollar, below 1.32. The end of the Euro is coming, and sooner than anyone dares think.
Dow 12,021.39, -162.87 (1.34%)
NASDAQ 2,612.26, -34.59 (1.31%)
S&P 500 1,236.47, -18.72 (1.49%)
NYSE Composite 7,363.49, -139.39 (1.86%)
NASDAQ Volume 1,523,045,375
NYSE Volume 3,421,469,750
Combined NYSE & NASDAQ Advance - Decline: 1272-4386
Combined NYSE & NASDAQ New highs - New lows: 79-120 (flipped to red)
WTI crude oil: 97.77 -1.64 (head back to 80-85 range)
Gold: 1,668.20 -48.60 (deflation signal)
Silver: 31.00, -1.25
Friday, December 9, 2011
European Crisis Summit Outlines Plans, Markets Reverse Course
After lengthy deliberations which reportedly lasted well into the evening, European leaders emerged with the outline of a fiscal union designed to maintain the current structure of the EU and the Euro-zone nations which use the Euro as currency.
Left out of the plan was Great Britain, which said it would not succumb to another layer of regulations from the Eu, especially since it still has the British Pound as its sovereign currency.
One highlight was the decision to cap the new permanent rescue fund at 500 billion euros.
Additionally, European central banks will lend 150 billion euros to the International Monetary Fund’s (IMF) general resources. Non-euro EU states will offer around 50 billion euros to the IMF. Having the central banks on board is a new development that was widely cheered by market participants as it should encourage sovereigns outside of europe to pitch in to an IMF fund as well.
Details of the complex plan and new treaty language are expected to be finalized by March, leaving plenty of time for intrigue and dissent in the interim.
Stocks in Europe were higher, with the French, German and UK markets scoring the largest gains. In the US, the effect of the summit was a reversal of the previous day's losses, resulting in a negligible net gain or loss over the two days market players had been anticipating with some anxiety.
So, after all the drama over Thursday's ECB policy meeting and the Friday's EU summit, the end result after two days of nail-biting was a 12-point loss for the Dow Industrials, about two points down on the NASDAQ and a six point loss on the S&P. Indeed, it was all much ado about nothing with the major averages ending the week with marginal gains.
Everyone on and off Wall Street can now get back to doing whatever they do until the next European crisis event, which, if recent history is any guide, should be some time next week.
Dow 12,184.26 186.56 (1.55%)
NASDAQ 2,646.85 50.47 (1.94%)
S&P 500 1,255.19 20.84 (1.69%)
NYSE Compos 7,502.88 133.36 (1.81%)
NASDAQ Volume 1,651,333,125.00
NYSE Volume 3,698,613,000
Combined NYSE & NASDAQ Advance - Decline: 4746-907
Combined NYSE & NASDAQ New highs - New lows: 141-67
WTI crude oil: 99.41, +1.07
Gold: 1,716.80, +3.40
Silver: 32.25, +0.72
Left out of the plan was Great Britain, which said it would not succumb to another layer of regulations from the Eu, especially since it still has the British Pound as its sovereign currency.
One highlight was the decision to cap the new permanent rescue fund at 500 billion euros.
Additionally, European central banks will lend 150 billion euros to the International Monetary Fund’s (IMF) general resources. Non-euro EU states will offer around 50 billion euros to the IMF. Having the central banks on board is a new development that was widely cheered by market participants as it should encourage sovereigns outside of europe to pitch in to an IMF fund as well.
Details of the complex plan and new treaty language are expected to be finalized by March, leaving plenty of time for intrigue and dissent in the interim.
Stocks in Europe were higher, with the French, German and UK markets scoring the largest gains. In the US, the effect of the summit was a reversal of the previous day's losses, resulting in a negligible net gain or loss over the two days market players had been anticipating with some anxiety.
So, after all the drama over Thursday's ECB policy meeting and the Friday's EU summit, the end result after two days of nail-biting was a 12-point loss for the Dow Industrials, about two points down on the NASDAQ and a six point loss on the S&P. Indeed, it was all much ado about nothing with the major averages ending the week with marginal gains.
Everyone on and off Wall Street can now get back to doing whatever they do until the next European crisis event, which, if recent history is any guide, should be some time next week.
Dow 12,184.26 186.56 (1.55%)
NASDAQ 2,646.85 50.47 (1.94%)
S&P 500 1,255.19 20.84 (1.69%)
NYSE Compos 7,502.88 133.36 (1.81%)
NASDAQ Volume 1,651,333,125.00
NYSE Volume 3,698,613,000
Combined NYSE & NASDAQ Advance - Decline: 4746-907
Combined NYSE & NASDAQ New highs - New lows: 141-67
WTI crude oil: 99.41, +1.07
Gold: 1,716.80, +3.40
Silver: 32.25, +0.72
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