One of the oldest adages of stock market investing is the time-honored, "the markets can remain irrational longer than you can remain solvent," or something to that effect.
This is particularly poignant in the midst of the current Wall Street "melt-up" which has been ongoing since the middle of December and shows little sign of letting up.
While corporate earnings continue to flow, the latest being from two big banks, Morgan Stanley (MS) and Bank of America (BAC), both of which met or exceeded expectations, though the accounting tricks and tactics employed by the mega-banks leave much to the imagination.
As far as Bank of America is concerned, their beat of expectations of 13 cents per share with a reported 15 cents included a bunch of one-time items and useful reserve and loan loss calculations, embedded deep within their monstrous 110-page quarterly report. Despite the discrepancies in the quarterly, Bank of America bounced higher again today, closing at 6.95, a 15 cent gain, after popping above $7 per share for the first time since Warren Buffett invested $5 billion in the bank in early 2011.
Morgan Stanley actually lost money for the quarter, but lost quite a bit less than expected. The firm’s net loss was $250 million, or 15 cents a share, compared with profit of $836 million, or 41 cents, a year earlier. The consensus expectation was for a loss of 57 cents per share. Traders took the data in stride, boosting the stock to its highest level since October. In this case, even P.T. Barnum would be proud, noting that "there's a sucker born every minute." All the better for momentum chasers in this beat-up financial.
There was a dose of economic data that surprised some and annoyed others, notably bearish investors. Initial unemployment claims came in at a sparkling 352,000 - the lowest number in months - after last week's upwardly revised 402,000. The unemployment figures continue to be a topic of some debate, in that the "seasonally-adjusted" model used by the BLS seems to have forgotten that December was holiday season, chock full of part time and temporary hires. Whatever the case, traders seemed less-than-satisfied with the numbers, as the markets began slowly but ground slowly higher through the session.
December CPI came in flat, after yesterday's -0.1% drop in the PPI, sparking fears of "disinflation" (a Federal reserve governor term) or deflation, the bogey man that haunts Fed chairman Ben Benanke.
Housing starts and building permits were flat to lower, though new home builders have been leading this rally, up more than 10% as a group since the first of the year.
How much longer can the rally last? Tomorrow being options expiration, one would think a major sell-off is in the cards for either Friday afternoon or Monday, though, as stated at the top of this piece, rationality is generally not a hallmark of recent rallies.
If you've not already taken part in this wild market ride, it may be a little late. Stocks are getting extremely overbought, as the advance-decline and new highs vs. new lows figures have been telegraphing lately.
Adding to the upside has been the unusually quiet tones coming out of Europe, as opposed to the rather hysterical daily dispatches that typified the latter half of 2011. Nothing's really changed over there, except perception, perhaps. Europe is mostly headed for a recession, which will hit the middle classes, though Greece, in particular, in already in the throes of a fiscal straightjacket which some might say is emulating a full-blown depression. To the Greeks, most of europe is saying "pay up," to which the Greeks respond with "shut up" or some other suitable and more demonstrable phraseology.
The long and short of it, if one is of the camp that believes a strong stock market is a proxy for a strong general economy, 2012 is shaping up to be a banner year or at least a good effort at kicking the can of economic woes down the road until after the elections in November.
Throwing a bit of cold water on the rally parade, as expected, Eastman Kodak (EK) filed for bankruptcy protection today, and Republican presidential nominee hopeful Mitt Romney has been found to have a number of accounts and holdings in off-shore banks, notably in the Cayman Islands, setting the stage - if he's the nominee - for a battle of ideologies between him as the ultimate one percenter and President Obama as the champion of the 99%.
While that may make for great TV, it's hardly honest, as President O'banker is about as 1% elitist as one can get without actually admitting to it.
Dow 12,625.19, +46.24 (0.37%)
NASDAQ 2,788.33, +18.62 (0.67%)
S&P 500 1,314.50, +6.46 (0.49%)
NYSE Composite 7,819.36, +52.41 (0.67%)
NASDAQ Volume 1,974,862,250
NYSE Volume 4,442,754,500
Combined NYSE & NASDAQ Advance - Decline: 3454-2119
Combined NYSE & NASDAQ New highs - New lows: 261-26 (yes, 10-1 is a bit extreme)
WTI crude oil: 100.39, -0.20
Gold: 1,654.50, -5.40
Silver: 30.51, -0.03
Thursday, January 19, 2012
Wednesday, January 18, 2012
Non-stop Rally Continues As Financials Lead
Editor's Note: Apologies for the brevity and lateness of today's missive. Technical issues required a call to the hated internet service provider, Time Warner, whose tech specialists could not solve the problem, though after an hour on the phone with said tech specialists, intrepid publisher, Fearless Rick, solved the problems all by himself, proving there's something to be said for resourcefulness and self-sufficiency.
Either there's something in the drinking water at the lower end of Manhattan or, from what the stock markets are telling us, there's no reason not to be fully invested in US stocks, as they continue to rise virtually every day since the last weeks of December.
Putting aside the issues of Greece and the rest of Europe, the fact that most of the largest US banks were insolvent just a few years ago and probably still are today, the huge number of unemployed persons in the US, the 84% disapproval rating of the US congress and various other issues, US stocks apparently look like the buys of the century to the people buying them.
Consider that beginning with December 19, 2011, the Dow Jones Industrials, in the span of 19 trading sessions, has risen an incredible 812 points, or, an average of nearly 43 points per session. In the same period, the S&P has added 102 points while the NASDAQ popped for 246 points, a gain of about 9%, which would be a great return for an ordinary year, but an absolutely insane rise in the span of just one month.
What strikes one as odd is that these outsize gains began on the Monday following options expiration in December, just as we approach January options expiration. While it might be simply serendipitous, the flow of money into options has been outstanding over the past few months, and that fact alone might help explain at least a portion of the insane gains of the past four weeks.
It could also be that Wall Street traders aren't overly concerned about the issues outlined above, or are at least somewhat oblivious to them. Then again, most of ordinary Americans hold stocks in mutual funds or retirement plans, so, to them, the stock market is more spectator sport than participant-guided.
Could it be that fears of the imminent demise of the Euro are overblown, or is Wall Street purposely blowing smoke up the collective behinds of the American public?
Whatever the case, some small fortunes - and perhaps a couple of big ones - have been made in just the past month. Carry on, because the next thing you'll know is that the unemployment rate will drop like a rock off a bridge, Iran will suddenly give up on its plans to develop a nuclear arsenal and unicorns will spit gold nuggets.
Dow 12,578.95, +96.88 (0.78%)
NASDAQ 2,769.71, +41.63 (1.53%)
S&P 500 1,308.04, +14.37 (1.11%)
NYSE Composite 7,766.95, +96.48 (1.26%)
NASDAQ Volume 2,035,416,625
NYSE Volume 4,096,162,500
Combined NYSE & NASDAQ Advance - Decline: 4400-1251
Combined NYSE & NASDAQ New highs - New lows: 207-31
WTI crude oil: 100.59, -0.12
Gold: 1,659.90, +4.30
Silver: 30.54, +0.41
Either there's something in the drinking water at the lower end of Manhattan or, from what the stock markets are telling us, there's no reason not to be fully invested in US stocks, as they continue to rise virtually every day since the last weeks of December.
Putting aside the issues of Greece and the rest of Europe, the fact that most of the largest US banks were insolvent just a few years ago and probably still are today, the huge number of unemployed persons in the US, the 84% disapproval rating of the US congress and various other issues, US stocks apparently look like the buys of the century to the people buying them.
Consider that beginning with December 19, 2011, the Dow Jones Industrials, in the span of 19 trading sessions, has risen an incredible 812 points, or, an average of nearly 43 points per session. In the same period, the S&P has added 102 points while the NASDAQ popped for 246 points, a gain of about 9%, which would be a great return for an ordinary year, but an absolutely insane rise in the span of just one month.
What strikes one as odd is that these outsize gains began on the Monday following options expiration in December, just as we approach January options expiration. While it might be simply serendipitous, the flow of money into options has been outstanding over the past few months, and that fact alone might help explain at least a portion of the insane gains of the past four weeks.
It could also be that Wall Street traders aren't overly concerned about the issues outlined above, or are at least somewhat oblivious to them. Then again, most of ordinary Americans hold stocks in mutual funds or retirement plans, so, to them, the stock market is more spectator sport than participant-guided.
Could it be that fears of the imminent demise of the Euro are overblown, or is Wall Street purposely blowing smoke up the collective behinds of the American public?
Whatever the case, some small fortunes - and perhaps a couple of big ones - have been made in just the past month. Carry on, because the next thing you'll know is that the unemployment rate will drop like a rock off a bridge, Iran will suddenly give up on its plans to develop a nuclear arsenal and unicorns will spit gold nuggets.
Dow 12,578.95, +96.88 (0.78%)
NASDAQ 2,769.71, +41.63 (1.53%)
S&P 500 1,308.04, +14.37 (1.11%)
NYSE Composite 7,766.95, +96.48 (1.26%)
NASDAQ Volume 2,035,416,625
NYSE Volume 4,096,162,500
Combined NYSE & NASDAQ Advance - Decline: 4400-1251
Combined NYSE & NASDAQ New highs - New lows: 207-31
WTI crude oil: 100.59, -0.12
Gold: 1,659.90, +4.30
Silver: 30.54, +0.41
Tuesday, January 17, 2012
New Year Rally Continues, But Financial Stocks Fade
Another three-day weekend has passed, another European crisis barely averted and, lo and behold, another Tuesday rally fueled by speculation in pre-market futures. To say that US markets - and, by inference, global markets - are being propped up on false hope and denial of reality would be a gross understatement.
A little history suffices to show that last year, January was a positive one for the markets, with the S&P 500 gaining 29 points, pointing the way toward - according to the mighty January Barometer - a solid year, and we all know how that turned out, with the market's absolute top occurring in late April.
This is a replay of just about the same scenario with one big difference. Stocks are probably a little better than fairly valued, but corporate profits are not expected to set new records (after 2011's record earnings). Rather, competition and currency exchange concerns will likely limit what most of the big, multinational firms will make in 2012, to say nothing of the impending default of Greece and the recent downgrading of about half of the nations comprising the Eurozone.
Here in the US, focus will be on the presidential race, which looks exceedingly like it will come down to a very disturbing and divisive fight between the incumbent Democrat, Barack Obama and the Republican Mitt Romney, who looks quite a bit like what "occupy" movement supporters deride as a fat-cat, political and capitalist sociopath.
In essence and for the practical purposes of governing, Romney's not much different from Obama, leaving Americans with the usual unpalatable choice of the lesser of two evils. The press, for the fourth presidential election in a row, will hail this as "the most important election of your life," which, of course, it certainly is not, though the amount of money pumped into the campaigns by super-PACs will be the stuff of legend.
With any luck, the preponderance of political advertising will result in more Americans revisiting old habits and older friends, and tuning out the mainstream propaganda machine full time.
As for this current vapor-rally on minimal volume (a tell-tale sign of weakness), it may just come to an abrupt end with the expiration of options on Friday, or, being that the powers behind the Ponzi fiat money scheme need to keep up appearances, it could just saunter along for a few more months. Since the Republicans in congress wish to unseat Mr. Obama at almost all costs, expect gridlock in Washington for the rest of 2012, though geo-political events (think Europe, Iran and the Middle East) could certainly send stocks spiraling lower, just as they did in late 2007 and through much of 2008.
Some interesting macro-economic facts came to light over the Martin Luther King holiday weekend, such as ratings agency Standard & Poor's commencing to downgrade the EU's main liquidity funding mechanism, the ESFS, a notch, from AAA to AA+, putting even more stress on the Continent's debt issues.
As mentioned Friday, talks about restructuring private Greek debt have fallen apart and an outright default before March 20 appears to be all but certain.
Back in the US, the average age of vehicles on the road has reached a new high of 10.8 years as strapped consumers delay the purchase of new cars indefinitely. So much for the government's bailout of GM and Chrysler. Shares of General Motors are up about four points this year, reaching 24.20 as of today, but are still well below the IPO price of $35 per share.
Two of the nation's largest banks issued 4th quarter earnings reports prior to the opening bell. Wells-Fargo (WFC), now the largest bank in the US by market cap, met expectations, but Citigroup missed badly, with reported earnings of 38 cents a share, missing rosy estimates of 51 cents per share and well below last year's fourth quarter of 43 cents. Shares of Citigroup were bashed, losing 2.53, to 28.22, a loss of more than eight percent.
Today's market was punctuated within the first 20 minutes of trading, hitting the highs for the day, with the Dow up 161 points before the day-long selling commenced. Optimistic gapped-up opens followed by floundering into a weak close is a sure sign of an over-hyped market, though the Dow has sported gains in six of ten sessions this year.
Bull markets don't last forever, especially secular bulls, such as this one, which has persisted since the bottom in March of 2009. The mini corrections in the Spring and again in August haven't dampened investor sentiment much, though weak volume remains a persistent feature. Eventually, reality, such as Citi's poor showing today, will take hold of even the most stubborn bulls... and their money.
Dow 12,482.07, +60.01 (0.48%)
NASDAQ 2,728.08, +17.41 (0.64%)
S&P 500 1,293.67, +4.58 (0.36%)
NYSE Composite 7,670.47, +38.44 (0.50%)
NASDAQ Volume 1,819,276,375
NYSE Volume 3,883,768,500
Combined NYSE & NASDAQ Advance - Decline: 3262-2341
Combined NYSE & NASDAQ New highs - New lows: 217-46
WTI crude oil: 100.71, +2.01
Gold: 1,655.60, +24.80
Silver: 30.14, +0.61
A little history suffices to show that last year, January was a positive one for the markets, with the S&P 500 gaining 29 points, pointing the way toward - according to the mighty January Barometer - a solid year, and we all know how that turned out, with the market's absolute top occurring in late April.
This is a replay of just about the same scenario with one big difference. Stocks are probably a little better than fairly valued, but corporate profits are not expected to set new records (after 2011's record earnings). Rather, competition and currency exchange concerns will likely limit what most of the big, multinational firms will make in 2012, to say nothing of the impending default of Greece and the recent downgrading of about half of the nations comprising the Eurozone.
Here in the US, focus will be on the presidential race, which looks exceedingly like it will come down to a very disturbing and divisive fight between the incumbent Democrat, Barack Obama and the Republican Mitt Romney, who looks quite a bit like what "occupy" movement supporters deride as a fat-cat, political and capitalist sociopath.
In essence and for the practical purposes of governing, Romney's not much different from Obama, leaving Americans with the usual unpalatable choice of the lesser of two evils. The press, for the fourth presidential election in a row, will hail this as "the most important election of your life," which, of course, it certainly is not, though the amount of money pumped into the campaigns by super-PACs will be the stuff of legend.
With any luck, the preponderance of political advertising will result in more Americans revisiting old habits and older friends, and tuning out the mainstream propaganda machine full time.
As for this current vapor-rally on minimal volume (a tell-tale sign of weakness), it may just come to an abrupt end with the expiration of options on Friday, or, being that the powers behind the Ponzi fiat money scheme need to keep up appearances, it could just saunter along for a few more months. Since the Republicans in congress wish to unseat Mr. Obama at almost all costs, expect gridlock in Washington for the rest of 2012, though geo-political events (think Europe, Iran and the Middle East) could certainly send stocks spiraling lower, just as they did in late 2007 and through much of 2008.
Some interesting macro-economic facts came to light over the Martin Luther King holiday weekend, such as ratings agency Standard & Poor's commencing to downgrade the EU's main liquidity funding mechanism, the ESFS, a notch, from AAA to AA+, putting even more stress on the Continent's debt issues.
As mentioned Friday, talks about restructuring private Greek debt have fallen apart and an outright default before March 20 appears to be all but certain.
Back in the US, the average age of vehicles on the road has reached a new high of 10.8 years as strapped consumers delay the purchase of new cars indefinitely. So much for the government's bailout of GM and Chrysler. Shares of General Motors are up about four points this year, reaching 24.20 as of today, but are still well below the IPO price of $35 per share.
Two of the nation's largest banks issued 4th quarter earnings reports prior to the opening bell. Wells-Fargo (WFC), now the largest bank in the US by market cap, met expectations, but Citigroup missed badly, with reported earnings of 38 cents a share, missing rosy estimates of 51 cents per share and well below last year's fourth quarter of 43 cents. Shares of Citigroup were bashed, losing 2.53, to 28.22, a loss of more than eight percent.
Today's market was punctuated within the first 20 minutes of trading, hitting the highs for the day, with the Dow up 161 points before the day-long selling commenced. Optimistic gapped-up opens followed by floundering into a weak close is a sure sign of an over-hyped market, though the Dow has sported gains in six of ten sessions this year.
Bull markets don't last forever, especially secular bulls, such as this one, which has persisted since the bottom in March of 2009. The mini corrections in the Spring and again in August haven't dampened investor sentiment much, though weak volume remains a persistent feature. Eventually, reality, such as Citi's poor showing today, will take hold of even the most stubborn bulls... and their money.
Dow 12,482.07, +60.01 (0.48%)
NASDAQ 2,728.08, +17.41 (0.64%)
S&P 500 1,293.67, +4.58 (0.36%)
NYSE Composite 7,670.47, +38.44 (0.50%)
NASDAQ Volume 1,819,276,375
NYSE Volume 3,883,768,500
Combined NYSE & NASDAQ Advance - Decline: 3262-2341
Combined NYSE & NASDAQ New highs - New lows: 217-46
WTI crude oil: 100.71, +2.01
Gold: 1,655.60, +24.80
Silver: 30.14, +0.61
Friday, January 13, 2012
Friday the 13th Unlucky for JP Morgan, Europe Sovereigns as Debt Ratings Are Slashed
Friday the 13th was unlucky for most investors as stocks slipped over concerns of "imminent" credit downgrades in Europe and JP Morgan Chase's (JPM) quarterly results disappointed on revenue.
JP Morgan released 4th quarter and annual results prior to the opening bell sending related financial stocks into a tailspin.
JPM's earnings excluding items met expectations of 90 cents per share, a decrease from $1.12 per share in the year-earlier period, but full-year net income was $19 billion, down from $26.72 billion a year ago and well below analyst expectations of $23 billion. Quarterly net income was $3.72billion, down from $4.83 billion a year earlier.
JP Morgan was down 93 cents at the close, to 35.92, a loss of 2.52%.
It wasn't long after trading commenced in New York that news began leaking out, via Reuters, that many European nation's credit ratings were about to be downgraded by Standard & Poor's, which had put all 17 Eurozone nations on credit watch negative on December 5th.
The persistent rumors haunted european bourses, which fell dramatically on the news. Finally, after US markets closed in advance of a three-day weekend, S&P confirmed, dropping the credit ratings of nine countries, leaving only Germany with the gold-standard, AAA rating.
The following list, courtesy of London's daily Telegraph details the action:
France CUT one notch to AA+
Austria CUT one notch to AA+
Italy CUT two notches to BBB+
Spain CUT two notches to A
Portugal CUT two notches to BB (junk)
Belgium AFFIRMED at AA (the country was cut in November)
Malta CUT one notch to A-
Cyprus CUT one notch to BB+ (junk)
Luxembourg AFFIRMED at AAA
Germany AFFIRMED at AAA
Slovenia CUT one notch to A+
Slovakia CUT one notch to A
Ireland AFFIRMED at BBB+
The Netherlands AFFIRMED at AAA
Estonia AFFIRMED at AA-
All outlooks remain negative, except for Germany and Slovakia.
US stocks were crushed in the early going, but rallied throughout the afternoon, limiting losses. The Dow Jones Industrials were off by as much as 160 points in early going.
The Euro fell to its lowest level in 16 months vs. the US Dollar, at $1.2667, which is actually good news for European exporters and generally bad for US companies doing business in Europe.
Volume in US markets was weak (same old story) as participation levels have fallen off dramatically since the 08-09 financial crisis, many individual investors pulling money out of equities via funds and/or personal accounts. The low trading levels is somewhat of a bell-weather for the economy, mirror low participation rates in the labor force as Americans seek alternatives to both investment and traditional working roles.
The losses today pretty much cut the week's gains for the major indices in half. Stocks have been grinding higher through the first two weeks of the year, but there seems to be little conviction from traders.
Next week will be chock-full of earnings reports, many of which will meet or beat expectations, though the number of pre-announcements has been running unusually high for the 4th quarter and investors are nervous, as action in the financials and JP Morgan, in particular, made quite clear.
Also, Greek talks with creditors have broken down, leaving open the possibility that the proposed 50% voluntary haircuts on Greek debt would become involuntary, triggering credit default swaps payouts as early as March, when Greece is scheduled to receive another round of funding from the IMF and ECB.
Dow 12,422.06, -48.96 (0.39%)
NASDAQ 2,710.67, -14.03 (0.51%)
S&P 500 1,289.09, -6.41 (0.49%)
NYSE Composite 7,632.03, -49.23 (0.64%)
NASDAQ Volume 1,686,001,750
NYSE Volume 3,692,377,750
Combined NYSE & NASDAQ Advance - Decline: 1874-3682
Combined NYSE & NASDAQ New highs - New lows: 142-50
WTI crude oil: 98.70, -0.40
Gold: 1,630.80, -16.90
Silver: 29.52, -0.60
JP Morgan released 4th quarter and annual results prior to the opening bell sending related financial stocks into a tailspin.
JPM's earnings excluding items met expectations of 90 cents per share, a decrease from $1.12 per share in the year-earlier period, but full-year net income was $19 billion, down from $26.72 billion a year ago and well below analyst expectations of $23 billion. Quarterly net income was $3.72billion, down from $4.83 billion a year earlier.
JP Morgan was down 93 cents at the close, to 35.92, a loss of 2.52%.
It wasn't long after trading commenced in New York that news began leaking out, via Reuters, that many European nation's credit ratings were about to be downgraded by Standard & Poor's, which had put all 17 Eurozone nations on credit watch negative on December 5th.
The persistent rumors haunted european bourses, which fell dramatically on the news. Finally, after US markets closed in advance of a three-day weekend, S&P confirmed, dropping the credit ratings of nine countries, leaving only Germany with the gold-standard, AAA rating.
The following list, courtesy of London's daily Telegraph details the action:
France CUT one notch to AA+
Austria CUT one notch to AA+
Italy CUT two notches to BBB+
Spain CUT two notches to A
Portugal CUT two notches to BB (junk)
Belgium AFFIRMED at AA (the country was cut in November)
Malta CUT one notch to A-
Cyprus CUT one notch to BB+ (junk)
Luxembourg AFFIRMED at AAA
Germany AFFIRMED at AAA
Slovenia CUT one notch to A+
Slovakia CUT one notch to A
Ireland AFFIRMED at BBB+
The Netherlands AFFIRMED at AAA
Estonia AFFIRMED at AA-
All outlooks remain negative, except for Germany and Slovakia.
US stocks were crushed in the early going, but rallied throughout the afternoon, limiting losses. The Dow Jones Industrials were off by as much as 160 points in early going.
The Euro fell to its lowest level in 16 months vs. the US Dollar, at $1.2667, which is actually good news for European exporters and generally bad for US companies doing business in Europe.
Volume in US markets was weak (same old story) as participation levels have fallen off dramatically since the 08-09 financial crisis, many individual investors pulling money out of equities via funds and/or personal accounts. The low trading levels is somewhat of a bell-weather for the economy, mirror low participation rates in the labor force as Americans seek alternatives to both investment and traditional working roles.
The losses today pretty much cut the week's gains for the major indices in half. Stocks have been grinding higher through the first two weeks of the year, but there seems to be little conviction from traders.
Next week will be chock-full of earnings reports, many of which will meet or beat expectations, though the number of pre-announcements has been running unusually high for the 4th quarter and investors are nervous, as action in the financials and JP Morgan, in particular, made quite clear.
Also, Greek talks with creditors have broken down, leaving open the possibility that the proposed 50% voluntary haircuts on Greek debt would become involuntary, triggering credit default swaps payouts as early as March, when Greece is scheduled to receive another round of funding from the IMF and ECB.
Dow 12,422.06, -48.96 (0.39%)
NASDAQ 2,710.67, -14.03 (0.51%)
S&P 500 1,289.09, -6.41 (0.49%)
NYSE Composite 7,632.03, -49.23 (0.64%)
NASDAQ Volume 1,686,001,750
NYSE Volume 3,692,377,750
Combined NYSE & NASDAQ Advance - Decline: 1874-3682
Combined NYSE & NASDAQ New highs - New lows: 142-50
WTI crude oil: 98.70, -0.40
Gold: 1,630.80, -16.90
Silver: 29.52, -0.60
Thursday, January 12, 2012
Stocks Continue Relentless March Higher Despite Poor Economic Data
Once again, US equities finished the day on an upbeat tone, though data hardly suggests that the economy is either robust or growing rapidly. In fact, two releases prior to the market open were depressing enough to send stocks to morning lows out of the open.
Retail Sales for December were nothing short of a disaster, rising a mere 0.1% on expectations of a 0.4% boost, putting an end to the fiction that was widely spouted around financial circles, that holiday sales were brisk and consumers had their wallets wide open during the festive season.
Ex-autos, retail sales were even worse, down 0.2% (maybe those annoying Lexus Christmas commercials were good for something after all) on epectations of a 0.3% gain.
Business inventories were tighter, growing at a modest 0.3% in December after being up 0.8% in November. The drawdown during Christmas season will have consequences, especially involving calculations of 4th quarter 2011 GDP, and, if it continues, 1st quarter 2012 figures as well.
Perhaps the scariest number of the morning came from the wholly-discredited BLS, with their weekly report on initial unemployment claims, which came in much higher than the expected 375,000, bumping up to 399,000, which no doubt will be revised upward above 400,000 next week. From the data, it certainly seems to make sense that the BLS numbers are not properly seasonally-adjusted, and that many of those holiday season jobs were just that, seasonal, as in not permanent.
The uptake on the data is that American retailers are in deep trouble, consumers aren't about to rush out and buy just because they have a few extra dollars in their wallets or purses, and good, well-paying jobs are still on the horizon of imagination.
All of those assumptions did not deter Wall Street from boosting stock prices for the fifth time in eight trading sessions this new year. The reason would most likely be in the belief that Europe's debt crisis is all but solved, following an ECB announcement of no movement in interest rates and better-than-expected results in Spanish and Italian bond auctions. As usual, traders will hang their collective hats on any data that supports the cause of endless money printing and higher and higher stock prices, in the belief that a strong stock market is a good reflection of the overall economic picture, which is pure folly.
Large bankruptcies are on the rise, indicating a resumption of the financial fallout from 2008. With Kodak already on the ropes and possibly days away from a formal bankruptcy announcement, Hostess, the maker of Twinkies, Ding-Dongs and other high fructose snacks, filed bankruptcy on Wednesday.
The next victim is likely to be Sears Holdings. Lender CIT, the firm now headed by the nefarious John Thain, has made it clear that vendors to Sears and K-Mart will no longer receive financing or payment guarantees. Thain, who was the last CEO of Merrill Lynch before it was forced upon Bank of America, was one of the leading banking figures responsible for much of the 2008 financial crash.
Apparently, Thain has found new life as a vulture, now circling the bond holdings and other assets of Sears.
On the real estate front, all the buzz is over the government plan - first suggested by the Federal Reserve, which is holding reams and reams of near-worthless RMBS - to turn Fannie Mae and Freddie Mac foreclosures into rental properties. The two failed GSEs became the lenders of last resort and have back-handedly bailed out the nation's biggest banks by buying back much of the worthless mortgages still sitting somewhere off the books of JP Morgan Chase, Bank of America, Citigroup and Wells-Fargo.
Many of the same firms who caused the financial and mortgage miasma in the first place are now lining up to buy the foreclosed properties at rock-bottom prices and turn America into a nation of renters. Deustche Bank, Fortress Capital, Barclays Capital, Neuberger Berman Group, Ranieri Partners and UBS are among firms interested in becoming property owners and managers. Good luck with that. Like all other attempts to inject new life into the failed housing market this program will be the subject of great scrutiny and consternation from American citizens, many of whom were forced out of their homes during the late 2000s.
Naturally, these vulture capitalists will get to cherry pick the foreclosures, largely at the expense of the US taxpayer. Outrage should begin forming from groups like the Occupy movement and others within weeks. The government will likely present the program as a jobs-building incentive when in reality it is nothing less than a well-conceived plan to fleece Americans as renters since virtually nobody can qualify for a mortgage these days.
Dow 12,471.02, +21.57 (0.17%)
NASDAQ 2,724.70, +13.94 (0.51%)
S&P 500 1,295.50, +3.02 (0.23%)
NYSE Composite 7,681.26, +19.28 (0.25%)
NASDAQ Volume 1,662,562,500
NYSE Volume 3,939,928,500
Combined NYSE & NASDAQ Advance - Decline: 3397-2175
Combined NYSE & NASDAQ New highs - New lows: 166-40
WTI crude oil: 99.10, -1.77
Gold: 1,647.70, +8.10
Silver: 30.12, +0.23
Retail Sales for December were nothing short of a disaster, rising a mere 0.1% on expectations of a 0.4% boost, putting an end to the fiction that was widely spouted around financial circles, that holiday sales were brisk and consumers had their wallets wide open during the festive season.
Ex-autos, retail sales were even worse, down 0.2% (maybe those annoying Lexus Christmas commercials were good for something after all) on epectations of a 0.3% gain.
Business inventories were tighter, growing at a modest 0.3% in December after being up 0.8% in November. The drawdown during Christmas season will have consequences, especially involving calculations of 4th quarter 2011 GDP, and, if it continues, 1st quarter 2012 figures as well.
Perhaps the scariest number of the morning came from the wholly-discredited BLS, with their weekly report on initial unemployment claims, which came in much higher than the expected 375,000, bumping up to 399,000, which no doubt will be revised upward above 400,000 next week. From the data, it certainly seems to make sense that the BLS numbers are not properly seasonally-adjusted, and that many of those holiday season jobs were just that, seasonal, as in not permanent.
The uptake on the data is that American retailers are in deep trouble, consumers aren't about to rush out and buy just because they have a few extra dollars in their wallets or purses, and good, well-paying jobs are still on the horizon of imagination.
All of those assumptions did not deter Wall Street from boosting stock prices for the fifth time in eight trading sessions this new year. The reason would most likely be in the belief that Europe's debt crisis is all but solved, following an ECB announcement of no movement in interest rates and better-than-expected results in Spanish and Italian bond auctions. As usual, traders will hang their collective hats on any data that supports the cause of endless money printing and higher and higher stock prices, in the belief that a strong stock market is a good reflection of the overall economic picture, which is pure folly.
Large bankruptcies are on the rise, indicating a resumption of the financial fallout from 2008. With Kodak already on the ropes and possibly days away from a formal bankruptcy announcement, Hostess, the maker of Twinkies, Ding-Dongs and other high fructose snacks, filed bankruptcy on Wednesday.
The next victim is likely to be Sears Holdings. Lender CIT, the firm now headed by the nefarious John Thain, has made it clear that vendors to Sears and K-Mart will no longer receive financing or payment guarantees. Thain, who was the last CEO of Merrill Lynch before it was forced upon Bank of America, was one of the leading banking figures responsible for much of the 2008 financial crash.
Apparently, Thain has found new life as a vulture, now circling the bond holdings and other assets of Sears.
On the real estate front, all the buzz is over the government plan - first suggested by the Federal Reserve, which is holding reams and reams of near-worthless RMBS - to turn Fannie Mae and Freddie Mac foreclosures into rental properties. The two failed GSEs became the lenders of last resort and have back-handedly bailed out the nation's biggest banks by buying back much of the worthless mortgages still sitting somewhere off the books of JP Morgan Chase, Bank of America, Citigroup and Wells-Fargo.
Many of the same firms who caused the financial and mortgage miasma in the first place are now lining up to buy the foreclosed properties at rock-bottom prices and turn America into a nation of renters. Deustche Bank, Fortress Capital, Barclays Capital, Neuberger Berman Group, Ranieri Partners and UBS are among firms interested in becoming property owners and managers. Good luck with that. Like all other attempts to inject new life into the failed housing market this program will be the subject of great scrutiny and consternation from American citizens, many of whom were forced out of their homes during the late 2000s.
Naturally, these vulture capitalists will get to cherry pick the foreclosures, largely at the expense of the US taxpayer. Outrage should begin forming from groups like the Occupy movement and others within weeks. The government will likely present the program as a jobs-building incentive when in reality it is nothing less than a well-conceived plan to fleece Americans as renters since virtually nobody can qualify for a mortgage these days.
Dow 12,471.02, +21.57 (0.17%)
NASDAQ 2,724.70, +13.94 (0.51%)
S&P 500 1,295.50, +3.02 (0.23%)
NYSE Composite 7,681.26, +19.28 (0.25%)
NASDAQ Volume 1,662,562,500
NYSE Volume 3,939,928,500
Combined NYSE & NASDAQ Advance - Decline: 3397-2175
Combined NYSE & NASDAQ New highs - New lows: 166-40
WTI crude oil: 99.10, -1.77
Gold: 1,647.70, +8.10
Silver: 30.12, +0.23
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