There's nothing quite like a Monday morning gap down at the open to portray the absurdity of the modern US equity markets.
Stocks opened sharply lower (the Dow down as much as 131 points by 10:30 am ET), but then staged a day-long rally ending with mostly flat to slightly lower averages that had everybody but day-traders scratching their heads.
The reason day traders would be among the least surprised by the tenor of today's trading is that gap ups and downs have become somewhat the norm over the past few years and especially so in the last six to eight months. Shrewd day-traders are out by the close and ready with new positions at every open, so, the gaps in trading from one day to the next create boundless opportunities for profit.
And who might these day-traders be? They are not, as many assume, older, well-off types who sit in front of computers in their McMansions ticking off trades. They are more than likely to be hedge funds and the brokerages of the largest banks in the world, and therein lies the wickedness and fruitlessness of trading in today's markets for the individual investor.
Today's deep dive at the open was fomented by a couple of data points from the government that saw personal income rise by 0.4% in December, but personal spending flat for the same month. That translated into a savings rate of 4% for the average American, far beyond what the powers that be would prefer, but the flat line on spending in December meant that the much-ballyhooed Christmas spending spree was more hot air and bluster than reality and the US economy is still barely treading water.
Adding insult to the intelligence of the American investor was the fact that almost every other stock market in the world took losses on the day, the euro was sharply lower against the US dollar (normally a selling signal) and the Greece debt crisis - which was supposed to be solved over the weekend - continues to deepen.
Anyone thinking that today's action in equities was a sign that the economy is on solid ground probably also thinkis Bank of America is a good investment (paging Dick Bove) and that Newt Gingrich would do well as a presidential candidate against Barack Obama.
Our markets are permanently broken, manipulated and dishonest and until there are radical changes in the ways brokerages are regulated and separated, not only from their holding banks, but from the Fed, the government and the PPT.
Until then, beware of rallies off of sharp opening declines and huge gaps up at opens as well. They're nothing but openings for traders with more skills, more money and more advantage than the average Jane or Joe, and the movements of the market are nothing more than maintaining the illusion of stability until the elections in November.
Dow 12,653.72, -6.74 (0.05%)
NASDAQ 2,811.94, -4.61 (0.16%)
S&P 500 1,313.02, -3.31 (0.25%)
NYSE Composite 7,830.42, -46.19 (0.59%)
NASDAQ Volume 1,621,418,500
NYSE Volume 3,493,897,750
Combined NYSE & NASDAQ Advance - Decline: 1983-2611
Combined NYSE & NASDAQ New highs - New lows: 218-25 (still extreme, bordering on absurd)
WTI crude oil: 98.78, -0.78
Gold: 1,731.00, -1.20
Silver: 33.53, -0.26
Monday, January 30, 2012
Paying Bills
This guest post from Lewis Beck
I have started paying all of my bills online. It is so much easier and it keeps me more organized. I used to have a stack of bills that came in the mail and I would have to use several stamps and mail each bill back. Sometimes, if I was out of stamps, I would end up mailing my bills back late because I would forget to go buy more stamps. If my bills were late, I would be charged a late fee. When I pay bills online can do it immediately and I do not have to worry about if the bill is going to be late. I also just get an email when the bill is due, so I do not have to worry about getting so much mail that just sits on my counter. I do not have to worry about late fees or stamps. It is so much easier to pay my bills online. I am so glad that I have Satelite Internet Oregon. It has made my life much less complicated and I do not know what I would do without the internet.
Friday, January 27, 2012
4th Quarter GDP Up 2.8%; 1.9% from Inventory Build; Checklist for Peace and Prosperity
US markets opened the day with news that the first estimate of 4th quarter 2011 GDP came in at 2.8%, a tad shy of the 3.0% (and many higher) estimates from the punditry. That bit of reality got stocks off to a ragged start and the choppiness continued throughout the day with the NASDAQ the only positive index for the bulk of the session.
The saddest part of the GDP breakout was that 1.9% of the 2.8% gain came from inventory build, which, as experienced in years past, will be quickly pushed out the door in the first quarter of 2012 and not fully replaced. That sets up an extraordinary condition through the first quarter: that of teetering on the brink of GDP contraction. Everyone is aware of the situation, which is why trading volumes have been so weak and stocks now being used as short-term bets rather than investments.
Still, the always-bullish crowd on Wall Street still, according to the January Barometer, believes there are better days ahead. That is until the bad days come, which they surely will. The aforementioned barometer is an old adage that purports that market direction, as dictated by the change in the month of January, will remain the same throughout the year. Last year, January was strong, just as this year, but we ended the year flat, and, after April, and especially after July, it was mostly downhill, so, take the sage guidance of the January Barometer with as many grains of salt as your risk appetite will allow.
Full year 2011 GDP was a grand 1.575%. And that's probably a stretch.
Muddle, muddle, toil and trouble,
Huddle, huddle, masses under the bubble.
America's economy is not growing and that's a good thing, though only for selected groups, like those who have seen it coming all along, nascent Nihilists and, of course, those at the top of the food chain (damn bankers).
Finally, here's my checklist for peace and prosperity in one's life:
Note that anything I-related, phone, pad, whatever, are not even optional. They're just future junk.
Since anybody who reads this blog is probably a notch or four above the teeming masses, we, as a group, should be exceptionally pleased that the system hasn't gone full retard into the eventual collapse, yet. Gives us more time to prepare for Armageddon, should it come, though we will be best prepared to fight off the zombies.
My advice: stick to your plan and work it. Hard. Tell those who think you're nuts (98% of population) to F-off. Fight like a gladiator for every penny and never lose faith in your own unique human ability, which knows only the limits you put on it.
Life is good and getting better for those who are prepared. The heck with the rest of the idiots.
Finally, two ideas in just four short words to mull over the weekend: Ron Paul. Short Google.
Dow 12,660.46, -74.17 (0.58%)
NASDAQ 2,816.55, +11.27 (0.40%)
S&P 500 1,316.32, -2.11 (0.16%)
NYSE Composite 7,876.60, -7.30 (0.09%)
NASDAQ Volume 1,685,430,875
NYSE Volume 3,822,956,000
Combined NYSE & NASDAQ Advance - Decline: 3540-1981
Combined NYSE & NASDAQ New highs - New lows: 235-18 (still extreme, but stalling out)
WTI crude oil: 99.56, -0.14
Gold: 1,732.20, +5.50
Silver: 33.79, +0.05
The saddest part of the GDP breakout was that 1.9% of the 2.8% gain came from inventory build, which, as experienced in years past, will be quickly pushed out the door in the first quarter of 2012 and not fully replaced. That sets up an extraordinary condition through the first quarter: that of teetering on the brink of GDP contraction. Everyone is aware of the situation, which is why trading volumes have been so weak and stocks now being used as short-term bets rather than investments.
Still, the always-bullish crowd on Wall Street still, according to the January Barometer, believes there are better days ahead. That is until the bad days come, which they surely will. The aforementioned barometer is an old adage that purports that market direction, as dictated by the change in the month of January, will remain the same throughout the year. Last year, January was strong, just as this year, but we ended the year flat, and, after April, and especially after July, it was mostly downhill, so, take the sage guidance of the January Barometer with as many grains of salt as your risk appetite will allow.
Full year 2011 GDP was a grand 1.575%. And that's probably a stretch.
Muddle, muddle, toil and trouble,
Huddle, huddle, masses under the bubble.
America's economy is not growing and that's a good thing, though only for selected groups, like those who have seen it coming all along, nascent Nihilists and, of course, those at the top of the food chain (damn bankers).
Finally, here's my checklist for peace and prosperity in one's life:
- Paid for (free and clear) house to live in Nice stacks of Precious Metals Guns & ammo Food in storage Garden Plenty of cash for six months expenses Solid understanding of the situation Don't give a rat's behind about upcoming elections Severe, deep-seated hatred of banks and government A business that keeps churning cash Clear conscience
Note that anything I-related, phone, pad, whatever, are not even optional. They're just future junk.
Since anybody who reads this blog is probably a notch or four above the teeming masses, we, as a group, should be exceptionally pleased that the system hasn't gone full retard into the eventual collapse, yet. Gives us more time to prepare for Armageddon, should it come, though we will be best prepared to fight off the zombies.
My advice: stick to your plan and work it. Hard. Tell those who think you're nuts (98% of population) to F-off. Fight like a gladiator for every penny and never lose faith in your own unique human ability, which knows only the limits you put on it.
Life is good and getting better for those who are prepared. The heck with the rest of the idiots.
Finally, two ideas in just four short words to mull over the weekend: Ron Paul. Short Google.
Dow 12,660.46, -74.17 (0.58%)
NASDAQ 2,816.55, +11.27 (0.40%)
S&P 500 1,316.32, -2.11 (0.16%)
NYSE Composite 7,876.60, -7.30 (0.09%)
NASDAQ Volume 1,685,430,875
NYSE Volume 3,822,956,000
Combined NYSE & NASDAQ Advance - Decline: 3540-1981
Combined NYSE & NASDAQ New highs - New lows: 235-18 (still extreme, but stalling out)
WTI crude oil: 99.56, -0.14
Gold: 1,732.20, +5.50
Silver: 33.79, +0.05
Thursday, January 26, 2012
Welcome to the Age of Financial Repression; Markets Fall, Metals Gain
This was truly a strange day in US equity markets. On the heels of Wednesday's Fed announcement that the federal funds rate would stay at 0-0.25% until the latter part of 2014 (read: as long as we need ZIRP to keep the economy from collapse) and blow-out earnings from Caterpillar (CAT), stocks opened sharply higher, but then nose-dived right at 10:00 am, after the Commerce Dept. reported that new home sales in December fell by 2.2%, to an annualized rate of 307,000. Additionally, the median price of a new house purchased last month declined 12.8% from a year ago. 2010 now stands complete as the worst year for new home sales since records began being kept in 1963.
On top of the earlier-reported initial unemployment claims spiking back up to 377,000 from an upwardly-revised 356,000 last week, not even the hope of endless largesse from the Federal Reserve could keep stocks in positive territory. All major indices ended in the red. By contrast, gold and silver posted solid gains.
A term one won't be hearing much on mainstream media is "financial repression," and if it sounds harsh, it's because it is, and it is the reality of much of today's economic world.
Here's a definition of Financial Repression from Investopedia:
Bingo. Another term for the collusion of business and government is fascism.
Welcome to the new world order. For a glimpse of who and what are destroying the value of capital and thus, your money, just take some time to view the goings-on at the World Economic Forum in Davos, Switzerland. Surely, George Soros, Mark Zuckerman, Jamie Dimon and a gaggle of billionaires have the worming men and women of the world's best interests at heart.
Dow 12,734.63, -22.33 (0.18%)
NASDAQ 2,805.28, -13.03 (0.46%)
S&P 500 1,318.43, -7.62 (0.57%)
NYSE Composite 7,883.90, -30.91 (0.39%)
NASDAQ Volume 2,061,939,750
NYSE Volume 4,521,722,000
Combined NYSE & NASDAQ Advance - Decline: 2651-2944
Combined NYSE & NASDAQ New highs - New lows: 332-21 (very extreme)
WTI crude oil: 99.70, +0.30
Gold: 1,726.70, +26.60
Silver: 33.74, +0.62
On top of the earlier-reported initial unemployment claims spiking back up to 377,000 from an upwardly-revised 356,000 last week, not even the hope of endless largesse from the Federal Reserve could keep stocks in positive territory. All major indices ended in the red. By contrast, gold and silver posted solid gains.
A term one won't be hearing much on mainstream media is "financial repression," and if it sounds harsh, it's because it is, and it is the reality of much of today's economic world.
Here's a definition of Financial Repression from Investopedia:
A term that describes measures by which governments channel funds to themselves as a form of debt reduction. This concept was introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I. McKinnon. Financial repression can include such measures as directed lending to the government, caps on interest rates, regulation of capital movement between countries and a tighter association between government and banks. The term was initially used in response to the emerging market financial systems during the 1960s, '70s and '80s.
Bingo. Another term for the collusion of business and government is fascism.
Welcome to the new world order. For a glimpse of who and what are destroying the value of capital and thus, your money, just take some time to view the goings-on at the World Economic Forum in Davos, Switzerland. Surely, George Soros, Mark Zuckerman, Jamie Dimon and a gaggle of billionaires have the worming men and women of the world's best interests at heart.
Dow 12,734.63, -22.33 (0.18%)
NASDAQ 2,805.28, -13.03 (0.46%)
S&P 500 1,318.43, -7.62 (0.57%)
NYSE Composite 7,883.90, -30.91 (0.39%)
NASDAQ Volume 2,061,939,750
NYSE Volume 4,521,722,000
Combined NYSE & NASDAQ Advance - Decline: 2651-2944
Combined NYSE & NASDAQ New highs - New lows: 332-21 (very extreme)
WTI crude oil: 99.70, +0.30
Gold: 1,726.70, +26.60
Silver: 33.74, +0.62
Wednesday, January 25, 2012
Fed to Keep Rates Low Through Late 2014; Most Investors Pleased
Ending the first FOMC rate policy meeting of 2012 with a bang, the Federal Reserve announced today no change in their target federal funds rate of 0-0.25%, but the major announcement was that they would keep this same, historically-low rate in effect through "late 2014." The rapid results of the Fed's announcement that they would keep monetary policy ridiculously easy for the next three years were felt immediately in all markets.
The dollar dropped like a rock against most other currencies, especially the Euro.
Bond yields fall dramatically.
Stocks turned from mildly negative to ferociously positive.
Gold, silver, crude oil and most other commodities spiked higher.
Those were the winners. The losers were just about anybody on a fixed income, which includes not only those on Social Security or retirement pensions, but also most workers in the private sector, which has experienced flat to lower labor prices for most of the past decade.
Therein lies the fallacy of the Fed's dual mandate of providing stable prices and full employment. Obviously, on both measures, the Fed has failed badly over recent years and is now in a no-win situation without much flexibility to react to real-time events and unforeseen circumstances.
With yields on money market funds and certificates of deposit at or near record lows, the Fed is encouraging risk, though Americans, still saddled with too much household debt, many with underwater mortgages to go along with stagnant wages, still aren't fully in the mood - nor do many have the wherewithal - to spend freely and get the economy out of the dolorous regime of 1-3% growth.
Business, generally, though there are pockets of severe conditions, are content to keep grinding on, though innovation and new enterprise creation has been somewhat stifled, though not to the degree it has been, especially during the forlorn days of late 2008 and early 2009.
Conditions are generally much better than back then, as major banks have largely re-capitalized, households have paid down a good portion of debt and governments - outside of the petulant federal one - have tightened budgets though labor reductions, better spending discipline and capital controls. The final pieces to the puzzle of a sustained, vibrant recovery rest squarely upon the shoulders of the federal government, which must seriously tackle the issues of Fannie Mae and Freddie Mac, reducing the annual deficit (a balanced budget, or something close to it, would be a welcome change), restructuring the tax code, reducing needless regulations and implementing fundamental changes in entitlement programs.
The federal government's list of dirty laundry is long and unlikely to be resolved to any great extent in the background of a presidential election year. That is not the Fed's problem, just as the profligate spending of many of the European nations should not be an epidemic for the ECB, though that is exactly what it has become.
The Fed is doing just about everything it can to make the business environment friendly and accommodative while the federal government, though gridlock and ideological differences, fights, kicking and screaming at any and every notion of change.
Americans, on the other hand, are ready for change in a more positive direction, a theme repeatedly stressed in Tuesday night's State of the Union address by President Obama, who outlined a number of measures to get government working for the people again at the federal level, such notions quickly dismissed by political commentators and opponent Republicans as mere politicking.
Sadly, the politics of Washington, DC will not allow for any substantive changes for at least another year, meaning that Americans are stuck with what they've been handed, like it or not, making the matter of improving one's economic conditions a paramount requirement for each individual and family.
How, though can individuals help the economy grow?
Perhaps through being wiser shoppers, better disciplined managers of their own finances and smarter stewards of their own assets, which is not limited to just stocks, bonds, retirement accounts and real estate, but must include a dedication to some basic American principles, such as working hard, saving (though that is tough, but necessary), and making progress and innovation in one's chosen career path.
Working Americans, must shoulder much of the burden, as usual, though the lot of most working Americans (the 80-90% of the labor force with jobs) isn't really all that bad presently, it's the future - along with the repayment of past debts - about which most are overly concerned.
Considering that the worst of the recession is well behind us by now and that the Fed has signaled that conditions are unlikely to change much in the coming three years, the real issue is that of confidence, in one's job, one's future and in America.
It is up to everyone to see to it that the federal government is brought into line with the wishes of the middle class. It's not enough to deride the rich for not paying their fair share of taxes. More emphasis must be placed upon the well-entrenched welfare state. The poor aren't pulling their weight very well, either.
It's not enough to vote for the candidates of choice in November. It is the duty of all Americans to inquire and to become informed about government policies, resist them if necessary, protest them if they are wrong and change them if possible.
The Federal Reserve or the federal government will not make the needed changes to bring America back to a system of individual rights and fairness without hearing from each of us, all of us. It is long past time for Americans to take matters into their own hands, deal with the vagueries and inconsistencies of institutions and turn the tide. We are at an important point of change in our history and individuals must make the difference.
Dow 12,758.85, +83.10 (0.66%)
NASDAQ 2,818.31, +31.67 (1.14%)
S&P 500 1,326.06, +11.41 (0.87%)
NYSE Composite 7,914.81, +74.16 (0.95%)
NASDAQ Volume 1,954,827,375
NYSE Volume 4,410,711,500
Combined NYSE & NASDAQ Advance - Decline: 4049-1578
Combined NYSE & NASDAQ New highs - New lows: 239-20
WTI crude oil: 99.40, +0.45
Gold: 1,710.90, +46.40
Silver: 33.28, +1.30
The dollar dropped like a rock against most other currencies, especially the Euro.
Bond yields fall dramatically.
Stocks turned from mildly negative to ferociously positive.
Gold, silver, crude oil and most other commodities spiked higher.
Those were the winners. The losers were just about anybody on a fixed income, which includes not only those on Social Security or retirement pensions, but also most workers in the private sector, which has experienced flat to lower labor prices for most of the past decade.
Therein lies the fallacy of the Fed's dual mandate of providing stable prices and full employment. Obviously, on both measures, the Fed has failed badly over recent years and is now in a no-win situation without much flexibility to react to real-time events and unforeseen circumstances.
With yields on money market funds and certificates of deposit at or near record lows, the Fed is encouraging risk, though Americans, still saddled with too much household debt, many with underwater mortgages to go along with stagnant wages, still aren't fully in the mood - nor do many have the wherewithal - to spend freely and get the economy out of the dolorous regime of 1-3% growth.
Business, generally, though there are pockets of severe conditions, are content to keep grinding on, though innovation and new enterprise creation has been somewhat stifled, though not to the degree it has been, especially during the forlorn days of late 2008 and early 2009.
Conditions are generally much better than back then, as major banks have largely re-capitalized, households have paid down a good portion of debt and governments - outside of the petulant federal one - have tightened budgets though labor reductions, better spending discipline and capital controls. The final pieces to the puzzle of a sustained, vibrant recovery rest squarely upon the shoulders of the federal government, which must seriously tackle the issues of Fannie Mae and Freddie Mac, reducing the annual deficit (a balanced budget, or something close to it, would be a welcome change), restructuring the tax code, reducing needless regulations and implementing fundamental changes in entitlement programs.
The federal government's list of dirty laundry is long and unlikely to be resolved to any great extent in the background of a presidential election year. That is not the Fed's problem, just as the profligate spending of many of the European nations should not be an epidemic for the ECB, though that is exactly what it has become.
The Fed is doing just about everything it can to make the business environment friendly and accommodative while the federal government, though gridlock and ideological differences, fights, kicking and screaming at any and every notion of change.
Americans, on the other hand, are ready for change in a more positive direction, a theme repeatedly stressed in Tuesday night's State of the Union address by President Obama, who outlined a number of measures to get government working for the people again at the federal level, such notions quickly dismissed by political commentators and opponent Republicans as mere politicking.
Sadly, the politics of Washington, DC will not allow for any substantive changes for at least another year, meaning that Americans are stuck with what they've been handed, like it or not, making the matter of improving one's economic conditions a paramount requirement for each individual and family.
How, though can individuals help the economy grow?
Perhaps through being wiser shoppers, better disciplined managers of their own finances and smarter stewards of their own assets, which is not limited to just stocks, bonds, retirement accounts and real estate, but must include a dedication to some basic American principles, such as working hard, saving (though that is tough, but necessary), and making progress and innovation in one's chosen career path.
Working Americans, must shoulder much of the burden, as usual, though the lot of most working Americans (the 80-90% of the labor force with jobs) isn't really all that bad presently, it's the future - along with the repayment of past debts - about which most are overly concerned.
Considering that the worst of the recession is well behind us by now and that the Fed has signaled that conditions are unlikely to change much in the coming three years, the real issue is that of confidence, in one's job, one's future and in America.
It is up to everyone to see to it that the federal government is brought into line with the wishes of the middle class. It's not enough to deride the rich for not paying their fair share of taxes. More emphasis must be placed upon the well-entrenched welfare state. The poor aren't pulling their weight very well, either.
It's not enough to vote for the candidates of choice in November. It is the duty of all Americans to inquire and to become informed about government policies, resist them if necessary, protest them if they are wrong and change them if possible.
The Federal Reserve or the federal government will not make the needed changes to bring America back to a system of individual rights and fairness without hearing from each of us, all of us. It is long past time for Americans to take matters into their own hands, deal with the vagueries and inconsistencies of institutions and turn the tide. We are at an important point of change in our history and individuals must make the difference.
Dow 12,758.85, +83.10 (0.66%)
NASDAQ 2,818.31, +31.67 (1.14%)
S&P 500 1,326.06, +11.41 (0.87%)
NYSE Composite 7,914.81, +74.16 (0.95%)
NASDAQ Volume 1,954,827,375
NYSE Volume 4,410,711,500
Combined NYSE & NASDAQ Advance - Decline: 4049-1578
Combined NYSE & NASDAQ New highs - New lows: 239-20
WTI crude oil: 99.40, +0.45
Gold: 1,710.90, +46.40
Silver: 33.28, +1.30
Subscribe to:
Posts (Atom)
Posts
