Freaky Friday: $6 Trillion In Fake Bonds, Euro-Greek Bond Swap; March 23rd Looking Grim

For a Friday, the news flow certainly was heavy.

The morning began with a report out of Italy, that $6 trillion worth of allegedly "fake" US Treasury bonds were seized by Italian police and the US Secret Service along with eight men involved in the counterfeiting and money laundering scam. Authorities said that the individuals arrested were planning to purchase plutonium from Nigeria, a story that has a familiar ring, last used as part of the pretense for going to war with Iraq after 9/11.

This story has all the markings of either a false flag event or wild conspiracy. Details are sketchy, though the assembled mainstream news media has already accepted the idea that the bonds are fakes. Don't expect to hear or see much more about this after today, except from bloggers and investigators outside the mainstream.

The European Central Bank (ECB) swapped its Greek bonds for new ones to ensure it isn’t forced to take losses in a debt restructuring. This story also greeted the morning in New York, without much fanfare, except for the press mimicking the officials at the ECB that Greece is moving closer to a resolution of its debt issues before the fateful date of March 20 arrives.

ZeroHedge has a pretty good take on the implications and possible illegalities of the move, which will apparently trigger the collective action clauses (CAC) and also Credit Default Swaps, as it would be a default event. Ooopsie. Could be a cascade coming.

Related, but unconfirmed, is a report that some banks already have documents detailing a March 23 default by Greece in which Greek banks will be closed, accounts frozen and Euro-denominated currency will become worthless in the land of Plato and Aristotle.

March 23 happens to be a Friday, which makes sense, since the report says the major credit agencies will declare Greece in default, and late Friday afternoons, after US markets have closed, seems to be the preferred time for any nasty news from the credit raters.

Late in the day, our normally-inept congress managed to PURPOSELY UNDERFUND THE SOCIAL SECURITY TRUST FUND by passing a bill to extend the roughly-30% cut to employees for the rest of the year and keep unemployment benefits flowing to the millions of Americans who just can't seem to find a good job.

Amid all of this, the stock market looked like a side show, with stocks limping along to yet another positive close - except for the NASDAQ, mostly because Apple finished down 0.09 - on horrifyingly-low volume.

It's tough to make this stuff up, but somebody must be, because financial markets are acting as if they're from another dimension or distant galaxy. The only reasonable correlation that can be assumed these days is that if the Euro is up, so will be US stocks. Oh, and any mention of Iran or the Strait of Hormuz is good for at least another 40-cent move higher in the price of crude, which has retail gasoline now priced at US record levels for February.

Hey, it's a three-day weekend. We can worry about Greece on Tuesday. But, don't drive too much. Could just wreck your budget.

Dow 12,950.10, +46.02 (0.36%)
NASDAQ 2,951.78, -8.07 (0.27%)
S&P 500 1,361.23, +3.19 (0.23%)
NYSE Composite 8,114.51, +22.32 (0.28%)
NASDAQ Volume 1,972,077,750
NYSE Volume 3,675,412,000
Combined NYSE & NASDAQ Advance - Decline: 3082-2535
Combined NYSE & NASDAQ New highs - New lows: 303-12 (0 new lows on NYSE. WOW!)
WTI crude oil: 103.24, +0.93
Gold: 1,725.90, -2.50
Silver: 33.22, -0.15

Stocks Scream Higher on Positive Economic Data

This one will practically write itself.

Stocks were buoyed today by falling initial unemployment claims (down to 348,000 after 361,000 last week), rising housing starts (699K) and building permits (676K), and a very tame PPI number of 0.01. The Phialdelphia Fed's survey of regional economic activity was also up, to 10.2 in February from 7.3 in January.

All of this good news - and the absence of anything untoward from Europe - sent stocks on a day long rally that just kept rising steadily throughout the session. Naturally, the Euro was higher, as that correlation remains wholly intact.

Whether or not one agrees with the numbers, Wall Street made sure to boost stocks one day before options expiry, which may have been the plan all along, since there aren't enough individual investors or opinions other than those espoused by the powers that be, to matter.

Never mind what I said yesterday about the possibility of a nasty correction and repeat after me: "the market must go higher."

The original JP Morgan would be flummoxed. Once, when hounded by rabid reporters asking what the market would do, Morgan casually tossed out an all-time classic. "The market will fluctuate," he said.

We sure could use a dose of Mr. Morgan's common sense, or, at least a few of the silver dollars named after him.

Keep in mind that this is an election year, so that whatever outcome has already been determined, the markets will provide the proper narrative. It appears that Barack Obama is their guy, so it should surprise nobody if unemployment is at 7.3% come November 2nd and the GDP is growing at 3 1/2 - 4%, no matter how convoluted the exercise to get to those numbers.

Which leads to another great quote: "There are three kinds of lies: lies, damned lies, and statistics." The phrase was popularized by Mark Twain, who attributed it to Benjamin Disraeli, though the quote never appears in any of Disraeli's published works.

Could Twain have made it up himself? After all, his real name was Samuel Clemens.

And, by the way, since the US seems intent on making Iran a whipping boy, $4/gallon gas is coming, sooner, not later, just in time to eat up the payroll tax cut extension which the congress agreed to this morning and will likely pass on Friday. No free lunch, kiddies.

Dow 12,904.08, +123.13 (0.96%)
NASDAQ 2,959.85, +44.02 (1.51%)
S&P 500 1,358.04, +14.81 (1.10%)
NYSE Composite 8,092.61, +93.96 (1.17%)
NASDAQ Volume 1,890,777,750
NYSE Volume 4,022,471,250
Combined NYSE & NASDAQ Advance - Decline: 4275-1405
Combined NYSE & NASDAQ New highs - New lows: 230-16
WTI crude oil: 102.31, +0.51
Gold: 1,728.40, +0.30
Silver: 33.37, -0.04

Numbers Racket: Greece, Euro, Apple, Transports and 100 Dow Points

Let's get real here.

Raise your hand if you think Greece is NOT going to default.

Very well. Maybe the rest of you with hands on hips or in pockets will appreciate the news out of Europe this morning, which somehow managed to pump futures toward a strong positive opening.

What's that? Even though Dow futures were up more than 80 points before former Treasury Secretary Hank (martial law) Paulson appeared on CNBC for the usual softball interview and were up 47 points just seconds before the open, the Dow only managed an initial gain of... hmmmm, less than 20 points.

Eurozone's 17 nations' (non) growth rate for the 4th quarter of 2011 was -0.3, the only countries showing gains in GDP growth being France and Slovakia.

Five countries in europe are already in recession. No surprise here, as Greece, Belgium, the Netherlands, Portugal and Italy have experienced two consecutive quarters of GDP decline. The one country everyone has an eye on is Germany, where output for the quarter fell by 0.2%, because the Germans have been the only country in the region showing any sign of elasticity and ability to weather the financial storms.

However, the rest of the Eurozone is dragging Germany's usually strong industrial sector down with the rest of the continent, a development that could prove disastrous as the EU plods through a troubling 2012.

Stocks took a spanking today in the US after the aforementioned recession news and then the communique out of Brussels from the esteemed EU finance ministers (a Baptist minister, a Catholic priest and an EU finance minister walk into a bar... oh, never mind) reminded the assembled money watchers worldwide that they are experts at procrastination and posturing.

While yesterday's commitment letter from Greek conservative leader Antonis Samaras stated that he would go along with the proposed - and passed by the Greek parliament - austerity measures, the potential future leader of Greece (give him about 6 months before he is bought off and retires, if he even wins the April race for Premier) contained a small caveat, saying he might reconsider, once, of course, the authorities deliver the 130 billion (or maybe it's more like 202 billion) Euros promised by the supra-government of the EU.

What happened today could best be described as controlled demolition. While the Dow was subsumed, hovering from 15 to 35 points in the red, the NASDAQ was wildly positive, though 90% of the gain was due to just one stock, Apple (APPL), which exploded in a number of ways on the day.

First, Apple rocketed to an all-time high of 526.29, but closed the day at the somewhat pedestrian level of 497.67. That's a pretty big round-turn, even for a stock with such a heady valuation. The decline was magnificent, falling 20 points in just the noon hour, and stumbling to a nearly 12-point loss in the remainder of the day. Volume was more than four times the average daily volume (12 million shares) at 53,457,212.

But Apple was just the NASDAQ story. The Dow charted its own path, guided by the Euro-dollar trade. The Euro slumped and finished below the psychotic 131 level, a number which is absolutely meaningless unless you're swapping currencies or considering travel to the doomed continent. But, stocks have followed the Euro-Dollar relationship like clockwork this year. Euro up, US stocks up, with the converse also true. The real value of the ephemeral Euro is all in the mind and to which equally worthless paper currency to which you compare it. If one would be so bold to compare it to some commodity - say, gold - well, a Euro won't buy you a single grain and it's gotten worse throughout its 11+ year life with each turning of the calendar.

So, the Dow set down at the close with its worse loss of 2012, which is not so much a surprise, being that the index (and all the other majors) has overheated in what has been an unusually-warm winter. But the Dow could just not surrender 100 points on the day, despite it being down 125 points at its worst level and down 108 points only one minute prior to the close. Perhaps that number (-100) has meaning to some people, but for the rest of us, -97.33 will just have to do.

What is alarming and scary (like Europe isn't enough of a fear factor) is the action in the Dow Transports, which suffered a two percent decline on the day, easily outstripping the widely-followed indices.(please have a gander at the 1 year chart with the 80% down-spike in November)

Another unpleasant thought concerns the timing of this week's reversal of fortune, just two days prior to options expiry, normally the strongest and upward-tilted week of any month in this Ponzi-like market scheme. Today's volume was also quite strong across all indices.

If stocks aren't making gains just prior to options expiry, then something very wrong is happening behind the scenes. It could be as simple as the market being overbought, or waking up to the awful European reality or the threat of war with Iran which looms larger each passing day.

Then again, it could just be that the low level of market participation has the major traders now drooling over each other's lunches. US stocks have been on a tear since October and the time and sentiment are ripe for a nasty correction.

A clue could come the day the Dow closes with a loss of more than 100 points, though that might prove to be a day too late and many billions of dollars short. Today's near-100-point loss should provide more than enough caution to everyone.

Keep a close eye on gold, and especially, silver, which has underperformed for the past two weeks. Any sustained gains in the precious metals should serve notice that there's something big brewing.

Dow 12,780.95, -97.33 (0.76%)
NASDAQ 2,915.83, -16.00 (0.55%)
S&P 500 1,343.23, -7.27 (0.54%)
NYSE Composite 7,998.65, -30.97 (0.39%)
NASDAQ Volume 2,036,710,750
NYSE Volume 4,045,495,750
Combined NYSE & NASDAQ Advance - Decline: 2267-
Combined NYSE & NASDAQ New highs - New lows: 264-23
WTI crude oil: 101.80, +1.06
Gold: 1,728.10, +10.40
Silver: 33.41, +0.06

Greek Drama Causes Wild Swings in US Stocks

Leave it to those wild, crazy, dancing Greeks to make a mockery of equity markets.

The information coming out of Athens, then Brussels, then back to Athens caused US stock indices to dive at the open, hit their lows of the day just a half hour before the close and then rally back to the flat line at the close.

It was Greek tragicomedy at its very best.

The day opened to word from Athens that the leader of Greece's conservative party, the outspoken Antonis Samaras, would not sign a letter committing to the austerity package approved by the Greek parliament on Sunday and added that if he were to become Greece's Prime Minister in the April elections, he would seek to re-negotiate the terms of that deal.

With that information in hand, EU finance ministers cancelled a scheduled Wednesday meeting that was intended to finalize the Greek agreement, paving the way for another round of bailout money before the country goes belly up on March 20.

That news sent markets into a choppy downside drift through the bulk of the session, with stocks hitting their lows right around 3:30 pm New York time.

But then, Samaras apparently had a change of heart - conveniently just before the close in New York - saying that he would sign the commitment letter, which sent stocks soaring in the final half hour of trading. The S&P - which still finished in the red bounced 10 points during that time, with the Dow picking up about 80 points and the NASDAQ good for an 18-point burst.

At the end of the day, it all worked out to not much ado about something, though nobody is sure just what's going to occur next in quickly-failing country of Greece.

The Euro dropped below 1.31 to the US dollar during the session, but rallied back above that benchmark late in the day. The Dollar Index, which was positive all day, took a bit of a trim, but still ended positive.

Volume was once more anemic, suggesting that there are only a few humans still playing in the news-and-computer-driven trading markets. In the most general terms, it's simply too risky to venture in and out of the markets no matter how often CNBC reminds us that stocks are up for the year or that corporate profits are solid.

There's an end-game out there, and it is currently hovering over the Parthenon. Ironic as it may be, the nation which brought democracy into the mainstream centuries ago has become the test site for centrally-planned financial suicide.

Dow 12,878.28, +4.24 (0.03%)
NASDAQ 2,931.83, +0.44 (0.02%)
S&P 500 1,350.50, -1.27 (0.09%)
NYSE Composite 8,029.61, -26.62 (0.33%)
NASDAQ Volume 1,879,330,000
NYSE Volume 3,839,528,250
Combined NYSE & NASDAQ Advance - Decline: 2094-3532
Combined NYSE & NASDAQ New highs - New lows: 174-14
WTI crude oil: 100.74, -0.17
Gold: 1,717.70, -7.20
Silver: 33.35, -0.37

Greece Passes Austerity Measures; Obama Budget Goes to Congress; Apple Closes Above 500

Any angst over Greece's passing of their mandatory austerity measures was quickly dispelled by the markets on Monday. Most European bourses finished the day solidly in the green, and US markets followed suit, posting gains which pretty much eviscerated Friday's fear-induced declines.

Even though the austerity in Greece is a death-knell for the country and widespread rioting took place in the capitol of Athens and elsewhere, the globalist elements of the EU, ECB and IMF viewed the vote as a positive referendum on the overall health of the Euro system.

Realistically, Greece will never be able to repay its debts nor will it be able to accommodate all of the cuts to social welfare programs and government employment, but the parliament did what was most expeditious to secure financing from its feudal masters in Germany and keep the game going.

The scheme - from the view of the IMF, ECB and Angela Merkel - seems to be to keep Greece functioning as a neo-slave-state to keep the Euro from collapsing, and, thus far, it seems to be working. A disorderly default by the Greeks might just be the catalyst that destroys whatever unity is left in the EuroZone, an outcome the supra-governmental EU leaders will fight bitterly with truckloads of money (it doesn't matter how much, they'll just print more) and the current kind of kabuki theatre that is disguised as "austerity" for the free-spending Greeks.

Their fear is that Greece's demise could foment similar outcomes in Portugal, Ireland and elsewhere, particularly Spain and Italy, and the continental currency experiment of the Euro would come crashing down upon their collective heads. Problematic as it may be, the monetarists in Brussels are committed to spending whatever it takes to keep the EuroZone intact by relentless money printing and worry about the consequences of widespread poverty, inflation, social unrest and ultimately, a continent-wide depression, later. We wish them luck, mostly because they'll need it, as desperate as the situation has become.

Here in the States, President Obama submitted his 2013 budget to congress, where it was deemed by many (mostly Republicans seeking to unseat the president this fall) as dead on arrival. Obama's 3.8 Trillion monstrosity would reduce military outlays while hiking outlays to infrastructure projects and features higher taxes for the wealthy and a $1.33 trillion deficit, marking the fourth straight year that the federal budget deficit would top one trillion dollars, despite an Obama campaign promise from 2008 to cut the deficit in half by the end of his first term.

Investors shrugged off the details and went about their task of re-inflating the corporate sector, sending stock prices close to their highest levels of 2012, though volume on the NYSE was the lowest for a non-Holiday session in over a decade.

Oil closed above $100 per barrel, despite US gas consumption being historically weak and Apple (AAPL) closing above 500 per share for the first time in its history. Apple is currently the largest company in the world by market cap, surpassing oil giant ExxonMobil for the top spot.

The major indices followed their now-routine pattern of a gap-up open followed by a mid-morning decline and rally and a flat-lining finish.

Dow 12,874.04, +72.81 (0.57%)
NASDAQ 2,931.39, +27.51 (0.95%)
S&P 500 1,351.77, +9.13 (0.68%)
NYSE Composite 8,056.25, +64.22 (0.80%)
NASDAQ Volume 1,613,612,250
NYSE Volume 3,462,219,000
Combined NYSE & NASDAQ Advance - Decline: 4236-1411
Combined NYSE & NASDAQ New highs - New lows: 262-12 (par-tay!)
WTI crude oil: 100.91, +2.24
Gold: 1,724.90, -0.40
Silver: 33.72, +0.12