Playing the Market, Twitter-Mob Style; Mogambo Guru Returns

It was certainly an exciting - if uneventful (depending on perspective) - end to the week, as the pumpers on CNBC breathlessly kept viewers in a strange state of animated suspense and anticipation over whether the Dow would actually close above the "psychologically important" (only to them) 13,000 level and the wrangling over details of the latest Greek bailout continued apace across the pond.

But, a funny thing happened on the way to 13,000 - or rather on the way down away from it - this morning, shortly after 10:00 am ET.

With the Dow at what would become the highs of the day, a sudden about-face took place, sending the index screaming for mercy in a 37-point drop over a roughly ten minute span.

Moves like this are not uncommon in the world of fast-paced HTF algos (a subject which has been noted here all too often in the past), but today's event might have had a bit of a different skew. Yesterday afternoon, a group of individuals (no names, please) decided to have a bit of fun, or mischief, possibly at the expense of the well-heeled crowd that convenes on Wall Street regularly.

A plan was concocted to see if a bunch of unrelated, inconspicuous internet users could have an effect on the HTF algos, which, as we know, track headlines from the likes of Bloomberg and the Wall Street Journal, but also follow trends on social websites like Facebook and Twitter.

The idea was that everyone would Tweet, at precisely 10:03 am, "Greece defaults" and see if the dumb algos would fall for the bait. The tweets went out, not all at the same time, and not uniform by any means, though the 10:03 time-stamp was extended, with various mentions of Greece defaulting flowing into the Twitter-verse in earnest for about twenty minutes.

Whether the tweeters actually managed to trip up the HFT traders and their zipity-do-dah algorithms is now and will likely forever be a matter of speculation, but if there were an actual cause and effect, it brings some interesting - and scary - possibilities to the table.

Suppose such crowd-sourced media were actually effective in moving the algos, thus affecting the price of an entire index? What then would be the effect on an individual stock? Were a group of people intent of making some money with this trick, it might be easier than anyone imagines, somewhat akin to elevator whisper campaigns designed to take down candidates in local elections or the old pump-and-dump strategies that were so effective in the early dotcom days of the internet, circa 1998-2001.

A plan could easily be put together to move a stock a few points in one direction or another, with appropriate bets placed by those "in the know." If truly effective, the profits could be staggering. Truth is, that's probably what has been happening in the US markets and elsewhere for quite some time, but especially theses days, as the market seems less than reluctant to trade on rumors and headlines rather than fundamentals.

Whatever the case, today's experiment via Twitter might raise a few eyebrows and give people some ideas. As for 13,000 on the Dow, the CNBC presenters and those with an emotional tie to the number will just have to wait until next week.

The other major development of the day also took place on the internet, and actually happened on Thursday, when the frightful visage of the Mogambo Guru suddenly reappeared sporting his own blog. The majestic Mogambo Guru (MMG) had been a regular typist and word-twister of financial follies on the Daily Reckoning for a long time, though he had taken an absence from penning the occasional witty and irreverent column (OWAIC).

Now that he's back and regularly submitting his thoughts to the public via a blog there should be little doubt that his hordes of faithful followers (HHOFF) will flock to his work like... ummm, bees to honey, or something like that.

Welcome back, oh great, glorious, hallowed, devious and mischievous Guru! Your absence left a hold in the fabric of time and space, but we're sure you'll be promptly attending to mending it.

Just a few quick notes for the weekend:

Today's volume, which has been horribly anemic on a regular basis anyway, was fairly ghastly today, the lowest in a decade, notes ZeroHedge.

There's a meeting of the G20 in Mexico City over the weekend in which the big fight is supposed to be between the IMF's Christine Lagarde and the finance ministers and representatives of Germany. The IMF wants more dough and the Germans are tiring of spending so much. Besides the main event, the undercard features thousands of police in riot gear protecting the one percenters from rock-hurling Mexican hooligans and potentially, armed drug cartel operatives. One has to admit that setting a meeting of world leaders in a place as dangerous as Mexico City offers a bit of intrigue, to say nothing of its inducement to all kinds of mayhem.

Dow 12,982.95, -1.74 (0.01%)
NASDAQ 2,963.75, +6.77 (0.23%)
S&P 500 1,365.74, +2.28 (0.17%)
NYSE Composite 8,151.96, +15.72 (0.19%)
NASDAQ Volume 1,641,587,000
NYSE Volume 3,367,789,000
Combined NYSE & NASDAQ Advance - Decline: 2827-2792
Combined NYSE & NASDAQ New highs - New lows: 281-11 (Really?)
WTI crude oil: 109.77, +1.94 (pain at the pump)
Gold: 1,776.40, -9.90
Silver: 35.34, -0.22

Is the Crisis Deepening?; Meg Whitman, Prototypical CEO Failure

Well, the PPT must have gotten up early today, because no sooner did the Dow dip 50 points off the open than it was boosted to a 50 mark to the positive.

Was there a reason, a rationale? Sure. Stocks must go up to bolster the perception that all is well in the good old US of A.

Naturally, once the market was back on a solid we're-going-to-13,000 footing once again, the HFT momo-chasers went to work, keeping the abhorrent, clumsy, no-volume rally going for the remainder of the lackluster session.

With stocks just screaming higher and higher virtually every day, some elements on the general tenor of the stock market rally vis-a-vis the real world economy need to be scrutinized.

Oil continues to rocket higher, up over $108 per barrel in electronic trading late today. The Euro/Dollar trade continues to be the creepiest, most cynical lie to the world. How does the Euro, with most of Europe already in a recession and the rest of it teetering on one, continue to ramp higher against the US dollar? Aren't we supposed to be in better shape than the various countries making up the Eurozone? Apparently not, because the EUR/USD hit another high today, closing above 1.33. It simply makes no sense, except if you have significant positions (like Goldman Sachs does) long the Euro and the stock market.

Last we checked, GDP was still growing at less than 3% in the US, though in Europe, minus signs and fractions of one percent dot the landscape. America still has more than 14 million unemployed people, wages have been stagnant to lower for more than a decade and the real estate market is officially in depression-like throes.

Something is definitely not right, when the Euro is up while most of the continent is in recession, oil is ramping to record levels for this time of year despite all manner of data showing rampant demand destruction, gold and silver are ripping, yet the stock market continues to rise and rise and rise without so much as a 3% pull-back. The Dow Jones Industrials are up a wicked, unbelievable 2339 points since October 1, an incredible gain of 21.95% in less than five months. Yep, the rich are getting richer... again.

Watch retail analyst Howard Davidowitz rip apart the notion of "growth" in the video below:

Hundreds of stores closing from a handful of retailers; the rest, Davidowitz calls "train wrecks."

A couple of lines gleans from Hewlett-Packard's (HPQ) newly-minted CEO, Meg Whitman, aptly demonstrate what's wrong with corporate and political America. First, Ms. Whitman, who, after a stint as the CEO of eBay, launched an unsuccessful bid for the governorship of California. Out of luck and out of a job, Meg was pegged to lead HPQ out of the abyss.

Good luck with that, you clueless board members. Whitman is uniquely suited to drive Hewlett Packard even deeper into an already well-dug hole. Her "success" at eBay can more or less be summed up in one line: A trained monkey could have done as well, and probably without alienating as many people, buyers and sellers alike.

Ebay was one of the few dotcom companies that fit the new paradigm of the internet perfectly, allowing small businesses and individuals to buy and sell just about anything under the sun. Ms. Whitman had, in reality, little to do with making the company a household name. It was all about eBay's near-monopolistic position in the online retail space that made the company a success. It would have actually been more of a surprise had she not succeeded. Meg Whitman didn't start the company. She got in when the getting was good.

In any case, here's some of the cliche claptrap that Whitman spewed on her CNBC interview this morning:

• On the timing of HPQ's turnaround: "Fundamental change... will take some time."
• On the challenges facing the company: "There are three 'buckets' of challenge: 1) basic execution, 2) each business has it's own unique challenges, 3) there have been changes in our business."
• On HPQ's structure: "We have to zero-base the bureaucracy..."
• "We have to save so we can invest and compete more effectively."
• "We're not where we want to be in China." (Meg should know. Ebay shuttered its China operations under Whitman after years of abject failure and lack of traction.)
• On when HPQ's metrics will show some change: "We'll know a lot by the end of 2012. Revenue acceleration in 2013."

It's a shame Ms. Whitman's on-the-job training as CEO of a real company didn't include lessons in humility, because the market provided some for her after the company beat (lowered) expectations narrowly this quarter, but was short on revenue and even shorter on guidance. Traders punished HPQ to the tune of a 6.5% decline upon the occasion of the release of its most recent quarter's numbers. That's a pretty impressive drop, considering the company had already lost a two-fifths of its value in just the past year. Meg Whitman is your gal, especially if you ascribe to the Peter Principle.

There isn't a day of reckoning coming. There will be many days of many reckonings over the coming years because the entire global financial and commercial system is being kept afloat on dreams, lies, cronyism and hype.

Dow 12,984.69, +46.02 (0.36%)
NASDAQ 2,956.98, +23.81 (0.81%)
S&P 500 1,363.46, +5.80 (0.43%)
NYSE Composite 8,135.98, +41.60 (0.51%)
NASDAQ Volume 1,723,876,625
NYSE Volume 3,726,037,500
Combined NYSE & NASDAQ Advance - Decline: 4040-1606
Combined NYSE & NASDAQ New highs - New lows: 243-24 (Wowser! Only one new low on the NYSE.)
WTI crude oil: 107.83, +1.55 (up 10% in February)
Gold: 1,786.30, +15.00 (closing in on all-time highs)
Silver: 35.56, +1.30 (about to break out)

Greek Debt Prison; Real Estate's Bogus Stats and Obama's Phantom Recovery

Let's Just Pretend.

That's what Wall Street, the EU and the central bankers of the world want you to do. Pretend.

Pretend there is a way out for Greece. Pretend that the US economy is growing, that the debtsof all nations will eventually be paid off through the magic of "growth," that your future, and that of your kids' will be secure.

None of it is true. The headlines from the likes of Reuters, Bloomberg and Dow Jones only parrot what the elite bankers and corrupt governments feed them. Journalism died during the Bush administration of the 2000s. The rule of law is being killed every day by the likes of the AG settlement, the non-prosecution of anybody involved in the mortgage/robo-signing/foreclosure scams and the constitution has been marginalized by congress and presidential orders.

What makes it even more frightful is that it seems to worsen every day. No statistics can be trusted and the words coming from the mouths of politicians ring hollow and void.

Take just a few of today's news items for instance. President Obama - to great fanfare - proposed new tax rates for businesses in the US. Never mind that they have less chance than Lindsay Lohan giving up drinking of ever being signed into law. Sure, they sound good (if by good you mean that the government is somehow entitled to the ridiculous amount of 28% of you company's net profits), but they will be twisted and broken and flailed about by a congress that knows nothing better than obfuscation, ridicule and deceit.

Then take a look at the January's existing home sales figures released by the NAR. Again, the trumpets blared that real estate is recovering, with the month's sales up 4.2% from December to an unadjusted 4.57 million, annualized (why do they annualize these figures in an age in which numbers can be recorded and crunched in an instant? It's easier to FAKE them that way.). Never mind that distressed properties boosted the number materially or that the rate of deals falling through continues to rise or that mortgage applications fell again this week.

But wait a minute. Last month's number was 4.61 million... Well, that was revised down to 4.38 million. So, that gain in December actually turned out to be a decline. Next month, the NAR can revise the January number down too, so that February shows a gain. It's a con. A shell game. And the American public is the mark.

And then there's the Greek deal, the third bailout for the nation in the past two years. It's not enough that the EU is "loaning" them another $172 billion ($130 billion Euros), but this one comes with various strings attached, such as a special account that requires Greece to pay its creditors before paying its own expenses; a permanent monitoring task force from the European Commission; private investors forced to eat 53.5% of the money they've already loaned (and are not getting back); drastic cuts to pensions, the minimum wage, defense spending, healthcare and public sector jobs; and more.

With these new conditions, Greece, for all intents and purposes, is no longer a sovereign state. Rather, it is a debt-slave, a ward of the European Union. Obviously, centuries of in-breeding among Europe's elite ruling class has taught them well how to subjugate the will of the masses.

But maybe there's hope. Since the signing of the Greek deal on Monday, stocks in Europe have done nothing but decline. There is little faith among professional investors that this arrangement will result in anything more than a temporary reprieve and an ultimate default.

In the US, stocks wandered around for the second straight day, though this time they finally bit the bullet and had to fall. Not by much, but any decline in stocks is a blow to the monied interests and they seem worried about Greece, about the price of gas and about the economy in general. And the volume was again absurdly low, because nobody but the banks, hedge funds and HFTs are playing.

They might even begin to worry that people are sick and tired of being lied to and are beginning to wake up.

Wake up, America. How much longer can these charades continue?

Dow 12,938.67, -27.02 (0.21%)
NASDAQ 2,933.17, -15.40 (0.52%)
S&P 500 1,357.66, -4.55 (0.33%)
NYSE Composite 8,094.39, -21.03 (0.26%)
NASDAQ Volume 1,676,971,875
NYSE Volume 3,608,714,750
Combined NYSE & NASDAQ Advance - Decline: 2032-3589
Combined NYSE & NASDAQ New highs - New lows: 162-24
WTI crude oil: 106.28, +0.03
Gold: 1,771.30, +12.80
Silver: 34.25, -0.18

Dow Runs at 13,000, Relents, as Oil Tops $106/Barrel; Gold, Silver Rocket Higher

On the heels of a three-day weekend and a late-night session of EU finance ministers which apparently (maybe, sort of, kinda) came to a conclusion on funding for the failed state of Greece, the Dow Jones Industrials were poised to exceed 13,000, a number not seen since May of 2008.

While the Eurocrats dithered, wrangled and finally agreed to a very messy agreement to stave off the imminent default of the Republic of Greece, most Americans were sleeping, though the conditions of the Greek people continued to worsen, seemingly by the hour.

Nonetheless, stocks opened with the usual ebullience afforded the opening of a new week of stock profit pursuits and quickly came within a whisker of the magic 13,000 level, before falling quickly backward at 10:00 am, as the Euro plunged.

Undiscouraged, the monkey algos, which amount for more than 70% of all trades, turned around as the Euro resumed gaining value against the US dollar and the Dow eventually broke through the haloed mark, though just briefly, on three different occasions during the session.

Meanwhile, the price of a barrel of WTI crude oil surpassed $105/barrel and just after 2:30, rang up $106. At that, the market had had enough and the day's rally was quickly over, the Dow - and all of the major averages - falling into the red before recovering slightly into the close for a split finish.

While there is still some guarded optimism over the Greek "deal" struck by the EU ministers, there are more than just a few doubters that the country will ever recover from the depression caused by decades of overspending, cheating on taxes (it's a Greek - and exceedingly a global - way of life) and an overhang of debt that would make even mighty Atlas himself shy from the task of holding aloft the birthplace of democracy.

Stock profiteers aside, there's ample reason to believe that Greece's ongoing tragedy will help pull down the rest of the Eurozone, and with it the global economy, fiat money and eventually, governments. The major economies of the world are playing with fire, printing without remorse nor sufficient moral appreciation of what the aftermath of global inflation will bring.

Today's skittish market turnaround may have been the first chapter in what could be "the great unraveling." Too little has been done - here in the US, in Europe, China and Japan - to address the underlying issues of the great recession, with the economists of the world having come up with no answer other than to simply pile more debt on top of the already enormous mountain of unpayable debts built up during the go-go 90s and moribund 2000s.

If there's any wonder why gold and silver took off today like they were launched out of cannons, the chart below may explain why the now-12-year bull run of the precious metals may just be getting started.

Dow 13,000 may be a pretty number and cause for celebration in some board rooms and on certain stock desks, but it has little to do with the overall health of the economy of any nation. Relentless printing of money, backed by "full faith and credit" has become the norm and we will all be the poorer for it in time and the price of oil is merely the tip of the spear that will pierce all the misconceptions and hopeful tones emanating from Wall Street, the City of London, Shanghai and Tokyo.

Dow 12,965.69, +15.82 (0.12%)
NASDAQ 2,948.57, -3.21 (0.11%)
S&P 500 1,362.21, +0.98 (0.07%)
NYSE Composite 8,115.42, +0.91 (0.01%)
NASDAQ Volume 1,815,109,000
NYSE Volume 3,766,193,750
Combined NYSE & NASDAQ Advance - Decline: 2490-3168
Combined NYSE & NASDAQ New highs - New lows: 260-16 (ridiculous)
WTI crude oil: 105.84, +2.60
Gold: 1,758.50, +32.60
Silver: 34.43, +1.21

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