Storm of Events Leading Markets and Economies Down Financial Abyss

As far as headwinds were concerned, the Spring storm which raged across the Northeast was nothing compared to the global typhoon of financial and economic news on Monday.

On Sunday, the French people went to the polls and pulled more levers for Socialist candidate Francois Hollande than for current conservative president Nicolas Sarkozy in the first round of voting. Sarkozy and Hollande will compete for the presidency in the next round of voting, in two weeks time, but the results are being characterized as investor-unfriendly, not only because Hollande's stance will be less favorable toward the Euro than Sarkozy's, but also because far right candidate Marine Le Pen took third place with 17.9 percent of the vote, signaling that French anger over unemployment and austerity are reaching fever pitch.

Overnight, China's "flash" PMI showed a sixth straight month of contraction at 49.1. Even though the reading was better than expected, the news fueled continued fears of a hard landing for China's economy.

As the week began in Europe, two events sent European stocks into a tailspin. The Central Bank of Spain reported that it was officially in recession, as its GDP shrank for the second straight quarter, down 0.4% for the first quarter of 2012, while in the Netherlands, the government collapsed - Prime Minister Mark Rutte and all cabinet members resigning - after failing to reach agreement on an austerity plan within EU strictures.

As if that wasn't enough for the opening of markets in the US, the scandal that Wal-Mart executives bribed Mexican officials for favorable results on building permits was exploding late Sunday into Monday after the New York Times broke the story on Sunday.

While the fact that a large American corporation would bribe officials in a foreign country to receive favorable treatment - the same is done legally in the US, though here it is called "lobbying" - is nothing new, the idea that Wal-Mart executives chose to cover up the scandalous behavior was a bit of an eye-opener.

However, as everyone in big business knows, payola, bribes, payoffs and other forms of cheating are all just part of the global domination game played every day around the world. It's like saying the recent Secret Service dalliances in Columbia were the first time that kind of activity ever occurred.

So, with enough negative news to shake down even the most ardent perma-bull, futures blazed red prior to the open and stocks fell quickly at the opening bell, reaching the lows of the day right around 11:00 am EDT. Even though stocks recovered in the afternoon, technical damage was done, with all four major indices closing below their 50-day moving averages, with the broadest measures - the NYSE Composite and NASDAQ - suffering the worst of it.

With all that news sloshing about, Wall Streeters were in no mood to hear that the nation's largest entitlement programs - Social Security and Medicare - would be running out of money sooner than expected. The trustees of the plans released their annual statements, saying that the Social Security trust fund would be exhausted in 2035, three years sooner than stated just last year. It added that the trust fund for its disability program, which serves 11 million people, would run out in 2016, just four years from now. Medicare was slated to go bankrupt in 2024, the same estimated date as last year's forecast, though the projections were based on very conservative considerations.

The impact of these projections are based on congress making no changes to any of the programs, though both Republicans and Democrats have proposed various plans to keep the Ponzi-scheme entitlements going. The reaction to this announcement should be a loud hue and cry from the American public, with proponents and detractors on both sides of the issue, but the reality is that any man or woman aged 45 or less should expect absolutely nothing in future years and consider the "deductions" from their weekly or bi-weekly paychecks nothing more than outright theft by decree.

Overall, today's news and events only paint the picture of global economic collapse in darker shades, with the rush toward implosion seeming to accelerate with each passing day.

One has to consider that having only papered over the immense losses from the 2008 crash, the next serious event could have ramifications far more severe than what was encountered just four years ago. Global leaders are at a loss for solutions other than adding more liquidity to problems that are solvency-based. Metaphorically, it's similar to the BP oil spill in the Gulf of Mexico, hoping that long-term environment problems would somehow be magically whisked away by vastness of the body of water diluting the harmful effects of the toxic spill.

Throwing more money at insolvent institutions - most major banks and the governments of developed and developing nations - won't fix the problems. It will only delay the ultimate solution and make conditions worse for even larger numbers of people.

Meanwhile, in Washington, all the politicians currently care about is getting re-elected, whereas on Wall Street the bankers to the world have proven to be numb to even the most stark global conditions.

Dow 12,926.86, -102.40 (0.79%)
NASDAQ 2,970.45, -30.00 (1.00%)
S&P 500 1,366.94, -11.59 (0.84%)
NYSE Composite 7,938.82, -86.72 (1.08%)
NASDAQ Volume 1,736,082,250
NYSE Volume 3,568,057,250
Combined NYSE & NASDAQ Advance - Decline: 1439-4198
Combined NYSE & NASDAQ New highs - New lows: 47-147
WTI crude oil: 103.11, -0.77
Gold: 1,632.60, -10.20
Silver: 30.53, -1.12

Friday Vapor Rally Runs Out of Steam

When rallies are built on nothing but hope and hype, i.e., pre-market futures - which were up outlandishly this morning - the end result is usually something along the lines of what happened today.

For the Dow, it meant, by the close, giving back nearly half the gains it had built by midday. For the NASDAQ and the S&P 500, the results were worse, being that Apple (AAPL) was whacked again today, losing another 2.5% on top of sizable losses earlier this week.

The NASDAQ gave up all of its gains and then some, finishing in the red, while the S&P gained just over a point-and-a-half by day's end.

There was nothing pushing this rally besides the absence of any kind of news, which, in current Wall Street parlance, is meant to be good news. Any hint of further malaise in Europe or on the US housing or employment fronts - which had already been well-disseminated earlier this week - would have sent stocks screaming for mercy into the weekend.

As such, nothing other than a few earnings reports were just barely enough to keep the stock wizards occupied, though the same classic bear market chart pattern as on Thursday emerged: up in the morning with a sell-off the remainder of the day.

Dow 13,029.26, +65.16 (0.50%)
NASDAQ 3,000.45, -7.11 (0.24%)
S&P 500 1,378.53, +1.61 (0.12%)
NYSE Composite 8,025.44, +29.52 (0.37%)
NASDAQ Volume 1,892,790,000
NYSE Volume 3,799,865,000
Combined NYSE & NASDAQ Advance - Decline: 3535-2076
Combined NYSE & NASDAQ New highs - New lows: 182-60
WTI crude oil: 103.05, +0.78
Gold: 1,642.80, +1.40
Silver: 31.65, -0.13

Early Earnings Euphoria Turns to Tears as Economic Data Disappoints

In the most classic of all classic bear market chart moves, the major indices took the ball that was handed to them by the like of Bank of America (BAC) and DuPont (DD), both of which reported 1st quarter earnings before the bell, opening to the upside, though without much conviction as the 380,000 initial unemployment claims hung over the markets like the Sword of Damocles.

Sporting gains by the 10:00 hour, the next set of economic data included the index of leading indicators from the shills at the Conference Board posting a gain of 0.3%, the Philadelphia Fed index showing a number of 8.3 when the expectations were for 12.0 and existing home sales - the real killer number - sporting a 2% decline from 4.60M in February to 48.8 in March.

Adding to the housing debacle is the fact that the numbers are woefully behind the times and generally a best-guess situation, indicating that April's figures, which will be released about this time in May, will be off the mark as well.

With those key economic data points in hand, the markets began to turn south and continued to do so until reaching the lows of the day before 3:00, though, of course, no Ponzi-scheme market would be complete without the requisite end-of-session tape painting that chopped off about 40% of the losses.

Still, it was an ugly chapter for a market struggling to find any kind of positive momentum. Those who based their hopes on bank earnings from BofA were sorely disappointed to find that the nation's most hated banking entity (though JP Morgan Chase and Citigroup are running close behind) produced a quarterly earnings report that more resembled a work of fiction rather than a well-reasoned, accurate accounting of their financial position.

Since 2008 - and probably even before then - all bank earning statements from the big five have been wholly fraudulent, based on assumptions like mark to model and other accounting gimmicks designed only to obfuscate the truth. Bank of America does't really make money any more than a dead person inhales oxygen, and the metaphor is appropriate, since BofA is technically a dead bank walking.

So, on a day in which the pundits and cheerleaders were looking for positives in corporate earnings, they got egg on their collective faces from the economy, which, after all, is the real harbinger of good or ill tidings. Continued high unemployment and a crippled housing market added to burgeoning government debt does not paint a very pretty picture, though Wall Street likes to view these things though rose-colored glasses.

Eventually, reality strikes home and the only option is to hit the sell button. Notably, today's volume was much higher than what has been the norm, not a good sign for any bulls still holding corporate shares.

Dow 12,964.10, -68.65 (0.53%)
NASDAQ 3,007.56, -23.89 (0.79%)
S&P 500 1,376.92, -8.22 (0.59%)
NYSE Composite 7,995.94, -34.43 (0.43%)
NASDAQ Volume 1,965,208,125
NYSE Volume 4,138,306,500
Combined NYSE & NASDAQ Advance - Decline: 2162-3363
Combined NYSE & NASDAQ New highs - New lows: 134-91
WTI crude oil: 102.27, -0.40
Gold: 1,641.40, +1.80
Silver: 31.78, +0.29

Volatility Returns; Oil Price Dips; Spanish Bond Auctions on Economic Radar

Yesterday's vapor rally was actually all about options expiration, it turns out, because as quickly as the control freak rats running Wall Street's biggest brokerages went piling in, they scrambled back out today, leaving the momentum stocks stuck in lifeless atrophy, hollowed out dead carcasses once the meat was taken from their bones.

Until such a time that the criminal element that brought us the financial collapse of 2008 is rounded up and summarily dismissed - which will likely never happen - expect more events such as the past two days to become more of the norm than the exception. Wall Street is a slimy, cheater's paradise where skimming a few decimal points worth of profit makes one a hero in a market that makes about as much sense - from a fundamental basis - as the dribbling rant of an imbecile.

The problem is that while imbeciles are generally disregarded and institutionalized, the leaders of the Wall Street horde are treated like rock stars in the financial realm, supposedly blessed with infinite knowledge of markets, economics and business, when in fact they are no better than underworld goons adept only at making the best of a rigged game.

There really is no sense investing in stocks, though some savvy players may be able - for a time - to make some money day-trading or playing the options game. The odds for the individual investor are stacked heavily against them and in favor of the controlling crowd that is the brutish Wall Street gang, who controls the direction of trades via futures manipulation, high frequency trading (HFT) and nearly unlimited amounts of money.

One might be inclined to take some pleasure in seeing the price of oil drop today in hopes that retail gas prices would soon follow, though it's likely only temporary and a hedged-out ploy at best, a cynical trade on the hopes and dreams of the average consumer that is just as likely to turn back up tomorrow as continue its decline.

Everything related to stocks, commodities and currencies is completely manipulated, if not by the bankers and brokerages, then by the central banks, and false. Still, we play along, hoping that some day, something will change the status quo and markets will once again be recognizable. It's a fruitless hope for most, as those in control will stay in control whether the markets go up, down or sideways.

The real shame is the fate of millions of Americans and citizens of other developed nations who have put their faith and money into such a sham of leadership, which shows almost daily its contempt for morality and principled investing and governance. A day of reckoning may come, but those worst affected will be the ill-informed general public which has dutifully played in the sandbox of the elitists.

Tomorrow's fiasco de jour will focus on long-dated Spanish bond auctions and the usual nonsense that is the weekly unemployment claims figure.

Dow 13,032.75 82.79 (0.63%)
NASDAQ 3,031.45 11.37 (0.37%)
S&P 500 1,385.14 5.64 (0.41%)
NYSE Compos... 8,030.39 33.69 (0.42%)
NASDAQ Volume... 1,573,320,125.00
NYSE Volume 3,436,646,250
Combined NYSE & NASDAQ Advance - Decline: 1759-3788
Combined NYSE & NASDAQ New highs - New lows: 105-92
WTI crude oil: 102.67, -1.53
Gold: 1,639.60, -11.50
Silver: 31.49, -0.19

On Tax Return Day, Wall Street Rocks Home a Winner

Apparently, the people (or machines) that trade on Wall Street have already done their taxes and owe nothing to the government, because a lot of cash went to work today, bidding up stocks closer to 3 1/2 year highs.

Although volume was light, that's become the new normal, so unless today's monster move was nothing more than bidding up prices in advance of options expiry, US businesses look to be in outstanding shape.

Earnings thus far for the first quarter have been better than expected for the most part, and, better yet, there haven't been any nasty developments or dissonant noise from Europe.

The questions surrounding recent moves in stocks are various and diverse. Are we extending the three-year-plus bull market or is this simply misplaced euphoria? Will fiscal policy of high deficits sink the economy or have the Fed's incessant money printing fostered a global boom? No matter which way one turns on those issues, one thing is clear: there's a magnificent absence of fear in the market right now.

The numbers speak for themselves:

Dow 13,115.54, +194.13 (1.50%)
NASDAQ 3,042.82, +54.42 (1.82%)
S&P 500 1,390.78, +21.21 (1.55%)
NYSE Composite 8,064.04, +114.47 (1.44%)
NASDAQ Volume 1,554,113,625
NYSE Volume 3,429,126,750
Combined NYSE & NASDAQ Advance - Decline: 4340-1306
Combined NYSE & NASDAQ New highs - New lows: 158-41
WTI crude oil: 104.20, +1.27
Gold: 1,651.10, +1.40
Silver: 31.68, +0.01