Wall street's Week of Worry Ends With JP Morgan Mea Culpa

In a week that will be remembered as one in which the Euro crisis came front and center, Wall Street turned its eyes upon an unlikely victim Friday, that being JP Morgan Chase.

The bank known for its "fortress" balance sheet (pure baloney) confessed to have had made a terribly wrong bet on a risk hedge - a la MF Global? - and poof went $2 billion. CEO Jamie Dimon explained how badly the bank had mistaken the markets in a conference call with journalists Thursday night after the close.

Details were sketchy, though it was widely assumed that there would be other victims in the trade involving a British trader known quaintly as "the Whale." The issue points up that even the brightest of the bright can make mistakes - and big ones at that.

While JPM's misplaced risk hedge sent futures into the tank pre-open (as if they needed any help with that), stocks initially sank, then rallied sharply into positive ground in the morning session, though all gains were ephemeral and summarily whisked away by the close, ending Wall Street's worst week in more than seven months.

Even though losses were tiny - and the NASDAQ managed to close positive by 0.18 points - signs of calamity were everywhere, from German citizens daring Greece to default and leave the Euro, to massive misapprehension over the proposed "Volker Rule" in light of the Morgan fiasco, to spiking Spanish bonds, slowing growth in China and a deflating PPI, which came in under expectations at -0.2% for April.

As the session ended with everybody closing positions in case some new, terrifying developments took place over the weekend, the once mighty, banker-run trading casino closed out the week with players seeking solace and probably more than a few strong drinks to soothe their jangled nerves.

Nobody can tell how events will play out exactly during the coming weeks, though, from the tenor of the trade this week, it seems pretty likely that conditions are not going to materially improve any time soon.

TGIF, indeed.

Of note, the Dollar Index advanced for the tenth straight day, explaining why precious metals have been pounded down so roughly over the past two weeks; and, new lows bettered new highs for the fifth day in the past six.

Dow 12,820.60, -34.44 (0.27%)
NASDAQ 2,933.82, +0.18 (0.01%)
S&P 500 1,353.39, -4.60 (0.34%)
NYSE Composite 7,816.48, -36.27 (0.46%)
NASDAQ Volume 1,692,045,125
NYSE Volume 3,727,488,000
Combined NYSE & NASDAQ Advance - Decline: 2225-3322
Combined NYSE & NASDAQ New highs - New lows: 107-131
WTI crude oil: 96.13, -0.95
Gold: 1,584.00, -11.50
Silver: 28.89, -0.29

Relief Rally Provides Little Comfort as Europe's Woes Weigh

Rick Santelli, one of the very few talking heads on CNBC who delivers honesty more often than not, said this morning that ignoring Europe is usually a big mistake.

Apparently, some of the computers and traders were taking notes, because today's highly-anticipated relief rally delivered less relief than angst to a market that seemingly wants to go nowhere but lower.

Stocks traded higher through most of the session, but, in classic bear market fashion, gave up their gains late in the day. While there was little more than whispers from across the Atlantic, the tone was dire, with Greece and now, Spain, topping the list of countries seeking to escape the clutches of an intractable currency clutch.

The general gist of the the thinking is that when - no longer "if" - Greece departs from the 17 nations who use the Euro as a common currency, Spain will likely follow, and then the others fall like dominoes: Italy, Portugal, Belgium, Ireland, in a disordered departure from a failed fiat folly.

It is testament to the frailty of centralized government planning that the Euro experiment will have lasted less than 20 years before the nations of Europe finally bite the nationalist bullet and return to their various sovereign currencies, like the lira, drachma, peseta, and various forms of francs, et. al. Current analysis has Greece departing within a year, followed in quick order by at least five other nations.

There will be opposition, and the usual courses of anxiety and cries of imminent depression, but, as it has in the past, Europe will return to nationalism, as quaint as that may be, and independence from an additional layer of government it never needed in the first place. Time will tell how it all turns out, though the final result is probably going to be a better condition for everyone from where things stand today.

Dow 12,855.04, +19.98 (0.16%)
NASDAQ 2,933.64, -1.07 (0.04%)
S&P 500 1,357.99, +3.41 (0.25%)
NYSE Composite 7,852.72, +32.46 (0.42%)
NASDAQ Volume 1,915,262,500
NYSE Volume 3,598,696,000
Combined NYSE & NASDAQ Advance - Decline: 3398-2161
Combined NYSE & NASDAQ New highs - New lows: 139-73
WTI crude oil: 97.08. +0.27
Gold: 1,595.50, +1.30
Silver: 29.18, -0.06

Stocks Exhibiting Serious Weakness as Correction Completes Day Six

For the fourth straight day, US markets exhibited the same trading pattern on the major indices: A plunge at the open and the rest of the day spent trundling back higher. This is the effect of an overabundance of trading algos all programmed to begin buying at certain levels. Fully 85% or more of all trades are handled by machines, drwing into question the overall wisdom of a market built on lies, false assumptions, sketchy models and the overwhelming directive that stocks MUST go higher, all the time, no matter the news or events in the real world.

In any case, it's made it easier for real, human investors to get the heck out of dodge, and it's likely that a good portion of the really smart money has already exited. This is apparent from the price of bonds, which have been in rally mode all week, pushing yields near historic lows.

The cause for all of the latest market turmoil is no big surprise; it is Europe, specifically Greece, but peripherally Spain and France, which seem the two most likely targets for increased political volatility, and thus, stock declines.

The Greeks have the world by the proverbial short hairs at the moment. At any given time, the EU, ECB, IMF or any of the nearly nations could tell the the government of Greece that it's game over, or that they'll loan them money anyway, which is exactly what happened today.

It was reported that the Greek government, even if it received the latest round of bailout money, could not meet it's obligations, so, one has to wonder, why bother? That's the line of the hard left parties in Greece at the moment. They don't want any more IMF or ECB bailout funds, preferring to go it alone, presumably to leave the Euro as a currency behind and take back up the drachma as its national money.

Of course, all of this uncertainty has a negative effect on stocks, though US markets have suffered much less than their European counterparts, some of which have already fallen into bear market territories, along with China, which has been in the grip of the bear for the past two years, but that's another story, and something that is also worrying the gloablists and their plans to control world commerce.

There is a problem with the US markets and their repeating pattern of falls and rises. The intra-day plunges keep getting deeper and deeper, setting new support levels which will, over time, be proven to have about all the holding power of a paper towel in a hurricane. Eventually, the computers will either be turned off or reprogrammed and the flush of stocks down the drain will be swift and complete. Even as it stands, stocks are off sharply over the past six sessions, with the Dow down all six, and the S&P and NASDAQ down five of six, the only positive returns for the duo being extremely marginal gains on Monday - a point on the NASDAQ, less than that (0.48) on the S&P.

Tomorrow, the drama continues, with the US throwing in with initial unemployment claims, a number that may be secondary to the uneasiness in Europe, but should provide a secondary betting point for the open. Stay tuned. It's just beginning to get interesting, as the same pattern as 2011 is playing out again, almost to to day, when stocks peaked at the end of April.

Volume was elevated once again and new lows beat new highs for the fourth consecutive session.

Dow 12,835.06, -97.03 (0.75%)
NASDAQ 2,934.71, -11.56 (0.39%)
S&P 500 1,354.58, -9.14 (0.67%)
NYSE Composite 7,827.75, -59.51 (0.75%)
NASDAQ Volume 1,959,315,250
NYSE Volume 3,949,908,500
Combined NYSE & NASDAQ Advance - Decline: 1865-3709
Combined NYSE & NASDAQ New highs - New lows: 106-161
WTI crude oil: 96.81, -0.20
Gold: 1,594.20, -10.30
Silver: 29.24, -0.22

Equities Continue Retreat on Greece, Euro Breakup Fears

Sooner or later, the deniers will realize that the global economy is coming apart at the seams and that holding any kind of asset that isn't tangible, liquid or immediately tradable may not be worth the risk.

Almost daily, there are signs that the euro experiment is imploding, with Greece and France now at the forefront, but Italy, Spain and Portugal not far behind in terms of insolvency, anarchy and chaos.

The issues are the same: governments promised too much, spent too much and now don't have the funds to continue operating as they were during boom times. The specific trouble for nations using the Euro as currency is that they cannot print their way out of their messes, a la the United States, and must rely on the continued support of their neighboring nations and the ECB and IMF to fund their operations.

In Greece, the leader of Greece's Left Coalition party, Alexis Tsipras, began to start forming a coalition government, calling for repudiation of the bailout measures forced upon the nation and an investigation into whether the bailouts were even legal.

As Greece moved closer and closer to anarchy, chaos, and the eventual default upon its debts, it is becoming more clear that Greece will not long remain a member of the Eurozone, it's fate sealed by decades of underfunding pensions, loose tax policies and general corruption at high levels of the government.

France's new president, Francois Hollande, has promised voters to curtail the austerity measures that have cut jobs and pensions and has crippled the nation's economy.

European stocks were, by and large, down on the day, while in the US, the major indices suffered heavy losses early on, but rallied in the afternoon on nothing but vapors and in defiance of the reality offered by a collapsing European Union and general sluggishness in the global economy.

The Dow was down as many as 198 points before the afternoon rally cut those losses in half. The same was true on the NASDAQ and S&P, the latter down 22 points before shaving them to a marginal decline.

Despite the completely bogus and likely foolhardy buying into the dip mentality that is pervasive in these day-traded, momentum markets, the smartest of the smart money has probably already headed for the hills, seeking safe havens in treasuries or other hard assets, though one could not tell that from the action in gold, which, along with silver, was battered down and did not experience relief.

Central banks have been buying gold with both hands recently, all the better for them is their ability to dictate price to the market, swooping in to buy at bargain prices. However, today's activity was reminiscent of early 2008, before the great collapse that took all assets lower, though gold and silver began rebounding months before equities. Today's trade was more than likely the result of margin calls on stocks, being paid off by selling gold and silver, another foolhardy strategy.

While the utter collapse of the Euro and the global economy is by no means a certainty, signs of slowing and antecedent deflation are emerging, the real question being how far the US Federal Reserve, the ECB and other central banks will go with more policy easing and money printing before the game engulfs them completely.

The late-day rally on wall Street may have eased some nerves and cooled some of the fear, but the trend is surely in place, as stocks have fallen in four of the past five sessions (five for five for the Dow).

Also notable was the heavy volume, another sign that investors who want out are getting out, albeit not at the prices they may have wanted. Additionally, new highs - new lows has been negative for three consecutive sessions.

Dow 12,932.09, -76.44 (0.59%)
NASDAQ 2,946.27, -11.49 (0.39%)
S&P 500 1,363.72, -5.86 (0.43%)
NYSE Composite 7,887.26, -61.50 (0.77%)
NASDAQ Volume 2,169,278,000
NYSE Volume 4,215,958,500
Combined NYSE & NASDAQ Advance - Decline: 2403-3181
Combined NYSE & NASDAQ New highs - New lows: 110-178
WTI crude oil: 97.01, -0.93
Gold: 1,604.50, -34.60
Silver: 29.46, -0.66

US and European Subdued Reaction to French, Greek Voting

The tide has turned in Europe... against austerity, whatever that means, and towards more socialistic societies in both France and Greece, as Francois Hollande defeated right wing president Nicolas Sarkozy on Sunday, and the Greek Parliamentary elections produced a government with no clear majority for any party and difficult coalitions to be formed ahead.

While the French election results represent a complete shift in sentiment, the issues for Greece will almost surely come to the forefront of Europe's continuing debt crisis as minority parties will almost surely attempt to block the wholesale gutting of the country by the ECB and IMF. Recent agreements over debt restructuring and repayment are already suffering serious difficulty; the opportunity for a disorderly default by the Hellenic nation certainly back on the table.

Reaction in Asia was negative, with all markets suffering losses, probably the eventual result for markets globally, once the "all is well" phony, manipulated response in Europe and America is worked through. european markets were mixed, as were those in the US, the result of more central planning and full-spectrum control, which will eventually fail.

There was no other economic news worth noting, though, as is usually the case in controlled, bogus markets, the day's results were muted and in plain opposition to facts.

There will almost certainly be a period of adjustment in the Western markets before the full brunt of a sea change in politics is accepted. Until then, expect markets in the US and Europe to behave as they have been, adrift on piles of freshly-printed worthless money, in denial of the truth and more than likely sideways before heading into the awaiting maw of the abyss into which they must fall.

Almost imperceptibly, the decline in equity prices has already begun. New lows bettered new highs for the second straight session, an indicator that should not be ignored during a period of rapid change.

Dow 13,008.53, -29.74 (0.23%)
NASDAQ 2,957.76, +1.42 (0.05%)
S&P 500 1,369.58, +0.48 (0.04%)
NYSE Composite 7,948.77, +15.47 (0.19%)
NASDAQ Volume 1,738,947,625
NYSE Volume 3,535,832,750
Combined NYSE & NASDAQ Advance - Decline: 3054-2523
Combined NYSE & NASDAQ New highs - New lows: 112-134
WTI crude oil: 97.94, -0.55
Gold: 1,639.10, -6.10
Silver: 30.12, -0.31