Stocks on Roller Coaster Ride with Greek Vote Looming; Greenspan Calls Euro a Failure

As mentioned in this space yesterday, the day-trading hedge funds and bank-owned brokerages (please, bring back Glass-Steagall) booked profits early in the day and went net short, their nifty algos doing the heavy lifting, as stocks drifted early and sank in the afternoon, making the market pulse for the week, down, up, down.

Today's action had all the earmarks of a seminal decline, with no oomph in the morning and a swift, brutal selloff which developed some serious downside momentum after 2:00 pm EDT.

While there was little to no news out of Europe to affect US stocks besides the downgrade of Spain from B to CCC+ by ratings firm Egan Jones, there was plenty right here on the home front.

JP Morgan Chase (JPM) CEO Jamie Dimon testified before the Senate Banking committee concerning his firm's $2 billion trading loss, though that made-for-TV event was little more than a dog-and-pony show, as most - if not all - of the committee members were recipients of sizable campaign contributions from the financial interests represented by the TBTF Wall Street banks, JPM a prominent donor to campaign slush funds of both parties.

Former Federal Reserve Chairman, Alan Greenspan, made some noise about the crisis in Euroland, saying that while the Euro was a "noble experiment" it is being proven ultimately a failure.

The consummate financial criminal enabler, Greenspan was an ardent advocate for repeal of Glass-Steagal beck in 1987, according to this flashback article by American Banker.

While market participants digested the day's disturbing headlines and news stories, stocks exhibited the kind of behavior befitting a system on the verge of breaking down, though outright panic still appears to be just a glimmer on the horizon.

Breadth was on the negative side for the day and new lows outpaced new highs for the second session consecutively. Oil continued its descent, continuing in bear territory following the absurd February run-up, while the fear trade in gold pressed higher, though silver continues to be suppressed, mostly by Blythe Masters, a protege of JPM's Dimon.

As the week progresses, however, a rebalancing of the S&P 500 and quadruple-witching of options and futures on Friday should determine the tenor of trading for the balance.

Dow 12,496.38, -77.42 (0.62%)
NASDAQ 2,818.61, -24.46 (0.86%)
S&P 500 1,314.88, -9.30 (0.70%)
NYSE Composite 7,506.29, -51.52 (0.68%)
NASDAQ Volume 1,528,772,500
NYSE Volume 3,363,560,750
Combined NYSE & NASDAQ Advance - Decline: 1747-3744
Combined NYSE & NASDAQ New highs - New lows: 75-112
WTI crude oil: 82.62, -0.70
Gold: 1,619.40, +5.60
Silver: 28.94, -0.01

Welcome Back, Volatility: Miracle Market Melt-up

Noting that the markets in the US were markedly higher this (turnaround) Tuesday, one would generally assume that some of the conditions that caused Monday's share collapse had been addressed and causing markets and investors to return to a more benign trading regimen.

Such an assumption would be, of course, dead wrong, because nothing really changed overnight. In fact, one could even go so far as to suggest that issues regarding the bailout of Spain's insolvent banks - which loan money to the insolvent Spanish government - had actually worsened, in Europe, at least.

First, there's the widespread assumption that the 100 billion euro bailout was already a done deal. It's not; not by any means. The German parliament still has to pass legislation to approve whatever funding is made available, and by which facility.

Second, the deal was supposed to have no strings attached, i.e., Spain would not have to agree to any austerity measures or fiscal controls. After all the deal was for the banks, not the government. Not so fast, my friends. Germany wants some guarantees of fiscal control and Finland has also made overtures about the need for substantial collateral.

And, if those two points are not enough, Spain will have to finance some of the bank debt itself, which is the epitome of the twisted pretzel that is the Eurozone. The Spanish government will borrow money to loan to the banks, which in turn fund the government. It's like borrowing money to loan to a friend who loans you money to pay off your debt, and we all know how those kinds of schemes turn out.

Additionally, in the utmost of ironies, Italy, the next nation in line for a likely bailout, will be borrowing money at 6% to loan to Spain at 3%. Lovely. Apparently, the Italians have been taking in a bit too much vino and forgot their 4th grade math.

So, what really changed to reverse the one-day trend lower and turn it up a few notches? Algos, naturally, the computer software that takes care of more than 85% off all trades on a daily basis, were re-programmed for a risk-on event, even though none actually took place. Around about 10:30 am EDT, with the major averages stumbling into the red, the correct knobs were turned and presto! all was well again at the Wall Street Zombie Casino.

From that time-stamp until the close, it was nothing but champagne and roses. Whoopie! Of course, the underlying theme of day-trading in both stocks and options by the hedgies and brokerages in advance of Friday's quadruple-witching event may have had a little to do with today's wicked upside.

Therein we have the week's trading strategy: Short Monday, long Tuesday, short Wednesday, long Thursday, and Friday, you're on your own, because over the weekend, Greece will once again go to the polls to see if they can elect a government in a country that neither has one nor - in the rare event that it will - heeds its dictates.

Greece could go belly up and back to the drachma, go pro-Euro and stick with the asset-stripping austerity, or alternately devolve into complete anarchy or continue to function on a day-to-day basis, essentially going sideways and solving nothing. Whatever happens in Greece, one thing is for certain: it's not going to be the final solution.

There was something of a "tell" to today's trading that belied the effectiveness of the rally. New lows beat new highs nearly 2-1.

Party on!

Dow 12,573.80, +162.57 (1.31%)
NASDAQ 2,843.07, +33.34 (1.19%)
S&P 500 1,324.18, +15.25 (1.17%)
NYSE Composite 7,557.82, +98.55 (1.32%)
NASDAQ Volume 1,589,679,500
NYSE Volume 3,400,954,250
Combined NYSE & NASDAQ Advance - Decline: 4156-1436
Combined NYSE & NASDAQ New highs - New lows: 64-113
WTI crude oil: 83.32, +0.62
Gold: 1,613.80, +17.00
Silver: 28.95, +0.33

Spanish Bank Bailout Has Bad Odor; Week Ahead Looks Fascinating

Following last week's magnificent vapor rally on the lightest volume of the year, the new week started off gangbusters with news of a $125 billion (100 billion euros) bailout of insolvent Spanish banks sending US equity futures up on a sugar high prior to the opening bell.

Asia rallied strongly on the same news, followed by significant upside on the European exchanges. However, once Wall Street got a whiff of the real stench coming from Europe (Spain's bailout is hardly anything to cheer about; the loans from either the ESM or EFSF are uncertain and have not been approved by the German parliament, which is a must; Greece's elections loom on Saturday), it didn't take long for the best minds, algos and short sellers on Wall Street to sell the rally and start taking profits from last week's big run.

The Dow was up 96 points in a flash, but by 10:00 am EDT was already under the unchanged line, dragging down the other major indices with it. Stocks took a breather during the middle of the session, but, after 2:00 pm, it was pretty much all downhill, as investors went scurrying for cover in defensive stocks and treasuries.

Fear of the impending and eventual full retard global financial collapse were once again front and center, and, with good reason.

Whatever the euphoria over endless money printing out of thin air, be it by the US Federal Reserve, the ECB, China or any other nation, it appears that most people with sense have come to ignore it, at least, and abhor it, at worst. This same story has been playing since the fall of 2008 - throwing more debt at bad debt - and, since the Spanish banks were about the only suckers buying the debt of the Spanish government, recapitalizing them was just another in a long, futile line of can-kicking efforts, far from a real solution to the global crisis caused by long-term issuance of excessive debt.

The centrally-planned, central bank model of piling more bad debt upon already bad debt is coming to a furious conclusion and there seems to be nothing to prevent a complete reset of the world's capital structure. Hard line Keynesians continue to pretend that there's a way to avoid a catastrophic global meltdown, but the reality is that very little has been done thus far, and it's probably now too late to change tactics.

What has passed muster in the past now seems old hat, the results already known, that more bailouts and printing of money will not suffice; old, tried and true methods such as default, bankruptcy, selling off of remaining assets and new management of failed institutions - be they financial or governmental in nature - are the only prescriptions that will cure the ailing patient that is the global financial system.

There is already a great deal of talk circulating about subordination, of soured notes and bonds taking a back seat to newer issues. Spain's stock market, up nearly 6% early on, ended the day in the red and in tatters, the Spanish benchmark 10-year note yielding above 6.5%, a danger area. Greece's 10-year has already achieved escape velocity, with a yield of more than 28%, probably not even ample considering the risk. The Euro finished below 1.25 to the dollar, which is still 20-30% too high, crude was pounded down to eight-month lows, and a quadruple-witching day awaits markets on Friday.

It's either ironic or appropriate that rich and poor dads alike will have one more day in the sun on Father's Day, June 17, upon which day Greeks vote once again to try to form a government in an ungovernable situation. By this time next Monday, there may well have been a 500-point decline on the Dow, with Europe slitting apart at the seams, US and other developed nations exhibiting no growth and Italy waiting in the wings to be the next major casualty.

This week promises to be one of the most interesting - from a macro perspective - though, with more than $800 billion being pulled out of equities in the two years following the May 2010 "flash crash," there may not be anyone left around the trading floor to turn off the lights.

The entire mess has been the product of government gone fiscally wild and banks more than willing to take on excessive, often foolish risk over the years and into today. There comes a reckoning, and that day will arrive eventually, without fanfare or pretense. Then the planet will tremble as great swaths of wealth are obliterated by the same system that made the unrealistic promise of endless growth on a finite planet.

Volume was once again horrifyingly absent, breadth was extremely negative and new lows crept up on new highs after a brief reversal last week.

Dow 12,411.23, -142.97 (1.14%)
NASDAQ 2,809.73, -48.69 (1.70%)
S&P 500 1,308.93, -16.73 (1.26%)
NYSE Composite 7,459.29, -94.49 (1.25%)
NASDAQ Volume 1,477,944,250
NYSE Volume 3,383,333,500
Combined NYSE & NASDAQ Advance - Decline: 1206-4401
Combined NYSE & NASDAQ New highs - New lows: 144-94
WTI crude oil: 82.70, -1.40
Gold: 1,596.80, +5.40
Silver: 28.62, +0.15

Week's Events Point to Global Collapse; Max Keiser Speaks Out on Germany Bank Downgrade, Global Economy

Editor's Note: This was a particularly trying and nervous week for the markets, as political and economic tensions seemed to escalate on daily basis. From China's interest rate easing to the downgrade of Germany's banks to the rising wave of racism and bias, the swirl of history seemed to take on an unusually pungent aroma, one which permeated all levels of discussion and event horizons.

I am horrified at my own - and that of Max Keiser and many other non-mainstream journalists - prognosis for the future of the global financial system, which is being rendered apart by self-created forces which have taken on unforeseen lives of their own. A complete crash could occur almost at any time without warning, with a ferocity that would make 2008-09 look like a leisurely stroll. With all my heart, I wish my predictions turn out to be 100% incorrect, though continuing and recent developments point in the opposite direction.

Of course, the elitist coalition of bankers and sovereign leaders will continue to apply bandages and tourniquets as needed, even though they must know that a mortal wound cannot be patched, that wound being the complete insolvency of the world's largest banks, begun in 2008 and proceeding this week to completely engulf all of Spain's mightiest financial institutions.

As the week drew to a close, US markets garnered further gains on what had to be the lowest trading volume day of the year. (Money Daily does not keep complete records of much, but the daily volume reports at the end of each daily post provide that statistic - though scrolling through five-plus months of posts is a bit of an arduous task late on a Friday afternoon. Trust in the fact that if today was not indeed the lowest volume of the year, it was in the lowest three.)

Zero Hedge (zerohedge.com) reports that volume for the week was the slightest of the year, in a week which produced the year's best gains. This kind of rigged result is exactly what's wrong with markets and the economy in general: they aren't functioning. Today's plaster to the upside, accompanied by abysmal volume is manifestation of the banker Ponzi in full bloom, trading amongst each other in a rigged game to the detriment of formerly-free markets.

At some point, the manipulation will come to an end, and likely an abrupt one, fully engineered by Rothchilds and fellow Illuminati types.

A point of reference is the upcoming November US presidential election, which incumbent president, Barack Obama, is purposely throwing, having done his job for his bankster allocators. The first hint that Obama was not fully engaged or committed to winning a second term came in the form of his absurd opposition to the Keystone XL Pipeline. His stance to block the project - which would bring oil from Canada's oil sands to America, but, as of last notice may be headed to China instead - until after the election, baffled all but the mainstream press, who haven't the collective mind power or journalistic will to delve into matters that involve anything more than rehashing the contents of official news releases.

Today's statement that the private sector in America is doing "OK" is the second nail in the defeat of Obama at the polls. Such obvious policy blunders and plainly unfounded statements point to nothing less than self-imposed defeat to the weakest Republican candidacy since Bill Clinton's second term re-election. Mr. Obama is an eloquent, intelligent speaker, but he has failed to ignite any fire of passion in either Democrats or independents. It's a very good bet that handing the presidency to the biggest shill for the 1%, in the person of Mitt Romney, is a reality.

For the week - again, the best of the year on the lightest volume - the Dow gained an ungodly 456 points, this on the heels of the month of May in which the blue chips gave back more than 800 points. Bear in mind that this gain comes as global conditions worsen, with little to no positive data or news.

The same kind of ride-up occurred on the NASDAQ, up 110 points, and the S&P, which registered a gain of 45 points. The whole affair is nothing more than a dog-and-pony show, and one which is not particularly well-staged. The sheeple of the world take it all in without question, that being one of the keys to the problem.

Along with the low volume, the session was characterized by slender breadth and a slight edge for new highs over new lows. Commodities, which began with oil down by more than $2.00 on the current futures price, were relatively flat by day's end.

In line with developments of the past few weeks - and years, for more perspective - the contagion from banking to sovereigns to currencies is accelerating, nearing an extremely dangerous global condition of collapse.


If implosion happens within weeks, it would be no surprise to the growing number of people who view the past four years of currency manipulation and incessant printing with disdain and skepticism. Global elites are desperately clinging to largely Keynesian ideas and potential solutions which have little to nothing to do with solving the epic calamity unfolding in real time.

There's no telling how much longer the global condition can be restrained as events in areas around the world are spiraling out of control at a rate of speed that is nearly impossible to track.

The Nicholas Brothers

Forget about the press reports and news conferences with governmental/political leaders like Obama, Merkel, Draghi, et. al. Issues on the ground are overtaking the ability of the political process to deal with the expanding crisis. The powerful are becoming less so, and eventually will be held responsible, and thus, powerless as populations erupt in wave upon wave of tension, uprising, catastrophe. Greece is just the most visible example, while Syria is already a lost cause due to the inaction or inability of bodies such as NATO or the loosely-aligned Euro-American force majure to act properly - and promptly - to quell the spreading genocide. Spain, Italy and France continue their joint descent into anarchy which will eventually pull all of Europe down with it.

Must see TV: Host of the Keiser Report, Max Keiser, brilliantly lays out the present and near-future in this six-minute segment courtesy of Russia Today.



In keeping with our new-found hobby of digging up rich pieces of joyful Americana from bygone eras, the following clip from the 1942 film, Orchestra Wives, featuring the Glenn Miller band with Tex Beneke performing "I've Got a Gal in Kalamazoo" along with the fast-talking, high-stepping dancing duo, the Nicholas Brothers, the elder Fayard, and Harold.

It's a real piperoo! Enjoy.



On a strictly personal note: Many thanks to the two saints on earth who appeared today as needed. Whatever one's personal beliefs, there is a power in faith that is beyond our small level of comprehension.

Dow 12,554.20, +93.24 (0.75%)
NASDAQ 2,858.42, +27.40 (0.97%)
S&P 500 1,325.66, +10.67 (0.81%)
NYSE Composite 7,553.77, +33.94 (0.45%)
NASDAQ Volume 1,396,691,125
NYSE Volume 3,497,203,500
Combined NYSE & NASDAQ Advance - Decline: 3810-1757
Combined NYSE & NASDAQ New highs - New lows: 111-78
WTI crude oil: 84.10, -0.72
Gold: 1,591.40, +3.40
Silver: 28.47, -0.06

Tumultuous Thursday: Bernanke Comments Spark Selloff

(Editor's note: running quite late again today, which seems to be happening with more frequency here at Downtown Magazine HQ. It could be a sign that at least this little corner of the economy is experiencing a pickup in activity. Today's comments will be somewhat abbreviated, but a full recap of the week's economic events will follow on Friday at markets' close.)

Things were sailing along rather smoothly in the morning session, with all of the major indices up sharply and European bourses closing modestly higher at 11:30 am EDT.

Federal Reserve Chairman Ben Bernanke's non-committal stance on additional stimulus measures, which he delivered to a joint congressional committee, and a downgrade of Spain's credit rating by Fitch collided with China cutting key lending rates by 1/4 percent, sending US markets into a tailspin.

It was hoped by many on Wall Street that the Fed Chairman would offer a glimpse of fresh stimuli, though his testimony merely served to cloud the picture and was not what equity traders had hoped to hear. The Dow Jones Industrials, which peaked just prior to 10:00 am with a 140-point gain, dithered most of the rest of the session, and, along with the other indices, was traded off in the final hour, losing roughly two-thirds of the advance.

The NASDAQ, which had posted a gain of nearly 30 points in the early going, gave all of that back and then some, ending in the red for the day, along with the S&P, which wasted a 14-point gain and ended fractionally lower.

In reality, China's lowering of interest rates, while stimulative on the surface, actually should have - and could have - been interpreted as a negative, since the country is the world's leading exporter and a slowdown there, prompting interest rate easing, is nothing but a manifestation of the problems in Europe, which include slowing demand for what China produces.

Bernanke's wait-and-see attitude was not well-received, obviously, though the potential for the US sinking back into a recession without additional stimulus was murmured and whispered around trading desks during the day. For perhaps the first time in years, the Fed may be sending a signal that the free lunch for financial firms hasn't produced many positive results and it's time to try something other than plain vanilla monetization of Treasury debt and back-door policy easing. It would be a watershed event, should the Fed not engage the markets with more easy money, which has been the case since early 2009.

In other economic news, initial unemployment claims eased back by 12,000, to 377K in the current week, from an upwardly-revised 389K last week. Also, according to CNBC, Art Cashin reported that sources told him yesterday's huge upside advance was largely aided by the largest amount of short-covering in 2 1/2 years. Viola! Rally! Though, really, it was all just fun and games for Wall Street heavy hitters and insiders.

The rich get richer. The rest of us are supposed to just grin and bear it. Doesn't sound like much of a plan.

Gold and silver were smashed lower, for no apparent good reason, other than coordinated action by central banks who are worried that people may actually see precious metals as a safe and sound alternative to floating, devaluing, fiat paper.

Dow 12,460.96, +46.17 (0.37%)
NASDAQ 2,831.02, -13.70 (0.48%)
S&P 500 1,314.99, -0.14 (0.01%)
NYSE Composite 7,519.82, +2.36 (0.03%)
NASDAQ Volume 1,652,958,125
NYSE Volume 3,939,869,000
Combined NYSE & NASDAQ Advance - Decline: 2427-3168
Combined NYSE & NASDAQ New highs - New lows: 122-52
WTI crude oil: 84.82, -0.20
Gold: 1,588.00, -46.20
Silver: 28.53, -0.96