Initial Claims, Leading Indicators Disappoint; Investors Don't Care

Initial unemployment claims and the Conference Board's Index of Leading Economic Indicators both showed disappointing results but investors (those few left) didn't seem to care.

The number of people looking for jobs fell 3,000 from last week, with 382,000 new filers. Leading indicators were down 0.1 percent in August after rising 0.5 percent in July and dropping 0.5 percent in June.

Stocks traded lower in the morning, but quickly rebounded to unchanged, where they remained range-bound the remainder of the session.

It was another low-volume fiasco, brought to you by bankers who can't balance their books and journalists who can scarcely string together two cogent sentences.

Markets, especially those in the US, are so woefully correlated to the macro trade that it would be funny if it weren't so pathetic. Since fall of 2008, trading has been conducted on rumor, innuendo and the latest efforts by the Federal Reserve to "revive" the economy, even though their efforts have been directed almost entirely at rescuing failed financial institutions.

The Fed has thrown more than $20 trillion at the problems which first surfaced with sub-prime lending, but have since infected institutions and sovereign governments globally. Their efforts have been largely futile, wasteful and unfriendly to savers, but there seems to be no other way to keep the world's economic mess going other than to make frequent use of easing, by sopping up debt nobody wants because it is either eminently non-collateralized, below par or not redeemable for anything approaching fair value.

Global markets continue to plod along, nations continue to spend beyond their means and Wall Street thinks it's wonderful.

Just play along.

Dow 13,596.93 18.97(0.14%)
NASDAQ 3,175.96 6.66 (0.21%)
S&P 500 1,460.26 0.79 (0.05%)
NYSE Compos... 8,373.06 27.43 (0.33%)
NASDAQ Volume 1,789,587,250
NYSE Volume 3,372,348,500
Combined NYSE & NASDAQ Advance - Decline: 2132-3369
Combined NYSE & NASDAQ New highs - New lows: 225-35
WTI crude oil: 91.87, -0.11
Gold: 1,770.20, -1.50
Silver: 34.68, -0.09

BOJ Eases; Housing a Little Better; Oil Takes Another Hit

OK, it's getting a little stupid with the incessant chorus of monetization of government (and bank debt).

Today, the Bank of Japan (BOJ) joined in, announcing something along the lines of a couple quadrillion yen to be added to liquidity over the next six to eight months. That may not be correct, but the numbers were large, the editor is too tired from cutting down dead limbs (from actual trees), and the time period is rather irrelevant, since the BOJ has been doing this kind of thing for 20-odd years, with obvious effect: keeping the Japanese economy mired in a semi-permanent state alternating between inflation and depression.

Markets took the news in stride, as usual, bounced around a bit, eventually ending only slightly higher on low volume. That's the story for now, and, while it doesn't change much, some day it will. In the meantime, we're taking our own advice and buying land, seeds (tomatoes, tobacco, broccoli, etc.), silver and maybe some working firearms.

There was what might be called "encouraging" news on the housing front. Housing starts (officially, a shovel in the ground or a stake being placed on a lot by a surveyor) came in at 750K in August, but that was below forecast, though up from the July figure of 733K, which was revised downward from 746K, so, expect the August figures to be revised lower as well, for a net gain of, well, who knows?

Existing home sales for August came in at an annual run-rate of 4.82 million, up from an unrevised 4.47 million in July and well ahead of forecasts. That was the best of the news, because August building permits, viewed as an indicator of current demand, fell from 812K in July to 803K, putting something of a damper on the "animal spirits" which keep calling the bottom in the housing market month after month.

Is this the bottom? Maybe, though that depends on perspective and how far out you wish to project. Give housing another four years of ZIRP, massive MBS buying and monetization of the federal debt and see where we are then.

Even better news came from the oil commodity complex, where the price of crude took another massive hit. There's no telling where the selling is coming from, or why, though it certainly seems fishy given the closeness to the general election - just six short weeks away - and the inherently inflationary effect of Bernanke's QEternity, but, it's welcome relief for drivers in the US, at least.

Dow 13,577.96, +13.32(0.10%)
NASDAQ 3,182.62, +4.82(0.15%)
S&P 5001,461.05, +1.73 (0.12%)
NYSE Composite 8,400.31, +12.87 (0.15%)
NASDAQ Volume 1,826,526,125
NYSE Volume 3,409,506,250
Combined NYSE & NASDAQ Advance - Decline: 2914-2500
Combined NYSE & NASDAQ New highs - New lows: 315-28
WTI crude oil: 91.98, -3.31
Gold: 1,771.70, +0.50
Silver: 34.59, -0.13

With Everything Priced In, Trading Remains Sluggish

Well, absolutely everything from QE3 to the ECB's bond-buying program to Midwest drought to the presidential election has been completely priced into stocks, so they have nowhere to go at present.

The NASDAQ traded in about an eight-point range, a fivepoint swing top to bottom as all the S&P could muster, while the Dow - the only index higher on the session - was range-bound by 64 points. Volume, not unexpectedly, was light and volatility was nowhere to be found.

This, of course, is the direct result of government intervention into what used to be free markets, central planning of the economy and socialization of losses by financial firms.

It goes without saying that it is tough to make money in such an environment. Stocks are poised either near all-time highs or, as in the case of the NASDAQ, multi-year highs. The level of complacency, knowing that the Fed can and will step in at any sign of weakness, is almost unbearably stupid.

Since Fed chairman Ben Bernanke called for $40 billion in monthly MBS purchases without placing a duration limit, the major averages have more or less flat-lined.

That's about the whole story for today. Nothing much happened.

There was one bit of good news: oil fell substantially for the second straight day. If the current move downward (oil prices usually drop after Labor Day) is sustained, within a month, drivers should begin to see lower prices at the pump.

Dow 13,564.64, -11.54(0.09%)
NASDAQ 3,177.80, -0.87 (0.03%)
S&P 500 1,459.32, -1.87 (0.13%)
NYSE Composite 8,387.52, -21.45 (0.26%)
NASDAQ Volume 1,672,492,500
NYSE Volume 3,350,519,000
Combined NYSE & NASDAQ Advance - Decline: 2560-2973
Combined NYSE & NASDAQ New highs - New lows: 191-20
WTI crude oil: 95.29, -1.33
Gold: 1,771.20, +0.60
Silver: 34.72, +0.35

Markets Close Down 15th Monday Out of Last 16

Despite the aggressive easing action by the Fed last week, today's session was marked by broad-based selling on low volume, the 15th consecutive Monday of the last 16 in which the markets turned lower for the day.

It is one of the odder trends in the markets these days, but is most likely tied to HFTs and the macro-analysis upon which markets currently depend. There was once a time in which everything didn't fall or rise in unison, perfectly predictable, dependent upon headlines, but that has been the regime - for the most part - since the financial crisis of 2008. Nothing's been repaired and market participants merely follow the herd, which, truth be told, has been a most profitable trade since March 2009, with stocks close to all-time or multi year highs.

Another oddity carried forth today was how the NYSE Composite took on roughly twice the water than the other indices, on a percentage basis. Apple (AAPL) kept the NASDAQ and S&P at relatively minimal losses, while the Dow Industrials were boosted by consumer stocks (Coca-Cola (KO) and McDonald's (MCD)), big phrama names, Merck (MRK) and Phizer (PFE), all of which bucked the trend and closed on the upside.

All of the major indices finished well off their lows, with a short-covering spike sending all off what were the lows of the day, in the final hour of trading.

There was little in the way of economic data - as if the markets would have cared anyway - except New York's Empire Manufacturing Index, which fell to -10.4, its lowest level since November, 2010. It followed the recent trend of other Fed regional indices, sporting sub-par results. With that in mind, it's little wonder that the Fed decided last week to go all in on what some are calling QE-infinity.

Financial markets are a complete farce now, and have been pretty much since the 2008 crash. The Federal Reserve's insistence to sop up the remains of old and recently-issued MBS truly points up the dilemma faced by central banks and sovereign government entities.

With the Fed becoming the world's largest landlord-by-proxy, the rally cry of "free houses for everyone!" has taken on new and even more cynical meaning.

In a move that can only be captioned by the phrase, "well, it's about time," crude oil skidded more than $3.00 before recovering slightly.

Dow 13,553.10, -40.27 (0.30%)
NASDAQ 3,178.67, -8.46 (0.27%)
S&P 500 1,461.19, -4.58 (0.31%)
NYSE Composite 8,408.92, -49.96 (0.59%)
NASDAQ Volume 1,428,619,250
NYSE Volume 3,135,453,500
Combined NYSE & NASDAQ Advance - Decline: 1883-3624
Combined NYSE & NASDAQ New highs - New lows: 228-26
WTI crude oil: 96.62, -2.38
Gold: 1,770.60, -2.10
Silver: 34.37, -0.29

It's Not Just Stocks; Americans Are Rising Again

If one were to look just the US stock markets, the assumption would likely be that all is well and good with the US economy.

The major averages are at multi-year highs, with the Dow less than 600 points from its all-time high (Oct. 9, 2007: 14,164.53 close) and the S&P 500 a mere 100 points away from its all-time closing high set on October 9, 2007, at 1565.15.

A peek under the hood, so to speak, would reveal a different reality, with unemployment above eight percent for nearly four years running, massive stimulus programs by the government and the Federal Reserve boosting stock prices but sparking inflation and leaving middle class America and small business seething through high gas prices, slack demand, virtually no job creation, a shrinking work force and record numbers of Americans receiving government assistance through food stamps, welfare and a variety of other programs.

The impression that all is apparently just fine is touted by the media to a largely unsuspecting public, though that aspect of life in America is changing. More and more people distrust government at all levels, actually understanding that the Federal Reserve is willfully destroying the value of the US dollar, engaging in all manner of underground economics, from backyard gardens to unreported side job incomes, leaving the "system" to fend for itself without public support.

Government, especially at the federal level, continues to parade about their so-called "expertise," knowing what's "good for the American people" while doing little to nothing to remedy the conditions which plague middle-to-low income families. The rapidity by which independent thinkers are withdrawing the consent to be governed is startling when one examines Americans up close.

While the economists and analysts look at largely massaged, incorrect and inconclusive numbers on jobs, spending, inflation, productivity and income, they entirely miss the now massive, unreported, burgeoning economics taking place in small towns and large cites across the expanse of the continent. Certainly, there are minions still without knowledge or understanding of the extent of the financial crisis - now nearly four years old and running - still willing to rely on government help, but a growing number of people have come to the realization that government today exists only to self-perpetuate and serve the needs of a greedy, cumbersome system of enormous public corporations and government regulations designed to stifle competition, crush creativity and retard personal growth.

Such people are increasingly taking matters into their own hands, purposely defaulting on fraudulent mortgage loans, making do with less, and living more off the land than having to depend on the corporate food chain of genetically-modified foods, products stuffed with hormones, sugars and high fructose corn syrup that are unhealthy but still promoted by government officials.

These people are eating better, more nutritious, healthier foods, avoiding government regulations in quiet protest and operating in a largely cash economy that will continue to grow and flourish because it is too big, too diverse and too pervasive for regulators and prosecutors to effectively control.

From the government's perspective, such actions by individuals and families in the private sector are viewed as counter-productive to their aim of the perfect welfare state. In the minds of the actual practitioners of this "new economy" it is a necessity of survival. They are finding like-minded individuals in their friends and neighbors, spreading the word to others who seek to escape the all-seeing eyes and ears of a tyrannical elite, and prospering while the government stumbles, bumbles and eventually will self-destruct.

When the invisible secondary economy becomes so large that it mirrors the "official "GDP," as occurred during the oppressive days of prohibition, radical change will certainly follow, as it did then. The people shall rise, not all as one, but in various pockets of defiance, from urban strongholds to rural outliers. For many, especially those which have not seen the light, chaos will prevail. For those who have been silently proactive in the management of their livelihoods and self-sufficiency, it shall be a time of prosperity and freedom.

America has been and will be a country based upon principles of personal liberty and economic freedom. If the government is ill-equipped to support these values or even to go so far as to attempt to deprive citizens of their rights under the constitution and other prevailing, fair, tested laws, then the people will withdraw their consent and forge a new era irrespective of government policy and procedure.

The process of reformation and recovery from a top-down, repressive, centrally-planned society and economy to one from which the nation was formed: individual, self-sustaining, resourceful and fiercely independent, will take years, even decades to come to fruition, but come it will, come it must.

American people of good conscience and knowledge have had nearly enough from a government that refuses to protect and promote the interests of its citizens. While a day of reckoning may never be realized, small steps forward by individuals and like-minded groups are already well underway and will continue until the jackals, thieves and miscreants who call themselves our "leaders" are swept away by a tidal wave of public discontent.

America - at least its spirit - will forever live in the hearts and minds of true patriots who will always choose to fight rather than to take flight.

Those who wish to limit freedoms and curtail the liberties which made the nation the greatest in the history of mankind will find their tenure short-lived and their efforts fruitless.

This post was inspired by a true American.

Dow 13,593.37, +53.51 (0.40%)
NASDAQ 3,183.95. +28.12 (0.89%)
S&P 500 1,465.77, +5.78 (0.40%)
NYSE Composite 8,458.88, +51.85 (0.62%)
NASDAQ Volume 2,028,686,500
NYSE Volume 5,067,050,000
Combined NYSE & NASDAQ Advance - Decline: 3749-1817
Combined NYSE & NASDAQ New highs - New lows: 749-31 (absurd)
WTI crude oil: 99.00, +3.78
Gold: 1,772.70, +31.50
Silver: 34.66, -0.12