"Cliff" Negotiations Going Nowhere; Wall Street Begins to Get the Message

Anybody who took the time to watch any of the Sunday morning comedy shows, otherwise known as "Meet the Press", "This Week" or "face the Nation could come to no other conclusion than the Democrats and Republicans were still miles apart on solutions to fixing issues pertaining to the "fiscal cliff" that has become the cause celebre in Washington, on Wall Street and just about everywhere else in America.

Alternating between Treasury Secretary Timothy Geithner, House majority leader, John Boehner and a parade of politicians, pundits and philosophers (notably, Grover Norquist), there was widespread agreement on one thing: that there was no middle ground upon which anybody was seen standing. The Democrats and Republicans are so far apart that the idea that there might not be a deal in time for all the Bush tax cuts to expire, sequestration of mandatory budget cuts would take place and the US economy - and with it the world - would fall into recession early in 2013.

It took Wall Street most of the day to figure out that a deal might not be forthcoming by the clowns they purchased in the last election cycle, a thought so pregnant with dire consequences that many in the (cough, cough) investment community might just be in denial on the topic.

By late afternoon, President Obama took his case to the Twitter-world, answering questions from his point of view. A little later, there was a counter-offer from Boehner's office, though it was much like the president's original proposal: having no chance of acceptance and merely a bargaining salvo, testing the waters, so to speak.

By the end of the day, there was some damage done, though it was nothing like what may occur should Wall Street types begin embracing the idea of actually plunging over the "cliff."

Incidentally, the Dow pooped out right at its 200-day moving average, especially in light of the somewhat stunning November ISM index, which drooped into contraction territory with a 49.5 reading, on expectations of 51.2. Naturally, hurricane Sandy was blamed for the bad read, though a number of analysts did not agree with that assessment, believing that Sandy might be responsible for 0.3 to 0.5 of the shortfall, which would still render a reading of 50, at best.

Spain requested a 39.5 billion euro bailout for its ailing banks, but fell short of making an official request for a sovereign bailout. In the best counterintuitive fashion, European stocks rallied and bond yields fell. Talk about denial! The Euros have that market cornered.

As the cliff diving enters a critical phase this week - because the politicians plan on making their escape from DC on the 14th of December, naturally, taking an extra week off on the taxpayer's dime - expect markets to get ever more jittery. Adding to the unusual noise, Friday's non-farm payroll report for November might rattle a few cages as well.

Dow 12,965.60, -59.98 (0.46%)
NASDAQ 3,002.20, -8.04 (0.27%)
S&P 500 1,409.46, -6.72 (0.47%)
NYSE Composite 8,223.54, -36.90 (0.45%)
NASDAQ Volume 1,666,248,500
NYSE Volume 3,060,504,000
Combined NYSE & NASDAQ Advance - Decline: 2307-3205
Combined NYSE & NASDAQ New highs - New lows: 213-44
WTI crude oil: 89.09, +0.18
Gold: 1,721.10, +8.40
Silver: 33.76, +0.48

No Talk about Fiscal Cliff Means Stocks Go Nowhere

Is this what happens when politicians don't talk about the fiscal cliff negotiations?

Nothing? Well, except that gold and silver got mashed down. Central bankers really don't like the precious metals... until they own all of them, that is. Sick.

So be it. The weekend awaits.

Dow 13,025.58, +3.76 (0.03%)
NASDAQ 3,010.24, -1.79 (0.06%)
S&P 500 1,416.18, +0.23 (0.02%)
NYSE Composite 8,260.35, +4.28 (0.05%)
NASDAQ Volume 1,973,701,750
NYSE Volume 3,640,136,500
Combined NYSE & NASDAQ Advance - Decline: 2878-2592
Combined NYSE & NASDAQ New highs - New lows: 176-34
WTI crude oil: 88.91, +0.84
Gold: 1,710.90, -16.30
Silver: 33.20, -1.144

Wall Street to Washington, the Clown Show Continues

OK, it's finally gotten officially stupid to invest any money at all in stocks, though judging by the massive outflows from stock-related mutual funds to bond funds, it seems that may be preaching to the choir as far as retail investors are concerned.

Today saw more ridiculous posturing and pontification by various US public office-holders, first by House Speaker John Boehner (who seems to relish in the publicity and his new-found super-power, capable of moving stock indices with a single phrase) who, after meeting with the president's chief negotiator - Treasury Secretary Timothy Geithner - said that there had been no substantive progress on the fiscal cliff issues in two weeks (no kidding!) and that the president needs to put his cards on the table.

Apparently, Geithner is stone-walling for Obama, insisting on allowing the Bush tax cuts to expire on the wealthiest taxpayers - those earning over $250,000 - while allowing them to remain in place for everyone else, but Boehner is likely still insisting on concrete spending cuts. Both have good ideas, though the probability of a realistic compromise appears to be still a ways off.

So, Boehner steps to the microphone a few minutes after 11:30 am ET, says a few words and the Dow loses 50 points in about a minute. A little while later, Senate Leader Harry Reid takes his turn and stocks recover a bit. Maybe Harry has a gentler touch? But stocks went up even more when NY Senator Chuck (I represent Israel) Schumer took to the podium and said a deal was almost a certainty by Christmas, once again, overstating the obvious. Senator Schumer probably had an options straddle working, needed a few extra points on the SPY and he got them.

Nancy Pelosi threatened to speak nearing the close, but held off until after the final bell. Apparently, Mrs. Pelosi plays the futures markets. It's all so absurd, the great Saul Bellow could not have penned a more abstract, obtuse script.

Other than the fiscal cliff bad theater, existing home sales in October were reported to have increased by 5.2% percent over the previous month, third quarter GDP was revised upward from 2.0% to 2.7%, which the market had expected, though most of the gains came from government spending, inventory additions and hedonic adjustments.

Retail Sales for November were reported by a number of chain stores, showing an overall gain of 1.7%, well below the happy forecast of a 4-5% jump. Naturally, Hurricane Sandy was blamed for much of the shortfall, though actual sales declines at Kohl's (down 5.6%), Macy's and Nordstom's were more likely due to a combination of competition, poor marketing and overall sluggish demand by consumers, who can only buy so many 42-inch flat screens, iPods and clothes on limited budgets.

Also, this graphic caught some attention. It shows how former Goldman Sachs executives are now the central bankers of most of Europe. No wonder they're doing so well over there.

Gold was up sharply, as was oil and silver, a day after being belted down by unseen forces. Silver, in particular, is at a two-month high, and looks like its about to break out, though that's been said and seen before, with no follow-through, thanks to the suppressive work constantly being done at JP Morgan.

The big tent will open for the circus promptly at 9:30 am ET tomorrow.

Dow 13,021.82, +36.71 (0.28%)
NASDAQ 3,012.03, +20.25 (0.68%)
S&P 500 1,415.95, +6.02 (0.43%)
NYSE Composite, 8,256.07, +48.71 (0.59%)
NASDAQ Volume 1,758,355,875.00
NYSE Volume 3,337,720,000
Combined NYSE & NASDAQ Advance - Decline: 3963-1531
Combined NYSE & NASDAQ New highs - New lows: 233-30
WTI crude oil: 88.07, +1.58
Gold: 1,727.20, +10.70
Silver: 34.35, +0.664

Turnaround Tuesday on Fiscal Cliff Comments from Boehner, Obama

Stocks careened lower at the open, with the Dow down more than 100 points on data that showed the number of new homes being built (maybe a shovel in the ground somewhere) slowing to an annual pace of 368,000, well below the estimate.

Shortly thereafter, House Majority leader, John Boehner, emerged from a brief meeting with some wall Street corporate CEOs and said something to the effect that the Democrats need to get serious about solving the issues of the fiscal cliff.

Around noon, President Obama came out and delivered some equally algo-soothing words, sending the market even higher. While neither man said anything specific or anything which could even remotely be construed as closing in on a deal, Wall Street computers took their words as a cue to buy, enough for a 200-point move on the Dow, something that hasn't happened in over a year's time.

We certainly are playing in interesting times. A politician moves his or her lips and markets respond. How perfectly Pavlovian.

Gold and silver were inexplicably down sharply, but not to worry. Tomorrow or the next day, markets will begin to respond to celebrity raised eyebrows, the body language of sports stars and maybe even dog scratching.

Besides, according to the Incan calendar, the world will reverse polarity on the 22nd of December, and instead of a fiscal cliff, we'll have a monetary waterfall, courtesy of the Federal Reserve, of course, fixing everything for eternity, or at least until the next election.

Dow 12,985.11, +106.98(0.83%)
NASDAQ 2,991.78, +23.99(0.81%)
S&P 500 1,409.93, +10.99(0.79%)
NYSE Composite 8,207.36, +56.57 (0.69%)
NASDAQ Volume 1,726,631,875
NYSE Volume 3,324,916,750
Combined NYSE & NASDAQ Advance - Decline: 3606-1863
Combined NYSE & NASDAQ New highs - New lows: 122-54
WTI crude oil: 86.49, -0.69
Gold: 1,716.50, -25.80
Silver: 33.68, -0.297

Washington Gets Back to Work (Kinda); Stocks Slump Despite (Kinda) Positive Data

Tuesday began with a flurry of good news.

First, over in Bizzarro-world(aka Europe), EU ministers were glad-handing and slapping each other's backs for another successful bailout of Greece (really, is this the third, fourth or fifth? Who's counting?), then, at 8:30 am ET, durable goods orders came in better than expected.

At 9:00 am ET, the September Case-Shiller Housing Index showed another in a series of positive gains for housing. Better yet, consumer confidence hit a four-and-a-half-year high, reported at 10:00 am ET.

So, why were the markets in such a sour mood, why did they end lower, and why were they not even lower than where they finished?

Ah, grasshopper, so many questions...

First, that somewhat refreshing zero print on durables was, in fact, pretty ugly, once one ventured to peek under the hood. As Zero Hedge reports, a continued collapse in durable goods new orders virtually guarantees that we're already in a recession, fiscal cliff or not (more on that canard later).

The Case-Shiller data, which showed the average price of a home purchase up by 3.6% nationally, has to be faded a little, only because housing is not stocks, and, even though home-buying is a relevant statistic, it matters little in the broader scheme of things, especially when the banks are keeping massive numbers of homes off the market in what's known as "foreclosure stuffing." Those in the know, really, really do know.

As far as the consumer confidence number, well, anybody who allows themselves to be branded a consumer for purposes of a survey can't be all that bright, after all.

In the case of the nth installment of the Greek bailout, there were scant details, the IMF hasn't signed off on it yet, the "deal" has to be approved by each member (17) country, so, the Euro sold off, anathema to US markets.

And then, about 2:30 pm ET, US lawmakers (that's a joke, son) emerged from talks over the fiscal cliff (that's not a pun, son) and did what everyone thought they'd do, since their track record is so plain and clear on this point: point fingers at the other side for not playing fairly.

Senate majority leader Harry Reid: "...little progress with Republicans..."

Senate minority leader Mitch McConnell: "...some difficulty turning off the campaign..."

Is it any surprise to anybody that working out a deal in DC was going to be a difficult, if not impossible, issue? After all, this whole "fiscal cliff" miasma started more than a year ago when the two sides failed to reach conciliatory postures on increasing the debt limit, and that puny increase of roughly $1.2 trillion is about to run out.

So, with no deal even remotely being discussed, the Titans of Wall Street started selling in earnest and continued selling into the close. They will probably still be selling when the opening bell rings on Wednesday and maybe even beyond that, because depending on Washington politicians to reach a concord on any matter of even insignificant importance is like getting cats and frogs to behave well together. It's just not going to happen.

Further, indispensable reading from the Wall Street Journal comes in the form of an editorial by Chris Cox and Bill Archer - respectively, former chairman of the House Republican Policy Committee and the Securities and Exchange Commission and former chairman of the House Ways & Means Committee - explaining why the fiscal cliff of $600 billion is merely a puff of smoke compared to the conflagration that is the real unfunded liabilities of Medicare and Social Security, refreshingly written in language even a protesting Wal-Mart worker could comprehend.

The saga continues to unfold tomorrow. Oh, by the way, so many people did their holiday shopping on Thanksgiving, Black Friday, Small Business Saturday and online on Cyber Monday this year, and, considering that since Turkey Day was so early this year that there's an extra week in the holiday shopping season, retail sales are going to be very slow for the one, two, three, four next weeks, until the last Saturday before Christmas (the 25th is a Tuesday), so, Happy Holidays! Free houses, Greek bailouts, durable goods and fiscal cliff-diving for everyone... including consumers!

Dow 12,878.13, -89.24 (0.69%)
Nasdaq 2,967.79, -8.99 (0.30%)
S&P 500 1,398.94, -7.35 (0.52%)
10-Yr Bond 1.65% -0.02
NYSE Volume 3,294,930,000
Nasdaq Volume 1,762,521,750
Combined NYSE & NASDAQ Advance - Decline: 2462-3041
Combined NYSE & NASDAQ New highs - New lows: 154-40
WTI crude oil: 87.18, -0.56
Gold: 1,742.30, -7.30
Silver: 33.98, -0.156