Wall Street and Washington's Theater of the Absurd

To say that the market is comical might be a bit of an understatement, as, under the current regime of endless QE, ZIRP, no-loss corporate interests and unlimited cash funding for all manner of speculation the entity that used to be known as the "stock market" is a sad comedy with wickedly tragic undertones.

Amidst the furor over "fiscal cliff" issues, Wall Street has managed to keep a straight face, as have most commentators and analysts, but today's activity was right out of the old PPT handbook.

Despite early morning futures pump-priming, actually solid economic data and no progress in Washington, stocks found themselves slumped into negative territory at 11:00 am ET.

However, this being a market typified by HFT and wing-and-a-prayer whimsical day-trading, that point in time marked low tide for the day.

Without warning and on absolutely no relevant news (we searched and searched and could not find a suitable catalytic argument), the Dow Industrials surged a massive 150 points in the next hour, making a v-bottom u-turn that was dazzling if for only its rapidity.

The news wires were touting the move as inspired by Bank of America, and, to a lesser extent, Citigroup, which today announced layoffs of 11,000, sending that stock up 2.17 (6.33%). It's a counter-intuitive world when slashing jobs causes such a huge run-up, but this is, after all, the bizarre world of Wall Street, where profits supersede humanity. BofA, for its part, surged 56 cents, to 10.46, a new 52-week high. The only caveat for the TBTF banks might be that they are in the midst of another round of stress tests, and, apparently, are set to receive passing grades despite having a multitude of unresolved bad debts residing both on and off their balance sheets.

Finally marking its zenith with a 137-point advance, the Dow meandered along through the afternoon, finally giving up the charade late in the session by cutting its gains nearly in half. The other laughable part was Apple (AAPL) which was hammered once again by profit-takers, taking down the NASDAQ - which remained in the red all session long - with it.

It's fairly common knowledge that over the past four years, rallies led by banks hae a kind of phantom character to them. Since banking's books are so opaque, only the select circle of insiders really know how to value them, and said values may or may not be realistic. Time only will tell.

Belying the rally, the advance-decline line was negative and the margin of new highs over new lows continued to tighten.

Meanwhile, Washington did its part to keep the comical nature of events going strong. Congressional members largely departed the Capitol at noon today, apparently having nothing to do and opting for a long weekend. Yes, a long weekend, just prior to what's planned to be a three-week holiday holiday beginning December 14.

Tis strange – but true; for truth is always strange; stranger than fiction.

-- Lord Byron

Dow 13,034.49, +82.71 (0.64%)
NASDAQ 2,973.70, -22.99 (0.77%)
S&P 500 1,409.28, +2.23 (0.16%)
NYSE Composite 8,270.43, +46.56 (0.57%)
NASDAQ Volume 1,747,690,750
NYSE Volume 4,086,650,000
Combined NYSE & NASDAQ Advance - Decline: 2641-2821
Combined NYSE & NASDAQ New highs - New lows: 121-65
WTI crude oil: 87.88, -0.62
Gold: 1,693.80, -2.00
Silver: 32.96, +0.149

Markets Stall as Fiscal Cliff Negotiations Are a Nullity

Talk about tight trading ranges, the major averages barely budged off the flat line today, and, considering the backdrop of the fiscal cliff non-negotiating stances of the warring parties, it's actually quite remarkable.

The NASDAQ was the most volatile of the majors, trading in negative territory the entire session, trading in a narrow band of 22 points. The S&P, top to bottom, moved an entire nine points and change, finishing ever-so-slightly in the red.

By comparison, the Dow's movement was phenomenal, covering an entire 82 points throughout the day. However, after giving up an initial thrust higher of some 53 points, the Dow's trading range from 11:00 am ET until the close was a mere 46 points. Just in case anybody is keeping tack, the Dow crossed over the unchanged line 27 times.

There was no economic data released, but the president did take to the airwaves in his first one-on-one interview since the election, exclusively on Bloomberg (take THAT CNBC!).

Basically reiterating that he would not budge from his position the the Bush tax breaks for the highest two percent earners (making over $250,000 per annum) must be allowed to expire before he and his democratic counterparts would seriously consider any proposal.

That did not inspire any reaction in either direction from the markets. It could be early onset of "cliff fatigue," since the two sides have engaged mostly in verbal sparring and little else. Wall Streeters may be getting a bit worn out, playing the waiting game for the past four weeks.

Without any movement in negotiations, the investment community will look to a crush of economic data releases beginning with the ADP Employment Change index for November, at 8:15 tomorrow, followed in close order by Q3 productivity revision and unit labor costs, factory orders, ISM services and crude oil inventories.

At the least, the ADP figure will give the non-farm payroll junkies a little to chew on until Friday when the BLS makes its monthly estimate of job growth in the nation.

Between now and then, don't look for a quick resolution to the fiscal cliff issues, as both sides appear to take the fight to the very last minute, if not beyond. Most of the politicians are planning on heading home for the holidays on the 14th of December, but, staying in the nation's capitol to iron out an agreement might be preferable to dealing with angry constituents back home, so the chance that congress might delay their holiday by a week is a distinct possibility.

While there are many voices expressing that the politicians will prevent the economy from going "over the cliff" more and more analysts are predicting that neither side sees any gain from negotiating a settlement and appearing weak in the eyes of constituents, especially from the Republican point of view, which is, has been and likely will be, completely intractable.

Things could get interesting at any time, though it appears more and more likely that the politicians will stall, posture and delay, to the ultimate detriment of everyone.

One can hardly blame the president for sticking to his guns on wanting to raise taxes on the rich. It's a no-brainer and long overdue. Besides, he did win re-election largely on the idea that the rich should pay more. How much more is the most cogent question, though the Republicans continue to appear myopic and standing in defense of their campaign contributors, not the people of America.

If the politicians don't come to agreement, blame will fall squarely on the shoulders of the Republican party, primarily the out-of-touch tea partiers in the House.

Dow 12,951.78, -13.82 (0.11%)
NASDAQ 2,996.69, -5.51 (0.18%)
S&P 500 1,407.05, -2.41 (0.17%)
NYSE Composite 8,223.87, +0.33 (0.00%)
NASDAQ Volume 1,746,404,375
NYSE Volume 3,218,542,500
Combined NYSE & NASDAQ Advance - Decline: 2638-2837
Combined NYSE & NASDAQ New highs - New lows: 94-55
WTI crude oil: 88.50, -0.59
Gold: 1,695.80, -25.30
Silver: 32.81, -0.951

"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