Why Stocks Were Down Today and Other Ramblings... and Links

Getting right to the point, stocks slipped a little bit more today, oddly enough, right around another 50 points were knocked off the Dow. why is that odd, you ask?

Well, if you were going to dismantle something and didn't want anyone to take notice, you'd do it a little bit at a time, right? So, after a 50-point drop yesterday, another 55 points today receives little fanfare. Anything over 100 on the Dow, in either direction, gets the attention of Bob Pisani and the other market-watching noobs on CNBC and Bloomberg, and you don't want them going around shouting, "hey, look at this!" but 50 points, not so much.

The point is that stocks went down today (and yesterday) because that's the way the Goldman Sachs and Merrill Lynch's roll. If there were any good reason to bid stocks up, they certainly would have, but, that all got taken care of on January 2nd, to the tune of a 300-point rally. Now it's profit-taking harvest time for the quick-traders out there making all the loot, but, you know, they don't want anyone thinking it's time to head for the hills because there's a flood of bad stuff coming our way.

Uh-uh. Can't have that. The muppets must not be allowed to understand anything that is really happening. Only the global elitists are privy to the inside baseball stuff.

So, what's that bad stuff heading our way? How about a nasty, well-orchestrated fight over the debt ceiling that leads directly to a government shutdown? It has been mentioned only a few dozen times just this week, though every political empty hat says they want to avoid that at all costs. (Rubbish: we all know how loathe the pols in Washington are to actually do any work and how much they relish leisure time.)

So, yes, get ready for that, and that would precipitate some selling of stocks. Once the big guys get their profits, then the little people can take losses, all the while the talking head analysts saying things like, "this is just a little correction," or "stocks will rebound in the second half" (like Notre Dame did last night? Let's hope not).

It's been almost two weeks since the latest market moving event - the fiscal cliff miasma - so, a new crisis can't really be far off. Things should start getting heated up in a few more days or maybe around the end of January, once the new members of congress are all schooled up on their new roles and understand the rules of the game.

Yep, the debt ceiling showdown should prove to be some of the best political theatre of the year, and maybe the most disruptive. The Republicans keep threatening it, and they don't want to look like the boy who cried wolf, so, this time, they'll probably do it, and it will last maybe two or three weeks before a compromise is reached. Naturally, such a compromise will solve nothing except to get most of the furloughed federal employees back on the job, slow down the "recovery" a little and provice cover for Wall Street's anticipated lousy earnings.

So, that's why stocks were down today, but they'll be up sooner or later, and trade sideways a bit before the real deal comes down. Then, they'll drop like rocks from a tower, and it will be YOUR MONEY losing value, not THEIRS.

BTW: Alcoa (AA) kicked off earnings season after the bell, posting in-line earnings per share of six cents, which says plenty about the health of this global giant and the world economy in general. Their outlook is for aluminum demand to increase seven percent this year, due to, get this, increased demand from the aerospace industry (read: defense contractors). Whether or not that hike in demand ever materializes, well, we will just have to stay tuned. In the meantime, Alcoa is still a sub-$10 stock, which it's been for close to a year now. There's a reason for that.

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Yesterday, I (that being me, Fearless Rick) opined on these pages that something was broken, though I could not quite put my finger on exactly what "it" was that had gone amiss, ending with the gloomy prospect that maybe everything was broken.

Of course, there are innumerable things broken in America and around the world, but there are many more that work, like the Internet, for instance. You're reading this, after all, on the internet. That works.

What's not working, and hasn't been for a long time is the media, but the internet is beginning to take care of that. Most people under the age of 30 get the majority of their news and opinion-making articles from the internet, not mainstream TV, newspapers or (heaven forbid!) the radio, so there's hope on that front.

So, thinking that I must find out just what it is that's broken, research ensued, which consisted of a couple of adult beverages and some internet surfing.

Well, I was right. The entire global economic system is broken, and has been broken for a long time, but I already knew that. I just didn't know exactly how badly broken it was until I came across this exceptional piece of video (8 parts) by one Ann Barnhardt, and her aptly-titled dissertation, The Economy Is Going To Implode...And You Deserve to now Why.

Ms. Barnhardt breaks the complexities of the modern global economy down to a very understandable, though frighteningly-real level that just about everyone (including politicians and tin-horn local office-holders) can understand. One may or may not agree with her approach or her views, but nobody can argue with the math, which presents an unshakable case for economic calamity. This is must viewing for anyone who wishes to understand why everything seems to be heading downhill in America or to relieve - at least for a short time - that nagging feeling that something is broken. Here's part one of the video series.



Just in case you were busy watching the disgrace of Notre Dame at the hands of Alabama last night, and missed this, here's Alex Jones going ballistic over gun control on the Piers Morgan Show. And, in case you don't know who Alex Jones is, well, you're probably just another sheeple, or maybe a sleeple (that's people who appear awake but are actually sleeping). So, here's a link to infowars.com. Enjoy the video rant.



Dow 13,328.85, -55.44 (0.41%)
NASDAQ 3,091.81, -7.00 (0.23%)
S&P 500 1,457.15, -4.74 (0.32%)
NYSE Composite 8,604.38, -32.53 (0.38%)
NASDAQ Volume 1,743,272,375
NYSE Volume 3,757,457,750
Combined NYSE & NASDAQ Advance - Decline: 3003-3411
Combined NYSE & NASDAQ New highs - New lows: 302-13
WTI crude oil: 93.15, -0.04
Gold: 1,662.20, +15.90
Silver: 30.46, +0.383

Something is Broken

Ever get that nagging feeling that something isn't quite right, you don't know what it is, but you're sure something important is broken, and it's going to cause problems?

That seemed to be the sense of things today. This marking the first day of the first full week of trading, and, after that spectacular, fiscal-cliff-solution-induced-rally last Wednesday, stocks have been just spinning their wheels.

Maybe it's the end of the holidays and getting back to reality, or, for those of us up in the North country, the dreary, dank, dark and depressing days of winter (only 73 mare days until Spring!), but there's a problem out there lurking that's bigger than the upcoming debt ceiling fight, the next unemployment report or whether we dip back into a recession.

It's the kind of feeling that pervaded Germany during the rise of Naziism, in which people didn't trust each other any more, everybody was on guard against some unseen, invisible, but just under the surface threat.

To put one's finger on it exactly would be a stroke of luck - or genius - but let's take a stab at it.

The house of cards the US has built up after the fall of the TBTF banks back in 2008 seems to be crumbling, and, like a house of cards, it starts at the top, where those on the bottom or even in the middle, can't see the collapse coming.

After the nonsensical debate and drawn-out rhetoric over the so-called "fiscal cliff," congress delivered a solution that was only half a solution, that being the taxation part. The hard part, cutting spending, is still ahead, and anybody who knows anything about how Washington has worked for the past thirty years knows that the congress and the president aren't willing or able to cut programs in any meaningful way.

So, the political structure at the top of the pyramidical structure called our society isn't working, and that's going to cause problems down below. The bankers, politicians and corporations currently at the top of the food chain don't seem to have adequate answers, only mildly appeasing artical solutions and glad=handing all around while the suppress and repress the rest of society. Eventually, one little slip up, one mistake, one good blow of wind from out of the blue takes the top cards off the structure and down tumbles everything into a massive, wrecked heap.

How long can the nation survive with clowns twirling dishes on stoks and juggling balls in the air at the top of the structure? So far, about four years, but it hasn't been pretty. There's just this feeling that it's all going to get worse.

Maybe if we turned Dow theory on its head, and noticed that the transportation average had moved to a technical, secular bear market back in July and August of 2011, and hasn't recovered to exceed the previous highs, and the Industrials since then have made a concerted, upside move based on nothing but short-covering rallies, asset inflation thanks to continual pumping by the Federal Reserve, that would give us all a clue to where things are going.

Or, maybe the Federal Reserve, the OCC and Fannie Mae all settling up with the banks on the first Monday of the New Year is a what? Coincidence? And nobody is concerned?

Maybe it's the breakdown of the relationship between the A-D line and the new highs vs. new lows. Maybe it's the flu. Maybe it's gold being constantly hammered down, or silver stuck in perpetuity at $30/ounce. And, maybe those are just symptoms.

Something is broken, for sure. Nobody is sure exactly what it is, but it could be everything.

Dow 13,384.29, -50.92 (0.38%)
NASDAQ 3,098.81, -2.85 (0.09%)
S&P 500 1,461.89, -4.58 (0.31%)
NYSE Composite 8,636.91, -30.77 (0.35%)
NASDAQ Volume 1,702,506,875
NYSE Volume 3,513,878,500
Combined NYSE & NASDAQ Advance - Decline: 2852-3657
Combined NYSE & NASDAQ New highs - New lows: 286-15
WTI crude oil: 93.19, +0.10
Gold: 1,646.30, -2.60
Silver: 30.08, +0.136

Jobs Number OK, Stocks Post Mild Gain

It was a pretty nice week for stocks all in all. Good kick-off to the new year, though there are still issues to be resolved. Once the euphoria over the horrid fiscal cliff deal wears off, it will be business as usual, more pimping and pumping of stocks to the sky.

Non-farm payrolls for December came in at a ho-hum 155,000 and the unemployment rate remained at 7.8%, due to a revision from last month, which was originally reported at 7.7%.

That's all. It's Friday. Go spend.

Dow 13,435.21, +43.85 (0.33%)
NASDAQ 3,101.66, +1.09 (0.04%)
S&P 500 1,466.47, +7.10 (0.49%)
NYSE Composite 8,667.68, +59.89 (0.70%)
NASDAQ Volume 1,743,607,375
NYSE Volume 3,662,983,000
Combined NYSE & NASDAQ Advance - Decline: 4529-1933
Combined NYSE & NASDAQ New highs - New lows: 400-8
WTI crude oil: 93.09, +0.17
Gold: 1,648.90, -25.70
Silver: 29.95, -0.774

Was That It? New Year's Rally a One-Day Wonder

Actually, the New Year's rally on Wednesday - the first day of trading in 2013 - wasn't even a one-day wonder. One might actually consider it a 30-minute - or even 30-second - wonder, in that most of the advances were right at the open with some follow-on in the first half hour of trading.

Naturally, this is how the market rolls these days. If you're not one of the connected special few that can trade pre-market, in futures or make huge buys via HFT computers, like 99% of individual investors, you're SOL, missing out on most of the biggest moves in the market.

Is there any wonder the individual investor has pulled most, if not all, of their money out of equities? The odds are severely stacked against the little and middle guys, yet another reason to despise the one-percenters who glom up the vast majority of Wall Street profits.

As for today's action, not much was happening. Stocks drifted lower in the morning, recovered to around break even or positive, but then slumped when the Fed minutes from the December FOMC meeting were released.

Horror of horrors, some members of the committee were actually openly suggesting an end to their long-standing asset purchase program "well before the end of" 2013.

It's obvious that the Fed can and will do whatever it feels necessary in order to achieve their goals of making every American a debt slave while keeping the US economy from falling into an abyss. In fact, the abyss might just be on the agenda, the Fed owing allegiance to nobody but themselves and their member banks.

So, when traders got a whiff of the odor of no more free money courtesy Helicopter Ben, some went scurrying for the exits, albeit, a bit prematurely. The Fed isn't about to end ZIRP or stop its insane money printing exercise (currenty at a cool $80 billion a month and counting), but there's also the fear that the political clowns in Washington may not exactly get around to cutting spending for a while, and they also may stage a huge fight over extending the debt limit, a la 2011.

So, life in La-La Land (AKA Wall Street) goes on. Stocks got a big boost by acersion of the fiscal cliff, though the job is only half done. There's a sense that whatever conditions arise to offend the investor class, the Fed and the government will be completely accommodative, so that corporate America and the financial sector participants can continue grinding the middle class into dust.

Today's small setback notwithstanding, there's very little fear to keep stocks contained in January, traditionally one of the best months for gains.

A couple of data releases on employment were mixed, with the ADP private jobs report for December showing a net gain of 215,000 jobs, while unemployment claims spiked higher, to 372.000, after last week's 350,000, which was revised (as it always is) higher, to 362,000. The dual releases sent a mixed message in front of tomorrow's December Non-farm Payroll data, due out at 8:30 am.

Dow 13,391.36, -21.19 (0.16%)
NASDAQ 3,100.57, -11.69 (0.38%)
S&P 500 1,459.37, -3.05 (0.21%)
NYSE Composite 8,597.61, -34.40 (0.40%)
NASDAQ Volume 1,724,966,250
NYSE Volume 4,005,988,250
Combined NYSE & NASDAQ Advance - Decline: 3305-3199
Combined NYSE & NASDAQ New highs - New lows: 427-17
WTI crude oil: 92.92, -0.20
Gold: 1,674.60, -14.20
Silver: 30.72, -0.287

Washington Comes Alive Past Last Minute; Fiscal Cliff Averted... for Now; Wall Street Rejoices

Well, Money Daily was right. There was no fiscal cliff deal by midnight, December 31, 2012, but, those wily congress-critters once again outfoxed everyone by playing past the deadline and passing a bill that was, by and large, a deal, though it certainly didn't address any long-term issues, nor did it include any meaningful spending cuts.

Congress and the president - now back in Hawaii, playing golf, presumably - made sure that all the handouts would continue being handed out, extending unemployment benefits and keeping the Bush tax cuts in place for individuals earning less than $400,000 per year ($450,000 for couples), while raising the tax on those making more than that from 35% to 39.6%, which is a pretty big bite.

The "deal" also raised capital gains taxes from 15% to 20%, but only on those earning more than $400,000, a bit of relief for the 99% gang.

Scoring by the Congressional Budget Office and others put the cost of this deal at an increase of some $4 trillion to be added to the national debt over the next ten years. Nice job, boys.

Everybody's taxes will go up, however, because the deal did not extend the 2% tax holiday on Social Security payroll deductions, which was cut from 6.2% to 4.2% last year and will go back up to 6.2% this year. So, if you make $1000 a week, the feds will be taking an extra $20 out of every paycheck.

Foreclosures and short sales will continue to prosper in 2013, as the deal extended the 2007 Mortgage Forgiveness Debt Relief Act, which allows homeowners who experience a debt reduction through mortgage principal forgiveness or a short sale are exempt from being taxed on the forgiven amount.

Yippie! Our "Free houses for everyone!" motto lives on.

Wall Street was enthralled by the deal, sending stocks rocketing to their biggest gains of the year (Money Daily expects this will be the largest one-day gain for stocks in 2013, so bookmark this page now!).

The major indices made back all of the losses they took in the final ten trading days of 2012, and then some in just the first trading day of the new year.

At issue is how long the rally will last, whether this is just a one-day wonder or whether stocks can still remain the darlings of investors with 4th quarter earnings season on the horizon and the new congress (and same old president) having to deal with sequestration, deficit reduction and a debt limit increase within 60 days.

Since, according to Treasury Secretary Tim Geithner, we've already exceeded the debt limit, the feds will be borrowing from government pension funds to fund the government in the interim. A huge fight is ensured in February, as congress, if the latest fiasco offers any clue, won't want to deal with these issues until late in the game.

For now, though, roll with it. The Federal Reserve has the government's back, standing at the ready to print billions more in greenbacks at the hint of any troublesome developments.

Along with equities, expect everything else to keep getting pricier because there's really no easy way out of the monetary fix we're in. Next week, when life returns somewhat to normal, the angst will reemerge.

BTW: Money Daily was actually correct in predicting that everybody's taxes would go up under any kind of deal. They did. Check your paycheck in coming weeks for proof.

Dow 13,412.55, +308.41 (2.35%)
NASDAQ 3,112.26, +92.75 (3.07%)
S&P 500 1,462.42, +36.23 (2.54%)
NYSE Composite 8,631.18, +187.67 (2.22%)
NASDAQ Volume 2,071,100,625
NYSE Volume 4,634,567,000
Combined NYSE & NASDAQ Advance - Decline: 5798-863 (wOW!)
Combined NYSE & NASDAQ New highs - New lows: 679-21 (WOW! again)
WTI crude oil: 93.12, +1.30
Gold: 1,688.80, +13.00
Silver: 31.01, +0.78