Monday, January 6, 2014

As Bitter Cold Grips the Nation, Are Bears Clawing at Wall Street?

In three days, the rally which started on March 9, 2009, will be 59 months long, or, just a month shy of five years. That's a long enough time, one should believe, to make gains and take profits, so why is Wall Street worried about the declines of the first few sessions of 2014?

Are they worried? Maybe not. After all, the rally has seen only one 10% correction in those five years, so taking a little off the top of all-time highs might actually be a buying opportunity.

Last week, the excuse was low volume because all the participants were still on vacation. That doesn't fly, now that Monday started off the first full week for markets with equally low volume.

Next, the weather will be blamed, for everything. Just watch.

DOW 16,425.10, -44.89 (-0.27%)
NASDAQ 4,113.68, -18.23 (-0.44%)
S&P 1,826.77, -4.60 (-0.25%)
10-Yr Note 98.23, +0.96 (+0.98%) Yield: 2.96%
NASDAQ Volume 2.14 Bil
NYSE Volume 3.23 Bil
Combined NYSE & NASDAQ Advance - Decline: 2409-3326
Combined NYSE & NASDAQ New highs - New lows: 256-28
WTI crude oil: 93.43, -0.53
Gold: 1,238.00, -0.60
Silver: 20.10, -0.108
Corn: 427.75, +4.25

Friday, January 3, 2014

Reinhart and Rogoff Return: Debt Overhang, Financial Repression, Inflation and 'Saver's Tax'

Forgetting the day-to-day action of the stock market for a moment to focus on the really, really larger issue of macro-economics, comes this daft little piece of literature from the infamous duo of Carmen M. Reinhart and Kenneth S. Rogoff, prepared for the IMF, entitled, boorishly, "Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten," as though the central bankers of the world have forgotten their purposes in life, which would be, in no particular order:
1. Create and control all of the world's currency;
2. Put governments, businesses and individuals in debt;
3. Act like you're doing everyone a favor.

The authors of this [PDF] 21-page memo to the IMF bring up some old tomes familiar to those in the central banking business, which, more likely than not, they have NOT forgotten, not at all, such as financial repression, inflation (the central way central banks enrich themselves and impoverish the rest of the world), and outright debt defaults, this final theme one which the central banks will encourage sovereigns to pursue, in the best interest of everyone.

When one reads this little write-up and thinks it through, a couple of ideas immediately sprout forth from the pages.

One, inflation, the central banker's ally in its never-ending quest to eventually destroy the value of all currencies, has been latent and absent for some time, something the Fed head, Ben Bernanke, has openly whined about, and probably privately been chastised by his handlers in the global banking cartel. Inflation will have to make a big comeback, soon, lest the Fed and fellow central banks lose out on massive profits from the ongoing, recent economic crises gripping all nations.

They have the means to do so, and they certainly will, now that they've successfully re-capitalized their member banks (all the biggest ones, which were insolvent in 2008), through various means, the most obvious being the "taper," or winding down of their balance sheet, and higher interest rates, making money more expensive and credit all-but-impossible to get, which will have the desired result of pushing prices skyward while crashing the stock markets and making most citizens, now already poorer due to the stealth tax of low interest rates over a prolonged period, severe debt slaves.

The central banks, through their conduits in central sovereign governments, will also encourage defaults on massive amounts of debt, causing even more panic and a rush of cries from governments to individuals for the central banks to "save us," when in reality, it is they who are causing the pain.

While Reinhart and Rogoff are surely on the right track - though a bit opaque in their language - they are telegraphing the next moves for central bankers, who will, soon enough, declare that all their efforts have not succeeded in creating economic prosperity, so they will embark on, sorry, more austere measures. Governments will overtax and overburden their citizens (to some degree this is already occurring in Europe and Japan), but eventually - maybe in five years, or ten, or more - there will at last be a period of economic "normalcy" with interest rates on, say, 10-year notes at about 5%, inflation raging along at 5-8% (payback for the years of no or low inflation) and employment (with associated confiscatory taxes and fees) steadily declining for some countries, still high for others.

For most people and businesses, surviving this period will be tantamount to picking up nickels in front of a runaway steamroller: barely profitable, but highly risky. Many will be crushed; others wounded, the steamroller that is the Fed, the ECB, the IMF, World Bank and the BIS will grind nations, businesses and individuals into wretched little nothings.

That's the message from these authors, and, no, the central bankers of the world have not forgotten. It's coming. Not all at once, and not with any dramatic waving of wands or arms or hands, but slowly, gradually, eventually...



On the second day of trading for 2014, stocks took a bit of a roller-caster ride not dissimilar to those encountered during bear markets, but with a twist of day-trading irony, up at the open, crashing back to unchanged mid-day, rallying late before giving all of it back, the Dow being the only average on the positive side of the ledger today, the NASDAQ still down, the S&P marginally negative.

No, this was not a snap-back rally, and no, again, everybody's not waiting for Monday to "really" start trading. These first two sessions of 2014 were real and they count. Money is being pulled out of the market because money knows what's ahead, and it's seeking safe harbor.

Two things to note: the divergence of the a-d line from the headline close, and the continued low numbers of new highs and new lows.

Thanks for a week of hope and no change.

DOW 16,469.99, +28.64 (+0.17%)
NASDAQ 4,131.91, -11.16 (-0.27%)
S&P 1,831.37, -0.61 (-0.03%)
10-Yr Note 97.90, +0.60 (+0.62%) Yield: 3.00%
NASDAQ Volume 1.56 Bil
NYSE Volume 2.76 Bil
Combined NYSE & NASDAQ Advance - Decline: 3577-2094
Combined NYSE & NASDAQ New highs - New lows: 205-21
WTI crude oil: 93.96, -1.48
Gold: 1,238.60, +13.40
Silver: 20.21, +0.083
Corn: 423.50, +3.00

Thursday, January 2, 2014

January Barometer? Stocks Fall on First Trading Day of 2014

Blasphemy!

Stocks are only supposed to go higher, and the idea that we would begin the new year with a large selloff in stocks is a disturbing development to those in charge of propagandizing our glorious and ever-expanding economy.

The last time stocks fell on the first trading day of a new year was 2008, and, unless you've been living under a rock the past five years, you know what happened that year.

Not to say that a precipitous decline on the first trading day of the new year is a bad omen or a signal of a down year for stocks, but, referencing the January Effect, there's an 88% positive correlation between the direction of stocks for the entire month of January and the rest of the year, so, starting off with a sharp decline is not the best indication of general health, wealth and happiness going forward.

Obviously, it's too early to tell wither stocks go from here, but the apologists were out in force on CNBC, citing the fact that volume was on the very low side, something they neglected to inform upon during the late-year rally of the past two weeks, when trading volume was among the lowest of the year. Actually, Thursday's volume was higher than the average of the previous two weeks on a daily basis, and closer to normal than at any time since December 16.

With the major indices all up more than 25% in 2013, it would not come as a surprise to anyone should the market face some headwinds in 2014. It deserves mention that while the indices did very well, profits - as Larry Kudlow so often opines, "the mother's milk of stocks" - were higher by only six percent for the year, trailing paper gains by a margin wide enough to haul a bear trap through.

The bad news for holders of stock certificates (or the electrons which signify ownership in a brokerage account - not quite exactly the same thing) is that the selling was rather broad-based, as per the advance-decline line. The good news for the rest of us - those who own hard assets like land, gold, silver, machinery and vehicles - is that deflation seems to not want to go away. Gold and silver were higher, with silver shining at a nearly 4% gain on the day, and corn was down, so the price of corn in silver terms continues the trend lower, which, as our notes imply, according to Adam Smith, that is a deflationary trend of great significance. Crude oil also was off sharply.

Lower prices for all manner of consumer goods would be a definite boon for consumers and the general economy, though it's arguable that Wall Street and the international banking cartel headquartered at the Federal Reserve and World Bank might not be so pleased.

A sneaking suspicion that another grand transfer of wealth - on a scale beyond that of 2008-09 - is about to commence has been bandied about by skeptics of the recovery story. Maybe it's just a one-day trade and there's nothing more to it, though it needs to be pointed out that trades made today - especially those sales at a profit - won't necessarily be taxed for a very long time, around March 15, 2015, to be precise. Now, that could explain more about today's price action than just about any other macro or micro-economic factor present.

DOW 16,441.35, -135.31 (-0.82%)
NASDAQ 4,143.07, -33.52 (-0.80%)
S&P 1,831.98, -16.38 (-0.89%)
10-Yr Note 98.00, -0.03 (-0.03%) Yield: 2.99%
NASDAQ Volume 1.62 Bil
NYSE Volume 3.06 Bil
Combined NYSE & NASDAQ Advance - Decline: 1995-3764
Combined NYSE & NASDAQ New highs - New lows: 185-41
WTI crude oil: 95.44, -2.98
Gold: 1,225.20, +22.90
Silver: 20.13, +0.758
Corn: 420.50, -1.50

Tuesday, December 31, 2013

Year-end Thoughts of Inequality and Fear

2013 was quite a year for stock investors, the best, in fact, since 1997.

As the annum comes to an end, and since the mainstream and financial media simply cannot or will not provide useful information, a couple of random comments from a favorite, anonymous author:


"This is beyond depressing. Just what is it that the international banking cartel wants?

They already have the global reserve currency, central banksters in all but a few sovereign states, 90% of the world's most valuable art and sculpture, all the best yatchs, coastal land, and anything else that signifies wealth.

Ah, but they won't be satisfied until they have every nation on the planet so deeply in debt that they can never escape, all of it in completely fabricated, made-up-out-of-thin-air fiat money.

Fake money, produced by creating debt to bankers, is valuable, but real money, gold and silver, is supposed to be near-worthless. This is not reality; it is pure fantasy, conjured by central bankers and sold by the mindless trolls of Wall Street and the media. All that's left is farmland, and that's becoming scarce, and they will eventually come for that, or, drive its price so high none but the connected or extremely well-heeled can afford it.

A few years ago, I thought that a condition such as we have today (insolvent banks financing companies to all-time stock market highs while the real economy contracts - and forget the "official" data - the global economy has grwon over the past six years only in terms of inflation) would have fomented a revolution. However, I have become resigned to the idea that Americans have lost their spine, are completely disorganized and suffer greatly from the pervasive normalcy bias (thank you, CogDis) created by the bankers and politicians.

Nobody wants the party to end, and it certainly will not, unless the bankers want it to, and, at the time of their choosing, and not a momet before, they will surely end it, impoverishing even more of the population of the world.

We are ruled by the most pernicious, evil, conniving group of men and women to ever walk the planet... and, we like it.

So sad."


"Yesterday, I picked up a can of tuna, thinking I might include it in a macaroni salad later in the day. Looked at the label and saw the word "Pacific" on it. Put it back.

A few days ago, I was buying vegetables and began to wonder where they came from. I live in upstate NY, so all winter vegetables are obviously coming from warmer climates. Bought a few peppers, a red onion and some broccoli, and thought that one day, perhaps soon, people will be asking where the vegetables come from.

Personally, I'm pretty freaked out about Fukushima. It's been nearly three years, and radiation of varying amounts and forms are still spilling out. I am not a nuclear scientist, but I know enough to realize that Fukushima needs to be contained and that the ongoing silence and probable coverup by various governments and the media are a sure warning sign that all is NOT well.

Sure, maybe I'm paranoid, but once February comes, and I move to my land in South Carolina, I'm growing as much as I can, as fast as I can, getting off the grid, eating only non-GMO vegetables and meats from locally-raised animals or fish from local waters. Not that I'm afraid of dying - I'm 60, and I'm not - but I like to think I have maybe 15-30 good years left and surely don't want to die from cancer because I ate food that was contaminated and our beneficent government didn't have the common decency to inform us.

Fuku may or may not be an ELE, but, if it proves to be, I plan on trying like hell to outlive it, and, if I can't, taking a bankster or two along with me on my final ride into Hades.

Happy New Year. Fight back."


DOW 16,576.66, +72.37 (+0.44%)
NASDAQ 4,176.59, +22.39 (+0.54%)
S&P 1,848.36, +7.29 (+0.40%)
10-Yr Note 97.59, -0.45 (-0.46%) Yield: 3.04%
NASDAQ Volume 1.29 Bil
NYSE Volume 2.30 Bil
Combined NYSE & NASDAQ Advance - Decline: 3533-2201
Combined NYSE & NASDAQ New highs - New lows: 458-50
WTI crude oil: 98.42, -0.87
Gold: 1,202.30, -1.50
Silver: 19.37, -0.245
Corn: 422.00, -1.50

Monday, December 30, 2013

Stocks Barely Moved on Low Volume Trading

The last days of the year are usually among the more sluggish in terms of trading volume, and this year is certainly no exception to the rule. The major indices were flat almost all session long, with the Dow ending up slightly positive due to some small buying interest in the latter part of the day.

The commodities complex was taken down another notch, with oil, gold, silver and most of the edible varieties lower.

It is difficult to read much of anything into any market moves at this point of the year, though there seems to be an overriding sense of smug complacency after one of the best years for stocks on record.

With the limited activity these past few days, a January rally out of the gate would surprise nobody, so expect stocks to languish tomorrow, but get a huge boost on the 2nd of January, the first official trading day of 2014.

DOW 16,504.29, +25.88 (+0.16%)
NASDAQ 4,154.20, -2.40 (-0.06%)
S&P 1,841.07, -0.33 (-0.02%)
10-Yr Note 98.09, +0.82 (+0.85%) Yield: 2.97%
NASDAQ Volume 1.27 Bil
NYSE Volume 2.21 Bil
Combined NYSE & NASDAQ Advance - Decline: 2747-1966
Combined NYSE & NASDAQ New highs - New lows: 327-65
WTI crude oil: 99.29, -1.03
Gold: 1,203.80, -10.20
Silver: 19.62, -0.434
Corn: 423.50, -4.00