April's Fools: Stocks Continue Slide

As noted yesterday, something is not quite right about the US equity markets, and, whatever it is, it's starting to get the attention of the investor class, or, at least the computer algos that make the trades for the investor class.

Stocks continued the slide begun on Tuesday, which already sent the Dow Industrials to negative on the year and is threateneing to do the same for the NASDAQ and S&P 500.

Main among culprits leading to displeasure with stocks is the disconnect between the real economy and the Wall Street economy. In the real economy, people have to make choices, every day, hour by hour, minute by minute, and those choices, magnified by the 300+ million Americans become what are known as statistics. These statistics are not, and have not, jibed with the "recovery" mantra so popular with the government and Wall Street crowd, the one which claims everybody is working and nobody is hurting, when in fact, major segments of the population are suffering from the strains of a controlled and contrived economy that favors only a small slice of very wealthy individuals.

By age group, it goes something like this: teens and college-age individuals can't find decent jobs in many places, and, while college students, generally, as a group, are not working, teens and those in their early 20s are finding the pickings pretty slim and opportunity for advancement a challenge. Wages are low, the work is monotonous or dreary, the bosses are boot-licking jack-asses and the fringe benefits are - in general terms - nil, as in, NONE.

College students, once they graduate, if they are fortunate enough to find gainful employment, are often up to their ears in student loan debt, the average being $27,000 for a four-year degree. Many are not finding work that pays well enough to pay off the loans, rent an apartment and live like a normal human, so many of these twenty-somethings are habitating in parents' basements, smoking herb and playing video games in between their postings on insta-chat or twitter-face or whatever the app du jour happens to be.

Then there are those who used to be known as middle class, the folks in their 30s, 40s and early 50s, with or without kids at home or away or actually grown, drowned in debt from auto loans, living in underwater homes they cannot sell, and denied any upward mobility because they are linked to the national ball-and-chain known as a credit score. Some are doing OK, but the hours are long, the taxes never stop and keep going higher, and maintaining an outward appearance of peace and civility is becoming harder and harder.

Following after them are the soon-to-be-retired baby boomers, who hope that the stock market doesn't crash, who long to be soon done with working seemingly forever for less then they're worth, who are told to spend rather than save, and who don't see the point of saving since interest rates are so low, it's simply not worth the effort. Every day, something else annoys them a little bit. A higher price for a staple item, or, what's even more common, less of the same item for the same price. Or a new tax, a new law, some absurd thing like "freedom of religion" or "anti-this-or-that" legislation.

Seniors, those above and beyond the age of 65, are trying to hang on, if at all, with social security and a medical plan they neither appreciate nor understand. Co-pays keep rising, the quality of care declines. Their savings are stuck in neutral, thanks to the Fed's wisdom of keeping interest rates at zero for the past seven years. They're slowly bleeding to death from places they didn't know they had.

Amidst all of the age groups are sub-groups, like small business owners, buried under government paperwork and besiged by regulations and onerous taxes, and, what's become known as the FSA (Free S--t Army), the legions of welfare and disability sufferers who live beneath the general strata of society, seeking nothing more than a monthly rent check, food stamps, an Obamaphone and free health care. Those, and a flat-screen TV covers the extent of their pretty-much worthless lives.

Of course, we have the useful idiots who work for government and its myriad levels: teachers, police, paper-shufflers or all kinds, getting fat on the public expense account, oblivious to the plight of their fellow citizens in the real world economy. These types retire after 20 or 30 years of wasteful spending of taxpayer money, just to waste even more with their lavish pensions.

Striding atop all of these folks are the politicians and financiers of Washington and Wall Street, and state capitols and in municipal government positions.

And they're no longer laughing. At least some of them aren't. They know, that but for the grace of these hordes of individuals suffering under tax slavery and monetary repression, they and their ilk would be hung, burned or somehow disenfranchised. They can only hope to keep the game going another day, another week, another year, another election, because when it ends, they have no skills by which they could fend for themselves. They would be set adrift into a seas of unhappiness and misery, like the rest of the population.

If they're not worried, they should be, because this system is ripping and tearing at the seams, because it is unsustainable. There's only so much fraud and so much money out of thin air that can cover up the obvious defects.

But, give the oligarchs, politicians and financial whiz-kids their due. They've kept the system alive longer than anyone could have expected them to, all the time since March of 2009. Six years is not a long time, but 10 is, and 15 is longer, and there's little doubt there will be changes - for which we all are mutually unprepared - to come.

Dow 17,698.18, -77.94 (-0.44%)
S&P 500 2,059.69, -8.20 (-0.40%)
NASDAQ 4,880.23, -20.66 (-0.42%)

Stocks Erase Most of Monday's Gains; Dow Closes Down for the Quarter, Year

Well, that escalated quickly...

After booming on Monday, Tuesday's players must have had a case of buyer's regret, selling back 2/3rds of what was bid up just a day earlier, very odd, considering that the last trading day of the month usually ends up positive, due to "window dressing" by fund managers.

That did not happen today. In fact, the markets reversed course right at the open, but really accelerated the selling in the final hour of trading.

Reasons? The Fed? Mountains upon mountains of un-payable debt? Iran? Yellen? Bueller?

Tracking the foibles and fantasies of the Wall Street crowd on a daily basis can be a thankless task, especially under the conditions which are currently reigning over the market. Levels of uncertainty are reaching a fever pitch, between various conditions in Europe (Draghi's failing QE, Ukraine, Turkey tuning totalitarian, Greece), the Middle East (ISIS, Syria, Iran) or the troubles bourn at home in the US, ranging from gay upset in Indiana, crumbing infrastructure, fracking drillers facing bankruptcy, insolvency of college grads with high student debt loads (a catastrophe waiting to happen), chronic underemployment or a host of other nagging circumstances which don't add up to recovery after six years of waiting.

The good news is that the credit spigots are wide open, though many individuals, having been burned by financial institutions or failed investments in the past have been wary to expend much energy spending money they don't have on things they don't need. Credit card companies have been unduly generous of late, the number of 0% interest cards offered having swelled in recent months.

Additionally, auto loans and leases are becoming as easy to obtain as water from a faucet, but default rates are also rising as consumers continue to be tapped out on the road.

Gas prices are low, sings of Spring are everywhere, but somehow, the major indices - at least for today - are not feeling the love.

Something is wrong, but we're not going to wait around to find out what it is. Anyone who hasn't divorced his/herself, at least in some part, from the credit-debt-tax-cycle-slave-system is missing the proverbial boat, which may sail off into the horizon at any time.

Americans, especially older ones, are becoming more detached from the system as the system disappoints and disillusions many who have played and paid and are seeing their paltry incomes stagnate and savings threatened by seven years of a low-interest regime engineered by the Federal Reserve.

And, with markets closed on Friday, who exactly will be able to react to the March non-farm payroll data? At least tomorrow, ADP will issue their March jobs report, which mirrors the NFP report to a degree.

Making matters worse, the Dow Industrials closed the quarter lower than at the start of the year, the S&P and NASDAQ posting fractional gains (less than one percent) for the quarter and the year so far.

So much to ponder and so little time. Tax day is April 15. What fun!

Dow 17,776.12, -200.19 (-1.11%)
S&P 500 2,067.89, -18.35 (-0.88%)
NASDAQ 4,900.88, -46.56 (-0.94%)

Everything Is Coming Up Roses...If You Live on Wall Street

Today's Markets:

Dow 17,976.31, +263.65 (1.49%)
S&P 500 2,086.24, +25.22 (1.22%)
NASDAQ 4,947.44, +56.22 (1.15%)

The results of trading today in New York (and just about everywhere else in the world) show that if a trend gets started for no good reason, people will follow along blindly.

There's no good reason for stocks to go up like they did today, especially in the face of weak economic data in the US and in many countries around the world. However, this is the normal conclusion to the debasing of currencies. If money is free to obtain, then it is not regarded as anything of value.

Worse, when markets and morals are manipulated (see gold and silver, primarily) or goosed by computer algorithms which actually do the bulk of the trading, this is what happens.

Should one take the time to research the companies that are being traded these days to higher and higher valuations, one may find an odd, but, nevertheless, disturbing trend among them: that earnings per share are being led higher by stock buybacks, which reduce the number of shares outstanding, so that the same, or even lower, earnings result in the same or higher, EPS. Or, one might discover that many of these same companies' earnings are actually falling, yet, in a complete break with logic and core investing principles, investors are willing to pay more per share for them.

This kind of trading, based on nothing but vapidness and the delusion of crowds, was once thought to be able to continue only for a short while, because, as investors discovered the reality of assets without any basis in reality, they would bail out, sell, and cause a wicked market correction or crash. That hasn't happened in six years of this kind of activity.

While the future is unknown, it can be assumed that whatever is guiding stocks to new high after new high will some day end. The trick is getting the timing right. For most, that would be impossible. For some it will be dumb luck, but, for the many, they will be stuck with stocks without any value.

On Friday, the BLS will release the non-farm payroll report for March, and everyone will happily accept the fiction that 250, 000 - 300,000 net new jobs were created during the month, or, failing that, some excuse, like "weather" will be invented, but stocks will soar to new highs again.

Some things, you can bank on them.

Stocks Finish Friday with Gains, but Down More Than Two Percent for the Week

Stocks finished up for the day, but down for the week, with the Dow Industrials retracing all of its gains from the prior week, losing 414.99 points, a 2.29% decline.

The S&P 500 lost 47.08 points, 2.23%, roughly the same as the Dow. Both indices are trading below their 50-day simple moving average.

The NASDAQ had the best gains of the past two days, but still finished the week down 135.20 points, and 2.69%. It is still hovering just above the 50-DMA.

Other than the third revision to 4th quarter GDP, there was little in the way of economic news on the session, which made for a dull time, except for the final thirty minutes, in which most of the gains were made. The revision was not revised at all, finalizing the fourth quarter GDP at 2.2% and the year at a squeamish 2.42%, not much to write home about or encourage rate hike hawks on the Fed.

There was a notable lack of volume in the final session of the week. With two trading days left in March, the focus will be on the Monday and Tuesday sessions, to see if the quarter can end positively. While the NASDAQ is clearly in the green for the year, the Dow and S&P are about even. Small losses on either or both days could tip them into the red.

If you held gold or silver for the week, you're way ahead of the stock-picking crowd.

Dow 17,712.66, +34.43 (0.19%)
S&P 500 2,061.02, +4.87 (0.24%)
NASDAQ 4,891.22, +27.86 (0.57%)

Individual Investors Should Not Be Confused About Volatility and Market Noise

Famously, John Pierpont (J.P.) Morgan, financier, banker, philanthropist and art collector who dominated corporate finance and industrial consolidation, when asked what the market would do, wistfully answered, "It will fluctuate," and that is the kind of sage advice by which individual investors should be guided.

Markets, whether they be stocks, bonds, commodities or baseball cards are continually in a condition of fluctuation, buffeted about by popular opinion, spin doctors, general sentiment, analyst opinions and the prevailing economic conditions of the time, and this time, like any other, is subject to the same market forces.

Volatility in markets generally is of benefit only to a small, elite group of active traders who are rabid in their pursuit of true value propositions and correct assumptions of price discovery. While the current regime of Fed-induced interest rate and bubble-manic equity markets might be confusing to some, they need not be to the astute, patient and prudent individual investor.

Today's events were dominated by turmoil in the Arabian peninsula - specifically, the fall of order in Yemen and subsequent armed invasion by the Saudis and Egyptians - which first sent stocks down, then up, then down again, etc., and the price of oil up, and only up. However, these knee-jerk reactions are meaningless in the larger scheme of things. A two-dollar rise in the price of WTI crude oil isn't going to affect the purchasing habits of millions of motorists, just as a one or two percent move in major averages like the Dow Jones Industrials or S&P 500 will influence investment decisions.

Military action today will likely be replaced by peace tomorrow, or, at some later date, and prices and markets will return to some semblance of normalcy. Enthusiastic journalists and commentators on CNBC and/or Bloomberg TV might have panic in their voice and fear in their eyes, but they are largely for entertainment purposes only and should never be considered when actual money and investment decisions are at hand.

In a world far away and long ago, that being prior to televised financial nonsense and noise, stocks were relatively calm and decent places in which to park excess cash. Today's monumental stupidity caused by too many people paying attention to talking heads on television and exacerbated by headline-scanning algorithms employed by HFT firms makes for markets that are irrational in the short term and less-than-reliable on a short-term basis, but, when viewed from a six-month or longer perspective, all the bumps and grinds of fast money (and yes, that is a swipe at CNBC's show by the same name) get smoothed out and wrung dry of volatility.

Unless and until there is a major market-moving event like the liquidity and solvency melt-down in 2008 and 2009, or the housing boom and bust that preceded it and extended beyond it, markets will behave in somewhat of a normal fashion. Looking at stocks over the past six years, starting with the bottom in March 2009, they've done nothing but perform brilliantly, and anyone who had simply bought and held the major indices correctly would have handsome profits today.

Oil and other commodities have behaved rather radically over the same time period, but what can be said about some may be applied to all. They are more volatile and subject to price swings. And, when one considers currency - because, honestly, parking all your cash in a single currency could be a bad idea - diversity is the key, though anyone considering a safe play might want to take a serious look at gold, and an even deeper peerage into the value of silver.

Both of the popular precious metals are really nothing more than alternative currencies, and, though they may not be quite as liquid as a stock of $100 bills, they also bear no counter-party risk and have been relatively stable over the near term, residing mostly near bottoms. That both gold and silver are bouncing around low levels is worthy of further consideration, because, beyond being currency, they can also be collateral and they may even offer some gain in terms of rising price. At the worst, either metal may suffer a small decline from current levels of maybe 10-15%, but in no way will they ever be worthless.

They are useful hedges and alternative currencies and not nearly enough investors and individuals have taken advantage of their purposefulness, though the fact that they are tightly held may be a part of their charm.

Overall, days like today and weeks and months in which one has to be subject to the whims and fantasies of speculators, newscasters, pundits, analysts and fools, aren't worth wasting one's time upon. It's far easier to make a few strident choices and be done with it. Life is indeed too short to worry about money, or even about the value of it. The world today seems preoccupied with it, though it should be remembered that it is only a means to an end, and not the end itself.

Dow 17,678.23, -40.31 (-0.23%)
S&P 500 2,056.15, -4.90 (-0.24%)
NASDAQ 4,863.36, -13.16 (-0.27%)

P.S.: If you did absolutely nothing today, i.e., made no trades, you out-performed 70% of the day-or-day-to-day-traders. Give yourself a pat on the back.