I know there are a good number of globe-trotting and Aussie readers of this blog, so from time to time, I like to point out sites I think are useful, entertaining or informative. Then there are the days when certain sites are brought to my attention that satisfy all three criteria.
That's what I call a red-letter site, though you may just want to bookmark it. Today's site in question is known as Rave About It, and its functionality comes in a variety of forms.
One can browse or search for businesses, and one can also write reviews of businesses once signing in for an account. The search function is particularly strong, as it allows for searching for specifics in addition to by locale.
For instance, a search for party hire Sydney returns a wealth of results - everything from Funeral Caterers to Turquoise Turkish Cuisine, and, well, everything in between and beyond.
The site is extremely functional in that you can find a business, read other users' reviews and decide for yourself if it is worth your hard-earned money or whether you should keep on looking. The additional ability to review and rate (with 1-5 check marks) any business you might frequent or happen upon is a great benefit, not only for you, but for anyone who might be searching for a similar business, store, service or experience.
So, when traveling Down Under, don't forget to Rave About It.
Friday, February 20, 2009
Stocks Hammered Again, But It Should Have Been Worse
After falling below key support on Tuesday, the Dow Jones Industrials, and US equities in general, were pounded down as fears of bank nationalization and unease over the future of the economy and even the welfare of the nation itself scared investors out of many positions.
While the technical damage on the Dow was serious, it should have been even worse, if not for subversive afternoon intervention by the usual corrupt cast of characters - the PPT, Goldman Sachs, Morgan Stanley, et. al. - which brought the Dow all the way back from a 215 point loss at 1:15 pm to a small gain at 10 minutes until 3:00.
At the heart of the matter was the fates of Bank of America and Citigroup, which suffered another day of crippling losses. At the low point of the day, Bank of America (BAC) was down 1.40, to 2.53, while Citigroup (C) fell 90 cents, to 1.51. On a basis unadjusted for splits, both were at all-time lows. Bank of America closed the day down a mere 14 cents, at 3.79, though Citigroup was not so fortunate, finishing 22% lower, down 56 cents at 1.95.
BofA CEO Ken Lewis was also subpoenaed by NY Attorney General Andrew Cuomo over the bonuses paid to Merrill Lynch executives in 2008. BofA took over Merrill under government supervision during the meltdown last fall.
It was only a hastily-prepared White House statement pledging a commitment to keeping banks in private hands that kept the markets from an all-out rout.
There's little doubt that the some kind of solution must be found for the ailing banking session, and soon. The public, however, has seen enough of bailouts and handouts, so the newly-installed Obama administration and Democratically-led congress must tread lightly.
Truth of the matter is that two of the nation's largest banks (and probably more) will have to be managed by the government, or somebody sober, for some time, in order to restore even a hint of credibility in the markets. There is also a distinct possibility that the government may not have sufficient power to prevent a complete collapse of an over-leveraged banking sector. In some ways, it is nothing more than the market hurrying the bankers' self-inflicted collapse.
Yesterday's rant by Rick Santelli at the Chicago Board of Trade (Feb. 19, 2009) on CNBC created no small sensation across the blogosphere. One of his more poignant remarks was his this gem:
Santelli was even called on the carpet by NBC's Brian Williams and Matt Lauer (NBC owns CNBC) on this morning's Today Show and put across the screen from his network nemesis, Steve Leisman, a puppy lapdog for the industrial-military-communications junta which rules the government and the nation. Santelli certainly has never backed down from a fight, and his performance on the Today Show was remarkably well-reasoned and honest with obvious middle-class populist overtones.
And now the censorship begins. While attempting to retrieve the code, I was initially met with a mention that the above-referenced video was no longer available on Youtube.com, a not-very-subtle attempt by the media elite to silence the truth and keep the public under wraps.. Don't be surprised if Santelli isn't quietly relieved of his duties soon or, more likely, continually marginalized. Nevertheless, as mentioned yesterday, the genie is well out of the bottle and the public outrage at just about anything and everything concerning government and big business will not be contained much longer.
Dow 7,365.67, -100.28 (1.34%)
NASDAQ 1,441.23, -1.59 (0.11%)
S&P 500 770.05, -8.89 (1.14%)
NYSE Compos 4,804.51, -76.65 (1.57%)
Internals were as expected, favoring declining issues over advancing ones, 4906-1775. New lows dominated new highs, expanding to new levels with 1119 new lows and a mere 25 new highs. The massive number of stocks hitting 52-week lows (1 in 6) have only been seen on days of extreme market turmoil, and today surely fit that bill. Volume was the highest in weeks, owing to options expirations, market intervention, usual trading and high levels of outright open executions on the sell side.
NYSE Volume 2,117,367,000
NASDAQ Volume 2,560,465,000
Commodities remained on their own track. Oil for March delivery closed down 54 cents, at $38.94 on the final day of that contract. Gold topped the $1000 mark, gaining $25.70, to $1,002.20. In concert, silver gained 56 cents, to $14.49. All food-related commodity futures were markedly lower.
The CPI figures released this morning demonstrated an increase of 0.4%, the first gain since July, 2008, though it is more than likely only an aberration in the continuing deflationary spiral.
Stocks should have finished much lower than they did today, which only means that they will fall further at some future date. Considering the level of angst in the market, in the public, and the ineptitude of government and corporate business to constrain the wealth destruction leads one to believe that the market is well into the third and most crucial phase of the bear market, total, utter, final capitulation.
All of the major indices finished the week with substantial losses. The Dow registered its lowest close since October 27, 1997.
For the week, the Dow was down a whopping 485 points, and closing in on a 50% decline from the October 2007 all-time high. The NASDAQ lost 93 points; the S&P surrendered 57; the NYSE Composite was down 402 points.
It's not a pretty picture and not likely to improve soon.
While the technical damage on the Dow was serious, it should have been even worse, if not for subversive afternoon intervention by the usual corrupt cast of characters - the PPT, Goldman Sachs, Morgan Stanley, et. al. - which brought the Dow all the way back from a 215 point loss at 1:15 pm to a small gain at 10 minutes until 3:00.
At the heart of the matter was the fates of Bank of America and Citigroup, which suffered another day of crippling losses. At the low point of the day, Bank of America (BAC) was down 1.40, to 2.53, while Citigroup (C) fell 90 cents, to 1.51. On a basis unadjusted for splits, both were at all-time lows. Bank of America closed the day down a mere 14 cents, at 3.79, though Citigroup was not so fortunate, finishing 22% lower, down 56 cents at 1.95.
BofA CEO Ken Lewis was also subpoenaed by NY Attorney General Andrew Cuomo over the bonuses paid to Merrill Lynch executives in 2008. BofA took over Merrill under government supervision during the meltdown last fall.
It was only a hastily-prepared White House statement pledging a commitment to keeping banks in private hands that kept the markets from an all-out rout.
There's little doubt that the some kind of solution must be found for the ailing banking session, and soon. The public, however, has seen enough of bailouts and handouts, so the newly-installed Obama administration and Democratically-led congress must tread lightly.
Truth of the matter is that two of the nation's largest banks (and probably more) will have to be managed by the government, or somebody sober, for some time, in order to restore even a hint of credibility in the markets. There is also a distinct possibility that the government may not have sufficient power to prevent a complete collapse of an over-leveraged banking sector. In some ways, it is nothing more than the market hurrying the bankers' self-inflicted collapse.
Yesterday's rant by Rick Santelli at the Chicago Board of Trade (Feb. 19, 2009) on CNBC created no small sensation across the blogosphere. One of his more poignant remarks was his this gem:
You know, they’re pretty much of the notion that you can’t buy your way into prosperity, and if the multiplier that all of these Washington economists are selling us is over… that we never have to worry about the economy again. The government should spend a trillion dollars an hour because we’ll get 1.5 trillion back.
Santelli was even called on the carpet by NBC's Brian Williams and Matt Lauer (NBC owns CNBC) on this morning's Today Show and put across the screen from his network nemesis, Steve Leisman, a puppy lapdog for the industrial-military-communications junta which rules the government and the nation. Santelli certainly has never backed down from a fight, and his performance on the Today Show was remarkably well-reasoned and honest with obvious middle-class populist overtones.
And now the censorship begins. While attempting to retrieve the code, I was initially met with a mention that the above-referenced video was no longer available on Youtube.com, a not-very-subtle attempt by the media elite to silence the truth and keep the public under wraps.. Don't be surprised if Santelli isn't quietly relieved of his duties soon or, more likely, continually marginalized. Nevertheless, as mentioned yesterday, the genie is well out of the bottle and the public outrage at just about anything and everything concerning government and big business will not be contained much longer.
Dow 7,365.67, -100.28 (1.34%)
NASDAQ 1,441.23, -1.59 (0.11%)
S&P 500 770.05, -8.89 (1.14%)
NYSE Compos 4,804.51, -76.65 (1.57%)
Internals were as expected, favoring declining issues over advancing ones, 4906-1775. New lows dominated new highs, expanding to new levels with 1119 new lows and a mere 25 new highs. The massive number of stocks hitting 52-week lows (1 in 6) have only been seen on days of extreme market turmoil, and today surely fit that bill. Volume was the highest in weeks, owing to options expirations, market intervention, usual trading and high levels of outright open executions on the sell side.
NYSE Volume 2,117,367,000
NASDAQ Volume 2,560,465,000
Commodities remained on their own track. Oil for March delivery closed down 54 cents, at $38.94 on the final day of that contract. Gold topped the $1000 mark, gaining $25.70, to $1,002.20. In concert, silver gained 56 cents, to $14.49. All food-related commodity futures were markedly lower.
The CPI figures released this morning demonstrated an increase of 0.4%, the first gain since July, 2008, though it is more than likely only an aberration in the continuing deflationary spiral.
Stocks should have finished much lower than they did today, which only means that they will fall further at some future date. Considering the level of angst in the market, in the public, and the ineptitude of government and corporate business to constrain the wealth destruction leads one to believe that the market is well into the third and most crucial phase of the bear market, total, utter, final capitulation.
All of the major indices finished the week with substantial losses. The Dow registered its lowest close since October 27, 1997.
For the week, the Dow was down a whopping 485 points, and closing in on a 50% decline from the October 2007 all-time high. The NASDAQ lost 93 points; the S&P surrendered 57; the NYSE Composite was down 402 points.
It's not a pretty picture and not likely to improve soon.
Thursday, February 19, 2009
Panic Selling Crashes Stocks Through False Bottom
Yesterday's manipulated close above the false bottom at Dow 7552 could not hold, not even for a day, in the wake of unprecedented government handouts and institutional selling that nearly brought the major stock indices to their knees in the final hours of Thursday's session. The Dow Jones Industrials finished the day at their lowest level since October 9, 2002, prior, even to the start of the Iraq War.
The best the government interlopers (through their proxies at Goldman Sachs, Morgan Stanley, et. al.) could muster today was putting a good face on an unmitigated disaster. The game is over for Wall Street. A massive systemic collapse of global finance is palpable and seemingly inevitable.
With an opening pop, investors bought the Dow up about 60 points, but the market could not sustain the gains. By 10:30 the index was back into the red. After a brief, heartless rally, stocks cascaded lower with the Dow eventually falling below 7450. From 11:30 to the close, the the major indices were all under water. Selling was relentless, with the occasional covering of options positions, which close tomorrow. A line could be drawn diagonally across the tops. The slope of the bottoms was more severe.
Dow 7,465.95, -89.68 (1.19%)
NASDAQ 1,442.82, -25.15 (1.71%)
S&P 500 778.94, -9.48 (1.20%)
NYSE Compos 4,881.16, -43.38 (0.88%)
It was not the size of the losses that mattered much in this session, but the overall tenor and tone of trading. The level of desperation as a standard emotion continues to deepen, even daily. People are angry. The press, economists, and the public are all up in arms over the rapid-fire moves of the federal government. Most of the abuse is being heaped upon newly-elected President Obama, though much of the focus is rightfully on the US congress.
Unsurprisingly, the Dow components were a shambles, 20 down and 10 up, with most of the largest losses sustained by financials and tech, though the damage was truly broad-based. Paradoxically, the largest percentage gainer on the Dow was Home Depot, which gained 1.82%, up 0.36 to 20.16.
If you're seeking a good proxy for the Dow, look no further than JP Morgan Chase (JPM), which turned negative today just as the Dow was rolling over. The pride of Wall Street banking, JPM is probably overvalued by a factor of 5-10, since it is in largely the same boat as brethren Bank of America and Citigroup, all of whom are in the government's notorious gang of Systemically Significantly Failing Institutions under the Capital Purchase Program.
JP Morgan Chase dipped 0.91 to 20.60, a mere 4.23% loss, but it is joined at the hip to Bank of America (-0.64, 3.93, -14%) and Citigroup (-40, 2.51, -13.75).
The January Producer Price Index (PPI) registered its first gain in six months, edging up 0.8% over December. This shouldn't have come as much of a surprise, since retailers discounted heavily in December during one of the worst holiday shopping seasons in memory.
Inflation alarmists should also take a cold shower on this news, as much of the increase was due to slightly higher energy prices, and, of course, the figures are seasonally adjusted. Deflation continues to rule.
But the real story of the day was the final breakdown through the November 20 bottom on the Dow. The process will no doubt continue as the other indices approach and retest their lows. The markets are again in uncharted territory.
Friday's action most certainly will be among the most volatile of recent vintage. Thursday was only a prelude to the real wealth-cleansing that will occur over the coming days, weeks and months.
Internals did little to mask the carnage. Decliners swept by advancers, 4384-2129. New lows outnumbered new highs, 617-11. Volume was strong enough to suggest more selling as more participants become engaged in a race to the bottom.
NYSE Volume 1,485,501,000
NASDAQ Volume 2,036,313,000
Commodities exhibited perhaps the most random and directionless trade in decades. Oil priced $4.86 higher, to $39.48. Gold fell $1.70, to $976.50, while silver lost 36 cents, to $13.94. The metals cooled off what was, until today, a torrid rally. Beef and corn were up, pork and soybeans were down. Natural gas fell to a new seasonal low as at $4.11, as milder weather and conservation measures are keeping demand tamped down.
The level of unrest, not only on Wall Street but on Main Street and across the nation and around the world, cannot be underestimated. Cheats and scoundrels in government and business have opened the gates of hell with their wrong-headed policies over many years. Another of America's dates with destiny is fast approaching.
Brace yourself.
The best the government interlopers (through their proxies at Goldman Sachs, Morgan Stanley, et. al.) could muster today was putting a good face on an unmitigated disaster. The game is over for Wall Street. A massive systemic collapse of global finance is palpable and seemingly inevitable.
With an opening pop, investors bought the Dow up about 60 points, but the market could not sustain the gains. By 10:30 the index was back into the red. After a brief, heartless rally, stocks cascaded lower with the Dow eventually falling below 7450. From 11:30 to the close, the the major indices were all under water. Selling was relentless, with the occasional covering of options positions, which close tomorrow. A line could be drawn diagonally across the tops. The slope of the bottoms was more severe.
Dow 7,465.95, -89.68 (1.19%)
NASDAQ 1,442.82, -25.15 (1.71%)
S&P 500 778.94, -9.48 (1.20%)
NYSE Compos 4,881.16, -43.38 (0.88%)
It was not the size of the losses that mattered much in this session, but the overall tenor and tone of trading. The level of desperation as a standard emotion continues to deepen, even daily. People are angry. The press, economists, and the public are all up in arms over the rapid-fire moves of the federal government. Most of the abuse is being heaped upon newly-elected President Obama, though much of the focus is rightfully on the US congress.
Unsurprisingly, the Dow components were a shambles, 20 down and 10 up, with most of the largest losses sustained by financials and tech, though the damage was truly broad-based. Paradoxically, the largest percentage gainer on the Dow was Home Depot, which gained 1.82%, up 0.36 to 20.16.
If you're seeking a good proxy for the Dow, look no further than JP Morgan Chase (JPM), which turned negative today just as the Dow was rolling over. The pride of Wall Street banking, JPM is probably overvalued by a factor of 5-10, since it is in largely the same boat as brethren Bank of America and Citigroup, all of whom are in the government's notorious gang of Systemically Significantly Failing Institutions under the Capital Purchase Program.
JP Morgan Chase dipped 0.91 to 20.60, a mere 4.23% loss, but it is joined at the hip to Bank of America (-0.64, 3.93, -14%) and Citigroup (-40, 2.51, -13.75).
The January Producer Price Index (PPI) registered its first gain in six months, edging up 0.8% over December. This shouldn't have come as much of a surprise, since retailers discounted heavily in December during one of the worst holiday shopping seasons in memory.
Inflation alarmists should also take a cold shower on this news, as much of the increase was due to slightly higher energy prices, and, of course, the figures are seasonally adjusted. Deflation continues to rule.
But the real story of the day was the final breakdown through the November 20 bottom on the Dow. The process will no doubt continue as the other indices approach and retest their lows. The markets are again in uncharted territory.
Friday's action most certainly will be among the most volatile of recent vintage. Thursday was only a prelude to the real wealth-cleansing that will occur over the coming days, weeks and months.
Internals did little to mask the carnage. Decliners swept by advancers, 4384-2129. New lows outnumbered new highs, 617-11. Volume was strong enough to suggest more selling as more participants become engaged in a race to the bottom.
NYSE Volume 1,485,501,000
NASDAQ Volume 2,036,313,000
Commodities exhibited perhaps the most random and directionless trade in decades. Oil priced $4.86 higher, to $39.48. Gold fell $1.70, to $976.50, while silver lost 36 cents, to $13.94. The metals cooled off what was, until today, a torrid rally. Beef and corn were up, pork and soybeans were down. Natural gas fell to a new seasonal low as at $4.11, as milder weather and conservation measures are keeping demand tamped down.
The level of unrest, not only on Wall Street but on Main Street and across the nation and around the world, cannot be underestimated. Cheats and scoundrels in government and business have opened the gates of hell with their wrong-headed policies over many years. Another of America's dates with destiny is fast approaching.
Brace yourself.
Will Congress Ever Represent the Public Interest?
Now that President Obama and the Dem-controlled congress has spent somewhere in the neighborhood of $1.5 Trillion over the past few weeks, one wonders from where - especially in the stimulus bill - the new jobs are going to come.
There is plenty of money being thrown at Wall Street banking interests, state governments, food stamps, unemployment insurance, mortgage defaults and public works projects, but nowhere is found a single tax credit or incentive for small businesses to actually hire anyone.
It seems that since small business creates more than 90% of private sector jobs, congress would have included something along those lines, maybe even (my idea here) swapping unemployment benefits for actual work. My concept would put to work people collecting unemployment, by requiring them to find a job in a relevant industry. The business would only have to pay a small amount for, say, six months, like 1/4 to 1/3 of the amount the recipient is receiving in benefits, while the worker is integrated into the business.
Not only would the worker have a job guaranteed after his benefits run out, the government would pick up much of the tab during the initial period. Of course, the business would have to keep all current employees on the job (to avoid cheating the system) during this period and guarantee employment to the worker for at least another 6 months to a year.
Well, that's just one idea, but another would be for congress to actually get up to speed with the rest of us by running some public surveys available in 360 degree software or other such programs.
Imagine congress sending an email to constituents, or putting a public interest poll on their taxpayer-funded web sites with real choices for real legislative options.
Maybe it's just too much to ask of our special interest congress. But, it is nice to think about.
There is plenty of money being thrown at Wall Street banking interests, state governments, food stamps, unemployment insurance, mortgage defaults and public works projects, but nowhere is found a single tax credit or incentive for small businesses to actually hire anyone.
It seems that since small business creates more than 90% of private sector jobs, congress would have included something along those lines, maybe even (my idea here) swapping unemployment benefits for actual work. My concept would put to work people collecting unemployment, by requiring them to find a job in a relevant industry. The business would only have to pay a small amount for, say, six months, like 1/4 to 1/3 of the amount the recipient is receiving in benefits, while the worker is integrated into the business.
Not only would the worker have a job guaranteed after his benefits run out, the government would pick up much of the tab during the initial period. Of course, the business would have to keep all current employees on the job (to avoid cheating the system) during this period and guarantee employment to the worker for at least another 6 months to a year.
Well, that's just one idea, but another would be for congress to actually get up to speed with the rest of us by running some public surveys available in 360 degree software or other such programs.
Imagine congress sending an email to constituents, or putting a public interest poll on their taxpayer-funded web sites with real choices for real legislative options.
Maybe it's just too much to ask of our special interest congress. But, it is nice to think about.
Wednesday, February 18, 2009
Dow Players Paint Tape, Confirm (False) Double Bottom
Stocks began the day with small gains and hit the day's highs shortly after noon, though they were clearly under pressure all day.
While the Dow flirted with the flat line in a very narrow range through almost all of the session, sentiment was severely split. Neither bears nor bulls could muster enough energy to move stocks clearly in one direction or the other, though the NYSE Composite and the S&P 500 spent the majority of the day in the red.
The Dow stayed on a somewhat even keel all session long, even though there were never more than 13 of the 30 stocks inside the index showing gains. Chief among the gainers was Wal-Mart (WMT), which finished the day with the biggest gain of any Dow component, up 1.76, to an even 50.00.
Others which aided the index from falling were Intel (INTC), McDonald's (MCD), IBM (IBM), Proctor Gamble (PG) and ExxonMobil (XOM). The case could be made for selective boosting of the Dow by insiders, as any number of players did not want to witness another bout of selling after yesterday's classic double bottom formation.
One had to look only so far as ExxonMobile vs. Chevron (CHV). While the former was higher all day, the latter was underwater throughout the afternoon except for the final half hour, despite the two of them being in essentially the same business. Chevron finished with a 6 cent loss, while ExxonMobil ended the day with a 66 cent gain.
At the end of the day, the bulls prevailed, lifting the Dow by the smallest of margins, notably on late day buying of just three stocks: Chevron (CHV), American Express (AXP) and Merck (MRK), each of which spent almost the entire day lower before a burst of buying in the final half hour of trading.
Dow 7,555.63, +3.03 (0.04%)
NASDAQ 1,467.97, -2.69 (0.18%)
S&P 500 788.42, -0.75 (0.10%)
NYSE Composite 4,924.54, -14.57 (0.29%)
Adding to the argument of the bears is the fact that only the Dow finished in positive territory, further evidence of insider trading in a concerted effort to finish above the now double bottom at 7552.29 (Nov. 20) and 7552.60 (Feb. 17). Their argument is hardly convincing when considering the various factors affecting market movement.
The internals were decidedly bearish, to a point at which one must question today's headline results. Advancing issues were buried under a deluge of losers, with decliners ahead, 4396-2120, a better-than 2-1 margin. Further, the gap between new lows and new highs expanded greatly, with 661 new lows to just 22 new highs. Those two indicators strongly suggest that today's finish on the Dow was a serious case of painting the tape so that the bullish cause can now call a bottom, right there at 7552 and change.
Nothing could be further from the truth. First, the Dow's gains were insignificant. Second, the other three indices finished lower and have not come close to retesting their respective lows. Third, the new highs/new lows and advance/decline lines were of a nature more like a day in which the Dow would have lost 100-200 points. Fourth, Most of the Dow stocks were lower, with the final tally at 12 up and 18 down, with the biggest volume stocks sharply lower.
NYSE Volume 1,433,404,000
NASDAQ Volume 2,060,209,000
Two largest volume movers by far - Citigroup (C) and Bank of America (BAC) were down substantially all day long with Bank of America suffering a 6.73% loss, down 0.33, to $4.57. Citigroup was down 4.90%, losing 0.15, to 2.91.
There is a growing acceptance that those two - the largest banks in America - will have to undergo some form of government receivership, or, "nationalization" in a controlled divestiture or bankruptcy proceeding with the likely assistance of the FDIC, Treasury and the Federal Reserve.
Once again, commodity prices were mixed, though similar to Tuesday's action. The metals were all higher, while foodstuffs were markedly lower, as was oil, losing 31 cents, to $34.62. Gold galloped ahead by $10.70, to $978.20, while the rally in silver continued unabated, up another 28 cents, to $14.29.
Adding to the bear case were the four economic indicators, all showing signs of stress by registering numbers for January that were down and lower than expected. Housing starts fell to 466,000, from 560,000 in December. Building permits fell to 521,000, from 547,000 in the prior month. Capacity utilization continued in free fall, down to 72% form 73.3% a month earlier. So too, industrial production, falling by 1.8% on the heels of a 2.4% fall in December.
As far as a double bottom is concerned, the charts will confirm it because they do not lie, even though the results of today's trading are highly suspect. In the end, this will be seen only as a support/resistance level as another move lower is clearly in the cards.
The manipulators in the marketplace may get a temporary boost on false hopes, though it's just as likely that the markets will continue to deteriorate and today was only an effort mixed in with Friday's options expiration. The Dow could easily lose (or gain) 300-500 points be the end of the week. It could also meander along in a meaningless pattern for some time, but eventually, this bottom will be taken out, because it is a false one.
While the Dow flirted with the flat line in a very narrow range through almost all of the session, sentiment was severely split. Neither bears nor bulls could muster enough energy to move stocks clearly in one direction or the other, though the NYSE Composite and the S&P 500 spent the majority of the day in the red.
The Dow stayed on a somewhat even keel all session long, even though there were never more than 13 of the 30 stocks inside the index showing gains. Chief among the gainers was Wal-Mart (WMT), which finished the day with the biggest gain of any Dow component, up 1.76, to an even 50.00.
Others which aided the index from falling were Intel (INTC), McDonald's (MCD), IBM (IBM), Proctor Gamble (PG) and ExxonMobil (XOM). The case could be made for selective boosting of the Dow by insiders, as any number of players did not want to witness another bout of selling after yesterday's classic double bottom formation.
One had to look only so far as ExxonMobile vs. Chevron (CHV). While the former was higher all day, the latter was underwater throughout the afternoon except for the final half hour, despite the two of them being in essentially the same business. Chevron finished with a 6 cent loss, while ExxonMobil ended the day with a 66 cent gain.
At the end of the day, the bulls prevailed, lifting the Dow by the smallest of margins, notably on late day buying of just three stocks: Chevron (CHV), American Express (AXP) and Merck (MRK), each of which spent almost the entire day lower before a burst of buying in the final half hour of trading.
Dow 7,555.63, +3.03 (0.04%)
NASDAQ 1,467.97, -2.69 (0.18%)
S&P 500 788.42, -0.75 (0.10%)
NYSE Composite 4,924.54, -14.57 (0.29%)
Adding to the argument of the bears is the fact that only the Dow finished in positive territory, further evidence of insider trading in a concerted effort to finish above the now double bottom at 7552.29 (Nov. 20) and 7552.60 (Feb. 17). Their argument is hardly convincing when considering the various factors affecting market movement.
The internals were decidedly bearish, to a point at which one must question today's headline results. Advancing issues were buried under a deluge of losers, with decliners ahead, 4396-2120, a better-than 2-1 margin. Further, the gap between new lows and new highs expanded greatly, with 661 new lows to just 22 new highs. Those two indicators strongly suggest that today's finish on the Dow was a serious case of painting the tape so that the bullish cause can now call a bottom, right there at 7552 and change.
Nothing could be further from the truth. First, the Dow's gains were insignificant. Second, the other three indices finished lower and have not come close to retesting their respective lows. Third, the new highs/new lows and advance/decline lines were of a nature more like a day in which the Dow would have lost 100-200 points. Fourth, Most of the Dow stocks were lower, with the final tally at 12 up and 18 down, with the biggest volume stocks sharply lower.
NYSE Volume 1,433,404,000
NASDAQ Volume 2,060,209,000
Two largest volume movers by far - Citigroup (C) and Bank of America (BAC) were down substantially all day long with Bank of America suffering a 6.73% loss, down 0.33, to $4.57. Citigroup was down 4.90%, losing 0.15, to 2.91.
There is a growing acceptance that those two - the largest banks in America - will have to undergo some form of government receivership, or, "nationalization" in a controlled divestiture or bankruptcy proceeding with the likely assistance of the FDIC, Treasury and the Federal Reserve.
Once again, commodity prices were mixed, though similar to Tuesday's action. The metals were all higher, while foodstuffs were markedly lower, as was oil, losing 31 cents, to $34.62. Gold galloped ahead by $10.70, to $978.20, while the rally in silver continued unabated, up another 28 cents, to $14.29.
Adding to the bear case were the four economic indicators, all showing signs of stress by registering numbers for January that were down and lower than expected. Housing starts fell to 466,000, from 560,000 in December. Building permits fell to 521,000, from 547,000 in the prior month. Capacity utilization continued in free fall, down to 72% form 73.3% a month earlier. So too, industrial production, falling by 1.8% on the heels of a 2.4% fall in December.
As far as a double bottom is concerned, the charts will confirm it because they do not lie, even though the results of today's trading are highly suspect. In the end, this will be seen only as a support/resistance level as another move lower is clearly in the cards.
The manipulators in the marketplace may get a temporary boost on false hopes, though it's just as likely that the markets will continue to deteriorate and today was only an effort mixed in with Friday's options expiration. The Dow could easily lose (or gain) 300-500 points be the end of the week. It could also meander along in a meaningless pattern for some time, but eventually, this bottom will be taken out, because it is a false one.
Tuesday, February 17, 2009
What's in Your Wallet? Not Much, Says Capital One
I'm not sure, but probably more than 30% of all adult Americans have a Capital One credit card. I used to have two, before the company - kicking and screaming all the way - finally acceded to my demands to combine them into one.
While checking some financial sector stocks earlier today, I noticed that Capital One (COF) has taken a hellacious beating this year. Since closing at 31.05 on December 31, 2008, the stock has received a 67% haircut, down to 10.13. Capital One is the nation's largest purveyor of individual credit cards, but also dabbles in making new car loans, home equity loans and other, similarly risky endeavors.
The company is notably the subprime credit lender of nearly last resort to consumers who have tapped out their home equity and are now piling up credit card debt, typically at rates of 15% and higher, and now it appears that many are not paying back their lender, as Forbes reports:
Apparently, when it comes to paying their debt to Capital One, there really isn't much left in people's wallets, much to the displeasure of COF shareholders, as the company wiped out all of the year's gains in 2008 with a 4th quarter loss of $3.74 per share.
Much of Wall Street was sharing the pain with Capital One, as stocks took yet another drubbing, with the Dow falling to within a whisker of the November 20 low (7552.29), closing right at the lows of the day, 7552.60.
This sets the stage for an interesting remainder of the week, as today's close is undeniably a double bottom on the Dow. The other majors are close to their previous lows, but not quite there.
Dow 7,552.60, -297.81 (3.79%)
NASDAQ 1,470.66, -63.70 (4.15%)
S&P 500 789.17, -37.67 (4.56%)
NYSE Compos 4,939.12, -267.64 (5.14%)
The NASDAQ has another 154 points to go, the S&P would have to shed another 36 points and the NYSE Composite is still 288 above its November 20 close. Obviously, the bank and financial stocks of the Dow have weighed heavily of late.
Bank of America (BAC) crossed the $5 Rubicon again, closing at 4.90, down 67 cents. CitiGroup (C) continued down the rat hole, losing 43 cents, to 3.06. even venerable JP Morgan Chase (JPM) lost 3.04, to 21.65. Each of those company's shares were down by more than 12% on the session.
Market internals verified just how rough a day it was for US stocks. Declining issues absolutely slammed advancers, 5803-775. New lows expanded to 555, versus a paltry 18 new highs. Volume was outstanding, signaling more selling dead ahead. Only one issue of the Dow 30 closed with a gain: Wal-Mart (WMT). For more on that, see below.
NYSE Volume 1,590,783,000
NASDAQ Volume 2,395,914,000
Commodities were split down the middle. Anything consumable, from unleaded gas to pork bellies, was down, while the precious metals shot to short term highs. Crude oil for March delivery were down $2.58, to $34.93; natural gas was off 22 cents, to $4.22, and wholesale unleaded gas closed at $1.11, begging the question as to how most consumers are paying roughly $2.00 at the pump. Look for another record quarter for the oil companies.
Gold gained $25.30, to $967.50. Silver broke 39 cents higher, to $14.01. With deflation clearly the issue, one has to wonder how far the bulls will push the metals. They are, after all, investment hedges - primarily against inflation - but commodities at heart.
Investors find themselves at a critical crossroad at the open tomorrow. Considering that only the Dow has retraced its low, it should be a pretty safe bet that all indices are heading lower in the short term.
Want to know why Wal-Mart was the only Dow component to show a gain on the day? Watch the video below:
While checking some financial sector stocks earlier today, I noticed that Capital One (COF) has taken a hellacious beating this year. Since closing at 31.05 on December 31, 2008, the stock has received a 67% haircut, down to 10.13. Capital One is the nation's largest purveyor of individual credit cards, but also dabbles in making new car loans, home equity loans and other, similarly risky endeavors.
The company is notably the subprime credit lender of nearly last resort to consumers who have tapped out their home equity and are now piling up credit card debt, typically at rates of 15% and higher, and now it appears that many are not paying back their lender, as Forbes reports:
The company also reported its annual net charge-off rate a measure of credit default, for U.S. credit cards rose to 7.82% in January from 7.71% in December.
Apparently, when it comes to paying their debt to Capital One, there really isn't much left in people's wallets, much to the displeasure of COF shareholders, as the company wiped out all of the year's gains in 2008 with a 4th quarter loss of $3.74 per share.
Much of Wall Street was sharing the pain with Capital One, as stocks took yet another drubbing, with the Dow falling to within a whisker of the November 20 low (7552.29), closing right at the lows of the day, 7552.60.
This sets the stage for an interesting remainder of the week, as today's close is undeniably a double bottom on the Dow. The other majors are close to their previous lows, but not quite there.
Dow 7,552.60, -297.81 (3.79%)
NASDAQ 1,470.66, -63.70 (4.15%)
S&P 500 789.17, -37.67 (4.56%)
NYSE Compos 4,939.12, -267.64 (5.14%)
The NASDAQ has another 154 points to go, the S&P would have to shed another 36 points and the NYSE Composite is still 288 above its November 20 close. Obviously, the bank and financial stocks of the Dow have weighed heavily of late.
Bank of America (BAC) crossed the $5 Rubicon again, closing at 4.90, down 67 cents. CitiGroup (C) continued down the rat hole, losing 43 cents, to 3.06. even venerable JP Morgan Chase (JPM) lost 3.04, to 21.65. Each of those company's shares were down by more than 12% on the session.
Market internals verified just how rough a day it was for US stocks. Declining issues absolutely slammed advancers, 5803-775. New lows expanded to 555, versus a paltry 18 new highs. Volume was outstanding, signaling more selling dead ahead. Only one issue of the Dow 30 closed with a gain: Wal-Mart (WMT). For more on that, see below.
NYSE Volume 1,590,783,000
NASDAQ Volume 2,395,914,000
Commodities were split down the middle. Anything consumable, from unleaded gas to pork bellies, was down, while the precious metals shot to short term highs. Crude oil for March delivery were down $2.58, to $34.93; natural gas was off 22 cents, to $4.22, and wholesale unleaded gas closed at $1.11, begging the question as to how most consumers are paying roughly $2.00 at the pump. Look for another record quarter for the oil companies.
Gold gained $25.30, to $967.50. Silver broke 39 cents higher, to $14.01. With deflation clearly the issue, one has to wonder how far the bulls will push the metals. They are, after all, investment hedges - primarily against inflation - but commodities at heart.
Investors find themselves at a critical crossroad at the open tomorrow. Considering that only the Dow has retraced its low, it should be a pretty safe bet that all indices are heading lower in the short term.
Want to know why Wal-Mart was the only Dow component to show a gain on the day? Watch the video below:
Friday, February 13, 2009
Got Stocks? Too Bad!
Some days are better than others, and Friday, being the end of the work week - despite being the unlucky 13th - is generally better than most. Wall Streeters, however, must be leaving their posts with sullen feelings, as the stock market took another one on the chin.
For those keeping score, the major indices - Dow, NASDAQ, S&P 500 and NYSE Composite - all fell this week, marking the 5th weekly loss against just one weekly gain - last week.
For the week, the Dow lost 420 points. The NASDAQ was down 57. The S&P finished 41 points lower and the NYSE Composite was down 268 points. Not very pretty, and not likely to improve much in the coming weeks and months. While some may point out that stocks are generally cheap (some are, most aren't, and besides, it's a question of value, which is relative), and the market is oversold, there is still unfinished business on the downside.
It's likely that investors are scared silly of making significant investments at this point in time, being that the political condition is as unstable and the nation's finances. The banks continue to be at the center of the storm, and every day that passes that they are not brought under the bright light of scrutiny is a day lost to the US economy, and to the global financial system as well.
As many as eight major banking outfits are technically insolvent - and you don't have to ask me, just try Nobel Prize winner Paul Krugman:
So there you have it. The malinvestments made by these banks have to be written down and if the banks don't have sufficient assets to cover their losses, like any other business, they will be forced to liquidate or reorganize. That is their fate, and the sooner it gets done, the better.
Dow 7,850.41, -82.35 (1.04%)
NASDAQ 1,534.36, -7.35 (0.48%)
S&P 500 826.84, -8.35 (1.00%)
NYSE Compos 5,206.76, -49.69 (0.95%)
Despite a near total absence of corporate news or economic reports (the University of Michigan reading of consumer confidence fell in at 56.2, down from 61.2 last month), the public is clearly displeased and traders are feeling the pinch.
On the day, internals were in line with headline numbers, as declining issues outdid advancers, 3629-2862, an expansion of the margin. New lows continued their 15+ month-long streak of beating out new highs, 201-19. Volume was on the light side, for a Friday.
NYSE Volume 1,241,224,000
NASDAQ Volume 2,022,550,000
Commodities were all over the map, with crude oil more than 10% higher, up $3.53, to $37.51. Gold gave back some recent gains, losing $7.00, to $942.20, though silver continued to rise, up another 12 cents, to $13.63, currently above our preferred buying range.
As mentioned previous in posts past, the eventual unwind to Dow 7550 might take six days or six months. We don't know for sure - nobody does - but we're certain that it will happen. The eventual fall will likely be tied to some event, such as the shuttering of Bank of America or some other plausible, but still shocking, news.
As I have personally been out of the market for about four months, including not even playing any options, the time seems to be coming for first a downdraft, and then a possible short-term buying opportunity. As sure as the Dow will test 7550, it will also either bounce off there, establishing a long-sought-after bottom, or it will go even lower. I am of the opinion that the latter is more likely, with 6600 as a final resting place, though I have heard some analysts saying the Industrials could eventually hit the 4000 range.
It's all speculation, so keep your powder dry.
For those keeping score, the major indices - Dow, NASDAQ, S&P 500 and NYSE Composite - all fell this week, marking the 5th weekly loss against just one weekly gain - last week.
For the week, the Dow lost 420 points. The NASDAQ was down 57. The S&P finished 41 points lower and the NYSE Composite was down 268 points. Not very pretty, and not likely to improve much in the coming weeks and months. While some may point out that stocks are generally cheap (some are, most aren't, and besides, it's a question of value, which is relative), and the market is oversold, there is still unfinished business on the downside.
It's likely that investors are scared silly of making significant investments at this point in time, being that the political condition is as unstable and the nation's finances. The banks continue to be at the center of the storm, and every day that passes that they are not brought under the bright light of scrutiny is a day lost to the US economy, and to the global financial system as well.
As many as eight major banking outfits are technically insolvent - and you don't have to ask me, just try Nobel Prize winner Paul Krugman:
The problem is not toxic assets. The problem is that financial institutions have lost a lot of money and many of the big ones, if they are not actually insolvent, are very close.
So there you have it. The malinvestments made by these banks have to be written down and if the banks don't have sufficient assets to cover their losses, like any other business, they will be forced to liquidate or reorganize. That is their fate, and the sooner it gets done, the better.
Dow 7,850.41, -82.35 (1.04%)
NASDAQ 1,534.36, -7.35 (0.48%)
S&P 500 826.84, -8.35 (1.00%)
NYSE Compos 5,206.76, -49.69 (0.95%)
Despite a near total absence of corporate news or economic reports (the University of Michigan reading of consumer confidence fell in at 56.2, down from 61.2 last month), the public is clearly displeased and traders are feeling the pinch.
On the day, internals were in line with headline numbers, as declining issues outdid advancers, 3629-2862, an expansion of the margin. New lows continued their 15+ month-long streak of beating out new highs, 201-19. Volume was on the light side, for a Friday.
NYSE Volume 1,241,224,000
NASDAQ Volume 2,022,550,000
Commodities were all over the map, with crude oil more than 10% higher, up $3.53, to $37.51. Gold gave back some recent gains, losing $7.00, to $942.20, though silver continued to rise, up another 12 cents, to $13.63, currently above our preferred buying range.
As mentioned previous in posts past, the eventual unwind to Dow 7550 might take six days or six months. We don't know for sure - nobody does - but we're certain that it will happen. The eventual fall will likely be tied to some event, such as the shuttering of Bank of America or some other plausible, but still shocking, news.
As I have personally been out of the market for about four months, including not even playing any options, the time seems to be coming for first a downdraft, and then a possible short-term buying opportunity. As sure as the Dow will test 7550, it will also either bounce off there, establishing a long-sought-after bottom, or it will go even lower. I am of the opinion that the latter is more likely, with 6600 as a final resting place, though I have heard some analysts saying the Industrials could eventually hit the 4000 range.
It's all speculation, so keep your powder dry.
Thursday, February 12, 2009
The Dangers of Fraudulent Behavior
Throughout most of the Thursday session, markets were substantially lower for no good reason other than that stocks are still overvalued and too risky right now for the majority of investors.
Right at 3:00 pm, however, it was as though Moses had parted the Red Sea and the enslaved people were freed. The Dow had just broken below 7700 for the first time since November 21, but it would not stay down long. (see image at right)
Like Rocky rising from the canvas, the Dow Jones Industrials staged somewhat of a "miracle" recovery, finishing at 7932.76, easily the best level of the day and a solid 240 points higher in just the last hour of trading.
Hallelujah! Reuters is giving credit to the Obama administration for the rally, citing his sketchy plans to help homeowners.
The real headline - instead of Reuters' tag: S&P and NASDAQ rise after mortgage plan news - should have been "stocks higher as day-trading Wall Street wheedlers cover their shorts."
My headline is probably closer to the truth. Hilary Kramer (left), a frequent guest on PBS "Nightly Business Report" said, during her appearance on the February 11 show, that her most profitable trades of late were short term buys, which she would be out of in less than "48 hours." If Wall Street professionals are day-trading (which is trading, not investing) then what does that say of US equity markets?It says quite a bit, but clearly expresses an understanding that they are no place for actual long-term investments. Today points up what many people suspect. That Wall Street is becoming even more of an inside game than ever before. The bankers who testified to congress yesterday didn't reveal anything about what or how they were doing internally. Traders won't normally tell either, though one must respect Ms. Kramer's candid behavior on a national financial show.
In any case, we should all be used to substantial bear market rallies appearing out of nowhere for no reason. Today was such a case. In days ahead, expect the losses to resume because hitting 7700 and bouncing off it is not a retest of the November 20 lows - not even close.
It may take six months or six days, but those bottoms must be tested, and they will. No significant bottom has occurred in this market and for good reason: we haven't seen the worst of this recession yet.
Dow 7,932.76, -6.77 (0.09%)
NASDAQ 1,541.71, +11.21 (0.73%)
S&P 500 835.19, +1.45 (0.17%)
NYSE Composite 5,256.45, +3.77 (0.07%)
Faced with a market such as this, individual traders must use their own judgment. The smartest among us are out completely, having moved into the safety of money markets and, in my case, heavily into silver (Since silver broke through 13.50 yesterday, I am temporarily out, awaiting the next buying dip.).
If you must be in play, Kramer's advice is a gem of unusual clarity. In and out is the only way to play.
On the day, there were some interesting economic numbers released, including initial estimates of retail sales for January, which tallied a 1% increase over December, which, in itself, is somewhat of a shocker. In other words, people bought more after the holidays (January) than before or during them (December). Of course, the US Census Bureau's numbers are "adjusted for seasonal variation and holiday and trading-day differences, but not for price changes..."
Well, that's a mouthful upon which I won't bite. Never mind that "Total sales for the November 2008 through January 2009 period were down 9.5 percent (±0.5%) from the same period a year ago."
New unemployment claims were significantly higher, at 623,000, which alone could have accounted for the 200+ point drop on the Dow, that is, until manic buying took hold.
Our trusty internal indicators told a vastly different story. There were more declining issues than advancing, 3319-3050. New lows were 321, compared to just 19 new highs. Volume was quite high, especially on the NASDAQ, not unusual considering the overall volatility.
NYSE Volume 1,480,256,000
NASDAQ Volume 2,470,079,000
Commodities, less prone to manipulation and political head fakes acted more rationally. Oil fell $1.96, to $33.98, its lowest level since mid-December.
Gold's rapid rally stalled slightly, gaining $4.70, to $949.20, a gain much smaller than those of the past few days. Silver dipped a penny, to $3.51.
Congress was still diddling around with the banking fix and the stimulus package, though those two major pieces of legislation/regulation are quickly becoming back burner issues. Stocks are supposed to rise and fall on fundamentals, earnings, profit, not politics, though that is what currently seems to be moving markets. It's a condition which cannot last long before becoming a very unhealthy environment.
Wednesday, February 11, 2009
Wall Street Still Waiting on Washington
Markets were mildly optimistic on Wednesday, awaiting word from Washington on the proposed $800 billion stimulus bill in Senate-House negotiations, which appeared close to a deal.
Having investors focus on anything other than issues regarding US banking interests was likely preferable, following yesterday's massive sell-off on the heels of Treasury Secretary Timothy Geithner's sketchy bank plan announcement.
Following the initial shock, players in the financial field are beginning to flesh out possible scenarios, each of them fraught with peril as economists delve into the unknown. Preeminent are the individual balance sheets and books of the banks in question, primarily bank of America and Citigroup, the two which seem to be most at risk, though the books of Wells Fargo, JP Morgan Chase and others will surely require the close scrutiny of government fixers before any steps toward a working solution are attempted.
Like an alcoholic with serious addiction issues the major money center banks have not yet taken the serious step of actually disclosing the size of their losses and may never do so, publicly, as the sheer size of the numbers would panic most ordinary people. It's essential to any kind of recovery that the banks confess their shortfalls to the government, so that an appropriate solution can be delivered.
As for the bank plan being devised at Treasury and the Fed, there is some agreement, that, considering the broad outlines, banks will be merged and/or downsized in coming months.
Trading in very narrow ranges, all of the major indices finished on the upside, though only marginally. Much of the trade was tied to hope for quick passage of the stimulus bill or recovery from yesterday's drama. As for a dead cat bounce, today's action barely merited notice, though most traders seemed relieved that the markets didn't devolve into indiscriminate selling.
Dow 7,939.53, +50.65 (0.64%)
NASDAQ 1,530.50, +5.77 (0.38%)
S&P 500 833.74, +6.58 (0.80%)
NYSE Composite 5,252.65, +37.94 (0.73%)
Much of the bounce-back on the Dow was due to the financials, as Citigroup (C) and Bank of America (BAC) each rose by more than 7%, and JP Morgan, another Dow component, lifted to a 4% higher close.
Internally, the market sent a mixed message, one to which traders have become accustomed over the past 18 months. Advancing issues outnumbered decliners, 3669-2769, though new lows sailed past new lows, 232-14, increasing by both raw number and the overall divergence.
NYSE Volume 5,977,889,500
NASDAQ Volume 2,206,760,750
Crude futures took a severe hit after US inventories were reported to be close to 16-year highs. Oil for March delivery fell $1.61, to $35.94.
Gold finished with strong gains for the second straight day, as the flight to safety continues. Gold was up $30.50, to $944.50, with the magic $1000 mark clearly in sight. Silver also showed strong gains, picking up 39 cents to finish at $13.52 in New York.
In yet more good news for consumers, natural gas lost a penny and all food stock futures were lower. After Citigroup analysts downgraded supermarket chain operators Safeway (SWY) and Kroger (KR) on Tuesday, warning of a protracted "price war," shoppers should expect stable to lower prices on grocers' shelves over the near term.
Considering the dark cloud over the stock markets and the number of layoffs occurring in the past few months, cheaper food and fuel are providing the silver lining.
Having investors focus on anything other than issues regarding US banking interests was likely preferable, following yesterday's massive sell-off on the heels of Treasury Secretary Timothy Geithner's sketchy bank plan announcement.
Following the initial shock, players in the financial field are beginning to flesh out possible scenarios, each of them fraught with peril as economists delve into the unknown. Preeminent are the individual balance sheets and books of the banks in question, primarily bank of America and Citigroup, the two which seem to be most at risk, though the books of Wells Fargo, JP Morgan Chase and others will surely require the close scrutiny of government fixers before any steps toward a working solution are attempted.
Like an alcoholic with serious addiction issues the major money center banks have not yet taken the serious step of actually disclosing the size of their losses and may never do so, publicly, as the sheer size of the numbers would panic most ordinary people. It's essential to any kind of recovery that the banks confess their shortfalls to the government, so that an appropriate solution can be delivered.
As for the bank plan being devised at Treasury and the Fed, there is some agreement, that, considering the broad outlines, banks will be merged and/or downsized in coming months.
Trading in very narrow ranges, all of the major indices finished on the upside, though only marginally. Much of the trade was tied to hope for quick passage of the stimulus bill or recovery from yesterday's drama. As for a dead cat bounce, today's action barely merited notice, though most traders seemed relieved that the markets didn't devolve into indiscriminate selling.
Dow 7,939.53, +50.65 (0.64%)
NASDAQ 1,530.50, +5.77 (0.38%)
S&P 500 833.74, +6.58 (0.80%)
NYSE Composite 5,252.65, +37.94 (0.73%)
Much of the bounce-back on the Dow was due to the financials, as Citigroup (C) and Bank of America (BAC) each rose by more than 7%, and JP Morgan, another Dow component, lifted to a 4% higher close.
Internally, the market sent a mixed message, one to which traders have become accustomed over the past 18 months. Advancing issues outnumbered decliners, 3669-2769, though new lows sailed past new lows, 232-14, increasing by both raw number and the overall divergence.
NYSE Volume 5,977,889,500
NASDAQ Volume 2,206,760,750
Crude futures took a severe hit after US inventories were reported to be close to 16-year highs. Oil for March delivery fell $1.61, to $35.94.
Gold finished with strong gains for the second straight day, as the flight to safety continues. Gold was up $30.50, to $944.50, with the magic $1000 mark clearly in sight. Silver also showed strong gains, picking up 39 cents to finish at $13.52 in New York.
In yet more good news for consumers, natural gas lost a penny and all food stock futures were lower. After Citigroup analysts downgraded supermarket chain operators Safeway (SWY) and Kroger (KR) on Tuesday, warning of a protracted "price war," shoppers should expect stable to lower prices on grocers' shelves over the near term.
Considering the dark cloud over the stock markets and the number of layoffs occurring in the past few months, cheaper food and fuel are providing the silver lining.
Tuesday, February 10, 2009
Geithner's Wall Street Cram-Down
It was pretty evident that Wall Street didn't like what Treasury Secretary Timothy Geithner was telling them when he began outlining the details of TARP II, the $350 billion Obama administration's side of the original $700 billion plan approved in October of 2008.
Stocks were already trading lower when Geithner stepped to the mic, but they really tanked as he drilled out scant details of the government's plan. The Dow was down about 45 points when he started speaking at 11:00 am. By the time he was finished, just a half hour later, the blue chip index was off nearly 300. Matters proceeded to become materially worse from there. The Dow was down more than 400 points before a last-gasp rally trimmed the losses by about 40 points in the final 15 minutes.
Dow 7,888.88, -381.99 (4.62%)
NASDAQ 1,524.73, -66.83 (4.20%)
S&P 500 827.17, -42.72 (4.91%)
NYSE Composite 5,214.34, -265.54 (4.85%)
Some of the more vocal Wall Street banking crowd are complaining that Geithner's plan - which reportedly has provisions for the assumption of some of the banks' toxic assets by private investors - is short on specifics.
The truth of the matter is that it likely opens the banks in question to too much public scrutiny, as evidenced by the government's new web site, financialstability.gov.
For a glimpse of what's ahead for the Bailout Bunch, the site currently links to Treasury's own Emergency Economic Stabilization Act web site. drilling down just a page reveals, under "Systemically Significantly Failing Institutions" we find reams of info on Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, JP Morgan Chase, Wells Fargo & Co., Bank of New York Mellon, State Street, Merrill Lynch, AIG, plus Chrysler, General Motors and GMAC.
How appropriate and sweetly ironic that these banks and businesses are grouped under such a heading. Most, if not all, are already insolvent. Bloggers and economists should have a field day with all the fresh light shining on these cheaters, liars and scoundrels. There's a wealth of information there, much of it which will almost surely facilitate the demise of these failed firms.
Could the government actually be forcing the banks to confess to their excess and the extent of their failures? It sure looks that way, and, if so, it's a great step forward. Wall Street fails to see it that way, but, clue to the clueless, Wall Street isn't America and the fate of 300 million Americans is not inexorably tied to the ups and downs of the Dow Jones Industrials.
Main Street may finally be catching a break as the banks are forced to come clean, which means that a good number of them will be forced into bankruptcy and/or liquidation, the key step in ridding the market of malinvestments and failed institutions.
Could it be that Secretary Geithner, under the thumb of President Obama, has finally gotten religion and intends to actually correct the mess that he was already a party to? Could be. Obama's sincerity and forthrightness was on display just last night at his first press conference when he left the door a bit ajar in his response to a reporter's question about investigating former administration officials.
His response to a question about Senator Patrick Leahy's calling for a "truth commission" was decidedly grey-area, as the President said much to the affect that while he preferred to "look forward" he would not block investigative efforts. Between those comments and the Geithner cram-down on Wall Street, maybe real healing in America can begin.
This writer honestly hasn't felt this good about a serious market tumble since the dot-com bust, the key being Geithner's fairly obvious signal that the rules have changed and the hand-outs and free rides are now relics of the past.
Advancing issues were absolutely overwhelmed by decliners in the broadest selling since November. Losers led gainers, 5405-1145, a nearly 5-1 edge. New lows continued to strengthen ahead of new highs, 203-19. A major part of the story was volume, which was very strong, indicating that this bust was the real deal.
NYSE Volume 1,757,078,000
NASDAQ Volume 2,473,252,000
Financial stocks took a beating, especially the most egregious offenders. Bank of America (BAC) lost 1.33 to close at 5.56 (-19.30%). There was false hope recently as BofA rallied from below $4 to above $6, a level at which major funds could still participate. It now looks to fall below $5 again, signaling a continuance of the classic death spiral.
Ironically, this stock looks very much like Countrywide did in January of 2008, after Bank of America had assumed most of the company's assets. Countrywide eventually was fully assumed by Bank of America. Much of the same bad debt which killed that company are now crushing CEO Ken Lewis' company. Bank of America has been insolvent for quite some time and it will be interesting to watch the continuing saga of what was once America's largest banking interest.
Citigroup (C), another of the walking dead, was hammered 0.60, to 3.35 (-15.19). This company's future may be numbered in weeks rather than months.
Goldman Sachs (GS) was hard hit, dropping 7.49, to 90.40 (-7.65%). Morgan Stanley (MS)lost 2.82, to 20.79 (-11.95). JP Morgan Chase fell 2.66, to 24.62 (-9.75).
Commodities were mostly mixed with oil down substantially, losing 2.01, closing at $37.55, a three-week low. The metals were moving in the opposite directed, hurriedly. Gold shot up 21.40, to $914.20. Silver gained 30 cents, to 13.13.
The precious metals prices are signaling another flight to safety. Clearly, equities are not the place to be now, as they haven't been for the past 18 months, and they still won't be for some time even though today's decline could be interpreted as the beginning of the recovery. The dollar was up sharply against other currencies.
While our own corrupt bankers and wheedlers express themselves with outcries of fear and panic, smart money is on the greenback and gold, a combination that may not seem plausible at first, though it's better understood when seen in the light of a basic turnover of power. It's clear that the Obama administration is not going to tolerate much less than complete transparency. THAT is a very positive development.
Silver remains my #1 investment. On the other hand, opportunities may begin to emerge in black market tobacco and stinging race and sports fixers, the ultimate revenge play.
Today's losses were surely not the last, as the Dow closed at its lowest level since November 20 of last year and is also the first close since then below 7900. Wall Street is in serious jeopardy of breaking apart at the seams. Another precipitous move lower could be in the cards as the market must retest 7550 on the Dow, though that move actually seems a foregone conclusion after today.
It was a poor day for Wall Street, but a darned good one for the United States of America.
Stocks were already trading lower when Geithner stepped to the mic, but they really tanked as he drilled out scant details of the government's plan. The Dow was down about 45 points when he started speaking at 11:00 am. By the time he was finished, just a half hour later, the blue chip index was off nearly 300. Matters proceeded to become materially worse from there. The Dow was down more than 400 points before a last-gasp rally trimmed the losses by about 40 points in the final 15 minutes.
Dow 7,888.88, -381.99 (4.62%)
NASDAQ 1,524.73, -66.83 (4.20%)
S&P 500 827.17, -42.72 (4.91%)
NYSE Composite 5,214.34, -265.54 (4.85%)
Some of the more vocal Wall Street banking crowd are complaining that Geithner's plan - which reportedly has provisions for the assumption of some of the banks' toxic assets by private investors - is short on specifics.
The truth of the matter is that it likely opens the banks in question to too much public scrutiny, as evidenced by the government's new web site, financialstability.gov.
For a glimpse of what's ahead for the Bailout Bunch, the site currently links to Treasury's own Emergency Economic Stabilization Act web site. drilling down just a page reveals, under "Systemically Significantly Failing Institutions" we find reams of info on Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, JP Morgan Chase, Wells Fargo & Co., Bank of New York Mellon, State Street, Merrill Lynch, AIG, plus Chrysler, General Motors and GMAC.
How appropriate and sweetly ironic that these banks and businesses are grouped under such a heading. Most, if not all, are already insolvent. Bloggers and economists should have a field day with all the fresh light shining on these cheaters, liars and scoundrels. There's a wealth of information there, much of it which will almost surely facilitate the demise of these failed firms.
Could the government actually be forcing the banks to confess to their excess and the extent of their failures? It sure looks that way, and, if so, it's a great step forward. Wall Street fails to see it that way, but, clue to the clueless, Wall Street isn't America and the fate of 300 million Americans is not inexorably tied to the ups and downs of the Dow Jones Industrials.
Main Street may finally be catching a break as the banks are forced to come clean, which means that a good number of them will be forced into bankruptcy and/or liquidation, the key step in ridding the market of malinvestments and failed institutions.
Could it be that Secretary Geithner, under the thumb of President Obama, has finally gotten religion and intends to actually correct the mess that he was already a party to? Could be. Obama's sincerity and forthrightness was on display just last night at his first press conference when he left the door a bit ajar in his response to a reporter's question about investigating former administration officials.
His response to a question about Senator Patrick Leahy's calling for a "truth commission" was decidedly grey-area, as the President said much to the affect that while he preferred to "look forward" he would not block investigative efforts. Between those comments and the Geithner cram-down on Wall Street, maybe real healing in America can begin.
This writer honestly hasn't felt this good about a serious market tumble since the dot-com bust, the key being Geithner's fairly obvious signal that the rules have changed and the hand-outs and free rides are now relics of the past.
Advancing issues were absolutely overwhelmed by decliners in the broadest selling since November. Losers led gainers, 5405-1145, a nearly 5-1 edge. New lows continued to strengthen ahead of new highs, 203-19. A major part of the story was volume, which was very strong, indicating that this bust was the real deal.
NYSE Volume 1,757,078,000
NASDAQ Volume 2,473,252,000
Financial stocks took a beating, especially the most egregious offenders. Bank of America (BAC) lost 1.33 to close at 5.56 (-19.30%). There was false hope recently as BofA rallied from below $4 to above $6, a level at which major funds could still participate. It now looks to fall below $5 again, signaling a continuance of the classic death spiral.
Ironically, this stock looks very much like Countrywide did in January of 2008, after Bank of America had assumed most of the company's assets. Countrywide eventually was fully assumed by Bank of America. Much of the same bad debt which killed that company are now crushing CEO Ken Lewis' company. Bank of America has been insolvent for quite some time and it will be interesting to watch the continuing saga of what was once America's largest banking interest.
Citigroup (C), another of the walking dead, was hammered 0.60, to 3.35 (-15.19). This company's future may be numbered in weeks rather than months.
Goldman Sachs (GS) was hard hit, dropping 7.49, to 90.40 (-7.65%). Morgan Stanley (MS)lost 2.82, to 20.79 (-11.95). JP Morgan Chase fell 2.66, to 24.62 (-9.75).
Commodities were mostly mixed with oil down substantially, losing 2.01, closing at $37.55, a three-week low. The metals were moving in the opposite directed, hurriedly. Gold shot up 21.40, to $914.20. Silver gained 30 cents, to 13.13.
The precious metals prices are signaling another flight to safety. Clearly, equities are not the place to be now, as they haven't been for the past 18 months, and they still won't be for some time even though today's decline could be interpreted as the beginning of the recovery. The dollar was up sharply against other currencies.
While our own corrupt bankers and wheedlers express themselves with outcries of fear and panic, smart money is on the greenback and gold, a combination that may not seem plausible at first, though it's better understood when seen in the light of a basic turnover of power. It's clear that the Obama administration is not going to tolerate much less than complete transparency. THAT is a very positive development.
Silver remains my #1 investment. On the other hand, opportunities may begin to emerge in black market tobacco and stinging race and sports fixers, the ultimate revenge play.
Today's losses were surely not the last, as the Dow closed at its lowest level since November 20 of last year and is also the first close since then below 7900. Wall Street is in serious jeopardy of breaking apart at the seams. Another precipitous move lower could be in the cards as the market must retest 7550 on the Dow, though that move actually seems a foregone conclusion after today.
It was a poor day for Wall Street, but a darned good one for the United States of America.
Monday, February 9, 2009
Markets Flatline Awaiting Stimulus
Stocks traded in narrow ranges on the major indices Monday as investors awaited congressional delegations to reconcile differences in the Senate and House versions of the massive $800 billion government stimulus bill.
While Washington fiddles, Wall Street diddles, indeed. The Dow barely surpassed a 100-point full-session range. The S&P 500 never moved more than 7-points off of no change, finishing with a minimal gain of 1.29, joining the NYSE on the upside, while the Dow and NASDAQ ended lower.
Dow 8,270.95, -9.64 (0.12%)
NASDAQ 1,591.56, -0.15 (0.01%)
S&P 500 869.89, +1.29 (0.15%)
NYSE Composite 5,479.86, +4.58 (0.08%)
The imperfect storm included a lack of corporate reports, scarce economic news and a delay in the highly-anticipated "TARP II" bailout plan for major financial firms.
Lethargic conditions resulted in a severe lack of volume and volatility. Maybe everybody just needed a break from the steady salvo of bad news, inquisition and recrimination. Word is out that the global economy is quitting, the question is over haw bad it will become and whether any government plan can stem the tide of defaults, layoffs and deflation.
On the day, advancing and declining issues were virtually split, with advancers ahead, 3279-3221. New lows continued to outnumber new highs, 115-19. The volume figures, as mentioned, were rather anemic.
NYSE Volume 1,257,726,000
NASDAQ Volume 1,912,234,000
The major tracking commodities deflated as crude oil closed near its session lows at $39.56 per barrel, down 61 cents. Gold fell $21.50, to $892.80, with silver slipping 23 cents, ending at $12.83 the ounce in New York.
There was so little to report on today, even I am at a loss for words.
While Washington fiddles, Wall Street diddles, indeed. The Dow barely surpassed a 100-point full-session range. The S&P 500 never moved more than 7-points off of no change, finishing with a minimal gain of 1.29, joining the NYSE on the upside, while the Dow and NASDAQ ended lower.
Dow 8,270.95, -9.64 (0.12%)
NASDAQ 1,591.56, -0.15 (0.01%)
S&P 500 869.89, +1.29 (0.15%)
NYSE Composite 5,479.86, +4.58 (0.08%)
The imperfect storm included a lack of corporate reports, scarce economic news and a delay in the highly-anticipated "TARP II" bailout plan for major financial firms.
Lethargic conditions resulted in a severe lack of volume and volatility. Maybe everybody just needed a break from the steady salvo of bad news, inquisition and recrimination. Word is out that the global economy is quitting, the question is over haw bad it will become and whether any government plan can stem the tide of defaults, layoffs and deflation.
On the day, advancing and declining issues were virtually split, with advancers ahead, 3279-3221. New lows continued to outnumber new highs, 115-19. The volume figures, as mentioned, were rather anemic.
NYSE Volume 1,257,726,000
NASDAQ Volume 1,912,234,000
The major tracking commodities deflated as crude oil closed near its session lows at $39.56 per barrel, down 61 cents. Gold fell $21.50, to $892.80, with silver slipping 23 cents, ending at $12.83 the ounce in New York.
There was so little to report on today, even I am at a loss for words.
Friday, February 6, 2009
Bear Market Rally Like Crack Cocaine
2:35 pm : The stock market sports strong gains near session highs. Beaten down industry groups top the leader board -- homebuilding (+16%), diversified financial services (+14%), regional banks (+14%), diversified banks (+12%), auto parts and equipment makers (+12%).
The above quote is from briefing.com, noted as the markets approached the highs of the day on Friday. As I noted earlier today, the market has absolutely rejected the obvious, continuing stream of bad news, including January's horrific jobs numbers (-598,000), released prior to the market's opening bell by the Bureau of Labor Statistics (BLS).
So, is this "irrational exuberance?" A little of that. The mainstream-obviated financial press is attributing the rise in equities to anticipation of congress passing a stimulus bill, presumably by tonight. There's probably a little of that, too, but the truth probably lies somewhere between the PPT and the fact that Bank of America stock had fallen below $5.00 per share on Wednesday, and our great and glorious financial leaders could not stomach the thought that investment and pension funds would not - by charter - be able to throw more cash down that rat hole of a "bad bank." Throw in a teaspoon of short-covering and viola! Bear market rally.
Rallies like this, in the midst of a serious recession, are like crack cocaine: a great rush, but it doesn't last and the crash is difficult. We've all seen them before and, judging by past experience, this one is just a lot of noise, indicative of nothing in particular except for the assertion that investors can be herded more readily than cats.
Bank of America was the among the biggest winners of the day, gaining 31% at one point of the activities. The stock finished the session with a nifty 1.29 point gain, closing at 6.13, up 26.65%.
But take a gander at those industry groups leading the rally. Banks? Homebuilders? Auto Parts? Aren't these the same companies needing bailouts and TARPs? This was another in a series of well-orchestrated pumping by the "invisible hand" of government and financial firms afraid of losing their grip on the American psyche. Naturally, jacking the stock markets is only a temporary solution.
Another irony of our day is the news that many of the banks and institutions receiving TARP funds - now that severe restrictions have been placed upon them, like limits on executive compensation - banks are turning away from government largess and Bank of America's CEO, Ken Lewis (left), says his firm won't need any more.Is Lewis to be believed? Probably not. Bank of America is technically insolvent. Besides, his bank has already received $45 billion in direct funding, plus another $118 billion in government loan guarantees. Let's hope BofA doesn't need any more money.
Here's some more proof of the extent of insider meddling in today's (and every day's) trading. Look at how closely the indices tracked by percentage gain. Absolute lock-step. Unusually aligned.
Dow 8,280.59, +217.52 (2.70%)
NASDAQ 1,591.71, +45.47 (2.94%)
S&P 500 868.60, +22.75 (2.69%)
NYSE Composite 5,475.28, +149.27 (2.80%)
To say that today's gains are illusory or fantastical might be putting too fine a point on it, so I'll patiently wait until stocks on the Dow (of which every single one was higher today) revert to the norm at 8149, pulled down by the absolute weight and unshakable might of pure market dynamics. The Dow can only go so far for so long before retesting the lows set last November. How far and how long you ask? A few hundred points (maybe a top at 8600, though that's doubtful) and about another month at the outside. Sooner or later reality rears it's pretty head and investors head elsewhere, profits in hand.
On the day, advancing issues hammered decliners, by a heavy margin, 5137-1446. New lows remained atop new highs, 144-22. Volume, as it was yesterday, was strong, not surprising, considering how much money went into bidding up stocks that should have been going down.
NYSE Volume 1,611,600,000
NASDAQ Volume 2,429,589,000
Commodities continued under some pressure, which is normal. Oil futures finished a volatile session down $1.00, at $40.17. Gold barely budged, picking up 10 cents to $914.30. Silver's advance was the sharpest of all, up 41 cents, to a multi-month high of $13.16.
The stock indices all registered gains for the week, snapping four-week losing streaks and posting the first weekly gain of 2009. Direction is still down, though point-and-figure chartists will note a reversal here. Considering the depth of economic despair the country and globe is encountering, this doesn't seem to be much of a sustainable trend.
SPECIAL: Markets Off Course, Major Correction Coming
This is a special report on the unusual action in US equity markets this morning. Our usual recap will be posted around 5:00 today.
Last night, well after markets closed, News Corp. (NWSA) - the media conglomerate controlled by Rupert Murdoch - reported a loss of $6.4 billion in its most recent quarter.
This morning, paper and pulp producer Weyerhaeuser (WY) posted a 4th quarter loss of more than $1.21 billion, or $5.73 a share, from a loss of $63 million, or 30 cents a share, a year ago.
An hour prior to the opening bell, the Bureau of Labor Statistics reported job losses of 598,000 in January and a jump in the "official" unemployment rate to 7.6%.
So, naturally, at the open, the major US equity indices went straight UP. What's that you say? Doesn't make any sense?
Well, you're right. As I mentioned briefly yesterday, and the day before, and many times prior to that, US MARKETS ARE RIGGED.
As I write, I am watching stocks race towards the sky, with the Dow up 180 points, the NASDAQ higher by 33 and the S&P ahead by 17.
Speaking of the S&P, Standard & Poor's Index Services reports that it expects dividends for components of its S&P 500 Index to drop 13.3% this year. More bad news, right?
Stocks are higher, based on absolutely nothing but hype, not even hope! Zounds!
As a bonus, here's Peter Schiff on why the stimulus package is going to make things worse:
And...
- Secretary of State Thomas Jefferson
Anyhow, look for stocks to stop rallying on this semi-short squeeze and tank below 7500 in the near future. I'll be back later to report on how the rest of the day went.
Last night, well after markets closed, News Corp. (NWSA) - the media conglomerate controlled by Rupert Murdoch - reported a loss of $6.4 billion in its most recent quarter.
This morning, paper and pulp producer Weyerhaeuser (WY) posted a 4th quarter loss of more than $1.21 billion, or $5.73 a share, from a loss of $63 million, or 30 cents a share, a year ago.
An hour prior to the opening bell, the Bureau of Labor Statistics reported job losses of 598,000 in January and a jump in the "official" unemployment rate to 7.6%.
So, naturally, at the open, the major US equity indices went straight UP. What's that you say? Doesn't make any sense?
Well, you're right. As I mentioned briefly yesterday, and the day before, and many times prior to that, US MARKETS ARE RIGGED.
As I write, I am watching stocks race towards the sky, with the Dow up 180 points, the NASDAQ higher by 33 and the S&P ahead by 17.
Speaking of the S&P, Standard & Poor's Index Services reports that it expects dividends for components of its S&P 500 Index to drop 13.3% this year. More bad news, right?
Stocks are higher, based on absolutely nothing but hype, not even hope! Zounds!
As a bonus, here's Peter Schiff on why the stimulus package is going to make things worse:
And...
"If the American people ever allow the banks to control the issuance of their currency.. the banks and corporations that will grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered."
- Secretary of State Thomas Jefferson
Anyhow, look for stocks to stop rallying on this semi-short squeeze and tank below 7500 in the near future. I'll be back later to report on how the rest of the day went.
Thursday, February 5, 2009
Bad News Rally? Really?
Once the opening bell rang, investors knew what to do after seeing the latest round of initial unemployment claims coming in at a record number, 626,000. All of the major indices dropped right out of the gate, building losses until right around 10:30 am, with the usual suspects, banks and related financial firms, leading the way.
Adding to the early Thursday thumping was the 4th quarter report from Cisco (CSCO), along with a very disappointing outlook for Q1 of 2009.
Additionally, a slew of retailers reported same-store sales falling in the range of 15-25% in January. Overall, there wasn't much good news about.
But, then word hit the street that “mark-to-market” accounting rules might be suspended to provide additional relief to banks and financial institutions. In other words, banks would be able to hide bad debts deep in the bowels of their books. Fine. Dandy. More phony accounting should be just the elixir to pull the nation out of its deflationary tailspin.
I have a word for what the government has been doing and continues to do regarding the banks. It's called "manipulation."
Massaging the bank's books aren't going to magically make the bad paper go away. Toxic CDO and MBS are bad, plain and simple. Allowing the banks to put them into a tier of liabilities or assets that doesn't realistically reflect their market value only delays the eventual reckoning. It was the suggested "mark to model" accounting, by which the banks were able to conceal their liabilities in the gobbledegook of their accounting which was largely responsible for the entire mess to begin with. Now, the "change agents" in the federal government believe that a return to those failed and false standards will somehow turn the tide.
Rubbish. Absolute garbage and trash. The government has no silver bullet. The answer is to allow the market to function by bankrupting all of the major players (Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, et. al.) who are INSOLVENT. Instead, the government and Wall Street is conspiring to continue the rape of the American taxpayer by propping up these failed institutions. They are plotting nothing less than the destruction of the United States of America.
So, the market soars on the news. The Dow, in particular, turned a 110-point loss at 10:30 am to a 150-point gain just after noon. The other indices registered similar moves and finished at or near the highs of the day. Not surprisingly, the banking sector was up sharply.
Dow 8,063.07, +106.41 (1.34%)
NASDAQ 1,546.24, +31.19 (2.06%)
S&P 500 845.85, +13.62 (1.64%)
NYSE Composite 5,326.01, +83.26 (1.59%)
So, there you have it. Bad news almost all around, but because the feds offer easier accounting rules, everything is magically worth more today than yesterday. Not only is our government completely off the rails, they are taking all of the money with them through the corrupt, failed banking system. If Americans ever understand the truth rather than accepting the pablum spoon-fed to them daily by the equally-complicit mainstream media, there would be marches and sit-ins in Washington which would make the record crowds at Obama's inauguration look like a high-school picnic - that is, if the American people somehow rediscover their spines.
Of course, most of the American population has been placated by either poverty, the media, handouts (welfare and extended unemployment benefits) or a noxious combination of all three. Largely, the American public is a brain-dead, limp and nearly lifeless non-entity. They don't have a voice in their politics and those who actually understand what's happening are marginalized as kooks or conspirators. Our rights have been gradually stripped away (and not restored by the current administration) to the point at which we barely matter. Congress and the president do as they please. Wall Street openly steals billions of dollars. Americans pay their bills, struggle to make ends meet, try to get by, hundreds of thousands of Kentuckians are still in the dark and cold, recalling images of hurricane Katrina and the aftermath of New Orleans. Sick. Sick Sick.
Tracking the day's trends, advancing issues beat back losers, 4155-1308, but, new lows continued to hold a large edge over new highs, 288-12. Volume was very high, especially at the open (down) and into the close (flat) as the powers at work threw everything they had into the market to prevent the dissipation of the day's gains. The bull-bear struggle from 3:30 to 4:00 pm was monumental, even though the indices barely budged.
NYSE Volume 1,627,892,000
NASDAQ Volume 2,563,955,000
Commodity markets responded as would be expected. Oil rose by 85 cents, to $41.17. Gold was up $12.00, to $914.20; silver advanced another 28 cents, to $12.75.
Naturally, all the efforts of the pumpers and pimps of the market could not overcome the monumental resistance line set up at 8149 on the Dow... not even coming close. Friday morning will prove to be quite interesting. The Bureau of Labor Statistics releases their non-farms payroll report for January at 8:30 am. The consensus is for another loss of 525,000 jobs. ADP has already (on Wednesday) released their independent figure for January at -522,000 jobs for January. Whichever way the BLS decides to massage their figures will decide the line of the day's trade. Anything significantly over their "consensus" figure should cause a decline. Anything at or below the figure will trigger a monster rally. Either way, its the sucker trade of the week, or year, or... well, there have been so many sucker moves lately that it may just fall in line with the rest of them.
Suck it up, America. The oligarchs cannot be inconvenienced.
Adding to the early Thursday thumping was the 4th quarter report from Cisco (CSCO), along with a very disappointing outlook for Q1 of 2009.
Additionally, a slew of retailers reported same-store sales falling in the range of 15-25% in January. Overall, there wasn't much good news about.
But, then word hit the street that “mark-to-market” accounting rules might be suspended to provide additional relief to banks and financial institutions. In other words, banks would be able to hide bad debts deep in the bowels of their books. Fine. Dandy. More phony accounting should be just the elixir to pull the nation out of its deflationary tailspin.
I have a word for what the government has been doing and continues to do regarding the banks. It's called "manipulation."
Massaging the bank's books aren't going to magically make the bad paper go away. Toxic CDO and MBS are bad, plain and simple. Allowing the banks to put them into a tier of liabilities or assets that doesn't realistically reflect their market value only delays the eventual reckoning. It was the suggested "mark to model" accounting, by which the banks were able to conceal their liabilities in the gobbledegook of their accounting which was largely responsible for the entire mess to begin with. Now, the "change agents" in the federal government believe that a return to those failed and false standards will somehow turn the tide.
Rubbish. Absolute garbage and trash. The government has no silver bullet. The answer is to allow the market to function by bankrupting all of the major players (Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, et. al.) who are INSOLVENT. Instead, the government and Wall Street is conspiring to continue the rape of the American taxpayer by propping up these failed institutions. They are plotting nothing less than the destruction of the United States of America.
So, the market soars on the news. The Dow, in particular, turned a 110-point loss at 10:30 am to a 150-point gain just after noon. The other indices registered similar moves and finished at or near the highs of the day. Not surprisingly, the banking sector was up sharply.
Dow 8,063.07, +106.41 (1.34%)
NASDAQ 1,546.24, +31.19 (2.06%)
S&P 500 845.85, +13.62 (1.64%)
NYSE Composite 5,326.01, +83.26 (1.59%)
So, there you have it. Bad news almost all around, but because the feds offer easier accounting rules, everything is magically worth more today than yesterday. Not only is our government completely off the rails, they are taking all of the money with them through the corrupt, failed banking system. If Americans ever understand the truth rather than accepting the pablum spoon-fed to them daily by the equally-complicit mainstream media, there would be marches and sit-ins in Washington which would make the record crowds at Obama's inauguration look like a high-school picnic - that is, if the American people somehow rediscover their spines.
Of course, most of the American population has been placated by either poverty, the media, handouts (welfare and extended unemployment benefits) or a noxious combination of all three. Largely, the American public is a brain-dead, limp and nearly lifeless non-entity. They don't have a voice in their politics and those who actually understand what's happening are marginalized as kooks or conspirators. Our rights have been gradually stripped away (and not restored by the current administration) to the point at which we barely matter. Congress and the president do as they please. Wall Street openly steals billions of dollars. Americans pay their bills, struggle to make ends meet, try to get by, hundreds of thousands of Kentuckians are still in the dark and cold, recalling images of hurricane Katrina and the aftermath of New Orleans. Sick. Sick Sick.
Tracking the day's trends, advancing issues beat back losers, 4155-1308, but, new lows continued to hold a large edge over new highs, 288-12. Volume was very high, especially at the open (down) and into the close (flat) as the powers at work threw everything they had into the market to prevent the dissipation of the day's gains. The bull-bear struggle from 3:30 to 4:00 pm was monumental, even though the indices barely budged.
NYSE Volume 1,627,892,000
NASDAQ Volume 2,563,955,000
Commodity markets responded as would be expected. Oil rose by 85 cents, to $41.17. Gold was up $12.00, to $914.20; silver advanced another 28 cents, to $12.75.
Naturally, all the efforts of the pumpers and pimps of the market could not overcome the monumental resistance line set up at 8149 on the Dow... not even coming close. Friday morning will prove to be quite interesting. The Bureau of Labor Statistics releases their non-farms payroll report for January at 8:30 am. The consensus is for another loss of 525,000 jobs. ADP has already (on Wednesday) released their independent figure for January at -522,000 jobs for January. Whichever way the BLS decides to massage their figures will decide the line of the day's trade. Anything significantly over their "consensus" figure should cause a decline. Anything at or below the figure will trigger a monster rally. Either way, its the sucker trade of the week, or year, or... well, there have been so many sucker moves lately that it may just fall in line with the rest of them.
Suck it up, America. The oligarchs cannot be inconvenienced.
Wednesday, February 4, 2009
Bye, Bye, Bank of America
There was a rally underway on Wall Street, until, that is, around 10:30 am, when President Obama announced that executive pay for bankers whose institutions receive TARP funds would be capped at $500,000. That's when stocks peaked, eventually losing more than 200 points from top to bottom on the Dow, which was the worst affected of all indices.
Dow 7,956.66, -121.70 (1.51%)
NASDAQ 1,515.05, -1.25 (0.08%)
S&P 500 832.23, -6.28 (0.75%)
NYSE Composite 5,242.75, -25.27 (0.48%)
The blue chips were aided in their descent by 4th quarter earnings reports from Disney (DIS) and Kraft (KFT), in addition to Bank of America (BAC), which reportedly lost 12 investment bankers on the Obama announcement, jumping ship to join Deutsche Bank (DB), which has received no TARP funds nor money from their home, German government.
Among the three big losers on the Dow, Kraft posted a 72% earnings decline year-over-year, losing 9% on the day as traders punished the stock, sending it to 26.13, down 2.61 at the close. Disney suffered through a troubling fiscal first quarter, earning 45 cents a share in the quarter ended Dec. 27, compared with 63 cents a share, in the same quarter a year ago. Disney finished at 19.00, off 1.60, a 7.8% loss.
Bank of America was hit with massive selling, with more than 600 million shares changing hands, almost 4 times the average daily volume. shares fell to 4.60, a 17-year low, off 0.60, a decline of more than 11%. The number of shares trading is significant in that many funds, by charter, cannot maintain positions in stocks valued under $5 per share. The rout of the bank's backers should continue as long as the company's shares remain at depressed levels.
In truth, Bank of America should already have filed for bankruptcy protection as its operations have been underwater for quite some time. Continuing to shovel money into the bottomless pits of BofA and Citigroup, particularly, has been a mistake from the very start. No business is "too big to fail" and pouring taxpayer money into these obviously failed institutions is a monumental blunder on the part of the federal government, more likely to prolong and deepen the financial crisis than repair it.
A very astute rendering of the current economic malaise is offered by Ismael Hossein Zadeh, in "Too Big to Fail:" a Bailout Hoax at counterpunch.org. This article should be required reading for all of our elected federal officials, who, as a group, are poorly prepared to handle any kind of economy, especially one which is in dire straits.
Sadly, most of them will not read it or any other tract on economics, being that, for most of them, their major accomplishments involve using other people's money to land big-time government jobs. Of all the 650 or so congresspeople there is maybe a handful (10 to 20) who really have a grasp for economics of this scale. The rest simply are led by their noses by supposed government "experts" who dictate policy. There's little doubt that the worst enemy of the United States of America does not domicile in Afghan or Pakistani caves, but in tony residences around the Capitol. The lot of them and their predecessors has led America down this path of destruction since 1980 at least. Those currently holding office in congress will certainly finish the job in a smashing manner, impoverishing the nation in a manner never before seen.
As for the president who promised change, little has. Instead, he has surrounded himself with the very same people who are responsible for the whole mess. Yes, I voted for him, thinking he could turn around many of our mistakes, but, thus far, he has been a huge disappointment, favoring massive deficit spending over actual, practical solutions, like cutting the payroll tax, surely the easiest and quickest way to stimulate the overall economy.
Interestingly, and probably not coincidentally, today's morning rally stalled out just above my magic 8149.09 mark, the level which cannot be penetrated before lows are retested. This number is turning out to be a very strong resistance point, one that could endure for months, if not years. The Dow needs to fall further and our economy needs to find a solid footing before advancing in any meaningful way. That, sadly, is also months, or years, away and seemingly getting pushed further along the horizon every day.
The sooner the pols in Washington realize that decentralization of everything from the energy grid to banking to politics is at the heart of recovery, the sooner various parts of the country can begin to function well again. What's interesting and even amusing about this economic era is that the people being damaged the most are, not in any particular order, the rich, Wall Street, and Washington politicians, the last of which is rapidly losing credibility and relevance.
Recovery will begin more on local levels than at the federal. Communities with forward-looking. realistic activists will be better prepared to deal with the downturn and offer solutions for recovery. Those solutions will be more proactive and less involved with government and other macro-style solutions. They are likely to be based on models of sustainability, conservation and localism. The ideas are emerging. Many of them will be featured on this very blog as they become evident.
On the day, market internals confirmed the absolute pummeling the markets took on Wednesday. Declining issues overwhelmed advancers, 3732-2766. New lows expanded their edge over new highs, 235-17. Volume was strong, indicating that the decline is gaining momentum.
NYSE Volume 6,413,953,000
NASDAQ Volume 2,187,395,750
Commodities continue to trade in mixed fashion with oil falling 46 cents to $40.32, while gold gained $9.70, to $902.20, and silver posting a 17 cent gain, to $12.47. This is likely a trend which will continue. Commodities which are used widely - energy and food stocks - should continue to feel the pinch of deflation, while the safety of the precious metals will attract smart money seeking safety. Naturally, when the real effects of government overspending become evident in a weakened dollar, those same commodities should rise, and the metals will go parabolic. That eventuality is likely 2-3 years away, maybe longer.
In the interim, the US and world economies are undergoing a massive shift from globalization to localization. More and more people every day are understanding that their basic needs are not being met by government and ultra-national corporate entities, but by local economies, farms, businesses and people. This could be the beginning of the absolute end of big government in its many layers. From towns and villages all the way up to the federal level, the American public is increasingly weary of being overtaxed and underserved, harassed and obligated to the very institutions which are supposed to support and protect us.
Wall Street and Washington has screwed us all the way down. The American people will fix this on the way up, but, like a drunk with a problem, the first step is bottoming out, and we haven't done that yet. Mostly, we are still in denial.
More tomorrow.
Dow 7,956.66, -121.70 (1.51%)
NASDAQ 1,515.05, -1.25 (0.08%)
S&P 500 832.23, -6.28 (0.75%)
NYSE Composite 5,242.75, -25.27 (0.48%)
The blue chips were aided in their descent by 4th quarter earnings reports from Disney (DIS) and Kraft (KFT), in addition to Bank of America (BAC), which reportedly lost 12 investment bankers on the Obama announcement, jumping ship to join Deutsche Bank (DB), which has received no TARP funds nor money from their home, German government.
Among the three big losers on the Dow, Kraft posted a 72% earnings decline year-over-year, losing 9% on the day as traders punished the stock, sending it to 26.13, down 2.61 at the close. Disney suffered through a troubling fiscal first quarter, earning 45 cents a share in the quarter ended Dec. 27, compared with 63 cents a share, in the same quarter a year ago. Disney finished at 19.00, off 1.60, a 7.8% loss.
Bank of America was hit with massive selling, with more than 600 million shares changing hands, almost 4 times the average daily volume. shares fell to 4.60, a 17-year low, off 0.60, a decline of more than 11%. The number of shares trading is significant in that many funds, by charter, cannot maintain positions in stocks valued under $5 per share. The rout of the bank's backers should continue as long as the company's shares remain at depressed levels.
In truth, Bank of America should already have filed for bankruptcy protection as its operations have been underwater for quite some time. Continuing to shovel money into the bottomless pits of BofA and Citigroup, particularly, has been a mistake from the very start. No business is "too big to fail" and pouring taxpayer money into these obviously failed institutions is a monumental blunder on the part of the federal government, more likely to prolong and deepen the financial crisis than repair it.
A very astute rendering of the current economic malaise is offered by Ismael Hossein Zadeh, in "Too Big to Fail:" a Bailout Hoax at counterpunch.org. This article should be required reading for all of our elected federal officials, who, as a group, are poorly prepared to handle any kind of economy, especially one which is in dire straits.
Sadly, most of them will not read it or any other tract on economics, being that, for most of them, their major accomplishments involve using other people's money to land big-time government jobs. Of all the 650 or so congresspeople there is maybe a handful (10 to 20) who really have a grasp for economics of this scale. The rest simply are led by their noses by supposed government "experts" who dictate policy. There's little doubt that the worst enemy of the United States of America does not domicile in Afghan or Pakistani caves, but in tony residences around the Capitol. The lot of them and their predecessors has led America down this path of destruction since 1980 at least. Those currently holding office in congress will certainly finish the job in a smashing manner, impoverishing the nation in a manner never before seen.
As for the president who promised change, little has. Instead, he has surrounded himself with the very same people who are responsible for the whole mess. Yes, I voted for him, thinking he could turn around many of our mistakes, but, thus far, he has been a huge disappointment, favoring massive deficit spending over actual, practical solutions, like cutting the payroll tax, surely the easiest and quickest way to stimulate the overall economy.
Interestingly, and probably not coincidentally, today's morning rally stalled out just above my magic 8149.09 mark, the level which cannot be penetrated before lows are retested. This number is turning out to be a very strong resistance point, one that could endure for months, if not years. The Dow needs to fall further and our economy needs to find a solid footing before advancing in any meaningful way. That, sadly, is also months, or years, away and seemingly getting pushed further along the horizon every day.
The sooner the pols in Washington realize that decentralization of everything from the energy grid to banking to politics is at the heart of recovery, the sooner various parts of the country can begin to function well again. What's interesting and even amusing about this economic era is that the people being damaged the most are, not in any particular order, the rich, Wall Street, and Washington politicians, the last of which is rapidly losing credibility and relevance.
Recovery will begin more on local levels than at the federal. Communities with forward-looking. realistic activists will be better prepared to deal with the downturn and offer solutions for recovery. Those solutions will be more proactive and less involved with government and other macro-style solutions. They are likely to be based on models of sustainability, conservation and localism. The ideas are emerging. Many of them will be featured on this very blog as they become evident.
On the day, market internals confirmed the absolute pummeling the markets took on Wednesday. Declining issues overwhelmed advancers, 3732-2766. New lows expanded their edge over new highs, 235-17. Volume was strong, indicating that the decline is gaining momentum.
NYSE Volume 6,413,953,000
NASDAQ Volume 2,187,395,750
Commodities continue to trade in mixed fashion with oil falling 46 cents to $40.32, while gold gained $9.70, to $902.20, and silver posting a 17 cent gain, to $12.47. This is likely a trend which will continue. Commodities which are used widely - energy and food stocks - should continue to feel the pinch of deflation, while the safety of the precious metals will attract smart money seeking safety. Naturally, when the real effects of government overspending become evident in a weakened dollar, those same commodities should rise, and the metals will go parabolic. That eventuality is likely 2-3 years away, maybe longer.
In the interim, the US and world economies are undergoing a massive shift from globalization to localization. More and more people every day are understanding that their basic needs are not being met by government and ultra-national corporate entities, but by local economies, farms, businesses and people. This could be the beginning of the absolute end of big government in its many layers. From towns and villages all the way up to the federal level, the American public is increasingly weary of being overtaxed and underserved, harassed and obligated to the very institutions which are supposed to support and protect us.
Wall Street and Washington has screwed us all the way down. The American people will fix this on the way up, but, like a drunk with a problem, the first step is bottoming out, and we haven't done that yet. Mostly, we are still in denial.
More tomorrow.
Tuesday, February 3, 2009
Obama's PPT Working Group On the Job
The perks of the presidency are large.
One of them is that you have at your disposal, thanks to the "godfather of conservatism," Ronald Reagan, who, in his limited wisdom, created, by Executive Order 12631 -- Working Group on Financial Markets(otherwise known as the PPT, or Plunge Protection Team) to ostensibly put the nation's various stock exchanges under the control of top government operatives whenever necessary.
The presidency being largely a function of public relations, it seems that President Obama has finally gotten his guys together and instructed them to keep the market on an upward keel. All of the fingerprints are there: the subtle prodding, the 50-point spikes after 2:00 and 3:00 pm, the positive close. It's just so nice to be able to salve the wounds of fractured investors with a couple of nice gains.
Of course, it's merely a mirage, and a temporary one at that. Once again, I must invoke my status as Resident Genius, noting that the Dow (and by inference, the other major indices) cannot escape the clutches of pure market dynamics at the resistance line of 8149, the point at which the market must invariable submit. Today's pumping was likely some short-covering and market tinkering to keep the Dow above 8000, a key psychological level, but nothing more than that. In the long run, it's just another number on the way back down to the mid-7000s.
Being that my job is keeping track of these arcane, diabolical market assumptions, it's clear that the investment community (with the assistance of the Working Group) still has much work to do, now that the Dow has closed below our magic number 8 times since its invocation on December 1, 2008, and, with today's finish, for the fourth time in a row.
So, when your friends say smart things like, "How'd ya like the Dow today, huh?" You can even-more-smartly respond with the retort, "8149, kid, watch it," secure in the knowledge that any rally that doesn't reach that level is doomed, caught like a fly in a spider's web.
Besides, the bears have a secret weapon which will be unleashed on Friday morning. It's called the Non-farms payroll report, tracking the number of jobs lost in January (lots of them, like more than 500,000).
When the BLS releases that figure at 8:30 am, all the little knee-jerk relief rallies of this week will look like just so much noise because that's all they are. Lows must be retested and haven't been. Just getting within 400 points is not enough.
Dow 8,078.36, +141.53 (1.78%)
NASDAQ 1,516.30, +21.87 (1.46%)
S&P 500 838.50, +13.06 (1.58%)
NYSE Composite 5,268.00, +101.53 (1.97%
As for news flow, it was good early - Pending home sales improved 6.3% in December as eager buyers snatched up foreclosed homes, Merck (MRK) reported a strong 4th quarter - but soured late as automotive firms reported year-over-year sales declines for January: GM -51%, Ford -40%, Toyota -34%. It's not pretty in the auto dealer world. And it's not improving, either.
Citigroup says they're going to start loaning money again, which is really not news, or shouldn't be, since that's what banks are supposed to do, but they announced that they'll employ some $36 billion of the money the government GAVE them, for loans and securitizations of mortgages. Maybe they'll get it right this time, though any positive result from bank lending is still very much in doubt and a matter of severe speculation.
The trouble with unleashing loans across the landscape is that the lender still has no idea what the immediate future holds. No doubt, the honchos at Citi were prodded into making a public loan announcement by the Fed or Treasury or both, as the public has been outraged over the non-use of some $350 billion in TARP funds. Whether this round of lending will help Citigroup is a dodgy issue. Home prices are still falling and the economy is anything but stable. It's likely that this $36 billion to be lent is just a cover for the eventual break-up and bankruptcy of the once high-and-mighty Citi.
Market internals confirmed the move higher. Advancers beat back decliners, 3840-2624. New lows remained ahead of new highs, though the number of new lows decreased along with the gap, 250-24. Volume was nothing exciting, as low volume is becoming a semi-permanent feature of this sublimated market.
NYSE Volume 1,353,295,000
NASDAQ Volume 2,091,114,000
Commodities were mixed, if not mixed up. Oil for March delivery gained 70 cents, to $40.78. Natural gas slipped 4 cents to $4.51. It seems as though the home heating fuel folks missed their opportunity completely this winter. January was extremely cold, but prices barely budged. The Midwest and Northeast parts of the US are about to experience the other side of the coin, with warmer weather predicted for much of February.
Gold fell $14.70, to $892.50. Silver dipped 12 cents to $12.30. The precious metals are still the sweet spot in this market, especially silver, which is being suppressed in a variety of ways and is well below the traditional gold-silver ratio. Just as gold was the fair-haired boy of the previous five years, it may be silver's time to shine.
Midday, Tom Daschle withdrew his nomination for Secretary of Health and Human Services in a tax-related snafu.
Honestly, is that good news or bad? Probably a little of both. Maybe it's time to overhaul the tax code. Just a thought...
One of them is that you have at your disposal, thanks to the "godfather of conservatism," Ronald Reagan, who, in his limited wisdom, created, by Executive Order 12631 -- Working Group on Financial Markets(otherwise known as the PPT, or Plunge Protection Team) to ostensibly put the nation's various stock exchanges under the control of top government operatives whenever necessary.
The presidency being largely a function of public relations, it seems that President Obama has finally gotten his guys together and instructed them to keep the market on an upward keel. All of the fingerprints are there: the subtle prodding, the 50-point spikes after 2:00 and 3:00 pm, the positive close. It's just so nice to be able to salve the wounds of fractured investors with a couple of nice gains.
Of course, it's merely a mirage, and a temporary one at that. Once again, I must invoke my status as Resident Genius, noting that the Dow (and by inference, the other major indices) cannot escape the clutches of pure market dynamics at the resistance line of 8149, the point at which the market must invariable submit. Today's pumping was likely some short-covering and market tinkering to keep the Dow above 8000, a key psychological level, but nothing more than that. In the long run, it's just another number on the way back down to the mid-7000s.
Being that my job is keeping track of these arcane, diabolical market assumptions, it's clear that the investment community (with the assistance of the Working Group) still has much work to do, now that the Dow has closed below our magic number 8 times since its invocation on December 1, 2008, and, with today's finish, for the fourth time in a row.
So, when your friends say smart things like, "How'd ya like the Dow today, huh?" You can even-more-smartly respond with the retort, "8149, kid, watch it," secure in the knowledge that any rally that doesn't reach that level is doomed, caught like a fly in a spider's web.
Besides, the bears have a secret weapon which will be unleashed on Friday morning. It's called the Non-farms payroll report, tracking the number of jobs lost in January (lots of them, like more than 500,000).
When the BLS releases that figure at 8:30 am, all the little knee-jerk relief rallies of this week will look like just so much noise because that's all they are. Lows must be retested and haven't been. Just getting within 400 points is not enough.
Dow 8,078.36, +141.53 (1.78%)
NASDAQ 1,516.30, +21.87 (1.46%)
S&P 500 838.50, +13.06 (1.58%)
NYSE Composite 5,268.00, +101.53 (1.97%
As for news flow, it was good early - Pending home sales improved 6.3% in December as eager buyers snatched up foreclosed homes, Merck (MRK) reported a strong 4th quarter - but soured late as automotive firms reported year-over-year sales declines for January: GM -51%, Ford -40%, Toyota -34%. It's not pretty in the auto dealer world. And it's not improving, either.
Citigroup says they're going to start loaning money again, which is really not news, or shouldn't be, since that's what banks are supposed to do, but they announced that they'll employ some $36 billion of the money the government GAVE them, for loans and securitizations of mortgages. Maybe they'll get it right this time, though any positive result from bank lending is still very much in doubt and a matter of severe speculation.
The trouble with unleashing loans across the landscape is that the lender still has no idea what the immediate future holds. No doubt, the honchos at Citi were prodded into making a public loan announcement by the Fed or Treasury or both, as the public has been outraged over the non-use of some $350 billion in TARP funds. Whether this round of lending will help Citigroup is a dodgy issue. Home prices are still falling and the economy is anything but stable. It's likely that this $36 billion to be lent is just a cover for the eventual break-up and bankruptcy of the once high-and-mighty Citi.
Market internals confirmed the move higher. Advancers beat back decliners, 3840-2624. New lows remained ahead of new highs, though the number of new lows decreased along with the gap, 250-24. Volume was nothing exciting, as low volume is becoming a semi-permanent feature of this sublimated market.
NYSE Volume 1,353,295,000
NASDAQ Volume 2,091,114,000
Commodities were mixed, if not mixed up. Oil for March delivery gained 70 cents, to $40.78. Natural gas slipped 4 cents to $4.51. It seems as though the home heating fuel folks missed their opportunity completely this winter. January was extremely cold, but prices barely budged. The Midwest and Northeast parts of the US are about to experience the other side of the coin, with warmer weather predicted for much of February.
Gold fell $14.70, to $892.50. Silver dipped 12 cents to $12.30. The precious metals are still the sweet spot in this market, especially silver, which is being suppressed in a variety of ways and is well below the traditional gold-silver ratio. Just as gold was the fair-haired boy of the previous five years, it may be silver's time to shine.
Midday, Tom Daschle withdrew his nomination for Secretary of Health and Human Services in a tax-related snafu.
Honestly, is that good news or bad? Probably a little of both. Maybe it's time to overhaul the tax code. Just a thought...
Monday, February 2, 2009
Wall Street to Washington, DC: A Road Paved with Fraud
I took this past weekend to catch up on some reading and focus my thoughts on the economy, the stock market and government.
Then I watched the Super Bowl, which worked out well enough for me. Though the Cardinals did not win, as I predicted, the Steelers did not cover the spread, which I also predicted, and, since covering the line is all that matters to gamblers, I retain my status as a near-genius football picker. Like anything else in our crazy world, we are judged most by our last effort. In the NFL prognostication business, that last effort each season happens to be the Super Bowl, so I'm good to go until August.
One final note on the game: Arizona nearly killed itself throughout the entire contest and, without the numerous mistakes and crippling penalties, they would have won easily. But, no excuses. All hail the Pittsburgh Steelers.
So, getting back to my laser-like focus on the economy, stock market and government, I can say one thing that applies to them all: They stink. Our economy is so deeply in debt that radical changes are needed for it to ever be fixed and workable. The government is simply too corrupt, too inept and too rooted in old, failed ideologies to make the necessary changes. As for the stock market, well, that's just a rigged craps table. You can place all the bets you like, but chances are you're going to lose because the game is rigged from the inside, for the insiders.
Monday was no exception to the rigging of Wall Street. At 3:00 pm, all indices were at or near the lows of the day. By the close, the losses were pared and the NASDAQ actually finished with a decent gain, that owing to the flawed thinking that tech firms would benefit from the new plans being shuffled about by the Obama administration and the Democratic congress.
Dow 7,936.75, -64.11 (0.80%)
NASDAQ 1,494.43, +18.01 (1.22%)
S&P 500 825.43, -0.45 (0.05%)
NYSE Composite 5,166.47, -29.32 (0.56%)
The pols, however, are a sideshow. Whatever they compose in "stimulus" legislation, it won't help stem the rising tide of defaults and bankruptcies (everything from individuals to banks, to cities, counties and states), nor will they correct the essential flaw in our system: government at all levels which is too corrupt, too large and too endeared to their own hold on power. Americans face some dim prospects in the near future. There is either going to be a prolonged economic disaster (caused by Wall Street and the federal government) or riots and overthrow of the government, or martial law.
None of those are palatable, but, believe it or not, the one in the middle (riots and revolution) is probably the best solution.
Clean slate. Put all the fraudsters and criminals from Wall Street to Washington behind bars or at least, out of positions of power. Being that the government has all the money and guns, it's probably going to be easier for most Americans to simply submit to martial law (this should occur by September) or leave the country (Get those passports now!).
The imbecility of the American public cannot be underestimated. They continue to elect leaders from the same two entrenched, powerful parties, and expect different results. When the newly-elected get to their appointed positions of power, they have become members of the club. They are no longer Democrats and Republicans, they are all elitists, taking their orders from the oligarchs (CEOs) behind the various Wall Street fraud schemes.
That the entire house of cards is collapsing upon them at once is a very large problem, one which neither the Wall Streeters or the federal (or state) government operatives seem to be able to right. They're screwed, and because of that, the American people is about to be screwed even more.
Already, Californians are getting IOUs instead of tax refund checks. The Governor and the legislature wants to raise taxes and fees to fill the burgeoning budget gap. Higher taxes and fees are also being bandied about in state houses from New York to Wisconsin, Florida to Arkansas, Massachusetts to Michigan. The states are facing monumental budget shortfalls and instead of cutting pay to overpaid civil servants, they're opting for more blood (tax revenue) from constituents.
From the federal level on down, government has the equation all wrong. They're facing shortfalls because there isn't enough revenue, because people are out of work, or out of their homes, or both. Raising taxes on the rest of the population isn't going to repair that condition. In fact, their higher tax solutions will only serve to infuriate the masses even more.
Backing up my contention that the market is rigged (a small loss today instead of a big one) are the internals, which worsened considerably today. Declining issues outnumbered advancers, 3408-3126. The number of new lows expanded to 357, while the new highs contracted to 17. These are unmistakable signs of a worsening condition. The indices are heading back to the November 20 lows, likely to exceed them by a long shot on the downside.
NYSE Volume 1,326,851,000
NASDAQ Volume 2,014,289,000
The commodity markets, much less prone to outright manipulation, showed continuing signs of deflationary strain. Oil futures fell $1.60, to $40.08. Gold was overtaken by profit-takers, losing $21.20, to $907.20. Silver also fell, by 15 cents, to $12.42.
Buy silver, food and bullets.
This morning, I undertook a small test of the value of stocks as investments. I'll spare you the math, but I decided to look at what a basket of 10 stocks, purchased in February, 1999, would look like today. My selections were household names, all of which paid dividends: Intel (INTC), IBM (IBM), General Electric (GE), ExxonMobil (XON), FedEx (FDX), Bank of America (BAC), Caterpillar (CAT), McDonald's (MCD), Wal-Mart (WMT) and Coca-Cola (KO). In my example, I purchased $10,000 of each stock, for a total investment of $100,000.
The results, considering that I didn't pick all outright losers (In fact, 6 of the 10 were higher today than in 1999.), was an eye-opener. Before all taxes and fees, the $100,000 invested in 1999 would have been worth just $2347 less today. Adding in dividends, that number became positive, to the tune of a total return of $27,953. Not bad. right?
Not good, is my response. A simple fixed investment retuning 4% annually would have produced a profit of $48,024 before tax considerations. My takeaway on this is simple: Wall Street is a major fraud, built on high risk. Your money would be much better off in a simple savings account with a fair rate of interest. Therein lies the major disconnect of our age: the difference between saving and investing. Most individuals are not investors, just as most investors are not savers. Over the last 40-50 years, we've been fed a steady diet that investing was the key to prosperity, when the truth - all along - was that saving was the real key.
Americans can now focus on saving, thrift and intelligent consumerism, rather than engage in the highly-leveraged, risk-ridden world of Wall Street. Let the rich take the risk. The rest of us can prosper well enough without them.
And for the government, how can be be confident in a leadership that allows tax cheats to take over some of the most critical and demanding jobs in government? I'm talking about Tim Geithner and Tom Daschle, each of whom evaded taxes knowingly and yet will be confirmed as Secretaries of Treasury and Health and Human Services, respectively. Geithner's already been seated. Daschle has widespread support, including President Obama himself.
Our institutions have been corrupted beyond any hope for a reasonable repair. Our economy is a black hole and Americans will need new leaders and renewed resolve to get through this period with our nation intact. God save us all.
Then I watched the Super Bowl, which worked out well enough for me. Though the Cardinals did not win, as I predicted, the Steelers did not cover the spread, which I also predicted, and, since covering the line is all that matters to gamblers, I retain my status as a near-genius football picker. Like anything else in our crazy world, we are judged most by our last effort. In the NFL prognostication business, that last effort each season happens to be the Super Bowl, so I'm good to go until August.
One final note on the game: Arizona nearly killed itself throughout the entire contest and, without the numerous mistakes and crippling penalties, they would have won easily. But, no excuses. All hail the Pittsburgh Steelers.
So, getting back to my laser-like focus on the economy, stock market and government, I can say one thing that applies to them all: They stink. Our economy is so deeply in debt that radical changes are needed for it to ever be fixed and workable. The government is simply too corrupt, too inept and too rooted in old, failed ideologies to make the necessary changes. As for the stock market, well, that's just a rigged craps table. You can place all the bets you like, but chances are you're going to lose because the game is rigged from the inside, for the insiders.
Monday was no exception to the rigging of Wall Street. At 3:00 pm, all indices were at or near the lows of the day. By the close, the losses were pared and the NASDAQ actually finished with a decent gain, that owing to the flawed thinking that tech firms would benefit from the new plans being shuffled about by the Obama administration and the Democratic congress.
Dow 7,936.75, -64.11 (0.80%)
NASDAQ 1,494.43, +18.01 (1.22%)
S&P 500 825.43, -0.45 (0.05%)
NYSE Composite 5,166.47, -29.32 (0.56%)
The pols, however, are a sideshow. Whatever they compose in "stimulus" legislation, it won't help stem the rising tide of defaults and bankruptcies (everything from individuals to banks, to cities, counties and states), nor will they correct the essential flaw in our system: government at all levels which is too corrupt, too large and too endeared to their own hold on power. Americans face some dim prospects in the near future. There is either going to be a prolonged economic disaster (caused by Wall Street and the federal government) or riots and overthrow of the government, or martial law.
None of those are palatable, but, believe it or not, the one in the middle (riots and revolution) is probably the best solution.
Clean slate. Put all the fraudsters and criminals from Wall Street to Washington behind bars or at least, out of positions of power. Being that the government has all the money and guns, it's probably going to be easier for most Americans to simply submit to martial law (this should occur by September) or leave the country (Get those passports now!).
The imbecility of the American public cannot be underestimated. They continue to elect leaders from the same two entrenched, powerful parties, and expect different results. When the newly-elected get to their appointed positions of power, they have become members of the club. They are no longer Democrats and Republicans, they are all elitists, taking their orders from the oligarchs (CEOs) behind the various Wall Street fraud schemes.
That the entire house of cards is collapsing upon them at once is a very large problem, one which neither the Wall Streeters or the federal (or state) government operatives seem to be able to right. They're screwed, and because of that, the American people is about to be screwed even more.
Already, Californians are getting IOUs instead of tax refund checks. The Governor and the legislature wants to raise taxes and fees to fill the burgeoning budget gap. Higher taxes and fees are also being bandied about in state houses from New York to Wisconsin, Florida to Arkansas, Massachusetts to Michigan. The states are facing monumental budget shortfalls and instead of cutting pay to overpaid civil servants, they're opting for more blood (tax revenue) from constituents.
From the federal level on down, government has the equation all wrong. They're facing shortfalls because there isn't enough revenue, because people are out of work, or out of their homes, or both. Raising taxes on the rest of the population isn't going to repair that condition. In fact, their higher tax solutions will only serve to infuriate the masses even more.
Backing up my contention that the market is rigged (a small loss today instead of a big one) are the internals, which worsened considerably today. Declining issues outnumbered advancers, 3408-3126. The number of new lows expanded to 357, while the new highs contracted to 17. These are unmistakable signs of a worsening condition. The indices are heading back to the November 20 lows, likely to exceed them by a long shot on the downside.
NYSE Volume 1,326,851,000
NASDAQ Volume 2,014,289,000
The commodity markets, much less prone to outright manipulation, showed continuing signs of deflationary strain. Oil futures fell $1.60, to $40.08. Gold was overtaken by profit-takers, losing $21.20, to $907.20. Silver also fell, by 15 cents, to $12.42.
Buy silver, food and bullets.
This morning, I undertook a small test of the value of stocks as investments. I'll spare you the math, but I decided to look at what a basket of 10 stocks, purchased in February, 1999, would look like today. My selections were household names, all of which paid dividends: Intel (INTC), IBM (IBM), General Electric (GE), ExxonMobil (XON), FedEx (FDX), Bank of America (BAC), Caterpillar (CAT), McDonald's (MCD), Wal-Mart (WMT) and Coca-Cola (KO). In my example, I purchased $10,000 of each stock, for a total investment of $100,000.
The results, considering that I didn't pick all outright losers (In fact, 6 of the 10 were higher today than in 1999.), was an eye-opener. Before all taxes and fees, the $100,000 invested in 1999 would have been worth just $2347 less today. Adding in dividends, that number became positive, to the tune of a total return of $27,953. Not bad. right?
Not good, is my response. A simple fixed investment retuning 4% annually would have produced a profit of $48,024 before tax considerations. My takeaway on this is simple: Wall Street is a major fraud, built on high risk. Your money would be much better off in a simple savings account with a fair rate of interest. Therein lies the major disconnect of our age: the difference between saving and investing. Most individuals are not investors, just as most investors are not savers. Over the last 40-50 years, we've been fed a steady diet that investing was the key to prosperity, when the truth - all along - was that saving was the real key.
Americans can now focus on saving, thrift and intelligent consumerism, rather than engage in the highly-leveraged, risk-ridden world of Wall Street. Let the rich take the risk. The rest of us can prosper well enough without them.
And for the government, how can be be confident in a leadership that allows tax cheats to take over some of the most critical and demanding jobs in government? I'm talking about Tim Geithner and Tom Daschle, each of whom evaded taxes knowingly and yet will be confirmed as Secretaries of Treasury and Health and Human Services, respectively. Geithner's already been seated. Daschle has widespread support, including President Obama himself.
Our institutions have been corrupted beyond any hope for a reasonable repair. Our economy is a black hole and Americans will need new leaders and renewed resolve to get through this period with our nation intact. God save us all.
Friday, January 30, 2009
January Barometer Predicts Down Year
For all of the optimism associated with a 3-or-4-day winning streak (depending on the index) and a big upside day on Wednesday, it may come as somewhat of a surprise to some that the major US equity indices all ended the week with losses.
The widely-watched Dow Jones Industrial Average tacked on more losses to Thursday's massive beat-down in Friday's one-sided trade, sending the index into negative ground, down 77 points for the week. The NASDAQ fared better, down less than a point since last Friday. The S&P 500 gave back 6 points, while the NYSE Composite finished higher by a slim 0.28 points.
Were the markets stabilizing? Hardly. Investors not only had to navigate through a slew of 4th quarter and full year 2008 earnings reports, but the stew of demoralizing economic reports continued in deluge fashion. There were some hopeful signs - like the government's initial estimate of 4th quarter '08 GDP posting a decline of 3.8% (better than estimates) - but not enough to keep serious money on the sidelines or increasingly heading toward bonds and precious metals.
Dow 8,000.86, -148.15 (1.82%)
NASDAQ 1,476.42, -31.42 (2.08%)
S&P 500 825.88, -19.26 (2.28%)
NYSE Composite 5,195.83, -105.07 (1.98%)
Also, the averages are not showing any signs of making upside progress. Since the fallout of November 20, they have recovered slightly, but mostly went sideways.
This being the final trading day of January, it should come as no comfort that the January Barometer is clearly indicating a down year for stocks in 2009, with all major indices closing the month anywhere from 7 to 9% lower than they had begun. Based on the adage "as goes January, so goes the year," the January Barometer has as solid a track record as any simple indicator, with accuracy in the range of upwards of 80%, depending on which sources are cited.
The day's internals were as unappealing as the headline numbers. Declining issues outflanked advancers, 4558-1903. There were more new lows than new highs, 253-12. This is the most troubling of all indicators, due entirely to its persistence. There have been only a handful of days where this condition did not persist - i.e., more new lows than highs in the daily data - since I have been tracking it since October 31, 2007. This is a 15-month, one-sided trend that has always declared general direction.
Of course, this was the natural conclusion of a 54 or 58-week bull market from 2003-2007 - one of the longest in history - built mostly on bad investments, incompetent fiscal policy, absence of regulations and general thievery. That's why the correction has been so severe. The foundation of the previous bull was built on sand.
Volume was as strong on Friday as it was on Tuesday's 200-point Dow rally, which also is not encouraging for stocks. Not to worry, the same kind of serious correction is occurring around the globe.
NYSE Volume 1,500,684,000
NASDAQ Volume 2,108,279,000
Commodities were the place to be. Crude oil was up 24 cents, to $41.68, though natural gas futures fell to $4.39, an obviator of oversupply. Gold zipped ahead $21.90, to $928.40, a multi-week high. Silver advanced 42 cents, to $12.57, making silver no longer a bargain and possibly short-term oversold, though it may be risky to rest on that assumption.
Employment and housing continue to be the main trouble spots in the economy, and those areas are likely to continue to deteriorate until there's some real relief for the middle class in government policy, namely, immediate tax relief via relaxed withholding, though our pals in Washington don't seem to like that idea. Since asking for a government wage and spending freeze would likely be too much, I won't bother to ask for actual spending cuts. The so-called "leaders" of our age are proving to be among the most incompetent bunch in history (unless you buy the conspiracy side of the argument for "big government"), unable to manage affairs of state effectively.
The world will wait while Washington winces, whines and wails. That's unfortunate because people must move on towards an improved existence. It is the history of civilization and should not be short-circuited by failures of financial creations.
To replace the broken models of the past, new ideas must be developed .
The widely-watched Dow Jones Industrial Average tacked on more losses to Thursday's massive beat-down in Friday's one-sided trade, sending the index into negative ground, down 77 points for the week. The NASDAQ fared better, down less than a point since last Friday. The S&P 500 gave back 6 points, while the NYSE Composite finished higher by a slim 0.28 points.
Were the markets stabilizing? Hardly. Investors not only had to navigate through a slew of 4th quarter and full year 2008 earnings reports, but the stew of demoralizing economic reports continued in deluge fashion. There were some hopeful signs - like the government's initial estimate of 4th quarter '08 GDP posting a decline of 3.8% (better than estimates) - but not enough to keep serious money on the sidelines or increasingly heading toward bonds and precious metals.
Dow 8,000.86, -148.15 (1.82%)
NASDAQ 1,476.42, -31.42 (2.08%)
S&P 500 825.88, -19.26 (2.28%)
NYSE Composite 5,195.83, -105.07 (1.98%)
Also, the averages are not showing any signs of making upside progress. Since the fallout of November 20, they have recovered slightly, but mostly went sideways.
This being the final trading day of January, it should come as no comfort that the January Barometer is clearly indicating a down year for stocks in 2009, with all major indices closing the month anywhere from 7 to 9% lower than they had begun. Based on the adage "as goes January, so goes the year," the January Barometer has as solid a track record as any simple indicator, with accuracy in the range of upwards of 80%, depending on which sources are cited.
The day's internals were as unappealing as the headline numbers. Declining issues outflanked advancers, 4558-1903. There were more new lows than new highs, 253-12. This is the most troubling of all indicators, due entirely to its persistence. There have been only a handful of days where this condition did not persist - i.e., more new lows than highs in the daily data - since I have been tracking it since October 31, 2007. This is a 15-month, one-sided trend that has always declared general direction.
Of course, this was the natural conclusion of a 54 or 58-week bull market from 2003-2007 - one of the longest in history - built mostly on bad investments, incompetent fiscal policy, absence of regulations and general thievery. That's why the correction has been so severe. The foundation of the previous bull was built on sand.
Volume was as strong on Friday as it was on Tuesday's 200-point Dow rally, which also is not encouraging for stocks. Not to worry, the same kind of serious correction is occurring around the globe.
NYSE Volume 1,500,684,000
NASDAQ Volume 2,108,279,000
Commodities were the place to be. Crude oil was up 24 cents, to $41.68, though natural gas futures fell to $4.39, an obviator of oversupply. Gold zipped ahead $21.90, to $928.40, a multi-week high. Silver advanced 42 cents, to $12.57, making silver no longer a bargain and possibly short-term oversold, though it may be risky to rest on that assumption.
Employment and housing continue to be the main trouble spots in the economy, and those areas are likely to continue to deteriorate until there's some real relief for the middle class in government policy, namely, immediate tax relief via relaxed withholding, though our pals in Washington don't seem to like that idea. Since asking for a government wage and spending freeze would likely be too much, I won't bother to ask for actual spending cuts. The so-called "leaders" of our age are proving to be among the most incompetent bunch in history (unless you buy the conspiracy side of the argument for "big government"), unable to manage affairs of state effectively.
The world will wait while Washington winces, whines and wails. That's unfortunate because people must move on towards an improved existence. It is the history of civilization and should not be short-circuited by failures of financial creations.
To replace the broken models of the past, new ideas must be developed .
Thursday, January 29, 2009
Investors Find No Easy Way Out
The stock market is a fickle beast.
No sooner than one believes one thing, conditions change to make the opposite true. That's why stocks go up and down. Yes, really.
After yesterday's rally on news that Tim Geithner was confirmed as Treasury Secretary and was boosting plans for a "bad bank" bailout for the endangered species that are large commercial banks, and the Obama administration was toasting with congressional cohorts their $800+ billion stimulus plan, news changed.
Starbucks plans to close more stores and lay off 7000 more employees. Ditto Boeing, ditto Kodak, and others. New home sales for 2008 sank to their lowest level in 26 years. There were record numbers of first-time unemployment claims filed last week. Durable goods orders fell another 2.6% in just one month. Pundits far and wide were assailing the stimulus plan as too little, too late. In the relatively short span between Wednesday's closing bell and Thursday's open (a scant 17 1/2 hours) the mood had changed.
But, if you're a chartist with keen observational skills, you already knew that stocks could not sustain any meaningful rally. As I mentioned just two days ago, in my post, Why Stocks Won't Move:
Well, on Wednesday, the Dow did gain 200 points. And on Thursday, it fell by 226, closing at 8149.01. Hmmm... seems somebody's a penny off. Close enough, though, because nobody's perfect. Since 4:00 pm this afternoon, however, I have been answering the phone with the salutation, "Hello, resident genius."
Dow 8,149.01, -226.44 (2.70%)
NASDAQ 1,507.84, -50.50 (3.24%)
S&P 500 845.14, -28.95 (3.31%)
NYSE Composite 5,300.77, -200.69 (3.65%)
The condition of the economy is decidedly poor. The politicos in Washington can try to spin in any way they like, but many Americans - squeezed by ridiculous utility bills, overtaxed to near-death, and now many of them out of work and soon to be out on the street - are not schmoozing with cocktails after work. Many are just lucky enough to be able to afford dinner and maybe a malt liquor or pale ale.
Once again, the big-wigs in DC are sending the same wrong message as the CEOs and top executives on Wall Street. The Wall Street crowd has been chided by the government, so it's the public's right to express anger at elected officials.
Shame on you, Mr. Obama, Ms. Pelosi, Mr. Reid, Mr. McConnell, Mr. Boehner. Having cocktails while people are hungry, homeless, jobless and yearning smacks of elitism. I voted for Mr. Obama. I'm sure he was a better choice than McCain, but I'll say this just once: "Bush wrecked the economy, now it's Obama's turn to make it worse." I hope I'm wrong.
On the day, declining issues overwhelmed advancers, 5200-1333. 176 stocks made new 52-week lows. Only 16 made new highs. Volume was uninspired.
NYSE Volume 1,435,231,000
NASDAQ Volume 1,939,281,000
Oil fell another 72 cents, to $41.44. Gold picked up the slack, gaining $16.50, to $906.50. Silver also was higher, up 18 cents, to $12.15. Lean hogs and live cattle were little changed, but they are much lower than at this time last year. Food and energy have fallen precipitously in the deflationary cycle, perhaps providing some little modicum of comfort in this era of widespread distress.
Tomorrow, the government releases preliminary data on 4th quarter GDP and it's expected to show a contraction of roughly 5%. While that news will be neither surprising nor conclusive, it will confirm that the economy is in the throes of a deep, dark, dismal retreat.
Sure, Senator, the Resident Genius would like a screaming orgasm and some of that pulled pork you're passing around, thank you.
No sooner than one believes one thing, conditions change to make the opposite true. That's why stocks go up and down. Yes, really.
After yesterday's rally on news that Tim Geithner was confirmed as Treasury Secretary and was boosting plans for a "bad bank" bailout for the endangered species that are large commercial banks, and the Obama administration was toasting with congressional cohorts their $800+ billion stimulus plan, news changed.
Starbucks plans to close more stores and lay off 7000 more employees. Ditto Boeing, ditto Kodak, and others. New home sales for 2008 sank to their lowest level in 26 years. There were record numbers of first-time unemployment claims filed last week. Durable goods orders fell another 2.6% in just one month. Pundits far and wide were assailing the stimulus plan as too little, too late. In the relatively short span between Wednesday's closing bell and Thursday's open (a scant 17 1/2 hours) the mood had changed.
But, if you're a chartist with keen observational skills, you already knew that stocks could not sustain any meaningful rally. As I mentioned just two days ago, in my post, Why Stocks Won't Move:
The US equity markets are so solidly stalled, constipated and intractable for one simple reason. They have yet to retest the November 20 lows. Until that task is accomplished, there will be no meaningful rally in stocks, as there is no chart confirmation and thus, no commitment.
This is not to say that the Dow cannot escape the clutches of 7500 and change, though the current battle line clearly has been set at the most reasonable level of 8149. Stocks could easily advance another couple hundred points without anyone questioning whether or not they're overbought.
Well, on Wednesday, the Dow did gain 200 points. And on Thursday, it fell by 226, closing at 8149.01. Hmmm... seems somebody's a penny off. Close enough, though, because nobody's perfect. Since 4:00 pm this afternoon, however, I have been answering the phone with the salutation, "Hello, resident genius."
Dow 8,149.01, -226.44 (2.70%)
NASDAQ 1,507.84, -50.50 (3.24%)
S&P 500 845.14, -28.95 (3.31%)
NYSE Composite 5,300.77, -200.69 (3.65%)
The condition of the economy is decidedly poor. The politicos in Washington can try to spin in any way they like, but many Americans - squeezed by ridiculous utility bills, overtaxed to near-death, and now many of them out of work and soon to be out on the street - are not schmoozing with cocktails after work. Many are just lucky enough to be able to afford dinner and maybe a malt liquor or pale ale.
Once again, the big-wigs in DC are sending the same wrong message as the CEOs and top executives on Wall Street. The Wall Street crowd has been chided by the government, so it's the public's right to express anger at elected officials.
Shame on you, Mr. Obama, Ms. Pelosi, Mr. Reid, Mr. McConnell, Mr. Boehner. Having cocktails while people are hungry, homeless, jobless and yearning smacks of elitism. I voted for Mr. Obama. I'm sure he was a better choice than McCain, but I'll say this just once: "Bush wrecked the economy, now it's Obama's turn to make it worse." I hope I'm wrong.
On the day, declining issues overwhelmed advancers, 5200-1333. 176 stocks made new 52-week lows. Only 16 made new highs. Volume was uninspired.
NYSE Volume 1,435,231,000
NASDAQ Volume 1,939,281,000
Oil fell another 72 cents, to $41.44. Gold picked up the slack, gaining $16.50, to $906.50. Silver also was higher, up 18 cents, to $12.15. Lean hogs and live cattle were little changed, but they are much lower than at this time last year. Food and energy have fallen precipitously in the deflationary cycle, perhaps providing some little modicum of comfort in this era of widespread distress.
Tomorrow, the government releases preliminary data on 4th quarter GDP and it's expected to show a contraction of roughly 5%. While that news will be neither surprising nor conclusive, it will confirm that the economy is in the throes of a deep, dark, dismal retreat.
Sure, Senator, the Resident Genius would like a screaming orgasm and some of that pulled pork you're passing around, thank you.
Wednesday, January 28, 2009
Fed Doublespeak, Bad Bank Idea Signal Bull Run
Forget the idea that earnings move the market. Most of the firms which reported 4Q and full year results between Tuesday and Wednesday's close actually showed negative comparisons to year-ago figures for both revenue and earnings. What mattered most today was that congress is about to pass a nearly $900 billion spending bill and Tim Geithner, the newly-confirmed Treasury Secretary, will go about buying up all of the bad assets on the books of the major banks, in effect, creating a "bad bank" for which to orderly dispose of those nasty ill-advised and now non-performing loans.
It's a great day for inflationists. Unfortunately, it's a bad day for the value of the dollar and not such a great day for anybody who recently lost his or her job. There's nothing in the bill which will actually create new, private sector jobs, which is what - long term - is needed to stabilize and grow the economy.
Never minding the inflationary implications of government boosterism, investors went absolutely ballistic, sending the US indices on a rocket ride higher.
Dow 8,375.45, +200.72 (2.46%)
NASDAQ 1,558.34, +53.44 (3.55%)
S&P 500 874.09, +28.38 (3.36%)
NYSE Composite 5,501.49, +186.05 (3.50%)
The measure passed in the House contains a hodge-podge of government spending and tax relief, though nothing which directly affects either housing or employment, currently the two keys to any kind of economic betterment. Much of the criticism being directed at the government stimulus plan is that it will not begin working soon enough to have a meaningful near-term impact.
The Fed, after meeting for two days, did exactly nothing more than snort out a few missives about how the economy continued to deteriorate and how they were prepared to engage in - though they are not currently - direct purchases of Treasury debt securities. Keeping the key rate at "Zero to 25 basis points" the Fed is effectively out of policy bullets. Clearly, from the release notes of their meeting, deflation is the enemy, though it is not mentioned by name. Included was this nugget, which underscores the Fed's inflation leaning:
Just how the Fed manages to justify the differences of "inflation" and "price stability" was not covered by the release because, of course, their position is impossible to attain.
Today's speculative fling was obviously based on false hopes in that the market "gapped up" at the opening bell. It's a sign that investor optimism has not been fully demolished by recent events. And it was just yesterday that I mentioned that stocks could only gain a few hundred points because they had yet to retest the lows. How prescient of the market... and me!
Markets hate gaps and always find ways to fill them. This market had been stuck between 8149 and 8200 on the Dow. Today, it simply ignored the level. Danger lurks in today's gaps, but the public is being prepared for another onslaught of negative news, most likely not until March, however. Clearly, stocks have further to fall from these levels.
Optimism was as naked today as a bull's backside as advancing issues trounced decliners, 5412-1178. Plenty of pent-up investor demand went to work. Volume was reasonable. New lows outpolled new highs, 111-15.
NYSE Volume 1,548,266,000
NASDAQ Volume 2,160,559,000
Speculators in commodity markets were less convinced. Oil gained a sparing 58 cents, to $42.16. Gold fell $11.40, to $890.00, while silver lost 21 cents, to $11.96. The unmistakable signal from commodities are bearish and deflationary, right in line with slack demand and tight credit markets.
After the bell, Starbucks reported earnings and revenue that missed estimates and says it will cut 6,700 jobs in '09.
Enjoy your latte. The government and Wall Street are supplying the froth.
It's a great day for inflationists. Unfortunately, it's a bad day for the value of the dollar and not such a great day for anybody who recently lost his or her job. There's nothing in the bill which will actually create new, private sector jobs, which is what - long term - is needed to stabilize and grow the economy.
Never minding the inflationary implications of government boosterism, investors went absolutely ballistic, sending the US indices on a rocket ride higher.
Dow 8,375.45, +200.72 (2.46%)
NASDAQ 1,558.34, +53.44 (3.55%)
S&P 500 874.09, +28.38 (3.36%)
NYSE Composite 5,501.49, +186.05 (3.50%)
The measure passed in the House contains a hodge-podge of government spending and tax relief, though nothing which directly affects either housing or employment, currently the two keys to any kind of economic betterment. Much of the criticism being directed at the government stimulus plan is that it will not begin working soon enough to have a meaningful near-term impact.
The Fed, after meeting for two days, did exactly nothing more than snort out a few missives about how the economy continued to deteriorate and how they were prepared to engage in - though they are not currently - direct purchases of Treasury debt securities. Keeping the key rate at "Zero to 25 basis points" the Fed is effectively out of policy bullets. Clearly, from the release notes of their meeting, deflation is the enemy, though it is not mentioned by name. Included was this nugget, which underscores the Fed's inflation leaning:
Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
Just how the Fed manages to justify the differences of "inflation" and "price stability" was not covered by the release because, of course, their position is impossible to attain.
Today's speculative fling was obviously based on false hopes in that the market "gapped up" at the opening bell. It's a sign that investor optimism has not been fully demolished by recent events. And it was just yesterday that I mentioned that stocks could only gain a few hundred points because they had yet to retest the lows. How prescient of the market... and me!
Markets hate gaps and always find ways to fill them. This market had been stuck between 8149 and 8200 on the Dow. Today, it simply ignored the level. Danger lurks in today's gaps, but the public is being prepared for another onslaught of negative news, most likely not until March, however. Clearly, stocks have further to fall from these levels.
Optimism was as naked today as a bull's backside as advancing issues trounced decliners, 5412-1178. Plenty of pent-up investor demand went to work. Volume was reasonable. New lows outpolled new highs, 111-15.
NYSE Volume 1,548,266,000
NASDAQ Volume 2,160,559,000
Speculators in commodity markets were less convinced. Oil gained a sparing 58 cents, to $42.16. Gold fell $11.40, to $890.00, while silver lost 21 cents, to $11.96. The unmistakable signal from commodities are bearish and deflationary, right in line with slack demand and tight credit markets.
After the bell, Starbucks reported earnings and revenue that missed estimates and says it will cut 6,700 jobs in '09.
Enjoy your latte. The government and Wall Street are supplying the froth.
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