Crash Averted by PPT

The absolute garbage coming from the Federal Reserve in the form of jawboning, daily repurchase agreements and soon-to-be-announced round of rate cuts, have distorted and perverted the US equity markets to a point at which there should be no investor confidence whatsoever.

With the markets down significantly all day, the Fed and Treasury, under the guise of the Plunge Protection Team (PPT, or, more specifically, the President's Working Group on Financial Markets) sent stocks soaring off their lows and nearly into positive territory. The most egregious escapade was on the Dow, which went from being down 190 points at 2:15 to UNCHANGED at 3:15. Right around 3:10 ET, the index went absolutely parabolic, gaining 70 points in under four minutes.

There are no brokerages, investors or arbitrageurs on the planet who could have accomplished such a monumental market-moving feat other than the PPT, working in concert with the nation's largest brokerages, Merrill Lynch (more about them later), Goldman Sachs, et. al.

The fraud perpetrated upon the people of the United States is one which purports that our financial markets are safe and secure, when in fact they are propped up daily by infusions of cash from the Federal Reserve and brokerages working in concert.

Only some late day selling by honest market participants kept the markets from a complete recovery into positive territory. That the Dow finished the day anywhere near positive is an affront to every educated trader on the planet. I take these matters personally, since it is my money (and others) being toyed with by the Fed.

The unmitigated actions by the Fed of late have become so pronounced and obvious to seasoned market watchers as to be laughable, were it not for the fact that they are pumping billions of dollars into the markets to avoid a complete and utter capitulation of the equity markets. With the worldwide credit markets already in a state of seizure, the Fed and Treasury actions are a desperate propping up by a bunch who are effectively destroying the value of the US Dollar every day. They deserve nothing less than a monumental market crash followed by ouster from office and criminal proceedings.

It's sick. It should stop, but it won't. We're under a fascist regime, so all lies are allowed, even big ones that affect the lives of every man woman and child in the country and millions more who haven't even been born.

Dow 13,675.25 -0.98; NASDAQ 2,774.76 -24.50; S&P 500 1,515.88 Down 3.71; NYSE Composite 10,009.30 -31.69

Despite the outright rigging by the Fed, PPT, Goldman, etc., stocks sagged again on Wednesday as the overhang of the mortgage malaise continues to haunt any company even remotely associated with the housing industry.

Merrill Lynch, one closely aligned by the weight of their mortgage portfolio, got the ball rolling downhill before the markets opened, offering a third quarter report that the officers of the company wish had been chewed up by a friendly dog.

Merrill (MER) lost so much money this quarter it won't fit on the screen. They were pounded most of the day and according to reports, investors were withdrawing money from Merrill trading accounts as quickly as they could.

As sickening as the corrupt Fed intervention into today's (and every day's) market was, declines outnumbered advances 2 to 1 and new lows distanced themselves from new highs, 353-161. It's a very sick market which should have closed at or near the intraday lows.

Oil was up another $1.83 to $87.10, gold gained $2.50 to $765.60, and silver slipped 6 cents to $13.59

But, really, how did the Dow lose less than a point? The US economy is virtually on its knees. That's without a doubt, despite what the president, Ben Bernanke, Hank Paulson, or any other paid shill tells you.

NYSE Volume 3,803,483,500
NASDAQ Volume 2,739,684,250

Paper Chase Leads Stocks Higher

Stocks closed sharply higher on US markets Tuesday, with relief coming in the form of better-than-expected earnings from a handful of companies. Still, the market struggled through much of the day, as the Dow, in particular, made 70 points of the day's gains in the final 40 minutes of trading.

Dow 13,676.23 +109.26; NASDAQ 2,799.26 +45.33; S&P 500 1,519.59 +13.26; NYSE Composite 10,040.99 +110.21

After falling five consecutive days last week (with the exception of the NASDAQ, which had one up session last week), the markets have opened this important earnings season week with a pair of gainers. Absent important economic reports, the markets continue to climb a wall of worry, depending upon the 3rd quarter results of various firms.

The only meaningful economic reports this week are existing and new home sales, due out tomorrow and Thursday, respectively, both at 10:00 am ET.

Companies that reported after the close Monday or before the open Tuesday were Apple (AAPL), American Express (AXP), AT&T (T), Lockheed Martin (LMT), TD Ameritrade (AMTD) and UPS (UPS), all of which beat street expectations.

After the close Tuesday, internet retailer Amazon (AMZN) reported earnings for the quarter of $80 million, or 19 cents per share, from $19 million, or 5 cents per share, during the same period last year, beating expectations by a penny. Shares were higher by 9.53 (to 100.82) prior to the release, though the stock gave most of that gain back in after-hours trade due to gross margin worries.

Omnicom, Inc. (OMC), the world's largest advertising and marketing concern, posted net income of 62 cents per share, beating expectations by .01. Despite the solid results, the stock lost on the day, due to concerns going forward. The company gave a cautious outlook for 2008.

Advancing issues beat decliners by a nearly 2-1 margin, but new lows continued to hold sway over new highs, though by a narrow margin, 213-186.

Oil slid 75 cents to $85.27. Gold and silver registered marginal gains.

With Amazon's news after the close Tuesday, Wednesday may open with more gains. Of assistance could be these companies, reporting prior to the open: energy conglomerate ConocoPhillips (COP), drug manufacturer GlaxoSmithKline (GSK), aircraft maker Boeing (BA) and brokerage Merrill Lynch (MER). Those stocks could make or break the will of investors out of the gate.

NYSE Volume 3,172,097,500
NASDAQ Volume 2,324,812,500

Day-Trading with the Fed

Every day, investors take risks.

Implied in the buying and selling of stocks is the gamble that shares of the stocks in question will go up or down, lose or gain value, based often on little more than the whims of the market.

However, it's a rigged game. The Fed routinely pumps money into the markets through their daily repurchase agreements, or "repos" as they're known. Today's "fun money" - $10.5 billion - arrived precisely 10 minutes after the market had opened, just in time to stave off a massive sell off which had the Dow down more than 100 points right out of the gate.

As the day wore on, the effect of this "money out of thin air" had on the psyche of the market was apparent. The Dow took a nearly 200-point round trip, eventually ending the day with a gain of 45 points, ending a five-day losing streak.

Dow 13,566.97 +44.95; NASDAQ 2,753.93 +28.77; S&P 500 1,506.33 +5.70; NYSE Composite 9,930.78 +10.51

So, effectively, the Fed took most of the risk out of buying stocks, for today, at least. Tomorrow, and the remainder of this week and next, is likely to be more of the same stumbling around we've experienced for the past few months.

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The market direction is predominantly to the downside, though Fed actions have prevented the essential shakeout to occur in all its fury. Instead, we get the slow motion train wreck with the occasional pileup like we had on Friday.

Stocks really were weak at the open and actually for much of the day. Advancing issues only led decliners by a 7-5 margin, while new lows dislocated new highs, 420 to 94. So, if you're convinced the worst is over, think again.

Oil dipped $1.04 to $87.56, a price so gaudy and absurd that it's painful to print the actual number. Gold lost $8.40 to $760.00, yet another sign of the credit-to-cash trade. Silver dipped 8 cents to $13.56 amid continuing commercial supply-demand usage debate.

Today's market gains were purely Fed-inspired and can hardly be called sustainable into the remainder of the week.

Nearly a third of the S&P 500 components will report their quarterly results this week. More than 25% have missed profit targets, many of which were supposed to be easy marks.

After Monday's close, 36 companies will report their earnings including Apple (AAPL), American Express (AXP) and Texas Instruments (TXN).

There are 71 companies reporting their earnings prior to Tuesday's open.

The off-balance-sheet fraud inspired by Enron has now spread fully to the banking system. The credit crunch has severely damaged the world economic racket and the banks can do nothing other than hide the losses for now. At some later date, probably some time in the first quarter of '08, those losses will see the light of day and the end-game will commence.

NYSE Volume 3,310,854,000
NASDAQ Volume 1,923,987,125

That Sinking Feeling

US equity investors lost boatloads of money on Friday as weak corporate earnings reports, credit concerns, fears of recession and oil over $90 a barrel sent stocks on a stunning day-long decline.

Dow 13,522.02 -366.94; NASDAQ 2,725.16 -74.15; S&P 500 1,500.63 -39.45; NYSE Composite 9,920.27 -254.34

For the week, the Dow Jones Industrials lost 576 points and did not post a gain on any single day. The Dow is now on a five day losing streak and has closed lower in seven of the last eight sessions. Friday's loss was the third worst of the year for the Dow.

The NASDAQ and S&P 500 also closed decisively lower and the NYSE Composite broke below the 10,000 mark for the first time since September 26.

All 30 of the Dow components were down, a very rare occurrence. The biggest hit was taken by Caterpillar (CAT), which reported net income for the three months ended Sept. 30 of $927 million, or $1.40 a share, from $769 million, or $1.14 a share in the year-ago period. Analysts expected a third-quarter profit of $1.43 a share.

The company lowered its forecast for the remainder of 2007 and warned that 2008 would be "below potential" and that the US economy would be in or near recession next year. That sent the stock reeling, losing 4.26 to 73.40, a 5.5% decline for the day.

Financial stocks also took serious hits. Bank of America (BAC), Citigroup (C) and troubled mortgage originator Countrywide Financial (CFC) were among the loss leaders.

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As might be expected from the dreadful headline numbers, declining issues outpaced advancers by a better than 5-1 margin. New lows catapulted past new highs, 375-143.

After briefly topping $90, crude for November delivery backed off, finally closing down 87 cents to $88.60. Gold was lower, losing 30 cents to close at $768.40/ounce. Silver continued its mini-slump, dropping another 17 cents to $13.64. Despite the lackluster day, precious metals remain a top choice for investors looking for protection against any economic downturn and a hedge against inflation. Both a recession and inflation now appear to be almost certainties in the upcoming months.

After the disaster that this week was, investors probably aren't going to get much relief next week, as more corporate earnings reports continue to flow into the mix. Additionally, reports on September existing and new home sales come out on Wednesday and Thursday, respectively. Durable Goods Orders for September will also be reported on Thursday, October 25.

NYSE Volume 3,531,780,250
NASDAQ Volume 2,371,651,750

The Grand Charade Continues

Prior to the market's opening, Bank of America (BAC) released a dismal set of numbers for the 3rd quarter. The nation's second-largest bank posted profits of $3.7 billion, down 31%, and far short of analyst estimates. The bank's profits in investment banking plummeted 93%, to $100 million, thanks to a $607 million trading loss, another $527 million loss related to mortgage and credit derivatives, and a $247 million write-down for leveraged loans.

Washington Mutual (WAMU) also released similarly-ugly 3rd quarter results prior to the open. eBay reported a loss the previous night.

At the open, the Dow and other indices went straight into the tank. The Dow was down 90 points by 10:00 am. However, the diligent idiots at the Fed repo window were hard at work, granting $28 billion in liquidity to various members. See here.

For the remainder of the trading session, instead of the all-out plunge that should have occurred, traders were treated to the tantalizingly delicious prospect of a completely manipulated market. $28 billion goes a long way towards keeping markets liquid and avoiding catastrophe. Our resident geniuses at the Fed and major brokerages have now managed to not only avoid collapse, but keep honest participants out by constantly pumping in new money and, in some cases, posting gains!

Dow 13,888.96 -3.58; NASDAQ 2,799.31+6.64; S&P 500 1,540.08 -1.16; NYSE Composite 10,174.61 +9.31

I actually began a thread on the Fed's $28 billion in repos. Some interesting commentary followed my lead.

What does this mean? Essentially, the Federal Reserve loans out funds to various member banks, who then turn the money loose - through their brokerage arms - on the general market. This causes a large amount of dislocation in orderly trade, call it manipulation. The brokerages and the Fed have a vested interest in avoiding "events" that could cause panic. But what they are doing is eroding not only their own credibility, but that of the US dollar with capricious market intervention at any sign of trouble.

Orderly markets need to correct when there has been systemic dysfunction, like what we've seen in the sub-prime mortgage market and the spillage into the general credit system.

In August, the market was correcting, on heavy volume, though the Fed decided to change the game by lowering the discount rate (twice) and the Fed funds rate by 50 basis points at their September meeting. Everything since then - including the incredible 1000+ point gain from August 18 to October 1 - has been pure fiction, built with Fed money, essentially OUR money, the public's money, which the Fed and Treasury see fit to debase freely in order to bail out their friendly bankers and corporate CEOs.

The entire scheme only gets worse, and eventually these short-term bandages will cause a complete and total collapse of the economy. We're actually quite close to that now, but don't worry, because if the economy implodes, and prices for milk and gas and heating fuel reach levels where only the rich can afford them, your stocks will continue to go up and up and up.

Thanks, Mr. Bernanke. I thought your predecessor, Mr. Greenspan was a bubble-inducing tool of politicians. But you have shown that he was nothing more than a piker. You, sir, have no scruples and pray at the altar of Wall Street and Broad. You are a complete traitor to the United States and should be in prison along with most of your banking "buddies." You are a complete fraud and a wastrel, a pimp for corporations and politicians. You are, in a word, deficient.

It's almost futile to cite the internals of this twisted market, but in any case, they prove instructive. Declining issues beat advancers narrowly, 16-15, while new lows overcame new highs, 278-223. In other words, this market continues to want to sell off.

Oil for November delivery hit yet another record high, gaining $2.07 to $89.47 per barrel. Gold shot up $6.40 to $768.70. Silver was higher by a nickel to $13.80.

After the close, Google (GOOG), Wall Street's tech darling of the moment, posted third-quarter net income of $1.07 billion, or $3.38 per diluted share. Wall Street was looking for a net profit, on average, of $3.22 per share. Gross revenue rose 57 percent to $4.23 billion. The stock traded higher in the regular session by 6 points and had added another four points in early after-hours trading. Last print was above 644.00.

With today fully divorced from reality, Friday's session could go either way, though betting against the Fed and the Plunge Protection Team's (PPT) pumping strategy, could prove risky to bears who believe the entire market and credit structure to be on shaky ground.

Apparently, the entire planet could be blown to bits, yet the Fed would still pump more money into markets, gaily ringing the "all clear" chime.

NYSE Volume 2,895,854,250
NASDAQ Volume 1,973,083,875