Since the Federal Reserve announced last Wednesday that they would be injecting $600-900 billion into the monetary system through outright purchases of Treasury bond issuance, the cacophony of protest and derision has been boisterous and unrelenting. Chairman Ben Bernanke's purposeful nuking of the value of the world's reserve currency, the US Dollar, has raised eyebrows and voices from Shanghai to Sao Paulo as global finance leaders attempt to adjust their currencies to meet the expected influx of freshly-printed greenbacks.
Along with complaints from the global financial community, voices inside the United States have also weighed in, mostly condemning the action as unneeded, unwanted and eventually, inflationary.
What's worse, it doesn't seem to be working very well, as evidenced by today's 30-year bond auction, which saw lowered levels of participation and the highest yield in five months, exactly the opposite of what the liquidity tsunami was supposed to accomplish.
It's likely too early to tell, as the Fed has only today set down their Tentative Outright Treasury Operation Schedule, or TOTO, which as we all know, was the name of Dorothy's little dog in the movie, "The Wizard of Oz," an appropriate, if not slightly cynical metaphor for Mr. Bernanke standing behind a curtain pulling the levels and strings of the global economy.
Interested investors may want to print out the Fed's schedule as it should provide some guidance into which days would be better to buy or sell (warning: the Fed does not want you to sell) stocks. Those days with "operations" should be the prime selling days, and those without, opportunities to buy as the market will, no doubt, be on hold or falling. So much for free, fair and open markets. The Fed's interventionist policies have made Wall Street even more of a casino than it already was, and now they're using stocked decks and loaded die.
Things got off to another bad start for Bennie and his buddies this morning, as stocks backslid right out of the open, with the Dow falling 91 points, to its low of the day, shortly after 10:00 am. After that, however, with the banks holding firmly to the silver shorts which torpedoed a wicked rally in the precious metals late yesterday, it was once again off to the races, though the markets' pace more resembled that of a snail than a thoroughbred.
After two days of losses, the markets shrugged off middling new unemployment claims at 435,000 (below estimates, but sure to be revised higher next week), and, having convinced the sixteen suckers still trading via their e-trade accounts that the direction was negative, began the process of fleecing the sheep, all led to slaughter by the Fed-Wall Street money crunching machine.
Dow 11,357.04, +10.29 (0.09%)
NASDAQ 2,578.78, +15.80 (0.62%)
S&P 500 1,218.71, +5.31 (0.44%)
NYSE Composite 7,747.46, +45.15 (0.59%)
NASDAQ Volume 2,023,686,125
NYSE Volume 5,268,140,500
Advancing issues turned the tide on decliners, 4158-2329. New highs numbered only 362, a notable change from the kinds of numbers reported over the past three weeks. Only 49 stocks made new lows. Volume was right about average on a day in which the dollar was up against most other currencies.
So, the Fed may be getting what it wants when it turns on the money spigot on Friday with the first of 18 monetary injections. They'll keep at it every day except the days immediately before and after Thanksgiving, for a total of about $105 billion, through December 9. If that doesn't get stocks flying higher than a redneck on meth, nothing will, and that's just the Fed's point, to make asset values climb, staving off the dastardly deflation, a condition that would suit most Americans just fine. A big THANK YOU VERY MUCH to Mr. Bernanke from the middle class.
Most commodity prices are already much higher than they were just two months ago, when Bernanke first began to whisper loudly about the now-imminent liquidity push. Cotton, corn, wheat and almost all foodstuffs have been on a tear, so much so that the exchanges have been slapping on tighter margin requirements for many.
Crude oil was up $1.09 on the day, to a 2010 high of $87.81. Just in time for Christmas, the Fed's policies are about to send gas prices through the roof. Thanks again, Mr. Ben! After yesterday's drubbing, gold gained $10.70, to $1403.40 at last print. Silver also caught a bid, trading at $27.14, up 19 cents on the day.
Meanwhile in the aftermath of mortgage insurer Ambac's bankruptcy filing Monday (and delisting as of today),the city of Harrisburg, PA, the state capitol, hired the law firm of Cravath, Swaine & Moore to advise on a potential municipal bankruptcy, which has been rumored for many months. with the fall of Ambac, the dominoes may begin tumbling, first among other mortgage insurers, then to municipalities and into credit default swaps mostly in the hands of the nation's largest banks.
Considering the timing of the Fed's dramatic money creation scheme, might these funds be nothing more than a backdoor backstop to the banks again? They certainly were aware of Ambac's condition and that of the handful of other illiquid mortgage insurers. If this were the case, then all bets are off concerning market gains, as the money will never see the light of day. It will be parceled out among the nation's greatest criminals to cover their corrosive and rapidly depreciating swaps and guarantees between each other.
While Ambac's portfolio may be only a few billion short, the forward effect is to cause other defaults along the chain, and once the genie gets out of the unregulated CDS bottle, there's likely no putting her back in. The cascading effect of illiquid assets turning enterprises wholly insolvent could happen within split seconds, without warning, and it's already apparent that the band-aids applied to the insolvent banks thus far have not proved remedial.
Higher interest rates on Treasuries going forward will be a sure sign that the financial structure is about to topple, with over $600 TRILLION of notional exposure ready to come crashing down. This is the conditions under which we watch our financial markets these final days of 2010. If Bernanke's plan does not cause stocks to rise, interest rates to fall and general inflation (bad enough), it's a safe bet that financial reckoning day may come sooner rather than later.
Tracing out the scenario, the Fed would probably not allow everything to simply collapse in a heap. After a few days of severe declines in the stock markets, highlighted by drops in financial stocks, the president would likely call a bank holiday stretching anywhere from a week to a month in an effort toward calmness. Unfortunately, the effect of that would be wide-eyed panic, as most people would be without cash and maybe denied access to credit cards as well.
After that, who knows? Emergency powers? Martial law? A complete overhaul of the Fed and Treasury? The ripples would be worldwide.
It's the nightmare scenario, but in the current climate, the possibility of a massive failure is possible and palpable.
Wednesday, November 10, 2010
Tuesday, November 9, 2010
There's Something Very Wrong and the Tea Party Knows It
Stocks were down for the second straight session, as criticism of the Federal Reserve's recently-announced QE2 has ramped up and is nearing a fever pitch. While the Fed seeks to embark on another round of handing easy money to criminals on Wall Street, the rest of the world is not exactly enamored with Chairman Ben Bernanke.
Europe is beset with its own problems, stemming from unstable, out-of-control government spending in the PIIGS countries, but particularly Ireland and Portugal, which have gone from bad to mush worse over the past six months. That has kept the US dollar from appreciating against the Euro to any great degree, only because money seeks its safest refuge, and in currency markets, the US still appears to be a safer bet than most of Europe.
The Chinese expressed their displeasure by having their ratings agency, Dagong Global Credit Rating Co. Ltd cut the U.S. local and foreign currency long-term sovereign credit rating to A-plus from AA.
Throughout the day, stocks were sent lower as gold and silver, especially, caromed ever higher, with gold spiking to $1425.50 and silver hitting $29.38. By the end of the day, however, the fiat money-makers had had enough and the CME announced an increase in margin requirements to buy silver from $5000 per contract to $6500 (silver is traded in 5000 oz. increments).
That may have been cover for some serious naked shorting of both gold and silver, because while it may explain the late day selloff in silver, it would have had little effect on gold, which also crashed late in the day (see chart at right). At the moment, the bid on gold is $1393.00, and silver has been smashed down to $26.95. The obvious take-away is that the Bernanke put - his $600-900 billion in USSS created right out of thin air, is receiving some serious competition from real money, that being gold and silver, and the Fed, through their proxies on the trading floors had to do something.
They're likely to try to tamp down gold and silver prices in order to garner more bids on their beloved US stock markets, though it's unclear at this time whether anything they do can stem the tide rising against them. In the long run, though most people will never notice, gold and silver are going to become the basis for currency, not Federal Reserve Notes (FRNs) and debt. Sides are being drawn and this battle will end with few winners. Most of the losers will be stockholders and owners of paper currencies. Gold and silver - as they have over thousands of years - will prevail.
Dow 11,346.75, -60.09 (0.53%)
NASDAQ 2,562.98, -17.07 (0.66%)
S&P 500 1,213.40, -9.85 (0.81%)
NYSE Composite 7,702.31, -79.89 (1.03%)
NASDAQ Volume 2,204,733,500
NYSE Volume 5,605,771,500
Declining issues rocked advancers, 4709-1789. There were still 777 new highs to a paltry 82 new lows, but volume was much higher than yesterday's session and better than most days during the run-up of the past two months, a discouraging sign for stock investors, but probably the best news for the long-term, in which the stock market becomes a game of last-man standing.
Oil even came down for a change, dropping 34 cents, to $86.72, and if the stock market continues to slide, expect oil to diverge from gold and silver, following stocks down the deflationary path. Bernanke's big money bet notwithstanding, the next few weeks and into the end of the year may be very hazardous times for trading in anything.
With a pickup of sixty seats in the House, the Republican party has taken control, spurred onward by the success of anywhere from 30-40 Tea Party candidates. In the wide-ranging report from PBS below, some of the nuances are Rand Paul's hint that he may cut federal employee paychecks by 10%, Utah Senator Mike Lee pondering a constitutional amendment to balance the budget, cut the Department of Education and voting NO on raising the debt ceiling, a vote that is likely to come up early in the next term (March-May, 2011).
Europe is beset with its own problems, stemming from unstable, out-of-control government spending in the PIIGS countries, but particularly Ireland and Portugal, which have gone from bad to mush worse over the past six months. That has kept the US dollar from appreciating against the Euro to any great degree, only because money seeks its safest refuge, and in currency markets, the US still appears to be a safer bet than most of Europe.
The Chinese expressed their displeasure by having their ratings agency, Dagong Global Credit Rating Co. Ltd cut the U.S. local and foreign currency long-term sovereign credit rating to A-plus from AA.
Throughout the day, stocks were sent lower as gold and silver, especially, caromed ever higher, with gold spiking to $1425.50 and silver hitting $29.38. By the end of the day, however, the fiat money-makers had had enough and the CME announced an increase in margin requirements to buy silver from $5000 per contract to $6500 (silver is traded in 5000 oz. increments).
They're likely to try to tamp down gold and silver prices in order to garner more bids on their beloved US stock markets, though it's unclear at this time whether anything they do can stem the tide rising against them. In the long run, though most people will never notice, gold and silver are going to become the basis for currency, not Federal Reserve Notes (FRNs) and debt. Sides are being drawn and this battle will end with few winners. Most of the losers will be stockholders and owners of paper currencies. Gold and silver - as they have over thousands of years - will prevail.
Dow 11,346.75, -60.09 (0.53%)
NASDAQ 2,562.98, -17.07 (0.66%)
S&P 500 1,213.40, -9.85 (0.81%)
NYSE Composite 7,702.31, -79.89 (1.03%)
NASDAQ Volume 2,204,733,500
NYSE Volume 5,605,771,500
Declining issues rocked advancers, 4709-1789. There were still 777 new highs to a paltry 82 new lows, but volume was much higher than yesterday's session and better than most days during the run-up of the past two months, a discouraging sign for stock investors, but probably the best news for the long-term, in which the stock market becomes a game of last-man standing.
Oil even came down for a change, dropping 34 cents, to $86.72, and if the stock market continues to slide, expect oil to diverge from gold and silver, following stocks down the deflationary path. Bernanke's big money bet notwithstanding, the next few weeks and into the end of the year may be very hazardous times for trading in anything.
With a pickup of sixty seats in the House, the Republican party has taken control, spurred onward by the success of anywhere from 30-40 Tea Party candidates. In the wide-ranging report from PBS below, some of the nuances are Rand Paul's hint that he may cut federal employee paychecks by 10%, Utah Senator Mike Lee pondering a constitutional amendment to balance the budget, cut the Department of Education and voting NO on raising the debt ceiling, a vote that is likely to come up early in the next term (March-May, 2011).
Monday, November 8, 2010
Currency Wars: Gold/Silver vs. US$ vs. Euro
While there wasn't much of a downdraft in stocks today (the NASDAQ was positive at the close), currency watchers had plenty to occupy their attention as the dollar appreciated against the Euro, though the big winners were Gold and Silver (the shining star of the past two months).
The Fed offered up $6.5 billion to Wall Street in the form or a POMO, but the boys said, "oh, no" and continued their selling of overpriced stocks in the face of Euro woes.
The European answer to Ben Bernanke's blind monkey monetary policy (QE2) was expressly Continental. As Ireland, Greece, Portugal and Spain teeter on the brink of insolvency, the European response was a curt, "you're not so bad; we're worse," as the race to the bottom of the currency abyss accelerated to a manic pace.
The big beneficiaries were manifested in pronounced moves in gold and silver, the former reaching new all-time highs, the latter continuing it's crusade against anything fiat. At the end of the day, owning gold, silver or dollars was the correct bet, against the wishes of Mr. Bernanke, and, at least for today, a complete repudiation of his overt, repulsive monetarism.
One outlier worth note was Bank of America (BAC), which defied all logic and sound investing strategy by posting another in a series of gains. Shares of the nation's largest mortgage lender finished up 24 cents, to $12.60, equaling its close on October 14. Shares had sunk as low as 11.16 (October 25), but have since found new life, though the stock is so heavily shorted, it may be merely a shaking out of weak hands. The stock gapped up at the open and made its best advances in the afternoon, trading as high as 12.73 before settling lower.
Oddly enough, the euphoria from last week, spurred by the Fed's announcement that it would monetize up to $900 billion in debt over the next eight months and sweeping victories in the House by the Republican party, seemed to fade in the light of the new week. Doubters of Fed policy are numerous and many have loudly decried Mr. Bernanke's QE as the wrong prescription for the US and global economies. Among them, US Representative Ron Paul from Texas, who expressed a view that the Fed would fail on its own and that gold should compete with Federal Reserve Notes as currency (see video below).
Additionally, Paul took aim at entitlements on his congressional website, calling for a rejection of the welfare state and offered a position to make Social Security voluntary.
Dow 11,406.84, -37.24 (0.33%)
NASDAQ 2,580.05, +1.07 (0.04%)
S&P 500 1,223.25, -2.60 (0.21%)
NYSE Composite 7,782.20, -18.46 (0.24%)
With the first downturn in the last seven sessions, declining issues paraded past advancers, 3437-3012. New highs led new lows, 691-53, so there's obviously still a good deal of speculation continuing. Volume, however, returned to moribund levels that prevailed prior to last week.
NASDAQ Volume 1,824,770,375.00
NYSE Volume 4,468,926,000
Oil continued to surge, despite the higher dollar, gaining 21 cents, to $87.06, on the front-end contract. The latest print on gold was up $15.30, to $1409.40, while silver amazed again, gaining 95 cents, to $27.71.
The Fed offered up $6.5 billion to Wall Street in the form or a POMO, but the boys said, "oh, no" and continued their selling of overpriced stocks in the face of Euro woes.
The European answer to Ben Bernanke's blind monkey monetary policy (QE2) was expressly Continental. As Ireland, Greece, Portugal and Spain teeter on the brink of insolvency, the European response was a curt, "you're not so bad; we're worse," as the race to the bottom of the currency abyss accelerated to a manic pace.
The big beneficiaries were manifested in pronounced moves in gold and silver, the former reaching new all-time highs, the latter continuing it's crusade against anything fiat. At the end of the day, owning gold, silver or dollars was the correct bet, against the wishes of Mr. Bernanke, and, at least for today, a complete repudiation of his overt, repulsive monetarism.
One outlier worth note was Bank of America (BAC), which defied all logic and sound investing strategy by posting another in a series of gains. Shares of the nation's largest mortgage lender finished up 24 cents, to $12.60, equaling its close on October 14. Shares had sunk as low as 11.16 (October 25), but have since found new life, though the stock is so heavily shorted, it may be merely a shaking out of weak hands. The stock gapped up at the open and made its best advances in the afternoon, trading as high as 12.73 before settling lower.
Oddly enough, the euphoria from last week, spurred by the Fed's announcement that it would monetize up to $900 billion in debt over the next eight months and sweeping victories in the House by the Republican party, seemed to fade in the light of the new week. Doubters of Fed policy are numerous and many have loudly decried Mr. Bernanke's QE as the wrong prescription for the US and global economies. Among them, US Representative Ron Paul from Texas, who expressed a view that the Fed would fail on its own and that gold should compete with Federal Reserve Notes as currency (see video below).
Additionally, Paul took aim at entitlements on his congressional website, calling for a rejection of the welfare state and offered a position to make Social Security voluntary.
Dow 11,406.84, -37.24 (0.33%)
NASDAQ 2,580.05, +1.07 (0.04%)
S&P 500 1,223.25, -2.60 (0.21%)
NYSE Composite 7,782.20, -18.46 (0.24%)
With the first downturn in the last seven sessions, declining issues paraded past advancers, 3437-3012. New highs led new lows, 691-53, so there's obviously still a good deal of speculation continuing. Volume, however, returned to moribund levels that prevailed prior to last week.
NASDAQ Volume 1,824,770,375.00
NYSE Volume 4,468,926,000
Oil continued to surge, despite the higher dollar, gaining 21 cents, to $87.06, on the front-end contract. The latest print on gold was up $15.30, to $1409.40, while silver amazed again, gaining 95 cents, to $27.71.
Friday, November 5, 2010
US Stock Markets Are Absurdly Manipulated
Here's a message to the people manipulating the markets:
We know what you're doing because you're so bad at it. Like today. Stocks were down all day, except for the last 20 minutes, you and your fat-cat cohorts boosted everything just to show a positive print. Very lame!
Really, folks, the markets are so out of touch, they're not to be touched. I had planned to write a bit about the blowback from the financial community over Bernanke's relentless pumping, a la QE2, but I'm so thoroughly disgusted, I just can't bring myself to write it. Suffice it to say that most of the rest of the world thinks his tinkering is bad monetary policy, and you can count me as one of that group.
Dow 11,444.08, +9.24 (0.08%)
NASDAQ 2,578.98, +1.64 (0.06%)
S&P 500 1,225.85, +4.79 (0.39%)
NYSE Composite 7,800.66, +18.23 (0.23%)
Advancing issues topped decliners, 3679-2767. There were 1069 new highs and 96 new lows. Volume was strong for the second straight day.
NASDAQ Volume 1,984,391,875.00
NYSE Volume 6,297,631,000
The abhorrent non-farm payroll figures - a complete fabrication - came in at +151,000, though most of the increase was surely artificial, boosted by the birth-death model and seasonal adjustments. It's all part of the feel-good story the politicians and bankers keep trying to spin, while real unemployment stands at about 20%. Go to a big city or any medium sized city in the South and you can see first hand what's really going on in America.
The poor are being kicked completely to the curb, the middle class soon to join them. Mainstream media has become nothing more than a mouthpiece for corporate America. It's really quite sad.
Since September 1, the Dow Jones Industrials are up nearly 1400 points, a 14% increase, as though we were in the midst of a massive recovery.
Crude oil tacked on another 36 cents on Friday, to $86.85. Expect $4.00 gas by Spring. Gold finished another $1.10 higher, another all-time high, at $1394.00. Silver continued its meteoric ascent, adding 38 cents, to $26.75.
The Fed has depreciated the value of the dollar some 95% since its inception in 1913. They are in the process of squeezing the final 5% out of it. Be ready for some serious holiday inflation, but enjoy the weekend!
We know what you're doing because you're so bad at it. Like today. Stocks were down all day, except for the last 20 minutes, you and your fat-cat cohorts boosted everything just to show a positive print. Very lame!
Really, folks, the markets are so out of touch, they're not to be touched. I had planned to write a bit about the blowback from the financial community over Bernanke's relentless pumping, a la QE2, but I'm so thoroughly disgusted, I just can't bring myself to write it. Suffice it to say that most of the rest of the world thinks his tinkering is bad monetary policy, and you can count me as one of that group.
Dow 11,444.08, +9.24 (0.08%)
NASDAQ 2,578.98, +1.64 (0.06%)
S&P 500 1,225.85, +4.79 (0.39%)
NYSE Composite 7,800.66, +18.23 (0.23%)
Advancing issues topped decliners, 3679-2767. There were 1069 new highs and 96 new lows. Volume was strong for the second straight day.
NASDAQ Volume 1,984,391,875.00
NYSE Volume 6,297,631,000
The abhorrent non-farm payroll figures - a complete fabrication - came in at +151,000, though most of the increase was surely artificial, boosted by the birth-death model and seasonal adjustments. It's all part of the feel-good story the politicians and bankers keep trying to spin, while real unemployment stands at about 20%. Go to a big city or any medium sized city in the South and you can see first hand what's really going on in America.
The poor are being kicked completely to the curb, the middle class soon to join them. Mainstream media has become nothing more than a mouthpiece for corporate America. It's really quite sad.
Since September 1, the Dow Jones Industrials are up nearly 1400 points, a 14% increase, as though we were in the midst of a massive recovery.
Crude oil tacked on another 36 cents on Friday, to $86.85. Expect $4.00 gas by Spring. Gold finished another $1.10 higher, another all-time high, at $1394.00. Silver continued its meteoric ascent, adding 38 cents, to $26.75.
The Fed has depreciated the value of the dollar some 95% since its inception in 1913. They are in the process of squeezing the final 5% out of it. Be ready for some serious holiday inflation, but enjoy the weekend!
Thursday, November 4, 2010
POMO + QE2 = Stocks to the Moon, Silver Soaring
One of the side effects of Ben Bernanke's $800 billion gambit - and there are many - is to send stocks directly upward, while also giving silver and gold somewhat of a boost.
A day after the announcement of $600 billion in QE2, plus another $150-200 billion more in re-allocated MBS, the Fed hit the trifecta with a 4$.5 billion POMO today and sent stocks to the their best levels since the crash of 2008.
Yes, siree! We're back on easy street thanks to Uncle Benji debasing the currency. Now all you people worried about your pension funds and 401Ks can rest easy, Uncle Ben's got ya covered.
Another side affect of QE is runaway inflation, but let's not talk about that now. Let's talk about that when gas is $4.25 a gallon, because that's where this is evidently headed. And word has it that if this round of stimulus via magic money creation isn't enough, don't worry, Ben can just conjure up some more. Isn't capitalism nice, easy, fun?
Oh, and you people who have saved diligently and are now in fixed income securities, bonds, and money markets, well, you're screwed. You'll still have money; it just won't be worth much, and, as an added bonus, it will buy even less in years ahead. Happy Retirement!
To the uninitiated, typical, dumb-ass American, they'll just see that the Dow was up AGAIN! and their stocks are doing well, so all is good in America. We've got a whole slew of newly-minted Republicans in the House of Representatives all set to slash taxes (for corporations), cut spending (on social programs) and usher in a new era of prosperity for the good old USA.
The problem with this scenario is that it's just all bunk. We're headed down the path of the Weimar Republic or, more recently, Zimbabwe, places where inflation was so out of control that restaurants asked patrons to pay in advance because by the time they'd finish their meal, it would cost more. The currency became essentially worthless in a matter of days and weeks.
Don't worry, though, we're just getting started. The fun part of hyper-inflation won't come until the dollar index hits something like 45. It's still above 75, or at least it was this afternoon. That could have changed.
Dow 11,434.84, +219.71 (1.96%)
NASDAQ 2,577.34, +37.07 (1.46%)
S&P 500 1,221.06, +23.10 (1.93%)
NYSE Composite 7,782.43, +174.02 (2.29%)
Gainers decimated losers on the day, 5265-1295. The new highs, new lows numbers were simply amazing: 1343 new highs; perhaps more amazing were the 112 new lows. From where did those come?
Volume was exceptional, for once, though considering that the Fed has only begun to pump nearly a trillion dollars into the stock market, we could see volume spikes which dwarf this in weeks and months to come. Today was a day to just pick some stocks you like and throw a bunch of money at them. They're almost guaranteed to go up. Even Bank of America (BAC) was up nearly 5%, despite the news that they may be on the hook for over $120 Billion in mortgage put-backs. In other words, the bank will be munching on those loans for years to come and, in fact, their exposure is probably more on the order of double or triple that.
NASDAQ Volume 2,533,570,750.00
NYSE Volume 6,609,444,500
The good news is that gold and silver went off like rockets today as well, because the really smart money (which gold and silver are) is into this space in expectation of enormous inflation and destruction of the dollar and other currencies. Gold was up $44.10, hitting a new all-time record high of $1392.90. Silver, in percentage terms, did even better, gaining $1.53, to $26.37, as JP Morgan and HSBC face criminal and class action lawsuits related to shorting and manipulating the silver market. Ouchie for them; great for anyone who loves silver.
It's a wild world out there; every man, woman and child for themselves.
Just a note in the wind. Keep an eye on House of Representative member Ron Paul, and his newly-elected Senator son, Rand. I'm promoting a Paul-Paul ticket for president and VP in 2012. A father-son team in the White House. Looks like a natural to me.
Oh, and never mind that unemployment claims were up 20,000 this week, to 457,000. That number will grow ever larger, likely to surpass 500,000 in December or by late January at the latest, while the stock market soars. Hey, who needs employees when you've got the Fed's printing presses on your side.
Tomorrow's non-farm payroll report for October should be a non-event, as will most fabricated economic data from now on. with money creation out the wazoo, there's no sense in measuring anything except the thickness of your bankroll.
Yippie! We're all going to be rich!
A day after the announcement of $600 billion in QE2, plus another $150-200 billion more in re-allocated MBS, the Fed hit the trifecta with a 4$.5 billion POMO today and sent stocks to the their best levels since the crash of 2008.
Yes, siree! We're back on easy street thanks to Uncle Benji debasing the currency. Now all you people worried about your pension funds and 401Ks can rest easy, Uncle Ben's got ya covered.
Another side affect of QE is runaway inflation, but let's not talk about that now. Let's talk about that when gas is $4.25 a gallon, because that's where this is evidently headed. And word has it that if this round of stimulus via magic money creation isn't enough, don't worry, Ben can just conjure up some more. Isn't capitalism nice, easy, fun?
Oh, and you people who have saved diligently and are now in fixed income securities, bonds, and money markets, well, you're screwed. You'll still have money; it just won't be worth much, and, as an added bonus, it will buy even less in years ahead. Happy Retirement!
To the uninitiated, typical, dumb-ass American, they'll just see that the Dow was up AGAIN! and their stocks are doing well, so all is good in America. We've got a whole slew of newly-minted Republicans in the House of Representatives all set to slash taxes (for corporations), cut spending (on social programs) and usher in a new era of prosperity for the good old USA.
The problem with this scenario is that it's just all bunk. We're headed down the path of the Weimar Republic or, more recently, Zimbabwe, places where inflation was so out of control that restaurants asked patrons to pay in advance because by the time they'd finish their meal, it would cost more. The currency became essentially worthless in a matter of days and weeks.
Don't worry, though, we're just getting started. The fun part of hyper-inflation won't come until the dollar index hits something like 45. It's still above 75, or at least it was this afternoon. That could have changed.
Dow 11,434.84, +219.71 (1.96%)
NASDAQ 2,577.34, +37.07 (1.46%)
S&P 500 1,221.06, +23.10 (1.93%)
NYSE Composite 7,782.43, +174.02 (2.29%)
Gainers decimated losers on the day, 5265-1295. The new highs, new lows numbers were simply amazing: 1343 new highs; perhaps more amazing were the 112 new lows. From where did those come?
Volume was exceptional, for once, though considering that the Fed has only begun to pump nearly a trillion dollars into the stock market, we could see volume spikes which dwarf this in weeks and months to come. Today was a day to just pick some stocks you like and throw a bunch of money at them. They're almost guaranteed to go up. Even Bank of America (BAC) was up nearly 5%, despite the news that they may be on the hook for over $120 Billion in mortgage put-backs. In other words, the bank will be munching on those loans for years to come and, in fact, their exposure is probably more on the order of double or triple that.
NASDAQ Volume 2,533,570,750.00
NYSE Volume 6,609,444,500
The good news is that gold and silver went off like rockets today as well, because the really smart money (which gold and silver are) is into this space in expectation of enormous inflation and destruction of the dollar and other currencies. Gold was up $44.10, hitting a new all-time record high of $1392.90. Silver, in percentage terms, did even better, gaining $1.53, to $26.37, as JP Morgan and HSBC face criminal and class action lawsuits related to shorting and manipulating the silver market. Ouchie for them; great for anyone who loves silver.
It's a wild world out there; every man, woman and child for themselves.
Just a note in the wind. Keep an eye on House of Representative member Ron Paul, and his newly-elected Senator son, Rand. I'm promoting a Paul-Paul ticket for president and VP in 2012. A father-son team in the White House. Looks like a natural to me.
Oh, and never mind that unemployment claims were up 20,000 this week, to 457,000. That number will grow ever larger, likely to surpass 500,000 in December or by late January at the latest, while the stock market soars. Hey, who needs employees when you've got the Fed's printing presses on your side.
Tomorrow's non-farm payroll report for October should be a non-event, as will most fabricated economic data from now on. with money creation out the wazoo, there's no sense in measuring anything except the thickness of your bankroll.
Yippie! We're all going to be rich!
Subscribe to:
Posts (Atom)
Posts
