Friday, March 30, 2012

First Quarter window Dressing Complete

Little explanation needed for the results below. Pure window dressing on a day-long melt up by the fundies, loading up on first quarter top performers and blue chips like Apple, Chipolte Mexican Grill, Bank of America, IBM and other garbage momentum stocks, just so they can say, "see, we own that!"

Amusing that the Naz was down for the day. Somebody must have taken massive profits on Apple.

Nice to see gold and silver making a move, though they are both well off recent highs.

Dow 13,212.04, +66.22 (0.50%)
NASDAQ 3,091.57, -3.79 (0.12%)
S&P 500 1,408.47, +5.19 (0.37%)
NYSE Composite 8,206.93, +40.56 (0.50%)
NASDAQ Volume 1,831,280,750
NYSE Volume 3,598,988,250
Combined NYSE & NASDAQ Advance - Decline: 2972-2654
Combined NYSE & NASDAQ New highs - New lows: 212-
WTI crude oil: 103.02, +0.24
Gold: 1,669.30, +17.10
Silver: 32.48, 0.49

Thursday, March 29, 2012

Thursday Turnaround Mostly Vapors and Short-Covering

Let's see if we can find the good news that took the Dow back from a morning loss of 94 points to a gain of nearly 20 points by day's end?

Initial employment claims came in at 359K on expectations of 350K and the prior week was revised higher, from 348K originally reported to 364K. Well, that can't be it.

The third and final estimate for fourth quarter 2011 GDP remained steady at 3.0%. Maybe.

Moody's downgraded five Portugese banks. Nope.

Gas at the pump is still hovering around the $3.90/gallon range, on average, across the United States. Hmmm, probably not.

Those were the major headlines and issues on this Turnaround Thursday, as all the major averages fell out of bed, then through the magic of computer-programmatic algorithms, found a suitable bottom and rose through the afternoon and into the close.

In days past, chartists would say that the market put in another, higher bottom, but this intra-day bottom happened to be the low for the week. In other words, the monster rally from Monday was all eaten up by greedy, high-powered day-traders who more or less control this thinly-traded market.

Now, volume was a bit more perky today, but that would be due likely to short covering and the fact that it takes more trades to move all the indices from a cratered loss to near the break-even point. All of it is rather meaningless, since only the major banks, brokerages, fund managers and some moribund hedge funds have actually been engaging in this casino-style market since the middle of 2010, right after the flash crash scared out the last remaining individual investors.

As mentioned in yesterday's post, this is all leading up to a big rally coming either Friday (1st quarter window dressing) or Monday (first trading day of the quarter), or both. Not that the end of a quarter or the beginning of one has anything to do with fundamentals, they're just when the big boys open and close their books, so it gives them something upon which to hang their hats.

The bull market that began in March of 2009 has been one of the best in history, with the major indices all up close to or more than 100% from the bottom. Doubling your money in three years is a trick only the magicians of Wall Street can perform, though they got plenty of help from the taxpayers and rich Uncle Ben Bernanke at the Federal Reserve.

In fact, uncle Ben is still pumping out scads of greenbacks to keep the rally going, because in case anyone cares to look at the Fed's policies of the past three to four years, the stock market gains are about the only positive result among them.

Sure, sure, everyone pats Bernanke on the back for "saving" the economy, but what he really saved was the banks, which had fallen over a solvency cliff. The government has been running record deficits ever since the '08 crash, the value of the dollar is on a gentle glide-path to zero, just like Ben's interest rates, inflation continues to ravage household budgets, while low interest rates on savings are killing seniors. Housing is still declining, another credit bubble - in the form of student loans, auto leases and credit cards - is forming rapidly and small business is too busy keeping up with Washington's rule changes and mountains of regulations to actually hire anyone or expand. Entrepreneurs have been completely scared off and looking to foreign shores for opportunity.

So, really, what did Ben Bernanke save besides his banking buddies and his own job? Oh, that's right, Europe. But, but, but, that's not his job, is it?

Dow 13,145.82, +19.61 (0.15%)
NASDAQ 3,095.36, -9.60 (0.31%)
S&P 500 1,403.28, -2.26 (0.16%)
NYSE Composite 8,166.37, -21.98 (0.27%)
NASDAQ Volume 1,755,819,875
NYSE Volume 3,772,621,250
Combined NYSE & NASDAQ Advance - Decline: 2268-3291
Combined NYSE & NASDAQ New highs - New lows: 108-61
WTI crude oil: 102.78, -2.63
Gold: 1,652.20, -5.70
Silver: 31.99, +0.16

Wednesday, March 28, 2012

Are Americans Waking up to Gold?

It's a rare day indeed when Money Daily sources information from CNBC, because the on-air talent are generally stock-pumping cheerleaders for equities, but today's information presented by Steve Liesman, who offered up the results of CNBC's All-American Economic Survey in various spots on the network throughout the day, had heads spinning and eyes and ears popping when he revealed that of the 836 respondents in the survey, 37% found gold to be their preferred investment, followed by real estate at 24% and stocks a distant third, at 19%.

What this says about the stock market and American attitudes towards it partially explains the low volumes that have been a dominant feature for many months, implying (and there are numerous studies to back this up) that individual investors have nearly completely soured on stocks as stable investments due to a variety of factors, including, but surely not limited to, the financial collapse of 2008-09, the flash crash of May 6, 2010, a general distrust of Wall Street and the Federal Reserve and various other market events, such as the recent IPO failure of BATS.

What did not come out of the CNBC segment below, led off by Liesman's comment that he was "floored" by this finding, is that gold (and silver and platinum) are not only tradable investment vehicles that can be instantly redeemed for cash or bartered for other goods and services, but that the precious metals are tangible assets that not only appreciate, especially in light of dollar debasement, but are a store of value and wealth at a time in which there's an oversupply of skepticism pertaining to the management of currencies worldwide and yields on "safe" investments, such as money market funds or Treasuries are returning less than the rate of inflation.

(Note on this video: the first 6:15 covers the gold story; the remainder is on other topics.)

These stunning survey results are indicative of Americans' growing displeasure of a system which they rightly assume is unfairly slanted in favor of Wall Street fat cats and DC politicians, who engage in insider trading and other market-rigging activities with nearly universal disdain for the average American and small investor. It also destroys the notion that Americans are stupid when it comes to investing, as the "muppets," as some Goldman Sachs executives refer to their clients, appear to be more concerned about lasting value rather than quick, day-trading profits.

It was truly a pleasure to watch and listen to the various and mostly wrong CNBC commentators as they scrambled for explanations to somehow blunt the contrarian thrust of the message. Americans are not stupid and they don't like being cheated; there are two good reasons right there why more and more Americans are keeping a safe distance from stocks and Wall Street and putting their investment dollars into tangible assets, like gold.

As for the markets, todays was definitely a "risk off" event, with stocks and commodities both feeling the heat. Of course, in a yo-yo economy such as we have, one day does not make anything even closely resembling a trend, though the losses today and on Tuesday took a lot of the punch out of Monday's rally.

With just two more trading days left in the month and the first quarter, some shaving of profits should be expected prior to what are traditionally strong market up-moving days: the end of quarter "window dressing" by te fund managers expected on Friday and the first trading day of the new quarter, come Monday, April 2nd.

Dow 13,126.21, -71.52 (0.54%)
NASDAQ 3,104.96, -15.39 (0.49%)
S&P 500 1,405.54, -6.98 (0.49%)
NYSE Composite 8,188.34, -51.03 (0.62%)
NASDAQ Volume 1,764,716,250
NYSE Volume 3,854,093,750
Combined NYSE & NASDAQ Advance - Decline: 2033-3584
Combined NYSE & NASDAQ New highs - New lows: 144-46
WTI crude oil: 105.41, -1.92
Gold: 1,657.90, -27.00
Silver: 31.83, -0.78

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Tuesday, March 27, 2012

Evacuation Nation: Traders Flee in Final Hour; Fed Buys Euro Bonds

Dudley also said the central bank holds a very small amount of European sovereign debt and that he sees a “high bar” to additional purchases.
That line came from this story on Bloomberg and it leads off today because buying sovereign debt - other than US debt - is not in the Fed's charter.

Not that it will matter at all. Our brain-dead congress probably won't even notice, but it does raise some questions, like:

1. Aren't there enough buyers for all that Euro-debt?
2. How much did the Fed buy, and in what denominations?
3. With its balance sheet already over $3 trillion and stuffed full of MBS and Agency Debt, why are they buying ANY euro sovereign debt?

The most basic question, still, is, "how desperate are the world's central bankers?"

Probably pretty desperate.

Other than that, oh, and Case-Shiller showed that residential real estate values have fallen again, for the 9th straight month, bringing median US home prices back to 2003 levels (talk about a "lost decade," just a guess, but home prices have a lot more downside in them).

ON Wall Street, stocks meandered along the unchanged level most of the day (except for the NASDAQ, which had a small gain thanks mostly to Apple (AAPL)), but dropped like a rock in the last hour of trading.

Volume was dismal, but that's been the case for so long, everyone just thinks it's normal. (it's not)

Lastly, this blog's editor posted this comment over at Zero Hedge and it got some attention:

I'm 58, making me a baby boomer. I like Ron Paul, but I know he's never going to get elected, so nix that idea.

Most of my friends are BBs as well, and, as a group, they're idiots. They say things like, "we need at least $80,000 a year just to maintain our standard of living," while they have $800K in stocks and investments.

So, instead of retiring early and taking their money out of their 401ks, IRAs or whatever - many of them are past 58 1/2 - they keep on working, padding their "nest egg."

The folly of this is that by the time they retire, the world as we knew it will have ended. It already has. They'll lose in the next market downturn and keep working until they're 70 or longer to "make up the difference."

Me, I've been semi-retired in my own business since i was 43. After my business went bank-o - with plenty of help from asshat employees and dishonest corporate competitors - I decided the rat race just wasn't worth it.

I am now happy, though not content, make enough to get by and even save a little - PMs, cash, tools, necessities - and figure that I'll work my 4-5 hours a day at my own pace until I die.

Retirement, like a lot of other stuff thrown at us by the MSM, is a myth. People relying on pensions and especially SS are going to be sorely disappointed. I've already been disappointed, so it doesn't matter to me.

As for the younger crowd, they're nothing but wage-slaves. That covers about all of the demographics in America. We're royally screwed, but don't even know it and continue to keep thinking it will get better at some point.

This country has some severe deficits - in education, imagination, entrepreneurism and free-thinking. As far as I can tell, it's all been downhill since Duane Allman died, but, like I tell anyone who whines, be a warrior, and a happy one. You have to fight for everything these days. Might as well enjoy the fight.

My sister has three girls in high school and they all plan on going to college. They're all so screwed, but they don't listen to me much unless there's a crisis, so I don't talk to them much, though I do give them silver on their birthdays.

I have a feeling they'll be seeking out my counsel as time goes on.

Dow 13,197.73, -43.90 (0.33%)
NASDAQ 3,120.35, -2.22 (0.07%)
S&P 500 1,412.52, -3.99 (0.28%)
NYSE Composite 8,239.28, -49.51 (0.60%)
NASDAQ Volume 1,637,697,375
NYSE Volume 3,474,379,000
Combined NYSE & NASDAQ Advance - Decline: 2214-3380
Combined NYSE & NASDAQ New highs - New lows: 359-24
WTI crude oil: 107.33, +0.30
Gold: 1,684.90, -0.70
Silver: 32.62, -0.13