Thursday, May 31, 2012

May Finishes Badly; PMI Weakest in Over Three Years

Considering the crush of bad data that the markets encountered this morning, today's marginal negative close was something of a marvel. In fact, had stocks not taken an abrupt U-turn in the final 20 minutes of trading, one could have said that markets were ignoring the headlines.

As a whole, the month of May was about as dismal as has been seen since the aftermath of the '08 collapse. Both the S&P 500 and the Dow were down roughly 6%, wiping out most of the gains of the year. Energy, financials and materials were the three hardest hit sectors. Crude oil took more than a 17% haircut during the month, putting it technically in a bear market.

The five positive days on the Dow for the month was the worst for May since 1969 and the 17 down days bettered a May mark dating back to 1956.

Among the data releases from the morning that set the overall tone for the US markets were the announced job cuts in May, that jumped 67% from a year ago according to Challenger, Gray & Christmas, the 133K private sector jobs created in the month - 24,000 lower than the estimate - according to ADT, 383K initial unemployment claims, and a drop in the second estimate of first quarter GDP to 1.9% from the 2.2% previously supplied.

All of those releases were prior to the opening bell, but at 10:00 am EDT the hammer hit the market hard, as the Chicago PMI dropped from 56.2 in April to a current reading of 52.7, the worst showing since September 2009.

With that announcement, stocks did a face-plant, with all of the major indices falling quickly to the lows of the day. There was no sign of capitulation, that likely being saved for Friday's non-farm payroll report, which has all investors walking on eggs this week.

Taking the bad economic news in usual shrugging-off fashion, stocks climbed back to positive territory - except for the NASDAQ which was down all day - nearing the close, but fell apart at the end, finishing May with one of the worst performances on record, the major indices clinging to smallish gains for the year and the major averages resting just above their 200-day moving averages.

With prospects for a robust reading on jobs from the BLS not encouraging, Friday appears to be shaping up as a make or break session, notwithstanding issues ranging from Europe to bank downgrades on the horizon.

The 10-year bond fell to another historic low, closing with a yield of 1.57%, indicative of a flight to safety as investors worry about recession in Europe and how a slowdown there will affect US firms, many of which derive a significant portion of their revenues from the crumbling continent. Also under consideration are how the continued crisis in Europe will affect US banks, some of which have significant exposure to various countries in the Eurozone.

Crude oil continued its relentless slide, hitting its lowest price level in seven months and down 17% in May alone. Oil futures have entered a bear market, more than 20% off their highs, a condition drivers can only celebrate, as the national average price of retail gas at the pump is down to $3.62 per gallon according to AAA's fuel gauge report.

With May out of the way, tomorrow's 8:30 am EDT announcement on payrolls could be a make-or-break event for markets teetering on the brink.

Dow 12,393.45, -26.41 (0.21%)
NASDAQ 2,827.34, -10.02 (0.35%)
S&P 500 1,310.33, -2.99 (0.23%)
NYSE Composite 7,464.45, -6.95 (0.09%)
NASDAQ Volume 2,090,245,500
NYSE Volume 4,434,600,000
Combined NYSE & NASDAQ Advance - Decline: 2760-2984
Combined NYSE & NASDAQ New highs - New lows: 73-213
WTI crude oil: 86.53, -1.29
Gold: 1,562.60, -0.80
Silver: 27.76, -0.23

Wednesday, May 30, 2012

Reality Bites: Stock Charts Hit with Deflation Ugly Stick

One look at any of today's major index charts - or European charts, for that matter - tells the real story of the world economy and the overall effects of globalization, fiat money and constant Keynesian-modeled tinkering.

Down at the open and no chance of a rally at any point was the order of the day. Markets were completely flattened following Tuesday's slap-happy, bogus insider ramp job. With any luck, the same traders and rich, brassy speculators who made a few ducats on the way up yesterday are upside-down today.

While US markets were royally screwed, European bourses were overwhelmingly slammed to earth, with the major indices whacked more than 1.75%, led downward by the CAC 40, smashed a whopping 2.24% as the EUR/USD sank below 1.24 on its inexorable path to parity and then, extinction.

All indications from not just today's trade, but the overall tenor of markets since the end of April, are that Europe's crisis is not going to be solved easily, if at all. There's no hiding from the big stick of deflation, no crying in a deflationary spiral, except by the weak and unprepared, who deserve nothing but woe, destitution and poverty. May they take all of the major banking interests with them.

The carnage was unavoidable. The US 10-year note fell to an historic low yield of 1.62%, which, along with the German Bund, is headed for negative returns.

Whether or not this is coordinated end-game by the world's central bankers and our own small-minded Ben Bernanke, the siren's cry of lower prices has been heard loud and clear. By the end of fall or sooner, the entire charade should be over, for all intents and purposes. Adam Smith's invisible hand has given globalists the undeniable back-slap one receives for overindulgence, malinvestment and outright economic stupidity.

The pseudo-rally from the depths of 2008-09 is officially defunct and all that's left is picking up the pieces when everything crashes to the floor before falling into the abyss. It's almost as if the ancient tradition of the jubilee - in which all debts are forgiven - has been secretly woven into the fabric of modern economics. The crush of unpaid obligations will affect rich and poor alike. Only those with investments in useful machinery, arable land, real estate and precious metals will be spared, though their lot will no doubt be a difficult one.

Ordinary working class folk should be cheering the downfall of the tyrannical central banking regime, though anyone relying on pensions for retirement cushion should have already begun reordering their priorities. The last three-and-a-half years have been nothing more than a chance to prepare for the ultimate collapse of the global banking and sovereign state cabal and their over-leveraged, inflationist, dangerous, deadly ideas.

Resistance is futile against the wicked spiral of deflation, as it carries the weight of the world down with it, as derivatives are unwound and the banking and finance system breaks down. The worry is that governments will impose iron-fisted regimes and police states to quell the disquiet populace once the rioting begins, and it will, sure as day follows night.

As stocks tumbled, precious metals strengthened today, a significant development not seen in recent months and a trend almost certain to continue. Oil's drop continues and a plunge below $90/barrel today was an event long overdue. The world is absolutely glutted with the stuff as demand continues to plunge. Everything will be - or should be - cheaper as 2012 unfolds further.

The chaos should only worsen in this shortened week as the culmination is Friday's sure to be horrific non-farm payroll report. Tomorrow will afford an early sneak preview as ADT releases their private payroll data for May and hour and a quarter prior to the ringing of the bell at the Wall Street loser's casino. Additionally, Thursday will be heavy with data, with Challenger job cuts, initial unemployment claims and the second GDP estimate all due prior to US market opening. It should almost surely worsen from there forward with Chicago PNI and crude inventories guiding early-day trading.

It would require nothing short of divine intervention or an alien landing for the remainder of the week to be nothing short of a bloodbath.

Free houses for everyone! At least for those who need shelter and have a creative mind and two good hands with which to rebuild, that is.

Dow 12,419.86, -160.83 (1.28%)
NASDAQ 2,837.36, -33.63 (1.17%)
S&P 500 1,313.32, -19.10 (1.43%)
NYSE Composite 7,476.36, -138.68 (1.82%)
NASDAQ Volume 1,629,529,250
NYSE Volume 3,441,592,750
Combined NYSE & NASDAQ Advance - Decline: 1011-4774
Combined NYSE & NASDAQ New highs - New lows: 42-134
WTI crude oil: 87.82, -2.94
Gold: 1,563.40, +14.70
Silver: 27.98, +0.19

Tuesday, May 29, 2012

Global Bounce-Back After Uneventful Weekend

Worldwide, market participants must have been conjuring up images of a rally over the long US holiday weekend, because stocks roared back with a vengeance on Tuesday, bringing hopes of a sensible solution to the Greek and pan-European miasma to a new level of unreality. Come June 17, Greek voters will once again go to the polls to elect some form of workable government, which can then form a majority and a consensus on whether to leave the Euro or stay with the abject horrors of austerity which bailout upon bailout imposes.

Status quo politicos are hoping that the Greek citizenry will come to see things as do the uber-governors of the European Union and opt to remain a part of the crumbling structure that has been in control for the past decade.

On the ground, not only in Greece, but in Italy and Spain as well, fear of rioting and widespread anarchy are swelling. Ordinary citizens are being berated with burdensome taxation, cuts to government programs and draconian measures implemented by overreaching, broken, debt riddled governments which will have to go back to the ECB and IMF for more money to keep the citizenry quieted.

The problem with the Euro system is that all countries are not created equal, as the currency masters would like to believe. Since the member states of the EU still have their own governments and constitutions, there are many vague differences that eventually will cause the euro currency experiment to fail, over and over again, until, as happens in Europe with great regularity, the agreements are scrapped, the currency debased and the counties continue to go about business as best suits themselves, as it should be.

After Greece votes on June 17, there will be a few days of disruption while the newly-elected parties sort out their differences and make a decision that will affect not only Greece, but all of the nations of the Eurozone. While staying a part of the EU may provide some short-term stability in Greece, we have already witnessed the effects of austerity that hasn't really worked, though a conclusion that separates Greece from the union will result in more widespread immediate pain and suffering for all of the EU nations, particularly Germany, which has actually benefitted from the weaker Euro and transfers of wealth from the south to the northern states.

In the meantime, stocks will bounce around on the news or rumors of the day, because, in reality, nobody is sure what a breakup of the Euro would entail, though the most knowledgeable people seem to agree that the immediate effects would be overwhelming to the entire global financial structure.

That's not to say that long-term it might just be better to scrap the Euro, go back to individual currencies with all of their own inefficiencies and idiosyncratic behaviors, send the banking system into a tailspin, pick up the chips where they fall and start over. At least then, the great and small countries of Europe will retain their own identities and sovereignties and another layer of useless politicians - those being the clueless EU ministers and all of their meaningless meetings, conferences and white papers - can be swept away in the process of history.

Dow 12,580.69, +125.86 (1.01%)
NASDAQ 2,870.99, +33.46 (1.18%)
S&P 500 1,332.42, +14.60 (1.11%)
NYSE Composite 7,614.78, +80.46 (1.07%)
NASDAQ Volume 1,562,855,750
NYSE Volume 3,314,985,000
Combined NYSE & NASDAQ Advance - Decline: 4187-1414
Combined NYSE & NASDAQ New highs - New lows: 88-75
WTI crude oil: 90.76, -0.10
Gold: 1,548.70, -20.20
Silver: 27.79, -0.60

Friday, May 25, 2012

Markets Close Lower in Advance of 3-Day Weekend

Even with Friday's losses, stocks finished the week marginally higher overall, despite the coninuing, nagging issues plaguing investors from Europe, the foibles of Facebook, and JP Morgan's continuing non-hedge losses, which could end up costing the firm a couple of quarter's worth of earnings.

The Industrials took the bulk of the pain today, as once again, the various indices did not automatically align. Thankfully, it's the start of a three-day weekend, so, to the three of you actually reading this and not out enjoying the Friday afternoon, what the heck is wrong with you?

We'll get back to dissecting the crumbling fiat currency regime on Tuesday, when markets are expected to open. A day may come when they don't, but for now, they still be to be the favored playgrounds of the rich, famous, infamous and criminally insane, and, frankly, they need the work.

Have a great weekend, try not to think about your investments too much (unless they're in gold, silver, real estate or guns and ammo) and enjoy life a bit. It's really not that long a stay each of us have here.

As always, Free Houses for Everyone!

Dow 12,454.83, -74.92 (0.60%)
Nasdaq 2,837.53, -1.85 (0.07%)
S&P 500 1,317.82, -2.86 (0.22%)
NYSE Composite 7534.33, -18.03 (0.24%)
Combined NYSE & NASDAQ Advance - Decline: 2819-2711
Combined NYSE & NASDAQ New highs - New lows: 53-69
WTI crude oil: 90.86, +0.20
Gold: 1,568.90, +11.40
Silver: 28.39, +0.23

Thursday, May 24, 2012

Bifurcated Markets a Sure Sign of Trouble In Fantasy Finance Land

It should be pain as the day that there are many issues and headwinds facing financial markets in the current crisis situation. Today's trading, taking bounces up and down in a directionless trading session is yet another indictment of the power players' control - or lack thereof - during a turbulent period.

When markets react in odd ways, as similar ones diverge, correlations break down and generally things zig when they are expected to zag, one index is up while another is down, it's a sign of malaise and weariness, signifying not only trouble in the current time frame, but of more problems to come.

After Wednesday's hockey stick save off the lows on a temporary reversal of sentiment regarding Europe - which was wholly manufactured and false, by the way - in which all the major indices moved in the same direction at the same time, today's sloppiness could be attributed to speculative bets in different sectors, though the possibility that there are diverging opinions driving indices in different directions is palpable.

Even though the day's range - 120 points on the Dow; 32 points on the NASDAQ, the two did not move in anything even remotely resembling synchronicity. The Dow finished to the positive, the NASDAQ ended in the red.

Some may posit that these moves are by design, though that's a bit of a stretch even in this space, in which all conspiracy theories are given ample credit at least for the fact that somebody's paying attention.

In what was one of the least-inspiring trading days of the past two weeks, the best that can be said of today's performance was that it was at least back to the norm of low volume and moves without conviction. Europe has been quieted for the time being (don't worry, that will change), the Facebook IPO malaise is fading from the news cycle and JP Morgan is still losing money on the "London Whale" non-hedge hedge.

Eventually, all of these items and more either get swept under the Wall Street rug of fraud and collusion or explode in the faces of the criminal cartel that traverses the canyons of lower Manhattan as glad-handing gentlemen.

One would suppose that a break in the action might be a good thing, though if one is circumspect enough to check the recent charts of the major indices, one would have to be blind not to notice that the Dow, S&P and NASDAQ are all trading well below their 50-day moving averages and hovering just above their 200-DMA, a dangerous position. They're also taken off about 50% of the move higher from mid-December to the end of April, a retracement that adherents of Fibonacci will note as an area of support. In that regard, the indices have moved in synchronous fashion, though with their own idiosyncratic tendencies.

Two telling signs from market internals suggest there easily could be more downside in days and weeks to come. The advance-decline line has been negative 12 of the last 17 sessions, while there have been more new lows than new highs for 10 consecutive sessions and on 14 of the last 15 trading days.

This is an interesting time for markets, stuck in no-man's land without the support of earnings, driven by news, events and data flow.

Dow 12,529.75, +33.60 (0.27%)
NASDAQ 2,839.38, -10.74 (0.38%)
S&P 500 1,320.68, -1.82 (0.14%)
NYSE Composite 7,552.35, -11.45 (0.15%)
NASDAQ Volume 1,737,819,375
NYSE Volume 3,776,796,750
Combined NYSE & NASDAQ Advance - Decline: 3082-2527
Combined NYSE & NASDAQ New highs - New lows: 55-111
WTI crude oil: 90.66, +0.76
Gold: 1,557.50, +9.10
Silver: 28.16, +0.64