Another Euro Deal, Another Knock Your Socks Off Rally

Being Friday, European leaders ended their two-day summit on a positive note - to wit: European leaders agreed to create a single supervisory body to oversee the eurozone's banks which could use the single currency area's rescue funds, the European Financial Stability Facility or European Stability Mechanism, to aid banks directly without adding to governments' debt.

Well, that nugget, around which the narrative goes something like, "this is a step closer to a fiscal union," but which in essence only makes it easier to shift money from one bailout fund to another and to respective countries' broken banking systems and still solves nothing in terms of the real debt crisis faced by the EU, was enough to send markets higher around the globe.

Beginning in the Far East, where stock indices rose in unison by 1.11% to 2.59% (except Malaysia, which was up only 0.31%), equity markets had one of their cheeriest sessions in weeks.

Once trading began in Europe, the noise was amplified, with stock indices up hugely. At the low end was the Swiss market, which gained 1.33% on the day, though Germany's DAX and France's CAC 40 were ahead by 4.33% and 4.75%, respectively, at the close. All of the markets were topped by Greece, which saw the Athex Composite bubble up by 5.88%.

By the time US markets were gearing up for their open, index futures were nearly limit up, with Dow futures pointing to a 200-point gain at the outset. Following Thursday's late day ramp-up, a systems pointed to a serious end-of-month short squeeze combined with the usual end-of-quarter window dressing, and the markets surely did not disappoint.

Stocks roared out of the gate and held their strong gains throughout the session, one of the best of 2012, ending a week of turmoil and apprehension with a powerful rally to take investors into the third quarter with a full head of steam.

The "new deal" in Europe, coming in the 19th summit since the financial crisis began, is set to be ratified by the participating countries and ready for implementation by July 9, which should come as welcome relief to Spain and its banking sector, which is in need of between 62 and 100 billion Euros in order to continue functioning and funding government debt.

While the suckers in stock markets around the world had themselves a field day, many know that this is only a day-trading profit environment and that within weeks, there will be more turmoil to roil markets, be it from US shores or the favored European flavor, which has become expert at sending markets lower on fear before propping them up with a summit, statement that all is well and a swift kick further down the road to the economic fiat money ponzi can.

Austerity being too much to handle for most Europeans, and growth a figment of supply-side thinkers' collective imaginations, the only solutiona the Euro-genii have come up with are more bailout funds lending to and from another within a framework of constantly-changing rules and procedures. Naturally, the effect of piling more debt upon already unpayable debt will eventually end in tears and currencies in tatters, but that result is seemingly being pushed as far out into the future as possible, all the while suspending the tenets of traditional economic thinking.

Well, at least the leaders in Europe are looking out for the "little people" by giving them a morale boost on a Friday afternoon... before taxing them into servitude by which to pay off the gigantic debt bubble being created. The people, primarily taxpayers - except in Greece, where tax avoidance is a national pastime - seem to be content with having more time to enjoy their little lives or prepare for the ultimate end of the fiat money regime, which must come, sooner, if not later.

One of the downsides of all this "feel good" economics being parlayed from the Fed to the Europeans and back again is that it is all inherently inflationary, and commodities didn't miss a step in joining into the all-asset-classes-ramp-up-free-for-all. Oil had one of the biggest one day jumps in history, and even the precious metals could not be contained in the short-squeezing euphoria.

But for now, it's all good. As the 1969 Peggy Lee hit, Is That All There Is, penned by the songwriting duo of Jerry Leiber and Mike Stoller, so solemnly intoned, "...let's keep dancing, let's break out the booze and have a ball, if that's all there is..."

Here's Peggy:



Free houses for everybody, eventually.

Dow 12,880.09, +277.83 (2.20%)
NASDAQ 2,935.05, +85.56 (3.00%)
S&P 500 1,362.16, +33.12 (2.49%)
NYSE Composite 7,792.53, +195.02 (2.57%)
NASDAQ Volume 1,780,693,750
NYSE Volume 4,426,005,000
Combined NYSE & NASDAQ Advance - Decline: 4898-809
Combined NYSE & NASDAQ New highs - New lows: 378-35 (WOW!)
WTI crude oil: 84.96, +7.27
Gold: 1,604.20, +53.80
Silver: 27.58, +1.33

Supreme Court Affirms Health Care Mandate; Stocks Erase Losses on European Rumors

Kiss the US constitution goodbye... or, rather, what's left of it.

When the Chief Justice of the Supreme Court breaks ranks with his fellow conservative justices to affirm that all Americans must purchase health care insurance or be fined, siding with four liberal justices - who, by the way, should be stripped of their robes - in a matter of such great economic and political importance, then there's no hope left for the system left by our founding fathers.

Count Chief Justice John Roberts as just another Washington politician either bought and sold by special interests, playing presidential politics serving a master other than the people of the United States. Whatever the case, the law be damned with this horrendous decision, which accomplishes nothing other than to feed more fodder into the cannons of the upcoming political debate.

Republican presidential candidate Mitt Romney immediately went on the offensive, while the White House checked off a mark in the victory column. Choosing to evade the issue of whether the mandate violated the commerce clause, by calling the "penalty" a tax, the five affirming justices simply kicked the can down the road a pace, a maneuver that's well-learned in the halls of power these days.

Next, they'll be telling Americans to quit smoking or be fined, stop eating fatty foods or go to jail or by whatever "legal" means strip common citizens of even more rights while emptying their pockets of any available cash.

It's a sham, much like most of what comes out of Washington, DC, these days. The best solution, on an individual basis, is to ignore the law and resist any and all attempts to circumvent the constitution with passive opposition, or, failing that, take to the streets and fight (the author is dreaming).

After the initial shock and awe over the Supreme Court shocker, stocks continued to trend lower, as they had all day, until, with less than an hour left in the session, news from Europe that Angela Merkel had cancelled a conference call scheduled for tonight had stocks moving well off their lows, finishing with comfortable losses rather than worrisome ones.

The official story of the Dow erasing most of a 177-point decline is, of course, bunk. This was an orchestrated move to get stocks back into a more tenable range of trading as the second quarter comes to an end with Friday's closing bell and make today's closing numbers look more appealing to the herd of sheeple that populate the nation.

Not a thing is going to be resolved in Europe at the latest in a series of meaningless summits, so, for whatever reason, the HFT mechanisms which control 85% of the trading on Wall Street simply went into overdrive on a "risk-on" scenario late in the day.

The move, like most of what passes for economy and trading these days, was another pathetic example of why most individual investors have pulled their money out of stocks altogether and will remain on the sidelines until some semblance of balance and fair play is returned to the equity markets (more wishful thinking).

Meanwhile, commodities were lambasted, with oil down sharply, silver closing at its lowest level of 2012 and gold dropping close to its lower support.

For whatever it's worth, a growing number of Americans and professionals in the fields of finance and economics think the Wall Street casino is a complete and total farce.

Those embracing that line of reasoning are surely on to something.

Dow 12,602.26, -24.75 (0.20%)
NASDAQ 2,849.49, -25.83 (0.90%)
S&P 500 1,329.04, -2.81 (0.21%)
NYSE Composite 7,597.50, -0.55 (0.01%)
NASDAQ Volume 1,753,433,750
NYSE Volume 3,867,150,000
Combined NYSE & NASDAQ Advance - Decline: 2697-2879
Combined NYSE & NASDAQ New highs - New lows: 122-99
WTI crude oil: 77.69, -2.62
Gold: 1,550.40, -28.00
Silver: 26.25, -0.70

Stocks Gain on No News; Barclay's Fined, Phil Falcone Nabbed by SEC

As this market has shown consistently over the past few years, no headlines, no problem, and it's off to the races we go.

With the EU summit still a day away and some nearly-positive news in the form of a May durable goods number that came in plus 1.1%, above expectations of 1.0%. There is also a buoyant attitude surrounding the housing market these days. After new home sales showed a boost on Monday and the Case-Shiller 20-City Index was up on a monthly basis, a 5.9% gain in pending home sales from April to May added momentum to home builder stocks.

For the second straight day, there was near silence from Europe, which served to keep stocks rolling right along throughout the session.

It was also a day for regulators to catch up with a couple of the crooks, and what better reason to bid up stocks, as the ROI on financial crime is stupendous.

Billionaire hedge fund operator, Phil Falcone, who made a ton of money in 2007 betting against sub-prime mortgage securities, was charged by the SEC with securities fraud along with the firm he founded, Harbinger Capital Partners. Sadly, the charge, among others, is civil, no criminal, and centers around Falcone's receipt of a $114 million loan from his fund to pay his taxes and other schemes, such as short selling and short squeezing.

Also, Barclay's has agreed to pay British and US authorities $453 million in a settlement over allegations the firm manipulated key overnight bank lending rates know as Libor. Being the first to be nailed in association with the probe, the door is now open for regulators to go after other financial firms who may have colluded to rig the Libor.

Laughably, the US Department of Justice said that its criminal investigation is ongoing and focused on a wide swath of banking interests which may have taken part in a conspiracy to manipulate the Libor. If any charges are ever brought, expect them to coincide with President Obama's re-election bid. Like local police who round up prostitutes just before a sheriff's election, the feds operate in much the same manner.

Stocks galloped out of the opening gate and closed near the highs reached in the middle of the day.

Dow 12,627.01, +92.34 (0.74%)
NASDAQ 2,875.32, +21.26 (0.74%)
S&P 500 1,331.85, +11.86 (0.90%)
NYSE Composite 7,597.99, +70.90 (0.94%)
NASDAQ Volume 1,550,569,000
NYSE Volume 3,249,099,500
Combined NYSE & NASDAQ Advance - Decline: 4207-1385
Combined NYSE & NASDAQ New highs - New lows: 180-76
WTI crude oil: 80.21, +0.85
Gold: 1,578.40, +3.50
Silver: 26.94, -0.10

Markets Barely Budge on Quiet News Day

In the headline-driven market that has evolved into what passes today for what used to be among the finest equity discounting exchanges in the world, there was very little upon which investors could base a trade.

Europe was relatively calm, even though Moody's downgraded all Spanish banks after the close on Monday and Crete has become the latest nation to be seeking assistance from the European Union.

There was the badly out-dated Case-Shiller 20-City Index, which was up 1.3% in April from May, but fell 1.9% from a year earlier. The 10:00 am EDT June consumer confidence reading of 62.0 - down from 64.4 in May - did nothing to bolster sentiment.

Thus, US markets fell and rose over the course of the session, ending the session with marginal, almost worthless gains. Volume was poor, as usual, the advance-decline line improved over Monday's performance, but new lows outnumbered new highs for the second straight day.

All of this inactivity in a dull session gives rise to feelings - as opposed to yesterday's gloomy assessment - that this market may wish to move in a sideways pattern for the summer's duration. Most indicators are such that any good news is followed by bad, even though the usual chorus of "stocks are cheap" can be heard from the perma-bull crowd.

Such a market gives rise to feelings of anxiety over the future, but an urge to take a flier here and there, so, while wild swings in either direction are possible, the overall trend may be to drift, and quite possibly to edge lower.

It's a real guessing game at this point, with so many balls in the air, so to speak.

Any movement may be caused by Thursday's initial unemployment claims or what new nonsense comes out of the EU summit this Thursday and Friday.

Dow 12,534.67, +32.01 (0.26%)
NASDAQ 2,854.06, +17.90 (0.63%)
S&P 500 1,319.99, +6.27 (0.48%)
NYSE Composite 7,527.08, +35.21 (0.47%)
NASDAQ Volume 1,592,364,125
NYSE Volume 3,366,000,500
Combined NYSE & NASDAQ Advance - Decline: 3352-2202
Combined NYSE & NASDAQ New highs - New lows: 132-136
WTI crude oil: 79.36, +0.15
Gold: 1,574.90, -13.50
Silver: 27.04, -0.48

Europe's Pain Keeps World Markets in Red as Week Begins Badly

Back in the headlines again, Europe's continuing woes took front and center position in Monday's investment landscape.

Spain kicked off the festivities with a formal request for aid of up to 100 billion euros for their busted banking sector as they await a ratings cut from Moody's on all Spanish banks, expected to be delivered after the close of US equity markets.

The reality of another bank bailout by the EU and the rumors of the Moody's downgrade was enough to send all European indices lower, lead by the Athens Index Composite, which fell 6.84%. The Swiss Market was harmed the least, down on 0.75%, while the French and German bourses fell by more than two percent.

Greece added to the downside momentum as newly-appointed Finance Minister Vassilis Rapanos resigned his post due to ill health. The tiny island nation of Cyprus became the latest victim, telling the EU that it needs a bailout for its banks - heavily exposed to Greece - and its public sector economy. Estimates call for immediate funds of between 5-10 billion Euros to keep the nation banks and government operating.

US markets fell out of bed like a drunk with a bad hangover, down right from the opening bell through to the close, with the NASDAQ leading the way lower, followed closely by the S&P 500.

Stocks staged a small, uninspired rally near the end of the day, but there was little support to the buying. The evidence that the world is on the brink of a catastrophic global depression are simply too obvious to mask further. Investors are running scared money into the meat-grinder that is otherwise known as the capital markets in hopes that the European leaders will offer some kind of plan to end the crisis, one which has already spread across the nations on the southern periphery.

Internals suggested that today's moves could be a turing point for US markets as losers led gainers by a more than 3:1 margin and new lows outnumbered new highs by nearly 2:1.

The new highs to new lows reading, which has been consistent over the years as an early indicator of bullish and bearish trends has recently vacillated between positive and negative, so a sustained period in which new lows exceed new highs would point toward a more severe downturn and a return to bear market conditions.

As of today's close, the Dow is resting at 6% below the May 1 highs, so a move below 11,000 would have to be reached before true bear market conditions (-20%) would prevail. With the situation in Europe continuing to unravel and conditions in the US not gathering any momentum and actually, according to the latest data, already showing signs of stress and weakness, a downturn of that severity cannot be ruled out through the summer months, which are traditionally a slow period for stocks.

Whether the pain comes in the form of a sudden event or as a slow, painful, prolonged ordeal depends greatly upon how panicked investors become. With news and events so highly unpredictable, but bordering on crisis levels, a major happenstance could come from any quarter, be it Syria's upheavals, Germany contentious position or the collapse of Greece or Spain or even the unthinkable, Italy or France.

Once again, it cannot be stressed too much that events may be politically manipulated to coincide with the US presidential election in November, so great caution is urged, especially into the latter stages of the election cycle, late September into October.

Of course, media control being practically omnipresent, the outbreak of war or economic apocalypse could be spun into a positive, though that kind of propagandizing would only satisfy the controllers wishing to make a quick killing as it would likely be unsustainable in light of the true picture.

Following Friday's phony fermentation to the upside on global banks' repudiation of Moody's massive, across-the-board downgrades, it's a very good possibility that the manufactured rally was nothing more than another scam on the public to the profit of the banking cartel, who went long and then short, winning on both sides of the trade.

With that kind of perfidious behavior prevailing in nearly all capital markets, day-to-day movements should be greatly discounted and longer term trends the focus of greater scrutiny.

Dow 12,502.66, -138.12 (1.09%)
Nasdaq 2,836.16, -56.26 (1.95%)
S&P 500 1,313.72, -21.30 (1.60%)
NYSE Composite 7,491.90, -124.69 (1.64%)
NYSE Volume 3,433,923,250
Nasdaq Volume 1,432,183,125
Combined NYSE & NASDAQ Advance - Decline: 1362-4261
Combined NYSE & NASDAQ New highs - New lows: 87-163
WTI crude oil: 79.21, -0.55
Gold: 1,588.40, +21.50
Silver: 27.52, +0.86