Stocks Slammed Globally, S&P Under 1900; Dow Drops Below 16,000

Wall Street is, at last, getting the just desserts from seven years of Fed policies that have funneled trillions of dollars into the hands of the wealthiest people in the country.

The kicker is that the American public, the 65-70% that still works for a living, are going to get the worst of it.

Today's carnage in US equity markets was not an isolated event by any means. It began years ago, but, in its most current manifestation, the collapse began in China last night, when the SSE fell nearly 5% in its last session of the week.

The contagious selling fever spilled over into European markets, with the DAX, CAC-40, and FTSE-100 ending the day down by 2.54%, 2.38% and 1.93%, respectively.

Prior to markets opening in the US, however, there was a spate of poor economic data released.

Retail sales for December came in at -0.1. PPI went negative (deflation) in December, at -0.2%. Empire Manufacturing (a gauge for economic activity in the NY Fed district, collapsed from a reading of -6.2 in December, to a ghastly -19.4 in January.

Industrial Production fell 0.4%. Capacity Utilization slumped to 76.5%.

Then came the news from Wal-Mart that they would be closing 269 stores this year, with 154 of them in the United States. The full list of Wal-Mart store closings can be seen here.

By the time markets actually opened at 9:30 am ET, futures were showing the Dow down by more than 350 points and the indices all fell off a cliff at the sound of the opening bell.

By midday, the Dow was down more than 500 points, the NASDAQ had shed close to 150, and the S&P was sporting losses of more than 50 points.

While today's crashing stock indices were certainly bloody, they weren't even close to the 10 worst one-day Dow declines of all time, so all is not lost.

As the session wore on, the signs of a failing economy - both here in the US and globally - were everywhere. The 10-year note fell briefly below 2.00%. With 1/2 hour left to go, declining issues were leading advancers roughly 6:1. Intel (INTC) was down nine percent. Citigroup (C) was posting a 6% loss; Microsoft (MSFT) was clinging to a four percent downside. Bank of America (BAC), which was pushing 17 two weeks ago, sliced through 15 and was trading in the range of 14.40, down 4.0% on the day.

With more companies reporting Q4 and annual earnings next week, the action this week and today might just be an appetizer for what's about to come, and that might be a recession, collapsing corporate earnings, liquidations, bankruptcies and the wholesale destruction of pension funds - heavily invested in equities - nationwide.

For its part, the Fed trotted out William Dudley, president of the NY Fed and vice chairman of the FOMc, who noted that negative rates could be considered in light of the recent market volatility. His tongue-lapping of the markets didn't seem to carry much weight. Investors were only interested in getting out and limiting the damage prior to the long weekend.

The day's closing prices:
S&P 500: 1,880.28, -41.56 (2.16%)
Dow: 15,988.08, -390.97 (2.39%)
NASDAQ: 4,488.42, -126.59 (2.74%)

Crude Oil 29.67 -4.90% Gold 1,088.90 +1.43% EUR/USD 1.0920 +0.53% 10-Yr Bond 2.03 -3.10% Corn 362.50 +1.26% Copper 1.95 -1.57% Silver 13.90 +1.14% Natural Gas 2.10 -1.73% Russell 2000 1,005.44 -1.97% VIX 27.70 +15.66% BATS 1000 20,066.91 -1.99% GBP/USD 1.4255 -1.13% USD/JPY 117.0050 -0.97%

For the week:
S&P: -41.76 (-2.17)
Dow: -358.71 (-2.19)
NASDAQ: -155.21 (-3.34)

Rally Falls Short in Final Hour; NASDAQ Still Down for the Week; Investors Not Biting on FANGs

Of the hardest hit stocks, many of them, including some of the tech all-stars, such as Facebook (FB), Amazon.com (AMZN), Netflix (NFLX), and Alphabet (Google, GOOG), otherwise known as the FANGs have been mercilessly sold off since December, and, likely, for good reason.

Overall, their price-earnings ratios are stratospheric, they don't actually make anything, Amazon, in particular, rarely turns a profit, and they don't offer dividends, only appreciation in stock price as their sole saving grace.

Take away the increasing stock price and what have you got? Losses as far as the eye can see, and traders have recently shied and run away from these four horsemen of the internet.

The big winner today was Facebook, which gained nearly three percent, but is still down close to 10% overall. The others didn't fare quite so well. Amazon gained close to 2%, though it is still down over 12% since December 30. Netflix added back just 0.5%, and is down close to 20% since highs made the first week of December. Google, the best of the bunch, with regular profits and solid earnings quarter after quarter, gained 2% and is only down about 8% since after Christmas.

Fourth quarter earnings are coming due for the bunch of them, and market participants will be eager to note any difficulties experienced during the holiday period, though Amazon could surprise, as more and more people flocked to the web for holiday shopping in the past year.

Otherwise, it was a hopeful day on Wall Street, though the massive rally sparked by St. Louis Fed governor James Bullard's comments that the low price of oil was an impediment to the Fed's 2% inflation target, and thus, the Fed may "rethink" its interest rate hike policy for 2016.

While lower oil - and consequently gas - prices are good for everyone except possibly the oil companies and the Fed, Bullard's jawboning served to send the markets soaring on the day, wiping out much of Wednesday's steep losses.

However, the rally fell short in the final hour, as traders exhausted their buying optimism.

Not much should be made from today's trade. Stocks are still moribund and stuck well below all-time highs. The hope of making back the losses of the past two weeks is slim, and anyone thinking the indices will retrace all the way back to all-time highs made in May 2015 is whistling past the grave.

Unless earnings for the fourth quarter are utterly surprising to the upside, expect the pattern of wild swings to continue. Global markets are still in trouble, as is the worldwide currency crisis, reaching from Japan to China, Australia, Europe and even to Canada, where the looney has lost significantly to the dollar due to the downturn in the price of oil.

It's indeed unfortunate that so many keys of economics are locked to the price of oil, because, by most measures, the price is going to stay low or lower for an extended period of time, pushing all other prices down with it. At the apex of the deflationary spiral, oil, which powers more than just machines, pushes down prices for virtually all products, from manufactured to agricultural.

The rally today erased the loss for the week on the Dow, left the S&P virtually unchanged, and the NASDAQ with a 26-point loss. Friday will determine whether the week ends with a positive or negative tone.

The day's action:
S&P 500: 1,921.84, +31.56 (1.67%)
Dow: 16,379.05, +227.64 (1.41%)
NASDAQ: 4,615.00, +88.94 (1.97%)

Crude Oil 31.09 +2.00% Gold 1,077.20 -0.91% EUR/USD 1.0867 -0.14% 10-Yr Bond 2.0980 +1.55% Corn 358.25 +0.07% Copper 1.98 +1.12% Silver 13.85 -2.20% Natural Gas 2.14 -5.69% Russell 2000 1,025.67 +1.53% VIX 23.95 -5.04% BATS 1000 20,474.30 +1.64% GBP/USD 1.4412 -0.07% USD/JPY 118.0400 +0.34%

Stocks Massacred Again; S&P Below 1900; Dow Sheds Over 1200 Points in 2016

Another day, another 350+ point loss on the Dow.

There isn't much to say about this kind of result except that it isn't showing any sign of abating. It's what happens when you throw trillions of dollars for speculators to over-leverage on risk assets of all manner and then shut off the free money supply tap.

That's exactly what the Fed did on December 16, when they decided that the economy was strong enough - and gaining momentum - to withstand a rate hike. Dismissing the fact that it was only 25 basis points, the Fed, which has been wrong on everything from the effects of QE and ZIRP to employment, housing and growth, moved at the wrong time. The business cycle had already turned negative; it was exhausted and the consumer had been tapped out.

Not that the consequent decline in stocks was solely the fault of the Federal Reserve, no, the government, spending and taxing and taxing and spending the United States into 19 trillion dollars of unpayable debt, has had an equal hand in the destruction of American business enterprise.

Of course, the demise of the industrial giant wasn't all done overnight. It's taken decades of mismanagement to destroy the American dream and the destroyers aren't done yet. Stock market declines aren't the end of the road, either. Rather, they're just a symptom of the underlying malaise that will be unleashed full force as this election year unwinds.

Stocks are just the visible part of the credit bubble. The other parts consist of moving parts of underfunded pensions, bankrupt trust funds, the fraud of Obamacare, the welfare system, the education complex, military overspending, and a plethora of other wasteful programs funded by the unaware, eyes-shut, American public.

So, the start of 2016 isn't going to be anything monumental, despite the Dow losing 1273.62 in just the first eight trading sessions of the year. Bear in mind that the Dow has to lose roughly another 1500 points (to 14,679) before it's officially a bear market, and there's little doubt that this decline will eventually become a bear market with further downside from there.

No, the first few weeks of January, 2016 will likely be referred to as the "good old days," before the tsunami of deflation finally took hold of the global economy and would not let go. These will be recalled as the time before government fraud and waste was still acceptable, before we realized that unemployment wasn't really five percent, but 15%, or 20%, or more.

Today's trading was nothing short of a waterfall event. The main indices were up at the open, and in a classic bear market pattern, sold off and were negative within the first hour of the session. The Dow, which lost nearly 365 points, wasn't even the worst of it. In fact, on a percentage basis, it was the best of the three. The S&P lopped off 2.5%, the NASDAQ withstood a whopping 3.41% decline.

The 10-year note traded down to 2.05% and will be sporting a one-handle soon, possibly by the end of this week.

This isn't pretty. If you haven't gotten out of the way and out of stocks by now, and into cash or gold or silver, you have nobody to blame but your own greedy self.

Good luck winning the lottery, because your equity holdings are about to be wiped from the face of the earth.

Today's Sad Story
S&P 500: 1,890.28, -48.40 (2.50%)
Dow: 16,151.41, -364.81 (2.21%)
NASDAQ: 4,526.06, -159.85 (3.41%)

Crude Oil 30.40 -0.13% Gold 1,093.80 +0.79% EUR/USD 1.0881 +0.30% 10-Yr Bond 2.0660 -1.71% Corn 358.75 +0.56% Copper 1.95 -0.26% Silver 14.15 +2.90% Natural Gas 2.28 +1.20% Russell 2000 1,010.19 -3.30% VIX 25.22 +12.24% BATS 1000 20,143.62 -2.36% GBP/USD 1.4413 -0.15% USD/JPY 117.7130
1273.62

Stocks (and Oil) Can't Catch a Break

It was another ugly day on Wall Street, not because stocks finished higher, but because of how they got there.

Right out of the gate, the major averages were soaring, but all of the early gains were wiped away shortly after 11:00 am. Stocks zig-zagged through the midday, going positive, then negative, and, finally, just after 2:00 pm, decided that upwards would be the most-favored path, so the bid was in.

However, prior to that late-afternoon spike, there were more than a fair share of winners and losers, most of them being of the losing variety. Of the top ten most actives, nine of them were in the red, even with the indices moving decidedly positive. Only Apple (AAPL) was a winner, for reasons of which nobody could rightfully discern.

Of those nine losers, eight of them were energy or materials-related. The oddball in the group was Bank of America (BAC), which continues to shed market cap and is now in the early running for dog stock of the year (but, it's early, though since it's a bank, our money is on them).

Energy and material stocks were actively trending lower because of the all-too-obvious drop in the price of crude oil and just about anything else that falls into the commodity sphere. Oil continued to decline, price-wise, today reaching below $30/barrel for WTI crude as inventories rose and demand fell, giving the slick stuff a double whammy of bad news.

On the NYSE, losers and winners were nearly even, and there the disparity between the new highs (9) and new lows (564) was cause for alarm. On the NASDAQ, a similar story was unfolding, though breadth was slightly better. New highs numbered only 12, with 352 hitting new lows. That's where the real story is taking place. There are far too few stocks leading the market (large caps) and far too many small and mid-caps weighing it down.

These imbalances have much to do with the ongoing debate over wealth inequality. The policies of the Fed not only have benefitted the richest individuals in the society, they've also been particularly advantageous to the larger, better-established listed companies. The big firms have better access to big money for stock buybacks, primarily, while the smaller firms languish in the all-too-real mundane world where profits matter and cost-cutting continues.

Smaller firms have a harder time making their numbers in a slumping economy and are first hit when business begins to slide, or, at least that's how the current crop of traders has been conditioned. Slumping oil prices has morphed into an all-around slap-down of commodities in general, which, in normal times would be good for business, but today the low prices for everything from aluminum to copper to zinc has spread over to consumer goods, most of which are manufactured overseas in sweatshops at minimal cost.

The other side of the equation, that being consumer demand, has been hollowed out by years of fleecing by giant corporations and the Fed's insistence that nobody earn a dime in interest. While Wall Street could afford to speculate and spend because the spigot was wide open, Main Street tightened its belt until consumers are able to only afford the bare necessities after paying more in taxes, fees, credit card interest, student loans and, especially, health care. If there's one culprit upon which most of the blame can be laid for the rottenness of the general economy, it has to be the misappropriately-named Affordable Care Act, which acted as a wealth transfer mechanism from the pockets of ordinary citizens into the health care morass of hospitals, providers, big pharma and insurance companies. It has drained the economy of whatever excess had been created by reduced gas and fuel prices.

Today's closing quotes:
S&P 500: 1,938.68, +15.01 (0.78%)
Dow: 16,516.22, +117.65 (0.72%)
NASDAQ: 4,685.92, +47.93 (1.03%)

Crude Oil 30.57 -2.67% Gold 1,086.00 -0.93% EUR/USD 1.0849 +0.01% 10-Yr Bond 2.1020 -2.59% Corn 358.00 +0.35% Copper 1.96 -0.63% Silver 13.77 -0.69% Natural Gas 2.26 -5.68% Russell 2000 1,044.70 +0.27% VIX 22.47 -7.53% BATS 1000 20,630.49 +0.55% GBP/USD 1.4440 +0.04% USD/JPY 117.7805 +0.04%

Perception Trumps Reality and Why You Should Not Trade Stocks

A large part of investing consists of paying attention to details. It's not enough to know what a certain company or industry is experiencing over a short-term basis, but to examine the details and to put those details into historic perspective.

It is in this light that today's presentation will advise anyone and everyone to distrust the mainstream media reports of the economy in general, and often, even the specific.

Back in the early portion of this century, word began circulating about a mysterious group called the Plunge Protection Team (PPT for short), which had the extraordinary power of pulling the entire equity market out of a crash, thus restoring confidence to traders and investors.

For a long time, people who believed that the PPT existed at all and was causing the wild fluctuations seen in the summer of 2001 and 2002, were dismissed as conspiracy nuts and tin-foil hat wearers. However, the PPT had been exposed beforehand, and it was indeed real. Its true name was the Working Group on Financial Markets, and it was created via an executive order 12631, signed on March 18, 1988 by US President Ronald Reagan, largely in response to the market turmoil that resulted in a 22% drop on October 19, 1987.

The PPT is real, though current manipulators may not exactly match the same original cast of characters, there is still a shadowy group of government people making sure the equity markets don't crash, or, at the very least, they enter the market to manifest a desired outcome.

Just in case you still don't believe in the power of the PPT, or that the market can be massively manipulated on a short-term (leading to long-term) basis, consider that today from 3:17 to 3:38 pm ET, a span of a mere 21 minutes, the Dow Jones Industrials jumped from 16,261.93 to 16.444.04. That's 182.11 points, a number that would be exceptional (a better than 1% gain) for an entire session.

Thus, the Dow - and along with it, the S&P and NASDAQ - went from near the day's lows to modestly positive, nearing the close of the session. These heady days, as perception exceeds reality by a longshot, that result will be precisely ONLY what the mainstream media reports. Not that markets were in turmoil and extending losses from last week, or, that market conviction suddenly changed dramatically, but ONLY that stocks were up on the day. All is well. Nothing to see here. Move along.

That there are government entities meddling in what used to be fair, honest and open markets should be enough to discourage just about any thinking person to not only abhor the practice of manipulation, but to remove themselves and their money from the fraud that is Wall Street, because, if government operators can make the market go up, they have an equal power to make it go down, or up-then-down or whatever they wish it to be.

In essence, stock markets are not fair and open and free anymore, and haven't been for quite some time. Most stocks these days are wildly overvalued, and for good reason. The retirements of millions of Americans are tied to stocks. Not only that, but the entire economy of the planet is tethered, one way or another, to the US equity markets. There are sovereign wealth funds, trust funds, hedge funds, mutual funds and all other manner of funds, ETFs and investment vehicles that are inexorably tied to the success or failure of stocks.

Suppose there is a massive bear market in stocks, like we witnessed in 2000, and again in 2008. People panic. They sell. But that's old news. People don't move markets any more. Computers do, and those are controlled by the barons of Wall Street, the banks and brokerage firms.

Thus, the PPT does not have to exist at all anymore. There only needs to be a mechanism for all the main traders to move at once in the same direction, and that mechanism is probably already in place, has been used in the past, is being used presently and will be used in the future, either to make stocks cheaper (down) or more expensive (up). Either way, the trading firms will have the upper hand, advance notice and the blessing of the federal government.

US markets are not what they appear to be. For instance, they are much more thinly traded than ever, by fewer participants, many of whom are nefarious, criminal and immoral. Individual investors would likely be better off stuffing cash into a mattress, buying gold or silver, or trading comic books, baseball cards, Beanie Babies or other collectibles. Realistically, the collectible market is very robust and smart individuals can actually make a good living on places like eBay or Craigslist. The art market is also very good, especially for rarities.

Leave the stock market to professionals. If you like to gamble, try the lottery, the horses, or fantasy sports betting, because the Dow Jones Industrials, the S&P, the NASDAQ and the NYSE have become nothing more than sophisticated casinos, operating without gaming licenses, and the house always wins.

Always.

Today's closing quotes:
S&P 500: 1,923.67, +1.64 (0.09%)
Dow: 16,398.57, +52.12 (0.32%)
NASDAQ: 4,637.99, -5.64 (0.12%)

Crude Oil 31.31 -5.58% Gold 1,095.60 -0.21% EUR/USD 1.0855 -0.60% 10-Yr Bond 2.1580 +1.31% Corn 351.25 -1.61% Copper 1.97 -2.52% Silver 13.85 -0.49% Natural Gas 2.39 -3.16% Russell 2000 1,041.90 -0.41% VIX 24.30 -10.03% BATS 1000 20,518.11 -0.16% GBP/USD 1.4540 +0.22% USD/JPY 117.7050 +0.79%