Debt Downgrade Fallout: Stocks Shattered, Gold Soars, Europe a Wasteland

At 9:00 pm Eastern time on Friday night, August 5, S&P officially released their downgrade of US debt from AAA to AA+, prompting widespread panic and sharp rebukes from the White House, who claimed, in effect, that S&P had made what amounted to "math errors."

Over the weekend, much was made of the downgrade, as the Obama hit the airwaves with gusto, rebuking the call from the ratings agency. Fitch and Moody's had previously reaffirmed the US debt as AAA, the highest possible sovereign bond rating, but S&P would not back down, and the downgrade remained in effect.

What S&P reasoned was that the US government did not take the necessary steps - in its theatrical production of waiting until the last possible moment to pass a debt ceiling increase - to address the structural problems facing it. S&P rightly concluded that US debt levels were and continue to rise and discretionary spending levels have not been controlled. Therefore, they downgraded the nation's debt and threaten to do it a second time, sometime around November, if the 12-member congressional committee charged with dealing with long term debt does not come up with actionable, concrete, debt reduction proposals.

As markets opened on Monday, the effects of a global panic were evident, especially on the heels of a 10% decline in US indices over the past two weeks and Thursday's dramatic sell-off of over four per cent on major markets.

First, it was the Asian markets which tanked at their various openings and continued through the day to sell off anywhere from 1.5 to 4.0%. Next up was Europe, where the crisis over bailing out Italy and Spain have reached a point of no return. EU officials stressed that they would be in the market with the ECB, buying up italian and Spanish debt, but that did little to change the outlook of investors, which had turned sour over the past fortnight.

Appetite for risk was at a low, as European markets suffered steep losses. England's FTSE was the best of the lot, down only 2.62%. France's CAC-40 took a 4.68% loss and Germany's DAX shed 5.02%. Other Euro-zone markets fell between 3.76 and 6.11%.

By the time US markets were to open, index futures had been hammered down to presage an inauspicious opening. Within minutes of the bell, the Dow was down more than 200 points, the S&P had taken a 25-point hit and the NASDAQ fell more than 70 points, though those declines were nothing compared to the carnage that lay ahead.

By the end of the day, after a minor rally in the first 15 minutes of the final hour, stocks were trading at or near their lows, with the Dow Jones Industrials surrendering the 6th-worst performance in its history. While the Dow suffered a 5.5% decline on the day, the other indices were actually much worse, with the NYSE Composite topping them all, coming home with a 7.05% loss.

It wasn't just the debt downgrade that spurred the sell-off. Conditions in Europe have worsened significantly over the past few months, to the point that European Union officials are without reasonable solutions to the debt contagion spreading across the region. While the ECB has managed to prop up smaller countries like Greece, Portugal and Ireland, Italy especially poses a much larger concern.

All the European leaders could muster on Monday was a terse statement which offered no concrete proposals but plenty of assurances, which was be roundly written off by markets. To wit:

We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growth

That was the extent of the communique from the magnificent seven of the United States, Canada, Great Britain, France, Germany, Italy and Japan.

The irony is that one of them, Italy, has been the source of the most recent anguish.

Essentially, the funds available to the ECB fall short of meeting the debt purchases needed to save Italy and Spain. Europe will have to engage in quantitative easing, as was the case in the United States over the past two years, to stave off defaults and the threat of a cascading crisis which would envelop all of Europe and likely doom the 11-year-old Euro currency.

If the EU decides upon cheapening the currency - which it almost certainly will do - theknock-on effect will be to sink the Euro, probably close to parity with the US Dollar. As the dollar would grow in strength, commodities, particularly oil and gas for auto use, would plummet, a boon to US drivers and to the general economy. Costs of imports would also decline, on a relative basis, giving American consumers more purchasing power.

Within the same scenario, however, are pitfalls for the global manufacturers and companies that populate the S&P 500, NASDAQ and the Dow. A stronger US Dollar would make them less competitive in foreign markets, shrinking margins and thus, profits. Thus, the great selling rush today was more of a statement on the global condition rather than that of the debt downgrade, which, when all is said and done, won't amount to a hill of beans. In fact, treasuries were up sharply today, as yields fell to their lowest levels in over a year.

The benchmark 10-year note fell 25 basis points in just one day, from 2.56% on Friday to 2.31% on Monday. The 30-year bond fell 19 basis points, to 3.65% as the yield curve continues to flatten. Money is going out of stocks and into bonds, and whether they're AAA or AA+ doesn't matter to those seeking a safe haven. The ridiculously low yields offered are a moot point. As one trader put it, "Investors aren't looking at making money; they're more concerned with getting their money back."

And, therein, the next crisis, in bonds, especially if the US government doesn't get its house in order soon. Higher rates and another downgrade could trigger a default of impossible proportions as the US would be unable to roll over its debt and fund itself without incurring higher borrowing costs. Ditto for Europe. Rising interest rates signals the end game for fiat currencies globally and back to some form of honest money, most likely on a gold standard.

The market events of the past few days, in which the major indices lost more than 10% are not the end of the crisis, but rather the beginning of the end of a great generational bear market that began in 2007 and will eviscerate all risk assets until nobody wants to hold anything any more.

Markets have entered the final stages of the third leg down. QE 1 and 2 staved off the collapse, but there will be no bailouts this time around. It's every man, woman, child and company for itself. There will be some winners, but mostly there will be losers, anguish, agony and the disappearance of great hordes of wealth.

Dow 10,809.85, -634.76 (5.55%)
NASDAQ 2,357.69, -174.72 (6.90%)
S&P 500 1,119.46, -79.92 (6.66%)
NYSE Composite 6,895.97, -523.10 (7.05%)

The internals were equally as stunning as the headline numbers. Declining issues decimated advancers, 6553-375, a ratio of 17.5:1. It was truly one of the deepest, broadest declines in stock market history. On the NASDAQ, there were four (4) new highs next to 725 new lows. The NYSE had just three (3) new highs, but 1292 stocks making new 52-week lows. The combined total of seven (7) new highs and 2017 new lows rivals or exceeds the figures presented during the fallout of 2008-2009.

Volume was at the highest levels of the year, exceeding that of last Thursday, which was then the high volume day of the year. Investors aren't just scared, they are trampling each other running through the exits at breakneck speed.

NASDAQ Volume 4,002,857,250
NYSE Volume 11,046,384,000

Crude oil futures were pounded again, as the front-month contract on WTI crude fell $5.57, to $81.31. Gas prices will soon fall below $3.50 - and possibly below $3.00 - a gallon as current supplies are depleted and replaced by less expensive distillates. According to AAA, the average price of gas in the US is now $3.66 per gallon, but the deep declines have not yet been factored into the equation. That will happen over the next two to three weeks.

Gold was the big winner of the day, soaring $61.30, to $1,713.20, another all-time record price as investors, companies, nations, central banks and housewives scrambled to find reliable assets. Silver, still constrained by high margin requirements, gained $1.17, to $39.38. Silver is almost certainly the most under-appreciated asset in the world, though that will soon change. As the crisis escalates and governments make more and more bad moves, the precious metals will skyrocket to unforeseen heights.

The banking sector took it on the chin, but none more than Bank of America (BAC) which is on the verge of a well-deserved bankruptcy. shares of the nation's largest banks fell 20% on the day, losing 1.66, to close at 6.51. Just a few weeks ago, BofA was trading at a price nearly double that. The unfolding mortgage crisis, brought about by Bank of America's 2008 purchase of Countrywide, has become a fatal blow to the once proud institution.

David Tepper's Appaloosa Management Fund has reportedly sold its stake in Bank of America (BAC) and Wells Fargo (WFC), while significantly trimming Citigroup (C) from the portfolio.

Adding to the irony, AIG has sued Bank of America for $10 billion, citing "massive fraud" in its representations of mortgage-backed securities (MBS).

However, Citigroup analyst Keith Horowitz takes the booby prize for reiterating a "buy" rating on Bank of America shares this morning. Timing is not one of Mr. Horowitz's strong points, it would appear.

On top of all this, the FOMC of the Federal Reserve will issue a policy statement Tuesday at 2:00 pm EDT, followed by a news conference from Chairman Ben Bernanke. That alone should equate to another 300-point decline in the Dow.

For those with a morbid curiosity, check out the slideshow of the 10 worst days on the Dow, already outdated, as August 8, 2011, will go down in the history books as the 6th worst day for the blue chip index of all time.

Henry Blodgett and Aaron Task have a nice summation of the situation in the video below:

Bernanke Thinks Gold is Not Money as it Soars to Record Highs

Before launching into my daily monologue on what's wrong with the global financial system (almost everything), here's a short video clip of Federal Reserve Chairman Ben Bernanke's answer to Texas representative (and presidential candidate, though you wouldn't know it from watching TV) Ron Paul's question as to whether the Chairman of the world's largest central bank thinks gold is money.

Watch the latest iteration of "what's wrong with this picture" below.



Well, there you have it. The Chairman thinks funny-looking pieces of paper with pictures of dead presidents on them are money, but gold, which has been used as a medium of exchange and a store of value, is not. Is there any wonder then, why the global economic system is on the verge of a grand mal seizure?

Bernanke's comments came at a time at which gold was breaking out to record highs, making his remarks seem not only ignorant and ridiculous, but also contrived, disingenuous and bordering on being an outright lie.

If one were to follow Bernanke's train of thought, then, no, gold is not money, land is not real estate, the moon is not a satellite and the sun is not a star. Rubbish, pure, stinking trash.

In addition to making profoundly absurd statements like the one above, the Chairman, in testimony before the House Financial Services Committee, also signaled that he and the Fed were prepared to provide more stimulus should the US economy continue to falter, though he held steadfast to the curious position that the economy was improving.

With that, stocks and commodities took that as a cue to ramp higher, with the Dow gaining more than 160 points just before 11:00 am.

However, the euphoria over the potential for QE3 was fleeting and stocks drifted lower throughout the session, with selling accelerating in the final hour. Equity markets lost about 2/3rds of their earlier gains, as traders left the floor moribund and still confused over fiscal as well as monetary policy.

Elsewhere in Washington, the President and leaders of congress met for a fifth straight day to try to work out a compromise on the budget and raising the debt ceiling. The late-afternoon meeting (3:45 pm) offers little chance of reaching any kind of agreement right away as both sides seem entrenched on their particular set of issues. Republicans are resistant to any kind of tax increase, even if only on the very top earners, while Democrats and the President have been more accommodative, though seem reluctant to make any modifications to Medicare or Social Security without some bending by Republicans. The result is a standstill, with the good faith and credit of the USA hanging in the balance.

So, while it was a winner for the bulls overall, the feeling of failure was pervasive at the end of the day.

Dow 12,491.61, +44.73 (0.36%)
NASDAQ 2,796.92, +15.01 (0.54%)
S&P 500 1,317.72, +4.08 (0.31%)
NYSE Composite 8,246.80, +54.05 (0.66%)

Advancing issues still managed to defeat decliners by a healthy margin, 4557-1978. On the NASDAQ, there were 87 new highs, and 26 new lows. The NYSE had 61 new highs, 24 new lows, putting the combined total for the day at 148 new highs and just 50 new lows. Volume was fairly dull, though the broader NYSE outgained the Dow, which happens rarely and is a sign that assets are shifting from traditional safe havens to more riskier investments, not at all surprising given Bernanke's comments.

NASDAQ Volume 1,874,432,000
NYSE Volume 4,033,702,250

Commodities, especially the precious metals, had a field day. Oil was up 62 cents, to $98.05, but was a laggard by comparison. Gold made another new all-time high at $1,585.50, up $23.20, while silver was a 7% gainer, up $2.52, to $38.15.

The slate of economic data for Thursday is chock-full of interesting readings, beginning with weekly unemployment claims along with retail sales and June PPI at 8:30 am.

After the bell, Yum! Brands (YUM) beat expectations by five cents, posting 66 cents per share for the second quarter, though most of the profits were driven by overseas performance and a favorable shift in its tax rate. US same store sales slipped 4% in the quarter, which was a discouraging sign for the global fast food company.

Mariott International (MAR) posted diluted EPS of $0.37, roughly in line with estimates.

Ben Bernanke: World's Worst Cheerleader

We have witnessed some terrible ideas from the Federal Reserve over the past few years - decades - but their idea to have the Fed Chairman hold a news conference after the periodic FOMC rate policy announcement has to rank right up there among the worst.

Today's media-fest new conference, the second Ben Bernanke has held, was an absolute snoozer, with the Chairman reiterating what was already known from the rate announcement - no change in policy, keeping rates at ZERO to 1/4 per cent for an extended period, weak economy, frustratingly slow job growth, blah, blah, blah - and then giving highly nuanced responses to soft-ball questions from selected media.

The Chairman, being stuck in a policy environment that is absolutely untenable long-term, dead-panned throughout, looking at times stupid and at other times, less-than-honest. Wile the Fed did lower their forecasts for GDP in the second half of the year, they remained steadfast in the longer term outlook, saying that improvement in the economy would happen late in 2012 and into 2013, where they see lower inflation, a pick-up in job creation and GDP between 3.5 and 4.2 per cent.

Put simply, Ben Bernanke and his overpaid monkey economists are full of crap. Up to their ears in it, they are. Fed policy since the apocryphal events of 2008 has been nothing other than non-stop printing of dollars and feeding the beast that is the cartel of large banks which ruined and continue to run the economy into the ground. So, by doing more of the same the Fed is going to "work things out" just how?

Simple answer, they're not.

While the Chairman was speaking, stocks stumbled and then cratered once he was through, finishing at the lows of the day. Great performance, Mr. Bernanke. Just what do you have in store for an encore? We should expect nothing less than the complete and total disintegration of the dollar, and, by inference, the annihilation these United States. Thanks for the nap time, but between the Fed and congress and the presidency, America is royally screwed, kaput. It's over. Keep cashing those checks for as long as you can, because sooner or later they're going to bounce sky high. But Americans, being the slovenly sloths they are when it comes to understanding money and economics, will just keep going on, changing nothing and expecting different results, which is, by the way, the definition of insanity.

Our economy is practically dead and there will be no winners in the end.

After a brief respite, it appears that stocks are back to the losing ways of the past seven weeks. And the longer the congress takes to figure out that they must raise the debt ceiling, the steeper the decline. Even if they do pass a resolution to raise the debt ceiling - they will - with a deal on the table that is palatable to the phony "fiscal conservative" Republicans, it will offer no immediate assistance but rather a convenient platform from which to launch their campaigns for 2012.

Pretty sad, when all congress can think about is re-election. If nobody showed up to vote, it wouldn't matter. They'd just fix the results to be what they want them to be. Americans are the dumbest people on the planet. I went to another party this weekend where talking politics was barred, a policy that's becoming more and more prevalent. Apparently, people's normalcy bias is so great that they cannot stomach the truth.

Looks like I'll be partying by myself more often. At least the company is rational.

Dow 12,109.67, -80.34 (0.66%)
NASDAQ 2,669.19, -18.07 (0.67%)
S&P 500 1,287.14, -8.38 (0.65%)
NYSE Composite 8,101.84, -54.43 (0.67%)

Declining issues took the bull by the horns and flipped it on its back, leading advancers, 3983-2549. On the NASDAQ, 58 new highs and 41 new lows. There were 66 new highs and 23 new lows on the NYSE, putting the combined total for the day at 124 new highs and 64 new lows, an oddly-skewed metric, though considering the moves of the past few days, not really out of bounds.

Volume was minimally marginal, to say the least, as expected.

NASDAQ Volume 1,603,598,250
NYSE Volume 3,691,012,000

Crude futures rose on supply draw-down, gaining $1.24, to $95.41. Gold continued to break to new record highs, up $3.30, to $1550.50, with silver ahead a mere four cents, at $36.44. The bears and shorts have complete control over the paper silver market and will not allow it out of the $33-38 range, where it's been stuck for two months, making it one of the less desirable assets to hold currently, though that is bound to change.

Remember, don't talk politics or economics at any parties or barbeques unless you don't want to be invited back. Hmmm... now there's a plan.

Theatre of the Absurd in DC as Bernanke Threatens US

A grand assemblage of the masterminds responsible for the demise of the global economy met in Washington, DC, today, for what was called the Committee For A Responsible Federal Budget - somewhat of a misnomer or mutually exclusive mistake with "responsible" and "federal budget" in the same sentence.

Headlining the event was none other than the master thief, Fed Chairman Ben Bernanke, who spoke for about ten minutes to open the affair. In a somewhat petulant and, at the same time, preachily pedantic statement, Bernanke made an open threat to the citizens of the United States. As he outlined the possibilities of congress not raising the debt ceiling he said,

"Some have suggested that payments by the Treasury could be prioritized to meet principal and interest payments on debt outstanding, thus avoiding a technical default on federal debt. However, even if that were the case, given the current size of the deficit and the uneven time pattern of government receipts and payments, the Treasury would soon find it necessary to prioritize among and withhold critical disbursements, such as Social Security and Medicare payments and funds for the military." [emphasis mine]

There you have it folks. The Chairman of the Federal Reserve - a private bank in every sense of the word "private" - telling the world that failure to raise the debt ceiling would result in the US government defaulting on its obligations to its people. Not that the US government could send home millions of worthless government paper-shufflers or stop payments to oil companies or foreign countries, no, the government would stiff the elderly, the sick and infirm and those who fight our wars for global US dollar hegemony in the military.

Nice, huh?

Sickening is what it is. Absurd. Bizarre. Mere words cannot adequately describe the mendacity of the elite banker/politician class, their abject scorn for the public nor their ability to destroy in the last ten-and-a-half years what took 200 years to build. The American public, and, to some degree, the populations of the rest of the world are now and have been at the point of the spear wielded by the elitists of the world.

Just in case anybody is wondering, the chance of congress NOT raising the debt ceiling are about the same as the federal funds rate: approaching ZERO.

Today's well-orchestrated market response was a mammoth rally on - big surprise - the lowest volume in three weeks. Now we will be told by the mainstream mouthpieces in the media that the US economy is just in a soft patch on the road to recovery. All is well. Go out and spend.

These are free markets? Really? Go back to sleep if you believe that.

Dow 12,076.11, +123.14 (1.03%)
NASDAQ 2,678.72, +39.03 (1.48%)
S&P 500 1,287.87, +16.04 (1.26%)
NYSE Composite 8,132.77, +115.71 (1.44%)

Now, this is where it gets even weirder. Market internals show advancing issues beating decliners by a whopping 5268-1383. On the NASDAQ, there were 30 new highs and 68 new lows. The NYSE showed 30 new highs and 28 new lows, so the indicator is still negative with the combined 60 new highs bettered by 96 new lows. Give them a few days, though, and the market manipulators will turn these numbers around, even after eight straight days of the lows leading the highs.

Did somebody mention that volume was non-existent, and, normally, low volume on a huge upside day is a sure sign that the rally was a fake? Note that options expiration is Friday, and some rather large bets were likely cashed today.

NASDAQ Volume 1,725,560,250.00
NYSE Volume 3,972,814,250

Another sure sign that the planet is in the death grip of the banking cartel is that oil spiked by $2.07 today, to $99.37 per barrel. Flows into precious metals were strong, however, with gold up $8.80, to $1524.10 and silver ahead by 63 cents, to $35.39.

The hubris from the Fed Chairman today was breathtakingly simple and completely without precedent. We are owned.

Well, We All Knew This Was Coming

Nothing, in the world of the financial markets, moves in a straight line, so it was only a matter of time that the stock indices would cease falling and post a day of positive, "green shoots" results, and today was that day.

Call it whatever you like - PPT manipulation, dead cat bounce, oversold conditions, snap-back rally - it's nothing out of the norm for markets to do these kinds of things, and, taking a word from Fed Chaiman Ben Bernanke, it is likely a "transitory" event, like the wind, which passes on and blows in another time and place.

Even with today's sudden upsurge reversal of fortune, volume was horrid and stocks finished well off their highs, with widespread selling occurring in the final hour. That's likely because today's move was highly orchestrated by the usual suspects, with aid from the Fed (remember, QE2 isn't over yet). Bonds were flipped and turned into stock purchases, mostly in the very same names that control 80% of the trading on the exchanges. You know the names; no need to repeat them here.

Getting right down to it, after sustaining six straight days of losses, this was nothing about which to get excited, that's for sure. For instance, even factoring in today's gains, the Dow is still off a whopping 445 points since May 31, and 686 points since the top on April 29 (12,810).

Anyone suggesting that it is anything other than a one-day event should be barred from ever commenting on stocks or financial issues, in perpetuity. Selling stocks will resume sooner, rather than later.

Dow 12,124.43, +75.49 (0.63%)
NASDAQ 2,684.87, +9.49 (0.35%)
S&P 500 1,289.00, +9.44 (0.74%)
NYSE Composite 8,149.65, +68.30 (0.85%)

Internals were slightly improved, with advancing issues topping decliners, 3538-2116. The NASDAQ was good for 26 new highs and 119 new lows; the NYSE saw 31 new highs and 70 new lows, making our combined reading 57 new highs and 189 new lows, a fifth straight session with the lows leading the way.

Volume? Come on, now.

NASDAQ Volume 1,686,693,375
NYSE Volume 3,489,525,750

Over in the commodity space, the aberration known as crude oil futures gained $1.19, to $101.93. There is no good reason for the price of oil to be this high. A stable price of around 470-80 per barrel would be sufficient to satisfy all parties without putting unnecessary pressure on end-product consumers. If there's any one thing that will keep a slow economy from improving, it is high fuel or food prices and we have them both. Of course, the government, usually quick to impose its will wherever it pleases, does nothing about this. To put it simply, our elected officials at all levels have ceased representing the people of America long ago. In a few words, THEY SUCK.

Oddly enough, gold bugs saw right through the rise in equities and bought more, bringing the price up by $6.60, to $1544.40. Gold is still up 25% on the year. Difficult to argue with those kinds of returns. Silver was also bid higher, up 75 cents, to $37.55.

Tomorrow, the weekend. Thank goodness.

Classic Bear Market Session Ends with Disappointment from the Chairman

There's nothing that makes a bear market more palatable than a recognizable chart pattern, and today's charts were the perfect examples.

To wit: up in the early going and down into the close, and that's exactly what the markets offered up today. There is no doubt that the bear market which began in August-October 2007 is alive and well and ready to take more money prisoner. Albeit the long interruption from March 2009 to May 2011, the long rally was nothing more than a cyclical upturn aided by trillions of dollars in free cash flow, courtesy the Federal Reserve.

Now that QE2 is coming to an abrupt end, the bears once again have their claws sharpened and are gnashing their teeth in anticipation of a tasty fete of equity fare.

Fittingly, the day ended with Fed Chairman Ben Bernanke droning on in his monotone about world economic conditions and how the Fed is powerless to do anything about the weather. Yes, he did mention the weather. In essence, his speech before the International Monetary Conference in Atlanta offered nothing to the market; there was no new policy, no mention of further stimulus. In show biz parlance, he bombed, mightily.

Stocks were up early but began selling off around 2:00 pm, wiping out all gains by the close, except in the broad NYSE composite.

It was the fifth straight decline for the Dow, S&P and NASDAQ and a sure sign of more trouble for the embattled US economy ahead.

Dow 12,070.81, -19.15 (0.16%)
NASDAQ 2,701.56, -1.00 (0.04%)
S&P 500 1,284.94, -1.23 (0.10%)
NYSE Composite 8,131.69, +15.82 (0.19%)

Advancers finished slightly ahead of losers, 3174-2454, but new highs succumbed to the downdraft of new lows. On the NASDAQ, 21 new highs, 112 new lows. The NYSE was witness to 37 new highs and 60 new lows, making to combined total 58 new highs and 172 new lows, the forth straight session in which the new lows have outnumbered new highs, and a sure sign that the market is in a correction, soon to become known as the resumption of the bear market.

Volume was scant, though that in and of itself is nothing of a surprise. It exemplifies the general weakness in equities.

NASDAQ Volume 1,861,762,125
NYSE Volume 3,681,650,000

NYMEX crude oil futures for WTI gained 8 cents, closing at $99.09. Gold lost 30 cents, to $1543.60, while silver picked up 39 cents on the bid, at $37.19.

It's a slow week, though it is only the beginning of what appears to be shaping up as one slow, hot summer of declines. There is no catalyst for buying stocks. It is, however, a great time to stock up on gold, silver and other necessary household items one might need in case of emergency, like banks closing or a false flag terror scare or the end of the Euro, which is almost a certainty. The only thing uncertain about the demise of the Euro as a currency is the timing, but rest assured, when it does happen, it will send the global economy into a tailspin.

At the End of the Day, Everyone Knew This Was Coming

With the 8:30 am release of the May Non-farm Payroll date from the Bureau of labor Statistics, the bad news - for which everyone in the world had been pre-conditioned by NBC, CNBC and any other reliable propagandist sources - was finally revealed.

Only 54,000 new jobs had been created by the great ponzi scheme, the unimaginative artificial stimulus and $600 trillion in fresh buckeroos since last September from Fed Chairman Ben Bernanke.

The Keynesian experiment can now be exposed as the colossal failure that it is, though already the talking heads, left-wing politicians and idiotic economists from the Ivy League's ivory towers are already suggesting that the slowness in job creation is merely a "soft patch" in the recovery.

It is nothing of the sort. The US economy is closer to a complete shutdown and recession than at any time since the grand collapse in the fall of 2008. Not only were the NFP numbers off by grotesque magnitudes of scale, any suggestion that conditions will improve over the summer - while the worst congress in the history of our nation idly postures over the debt ceiling and enormous deficits - is nothing short of hot, gaseous, noxious air, the kind most prevalent inside Washington DC's beltway.

Rather than belabor the obvious: that the economy is stuck in first gear, if not simply idling, it is time for Americans to come to grip with what we have. And that is an aging population living on borrowed time, borrowed money, false hope and remembrances of things past, without an industrial base, energy policy, sound money, honest markets nor anyone even remotely willing or able to fix them.

We are a hollow shell of a formerly great nation, put on its collective knees by a cabal of bankers and politicians whose only purpose has been personal gain and control, a control which they are rapidly losing. 17% of the country receives food stamps. More than half the country depends on some form of government check for their basic needs. The middle class has been relegated to numb consumers of foreign goods, many without jobs and those that have them living in abject fear of losing them.

Nobody except bankers get raises, educational standards have been lowers persistently over the past forty years, though that's hardly a problem since there is no steady employment for engineers, chemists, biologists, and a raft of other high-skilled fields of endeavor.

All of the economic numbers for the past month have been dismal, despite the government's best efforts to fudge, obfuscate or otherwise obscure the truth that we, as a nation, are smack dab in the middle of the worst depression in the country's history.

People are living in houses without paying mortgages for two, three and four years because the banks can't produce clear titles, the courts are overwhelmed even when they dispense justice properly, which is seldom, and the number of weeks spent on unemployment is now at an all-time high.

Housing values have plummeted to levels worst than during the Great Depression, gas is more than ten times as expensive as it was 40 years ago, new car sales, retail sales, industrial production, capacity utilization, factory orders and durable orders are beginning to fall off a cliff. Municipalities everywhere are struggling to close budget deficits, while pensions are underfunded and tax receipts are falling. About the only thing that isn't falling apart the amount of outright lying and deception delivered daily from the various mainstream news outlets, politicians and business leaders, some of whom have already jumped ship and are oopenly saying that another recession is on its way (considering the first one ever ended).

And that's the good news.

It's good news that all of this is finally getting to see the light of day, so that Americans can outrightly reject any and all new proposals, taxes, regulations, elections and instead stand for change.

This is A TRULY GREAT DAY FOR AMERICA AND FREE MARKET CAPITALISM...

because the jobs data and all the other bad data from the past three weeks show that central planning doesn't work. Bailouts of insolvent banks don't work. Giving taxpayer money to the richest people and foreign financial institutions doesn't work. Mark this day down because it is the date upon which Wall Street, the Fed and the federal government (throw in the mainstream media for good measure) are shown to be complete frauds, liars and cheats, absolutely unfit to serve the good people of America in any capacity.

America can and will survive. Watch for more of the following, strictly from the private sector:

Innovation

entrepreneurship

rent parties

barn raisings

barter clubs

independent contractors

tax evasion

home business

cottage industry

buy American!

back yard garden

handymen (and women)

underground economy

black markets

and forget the following:

mortgage payment

property tax increase (or any tax increase for that matter)

bank loans

TBTF (at least two of the big four BAC, JPM, WFC, C) will fail within a year

minimum wage

health insurance

The restructuring of America can begin apace! Get the insurance companies out of health care and let doctors earn their livings like they should, treating their patients individually.

National banks will become much smaller.

The Fed has to go.

Back to the gold standard or some semblance of sound money.

We can also repeal the minimum wage, along with severely limiting all the other employment regulations, like unemployment benefits, worker's comp, Social Security and medicare deductions, etc.

Start putting up WE WIN! signs and people will first think you're nuts, until they start seeing you living better than them by rejecting the status quo.

It's time to put away the idea that government can fix problems, because they simply create more of them, along with wars, fear, famine and homelessness and time for Americans to do what they have always done in times of crisis: stand up individually and take control of your lives.

Stocks tumbled again, on low volume, but it could have been worse. Since the poor jobs number was telegraphed by the ADP report, much of the selling was already well underway on Wednesday. Today's figures were mostly priced in, though since there's almost no participation by individual investors at this point, the big, controlling interests can hold a while longer and take stocks down as they please. Wall Street has been and now is completely irrelevant. One could do better stuffing dollars into mattresses than taking a flyer on the various stock offerings being kicked about.

Th Dow Jones Industrial Average fell for the fifth consecutive week, the largest expanse of time for continuous losses since 2004, and it doesn't look like it's going to end any time soon. Stocks are probably 30-40% overvalued at this juncture, and a crash is dead ahead.

Dow 12,151.26, -97.29 (0.79%)
NASDAQ 2,732.78, -40.53 (1.46%)
S&P 500 1,300.16, -12.78 (0.97%)
NYSE Composite 8,222.15, -55.61 (0.67%)

Declining issues buried advancers, 4809-1792. NASDAQ new highs totaled 31, while there were 82 new lows. ON the NYSE, 37 new highs did not measure up to 48 new lows. Combined, there were 68 new highs and 130 new lows. The most reliable leading long-term trend indicator - highs-lows - has been flashing signs of reversal for months. This should be the tipping point after which the direction will be identified undeniably as straight down. As long as new lows outweigh new highs for a period of more than about six to eight trading days, there is virtually no way to reverse the trend. It also will be telling if the gap between the highs and lows continues to widen. Even as such, the Dow has already shed 657 points from its nominal high, reached exactly one month ago today. The turnover in the highs-lows is just now confirming the trend despite desperate pumping, dumping and priming by manipulative stock insiders.

NASDAQ Volume 1,908,014,125
NYSE Volume 4,028,291,000

The commodities markets were a tragi-comedy of denial that global deflation has ensued. All manner of commodities fell sharply in the morning, only to be ramped back up in the afternoon. Crude oil fell by a laughable eleven cents! to close at an abysmally-overpriced and speculatively-inflated $100.22.

Gold could not be held back, gaining $9.20, to $1543.00. Silver, despite being pushed down to near $35 early on, ended up 17 cents, at $36.32.

At least the weather is better. This is by no means over. Rather, a collapse worse than 2008 is already in the cards, though not represented in prices. The sum of all fears is on its way and it will be deflationary, desperate and lasting for more than a generation.

More POMO Equals More Momo; Less for Your Dollar

For the uninitiated, POMO stands for Permanent Open Market Operations, which, well, really doesn't explain anything, but let's just say this is how the Federal Reserve has been handing money over to primary dealers for the past 6 1/2 months, through various coupon pass-throughs and bond-repurchases.

So why POMO causes MOMO (slang for "momentum") is that these primary dealers have to do something with their newly-minted free Fed paper money, so they thrust it into the stock market and goose up shares of Apple (AAPL), Netflix (NFLX), Chipolte Mexican Grill (CMG) and other darlings of the "Fast Money" crowd.

The Fed is furiously throwing money around these days, attempting to keep the Ponzi market afloat before John Boehner decides to cram it all back to the Fed by insisting on budget cuts. Mr. Boehner best watch what he says or soon enough there will be calls for him to step down as Majority Leader in the House. Treasury Timmy and Bingo Bernanke don't like cuts in spending as it really diminishes the impact of their unilateral pumping of all things financial.

Of course, Mr. Boehner's calls for $2 trillion in budget cuts is laughable and will never happen. Even he knows that, but he must maintain the posture of a "conservative" even though he and his Republican members (except a brave few - very few - Tea Partiers) are as quick to spend a buck as their Democratic counterparts. There will be a few trifling spending cuts announced as part of some kind of compromise, but it won't matter. The government is about as desperate and broken as the stock markets, and that takes some doing.

So, today, on the back of a ramp job yesterday, we have more momentum playing, goosing stocks back towards the highs they scored a few weeks back. There are about 30 more POMO days before the Fed cuts the cord in late June, so expect the equity indices to be heading for higher highs before then. As long as the mainstream media can keep the public convinced inflation is marginal, transitory or immaterial, and that $4 or $5 gas is now acceptable, there will be no turning back the tidal wave of Federal Reserve Notes banging prices higher around the world.

Quoting Diane Keaton in her role as Annie Hall, from the Woody Allen movie by the same name, "la dee da." Welcome to the centrally planned economy.

Dow 12,760.36, +75.68 (0.60%)
NASDAQ 2,871.89, +28.64 (1.01%)
S&P 500 1,357.16, +10.87 (0.81%)
NYSE Composite 8,550.49, +72.30 (0.85%)

Advancing issues far outpaced decliners, 5077-1471, so one could call today's ramp-up, POMO-induced rally, broad-based, if one so chooses. Most of it are just calling it "nowhere to hide the devalued dollars." On the NASDAQ, there were 142 new highs and 34 new lows. Over on the NYSE big board, new highs were well ahead of new lows, 240-16. This is, in fact, easy to accomplish with free money, no restraint and near-record low volume - again.

NASDAQ Volume 1,996,086,625.00
NYSE Volume 3,778,728,750

Crude oil, despite an announced 25% margin hike which takes effect tomorrow, gained $1.33, to close at $103.88. And now, since oil has been sufficiently beaten down, we hear that numerous refineries are partially shut down, just in time for the nicer weather. Welcome to $4.00 and $4.50 gas coming to a fueling station near you.

Gold continued to strike back against the empire of debt, gaining $3.20, to $1516.30 up to the minute. Silver added 76 cents, at $38.47. The precious metals now have added momentum to meet and exceed previous all-time and multi-year highs before the end of June.

The government reported today that import prices (almost everything that US consumers purchase) rose 2.2% in April, on the heels of a 2.6% rise in March. Year-over-year, the increase was 11.1%

The 12-month advance in April was the largest year-over-year increase since an 11.2 percent gain between April 2009 and April 2010.

So, no, there's no inflation, just record import prices two years running.

Keep printing, Mr. Bernanke. We will continue to buy silver and gold, POMO and MOMO notwithstanding.

Death of Osama bin Laden Springs Bernanke Trap

Whether or not one accepts the story of the demise of Osama bin Laden as gospel or Golem, there is no doubting that the mainstream news media is treating it as the truth, and celebrating it with requisite aplomb.

It served as the leading commentary to an otherwise dull Monday, especially in the financial markets. At one time, the capture or death of the man who was widely recognized as the mastermind of the 9/11 attacks was thought to able to create a market rally of dizzying proportions, but today's response was muted, if not downright dismissive of the manhunt that took nearly ten years, untold thousands of lives and over a trillion dollars.

The euphoria felt at the White House on Sunday night was not reflected in the trading on Wall Street, though the death of the world's most infamous terrorist did manage to provide a suitable cover story for crashing silver, and, to some degree, calming the Midas effect in the gold pits.

Other than those obvious manipulations, the death of OBL did less to inspire confidence than it did to induce relief that the most evil person in the world had finally met his maker. The rest of the moves in the market could widely be attributed to nothing as earth-shattering as the ordinary movement of the US Dollar against other fiat currencies, particularly well=reflected by the dollar index (DXY).

Initially higher on the news, the DXY lost ground throughout the day, finally bottoming out at 72.72 in early afternoon before rallying back to 73.04 at the 4:00 pm NY close. The decline and subsequent rise in the dollar index was the primary mover of stocks throughout the session, in an inverse relationship that has been in effect since the first round of QE in 2009.

In essence - apply tin-foil hat here in appropriate degree - the timing of OBL's death came at the perfect time for the world's money men. The dollar had been in a vicious slide over the past three months, which fueled the commodity and stocks boom, but was also threatening to undermine the reserve status of the US dollar. The decision to "pull the trigger" - whether real or imagined - quieted dollar devaluation fears, for now, but also took down stocks, creating a Bernanke Trap, in which monetization of US debt and the associated demise of the dollar gives rise to inflation and commodity speculation but the inverse could foment a stock market correction or crash and more severe economic fallout.

Thus, with the death of Osama bin Laden, we have a new enemy, the evil genius chairman of the Federal Reserve, the man behind the curtain pulling the levers, Ben Bernanke, and he is hopelessly trapped into a scenario in which neither outcome is preferable or palatable. One might assume that the esteemed chairman will side momentarily with the monetarists who believe dollar hegemony is preferable to runaway inflation and rioting at gas stations, though making assumptions in the age of political markets is a dangerous game.

For today, the dollar and Bernanke have survived, barely, but tomorrow may be another story altogether. In the very least, we can be assured that the killing of Osama bin Laden represents a shared view at the very pinnacle of power that the the overarching narrative needed to be changed, and abruptly.

Mission Accomplished.

Dow 12,807.36, -3.18 (0.02%)
NASDAQ 2,861.84, -11.70 (0.41%)
S&P 500 1,361.22, -2.39 (0.18%)
NYSE Composite 8,641.56, -29.85 (0.34%)

Market internals belied the slight declines. Stocks which lost ground far outnumbered those gaining, 4135-2454. On the NASDAQ there were 177 new highs and 28 new lows. The NYSE had 337 stocks make new highs and just 13 reach new lows. Obviously, the new highs were made early in the session, before the dollar began to rise and kill the carry trade (now known as risk on). Volume could best be described as either laughable, embarrassing or just plain disinterested.

NASDAQ Volume 1,768,677,875
NYSE Volume 3,669,946,000

WTI crude futures actually fell 41 cents, to $113.52, though that hardly can be construed as relief for motorists already feeling the pinch from $4.00 gasoline. According to AAA, the average price for a gallon of unleaded regular gas is now $3.95, so, $5.00 by summer becomes a distinct possibility in at least 10 states. Already 14 states are experiencing average prices above $4.00, with Hawaii the highest, at $4.57. The lowest average price is in Wyoming, at $3.60, hardly a bargain.

Precious metals were hammered down by the movers and shakers at JP Morgan and the Fed, with gold getting hit with a $19.80 decline, down to $1545.90 as of this writing. Silver took the brunt of the action, with five margin hikes in the past two weeks putting the kibosh on larger speculation in the paper markets. Silver fell $4.39, to $43.55, a point which may actually trigger more paper selling and eventually result in ramped up physical buying.

There's little doubt that the masters of fiat money at the Federal Reserve will do anything to keep gold and silver from appreciating, though they've been an abject failure up to this point. The Fed simply cannot stomach competing currencies and gold and silver amply qualify. If it means the end of screenings at airports and reduction of global tensions, maybe it's a worthwhile tradeoff, but the other side of the Fed's coin is already painted red. Any squelching of precious metals by pumping up the US dollar is likely to have similar deleterious effects on the risk trade in stocks.

At the end of the trading day, Tim Giethner made his appearance and the purpose of all the frenetic activities of the past 18 hours suddenly became crystal clear. The Treasury outlined plans to extend the deadline for raising the debt ceiling to the first week of August, thus delaying or deferring a crisis in the congress.

America teetering on a debt default with the currency debased for the whole world to see must have appeared as the opportune moment to divert attention by killing public enemy #1.

Mission accomplished, indeed, but beware the ultimate costs.

Everything Is Going Up, Except Your Wages and the US Dollar

On March 28, 2008 - about the time Bears Stearns was blowing up and before just about anyone was predicting a crisis - the Dollar Index bottomed out at 71.585.

Today, after the FOMC re-confirmed (for about the 16th time) that the federal funds rate would remain at "near" zero per cent, that very same index hit a three-year low at 73.26, closing just a touch above that level, at 73.317.

Some not suffering from the all-American malaise of short-term memory loss will recall that 2008 was not a very pretty time to be in stocks. Nor was it particularly good to be working for a Fortune 500 or other large corporation, as, by the end of the year, employees were being shed light so much dead weight off a beached ocean cruiser.

Comparing today to that sorry state of affairs is rather simple. Then, we were just heading into what would turn out to be one of the most devastating recession/depressions of modern times. Today, we are still not recovered from it.

Back in 2008, Ben Bernanke was saying that everything was OK, and soon he would glibly announce that the sub-prime crisis had been contained (insert laugh track here).

Today, the Bernanke delivered the very first of what we hope will be a short-lived experiment - a press conference following the announcement of the FOMC rate policy (no change). Once again, the Bernanke assured us that everything was just peachy, except that the economy was "recovering" a little bit slower than he'd like. We can all join him in that sentiment.

Today, Mr. Bernanke read some prepared remarks, bored us to tears and took questions from the assembled press corps, boring us even more. Today, Mr. Bernanke wants us to believe that core inflation is running at about a 1.6 to 2.2% rate, and while that may be true, core inflation leaves out food and energy, so with those included, real inflation is running at about 6-8%.

The Chairman also assured us that inflation risks were contained, just like he said the sub-prime situation was contained back in 2008. Many of us in the blogosphere didn't believe him then, and we don't believe him now, except this time we have proof.

All one has to do is go shopping, which means getting in a vehicle and driving somewhere and maybe buying some gas, which is more expensive than it was last week, and the week before that and the week before that...

Once one is over the shock of $4.00/gallon gasoline, one can go shopping for some food maybe, and find that prices are higher on fruits, vegetables, canned goods, meats, just about everything.

So, no, Mr. Bernanke, you and your Federal Reserve buddies, whose mandate is to provide price and wage stability and full employment, have failed on all accounts and your pronouncements to the press and the public are falling on deaf ears. Many don't bother to pay any attention to you at all, and even more don't even know who you are (that may come in handy when the pitchforks and torches come out). Another group believes you are lying and that you are ruining the economy and the nation with your mindless inflation-building, dollar-destroying policies.

And don't forget, we have proof. This time, we won't be fooled again.

On this day that the Fed reiterated its Zero Interest Rate Policy (ZIRP), everything went up while the dollar crashed and burned. Stocks were up. Interest rates were up. Gold was up, so too silver, oil, live cattle, cocoa and oil. The few commodities that did go down were already way up, and will likely go up more in the not-too-distant future.

The Fed is killing us, which it why is so refreshing to learn that Ron Paul is running for president. The Texas firebrand, if elected, will run Bernanke and his crew out of town.

Dow 12,690.96, +95.59 (0.76%)
NASDAQ 2,869.88, +22.34 (0.78%)
S&P 500 1,355.66, +8.42 (0.62%)
NYSE Composite 8,609.28, +54.29 (0.63%)

On the major stock indices, advancers pummeled declining issues, 4233-2315. NASDAQ pumped out 148 new highs and 25 new lows. The NYSE produced 290 stocks which hit new highs and 10 which made new lows. Volume was in line with expectations, which is a polite way of saying it was low, again, as usual.

NASDAQ Volume 2,083,155,500
NYSE Volume 4,525,766,000

Crude oil closed up 55 cents, to $112.76. The average price for a gallon of unleaded regular in the USA is now $3.88. Nine states are already averaging over $4/gallon, and West Virginia and Wisconsin are at $3.96 and $3.97, respectively. Soon that number will be 15, then 25 then 45. In time, even those states closest to the Gulf of Mexico - Alabama, Mississippi, South Carolina, Louisiana, Georgia, where prices are among the lowest in the nation, will be hovering near the $4 mark, the point at which the nation surrenders what little is left of its dignity - and money - to the global oil cartel.

Those adding to their stash of gold and/or silver yesterday on the rare pull-back, received instant gratification as both metals popped on the FOMC and Bernanke's policy announcement. It seems the gold bugs and silver liners also appreciate Bernanke's policies, except that theywish he'd take a break now and again to give them time to buy more precious metals before the prices go absolutely hyperbolic.

Gold hit another all-time record, currently trading at $1527.20, up a whopping $20.10 from Tuesday's close. Silver also regained its mojo, picking up $2.16, to $47.76, closing in on the magical Hunt brothers high of $50.25, achieved in 1980. Silver is expected to go right on past that point as long as Bernanke keeps interest rates at zero and the dollar continues to slide into oblivion.

Therefore, if you're feeling a bit squeezed, thank the Bernanke. He's our guy.

Buy More Stocks Because the Dollar is Worthless

If anyone has any kind of notion that today's massive uptick in stocks had anything to do with the strength of the US economy, they'd better go back to economics 101 and check the chapter on currency devaluation.

Oh, there is no chapter on that? Well, allow me to explain how the dollar was absolutely savaged by - of all things - the Euro, and a host of other currencies including, but not limited to: the Aussie dollar, the Canadian looney, the Chinese Yuan and especially, the Swiss Franc.

On the dollar index (not a particularly great way to value US paper money, but sufficient for this discussion), the loss was 74 cents, or nearly one percent, meaning everything you buy that isn't produced in the United States - which is just about everything - costs 1% more today than it did yesterday. The corresponding rise in stocks only helps alleviate the pain for the richy-rich amongst us, but they usually find tax dodges or off-shore accounts for their hordes of cash anyhow.

The rest of you schmucks are just going to have to take it, see? You pay more so the Fed can print more billions, give them to the primary dealers and allow the government to continue overspending until eternity, which is a long, long, time. Next week, it will likely get worse, with gas heading for $5.00 a gallon nationally, and everything else going up accordingly, eventually, the average household will be able to buy food and fuel and little else, all the while watching those who own stocks make fortunes.

While the wizards of Wall Street frolic in the fields of greenbacks, you and I will be left holding the bag, containing manure, and be taxed into oblivion. Don't worry about Medicare and Social Security, most of us will die off before any benefits are actually paid out.

It's an ugly, severely evil set-up by the banks and our hands-out congress to create two distinct classes in the United States: the super, super rich and everyone else. You and I must learn how to raise our own crops and subsist off the land leased by our wealthy masters. Welcome to the golden age of feudalism!

I have nothing more to add except that if you haven't started some plants growing in your back yard and already own some silver or gold or both, you need to do so immediately, as time is running short and planting season is upon us. We are nearing the point of complete collapse of the middle class.

If your kids are planning to go to a big university and go into hock to the tune of $40, $50 or as much as $100,000 to get their degree, it might be time to sit them down and explain that their high school diploma will be sufficient, in their bleak future, to work as a mechanic, a gardener, or a chamber maid. Their dreams of becoming the next great biologist or astronaut will have to be put on indefinite hold.

Dow 12,453.54, +186.79 (1.52%)
NASDAQ 2,802.51, +57.54 (2.10%)
S&P 500 1,330.36, +17.74 (1.35%)
NYSE Composite 8,457.65, +125.62 (1.51%)

Advancing issues pounded decliners, 5245-1347. There were 133 new highs and 29 new lows. On the NYSE, 193 new highs and 16 new lows was the order of the day. Volume was relatively solid on the NASDAQ, where all the momentum stocks reside, but the usual miserable figures were posted on the NYSE. Almost all of the day's gains were made at the open, so the futures players made fortunes; the rest of the session was nothing more than churning.

NASDAQ Volume 2,112,464,250
NYSE Volume 4,657,346,000

Crude oil made a huge move of nearly 3%, gaining $3.17, to $111.45, making that $5.00 gallon of gas that the oil barons dream about that much closer to reality. Gold blasted through the $1500 mark again, but was taken down to $1,498.90, a gain of a mere $3.80. Silver continues to dazzle, gaining another 54 cents on the day, finishing in New York at $44.46.

While some argue that gold and silver are bubbles, if that is the case, then what is to be said of stocks, which have doubled off their March 2009 lows? Gold and silver are only a third to a fifth of the way to where they are eventually going. With every new dollar printed by the Chairman of the Fed, Ben Bernanke, an ounce of precious metals costs a little bit more, and that's about the only good news I can report today.

EDIT: Following the COMEX close in New York, gold bounced to $1502.10, and silver shot up to $45.22 an ounce at 5:18 pm EDT.

Slip Sliding Away

With all due apologies to Paul Simon, the stock markets the past 10 days have been playing the tune that says, in part, "the nearer your destination, the more you're slip sliding away."

With stocks making a new peak on February 18 and attempting a run at all-time highs via the Fed's easy money policy (Here's a couple billion. Don't blow it all at once.), the bump in the road has been met and it seems to have come in the familiar form of high oil and gasoline prices.

Everybody knows that when you spend more on gas to get where you're going, you have less money to spend on what you went there for, despite your original intentions. Gas has run up so high, so fast, some people (like me) are considering not driving at all.

Consider the things you can't do while driving: drinking, talking on a cell phone (in most states), texting, and I've heard that most police officers frown on any sexual activity while behind the wheel. So, since they've taken all the fun out of driving and it's really expensive, why not just give it up altogether?

One may note that eating is still allowed while driving, and that's obviously due to the huge sums of money the fast food giants give to political campaigns. Seriously, eating a Mac-Double and fries while at the wheel is at least as dangerous as talking on a cell phone, and not quite as healthy. But, it's still allowed. We wouldn't want to close down all those drive-thru windows, now would we?

Getting back to stocks, with today's close, the major indices have been down six of the last ten sessions, and the Dow is off by 300 points, or about 2 1/2%. Apparently, all the money pumped into the markets by the Fed's QE2 program has caused some unintended outcomes, those being, primarily, massive increases in everything people need to live: food and fuel, among other things.

Making matters worse, Fed Chairman Bernanke seems to believe a little inflation is not a bad thing and also doesn't think the Fed is responsible for commodity price increases, food prices spiking and now oil going through the roof.

Well, Mr. Bernanke is either profoundly stupid or a very, very bad liar, and neither of those conditions are very good. It's quite obvious, and economics 101 teaches us that increasing the supply of money will lead to higher prices for the same goods, or, inflation. The Fed has pumped about $400 billion of their promised $600 billion into the markets and this is the result so far. I, for one, can't wait to see what the next $250 billion of free cash for the bankers will do. How bout gas at $4.25 and a permanent 10% increase in your weekly grocery bill.

It's not completely Bernanke's fault for being a stubborn fool, since he was appointed by a president freely elected by the stupid masses (me and you) and the Fed's been doing this kind of thing since 1913. Amazingly, this is only the second Great Depression they've caused, but hopefully, it will be their last.

Movements are afoot in at least 11 states to make gold and silver (it's what the constitution of the United States of America calls money) legal tender, in direct competition to Federal Reserve Notes, which, in reality, are nothing more than debt instruments. Given time, we'll return to a gold standard, though we'll have to lay waste to the Federal Reserve and all of their too big to fail banks like Bank of America, Wells-Fargo, Citigroup, JP Morgan Chase and maybe even Goldman Sachs. It is with hope that the banks and the Fed go quietly, because we really don't want to go through another tumultuous period like the Civil War.

So, all is not lost, and we sincerely hope the Fed keeps making the US dollar worth less and less. Maybe gas prices over $6 or $7 a gallon will rile up enough people to start looking at the Federal Reserve as the real enemy, not the great benefactor of OUR money they like us to believe they are.

Dow 12,090.03, -79.85 (0.66%)
NASDAQ 2,745.63, -39.04 (1.40%)
S&P 500 1,310.13, -11.02 (0.83%)
NYSE Composite 8,337.02, -76.03 (0.90%)

Declining issues outpaced advancers, 4980-1583. On the NASDAQ, there were 107 new highs and 38 new lows. On the NYSE, 159 new highs and 22 new lows. These numbers continue to converge and there's probably less than two weeks left before the new lows begin to overtake new highs on a daily basis. There may be a time of sideways trading, but, as traders always like to look ahead, if the Fed is really going to cease it's QE activities at the end of June, it might be better to get out of the way before the carnage in stocks begins, because once they pull away the artificial stimulus, the economy will head right back into the tank, just as it did briefly last summer.

Mr. Bernanke and his friends at the Fed have painted themselves into a dark and ever-shrinking corner and they have found no way out. Their dual mandate of stable prices and full employment is nothing but a very bad joke. The sooner the American people wake up to the fact that the Fed, with congress and the administration as their willing accomplices, are ruining the country, the sooner we the people can stand up and start fixing it.

NASDAQ Volume 2,203,664,500.00
NYSE Volume 4,595,122,500

It was another thrilling day for commodities. Crude was up another $1.05 at the close, at $105.44, though it traded well over $106 early in the day. Gold tacked on a gain of $5.90, to $1,434.50 at the close, though it too traded much higher, the top being $1445.90. So too silver, which was as high as $36.79, but finished up a mere 54 cents, at $35.86.

As for the mighty US dollar, the daily chart of the Dollar Index shows the dip to 76.12 prior to US markets opening and the day-long ramp up. Buying the dollar (another Fed plaything?) caused oil, gold and silver to lose their early momentum, but it's a losing battle for fiat money and it's coming to a head, soon.

Big Rebound for Stocks on Low Volume

Today's jump in equities, led by Industrials, Financials and Health Care, was mostly based upon the usually shaded numbers from the BLS on initial unemployment claims, which came in at a three-year low of 368,000.

A good number, without a doubt, but market bettors were staking into stocks on the probability that those figures would translate into a much-improved non-farm payroll number on Friday. The current estimates are calling for the US economy to have created between 175,000 and 200,000 net new jobs in the month of February.

Taking into account the massive sums of money pumped into the economy through various stimuli, tax credits, bailouts, low tax regime and the Fed's QE, QE2 and ZIRP policies, it's about time for companies to begin hiring, and with gusto. Should the number tomorrow fall short of expectations, it would provide more fodder for those who believe the great Keynesian experiments of Ben Bernanke and the oligarchical banker subsidies have been for naught.

Those on the "recovery" side of that argument better hope that the BLS has massaged the numbers sufficiently to manage the message.

While today's gains were awesome to behold - the best for the S&P since December 1 and the biggest percentage gain for the NASDAQ since February 1 - the major indices are still 1-1 1/2% below the recent (Feb. 18) highs. events are still very much in flux, oil is still abnormally high-priced and we're still guessing that unemployment is beginning to come down, and worse yet, that guess is based upon a very faulty - and often revised - series of numbers supplied by a dodgy government agency, the BLS.

Not to poke holes in the recovery argument, for that's becoming a cause for being labeled un-American, but the stock market is such a wild, wide-open casino these days, that a big upside move is nothing upon which to hang one's investment hat. Additionally, it should be pointed out that the huge two-year rally off the March 9, 2009 lows has been upwards of 95% on the major indices and it is nothing more than a cyclical bull rally inside a secular bear market, one which the Western world entered in August of 2007.

Then there's still the question of what will happen when the Fed pulls the plug on QE, come June, or whether they will have the nerve and economic data to allow them to do so. That's when things get really dicey, as the underpinnings of the market are pulled out and interest rates make a natural rise, causing all that glorious government debt to be ever-more expensive to pay back.

And, if the Fed decides to pull the veritable plug of buying all US Treasury issuance, how soon will be see failed auctions? A scenario like that would make 2008 look like a stroll through the amusement park.

Enjoy it while you have it, perma-bulls. It may not last very long, especially in the face of what's gone on in gold and silver, the two behemoths scaring the living daylights out of central bankers everywhere.

Dow 12,258.20, +191.40 (1.59%)
NASDAQ 2,798.74, +50.67 (1.84%)
S&P 500 1,330.97, +22.53 (1.72%)
NYSE Composite 8,465.45, +126.69 (1.52%)

Matching the headline numbers, advancing issues galloped ahead of decliners, 5126-1431. NASDAQ new highs: 160; new lows: 22. NYSE new highs: 228; new lows: 4. Volume was down in the doldrums again, though not as badly as other, weaker days. With all the profits generated over the past two years, one would expect to see much higher volume on big trading days like this, but the bulk of the gain was done by noon, after which markets just marked time ahead of the key job announcement tomorrow morning.

There's also the small technical matter of the key, double-engulfing day on Tuesday, a symptom and a signal for a course correction, that is still in play. Today's high on the Dow was still 20 points shy of the opening high on Tuesday.

NASDAQ Volume 2,005,997,000
NYSE Volume 4,926,878,500

Oil took a bit of a breather, as events in Lybia and the Middle East were downplayed. NYMEX crude dipped 32 cents, but stabilizing over $100 - today's close was $101.91 - per barrel isn't anything anybody should be bullish about, unless one owns a well or three. Higher oil prices precede recessions, every time, and unless the situation in the Middle East isn't quieted soon, that high price is going to remain in place and possibly go higher. Moods change on the turn f a dime these days, and today's price - as well as today's stock gains - could be ancient history in a matter of hours or days.

Precious metals took a well-deserved day of profit-taking, and are consolidating at elevated levels. The next move higher should commence whenever conditions warrant, that being any time there's a flare-up in the Middle East, or, like Jean Claude Trichet mumbled today, interest rates should rise in Europe in order to stave off inflation.

Gold dropped $21.30, to $1,416.40; silver was down 51 cents, to $34.33. Both of those levels are close to historic, recent (yesterday) highs.

The future of the markets hinge upon tomorrow morning's key employment number, though one should not get too tied to this particular measure. There are more forces at work besides employment figures, though traders seem to want to hang their collective hats on this one.

Headlong Into Hyper-inflation

After last week's mini-correction - which is probably the worst decline we'll see for a while - stocks and the Fed are back on track, pumping newly-created POMO dollars into the system for the banking crooks to parlay into stocks. Up, up and away!

According to the Fed's published schedule of monetary injections, today was slated for $6-8 billion in outright coupon purchases. In other words, the Fed is buying back bonds from the Primary Dealers which were purchased just a few weeks ago, presumably at a loss, a small loss, but, nevertheless, a loss, so that the banks will remain willing participants to the Zimbabwe-ification of the US financial system.

These continued injections have become so commonplace that nobody bothers to report on them or even think about them. For those unfamiliar with the process, let's recap:

Step 1: The US Treasury issues bonds in certain amounts and maturities.

Step 2: Primary Dealers (AKA Too Big To Fail (TBTF) banks) buy the bonds.

Step 3: The Federal Reserve buys the bonds from the TBTF banks.

This is the simple process by which our currency is devalued every day and how the banks are shoring up their horrifically-insolvent balance sheets. While the Fed takes a loss of say, half a billion a day, the banks record the transaction as a profit. Viola! The banks are once again sound. The only problem is that the Fed is holding huge amounts of government debt.

Now, if you've been following carefully, you might question the process. Why bother? Why not just give the banks the money directly from the Federal Reserve, since they have the ability to just create money out of thin air?

Ah, what about the government's obligations? They must issue debt, so the game must continue. The auctions, however, conducted in secrecy, electronically, so that only a few people - ostensibly Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner - know who's buying what and for how much.

That's a problem, for obvious reasons, and explains, in part, why some people are beginning to think that the entire economy of the United States has already sunk and is being kept afloat by a massive fraud, perpetrated by the Federal Reserve, Treasury Department and the nation's six to eight largest banks (with assistance from European Central banks who are doing pretty much the same thing).

Nobody is buying US government debt. Nobody could be that stupid. The Fed is buying it all, monetizing the debt, smashing down interest rates and destroying the currency. The tiny little secret nobody wishes to speak of is that the rest of the world had better play along or their currencies will be flushed straight into the toilet along with billions of Ben Bernanke Bucks.

Yes, the Federal Reserve is buying all Treasuries issued, cooking their own books and helping out the banks, because, if they don't do it, we'll just have to liquidate those TBTF institutions and Jamie Dimon (our next Treasury Secretary) and his wealthy friends wouldn't like that. Besides, the Fed and the banks and the politicians they control would no longer be able to sway the American public every which way, as they choose.

Think about it. The Chinese stopped buying our debt at least a year ago. They are trying to unload it as fast as they can without causing a panic. Japan is also no longer interested. Reportedly, the UK has been buying scads of the stuff, but they're even more broke than we are, so that's a gigantic canard.

The Fed is buying all, or nearly all, of US debt issuance. We are a self-dealing, Ponzi-fied, Zimbabwe on steroids. There's no doubt about it and there's also no way out. The Fed cannot stop creating money because it just gets more and more worthless every day. It's being spent as quickly as they can put it into circulation, forcing prices higher and higher, inflating everything on the planet - including stocks - in a very devious, vicious cycle all caused by the bankers who imploded the world's economy back in 2008 when they couldn't figure out a way to cover all their bets without all of them failing.

That is when Hank Paulson, then Treasury Secretary, with Ben Bernanke as his willing accomplice, figuratively held a gun to the heads of the President, George W. Bush, and the leaders of congress and demanded $700 billion dollars with no strings attached. It was the crime of the century, committed in broad daylight, in front of hundreds of millions of people worldwide.

Ever since then, all we've gotten for our time and money is a song and dance, orchestrated to keep us all in line and dong the "recovery boogie." It's such an absolute charade, a sham and a complete lie that a lot - and I do mean a lot - of people are coming to the conclusion that it's not working, that we're stuck in this no-jobs, no-growth, high-inflation limbo until the the bar finally falls to earth.

The big holders of mortgage-backed securities are suing the banks with regularity. They want their money back for all the bad securities issued by the banks, backed by mortgages which were written with no other purpose than to have the homeowner default.

Insurance companies suing banks, with the Fed printing money as fast as they possibly can and prices rising globally because of it results in an unsustainable situation. It's already bad, and quickly getting worse. The rest of what suffices for news these days is just for show.

Think about it. In Wisconsin, they're trying to fill a $3 billion void in their budget. Why, the Fed issues twice that amount through their Treasury purchases EVERY DAY! Oil hitting $100 a barrel? All caused by uncontrolled speculation and outright thievery. There's a glut of oil out there and what the big energy companies are really worried about is people rationing their use of gas, taking fewer trips and buying less. with so many people out of work, they have little driving to do, and the oil companies are just trying to remain as richly profitable as they've always been by CHARGING MORE TO FEWER CUSTOMERS.

QE2, the Fed's gambit to restore economic prosperity by issuing more paper money, is slated to end by June. After that, it's anybody's guess, but the path of least resistance - and most sense, from an OMG mentality - would be to continue printing more. There's no economy, tax revenues have fallen off a cliff, and the Fed, because they've chosen to keep insolvent banks operating instead of closing them down, is powerless to do anything but what they've been doing for 2 1/2 years: print, print, print, and when you're done printing, print some more. Hello hyperinflation, followed by an acute depression, the worst ever seen. See you in Hades, Mr. Bernanke, because that's precisely where you and your policies are sending everyone else.

Dow 12,226.34, +95.89 (0.79%)
NASDAQ 2,782.27, +1.22 (0.04%)
S&P 500 1,327.22, +7.34 (0.56%)
NYSE Composite 8,438.55, +60.51 (0.72%)

Advancing issues outpaced decliners, 4051-2535. NASDAQ new highs: 144; new lows: 21. NYSE new highs: 258; new lows: 15. Volume was back down in the doldrums again, so everything is back to normal.

NASDAQ Volume 2,057,503,500
NYSE Volume 4,593,278,500

Oil prices fell again today, down 91 cents, to $96.97, but the damage has been done. Regular unleaded gas is now at a national average of $3.37 per gallon. Seven states are already over $3.45. Want to see a recession created almost overnight. Push ol to $115 a barrel and gas to a national average of $3.75 and see what happens. The protests in Wisconsin will look more like a picnic compared to the mass outrage that induces. Already, people are reconsidering their choices of paying $75-150 a week to get to and from a job that pays them less than $400 a week, taking home $300-340. For many, it's just not worth it any more.

Meanwhile, gold bugs and silver surfers are loving the chaos. Gold was up again today, but only by 60 cents, to $1,409.90. It was as high as $1,416 in earlier trading. Gold is now being pressured downward, or at least held down, for two reasons. First, the banker's know that everyone watches gold as a proxy to fiat currencies, so they are suppressing demand. Second, the very same banks want to hoard it, because they know everyone is right. The global economy is as close to complete meltdown as it was in the fall of 2008.

Silver got all the gains today, up 91 cents (same as the drop in oil, coincidentally), to $33.80. We're unsure whether or not that's a new 30-year high; we only know that $50 per ounce is the number that stopped the Hunt brothers back in 1979-80. When the bubble they created finally burst, Nelson Bunker Hunt, who purportedly lost more than a billion dollars in one day, said, "a billion dollars isn't what it used to be."

And, so, those immortal words, while the Fed pumps billions into an eventual oblivion, ring more true than ever, today.

Stocks Up; Silver at 30-Year High

All attempts to slander, deride or talk down the precious metals as the ultimate store of value have failed. Trillions of Benji Bucks, delivered to market participants by the Federal Reserve and sparking an equity and commodity boom the likes of which the world has never seen has finally defeated the forces holding down the value of gold and silver.

In what can only be characterized as a massive short squeeze, silver spiked to fresh 30-year highs, while gold surge to a one-month high. There is little to hold them back now save the massive short silver positions held by JP Morgan Chase, and they are being buried under frenzied buying.

Uprisings in Middle Eastern countries from Bahrain to Syria to Lybia to Algeria to Saudi Arabia, in the aftermath of the Egyptian triumph over tyranny, have been set off by upward global food price price pressure, the lack of stable employment and corruption in government. If those themes sound familiar to people in the more "developed" world such as the USA and Europe, it is because we are beset on all sides by corruption and inflation, a deadly combination for anyone who seeks to hold positions of political power.

Thus, the Federal Reserve has sparked rebellions overseas and maybe tipped the flobal community past the point of no return. Only the dole in England, food stamps in America and deeply-ingrained socialism in most of the EU has kept the people of these countries from "going Egyptian" on their political masters.

The Westernized nations certainly have a great deal to gripe about, though the impact of the Fed's policies of zero interest rate and quantitative easing are being felt first in the rest of the world. They will no doubt be visiting the shores of Europe and the United States at some as yet determined date. Runaway inflation, high unemployment, dissatisfaction with government policies and widespread fraud should result in tumult of the highest order just in time for the presidential elections in 2012, should the nation still be intact by then.

But, I digress. The most important signpost of the day was the spike in silver, without a doubt. It was, in warrior terminology, a shot across the bows of the ships of states printing fiat money, backed, laughably, by "good faith and cradit" of the issuer. In the case of the United States, unbeknownst to the rulers-at-large, all faith has been shattered and our national credit card has been tapped out. We loan mostly to ourselves, from ourselves, by ourselves, in a Ponzi scheme so deliciously evil that it would make Bernie Madoff look like a boy scout.

Dow 12,318.14, +29.97 (0.24%)
NASDAQ 2,831.58, +6.02 (0.21%)
S&P 500 1,340.43, +4.11 (0.31%)
NYSE Composite 8,497.41, +43.65 (0.52%)

Advancing issues beat decliners, 4118-2402. NASDAQ recorded 212 new highs and 22 new lows. On the NYSE, new highs topped new lows, 361-9, a number so ridiculously out of balance that only Ben Bernanke could love it. There is no downside risk to owning stocks and until there is, one should load up with tight stops on the underside. Volume was back into the abyss of the past two years.

NASDAQ Volume 1,952,032,375
NYSE Volume 4,178,143,000

Oil was up another $1.37, to $86.36 on conflicting reports that Iran was about to send warships through the Suez Canal. Israel is worried and called the act "provocative," while countries all around it are undergoing spasms of freedom and expressions of liberty. The smart money has already left Zion. A couple of Palestinaians were shot and killed by Israeli soldiers on the border of the Gaza strip.

Gold gained $10.00, to $1,385.10, and silver was up more than 2% at the close in New York, higher by 94 cents, to $31.57. Silver, said to be rarer than gold by some accounts, has jumped $5 dollars US in just over a month. Today's final push to new highs marks the beginning of a second phase in the bull rally that has slowly limped behind gold, but has recently outstripped nearly every other asset class, gaining 87% in 2010 alone.

Estimates for how high silver can go and in what time frame range from the reasoned to the impossible, though in today's upside-down economic world, the impossible - such as the S&P 500 doubling in just the past two years - is now possible. A reasonable guess is that silver will reach $50 by the end of the year, which would be "only" a 67% gain in an asset that has no counterparty risk if one holds physical metal and is deeply undervalued by almost every metric.

Now that buying stocks is a risk-less play, expect some surprises in the next downturn, such as it coming out of nowhere, for no particular reason and to be deep and quick. The sheep will surely get sheared once again as gold bugs and silver sleuths sit back and gloat.

Yes, and real estate in selected markets is cheap, but will be cheaper later this year, even cheaper in 2012 and practically fire-sale prices in 2013. Save your silver. In three years time, you'll be able to buy a reasonable three-bedroom home in a decent community for about 200 ounces of silver. I would not kid you about that. Of course, you may not be able to afford the property taxes, especially if the house is in New York, New Jersey, Massachusetts or California.

And, BTW, the banks are dead. They just won't admit it.

Mubarak Flees Egypt; Stocks Rally in US

Nothing like the deposition of a dictator to raise the animal spirits of the ruthless Wall Street crowd. The self-proclaimed Masters of the Universe are probably plotting now on how to best liberate the newly-free people of Egypt from their valuables.

Meanwhile, back at the exchanges, stocks started lower again and then rapidly moved up, similar to yesterday's trading, though with a little more lift. In addition to the news out of Cairo, the Primary Dealers were once again treated to a little $7 billion POMO, courtesy of their favorite Central Banker, Chairman Ben Bernanke.

Actually, with an overthrown government in the Middle East and $7 billion in walking-around money, one would think that today's results were less-than-adequate. Then again, stocks were extremely overpriced in October of last year, and it's been straight up since then, so there must be a dearth of new suckers... er, investors.

Dow 12,273.26, +43.97 (0.36%)
NASDAQ 2,809.44, +18.99 (0.68%)
S&P 500 1,329.15, +7.28 (0.55%)
NYSE Composite 8,374.89, +37.76 (0.45%)

Volume was pretty thin again, but advancing issued lambasted decliners, 4637-1883. NASDAQ recorded 237 new highs and a mere 25 new lows. On the NYSE, the numbers were skewed even more, with 318 new highs and only 10 new lows.

NASDAQ Volume 2,074,279,250.00
NYSE Volume 4,690,140,000

With tensions subsiding in Egypt, oil traders took down the price by $1.15, to $85.58. By the same rationale, gold fell $2.10, to $1,360.40, and silver was off by 10 cents, to an even $30.00 at the close of trading in NY.

With the markets up, winter coming to a fast end, Mubarak out and nothing but good times ahead, we evoke the spirit of depression-era impresario Ted Lewis, asking the musical question, Is Everybody Happy?

The Long Wait

Waiting for anything can be distressing, anxiety-causing, even depressing.

Today we heard Ben Bernanke at the National Press Club explain that increases in commodity prices were not due to his easy money policies, though increases in stock prices were.

Were it true, the principles of economics could be stood on their heads and spit nickels all day long.

The wait for the end of the manipulation, the final, desperate push into insolvency of the nation and the currency, is not for the weak-willed nor for the non-believer.

Egypt is but one manifestation of Bernanke's policies. Higher cereal prices, beef prices, pork, chicken, you name it, are all the result of easy money created daily at the Federal Reserve.

Rather than drone on, as I have for many posts over many months, my sentiments are similar to those of Mike Krieger. And I'll leave it there.

Dow 12,062.26, +20.29 (0.17%)
NASDAQ 2,753.88, +4.32 (0.16%)
S&P 500 1,307.10, +3.07 (0.24%)
NYSE Composite 8,289.05, +16.48 (0.20%)

There were a few more advancing issues than decliners: 3371-3016. On the NASDAQ, 138 new highs, 24 new lows. There were 192 new highs and 7 new lows on the NYSE. Volume was level.

NASDAQ Volume 1,947,644,875
NYSE Volume 4,874,717,000

NYMEX crude moderated, down 32 cents, to $90.54. Gold gained $20.10, to $1,353.00. Silver was up 44 cents, to $28.73. Apparently, somebody sees something in the precious metals.

Tomorrow's non-farm payroll report is supposed to provide some clarity on jobs in the US. Most likely, it will not. Were there any real news we could trust, we might be able to make an informed decision.

Bulls Dance with Bernanke (the Bernank) through January

Apparently, in this new world order, international crises affect stocks for only one day.

And that day was Friday. Today's trade was "risk on" again, even as the situation in Egypt crept closer to complete anarchy, rioting and food shortages.

Not to worry, Ben Bernanke, according to the schedule, furnished the Primary Dealers with between $6 and $8 billion through outright purchase to grease the skids... er, goose the...um, pump, ah, well, you get the picture.

Stocks went on another tear ahead, leaving Friday's sudden decline for the losers who sold. As all great analysts of today know, you don't fight the Fed or sell the dip. You buy the F-ing dip.

Since there was no news - good or bad - upon which to move markets, we find the tenor of today's trading most appropriate, since CNBC or any other financial journalist doesn't seem to feel a need to mention the beneficial nature of the Fed's QE2 program to stocks, nor the fact that it is inherently inflationary, destructive to capital and a huge Ponzi scheme.

Since this is the final day of trading for the month of January, there was probably some degree of window dressing being done by fund managers and also large dosages of red Kool-aid for all.

Wall Street is drunk with the power of money and fractional reserve banking and is officially in another universe, divorced completely from reality and interested only in fattening the wallets of their directors, themselves and their largest clients.

Egypt will fall, and maybe Saudi Arabia next, but the masters of the universe will still need to keep the stock market going higher, if only to delude millions of Americans that everything is all right. The party will go on as long as nobody removes the punch bowl from which they all drink, and making matters worse is the Ben Bernanke is both designated driver and punch bowl spiker. He has the keys to everyone's cars and an unlimited supply of monetary booze.

Party on! The Bulls are loving the frozen tundra of January, which, by way of reference, we bring the January Barometer, which preaches, "as goes January, so goes the year." And we have no reason to argue with the logic, at least until June, when QE2 is supposed to expire. Besides, the January Barometer has been wrong the past two years, so it should come back for a win in 2011, no?

Dow 11,891.93, +68.23 (0.58%)
NASDAQ 2,700.08, +13.19 (0.49%)
S&P 500 1,286.12, +9.78 (0.77%)
NYSE Composite 8,139.16, +76.52 (0.95%)

Advancing issues beat decliners 4230-2265. Oddly enough, there were only 68 new highs and 39 new lows on the NASDAQ. On the NYSE, new highs beat new lows, 125-18. Volume was well short of Friday's big number, but that's the norm here and has been for some time. Ask yourself, if there's more selling than buying, why are stocks going higher? Then hit yourself in the head with a hammer a few times. That should give you an idea of how convoluted our national markets really are.

NASDAQ Volume 1,991,840,000.00
NYSE Volume 4,939,404,000

Of course, the situation in Egypt, while good for stocks, apparently, is also good for screwing consumers at the pump. Crude futures started the day in the red, but quickly reversed course and ended the day more than 4% higher, up $4.32, to $92.19, even though the Suez Canal remains open and oil continues to flow to its destinations without interruption. There are no disruptions, except for those in the heads of people who believe we must pay more per gallon for gas, no matter what, forever and ever, amen.

And since there's an international crisis, gold should be bid up, but of course, the elitists controlling the precious metals can't have that (they want to buy more at low prices), so they sent the glittering metal down another %10.70, to $1,333.80. Silver also is desirable, though not as much, so it was allowed to rise 85 cents, to $28.17. These commodity trades make no sense unless you have your tin-foil hat firmly attached and antennae up. Otherwise, you don't get it.

While Cairo devolves into a weeping slog of hungry humanity, Wall Streeters will be anxiously awaiting the most current estimate of national shame, Friday's non-farm payroll report. We'll get the highly-discredited ADP report on Wednesday and there will be much speculation. The market experts expect the US to have added between 125,000 and 150,000 jobs in January. That number might be enough to keep up with population growth, and it's well short of anything even suggesting "growth" in job creation, but, if it falls short of the desired result, the very same experts will blame it on the weather, or snowfall, or just ignore it altogether as they usually do.

Because Uncle Benji will be delivering more Bernanke Bucks, and everything will be just fine, you just wait and see.

BTW: The Dow is up more than 300 points this month and since September 1, 2010, it's up almost 1900 points, good for a 19% gain in just five months. See? Everything is just fine.

Another Dip for Equity Speculators

As we've heard from countless pundits and analysts, stocks are cheap and headed higher in 2011.

The market, however, and continued unemployment and rising homelessness, tell us that American consumers are all but tapped out and seething over higher fuel and now, food prices. Ben Bernanke's great experiment with QE2, now well into its third month, continues to shovel money at the Primary Dealers, who, in turn, speculate and control the stock markets.

When they wish to sell, they do. When they desire gains, they simply hit the "BUY" button and spend the money the Fed has lavished upon them, which is why today's decline was simply wiped away and turned into a smallish dip. The speculators have all of their bets covered and will crush anybody, short or long, standing in the line of fire.

Stocks were getting creamed earlier in the day before the pretenders of recovery decided to give the market a little boost with some controlled buying. The Dow was down as much as 80 points before recovering into the close with only a small loss, though little could be done to stem the tide against Apple and other tech stocks on the NASDAQ, which suffered through another drubbing, the second in as many days. The NASDAQ, probably the most inflated of the major indices, has lost 62 points over the course of the last two sessions, but that's only the very beginning of what appears to be a massive exodus from high-flying tech names, since the index is up more than 600 points since September, 2010.

Dow 11,822.80, -2.49 (0.02%)
NASDAQ 2,704.29, -21.07 (0.77%)
S&P 500 1,280.26, -1.66 (0.13%)
NYSE Composite 8,076.72, -28.20 (0.35%)

Despite the marginal losses overall, especially on the Dow and S&P, the A/D line told a more sinister story. Declining issues beat back advancers by better than a 2:1 margin. Losers beat winners, 4359-2107. On The NASDAQ, there were 36 new highs to 22 new lows, the convergence now notable and significant of a major turning point. On the NYSE, new highs held sway over new lows, 44-24, also close to doing a complete reversal. Volume picked up again today, marking the best of the week, which is bad news for holders of stocks, generally.

NASDAQ Volume 2,277,221,500.00
NYSE Volume 5,579,977,500

What moved markets and commodities on the day was a set of data points out of China, where inflation is running at a 4.6% rate (probably higher) and the government is under increasing pressure to keep a lid on rising food prices. Unlike in the USA, where higher prices for things we put in our bodies is simply a sign of "recovery" and passed along to the consumer, in China people have a tendency to get a little bit crazier when they are facing wholesale starvation. If China doesn't clamp down hard on rising prices, there will be riots and military movements inside the Great Wall.

Commodities reacted strongly to China's inflation data, as they should have. Oil moved lower by $2.00, to $88.86, its lowest level in two weeks. Gold was pounded lower by $23.70, to $1,346.50, a two-month low, but likely only a temporary setback. Silver was punished mercilessly, losing more than 4.5%, down $1.33, to $27.47. Surely, the gold and silver trade is once again in the hands of the major world banking interests, who are resolute - though highly unsuccessful - in keeping prices of the precious metals down. But they will on occasion carry the day, or week, though for the multitude of investors who swear by gold and silver, these continued declines appear as buying opportunities.

Friday marks option expiration for a multitude of stocks and that derivative market will influce trading on the final session of the week. Monday now appears as the best possible continuation of the down-trend.