Stocks Drop, Metals Pop, BofA a Major Flop

As the debt crisis in Europe evolves, worries over the US debt ceiling non-negotiations continue to complicate matters for traders. Fear is pervasive on the Street and the pace of progress (what little there is) seems to suggest that congressional Republicans and President Obama are on a collision course in which the August 2 deadline for raising the debt ceiling might come to pass without a resolution, or, at least one with any real teeth.

The stalemate over raising the debt limit has been pushed by the Tea Party faction in the House of Representatives, and it's done nothing but squander time and any understanding between the opposing factions. Talks have broken down twice in the past two weeks and lawmakers seem to be no closer to a deal than they were a month ago.

What's at stake should the deadline pass without a resolution to raise the debt limit would be the credit rating of the US, which has been threatened by ratings agencies Moody's and Standard and Poor's. Even if a deal is somehow worked out, the wrangling over the issue has sent the wrong message: America looks more like a third world country than the leader of the free world.

The arguing and posturing has helped to stall the economy because businesses don't want to make major moves - like hiring or opening new facilities - with so much uncertainty in the air, and that has taken its toll on stocks.

The week started off the same way last week ended, on the wrong foot, with stocks down sharply at the open and plummeting to the lows of the day by noon. The Dow was down 180 points at that point and the NASDAQ had shed some 46 points before bargain hunters (read: morons or the PPT) stepped in to shore up the losses. None of the major indices saw even a glint of the positive side. In fact, closing levels were near the high points of the day.

Dow 12,385.16, -94.57 (0.76%)
NASDAQ 2,765.11, -24.69 (0.89%)
S&P 500 1,305.44, -10.70 (0.81%)
NYSE Composite 8,135.53, -91.51 (1.11%)

Decliners led advancers by a wide margin, 5363-1213. The NASDAQ recorded 36 new highs and 71 new lows, while the NYSE had 37 new highs and 93 new lows. The combined total favored new lows, 164-73. With that indicator flipping over again and no progress on any economic front, the recently-resumed slide in stocks should lengthen and deepen. Volume was sluggish, and that's being generous.

NASDAQ Volume 1,726,375,125
NYSE Volume 4,103,216,500

Commodities were led by gold, which broke through the $1600 mark, finishing at $1,602.40, up $12.30 on the day. Silver was up more than 3%, rising $1.27, to $40.34. The ascent of the metals over the past two to three weeks has been a resounding note of no confidence in the fiat money system and general financial malaise caused and exacerbated by central bank intervention.

Crude oil continued doing its odd two-step, as WTI finished down $1.31, to $95.93. Of course, this one-off loss will likely be offset by gains tomorrow. Such is the way rigged markets function. In the end, there will be no summer relief for drivers who are paying close to $4 per gallon. The nationwide average for a gallon of unleaded regular remains high, at $3.68, with ten states over $3.77.

Bank of America continues to be the least-loved stock or bank in the nation. Shares of the beleaguered financial institution fell to yet another 2-year low, closing at 9.72 as reports emerge that the company needs to raise $50 billion in order to become a healthy, functioning bank again. One can only imagine how the bank's books would look had they not been bailed out in 2008 by the federal government (taxpayers). Some - this writer included - still believe it would have been better to allow BofA to go into default and bankruptcy and have the huge bank broken up into smaller parts.

The jury is still out on that one, though it still appears that those favoring bankruptcy for the biggest banks may have been on the right track all along. BofA still may not make it through to 2012 and beyond. They are broke, busted and insolvent and are a primary reason for the suffering of millions of Americans who have lost homes and jobs because so much effort was spent by the government to help the bank, rather than actual citizens.

After the close, IBM reported second quarter earnings with an EPS of $3.09, ahead of analysts' estimates of $3.03. The company raised guidance for the full year to “at least $13.25″ per share, up from a prior estimate of “at least $13.15″ per share.

The Greatest Scam on Earth Run by Tyrants, Thieves and Traitors

If one didn't know any better, one might come to the conclusion - after viewing market activity on the NYSE and NASDAQ for a few days - that the markets are somehow rigged to never give correct signals and to never follow the same pattern as the day before.

And so it is with our markets, constantly being churned by the big players who will use CNBC as their foil to gin up any kind of story that fits the desired narrative of the day. Yesterday, Ireland's bailout, a flare-up in tensions on the North-South Korea border and raids on hedge funds by the FBI (no, CNBC barely mentions that dirty bit of business), sent stocks down for the day, with the Dow surrendering 142 points.

Today, based solely on improved numbers from the greasy BLS stack of initial unemployment claims (407,000 for the week, a short week at that and sure to be revised higher as they do 90% of the time) stocks gapped up as though yesterday's event occurred in a vacuum or were never really a big deal after all. What gap ups or downs at the open do is trap traders in overnight positions. Only the deft day-trading sharpies at Merrill, Goldman Sachs, et. al., are able to slide seamlessly in and out of stocks without mishap. Individual investors have the deck stacked entirely against them, suffering from limited knowledge, and, as the FBI raids confirm, widespread use of illegal inside information.

Trading in US stocks has become such an open scam that it's laughable to even think of investing in any listed companies. The markets have become completely the province of sophisticated high-rollers who daily prey on the wealth of those invested in mutual funds, 401K plans or individual stocks.

No further proof is needed. It's so blatant and obvious, just compare the trading yesterday and today (scroll down for yesterday's final numbers), and you can see for yourself that the Wall Street mob is running a game more crooked than any three-card monty would ever aspire to be.

In case you're unconvinced, consider that "traders" today completely ignored a 28% drop in new home sales year-over-year and a 3.3% decline in durable goods orders from the previous month.

The closing numbers for the two days are virtually a mirror image with only the plus and minus signs the only differential. What was down yesterday was up today, and the same thing happens over and over and over, until, of course, the big money wants to take it all radically higher or lower and then they induce panic or a two month rally, like the one we just had, lasting from September through the end of October.

A recent government report implied that 20% of Americans are mentally ill, but the number of suckers stuck in retirement plans and mutual funds that are invested in stocks suggests that the number should be much higher, because one would have to be out of their mind to invest in what is nothing more than a rigged carnival game, complete with the same bells at the open and close that one would hear at a casino when the slot machines hit a jackpot.

Except in the case of Wall Street the jackpot is only for the privileged few.

Dow 11,187.28, +150.91 (1.37%)
NASDAQ 2,543.12, +48.17 (1.93%)
S&P 500 1,198.35, +17.62 (1.49%)
NYSE Composite 7,579.26, +108.49 (1.45%)

Advancing issues ramped up well beyond decliners, 5191-1273. New Highs topped new lows, 329-53. Volume was at its lowest level in weeks, which the absolute moronic explanation would be due to the impending holiday, though it really is only more evidence of fraud.

NASDAQ Volume 1,648,491,625
NYSE Volume 3,743,356,250

Another big surprise was the rise in the price of oil, which is tied to gasoline prices at the pump, which shot up $2.61, to $83.86, just before one of the busiest driving periods of the year. Again, big surprise.

Gold fell $3.90, to $1372.60. Silver added six cents, to finish at $27.57. One can clearly see more evidence of fraud on a day that the dollar is up sharply and oil sets off on its own. The normal relationship is for oil to lessen in price when the dollar strengthens and increase when the dollar falls. It's what we've come to expect, though one should suppose that with the now-permanently rigged markets, the only relationship that matters is the big money trying to take more from unprotected individuals.

The FBI raids are a unique feature of the completed control market. Those being raided are the low-hanging fruit. We're tantalized by Goldman Sachs being mentioned as part of the probe, though we know they are exempt. No truly big players will ever receive as much as a subpoena, as the government needs those guys to keep funding their illicit raiding and fining procedures.

And that's all it's about. The government isn't squeezing enough money out of ordinary taxpayers - that well's run dry - so they go after the low hanging fruit that is the hedge fund industry.

Will the fraud and abuse ever end? Absolutely, but the price paid will be either buckets of blood from patriots willing to stand against the oppressive, fascist government-finance coalition, or the lives and livelihoods of millions of Americans and their children and grandchildren, a longer, more devastating prospect.

One need not look for this writer in the bread lines or poverty camps. He'll gladly die for what's right than live a lie, without a future. The frauds must be exposed and the guilty tried, jailed and made to make restitution for the billions stolen from ordinary Americans. That day may never come, but if it does, it will be none too soon.

Be thankful for what we have today, but bear in mind that we are being denied much more, as long as we remain in the grip of tyrants, thieves and traitors.

Equities Remain Stuck in Liquidity Trap

What would you do if you threw a party and nobody showed up?

Well, that's how brokers on Wall Street must be feeling, because there's a serious lack of trading going on these days. For well over a week now, stocks have been stuck within the deafening silence of a liquidity trap, bought about by an overwhelming amount of distrust, absence of investable capital and uncertainty about the future.

Individual investors - and, to a growing degree, some fund managers - have found safety and serenity in the simplicity of cash. Others have opted for money market returns of less than one percent, still more have waded into the refreshing bond waters or ventured into gold or other commodities.

Stocks, for better or worse, have fallen out of favor in the aftermath of the 08-09 meltdown, aided by government programs which were designed to spur demand but instead have only created one-off events, like the cash for clunkers fiasco or the failed stimulus that gave $8000 tax breaks to home owners.

Sure, the people who took advantage of government largesse got their new cars or their new homes, more than likely at inflated prices (we'll know for sure in another 12-18 months), but there was no appreciable overall gain in new buyers. Maybe most folks just like keeping what they have, secure in the fact that - especially in the case of cars - it's paid for or, with a house, knowing what it's roughly worth.

Still others are stuck with properties at inflated values. Recent home-buyers of 2003-2007 vintage are nearly universally upside-down, stuck with payments on outrageous mortgages while the value of their real estate continues a precipitous decline.

In this disheveled state of affairs, the last thing on people's minds is putting more money into the stock market, either by buying individual stocks, mutual funds or increasing the funding of their 401k plan. The average American has gotten the message loud and clear: save and save more. Non-essential purchases are being put on hold more often and investment decisions are based upon more immediate needs rather than with a long-term perspective. Besides, there's a real feeling that Wall Street is rotten and crooked and that stocks, as they have gone nowhere for the past ten years, look more and more like losing propositions.

Trading volumes on the major exchanges have been in a prolonged decline, and even for August, the recent volumes speak of something more sinister and pernicious than simply everybody being on vacation. There's no excitement or impetus for stocks to rise, and Monday's trade was more than likely bolstered by a fresh infusion of cash from the banks and brokerages. The Dow dipped 70 points right at the open before a sudden reversal just minutes into the session.

Once the averages found a more suitable footing, they just churned in a narrow range of about 50 points on the Dow before another minor blip downward and another round of funding from the "masters of the universe" at Goldman Sachs, JP Morgan and Merrill Lynch, BofA's trading arm.

This is a very serious condition which is not going to be solved without another blood-letting in stocks. The absence of confidence has spread all the way from Main Street to Washington to the canyons of Wall Street and now it's locked in place. Until somebody proves that stocks are safe and the economy is really on a rebound (impossible), the direction will be down, down and then down some more. Today's minor gains are overshadowed by the paucity of trading.

Dow 10,302.01, -1.14 (0.01%)
NASDAQ 2,181.87, +8.39 (0.39%)
S&P 500 1,079.38, +0.13 (0.01%)
NYSE Composite 6,871.58, +10.54 (0.15%)

Advancing issues took command over decliners, 3980-2440. There were 311 new highs and 223 new lows, but nobody is really bothering to keep score. Volume reached a new low on Monday, below the abysmal numbers from the previous Monday, which was off-the-charts ugly. People simply aren't interested in stocks right now, and for many good reasons.

NASDAQ Volume 1,636,439,375
NYSE Volume 3,569,886,750

Oil was down again, losing 15 cents, to $75.24, but gold gained $9.60, to $1,224.50. Silver was also up, better by 32 cents, to $18.42.

There was some small economic data, including the NY Fed's Empire Manufacturing Index, which came in with a reading of 7.10 for August after a 5.8 posting in July. The index is stuck at extreme low levels, indicating very modest growth, if any, with falling prices and negative future outlooks. It's not a pretty picture and New York is one of the better-performing areas of the country.

Prior to the open Tuesday, a number of important economic indicators will be released, including July PPI, housing starts and building permits. The numbers are expected to be flat or even down from June, which is just the kind of news Wall Street does not need at this juncture.

The true picture being painted by this low-volume regime is one bereft of confidence and capital. Like just about everything else in the current climate, it is unsustainable for more than a very short period of time, one which will be coming to an abrupt end shortly.